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           March 31, 2002
                                                -------------------------------

                                                         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 0-23367


                     BIRNER DENTAL MANAGEMENT SERVICES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                    COLORADO                                    84-1307044
-----------------------------------------------         ------------------------
 (State or other jurisdiction of incorporation                (IRS Employer
                or organization)                           Identification No.)


               3801 EAST FLORIDA AVENUE, SUITE 508
                        DENVER, COLORADO                          80210
------------------------------------------------------ -------------------------
            (Address of principal executive offices)           (Zip Code)

                                 (303) 691-0680
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                       N/A
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

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
     --------      ---------

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

             Class                          Shares Outstanding as of May 3, 2002
 ---------------------------------  --------------------------------------------
   Common Stock, without par value                     1,506,705



                                       1
<PAGE>





            BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
                               INDEX TO FORM 10-Q
<TABLE>
<CAPTION>


PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements                                                                                 Page
                                                                                                              ----

         Condensed Consolidated Balance Sheets as of December 31, 2001
<S>                                                                                                           <C>
           And March 31, 2002                                                                                  3

         Unaudited Condensed Consolidated Statements of Operations for the Quarters
           Ended March 31, 2001 and 2002                                                                       4

         Unaudited Condensed Statement of Shareholders' Equity                                                 5

         Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months
             Ended March 31, 2001 and 2002                                                                     6

         Unaudited Notes to Condensed Consolidated Financial Statements                                        8

Item 2.  Management's Discussion and Analysis of Financial Condition
                  And Results of Operations                                                                   10

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                           17


PART II -OTHER INFORMATION


Item 1.  Legal Proceedings                                                                                    18

Item 6.  Exhibits and Reports on Form 8-K                                                                     18

Signatures                                                                                                    19
</TABLE>



                                       2
<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

            BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                      December 31,         March, 31,
                                     ASSETS                                               2001                2002
                                                                                      ------------        -----------
                                                                                           **             (Unaudited)
<S>                                                                                      <C>                    <C>

CURRENT ASSETS:
    Cash and cash equivalents                                                       $   949,236          $   977,980
    Accounts receivable, net of allowance for doubtful accounts
       of $201,795 and $196,955, respectively                                         3,086,648            3,440,727
       Deferred tax asset                                                               112,214              112,214
       Prepaid expenses and other assets                                                724,429              673,694
                                                                                    -----------          -----------
                Total current assets                                                  4,872,527            5,204,615

PROPERTY AND EQUIPMENT, net                                                           5,369,198            4,975,910

OTHER NONCURRENT ASSETS:
    Intangible assets, net                                                           13,915,362           14,540,242
    Deferred charges and other assets                                                   216,285              189,695
    Notes receivable - related parties                                                  284,479              284,479
    Deferred tax asset, net                                                             104,074              104,074
                                                                                    -----------          -----------
                Total assets                                                        $24,761,925          $25,299,015
                                                                                    ===========          ===========

                       LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable and accrued expenses                                           $ 3,190,723          $ 3,473,644
    Income taxes payable                                                                 48,479              144,071
    Current maturities of long-term debt                                              1,332,158            1,222,333
                                                                                    -----------          -----------
             Total current liabilities                                                4,571,360            4,840,048

LONG-TERM LIABILITIES:
    Long-term debt, net of current maturities                                         3,296,304            3,331,512
    Other long-term obligations                                                         173,089              168,737
                                                                                    -----------          -----------
                Total liabilities                                                     8,040,753            8,340,297

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
    Preferred Stock, no par value, 10,000,000 shares
       authorized; none outstanding                                                           -                    -
    Common Stock, no par value, 20,000,000 shares
       authorized; 1,506,705 shares issued and
       outstanding                                                                   16,855,661           16,855,661
    Retained earnings (accumulated deficit)                                            (134,489)             103,057
                                                                                    -----------          -----------
                Total shareholders' equity                                           16,721,172           16,958,718
                                                                                    -----------          -----------
                Total liabilities and shareholders' equity                          $24,761,925          $25,299,015
                                                                                    ===========          ===========

**  Derived from the Company's audited consolidated balance sheet at December 31, 2001
</TABLE>

              The accompanying notes are an integral part of these
                     condensed consolidated balance sheets.



                                       3
<PAGE>




            BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                                 Quarters Ended
                                                                                                    March 31,
                                                                                            2001                2002
                                                                                            ----                ----

<S>                                                                                      <C>               <C>
NET REVENUE                                                                              $ 7,714,671       $ 7,767,614
DIRECT EXPENSES:
    Clinical salaries and benefits                                                         3,293,363         2,972,198
    Dental supplies                                                                          472,390           444,261
    Laboratory fees                                                                          623,399           594,971
    Occupancy                                                                                814,026           834,270
    Advertising and marketing                                                                 82,504            79,066
    Depreciation and amortization                                                            612,941           594,390
    General and administrative                                                               777,586           773,687
                                                                                         -----------       -----------
                                                                                           6,676,209         6,292,843
                                                                                         -----------       -----------
    Contribution from dental offices                                                       1,038,462         1,474,771
CORPORATE EXPENSES:
        General and administrative                                                           973,269           905,932
        Depreciation and amortization                                                         82,486            79,219
                                                                                         -----------       -----------
    Operating income (loss)                                                                  (17,293)          489,620
    Interest expense, net                                                                   (157,950)         (106,481)
                                                                                         -----------       -----------
    Income (loss) before income taxes                                                       (175,243)          383,139
    Income tax expense                                                                             -          (145,593)

                                                                                         -----------       -----------
Net income (loss)                                                                        $  (175,243)      $   237,546
                                                                                         ===========       ===========




Net income (loss) per share of Common Stock:
     Basic                                                                               $      (.12)      $       .16
                                                                                         -----------       -----------
     Diluted                                                                             $      (.12)      $       .15
                                                                                         ===========       ===========

Weighted average number of shares of Common Stock and dilutive securities:
     Basic                                                                                 1,506,705         1,506,705
                                                                                         ===========       ===========
     Diluted                                                                               1,506,705         1,609,461
                                                                                         ===========       ===========




</TABLE>



              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.



