UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

             [ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2000

                                       OR

           [   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from _____ to _____

                         Commission file number 0-12050

                       SAFEGUARD HEALTH ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)


                 DELAWARE                             52-1528581
       (State or other jurisdiction                (I.R.S. Employer
            of incorporation)                      Identification No.)


                                  95 ENTERPRISE
                          ALISO VIEJO, CALIFORNIA 92656
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (949) 425-4300
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.

                                   Yes  X   No
                                       ---     ---

The  number  of  shares  of registrant's common stock, par value $.01 per share,
outstanding  at  October 31, 2000, was 4,747,498 shares (not including 3,274,788
shares  of  common  stock  held  in  treasury).


<PAGE>
<TABLE>
<CAPTION>
                           SAFEGUARD HEALTH ENTERPRISES, INC.
                                    AND SUBSIDIARIES

                                       FORM 10-Q

                        FOR THE QUARTER ENDED SEPTEMBER 30, 2000

                             INFORMATION INCLUDED IN REPORT




                                                                                   Page
                                                                                   ----
<S>         <C>      <C>                                                           <C>
Part I.              Financial Information (unaudited) . . . . . . . . . . . . . . .  1
            Item 1.  Consolidated Financial Statements . . . . . . . . . . . . . . .  1
                     Consolidated Balance Sheets . . . . . . . . . . . . . . . . . .  1
                     Consolidated Statements of Operations . . . . . . . . . . . . .  2
                     Notes to Consolidated Financial Statements . . . . . . . . . .   5
            Item 2.  Management's Discussion and Analysis of Financial Condition
                     and Results of Operations . . . . . . . . . . . . . . . . . .   10
            Item 3.  Quantitative and Qualitative Disclosures about Market Risk . .  14
Part II.             Other Information . . . . . . . . . . . . . . . . . . . . . .   14
            Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .   14
            Item 3.  Defaults Upon Senior Securities . . . . . . . . . . . . . . .   15
            Item 4.  Submission of Matters to a Vote of Security Holders . . . . .   15
            Item 6.  Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . .  16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
</TABLE>



                                       i
<PAGE>
PART  I.     FINANCIAL  INFORMATION  (UNAUDITED)

ITEM  1.     CONSOLIDATED  FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>
                              SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
                                          CONSOLIDATED BALANCE SHEETS
                                                 (IN THOUSANDS)


                                                                                SEPTEMBER 30,    DECEMBER 31,
                                                                                    2000             1999
                                                                               ---------------  --------------
<S>                                                                            <C>              <C>

                                                     ASSETS                       (unaudited)
Current assets:
  Cash and cash equivalents                                                    $        1,089   $       1,639
  Investments available-for-sale, at fair value                                        13,337           4,642
  Accounts receivable, net of allowances                                                2,473           2,978
  Income taxes receivable                                                                  --             480
  Prepaid expenses and other current assets                                               895             641
                                                                               ---------------  --------------
    Total current assets                                                               17,794          10,380

Property and equipment, net of accumulated depreciation                                 3,460           4,816
Restricted investments available-for-sale, at fair value                                2,736           2,688
Notes receivable, net of allowances                                                     2,650           3,505
Assets of discontinued operations transferred under contractual arrangements              750           2,500
Intangible assets, net of accumulated amortization                                      4,419           4,437
Other assets                                                                              250             251
                                                                               ---------------  --------------

    Total assets                                                               $       32,059   $      28,577
                                                                               ===============  ==============

                                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable                                                             $        5,684   $       5,771
  Accrued interest, subject to conversion to equity (Note 5)                            4,038              --
  Other accrued expenses                                                                3,968           3,691
  Short-term debt, subject to conversion to equity (Note 5)                            47,545              --
  Other short-term debt                                                                    30             255
  Claims payable and claims incurred but not reported                                   6,415           6,437
  Deferred revenue                                                                      1,742           1,975
                                                                               ---------------  --------------
    Total current liabilities, including $51,583 of liabilities in 2000
      that are subject to conversion to equity (Note 5)                                69,422          18,129

Long-term debt, subject to conversion to equity (Note 5)                                   --          39,545
Other long-term liabilities                                                             1,134           1,310
Accrued interest, subject to conversion to equity (Note 5)                                 --           1,207

Stockholders' equity (deficit):
  Convertible preferred stock                                                              --              --
  Common stock                                                                         21,829          21,829
  Retained earnings (accumulated deficit)                                             (42,242)        (35,302)
  Accumulated other comprehensive income (loss)                                            39             (18)
  Treasury stock, at cost                                                             (18,123)        (18,123)
                                                                               ---------------  --------------
    Total stockholders' equity (deficit)                                              (38,497)        (31,614)
                                                                               ---------------  --------------

    Total liabilities and stockholders' equity (deficit)                       $       32,059   $      28,577
                                                                               ===============  ==============
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.


                                      -1-
<PAGE>
<TABLE>
<CAPTION>
                      SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF OPERATIONS
                        THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                          (UNAUDITED)



                                                                             2000      1999
                                                                           --------  ---------
<S>                                                                        <C>       <C>
Premium revenue, net                                                       $24,639   $ 24,065

Health care services expense                                                17,318     17,402
Selling, general and administrative expense                                  7,690      9,816
Loss on impairment of assets                                                    --     24,576
                                                                           --------  ---------

Operating loss                                                                (369)   (27,729)

Investment and other income (losses)                                           478       (147)
Interest expense on debt that is subject to conversion to equity (Note 5)   (1,287)    (2,759)
Other interest expense                                                         (53)       (42)
                                                                           --------  ---------

Loss before income taxes and discontinued operations                        (1,231)   (30,677)
Income tax expense                                                              --     12,224
                                                                           --------  ---------

Loss before discontinued operations                                         (1,231)   (42,901)
Discontinued operations:
  Loss from assets transferred under contractual arrangements               (1,750)    (1,099)
                                                                           --------  ---------

    Net loss                                                               $(2,981)  $(44,000)
                                                                           ========  =========

Basic and diluted loss per share:
  Loss from continuing operations                                          $ (0.26)  $  (9.04)
  Loss from discontinued operations                                          (0.37)     (0.23)
                                                                           --------  ---------

    Net loss                                                               $ (0.63)  $  (9.27)
                                                                           ========  =========

Weighted average basic and diluted shares outstanding                        4,747      4,747
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.


