<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

      For Quarter Ended: June 30. 1997    Commission File Number: 0-28680

                           DENTLCARE MANAGEMENT, INC.
                           --------------------------
        (Exact name of small business issuer as specified in its charter)

            Nevada                                             88-0301637
-------------------------------                         ----------------------
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                            Identification No.)

             2360 Hassell Rd, Ste F, Hoffman Estates, Illinois 60195
             -------------------------------------------------------
                    (Address of principal executive offices)

                     8118 E. 63rd St., Tulsa, Oklahoma 74133
                     ---------------------------------------
                 (Former address of principal executive offices)

                                 (847) 839-0891
                                 --------------
                           (Issuer's telephone number)

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by section 13 or 15(d) of the Securities Exchange Act during the
preceding 12 months (or for such shorter period that registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes |_| No |X|

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the close of the period covered by this report.

   Common Stock $0.001 par value                           10,934,867
   -----------------------------                 ----------------------------
             Class                               Outstanding at June 30, 1997

Transitional Small Business Disclosure Format:           Yes |_| No |X|
<PAGE>   2

                           DENTLCARE MANAGEMENT, INC.

                                      INDEX

                                                                           Page

  PART I. Financial Information

  Item 1. Consolidated Balance Sheets -
          June 30, 1997 and December 31, 1996                                3

          Consolidated Statements of Operations -
          Three and Six Months Ended June 30, 1997 and 1996                  4

          Consolidated Statement of Stockholders' Equity -
          Six Months Ended June 30, 1997                                     5

          Consolidated Statements of Cash Flows -
          Six Months Ended June 30, 1997 and 1996                           6-8

          Notes to Consolidated Financial Statements
          Six Months Ended June 30, 1997 and 1996                          9-13

  Item 2. Management's Discussion and Analysis of
          Financial Condition and Results of Operations                    14-15

 PART II. Other Information                                                 16


                                     2 of 17
<PAGE>   3

                   DENTLCARE MANAGEMENT, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                              June 30,     December 31,
                                                               1997           1996
                                                            (Unaudited)     (Audited)
                             ASSETS
<S>                                                         <C>            <C>        
Cash                                                        $    33,944    $    42,113
Barter currency (net of $128,778 & $142,032 reserves)            85,852         94,688
Accounts receivable (net of $423,939 & $423,939 reserves)       593,284        582,525
Due from trustee of subsidiary's bankruptcy trust                    --        449,375
Due from officers, stockholders and employees                    20,351         19,042
Prepaid expenses and supplies inventory                         104,922         90,454
                                                            -----------    -----------
    Total current assets                                        838,353      1,278,197

Net property & equipment                                      1,285,465      1,342,843
Barter currency, less current (net of $1,158,998 &
  $1,278,288 reserves)                                          772,665        852,194
Goodwill, net of amortization                                   187,358             --
Deposits and other                                               17,901         28,314
                                                            -----------    -----------

    Total assets                                            $ 3,101,742    $ 3,501,548
                                                            ===========    ===========

             LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable - affiliate                                   $   495,765    $   496,684
Notes payable - other                                           700,000             --
Current portion of long-term obligations                        180,861        208,202
Accounts payable                                              1,168,768      1,053,068
Accrued expenses                                                557,216        497,041
Due to stockholders                                             207,266        205,016
                                                            -----------    -----------
Total current liabilities                                     3,309,876      2,460,011
                                                            -----------    -----------

Long-term obligations, less current portion                     322,805        512,328

Deferred revenue                                                     --         22,462

Stockholders' equity
Preferred stock                                               2,500,000      2,500,000
Common stock                                                     10,935         10,852
Additional paid-in capital                                    6,054,089      5,854,172
Deficit                                                      (7,972,207)    (6,734,521)
Due from trustee of subsidiary's bankruptcy trust            (1,123,756)    (1,123,756)
                                                            -----------    -----------
    Total stockholders' equity                                 (530,939)       506,747
                                                            -----------    -----------

    Total liabilities and stockholders' equity              $ 3,101,742    $ 3,501,548
                                                            ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                     3 of 17
<PAGE>   4