                                       4
<PAGE>




            BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                   (UNAUDITED)


<TABLE>
<CAPTION>


                                                                                        Retained
                                                                                        Earnings             Total
                                                               Common Stock            (Accumulated       Shareholders'
                                                         Shares           Amount         Deficit)           Equity
                                                         ------           ------        -----------      ------------
<S>                                                     <C>            <C>                <C>              <C>
BALANCES, December 31, 2001                           1,506,705      $ 16,855,661       $ (134,489)      $ 16,721,172

   Net Income                                                 -                 -          237,546            237,546

BALANCES, March 31, 2002                              1,506,705      $ 16,855,661       $  103,057       $ 16,958,718
                                                      =========      ============     =============      ============

</TABLE>


























              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.




                                       5
<PAGE>





            BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                                Quarters Ended
                                                                                                   March 31,
                                                                                            2001                 2002
<S>                                                                                      <C>                      <C>
                                                                                            ----                 ----

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                                                 $   (175,243)         $  237,546
    Adjustments to reconcile net income (loss) to net
       cash provided by operating activities:
          Depreciation and amortization                                                    695,427             673,609
          Loss on disposition of property                                                    1,254                   -
          Provision for doubtful accounts                                                   10,122              (4,840)
          Amortization of debt issuance costs                                                7,787              27,367
    Changes in assets and liabilities, net of effects from acquisitions:
          Accounts receivable                                                             (301,081)           (349,239)
          Prepaid expense, income tax receivable and other assets                         (343,452)             56,661
          Accounts payable and accrued expenses                                            865,700             282,921
          Income taxes payable                                                                   -              95,592
          Other long-term obligations                                                        8,057              (4,352)
                                                                                      ------------          ----------
              Net cash provided by operating activities                                    768,571           1,015,265


CASH FLOWS FROM INVESTING ACTIVITIES:
    Notes receivable - related parties                                                      12,873                   -
    Capital expenditures                                                                  (260,793)           (106,547)
    Acquisition of dental offices                                                                -            (398,654)
                                                                                      ------------          ----------
              Net cash used in investing activities                                       (247,920)           (505,201)


CASH FLOWS FROM FINANCING ACTIVITIES:
    Net borrowings (repayments) - line of credit                                          (260,000)           (168,000)
    Repayment of bank term-loan                                                                  -            (250,000)
    Repayment of long-term debt                                                            (42,395)            (56,617)
    Payment of debt issuance and financing costs                                                 -              (6,703)
                                                                                      ------------          ----------
              Net cash used in financing activities                                       (302,395)           (481,320)

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                  218,256              28,744
CASH AND CASH EQUIVALENTS, beginning of period                                             691,417             949,236
                                                                                      ------------          ----------

CASH AND CASH EQUIVALENTS, end of period                                              $    909,673          $  977,980
                                                                                      ============          ==========

</TABLE>








              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.




                                       6
<PAGE>




            BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                                                                                Quarters Ended
                                                                                                   March 31,
                                                                                          2001                2002
                                                                                          ----                ----

SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW INFORMATION:

<S>                                                                                  <C>                   <C>
       Cash paid during the period for interest                                      $       160,145       $    106,664
                                                                                     ===============       ============

       Cash paid during the period for income taxes                                  $             -       $     50,000
                                                                                     ===============       ============

SUPPLEMENTAL DISCLOSURE OF NONCASH
    INVESTING AND FINANCING ACTIVITIES:

       Notes payable incurred from:
          Acquisition of dental offices                                              $             -       $    400,000
                                                                                     ===============       ============

</TABLE>


















              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.



                                       7
<PAGE>






            BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 2002

(1)    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
       ------------------------------------------------------

The  financial  statements  included  herein have been prepared by Birner Dental
Management Services,  Inc. (the "Company") pursuant to the rules and regulations
of the  Securities and Exchange  Commission.  Certain  information  and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with  accounting  principles  generally  accepted in the United States have been
condensed or omitted  pursuant to szzzuch  rules and  regulations,  although the
Company  believes that the disclosures  included herein are adequate to make the
information presented not misleading.  A description of the Company's accounting
policies and other financial information is included in the audited consolidated
financial statements as filed with the Securities and Exchange Commission in the
Company's Form 10-K for the year ended December 31, 2001.

In the opinion of management,  the accompanying unaudited condensed consolidated
financial  statements  contain all  adjustments  necessary to present fairly the
financial  position  of the  Company  as of March 31,  2002 and the  results  of
operations and cash flows for the periods presented. All such adjustments are of
a normal recurring nature. The results of operations for the quarter ended March
31, 2002 are not necessarily  indicative of the results that may be achieved for
a full fiscal year and cannot be used to indicate financial  performance for the
entire year.



(2)    EARNINGS PER SHARE

The Company  calculates  earnings  per share in  accordance  with  Statement  of
Financial Accounting Standards ("SFAS") No. 128 "Earnings Per Share".
<TABLE>
<CAPTION>

                                                                 Quarters Ended March 31,
                                                         2001                               2002
                                                         ----                               ----
                                                                    Per Share                              Per Share
                                         (Loss)          Shares       Amount       Income       Shares       Amount
                                         ------          ------     ---------      ------       ------     ---------
<S>                                       <C>             <C>          <C>          <C>          <C>          <C>

Basic EPS:
   Net income (loss) available to
    shares of Common Stock               $ (175,243)    1,506,705  $ (.12)        $  237,546    1,506,705   $ .16

   Effect of dilutive shares of
   Stock from stock
   and warrants                                   -             -       -               -         102,756    (.01)

Diluted EPS:
                                         ----------     ---------  ------         ----------    ---------   -----
   Net income (loss) available to
    shares of Common Stock               $ (175,243)    1,506,705  $ (.12)        $  237,546    1,609,461   $ .15
                                         ===========    =========  ======         ==========    =========   =====
</TABLE>

All options and warrants to purchase  shares of Common Stock were  excluded from
the  computation  of diluted  earnings per share for the quarter ended March 31,
2001 since they were anti-dilutive as a result of the Company's net loss for the
period.  The number of options and warrants excluded from the earnings per share
calculation because they are anti-dilutive, using the treasury stock method were
212 for the quarter ended March 31, 2001.  The  difference  in weighted  average
shares  outstanding  between basic  earnings per share and diluted  earnings per
share for the  quarter  ended  March 31,  2002  relates to the effect of 102,756
dilutive  shares of Common  Stock  from stock  options  and  warrants  which are
included in total shares for the diluted calculation.