                                      -2-
<PAGE>
<TABLE>
<CAPTION>
                      SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF OPERATIONS
                         NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                          (UNAUDITED)



                                                                             2000      1999
                                                                           --------  ---------
<S>                                                                        <C>       <C>
Premium revenue, net                                                       $73,275   $ 71,917

Health care services expense                                                52,287     51,206
Selling, general and administrative expense                                 23,701     27,691
Loss on impairment of assets                                                    --     24,576
                                                                           --------  ---------

Operating loss                                                              (2,713)   (31,556)

Investment and other income                                                  1,115      1,793
Interest expense on debt that is subject to conversion to equity (Note 5)   (3,504)    (4,682)
Other interest expense                                                         (88)      (168)
                                                                           --------  ---------

Loss before income taxes and discontinued operations                        (5,190)   (34,613)
Income tax expense                                                              --     10,934
                                                                           --------  ---------

Loss before discontinued operations                                         (5,190)   (45,547)
Discontinued operations:
  Loss from assets transferred under contractual arrangements               (1,750)    (4,363)
                                                                           --------  ---------

    Net loss                                                               $(6,940)  $(49,910)
                                                                           ========  =========

Basic and diluted loss per share:
  Loss from continuing operations                                          $ (1.09)  $  (9.59)
  Loss from discontinued operations                                          (0.37)     (0.92)
                                                                           --------  ---------

    Net loss                                                               $ (1.46)  $ (10.51)
                                                                           ========  =========

Weighted average basic and diluted shares outstanding                        4,747      4,747
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.


                                      -3-
<PAGE>
<TABLE>
<CAPTION>
                   SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                      NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                                     (IN THOUSANDS)
                                       (UNAUDITED)



                                                                      2000       1999
                                                                    ---------  ---------
<S>                                                                 <C>        <C>
Cash flows from operating activities:
  Net loss                                                          $ (6,940)  $(49,910)
  Adjustments to reconcile net loss to net
    cash provided by (used in) operating activities:
    Loss from discontinued operations                                  1,750      4,363
    Loss on impairment of assets                                          --     24,576
    Amortization of deferred loan costs                                  198      1,953
    Depreciation and other amortization                                2,100      3,220
    Gain on sale of investments and property and equipment               (82)        --
    Deferred income taxes                                                 --     10,569
  Changes in operating assets and liabilities:
    Accounts receivable                                                  505       (348)
    Income taxes receivable                                              480          5
    Prepaid expenses and other current assets                           (254)       414
    Accounts payable                                                     (86)     2,445
    Accrued expenses                                                   3,108       (401)
    Claims payable and claims incurred but not reported                  (22)     1,725
    Deferred revenue                                                    (233)       368
                                                                    ---------  ---------
    Net cash provided by (used in) operating activities                  524     (1,021)

Cash flows from investing activities:
  Purchase of investments available-for-sale                         (24,350)   (12,854)
  Proceeds from sales/maturities of investments available-for-sale    15,678     13,830
  Proceeds from sale of property and equipment                           200      3,500
  Purchases of property and equipment                                   (661)    (1,006)
  Additions to intangible assets                                        (395)      (969)
  Payments received on notes receivable                                  855        497
  Issuance of notes receivable                                            --       (500)
                                                                    ---------  ---------
    Net cash provided by (used in) investing activities               (8,673)     2,498

Cash flows from financing activities:
  Proceeds from issuance of long-term debt                             8,000         --
  Payments on notes payable and long-term debt                          (225)    (2,594)
  Decreases in long-term liabilities, net                               (176)       (28)
                                                                    ---------  ---------
    Net cash provided by (used in) financing activities                7,599     (2,622)
                                                                    ---------  ---------
Net increase (decrease) in cash                                         (550)    (1,145)
Cash balance at beginning of period                                    1,639      3,256
                                                                    ---------  ---------
Cash balance at end of period                                       $  1,089   $  2,111
                                                                    =========  =========
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.


                                      -4-
<PAGE>
               SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

NOTE  1.  GENERAL
-----------------

The accompanying unaudited consolidated financial statements of SafeGuard Health
Enterprises, Inc. and subsidiaries (the "Company") for the three months and nine
months  ended September 30, 2000 and 1999, have been prepared in accordance with
accounting  principles  generally  accepted  in  the  United  States of America,
applicable to interim periods. The accompanying financial statements reflect all
adjustments  that,  in  the  opinion  of  management,  are  necessary for a fair
presentation  of  the Company's financial position and results of operations for
the  interim periods.  The financial statements have been prepared in accordance
with the regulations of the Securities and Exchange Commission, and omit certain
footnote  disclosures  and  other information necessary to present the Company's
financial  position  and  results  of  operations  in accordance with accounting
principles  generally accepted in the United States of America.  These financial
statements  should  be  read  in  conjunction  with  the  Consolidated Financial
Statements  and  Notes  thereto contained in the Company's Annual Report on Form
10-K  for the year ended December 31, 1999.  Management believes the disclosures
herein  are adequate to prevent the accompanying financial statements from being
misleading.

Certain amounts in the prior year financial statements have been reclassified to
conform  to  the  current  year  presentation.

NOTE  2.  GOING  CONCERN  BASIS
-------------------------------

The  accompanying  financial  statements  have  been prepared on a going concern
basis,  which  contemplates  the  realization  of assets and the satisfaction of
liabilities  in  the  normal course of business. The financial statements do not
include  any  adjustments  related  to  the  recoverability or classification of
assets,  or  to  the  amounts  or  classification  of  liabilities that might be
necessary  in  the  event  the Company is unable to continue as a going concern.
During  the  nine  months ended September 30, 2000, and the years ended December
31,  1999  and  1998,  the  Company  incurred  net losses of $6.9 million, $52.0
million and $9.9 million, respectively. During the years ended December 31, 1999
and  1998,  net cash used by operating activities was $574,000 and $2.0 million,
respectively.  Net cash provided by operating activities was $524,000 during the
nine  months ended September 30, 2000. As of September 30, 2000, the Company was
not  in  compliance  with  certain  financial  covenants contained in the credit
agreements  related  to  its revolving credit facility and senior notes payable.
However,  both  lenders  have  agreed  not to demand or accept any payment under
these  credit  agreements,  and  not to take any enforcement actions of any kind
under  those  agreements  until  April  30,  2001  (see  Note  5).

As  of  September  30,  2000,  and  December  31,  1999,  the  Company's current
liabilities  exceeded its current assets by $51.6 million (which is due to $51.6
million  of  debt  and  accrued  interest  that is expected to be converted into
equity  securities,  as discussed in Note 5) and $7.7 million, respectively. The
Company  believes this lack of working capital will be mitigated by its plans to
return  to  profitability,  as  described  below.  The Company also sold certain
long-term  assets  during  October  2000,  as  discussed  in  Note  8.

In  March  2000  the  Company  entered into a Recapitalization Agreement with an
investor  group  and its primary lenders, under which the investor group and the
primary lenders agreed to convert substantially all of the Company's outstanding
debt  to  convertible preferred stock (see Note 5). This conversion is currently
pending  regulatory  approval of the change in control of the Company that would
result  from  the conversion. In connection with the Recapitalization Agreement,
the  Company  hired  a  new  president and chief executive officer, and obtained
certain  new  directors.