                   DENTLCARE MANAGEMENT, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                              Three Months Ended June 30,      Six Months Ended June 30,
                                                  1997            1996            1997            1996
<S>                                          <C>             <C>             <C>             <C>         
Management fee revenues                      $  1,255,172    $  1,191,785    $  2,642,783    $  1,871,335

Cost of dental services:
  Clinical and operating compensation             698,520         481,819       1,455,669         802,188
  Dental supplies and laboratory costs            288,232         252,153         538,029         390,561
  Facility and equipment costs                    188,777         130,877         386,752         216,151
  Depreciation and amortization                    43,614          44,800          85,549          89,600
  Advertising                                      58,877          63,268         135,071         124,854
  Other costs                                     121,390          36,456         210,045          89,275
                                             ------------    ------------    ------------    ------------
                                                1,399,410       1,009,373       2,811,115       1,712,629
                                             ------------    ------------    ------------    ------------
Gross profit (loss)                              (144,238)        182,412        (168,332)        158,706

General and administrative expenses               473,431         318,511         944,055         596,606
Depreciation and amortization                       3,901           2,500           7,517           5,000
                                             ------------    ------------    ------------    ------------
Operating loss                                   (621,570)       (138,599)     (1,119,904)       (442,900)

Other income (expense):
  Other income                                     12,787           4,395          13,251           8,120
  Interest expense                                (68,261)        (12,334)       (131,033)        (25,285)
                                             ------------    ------------    ------------    ------------

Loss before income taxes                         (677,044)       (146,538)     (1,237,686)       (460,065)

Income taxes                                           --              --              --              --
                                             ------------    ------------    ------------    ------------

Net loss                                     $   (677,044)   $   (146,538)   $ (1,237,686)   $   (460,065)
                                             ============    ============    ============    ============

Net loss per common share                    $      (0.06)   $      (0.02)   $      (0.11)   $      (0.08)
                                             ============    ============    ============    ============

Weighted average common shares outstanding     10,934,867       6,458,244      10,905,047       5,715,515
                                             ============    ============    ============    ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                    4 of 17
<PAGE>   5

                   DENTLCARE MANAGEMENT, INC. AND SUBSIDIARIES
                 Consolidated Statement of Stockholders' Equity
                         Six Months Ended June 30, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              Additional                   Due From       Stock-
                                       Preferred Stock       Common Stock      Paid-in                    Bankruptcy      holders'
                                     Shares    Amount      Shares     Amount   Capital       Deficit       Trustee        Equity
<S>                                  <C>     <C>         <C>         <C>      <C>          <C>           <C>           <C>        
Balance at December 31, 1996         25,000  $2,500,000  10,851,700  $10,852  $5,854,172   $(6,734,521)  $(1,123,756)  $   506,747

Issuance of common stock in the
    acquisition of a denture
    laboratory and dental practice                            8,333        8      24,992                                    25,000

Issuance of common stock for the
    employee benefit                                         16,500       17         (17)                                       --

Issuance of common stock in
   exchange for note payable                                 58,334       58     174,942                                   175,000

Net loss for the period                                                                     (1,237,686)                 (1,237,686)
                                     ------  ----------  ----------  -------  ----------   -----------   -----------   -----------

Balance at June 30, 1997             25,000  $2,500,000  10,934,867  $10,935  $6,054,089   $(7,972,207)  $(1,123,756)  $  (530,939)
                                     ======  ==========  ==========  =======  ==========   ===========   ===========   ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                    5 of 17
<PAGE>   6

                   DENTLCARE MANAGEMENT, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                     Six Months Ended June 30, 1997 and 1996
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         Six Months Ended June 30,
                                                            1997           1996
Increase (decrease) in cash
<S>                                                     <C>            <C>        
Cash flows from operating activities:
    Cash received from customers                        $ 2,632,024    $ 1,671,087
    Cash paid to suppliers and employees                 (3,471,896)    (2,120,170)
    Interest paid                                           (73,473)       (25,285)
                                                        -----------    -----------

    Net cash used by operating activities                  (913,345)      (474,368)
                                                        -----------    -----------