                                       8
<PAGE>





(3)      LINE OF CREDIT
         --------------

Under the  Company's  Credit  Facility  (as amended on December 17,  2001),  the
Company  may  borrow on a  revolving  basis up to the  lesser  of an  applicable
Borrowing  Base  (calculated in accordance  with the most recent  Borrowing Base
Certificate  delivered  to the Lender) or $2.0  million  and on a  non-revolving
basis, an aggregate  principal  amount not in excess of $4.0 million for working
capital,  for restructuring of the Original Loan and for other general corporate
purposes.  Balances  bear  interest at the lender's base rate (prime plus a rate
margin of 2.0%).  The Company is also obligated to pay an annual facility fee of
..50% on the average  unused  amount of the  revolving  line of credit during the
previous full calendar month. Borrowings on the revolving loan are limited to an
availability  formula based on the Company's  eligible accounts  receivable.  As
amended,  the  revolving  loan  matures  on April  30,  2002  (see  Footnote  7,
Subsequent  Events) and the  non-revolving  note matures on April 30,  2003.  At
March 31,  2002,  the Company had no  borrowings  outstanding  and $2.0  million
available for borrowing under the revolving loan and $3.625 million  outstanding
under the  non-revolving  loan. The Credit  Facility is secured by a lien on the
Company's accounts receivable and its Management Agreements. The Credit Facility
prohibits  the payment of dividends  and other  distributions  to  shareholders,
restricts or prohibits the Company from incurring indebtedness, incurring liens,
disposing of assets, making investments or making acquisitions, and requires the
Company to maintain  certain  financial ratios on an ongoing basis. At March 31,
2002 the Company was in full  compliance  with all of its  covenants  under this
agreement.

(4)    RECENT ACCOUNTING PROUNCEMENTS

In July 2001 the Financial  Accounting Standards Board ("FASB") issued SFAS 141,
"Business  Combinations," and SFAS 142, "Goodwill and Other Intangible  Assets,"
which replace Accounting  Principles Board ("APB") 16, "Business  Combinations,"
and APB 17,  "Intangible  Assets,"  respectively.  SFAS  141  requires  that the
purchase  method of accounting be used for all business  combinations  initiated
after  June 30,  2001,  and that the use of the  pooling-of-interests  method be
prohibited.  SFAS 142 changes the accounting  for goodwill from an  amortization
method  to  an  impairment-only-method.   Amortization  of  goodwill,  including
goodwill  recorded in past business  combinations,  ceased upon adoption of SFAS
142, which the Company was required to adopt on January 1, 2002.  After December
31, 2001,  goodwill can only be written down upon impairment  discovered  during
annual  tests for fair value,  or  discovered  during  tests taken when  certain
triggering  events  occur.  Prior to the  adoption  of SFAS 142,  impairment  of
intangibles was recognized according to the undiscounted cash flow test per SFAS
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed  Of." The  adoption of SFAS 141 and SFAS 142 on January 1,
2002 did not have a  material  impact on the  Company's  financial  position  or
results of operations.

In June  2001,  the FASB  approved  for  issuance  SFAS  143,  Asset  Retirement
Obligations.   SFAS  143  establishes  accounting  requirements  for  retirement
obligations associated with tangible long-lived assets, including (1) the timing
of the liability  recognition,  (2) initial  measurement of the  liability,  (3)
allocation of asset  retirement cost to expense,  (4) subsequent  measurement of
the liability and (5) financial statement disclosures. SFAS 143 requires that an
asset  retirement  cost should be capitalized as part of the cost of the related
long-lived  asset and  subsequently  allocated to expense using a systematic and
rational method. The statement is effective for the financial  statements issued
for fiscal years  beginning  after June 15,  2002.  The Company does not believe
that the adoption of the statement will have a material  effect on its financial
position, results of operations, or cash flows.

In August 2001,  the FASB issued SFAS 144,  "Accounting  for the  Impairment  or
Disposal  of  Long-Lived  Assets"  which  addresses  financial   accounting  and
reporting  for the  impairment  or disposal of  long-lived  assets.  SFAS 144 is
effective for fiscal years  beginning after December 15, 2001. The provisions of
this statement are generally to be applied  prospectively.  The adoption of SFAS
144 on January 1, 2002 did not have a material impact on the Company's financial
position, results of operations or cash flows.


                                       9
<PAGE>




(5)    INCOME TAXES
       -------------

The Company accounts for income taxes through recognition of deferred tax assets
and liabilities for the expected future income tax consequences of events, which
have been  included  in the  financial  statements  or tax  returns.  Under this
method,  deferred  tax  assets  and  liabilities  are  determined  based  on the
difference  between  the  financial  statement  and  tax  basis  of  assets  and
liabilities  using  enacted  tax  rates in  effect  for the  year in  which  the
differences  are  expected to reverse.  At December  31,  2001,  the Company has
available tax net operating loss carryforwards of approximately $753,000,  which
expire beginning in 2012.

The Company is aware of the risk that the  recorded  deferred tax assets may not
be realizable. However, management believes that it will obtain the full benefit
of the  deferred  tax  assets on the basis of its  evaluation  of the  Company's
anticipated   profitability   over  the  period  of  years  that  the  temporary
differences  are expected to become tax  deductions.  The Company  believes that
sufficient  book and taxable  income will be generated to realize the benefit of
these tax assets.

(6)      ACQUISITIONS

On January  31,  2002 the  Company  acquired  two-thirds  of the  remaining  50%
interest in Mississippi Dental Group for a total purchase price of $798,654. The
consideration consisted of $398,654 in cash and $400,000 in notes payable with a
term of 60 months and an interest rate of 8.0%. The Company recorded an increase
to intangible  assets for the total  purchase  price of the 33% interest in this
Office.