The  Company's  results  of  operations  have  improved  during  the first three
quarters  of  2000. Management believes this improvement is primarily the result
of  actions  taken  during  2000  to increase premium rates, renegotiate certain
non-standard  provider  agreements,  reduce  the  number  of  its  employees  by
consolidating  administrative  functions  in  one location, reduce the amount of
office space used, and reduce various other general and administrative expenses.
Management  plans  to  further  improve  the  profitability  of  the  Company by
continuing its actions to increase premium rates, reduce certain types of health
care  expenses, and reduce various general and administrative expenses, although
there  can be no assurance it will be successful in doing so. Management's plans
also include enhanced programs for customer retention, increasing the efficiency
of  its  provider  network,  and  streamlining  operations  with  a focus toward
strengthening  customer  service.  Management  believes the results of its plans
will  enable  the Company to meets its ongoing obligations on a timely basis and
continue  to  improve the profitability of the Company, although there can be no
assurance  it will be successful in doing so.  The Company also believes it will
be able to obtain additional financing, if necessary, to support its operations.


                                      -5-
<PAGE>
NOTE  3.  RECENT  ACCOUNTING  PRONOUNCEMENTS
--------------------------------------------

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  No.  133  ("SFAS  133"),  "Accounting  for
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting  standards  for  derivative  instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS 133 is
effective  for  all fiscal quarters of all fiscal years beginning after June 15,
2000.  SFAS  133  has  had  no  significant  effect  on  the Company's financial
statements,  and  the Company believes it will have no significant effect in the
future,  as  the  Company  has  no derivative instruments or hedging activities.

In  December  1999,  the United States Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance on applying generally accepted accounting
principles  to  revenue  recognition issues in financial statements. The Company
will  be  required to adopt SAB 101 no later than the fourth quarter of the year
ending  December  31,  2001.  The Company believes implementation of SAB 101will
have  no  significant  effect  on  its  financial  statements.

In  March  2000,  the  FASB  issued  FASB  Interpretation  No.  44  ("FIN  44"),
"Accounting  for  Certain  Transactions Involving Stock Compensation." FIN 44 is
effective  July  1,  2000  with  respect to certain provisions applicable to new
awards,  exchanges  of  awards  in  a  business  combination,  modifications  to
outstanding  awards,  and  changes in grantee status that occur on or after that
date.  FIN 44 addresses practice issues related to the application of Accounting
Practice  Bulletin  Opinion  No. 25, "Accounting for Stock Issued to Employees."
The  adoption  of  FIN  44  had no significant effect on the Company's financial
statements.

NOTE  4.  ASSETS  OF  DISCONTINUED  OPERATIONS  TRANSFERRED  UNDER  CONTRACTUAL
-------------------------------------------------------------------------------
ARRANGEMENTS
------------

During  the  three months ended September 30, 1997, the Company sold a number of
general dental practices to a single purchaser (the "Purchaser") in exchange for
$8.0  million of long-term promissory notes. In April 1998 the Company also sold
a number of orthodontic practices to the Purchaser in exchange for $15.0 million
of  long-term  promissory  notes.  During  1997  and  1998,  other entities that
purchased  four  other  general dental practices from the Company conveyed those
practices  to  the  Purchaser  in  exchange  for  the  assumption of the related
promissory notes payable to the Company. At the time of the conveyances of these
practices  to  the  Purchaser,  the  related  promissory  notes had an aggregate
outstanding principal balance of $1.9 million. During 1997 and 1998, the Company
loaned  a  total  of  $1.6  million to the Purchaser, which was used for working
capital  purposes  by  the  Purchaser.

Due  to uncertainty about the Purchaser's ability to meet its commitments to the
Company  under  the promissory notes, the Company did not treat the transactions
with  the  Purchaser  as sales for accounting purposes. Accordingly, the related
promissory  notes  and  the  working  capital  loans  are  not  reflected in the
accompanying  financial  statements.  Instead,  the  historical  cost of the net
assets  of  the  related  general  dental  and  orthodontic  practices, less the
interest  payments  received  from  the Purchaser, is reflected on the Company's
balance  sheet  under the caption "Assets of discontinued operations transferred
under  contractual arrangements," which is stated at estimated realizable value.
The  Company's  financial  statements  do  not  reflect  any gains on these sale
transactions,  and  do not reflect any interest income on the related promissory
notes.  In  addition,  the carrying value of the promissory notes related to the
four  practices  that  were  transferred  to  the  Purchaser, was reduced to the
historical  cost of the net assets of the related dental practices. These assets
are  also  reflected on the Company's balance sheet under the caption "Assets of
discontinued operations transferred under contractual arrangements." The working
capital  loans  were treated as expenses at the time the loans were made. In the
opinion  of  management,  this  accounting  treatment appropriately reflects the
economic  substance  of the transactions, as distinct from the legal form of the
transactions,  which  transactions  were  asset  sales.


                                      -6-
<PAGE>
During  1999,  the  Company  reached  an  oral  agreement with the Purchaser and
another  third party (the "New Purchaser"), under which the long-term promissory
notes  described  above (the "Notes") would be liquidated. Under this agreement,
the  Purchaser  would  convey the assets of the dental and orthodontic practices
that comprise the collateral for the Notes to the New Purchaser, in exchange for
proceeds  that  would be paid to the Company in satisfaction of the Notes. Based
on  this  agreement, the Company recorded a $4.4 million charge to earnings (net
of  income  tax  benefit of $2.1 million) during the nine months ended September
30,  1999,  to  reduce  the carrying value of "Assets of discontinued operations
transferred under contractual arrangements" to their estimated realizable value.
This  charge  is  reflected  on  the Company's statement of operations under the
caption  "Loss  from  operations  to  be  disposed  of."

In  March  2000  the Company entered into a definitive agreement with respect to
this  transaction.  In  September  2000, the Company entered into a restructured
agreement  with  respect  to  this  transaction,  which  superseded the previous
agreement.  Based  on  the  terms  of  the  restructured  agreement, the Company
recorded  a  $1.8  million  charge  to  earnings  during  the three months ended
September  30,  2000,  to  reduce  the carrying value of "Assets of discontinued
operations  transferred  under  contractual arrangements" to their new estimated
net  realizable  value.  This  charge is reflected on the Company's statement of
operations  under  the  caption  "Loss from assets transferred under contractual
arrangements."  See  Note 8 for discussion of a subsequent event with respect to
this  transaction.