Cash flows from investing activities:
    Capital expenditures                                    (31,965)       (87,774)
    Proceeds from sale of assets                                450             --
    Bank overdrafts                                              --        (12,180)
    Due from officers and employees                             941        (24,960)
    Cash utilized to acquire dental practice
     and denture laboratory                                (117,647)            --
                                                        -----------    -----------

    Net cash used by investing activities                  (148,221)      (124,914)
                                                        -----------    -----------

Cash flows from financing activities:
    Proceeds from loans                                     750,000         37,601
    Repayments of notes and capital lease obligations      (145,978)      (285,554)
    Proceeds from bankruptcy trustee                        449,375             --
    Proceeds from common stock offering                          --      1,025,000
                                                        -----------    -----------

    Net cash provided by financing activities             1,053,397        777,047
                                                        -----------    -----------

Net increase (decrease) in cash                              (8,169)       177,765

Cash at beginning of period                                  42,113          5,127
                                                        -----------    -----------

Cash at end of period                                   $    33,944    $   182,892
                                                        ===========    ===========
</TABLE>

                                                                       Continued

See accompanying notes to consolidated financial statements.


                                    6 of 17
<PAGE>   7

                   DENTLCARE MANAGEMENT, INC. AND SUBSIDIARIES
               Consolidated Statements of Cash Flows - (Continued)
                     Six Months Ended June 30, 1997 and 1996
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Six Months Ended June 30,
                                                               1997           1996
<S>                                                        <C>            <C>         
Reconciliation of net loss to net cash used by
    operating activities

Net loss                                                   $(1,237,686)   $  (460,065)
Adjustments to reconcile net loss to net cash used by
  operating activities:
    Depreciation                                                87,711         31,600
    Amortization                                                 5,355         68,000
    Interest accrued on related party notes payable             24,081             --
    Gain on sale of property for debt                           (9,729)
    Decrease (increase) in barter currency, net                 88,365        110,889
    Decrease (increase) in accounts receivable                 (10,759)      (208,368)
    Decrease (increase) in prepaid expense and supplies
      inventory                                                (12,768)       (77,316)
    Decrease (increase) in deposits                                (77)        (1,714)
    Increase (decrease) in accounts payable and accrued
      expenses                                                 152,162         62,606
                                                           -----------    -----------

Net cash used in operating activities                      $  (913,345)   $  (474,368)
                                                           ===========    ===========

Supplementary schedule of noncash investing and
  financing activities

Acquisition of dental practices and denture laboratory:
    Increase in accounts receivable and other assets             1,700        350,000
    Increase in dental equipment                                59,485        350,000
    Increase in goodwill                                       192,713        150,000
    Deposit applied                                            (10,000)            --
    (Increase) in accounts payable                              (1,251)      (100,000)
    (Increase) in other notes payable and long-term debt      (100,000)      (750,000)
    (Increase) in common stock                                      (8)        (2,700)
    (Increase) decrease in additional paid in capital          (24,992)         2,700
                                                           -----------    -----------

      Cash received (used)                                 $  (117,647)   $        --
                                                           ===========    ===========
</TABLE>

                                                                       Continued

See accompanying notes to consolidated financial statements.


                                    7 of 17
<PAGE>   8

                   DENTLCARE MANAGEMENT, INC. AND SUBSIDIARIES
               Consolidated Statements of Cash Flows - (Continued)
                     Six Months Ended June 30, 1997 and 1996
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                   Six Months Ended June 30,
                                                      1997         1996
<S>                                                  <C>       <C>
Supplementary schedule of noncash investing and
  financing activities, continued

Confirmation of plan of reorganization:
  Increase in due from trustee                            --   $ 2,035,353
  Decrease in notes payable                               --       773,571
  Decrease in accounts payable                            --       652,089
  Decrease in accrued expenses                            --       931,956
  Decrease in due to stockholders                         --       107,031
  (Increase) in common stock issued                       --        (2,400)
  (Increase) in additional paid in capital                --    (4,497,600)

Other transactions
  Common stock issued in exchange for notes
    payable                                          175,000            --
  Common stock and note issued as partial
    consideration for the acquisition of a
    denture laboratory and a dental practice         125,000            --
</TABLE>