 (7)   SUBSEQUENT EVENTS
       ------------------

On April 1, 2002 the Company  acquired  the  remaining  50% interest in Glendale
Dental  Group  for a total  purchase  price  of  $1,119,496.  The  consideration
consisted  of $560,496 in cash and  $559,000 in notes  payable with a term of 60
months and an  interest  rate of 8.0%.  The  Company  recorded  an  increase  to
intangible  assets for the total purchase price of the remaining 50% interest in
this Office.

On April 30, 2002,  the  Company's  current  Credit  Facility was amended.  This
amendment extends the maturity date for the revolving loan to April 30, 2003.


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITON AND RESULTS
OF OPERATIONS

Forward-Looking Statements

The statements  contained in this Form 10-Q ("Quarterly  Report") of the Company
which are not  historical in nature are  forward-looking  statements  within the
meaning  of  the  Private  Securities  Litigation  Reform  Act  of  1995.  These
forward-looking  statements  include  statements in this Item 2.,  "Management's
Discussion and Analysis of Financial  Condition and Results of Operations,"  and
in Part II, Item 1., "Legal  Proceedings",  regarding intent,  belief or current
expectations  of the Company or its officers with respect to the  development or
acquisition  of  additional  dental  practices  ("Offices")  and the  successful
integration  of  such  Offices  into  the  Company's  network,   recruitment  of
additional dentists,  funding of the Company's expansion,  capital expenditures,
payment or nonpayment of dividends, cash outlays for income taxes and outcome of
pending legal proceedings.

Such  forward-looking  statements  involve certain risks and uncertainties  that
could cause actual results to differ materially from anticipated results.  These
risks and  uncertainties  include  regulatory  constraints,  changes  in laws or
regulations  concerning the practice of dentistry or dental practice  management
companies,  the  availability  of suitable  new markets and  suitable  locations
within such markets,  changes in the Company's  operating or expansion strategy,
the general  economy of the United States and the specific  markets in which the
Company's  Offices  are located or are  proposed  to be  located,  trends in the
health  care,  dental  care and  managed  care  industries,  as well as the risk
factors set forth in the  "Management's  Discussion  and  Analysis of  Financial
Condition  and Results of  Operations - Risk  Factors"  section of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (as filed
with the Securities  Exchange  Commission on March 28, 2002), the  "Management's
Discussion and Analysis of Financial  Condition and Results of Operations  -Year
2002" of this Quarterly Report, and other factors as may be identified from time
to time in the Company's filings with the Securities and Exchange  Commission or
in the Company's press releases.



                                       10
<PAGE>





General

The following discussion relates to factors,  which have affected the results of
operations  and  financial  condition  of the Company for the three months ended
March 31, 2001 and 2002. This information should be read in conjunction with the
Company's Condensed  Consolidated Financial Statements and related Notes thereto
included elsewhere in this Quarterly Report.


Overview


The  Company  was  formed in May 1995,  and  current1y  manages  54  Offices  in
Colorado,  New  Mexico  and  Arizona  staffed  by 74  general  dentists  and  14
specialists.   The  Company  has  acquired  42  Offices   (five  of  which  were
consolidated  into existing Offices) and opened 18 de novo Offices (one of which
was consolidated  into an existing  Office).  Of the 42 acquired  Offices,  only
three  (the  first  three  practices,  which were  acquired  from the  Company's
President,  Mark Birner, DDS) were acquired from affiliates of the Company.  The
Company  derives  all of its revenue  (as  defined  below)  from its  Management
Agreements with professional  corporations  ("P.C.s") which conduct the practice
at each Office.  In addition,  the Company assumes a number of  responsibilities
when it  acquires a new  practice or  develops a de novo  Office,  which are set
forth in a Management  Agreement,  as described  below.  The Company  expects to
expand in existing markets  primarily by enhancing the operating  performance of
its  existing  Offices  and by  developing  de novo  Offices.  The  Company  has
historically  expanded in existing  markets by  acquiring  solo and group dental
practices and may do so in the future if an  economically  feasible  opportunity
presents  itself.  Generally,  the Company seeks to acquire dental practices for
which the Company believes  application of its Dental Practice  Management Model
will improve operating performance.

The Company  was formed  with the  intention  of  becoming  the  leading  dental
practice management company in Colorado. The Company's growth and success in the
Colorado  market led to its expansion into the New Mexico and Arizona markets as
well as to its  evaluation of  additional  markets.  During 2000,  the Company's
growth  strategy  shifted from an  acquisition  and  development  approach to an
approach which is focused on greater  utilization of exsisting physical capacity
through  recruiting  more dentists and support staff.  The following  table sets
forth the increase in the number of Offices  affiliated  with and managed by the
Company  from 1998  through  March 31,  2002,  including  the  number of de novo
Offices and acquired Offices in each such period.
<TABLE>
<CAPTION>

                                             1998            1999            2000           2001         2002 (1)
                                             ----            ----            ----           ----         --------
<S>                                           <C>             <C>             <C>            <C>            <C>
Offices at beginning of the period            34              49              54             56             54
De novo Offices                                5               5               2              0              0
Acquired Offices                              10               1               0              0              0
Consolidation of Offices                       0              (1)              0             (2)             0
Offices at end of the period                  49              54              56             54             54
</TABLE>

==============================================
(1)      From January 1, 2002 through March 31, 2002.


The combined  purchase  amounts for the 31 practices  acquired through 1998, and
the one practice acquired in 1999 were $15.9 million, and $760,000 respectively.
The average initial  investment by the Company in each of its 17 de novo Offices
has been approximately $210,000, which includes the cost of equipment, leasehold
improvements  and working  capital  associated  with the Offices.  These de novo
Offices,  which  were  opened  between  January  1996 and  October  2000,  began
generating positive  contribution from dental offices, on average,  within eight
months of opening.