NOTE  5.  SHORT-TERM  AND  LONG-TERM  DEBT
------------------------------------------

Short-term  and  long-term  debt  consisted  of  the  following  (in thousands):


                              SEPTEMBER 30,    DECEMBER 31,
                                  2000             1999
                             ---------------  --------------

  Investor senior loan       $        8,000   $          --
  Revolving credit facility           7,045           7,045
  Senior notes payable               32,500          32,500
  Other notes payable                    30             255
                             ---------------  --------------
  Total debt                         47,575          39,800
  Less - current portion            (47,575)           (255)
                             ---------------  --------------

  Long-term debt             $           --   $      39,545
                             ===============  ==============


On  March 1, 2000, the Company entered into a Recapitalization Agreement with an
investor  group  (the  "Investors"), the holder of the senior notes payable (the
"Senior  Note  Holder"),  and the revolving credit facility lender (the "Bank").
Under  the  Recapitalization Agreement, the Investors loaned $8.0 million to the
Company in the form of an investor senior loan, which is due April 30, 2001, and
bears  interest  at 10% annually. The Investors, the Senior Note Holder, and the
Bank  agreed to convert the $8.0 million investor senior loan, the $32.5 million
of  senior  notes payable, and the outstanding balance of $7.0 million under the
revolving credit facility, to convertible preferred stock, subject to regulatory
and  stockholder approval, as described below. See Note 8 for a subsequent event
related  to  the  Recapitalization  Agreement.

The  convertible  preferred  stock  would  not accrue dividends of any kind, and
would  be  convertible  into  common  stock  at  the  option  of the holder. The
convertible  preferred stock would entitle the holder to one vote for each share
of  common  stock into which the preferred stock is convertible, with respect to
all  matters  voted on by the common stockholders of the Company. The conversion
of  the  Company's  outstanding debt to convertible preferred stock is currently
pending  regulatory  approval of the change in control of the Company that would
result  from  this  conversion.

After  regulatory  approval  of  the  change  in  control  is  obtained, and the
conversion  of  the Company's outstanding debt to convertible preferred stock is
completed,  the existing stockholders of the Company would own approximately 14%
of  the  common  stock  interests  of  the  Company.  Under the Recapitalization
Agreement,  the Company agreed to place new directors on its board of directors,
who  represent  the  Investors,  the  Senior  Note Holder and the Bank, and who,
collectively,  will  constitute  a  majority  of  the  board  of  directors.


                                      -7-
<PAGE>
Under  the  Recapitalization Agreement, both the Senior Note Holder and the Bank
agreed  not to demand or accept any payment of principal or interest under their
respective  credit  agreements,  and  not to take any enforcement actions of any
kind  under  those  agreements  until  April 30, 2001. The Company is subject to
various  financial  covenant  requirements  under the credit agreements with the
Senior  Note  Holder  and the Bank. The Company was not in compliance with those
requirements as of September 30, 2000. Therefore, in the event the conversion of
the  Company's  outstanding debt to convertible preferred stock is not completed
prior to April 30, 2001, the outstanding balances under the senior notes payable
and  the  revolving  credit  facility will be due and payable on April 30, 2001.
Accordingly,  these outstanding balances are reflected as short-term debt on the
Company's  balance  sheet  as  of  September  30,  2000.

In  1999,  the  Company issued warrants to purchase 382,000 shares of its common
stock  for  $4.51  per share to the Senior Note Holder. However, the Senior Note
Holder  has  agreed  to  cancel  the  warrants  upon conversion of the Company's
outstanding  debt  into  convertible  preferred  stock,  as  set  forth  in  the
Recapitalization  Agreement  described  above.

RECAPITALIZATION  TABLE

The  expected  effect  of  the conversion of the Company's outstanding debt into
convertible  preferred  stock on the Company's capital structure is shown in the
recapitalization table below, as though the conversion had occurred on September
30,  2000  (in  thousands).

<TABLE>
<CAPTION>
                                                         ACTUAL AS OF
                                                         SEPTEMBER 30,     EFFECT OF          AFTER
                                                             2000         TRANSACTION    RECAPITALIZATION
                                                        ---------------  -------------  ------------------
<S>                                                     <C>              <C>            <C>
  Short-term debt, subject to conversion to equity      $       47,545   $    (47,545)  $              --
  Accrued interest, subject to conversion to equity              4,038         (4,038)                 --
  Other current liabilities                                     17,839             --              17,839
  Long-term liabilities                                          1,134             --               1,134
                                                        ---------------  -------------  ------------------
  Total liabilities                                             70,556        (51,583)             18,973

  Preferred stock                                                   --         16,500              16,500
  Common stock                                                  21,829             --              21,829
  Accumulated deficit                                          (42,242)        35,083              (7,159)
  Accumulated other comprehensive income (loss)                     39             --                  39
  Treasury stock                                               (18,123)            --             (18,123)
                                                        ---------------  -------------  ------------------
  Total stockholders' equity (deficit)                         (38,497)        51,583              13,086
                                                        ---------------  -------------  ------------------

  Total liabilities and stockholders' equity (deficit)  $       32,059   $         --   $          32,059
                                                        ===============  =============  ==================
</TABLE>

Pursuant  to the Recapitalization Agreement described above, it is expected that
substantially  all  of the Company's short-term debt ($47.5 million at September
30, 2000) and the accrued interest on the senior notes payable and the revolving
credit  facility  ($4.0  million  at  September 30, 2000) will be converted into
convertible  preferred  stock.  In exchange for the outstanding debt and accrued
interest,  it  is  expected  that  the  Company  will  issue  300,000  shares of
convertible  preferred stock. The convertible preferred stock has been valued at
$55  per  share  for  purposes  of the above information, which is the Company's
estimate of its market value as of September 30, 2000. Each share of convertible
preferred  stock  would  be convertible into 100 shares of common stock, and the
last  closing  price  of the Company's common stock as of September 30, 2000 was
$0.55  per  share.

The  transaction  illustrated  in  the above table is contingent upon regulatory
approval  of  the  change  in control of the Company that would result from this
transaction.  See Note 8 for a subsequent event related to this transaction. The
purpose  of  the  above  recapitalization  table is to show what the significant
effects  of  the  above-described transaction on the Company's capital structure
might  be if the transaction had been completed on September 30, 2000. The above
information  is  not necessarily indicative of the results of the transaction or
related  effects  on  the  Company's financial position that would result if the
above-described  transaction  is completed on a different date, with a different
valuation  of  the  convertible  preferred  stock.


                                      -8-
<PAGE>
NOTE  6.  INCOME  TAXES
-----------------------

The  Company's  deferred tax assets have been fully reserved since September 30,
1999,  due  to  uncertainty  about  whether they will be realized in the future,
primarily  due to operating losses incurred by the Company in 1998 and 1999, and
the existence of significant net operating loss carry-forwards. Accordingly, the
Company  recorded  no  income tax expense or benefit during the three months and
nine  months  ended  September  30,  2000.