See accompanying notes to consolidated financial statements 


                                    8 of 17
<PAGE>   9

                   DentlCare Management, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                     Six Months Ended June 30, 1997 and 1996
                                   (Unaudited)

A.    Summary of significant accounting policies

      The accompanying consolidated financial statements include the accounts of
      DentlCare Management, Inc. (the "Company" or "DCMI") and its wholly-owned
      subsidiaries, Dental Management Systems, Inc. ("DMSI"), DentureCare
      Services, Inc. ("DCSI"), HPS-Nevada, Hippocratic Preservation Society,
      Inc. ("HPS-Illinois") and National DentlCare Management, Inc. ("NDCMI").
      All material intercompany accounts and transactions have been eliminated.

      The interim consolidated financial statements included herein have been
      prepared pursuant to the rules and regulations of the Securities and
      Exchange Commission for interim reporting and include all adjustments
      (consisting only of normal recurring adjustments) which are, in the
      opinion of management, necessary for a fair presentation. The consolidated
      financial statements as of June 30, 1997 and for the three months and six
      months ended June 30, 1997 and 1996 have not been audited. The
      consolidated balance sheet as of December 31, 1996 has been derived from
      the audited consolidated balance sheet. Certain information and footnote
      disclosures normally included in financial statements prepared in
      accordance with generally accepted accounting principles have been
      condensed or omitted pursuant to such rules and regulations for interim
      reporting. The Company believes that the disclosures contained herein are
      adequate to make the information presented not misleading. The
      consolidated results of operations for the six months ended June 30, 1997
      is not necessarily indicative of the results of operations which will be
      realized for the year ending December 31, 1997. These interim consolidated
      financial statements should be read in conjunction with the consolidated
      financial statements and notes thereto included in the Company's Annual
      Report for the year ended December 31, 1996, which is included in the
      Company's Form 10-KSB. Certain reclassifications of the amounts presented
      for the comparative period have been made to conform to the current
      presentation.

B.    Acquisitions

      Effective March 1, 1996, the Company acquired HPS-Nevada, a Nevada
      corporation engaged in dental practice management, in exchange for
      1,350,000 shares of the Company's common stock. Goodwill of $64,294, which
      was recognized in connection with the acquisition, was written off prior
      to December 31, 1996 based on expected consolidated future cash flows. On
      June 30, 1996, the Company acquired HPS-Illinois, an Illinois corporation
      engaged in dental practice management, in exchange for 1,350,000 shares of
      the Company's common stock.

      On January 31, 1997, HPS-Illinois acquired the net assets of RES, Inc. a
      dental care related service provider in Chicago, Illinois for $250,000,
      consisting of $125,000 in cash, 8,333 shares of the Company's common stock
      valued at $3.00 per share and a $100,000 promissory note. Subsequent to
      the acquisition, HPS-Illinois defaulted in the payment of the promissory
      note and RES, Inc. filed a legal action against HPS-Illinois. The lawsuit
      was settled by the Company and the Company agreed to pay RES, Inc. the
      remaining $90,000 balance under the promissory note as follows: $25,000 on
      or before September 30, 1997 and the remaining $65,000, with interest at
      10% per annum, in 12 equal monthly installments of $5,715 commencing
      October 1, 1997.

      The above acquisitions have been accounted for by the purchase method of
      accounting with the assets acquired and the liabilities assumed being
      recorded at their fair values.


                                    9 of 17
<PAGE>   10

C.    Notes payable, long-term debt and capital lease obligations

      During the six months ended June 30, 1997, the Company borrowed $600,000
      from a bank and $100,000 from a private lender, with interest at 15%, and
      utilized a portion of the proceeds to repay a $50,000 loan which had been
      made earlier in the year. In addition, the Company utilized $117,647 of
      this amount to fund the cash required to acquire RES, Inc. The remainder
      of the loans were used for working capital and to reduce accounts payable.
      The Company also incurred long-term debt in the amount of $100,000 as a
      part of its acquisition of RES, Inc. In addition, the Company retired a
      $175,000 note through the issuance of 58,334 shares of its common stock.
      Other reductions in notes payable, long-term debt and capital lease
      obligations amounted to $95,978 during the period.