                                       11
<PAGE>





At March 31, 2002,  the Company's  total assets of  approximately  $25.3 million
included  approximately $14.5 million of identifiable  intangible assets related
to  Management  Agreements.  At that date,  the Company had total  shareholders'
equity of approximately  $17.0 million.  The Company reviews the recorded amount
of  intangible  assets and other  fixed  assets for  impairment  for each Office
whenever events or changes in circumstances  indicate the carrying amount of the
assets may not be recoverable. If this review indicates that the carrying amount
of the assets may not be  recoverable  as determined  based on the  undiscounted
cash flows of each Office, whether acquired or developed,  the carrying value of
the asset is reduced to fair  value.  Among the factors  that the  Company  will
continually  evaluate are  unfavorable  changes in each Office,  relative market
share and local market  competitive  environment,  current period and forecasted
operating results, cash flow levels of Offices and the impact on the net revenue
earned by the  Company,  and the  legal and  regulatory  factors  governing  the
practice of dentistry.

Components of Revenue and Expenses


Total dental group practice  revenue  ("Revenue")  represents the revenue of the
Offices  reported at estimated  realizable  amounts,  received from  third-party
payors and patients  for dental  services  rendered at the Offices.  Net revenue
represents Revenue less amounts retained by the Offices. The amounts retained by
the Offices  represent  amounts paid as salary,  benefits and other  payments to
employed dentists and hygienists.  The Company's net revenue is dependent on the
Revenue of the  Offices.  Management  service  fee  revenue  represents  the net
revenue  earned  by the  Company  for the  Offices  for which  the  Company  has
management agreements, but does not have control. Direct expenses consist of the
expenses  incurred by the  Company in  connection  with  managing  the  Offices,
including   salaries  and  benefits  (for  personnel  other  than  dentists  and
hygienists),   dental  supplies,   dental  laboratory  fees,   occupancy  costs,
advertising  and  marketing,  depreciation  and  amortization  and  general  and
administrative   (including  office  supplies,   equipment  leases,   management
information  systems and other expenses related to dental practice  operations).
The Company also incurs personnel and administrative expenses in connection with
maintaining  a corporate  function  that  provides  management,  administrative,
marketing, development and professional services to the Offices.

Under each of the Management  Agreements,  the Company  manages the business and
marketing  aspects  of  the  Offices,  including  (i)  providing  capital,  (ii)
designing  and  implementing  marketing  programs,  (iii)  negotiating  for  the
purchase of supplies, (iv) staffing, (v) recruiting, (vi) training of non-dental
personnel,  (vii)  billing and  collecting  patient fees,  (viii)  arranging for
certain legal and accounting  services,  and (ix)  negotiating with managed care
organizations.  The P.C. is responsible  for, among other things (i) supervision
of all dentists and dental  hygienists,  (ii) complying with all laws, rules and
regulations  relating to dentists and dental  hygienists,  and (iii) maintaining
proper patient records. The Company has made, and intends to make in the future,
loans to P.C.s in Colorado,  New Mexico and Arizona to fund their acquisition of
dental  assets  from  third  parties  in order to  comply  with the laws of such
states.

Under the typical  Management  Agreement used by the Company,  the P.C. pays the
Company a management  fee equal to the Adjusted Gross Center Revenue of the P.C.
less  compensation  paid to the dentists and dental  hygienists  employed at the
Office of the P.C.  Adjusted  Gross Center  Revenue is comprised of all fees and
charges  booked  each  month by or on behalf  of the P.C.  as a result of dental
services  provided  to  patients  at  the  Office,   less  any  adjustments  for
uncollectible accounts, professional courtesies and other activities that do not
generate a collectible  fee. The Company's costs include all direct and indirect
costs,  overhead and expenses relating to the Company's  provision of management
services at each Office under the Management Agreement,  including (i) salaries,
benefits and other direct costs of employees who work at the Office, (ii) direct
costs of all Company  employees  or  consultants  who provide  services to or in
connection with the Office, (iii) utilities,  janitorial,  laboratory, supplies,
advertising  and other  expenses  incurred by the  Company in  carrying  out its
obligations under the Management Agreement, (iv) depreciation expense associated
with the P.C.'s assets and the assets of the Company used at the Office, and the
amortization  of  intangible  asset value  relating to the Office,  (v) interest
expense  on  indebtedness  incurred  by  the  Company  to  finance  any  of  its
obligations  under  the  Management  Agreement,  (vi)  general  and  malpractice
insurance  expenses,  lease  expenses and dentist  recruitment  expenses,  (vii)
personal  property and other taxes assessed  against the Company's or the P.C.'s
assets used in connection with the operation of the Office, (viii) out-of-pocket
expenses of the Company's personnel related to mergers or acquisitions involving
the P.C., (ix) corporate  overhead  charges or any other expenses of the Company
including  the P.C.'s  pro rata  share of the  expenses  of the  accounting  and
computer services provided by the Company,  and (x) a collection  reserve in the
amount of 5.0% of Adjusted Gross Center Revenue. As a result,  substantially all
costs  associated with the provision of dental services at the Offices are borne
by the  Company,  other than the  compensation  and benefits of the dentists and
hygienists who work at


                                       12
<PAGE>




the Offices of the P.C.'s.  This enables the Company to manage the profitability
of the Offices.  Each Management  Agreement is for a term of 40 years.  Further,
each  Management  Agreement  generally  may be  terminated  by the P.C. only for
cause,  which includes a material default by or bankruptcy of the Company.  Upon
expiration or  termination of a Management  Agreement by either party,  the P.C.
must satisfy all obligations it has to the Company.

The Company's Revenue is derived  principally from  fee-for-service  revenue and
revenue  from  capitated  managed  dental  care plans.  Fee-for-service  revenue
consists  of P.C.  revenue  received  from  indemnity  dental  plans,  preferred
provider  plans and direct  payments by patients not covered by any  third-party
payment  arrangement.  Managed  dental care  revenue  consists  of P.C.  revenue
received from capitated managed dental care plans, including capitation payments
and patient  co-payments.  Capitated  managed  dental care contracts are between
dental benefits  organizations and the P.C.s.  Under the Management  Agreements,
the Company  negotiates and administers  these contracts on behalf of the P.C.s.
Under a  capitated  managed  dental care  contract,  the dental  group  practice
provides dental services to the members of the dental benefits  organization and
receives a fixed monthly  capitation  payment for each plan member covered for a
specific schedule of services  regardless of the quantity or cost of services to
the  participating  dental  group  practice  obligated  to  provide  them.  This
arrangement shifts the risk of utilization of these services to the dental group
practice   providing   the  dental   services.   Because  the  Company   assumes
responsibility under the Management  Agreements for all aspects of the operation
of the dental  practices  (other than the practice of dentistry)  and thus bears
all costs of the P.C.s  associated  with the provision of dental services at the
Offices (other than  compensation and benefits of dentists and hygienists),  the
risk of  over-utilization  of dental  services  at the Offices  under  capitated
managed  dental care plans is effectively  shifted to the Company.  In addition,
dental group  practices  participating  in a capitated  managed dental care plan
often receive supplemental payments for more complicated or elective procedures.
In contrast,  under traditional indemnity insurance arrangements,  the insurance
company pays whatever reasonable charges are billed by the dental group practice
for the dental services provided.