NOTE  7.  LITIGATION
--------------------

In  December  1999,  a  stockholder lawsuit against the Company was filed, which
alleged that the Company and certain of its officers violated certain securities
laws  by  issuing a series of alleged false and misleading statements concerning
the  Company's  publicly reported revenues and earnings during a specified class
period.  On  September  12, 2000, after the plaintiffs had filed a first amended
complaint,  the  Federal  District  Trial  Court  dismissed  the  lawsuit  with
prejudice,  stating  that the plaintiffs had failed to state a claim against the
Company.  On October 6, 2000, the plaintiffs filed an appeal of the dismissal of
the  lawsuit.  The  Company  has  directors and officers liability insurance and
intends  to  vigorously  defend this litigation. In the opinion of the Company's
management, the ultimate outcome of this matter will not have a material adverse
effect  on  the  Company's  financial  position  or  results  of  operations.

NOTE  8.  SUBSEQUENT  EVENTS
----------------------------

In  October 2000, the Company completed the sale of the assets described in Note
4.  As a result of this transaction, the Company expects to realize an estimated
$750,000  of  net  proceeds,  a  portion  of  which  is still subject to certain
contingencies.  In connection with this transaction, the New Purchaser agreed to
make all of the remaining lease payments related to the dental offices discussed
in  Note  4.  However,  the  Company  remains  contingently liable for the lease
payments  in  the  event  the  New  Purchaser  fails  to make those payments. At
September 30, 2000, the aggregate contingent liability of the Company related to
these  leases  was  approximately $4 million over the terms of the various lease
agreements,  which  expire  at  various dates through 2006.  As of September 30,
2000,  management  has  not  been  notified  of  any  defaults under these lease
agreements  that  would  materially  affect  the  Company's  financial position.

In  October 2000, the stockholders of the Company elected six directors to serve
until  the  next annual stockholders meeting, approved an increase in the number
of  authorized  common  shares  from  30  million  shares  to 40 million shares,
approved  an  amendment  to  the Company's Restated Articles of Incorporation to
eliminate the classification of the board of directors so that all directors are
elected  annually,  and  approved  an  amendment  to  the Stock Option Plan (the
"Plan")  to  increase  the  number  of  shares  issuable under the Plan from 1.3
million  to  3.0  million  shares. The reason for the increase in the authorized
common  shares  was  to  support  the  issuance of 300,000 shares of convertible
preferred  stock,  which  will  be  convertible into 30 million shares of common
stock,  in  connection  with  the  transaction  described  in  Note  5.


                                      -9-
<PAGE>
ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The  Private  Securities  Litigation Reform Act of 1995 provides a "safe harbor"
for  forward-looking  statements,  as long as those statements are identified as
forward-looking  and  are  accompanied  by  meaningful  cautionary  statements
identifying  important  factors  that  could  cause  actual  results  to  differ
materially  from  those discussed in the statements. The Company desires to take
advantage  of  these  safe  harbor  provisions.

The  statements  contained  in  this  Management's  Discussion  and  Analysis of
Financial  Condition  and  Results of Operations concerning expected growth, the
outcome of business strategies, future operating results and financial position,
economic  and  market  events  and trends, future premium revenue, future health
care  expenses,  the  Company's ability to control health care, selling, general
and  administrative  expenses,  and all other statements that are not historical
facts,  are  forward-looking  statements.  Words  such  as  expects,  projects,
anticipates, intends, plans, believes, seeks or estimates, or variations of such
words  and  similar  expressions,  are also intended to identify forward-looking
statements.  These  forward-looking statements are subject to significant risks,
uncertainties  and  contingencies,  many  of which are beyond the control of the
Company.  Actual  results  may  differ  materially  from  those projected in the
forward-looking  statements,  which  statements involve risks and uncertainties.

The  Company's  ability to expand its business is affected by competition from a
large  number  of other entities, many of which are much larger and have greater
financial  resources than the Company, that offer dental plans in the markets in
which the Company operates. There is a risk that the Company will not be able to
increase  revenues  in  the  future  as  employer groups and other purchasers of
dental  coverage  continue  to  resist premium rate increases, while demanding a
wide  choice  of  dental  care  providers  and a high level of customer service.
Securing cost-effective contracts with dentists may become more difficult due to
increased competition among dental plans for contracts with dental providers and
a  possible  decrease  in  the  number of dentists in practice in the markets in
which  the  Company  operates.

There  is  a  risk  that  the  Company  will  be unable to obtain waivers and/or
extensions  from  its  lenders,  in  the  event  the  expected conversion of its
outstanding  debt  to  preferred  stock does not occur. There are risks that the
Company  will  be  unable to obtain regulatory approval for the Recapitalization
Agreement  described  elsewhere  in this Report. There are risks associated with
changes  in  the  Company's operating and expansion strategies, and the possible
inability  to  realize  all  of  the  proceeds from the recent resale of certain
dental  office assets to a third party. There is a risk that the Company will be
unable  to continue to improve its earnings before interest, taxes, depreciation
and  amortization  ("EBITDA"),  as  any  such  improvement  is  dependent upon a
multitude  of  factors including, but not limited to, the ability of the Company
to  identify  additional  opportunities  to  reduce  costs.

There  is  a risk that the purchaser of certain resold dental office assets will
not  comply  with  its  agreement  to make rental payments on the related office
lease  agreements,  for which the Company remains contingently liable, and there
is a risk that other dentists who previously purchased dental practices from the
Company  will not make payment on their assigned or sublet lease agreements, for
which  the  Company  remains  contingently  liable.

There  is  a  risk  that the Company may incur additional expenses in connection
with the delivery of the dental office assets resold to the Purchaser, and there
are  risks  associated with additional health care expenses that may be incurred
by  the  Company  for the cost of the completion of dental treatment that may be
required  to  be  paid  in  connection  with the transfer of the recently resold
dental  office  assets.

All  of  these  risks  and  uncertainties  could  have  a negative impact on the
estimated  net realizable value of the dental office assets sold by the Company.
The  Company's  profitability  depends,  in  part,  on  its  ability to maintain
effective  control  over  its  health  care  costs, while providing members with
quality  dental  care. A variety of factors, such as utilization rates of dental
services,  changes  in  the value of the Company's assets, new technologies, the
cost  of dental services delivered by referral specialists, the amount of claims
incurred  by  patients  insured  by  the  Company,  and  numerous other external
influences  could  affect  the  Company's  operating  results.


                                      -10-
<PAGE>
All  of  the  risks set forth herein could negatively impact the earnings of the
Company  in  the  future. The Company's expectations for the future are based on
current  information  and  its evaluation of external influences. Changes in any
one factor could materially impact the Company's expectations related to premium
rates,  benefits plans offered, membership enrollment, the amount of health care
expenses  incurred, and profitability, and therefore, affect the forward-looking
statements  which  may  be  included in this report. In addition, past financial
performance  is  not  necessarily a reliable indicator of future performance. An
investor  should  not  use  historical  performance  alone  to anticipate future
results  or  future  period  trends.