D.    Bankruptcy proceedings

      On March 23, 1995, the Company's wholly owned subsidiary DCSI, filed a
      voluntary petition for relief under Chapter 11 of the United States
      Bankruptcy Code. In June 1996, the plan of reorganization (the "Plan"),
      was confirmed by the Bankruptcy Court of the Northern District of
      Oklahoma. In connection therewith, the Company issued 2,400,000 shares of
      its common stock in complete satisfaction of the third party liabilities
      of DCSI. Substantially all assets of DCSI are encumbered by liens which,
      in the event of failure of Plan performance, would entitle the lienholders
      to proceed against DCSI and its assets.

      Advances from DCMI and DMSI to DCSI which occurred prior to the voluntary
      petition are to be treated as unsecured claims while pre-petition and
      post-petition advances to DCSI from DCMI and DMSI, which represent
      advances for administrative purposes, are to be treated as priority
      claims. In the opinion of the bankruptcy counsel for DCSI it is reasonably
      possible that the following may occur and have an unfavorable outcome in
      that DCSI may face certain loss contingencies:

            In the event of a failure of performance of the terms of the Plan.
            Such loss contingencies encompass all the claims asserted in the
            Bankruptcy Case, covered by the Plan terms and such
            post-confirmation claims as have or may arise within that Bankruptcy
            Case proceeding, including professional fees and costs.

            In the event of failure of performance of ongoing obligations in the
            Bankruptcy Case proceedings, including but not limited to the
            payment of U.S. Trustee fees and other post-confirmation claims,
            including those of post-confirmation trade creditors and
            professionals employed by DCSI.

            In the event of failure to fulfill its ongoing obligations to
            appoint and participate as a member of the Plan Trust Committee
            established in the Plan, including failure to require the conduct of
            Plan Committee meetings and the presentation of reports by the Plan
            Trustee.

            In the event that DCSI has been involved in procuring or has
            received distributions from the Plan Trust before payments to
            creditors having payment priority, in contravention of the order of
            distribution set forth under the Plan terms.

            In the event that DCSI is charged with a breach of fiduciary
            obligations imposed on DCSI in the Bankruptcy Case, including such
            obligations arising from its status as debtor in possession, as
            reorganized debtor under the Plan and as Plan Committee member.


                                    10 of 17
<PAGE>   11

E.    Subsequent events and contingencies

      On June 16, 1997, a lawsuit was filed against DCMI in Nevada by a company
      for $125,000. On September 19, 1997, the Court entered a default judgment
      against DCMI, which was subsequently set aside. DCMI's management believes
      that the lawsuit will be settled for less than $125,000.

      On July 24, 1997, a lawsuit was filed in Texas against DCMI by an
      individual for $175,000 alleging breach of contract and violation of
      certain securities laws. The case was subsequently settled for $100,000
      and the issuance of 50,000 shares of the Company's common stock.

      The following are contingent liabilities of the Company due to provisions
      included in the corporate bylaws and pursuant to indemnification
      agreements between the Company and certain former officers:

            On July 1, 1997, a District Court in Tulsa, Oklahoma granted a
            judgment against certain former officers of the Company for
            $347,762, plus interest, for failure to pay bank debt in accordance
            with guarantees made by the former officers. The debt is scheduled
            to be paid under DCSI's bankruptcy plan of reorganization however,
            if the amount is not paid, the Company may be liable under an
            indemnification agreement.

            On July 17, 1997, the Internal Revenue Service (the "IRS") issued a
            final notice of intent to levy civil penalties for $195,709 against
            certain former officers of the Company relating to previous payroll
            tax liabilities of DCSI. Although the underlying debt is scheduled
            to be paid under DCSI's bankruptcy plan of reorganization, if the
            amount is not paid, the Company may be liable under an
            indemnification agreement. The IRS has verbally agreed to postpone
            any attempt to levy as long as DCMI is current in its withholding
            and payment of payroll taxes.