The Company seeks to increase its  fee-for-service  business by  increasing  the
patient volume at existing Offices through  effective  marketing and advertising
programs  and by opening new  Offices.  The  Company  seeks to  supplement  this
fee-for-service  business with revenue from  contracts  with  capitated  managed
dental care plans. Although the Company's  fee-for-service business generally is
more  profitable  than its capitated  managed  dental care  business,  capitated
managed dental care business serves to increase facility utilization and dentist
productivity.  The relative  percentage  of the Company's  revenue  derived from
fee-for-service business and capitated managed dental care contracts varies from
market to market depending on the availability of capitated  managed dental care
contracts  in any  particular  market and the  Company's  ability  to  negotiate
favorable  contractual  terms. In addition,  the profitability of managed dental
care Revenue  varies from market to market  depending on the level of capitation
payments and  co-payments in proportion to the level of benefits  required to be
provided.


Results of Operations

As a result of the shift in focus from expansion of the Company's business
through acquisitions and the development of de novo Offices to the greater
utilization of existing physical capacity through the recruitment of additional
dentists and staff, the period-to-period comparisons set forth below may not be
representative of future operating results.

For the three months ended March 31, 2002, Revenue remained constant at $11.0
million as compared to the three months ended March 31, 2001.



                                       13
<PAGE>





The following  table sets forth the  percentages  of net revenue  represented by
certain items reflected in the Company's  Condensed  Consolidated  Statements of
Operations.  The  information  contained in the table  represents the historical
results  of the  Company.  The  information  that  follows  should  be  read  in
conjunction with the Company's Condensed  Consolidated  Financial Statements and
related Notes thereto contained elsewhere in this Quarterly Report.
<TABLE>
<CAPTION>


                                                                      Quarters Ended March 31,
<S>                                                                     <C>              <C>
                                                                        2001             2002

Net revenue                                                            100.0 %           100.0 %

Direct expenses:
     Clinical salaries and benefits                                     42.7 %            38.3 %
     Dental supplies                                                     6.1 %             5.7 %
     Laboratory fees                                                     8.1 %             7.7 %
     Occupancy                                                          10.5 %            10.7 %
     Advertising and marketing                                           1.1 %             1.0 %
     Depreciation and amortization                                       7.9 %             7.6 %
     General and administrative                                         10.1 %            10.0 %
                                                                        -----             -----

                                                                        86.5 %            81.0 %
                                                                        -----             -----
Contribution from dental offices                                        13.5 %            19.0 %
Corporate expenses:
     General and administrative                                         12.6 %            11.7 %
     Depreciation and amortization                                       1.1 %             1.0 %
                                                                        -----             -----

Operating income (loss)                                                 (0.2) %            6.3 %
Interest expense, net                                                   (2.1)%            (1.4)%
                                                                        -----            ------

Income (loss) before income taxes                                       (2.3) %            4.9 %
Income tax expense                                                          - %           (1.9)%
                                                                        -----             -----
Net income (loss)                                                       (2.3) %            3.0 %
                                                                        =====             =====

</TABLE>



Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001:

Net revenue.  For the three  months  ended March 31, 2002 net revenue  increased
slightly to $7.8  million  compared to $7.7  million for the three  months ended
March 31, 2001, an increase of approximately $53,000, or 0.7%.

Clinical  salaries  and  benefits.  For the three  months  ended  March 31, 2002
clinical  salaries  and  benefits  decreased  to $3.0  million  compared to $3.3
million for the three  months  ended March 31,  2001,  a decrease of $321,000 or
9.8%.  This  decrease was  primarily  due to  attrition of support  staff at the
Offices  which were not  replaced.  As a  percentage  of net  revenue,  clinical
salaries  and  benefits  decreased to 38.3% for the three months ended March 31,
2002 compared to 42.7% for the three months ended March 31, 2001.

Dental  supplies.  For the three  months  ended March 31,  2002 dental  supplies
decreased to $444,000  compared to $472,000 for the three months ended March 31,
2001, a decrease of $28,000 or 6.0%. This decrease was primarily due to fewer de
novo office  starts that  require  additional  expenses to  establish a start-up
inventory. As a percentage of net revenue, dental supplies decreased to 5.7% for
the three  months  ended  March 31, 2002  compared to 6.1% for the three  months
ended March 31, 2001.

Laboratory  fees.  For the three  months  ended March 31, 2002  laboratory  fees
decreased to $595,000  compared to $623,000 for the three months ended March 31,
2001,  a decrease of $28,000 or 4.6%.  This  decrease was  primarily  due to the
Company's efforts to consolidate the use of dental laboratories so that improved
pricing could be obtained based upon the Company's  laboratory case volume. As a
percentage  of net  revenue,  laboratory  fees  decreased  to 7.7% for the three
months  ended March 31, 2002  compared  to 8.1% for the three  months  March 31,
2001.




                                       14
<PAGE>





Occupancy. For the three months ended March 31, 2002 occupancy expense increased
to $834,000  compared to $814,000 for the three months ended March 31, 2001,  an
increase of $20,000 or 2.5%. This increase was primarily due to increased rental
payments resulting from the renewal of Office leases at current market rates for
Offices whose leases expired  subsequent to the 2001 period.  As a percentage of
net  revenue,  occupancy  expense  increased to 10.7% for the three months ended
March 31, 2002 compared to 10.5% for the three months ended March 31, 2001.