SUMMARY  OF  RESULTS  OF  OPERATIONS

The following table shows the Company's results of operations as a percentage of
revenue,  and  is  used  in  the  period-to-period  comparisons discussed below.

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED  NINE MONTHS ENDED
                                                         SEPTEMBER 30,     SEPTEMBER 30,
                                                       -----------------  ---------------
                                                        2000      1999     2000    1999
                                                       -------  --------  ------  -------
<S>                                                    <C>      <C>       <C>     <C>
Premium revenue, net                                    100.0%    100.0%  100.0%   100.0%

Health care services expense                             70.3      72.3    71.4     71.2
Selling, general and administrative expense              31.2      40.8    32.3     38.5
Loss on impairment of assets                               --     102.1      --     34.2
                                                       -------  --------  ------  -------
Operating loss                                           (1.5)   (115.2)   (3.7)   (43.9)

Investment and other income                               1.9      (0.6)    1.5      2.5
Interest expense on debt that is subject
  to conversion to equity (1)                            (5.2)    (11.5)   (4.8)    (6.5)
Other interest expense                                   (0.2)     (0.2)   (0.1)    (0.2)
                                                       -------  --------  ------  -------

Loss before income taxes and discontinued operations     (5.0)   (127.5)   (7.1)   (48.1)

Income tax expense                                         --      50.8      --     15.2
                                                       -------  --------  ------  -------
Loss before discontinued operations                      (5.0)   (178.3)   (7.1)   (63.3)
Loss from assets transferred under contractual
  arrangements                                           (7.1)     (4.5)   (2.4)    (6.1)
                                                       -------  --------  ------  -------

  Net loss                                             (12.1)%  (182.8)%  (9.5)%  (69.4)%
                                                       =======  ========  ======  =======
<FN>
(1)  See  Note  5  to  the  accompanying  financial  statements  for a discussion of a
     transaction  that  is expected to convert substantially all of the Company's debt
     and the related  accrued  interest  into  preferred  stock.
</TABLE>

THREE  MONTHS  ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30,  1999

Premium  revenue  increased  by $574,000, or 2.4%, from $24.1 million in 1999 to
$24.6  million  in  2000.  The average membership for which the Company provided
dental coverage decreased by approximately 86,000 members, or 9.7%, from 883,000
members  during  1999 to 797,000 during 2000. The decrease in the average number
of  members  is  primarily due to the loss of several customers during the first
nine  months  of  2000.  Premium  revenue  increased by 2.4% even though average
membership  decreased  by 9.7%. This was primarily due to a shift in the product
mix toward preferred provider ("PPO")/indemnity plans, which have higher premium
rates  than  managed  care plans, increases in premium rates, and a shift in the
product  mix  toward  managed  care  plans with higher benefit levels and higher
premium  rates.

Health  care  services expense decreased by $84,000, or 0.5%, from $17.4 million
in  1999  to $17.3 million in 2000. Health care services expense as a percentage
of  premium  revenue (the "loss ratio") decreased from 72.3% in 1999 to 70.3% in
2000.  This  decrease  is  primarily  due to a decrease in the loss ratio in the
managed  care  business. This decrease was primarily due to a decrease in health
care  expenses  incurred pursuant to non-standard provider payment arrangements,
such  as minimum capitation arrangements and fee-for-service payments for dental
services  that are covered by capitation arrangements in most cases. The Company
renegotiated  several  of  these  non-standard  arrangements,  or in some cases,
terminated  the  related  provider  contracts,  during  the  first half of 2000.


                                      -11-
<PAGE>
Selling, general and administrative ("SG&A") expenses decreased by $2.1 million,
or  21.7%, from $9.8 million in 1999 to $7.7 million in 2000. SG&A expenses as a
percentage  of  premium  revenue  decreased from 40.8% in 1999 to 31.2% in 2000.
The  decrease  in SG&A expenses is due to several reasons. Salaries and benefits
decreased due to a reduction in the number of employees during the first quarter
of  2000,  in  connection  with  a consolidation of the Company's administrative
services  into  a  single  location.  The  decrease  is also partially due to an
accrual  for  a lease commitment for unused office space in the third quarter of
1999.  Part  of  the  decrease  is  due  to  a  decrease in computer programming
expenses,  as  the Company has completed several enhancements to its proprietary
management  information  system  that  were  in  process  during  1999.

Investment  and  other  income increased by $625,000, from a loss of $147,000 in
1999  to  income of $478,000 in 2000. This increase is primarily due to realized
losses  on  the  sale  of  investments  in  the  third  quarter  of  1999.

Total interest expense decreased by $1.5 million, or 52.2%, from $2.8 million in
1999  to $1.3 million in 2000. This decrease is primarily due to $1.9 million of
deferred  loan  costs  that  were charged to expense during the third quarter of
1999. This decrease was partially offset by interest expense and amortization of
deferred  loan  costs  related  to  the $8.0 million borrowing on March 1, 2000,
which  was  completed  in connection with the transaction described in Note 5 to
the  accompanying  financial  statements.

The  loss  before  income  taxes  and discontinued operations decreased by $29.4
million,  from  $30.7  million  in 1999 to $1.2 million in 2000. The loss before
income  taxes  and  discontinued  operations  as a percentage of premium revenue
decreased  from  127.5%  in  1999  to 5.0% in 2000. The decrease in the loss was
primarily due to a loss on impairment of assets of $24.6 million in 1999, a $2.4
million  decrease  in  SG&A  expenses,  as  discussed  above, and a $1.5 million
decrease  in  interest  income,  as  discussed  above.

The income tax benefit decreased from $12.2 million in 1999 to zero in 2000. The
Company  recorded  no income tax expense or benefit in 2000 due to the valuation
reserve  against  its  deferred  tax  assets.  See  Note  6  to the accompanying
financial  statements.

The  loss  from  assets  transferred under contractual arrangements increased by
$651,000,  from  $1.1  million in 1999 to $1.8 million in 2000. The loss in both
periods  represents a reduction in the carrying value of "Assets of discontinued
operations  transferred  under  contractual  arrangements"  to  their  estimated
realizable  value.  See  Note  8  to  the  accompanying financial statements for
discussion  of  a  transaction  in October 2000, in which the Company sold these
assets.

NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999

Premium  revenue  increased by $1.4 million, or 1.9%, from $71.9 million in 1999
to  $73.3 million in 2000. The average membership for which the Company provided
dental coverage decreased by approximately 50,000 members, or 5.7%, from 878,000
members  during  1999 to 828,000 during 2000. The decrease in the average number
of  members  is  primarily due to the loss of several customers during the first
nine  months  of  2000.  Premium  revenue  increased by 1.9% even though average
membership  decreased  by 5.7%. This was primarily due to a shift in the product
mix  toward  PPO/indemnity  plans,  which have higher premium rates than managed
care  plans,  increases  in premium rates, and a shift in the product mix toward
managed  care  plans  with  higher  benefit  levels  and  higher  premium rates.

Health  care  services  expense  increased  by $1.1 million, or 2.1%, from $51.2
million  in  1999  to  $52.3  million in 2000. Health care services expense as a
percentage of premium revenue (the "loss ratio") increased from 71.2% in 1999 to
71.4%  in  2000.  This  increase  is primarily due to a shift in the product mix
toward  more  PPO/indemnity  business, which was largely offset by a decrease in
the  loss  ratio  in  the  managed  care  business.  The Company's PPO/indemnity
business  has  a significantly higher loss ratio than its managed care business.
However, the PPO/indemnity business has a higher amount of gross margin (premium
revenue  less health care services expense) per insured individual. In addition,
the Company believes the PPO/indemnity business has significantly lower selling,
general and administrative expenses than the Company's managed care business, as
a  percentage  of premium revenue. The decrease in the loss ratio in the managed
care business was due to the reasons described above in the discussion of health
care  services  expense  in  the  third  quarter.


                                      -12-
<PAGE>
Selling, general and administrative ("SG&A") expenses decreased by $4.0 million,
or  14.4%, from $27.7 million in 1999 to $23.7 million in 2000. SG&A expenses as
a  percentage  of premium revenue decreased from 38.5% in 1999 to 32.3% in 2000.
The  decrease  in SG&A expenses is due to several reasons. Salaries and benefits
decreased due to a reduction in the number of employees during the first quarter
of  2000,  in  connection  with  a consolidation of the Company's administrative
services  into  a  single  location.  The  decrease  is  also partially due to a
decrease  in amortization expense related to intangible assets. During the third
quarter  of 1999, the Company recorded a $24.9 million impairment loss to reduce
the  carrying  values  of  its  intangible  assets to their estimated realizable
values,  which  caused  a  decrease in amortization expense in 2000. Part of the
decrease  is  due to a decrease in computer programming expenses, as the Company
has  completed  several  enhancements  to its proprietary management information
system  that were in process during 1999. An additional part of the decrease was
due  to  an  accrual  for  a  lease  commitment for unused office space in 1999.

Investment  and  other income decreased by $678,000, or 37.8%, from $1.8 million
in  1999 to $1.1 million in 2000. This decrease is primarily due to $1.2 million
of realized gains on the sale of investments in 1999, compared to nearly zero in
2000.  This  was partially offset by an increase in interest income in 2000, due
to  investment  of  the proceeds of the $8.0 million borrowing on March 1, 2000,
which  was  completed  in connection with the transaction described in Note 5 to
the  accompanying  financial  statements.

Total interest expense decreased by $1.3 million, or 25.9%, from $4.9 million in
1999  to $3.6 million in 2000. This decrease is primarily due to $1.9 million of
deferred  loan  costs  that  were charged to expense during the third quarter of
1999. This decrease was partially offset by interest expense and amortization of
deferred  loan  costs in 2000, related to the $8.0 million borrowing on March 1,
2000, which was completed in connection with the transaction described in Note 5
to  the  accompanying  financial  statements.

The  loss  before  income  taxes  and discontinued operations decreased by $29.4
million,  from  $34.6  million  in 1999 to $5.2 million in 2000. The loss before
income  taxes  and  discontinued  operations  as a percentage of premium revenue
decreased  slightly from 48.1% in 1999 to 7.1% in 2000. The decrease in the loss
was  primarily  due  to a loss on impairment of assets of $24.6 million in 1999,
and  a  $4.9  million  decrease  in  SG&A  expenses.

The income tax benefit decreased from $10.9 million in 1999 to zero in 2000. The
Company  recorded  no income tax expense or benefit in 2000 due to the valuation
reserve  against  its  deferred  tax  assets.  See  Note  6  to the accompanying
financial  statements.

The  loss  from  assets  transferred under contractual arrangements decreased by
$2.6  million,  from  $4.4  million in 1999 to $1.8 million in 2000. The loss in
both  periods  represents  a  reduction  in  the  carrying  value  of "Assets of
discontinued  operations  transferred  under  contractual arrangements" to their
estimated  realizable value. See Note 8 to the accompanying financial statements
for discussion of a transaction in October 2000, in which the Company sold these
assets.

LIQUIDITY  AND  CAPITAL  RESOURCES

Net  cash  provided  by operating activities was $524,000 during the nine months
ended September 30, 2000, compared to $1.0 million of net cash used by operating
activities  during  the same period in 1999. This improvement was due to several
reasons,  the  largest  of  which  are described below. There was a $3.1 million
increase  in  accrued expenses in 2000, compared to a $401,000 decrease in 1999.
The  increase  in  2000  was primarily due to a $2.8 million increase in accrued
interest  that is subject to conversion to equity, as described in Note 5 to the
accompanying  financial statements. Net cash used by the net loss, including the
adjustments  reflected  in  the accompanying statements of cash flows, decreased
from  $5.2  million in 1999 to $3.0 million in 2000, primarily due to a decrease
in  SG&A  expenses, as discussed above. These factors were partially offset by a
$108,000  decrease  in  accounts payable and claims payable in 2000, compared to
$4.3  million  of increases in those liabilities in 1999. The increases in these
liability  accounts  in 1999 were primarily due to an increase in the processing
time  for  both  accounts  payable  and  dental  claim payments during 1999. The
processing  time  for  claims  payable  has decreased significantly during 2000.
However,  this  decrease  was  offset  by  an  increase  in the amount of claims
payable, due to a shift in the product mix toward PPO/indemnity plans, for which
the  health  care  expenses are reimbursed based on claims submitted, instead of
capitation  payments.


                                      -13-
<PAGE>
Net  cash used by investing activities was $8.7 million during 2000, compared to
$2.5  million of net cash provided by investing activities in 1999. The net cash
used  by  investing  activities  in  2000  was  primarily due to the purchase of
investments  with the $8.0 million proceeds from the borrowing on March 1, 2000,
as  described  in  Note 5 to the accompanying financial statements. The net cash
provided  by  investing  activities in 1999 was primarily due to $3.5 million of
proceeds  from the sale of the building formerly used as the Company's corporate
office.  Net cash provided by financing activities was $7.6 million during 2000,
compared  to  net cash used by financing activities of $2.6 million during 1999.
This  change of $10.4 million was primarily due to $8.0 million of proceeds from
the  investor  senior  loan  obtained on March 1, 2000, and $2.6 million of debt
payments  in  1999.