      On August 12, 1997, a lawsuit was filed against certain former officers of
      DCMI who had previously entered into an agreement to purchase 42,717
      shares of DCMI's common stock from the plaintiff on July 31, 1997 for
      $3.50 per share. The lawsuit, which claims that the terms of the agreement
      had been breached, was filed for damages of $175,000. The lawsuit was
      settled by DCMI for $120,000 with payment to be made over a 3-year period.

      On August 27, 1997, certain former officers of DCMI who had previously
      entered into an agreement to purchase 17,932 shares of DCMI's common stock
      on July 31, 1997 from an individual for $3.50 per share, entered into a
      Forbearance and Revised Agreement for Repurchase of Shares (the "Revised
      Agreement"). Under the Revised Agreement, the individual, who is currently
      an employee of DCMI, agreed to extend the date at which the shares must be
      purchased to September 30, 1997 for 1/2 of the shares and December 31,
      1997 for the balance of the shares. The Company is currently in default
      under the Revised Agreement.

      In August 1997, DCMI entered into a restructuring agreement (the
      "Restructuring Agreement") with certain former officers (the "Shareholder
      Group"), a creditor, Bridge Bank, and the following investment entities
      and advisors: Capital International Holdings, Inc. ("CIH"), Capital
      International Securities Group, Inc. ("CISG"), Motivo Investments Limited
      ("Motivo"), James Goldberg ("Goldberg"), JLG Trading, Inc. ("JLG"), Hudson
      Riverview Consulting, Inc. ("Hudson") and James Neifeld ("Neifeld")
      whereby DCMI agreed to satisfy its indebtedness to Bridge Bank with the
      proceeds from the sale of its common stock in two private placement
      offerings through CISG (the "Offerings"). The terms of the Restructuring
      Agreement are as follows:

            The Shareholder Group agreed to deposit 3,698,218 shares of DCMI
            common stock into escrow to be released 2/3 to Motivo, 1/6 to Hudson
            and 1/6 to Neifeld pursuant to the


                                    11 of 17
<PAGE>   12

            following terms and conditions. Upon receipt by DCMI of the minimum
            amount in the first Offering, the common stock in escrow would be
            transferred into a voting trust to be voted by the trustee in
            accordance with instructions of Motivo, Hudson and Neifeld. Upon
            receipt by DCMI of the maximum amount in the first Offering,
            1,849,109 shares of common stock would be transferred from the
            voting trust to Motivo, Hudson and Neifeld. Upon receipt by DCMI of
            the minimum amount in the second Offering, the remaining 1,849,109
            shares of common stock would be transferred from the voting trust to
            Motivo, Hudson and Neifeld.

            The first Offering consisted of the sale of up to 10,000,000 shares
            of the Company's common stock at $.25 per share. In the third and
            fourth quarters of 1997, the Company sold 10,000,000 shares in the
            first Offering and received $2,500,000, which was used to pay
            certain liabilities, provide working capital and provide funds for
            future acquisitions.

            The second Offering is to consist of the sale of up to 1,800,000
            shares of the Company's common stock at $2.50 per share. In May
            1998, there was a reverse split of the Company's outstanding shares
            of common stock whereby the common stockholders were issued one (1)
            share of common stock for each five (5) shares held.

            The Restructuring Agreement also provides that (i) upon receipt of
            the minimum amount in the first Offering, Motivo shall have the
            right to elect up to five additional directors of DCMI; (ii) upon
            receipt of the maximum amount in the first Offering, DCMI shall
            grant CIH warrants to purchase 2,500,000 shares of the Company's
            common stock at an exercise price of $1.00 per share; and (iii) upon
            receipt of the minimum amount in the second Offering, DCMI shall
            grant to CIH warrants to purchase 5,000,000 shares of the Company's
            common stock at an exercise price of $1.20 per share.

      In August 1997, the Company entered into three-year employment agreements
      with three of its employees. The employment agreements provide that each
      employee receive an annual salary of $72,000 with increases of 6% per
      year. In addition, the employees received options to purchase a total of
      550,000 shares of the Company's common stock at the market value of the
      common stock at September 1, 1997.