Advertising and marketing. For the three months ended March 31, 2002 advertising
and  marketing  decreased  to $79,000  compared to $83,000 for the three  months
ended March 31,  2001,  a decrease  of $3,000 or 4.2%.  As a  percentage  of net
revenue,  advertising and marketing decreased to 1.0% for the three months ended
March 31, 2002 compared to 1.1% for the three months ended March 31, 2001.

Depreciation  and  amortization.  For the three  months  ended  March  31,  2002
depreciation and  amortization,  which consists of depreciation and amortization
expense incurred at the Offices,  decreased to $594,000 compared to $613,000 for
the three  months  ended March 31,  2001,  a decrease  of $19,000 or 3.0%.  This
decrease is related to the decrease in the Company's depreciable and amortizable
asset base. The decrease in the asset base is directly  related to the Company's
efforts to control costs,  including  capital  expenditures  and existing assets
becoming fully  depreciated.  As a percentage of net revenue,  depreciation  and
amortization  decreased  to 7.6% for the  three  months  ended  March  31,  2002
compared to 7.9% for the three months ended March 31, 2001.

General and  administrative.  For the three  months ended March 31, 2002 general
and administrative,  which is attributable to the Offices, decreased to $774,000
compared to $778,000  for the three  months  ended March 31, 2001, a decrease of
approximately  $4,000 or 0.5%.  As a  percentage  of net  revenue,  general  and
administrative  expenses decreased to 10.0% for the three months ended March 31,
2002 compared to 10.1% during the three months ended March 31, 2001.

Contribution  from dental offices.  As a result of the above,  contribution from
dental  offices  increased  to $1.5 million for the three months ended March 31,
2002  compared to $1.0 million for the three  months  ended March 31,  2001,  an
increase of $436,000 or 42.0%. As a percentage of net revenue, contribution from
dental  offices  increased  to 19.0% for the three  months  ended March 31, 2002
compared to 13.5% for the three months ended March 31, 2001

Corporate  expenses - general and  administrative.  For the three  months  ended
March 31, 2002  corporate  expenses - general and  administrative  decreased  to
$906,000  compared to $973,000  for the three  months  ended March 31,  2001,  a
decrease of $67,000 or 6.9%.  This  decrease  is  attributable  to a  management
initiative in the second quarter of 2001 to lower corporate  expenses  through a
reduction in personnel and other cost cutting  measures.  As a percentage of net
revenue,  corporate expense - general and administrative  decreased to 11.7% for
the three months ended March 31, 2002  compared to 12.6% during the three months
ended March 31, 2001.

Corporate  expenses - depreciation and amortization.  For the three months ended
March 31, 2002 corporate  expenses - depreciation and amortization  decreased to
$79,000  compared  to $82,000  for the three  months  ended  March 31,  2001,  a
decrease of $3,000 or 4.0%. As a percentage of net revenue, corporate expenses -
depreciation and amortization decreased to 1.0% for the three months ended March
31, 2002 compared to 1.1% for the three months ended March 31, 2001.

Operating  income  (loss).  As a result  of the  above,  the  Company  generated
operating  income of $490,000 for the three months ended March 31, 2002 compared
to a operating  loss of $(17,000)  for the three months ended March 31, 2001, an
increase of $507,000.

Interest  expense,  net.  For the three  months  ended March 31,  2002  interest
expense  decreased  to $106,000  compared to $158,000 for the three months ended
March 31,  2001,  a decrease  of $52,000 or 32.6%.  This  decrease  in  interest
expense  is  attributable  to lower  average  outstanding  debt  balances.  As a
percentage  of net  revenue,  interest  expense  decreased to 1.4% for the three
months  ended March 31, 2002  compared to 2.1% for the three  months ended March
31, 2001.

Net income (loss).  As a result of the above, the Company reported net income of
$238,000  for the three  months  ended March 31, 2002  compared to a net loss of
$(175,000)  for the three months ended March 31, 2001,  an increase of $413,000.
Net income for the quarter ended March 31, 2002 was net of income tax expense of
$146,000 while the net loss for the quarter ended March 31, 2001 did not include
a provision for income taxes.



                                       15
<PAGE>




Liquidity and Capital Resources

Since its  inception,  the Company has financed its growth through a combination
of private sales of convertible  subordinated  debentures and Common Stock, cash
provided by operating activities, a bank line of credit (the "Credit Facility"),
seller notes and its initial public offering of Common Stock.

Net cash provided by operating  activities was  approximately  $769,000 and $1.0
million for the three months ended March 31, 2001 and 2002, respectively. During
the 2002 period,  excluding net income and after adding back non-cash items, the
Company's  cash  provided by  operating  activities  consisted  primarily  of an
increase in accounts payable and accrued expenses of approximately  $283,000, an
increase  in income  taxes  payable of  approximately  $96,000 and a decrease in
prepaid expense, income tax receivable and other asets of approximately $57,000,
partially  offset  by  an  increase  in  accounts  receivable  of  approximately
$349,000.  Net cash  provided by  operating  activities  during the 2001 period,
excluding the net loss and after adding back non-cash items, consisted primarily
of an  increase  in accounts  payable  and  accrued  expenses  of  approximately
$866,000,   partially   offset  by  an  increase  in  accounts   receivable   of
approximately $301,000 and an increase in prepaid expense, income tax receivable
and other asssets of approximately $343,000.

Net cash used in investing  activities was  approximately  $248,000 and $505,000
for the three months ended March 31, 2001 and 2002, respectively.  For the three
months ended March 31, 2002, approximately $399,000 was utilized for acquisition
of dental  offices and  approximately  $107,000  was invested in the purchase of
additional property and equipment. During the three month period ended March 31,
2001, approximately $261,000 was invested in the purchase of additional property
and equipment.

Net cash used in financing  activities was  approximately  $302,000 and $481,000
for the three  months  ended March 31, 2001 and 2002,  respectively.  During the
three  months ended March 31, 2002,  net cash used in financing  activities  was
comprised of approximately $250,000 used to reduce the amount outstanding on the
Company's   term-loan  with  its  bank,  $168,000  used  to  reduce  the  amount
outstanding on the Company's bank line of credit and  approximately  $57,000 for
the repayment of long-term  debt.  During the three months ended March 31, 2001,
net cash used in financing  activities was comprised of  approximately  $260,000
used to reduce the amount  outstanding  on the Company's bank line of credit and
approximately $42,000 for the repayment of long-term debt.