The  Company's  total short-term and long-term debt increased from $39.8 million
at  December  31,  1999, to $47.6 million at September 30, 2000, due to the $8.0
million  borrowing  on March 1, 2000, as described in Note 5 to the accompanying
financial  statements.  The Company believes it has adequate financial resources
to  continue  its  current  operations  for  the  foreseeable  future.

IMPACT  OF  INFLATION

The Company's operations are potentially impacted by inflation, which can affect
premium  rates,  health  care  services  expense,  and  selling,  general  and
administrative expense. The Company expects that its earnings will be positively
impacted by inflation in premium rates, because premium rates for dental benefit
plans  in  general  have  been  increasing due to inflation in recent years. The
impact  of  inflation on the Company's health care expenses is mitigated to some
extent  by  the  fact  that  45-50%  of  total  health  care services expense is
comprised  of  capitation  or  fixed payments to providers. However, the Company
expects  that  its  earnings  will be negatively impacted by inflation in health
care  costs  to some extent, because fees charged by other dental providers have
been  increasing  due  to  inflation  in  recent years. In addition, most of the
Company's  selling,  general and administrative expenses are impacted by general
inflation  in  the  economy.

ITEM  3.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT MARKET RISK

The  Company  is  not subject to a material amount of risk related to changes in
interest  rates  or  foreign  currency  exchange  rates.

PART  II.    OTHER  INFORMATION

ITEM  1.     LEGAL  PROCEEDINGS

The  Company  is  subject  to  various  claims and legal actions in the ordinary
course  of  business.  The  Company  believes that all pending claims either are
adequately covered by insurance maintained by its contracted dental providers or
by  the  Company,  or  will  not have a material adverse effect on the Company's
results  of  operations  or  financial position. In December 1999, a stockholder
lawsuit  against  the  Company  was  filed,  which  alleged that the Company and
certain  of its officers violated certain securities laws by issuing a series of
alleged  false  and  misleading  statements  concerning  the  Company's publicly
reported revenues and earnings during a specified class period. On September 12,
2000,  after  the  plaintiffs  had  filed a first amended complaint, the Federal
District  Trial  Court  dismissed  the  lawsuit with prejudice, stating that the
plaintiffs  had failed to state a claim against the Company. On October 6, 2000,
the  plaintiffs filed an appeal of the dismissal of the lawsuit. The Company has
directors and officers liability insurance and intends to vigorously defend this
litigation.  In the opinion of the Company's management, the ultimate outcome of
this  matter  will not have a material adverse effect on the Company's financial
position  or  results  of  operations.


                                      -14-
<PAGE>
ITEM  3.     DEFAULTS  UPON  SENIOR  SECURITIES

See  Note  5  to  the  accompanying  consolidated  financial  statements herein.

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

A Special Meeting of the Stockholders (the "Meeting") of the Company was held at
the  executive  offices of the Company in Aliso Viejo, California on October 25,
2000,  4:00  p.m.  The  following  matters  were  addressed  at  the  Meeting:

ELECTION  OF  DIRECTORS

It  was  proposed  that Steven J. Baileys, James E. Buncher, Ronald I. Brendzel,
Dennis  L. Gates, Jack R. Anderson, and Leslie B. Daniels be elected to serve as
Directors  of  the  Company  until  the  Company's  next  annual  meeting  of
stockholders.  The  proposal received an affirmative vote of 4,429,826 shares of
Common  Stock  present  at  the  Meeting  in person or by proxy, or 94.5% of the
4,687,727 shares entitled to vote, or 93.3% of the 4,747,498 shares outstanding,
and  was  approved.

PROPOSAL  TO  INCREASE  AUTHORIZED  SHARES  OF  COMMON  STOCK

It  was  proposed  that  the number of authorized shares of the Company's Common
Stock  be  increased  from  30  million to 40 million.  The proposal received an
affirmative  vote of 4,427,976 shares of Common Stock, or 93.3% of the 4,747,498
shares  outstanding,  and  was  approved.

PROPOSAL  TO  AMEND  THE  RESTATED  CERTIFICATE  OF  INCORPORATION  TO ELIMINATE
CLASSIFICATION  OF  THE  BOARD  OF  DIRECTORS

It  was  proposed  that  the  Company's Restated Certificate of Incorporation be
amended  to eliminate the classification of the Board of Directors such that all
members  of the Board of Directors will constitute a single class and be elected
annually.  The  proposal  received  an  affirmative  vote of 3,560,187 shares of
Common  Stock,  or 75.0% of the 4,747,498 shares outstanding, which exceeded the
66  and 2/3% of the outstanding shares of the Company's Common Stock required by
the  Company's  by-laws  to amend the applicable section of the by-laws, and was
approved.

PROPOSAL  TO  AMEND  THE  COMPANY'S  STOCK  OPTION  PLAN

It  was  proposed  that the Company's Employee Stock Option Plan (the "Plan") be
amended to increase the number of shares of Common Stock issuable under the Plan
from 1.7 million to 3 million shares.  The proposal received an affirmative vote
of  3,011,436  shares of Common Stock, or 64.2% of the 4,687,727 shares entitled
to  vote,  or  63.4%  of  the  4,747,498  shares  outstanding, and was approved.


                                      -15-
<PAGE>
ITEM  6.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)  EXHIBITS

          EXHIBIT          DESCRIPTION
          -------       -----------------

          27.1          Financial  Data  Schedule

(b)  REPORTS  ON  FORM  8-K.

None.


                                      -16-
<PAGE>
                                   SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) of the Securities Exchange
Act  of  1934,  the  Registrant  has duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized, in the City of Aliso
Viejo,  State  of  California,  on  the  13th  day  of  November  2000.

                    SAFEGUARD  HEALTH  ENTERPRISES,  INC.


                    By:  /s/  James  E.  Buncher
                         -----------------------
                         James  E.  Buncher
                         President  and  Chief  Executive  Officer
                         (Principal  Executive  Officer)


                    By:  /s/  Dennis  L.  Gates
                         ----------------------
                         Dennis  L.  Gates
                         Senior  Vice  President  and  Chief  Financial  Officer
                         (Chief  Accounting  Officer)


                                      -17-
<PAGE>
                                   SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) of the Securities Exchange
Act  of  1934,  the  Registrant  has duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized, in the City of Aliso
Viejo,  State  of  California,  on  the  13th  day  of  November  2000.

                    SAFEGUARD  HEALTH  ENTERPRISES,  INC.


                    By:
                         -----------------------
                         James  E.  Buncher
                         President  and  Chief  Executive  Officer
                         (Principal  Executive  Officer)


                         By:
                         -----------------------
                         Dennis  L.  Gates
                         Senior  Vice  President  and  Chief  Financial  Officer
                         (Chief  Accounting  Officer)


                                      -18-
<PAGE>