      On August 28, 1997, the Company entered into an employment agreement with
      Dr. Charles Mitchell which provides that Dr. Mitchell will serve as DCMI's
      President and Chief Operations officer through December 31, 2002. As
      compensation for his services, Dr. Mitchell is to receive an annual salary
      of $96,000 with increases of 6% per year, 100,000 shares of the Company's
      common stock, an annual cash bonus of 3% of the Company's annual pre-tax
      earnings and options to purchase up to 3,100,000 shares of the Company's
      common stock exercisable upon the achievement of certain earnings. In
      addition, Dr. Mitchell agreed to cause the sale of the operating assets of
      several dental practices (the "Practices") to DCMI in exchange for
      $200,000 and $1,000,000 of preferred stock which is convertible into
      2,000,000 shares of DCMI's common stock. Subsequent to the sale, DCMI will
      assume the management of the Practices. The shares of common stock to be
      issued under the employment agreement shall be decreased proportionally to
      the extent the first six months pre-tax profits of the Practices do not
      equal $125,000. On November 1, 1997, DCMI acquired the operating assets of
      the Practices in a business combination accounted for as a purchase. The
      acquisition was completed through the payment of $200,000 and the issuance
      of 2,000,000 shares of the Company's common stock.

      The Series A preferred stock dividends of $100,000 ($.04 per share) are in
      arrears through December 1, 1997. Under the Company's agreement with the
      holders of the Series A preferred stock, they have the right to appoint
      members to the Board of Directors with voting power equal to 50% if the
      dividends are not paid when due. In January 1998, the Company entered into
      an agreement with the holders of the preferred stock whereby they agreed
      that the preferred stock


                                    12 of 17
<PAGE>   13

      dividends for the period from November 1996 through November 1998 would be
      paid through the issuance of the Company's common stock.

F.    Continuation of the Company as a Going Concern

      The accompanying financial statements have been prepared in conformity
      with generally accepted accounting principles which contemplates the
      continuation of the Company as a going concern. As of June 30, 1997, the
      Company had a deficiency in working capital of $2,472,000 and a deficiency
      in assets of $531,000. In addition, the Company has sustained substantial
      operating losses since its inception. Although, the Company raised
      $2,500,000 from the sale of 10,000,000 shares of its common stock in the
      third and fourth quarters of 1997, the Company will need additional
      working capital to fund its future operations. In view of these matters,
      realization of the assets included in the accompanying balance sheet is
      dependent upon the continued operations of the Company, which in turn is
      dependent upon the Company's ability to meet its financing requirements
      and the success of its future operations. Management believes that actions
      currently being taken to revise the Company's operating and financial
      requirements provide the opportunity for the Company to continue as a
      going concern.


                                    13 of 17
<PAGE>   14

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

From time to time, the Company may publish forward-looking statements relating
to certain matters, including anticipated financial performance, business
prospects, product development, and other similar matters. All statements other
than statements of historical fact contained in this Form 10-QSB or in any other
report of the Company are forward-looking statements. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of that safe harbor, the Company
notes that a variety of factors could cause the Company's actual results and
experience to differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements. In addition,
the Company disclaims any intent or obligation to update those forward-looking
statements.

The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements included herein.

Results of Operations

For the six months ended June 30, 1997, the Company's dental practice management
revenues amounted to $2,642,783, which included $1,115,117 (42%) from the Las
Vegas operations, $763,475 (29%) from the Tulsa operations and $764,191 (29%)
from the Chicago operations. During the same period in 1996, dental practice
management revenues amounted to $1,871,335, which included $899,442 (48%) from
the Las Vegas operations and $971,893 (52%) from the Tulsa operations. The
Company's acquired the Las Vegas operations in March 1996 and the Chicago
operations in July 1996.

On a pro forma basis, the Las Vegas operations would have had approximately
$1,349,000 in dental practice management revenues during the six months ended
June 30, 1996. Accordingly, dental practice management revenues for the Las
Vegas operations have decreased approximately 17% during the six months ended
June 30, 1997 as compared to the same period in 1996 on a proforma basis. The
decrease is primarily due to increased competition during the 1997 period.
During the six months ended June 30, 1997, the Las Vegas operations had a loss
(before administrative costs and other income and expenses) of $40,173 compared
to a profit of $145,844 during the four months ended June 30, 1996. The loss in
1997 is primarily due to increases in amounts being retained by dentists and
hygienists (32% of gross patient revenues in 1997 compared to 20% in 1996), due
primarily to a shortage of dentists and hygienists in Nevada.