Under the  Company's  Credit  Facility  (as amended on December 17,  2001),  the
Company  may  borrow on a  revolving  basis up to the  lesser  of an  applicable
Borrowing  Base  (calculated in accordance  with the most recent  Borrowing Base
Certificate  delivered  to the Lender) or $2.0  million  and on a  non-revolving
basis, an aggregate  principal  amount not in excess of $4.0 million for working
capital,  for restructuring of the Original Loan and for other general corporate
purposes.  Balances  bear  interest at the lender's base rate (prime plus a rate
margin of 2.0%).  The Company is also obligated to pay an annual facility fee of
..50% on the average  unused  amount of the  revolving  line of credit during the
previous full calendar month. Borrowings on the revolving loan are limited to an
availability  formula based on the Company's  eligible accounts  receivable.  As
amended, the revolving loan matures on April 30, 2002 and the non-revolving note
matures on April 30,  2003.  At March 31,  2002,  the Company had no  borrowings
outstanding  and $2.0 million  available for borrowing  under the revolving loan
and $3.625 million outstanding under the non-revolving loan. The Credit Facility
is secured by a lien on the Company's  accounts  receivable  and its  Management
Agreements.  The Credit  Facility  prohibits  the payment of dividends and other
distributions to shareholders, restricts or prohibits the Company from incurring
indebtedness, incurring liens, disposing of assets, making investments or making
acquisitions,  and requires the Company to maintain certain  financial ratios on
an ongoing basis.  At March 31, 2002 the Company was in full compliance with all
of its covenants under this agreement.

On April 30, 2002,  the  Company's  current  Credit  Facility was amended.  This
amendment extends the maturity date for the revolving loan to April 30, 2003.

At March 31, 2002, the Company had  outstanding  indebtedness  of  approximately
$929,000  represented  by notes  issued  in  connection  with  various  practice
acquisitions, all of which bear interest at rates varying from 8.0% to 9.0%. The
Company's  material  commitments for capital  expenditures  total  approximately
$850,000 which includes the acquisition of controlling  interest in one existing
Office  which  occurred  on April 1, 2002.  The Company  anticipates  that these
capital  expenditures  will be provided  from cash on hand,  cash  generated  by
operations,  or borrowings under the Company's  Credit  Facility.  The Company's
retained  earnings  as of March  31,  2002 was  approximately  $103,000  and the
Company had working capital on that date of approximately $365,000.



                                       16
<PAGE>




The Company  believes that cash generated from  operations and borrowings  under
its Credit Facility,  will be sufficient to fund its anticipated working capital
needs,  capital  expenditures  and future  acquisitions for at least the next 12
months.  In the event the  Company is not able to  successfully  negotiate a new
Credit  Facility  at the end of its  term,  the  Company's  current  sources  of
liquidity  may not be  adequate.  In  addition,  in order to meet its  long-term
liquidity  needs the Company may issue  additional  equity and debt  securities,
subject  to market and other  conditions.  There can be no  assurance  that such
additional  financing will be available on terms acceptable to the Company.  The
failure to raise the funds  necessary  to finance its future  cash  requirements
could  adversely  affect the Company's  ability to pursue its strategy and could
negatively affect its operations in future periods.

On April 30, 2002,  the  Company's  current  Credit  Facility was amended.  This
amendment extends the maturity date for the revolving loan to April 30, 2003.

On September 5, 2000, the Company's Board of Directors  unanimously approved the
purchase of shares of the Company's Common Stock on the open market, total value
not to exceed $150,000.  During 2000, the Company, in 18 separate  transactions,
purchased approximately 26,300 shares of Common Stock for total consideration of
approximately $113,000 at prices ranging from $3.80 to $6.68 per share. At March
31, 2002  approximately  $37,000 remains available under this Board of Directors
approved program.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact the financial  position,
results of  operations  or cash flows of the Company  due to adverse  changes in
financial  and  commodity  market  prices and rates.  The  Company is exposed to
market risk in the area of changes in United States interest rates. Historically
and as of March 31, 2002,  the Company has not used  derivative  instruments  or
engaged in hedging activities.

Interest Rate Risk.  The interest  payable on the Company's  line-of-credit  and
term-loan  is  variable  based upon the prime rate and,  therefore,  affected by
changes  in  market  interest  rates.  At March 31,  2002,  $3.625  million  was
outstanding  with an interest  rate of 6.75% (Prime plus 2.0%).  The Company may
repay the balance in full at any time without penalty.  As a result, the Company
does not believe that reasonably  possible  near-term  changes in interest rates
will result in a material effect on future  earnings,  fair values or cash flows
of the Company.  Based on calculations performed by the Company, a 1.0% increase
in the Company's  interest rate would result in additional  interest  expense of
approximately $9,800 for the three months ended March 31, 2002.




                                       17
<PAGE>



                           PART II. OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

From  time to time the  Company  is  subject  to  litigation  incidental  to its
business. The Company is not presently a party to any material litigation.  Such
claims,  if  successful,  could  result  in  damage  awards  exceeding,  perhaps
substantially, applicable insurance coverage.




ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K


(a)  Exhibits

Exhibit
Number       Description of Document

10.39    First  Amendment to Amended and Restated  Credit  Agreement dated April
         30, 2002 between the Registrant and Key Bank of Colorado.

(b)      Reports on Form 8-K

             None




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                                   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.




                            BIRNER DENTAL MANAGEMENT SERVICES, INC.
                            a Colorado corporation

Date:  May 3, 2002          By:     /s/ Frederic W.J. Birner
                                    ------------------------
                            Name:   Frederic W.J. Birner
                            Title:  Chairman of the Board, Chief
                                    Executive Officer and Director
                                   (Principal Executive Officer)


Date:  May 3, 2002          By:     /s/ Dennis N. Genty
                                    --------------------
                            Name:   Dennis N. Genty
                            Title:  Chief Financial Officer, Secretary,
                                    Treasurer and Director
                                   (Principal Financial and Accounting Officer)




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