For the six months ended June 30, 1997, dental practice management revenues from
the Tulsa operations declined 21% from the same period in the preceding year.
One dental office was closed as of the end of the third quarter of 1996, which
accounted for approximately 9% of the decline. During the six months ended June
30, 1997, the Tulsa operations had a loss (before administrative costs and other
income and expenses) of $104,330 compared to a loss of $124,441 during the same
period in 1996. While all operating costs were lower in 1997 as compared to
1996, primarily due to the closing of the dental office at the end of the third
quarter of 1996, the decreased loss is primarily due to the elimination of
goodwill related to the Tulsa operations at the end of 1996, which accounted for
a decrease of $56,000 in depreciation and amortization for the six months ended
June 30, 1997.

For the six months ended June 30, 1997, dental practice management revenues from
the Chicago operations remained relatively stable as compared to the year
earlier period on a proforma basis. During the six months ended June 30, 1997,
the Chicago operations had a loss (before administrative costs and other income
and expenses) of $23,829, the majority of which was attributable to start-up
costs associated with a dental insurance company formed by the Company in the
first quarter of 1997. The operations of the dental insurance company were
discontinued in the fourth quarter of 1997.


                                    14 of 17
<PAGE>   15

For the six months ended June 30, 1997, general and administrative expenses of
the Company amounted to $944,055 compared to $596,606 for the same period in
1996, a 58% increase. The principal components of the increase were higher
compensation costs and higher travel costs associated with the additional dental
practices being managed by the Company during the 1997 period. General and
administrative expenses in 1997 also includes an increase of $56,574 in the
allowance for bad debts.

Interest expense increased $105,748 (418%) during the six months ended June 30,
1997 as compared to the same period in the prior year. The increase is primarily
due to increases in debt in connection with acquisitions as well as working
capital loans which the Company initiated during January 1997.

Liquidity and Capital Resources

As of June 30, 1997, the Company had a deficiency in working capital of
$2,471,523, as compared to a deficiency in working capital of $1,181,814 as of
December 31, 1996, an increase of $1,289,709. The increase is primarily due to
the loss during the six months ended June 30, 1997 of $1,237,686. Current assets
declined $439,844, primarily due to the collection of $449,375 from the trustee
of the bankruptcy trust of a subsidiary of the Company. Current liabilities
increased during the same period by $849,865, primarily due to the increase in
notes payable of $700,000. As of June 30, 1997, the Company had a deficiency in
assets of ($530,939) as compared to stockholders' equity of $506,747 at December
31, 1996. The decrease in stockholders' equity was primarily due to the loss for
the six months ended June 30, 1997, less the issuance of $200,000 in common
stock to retire a note payable and for the partial payment of the RES, Inc.
acquisition.

During the six months ended June 30,1997, the Company acquired approximately
$32,000 in capital equipment and added equipment of approximately $59,000 in
connection with its acquisition of RES, Inc.

During the six months ended June 30, 1997, the Company borrowed $600,000 from a
bank and $100,000 from a private lender and utilized the proceeds to reduce
outstanding obligations. The $600,000 loan was exchanged for the Company's
common stock in connection with the first private Offering. (See Note E of Notes
to Consolidated Financial Statements.

As of June 30, 1997, the Company had a deficiency in working capital of
approximately $2,472,000 and a deficiency in assets of approximately $531,000.
In addition, the Company has sustained substantial operating losses since its
inception. Although, the Company raised $2,500,000 from the sale of 10,000,000
shares of its common stock in the third and fourth quarters of 1997, the Company
will need additional working capital to fund its future operations. (See Note F
of Notes to Consolidated Financial Statements.)

Trends

There are no seasonal factors affecting the Company's business.


                                    15 of 17
<PAGE>   16

                                     PART II

ITEM 1. LEGAL PROCEEDINGS.

See Note E of Notes to Consolidated Financial Statements.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

      (a)   Exhibits - None

      (b)   Reports on Form 8-K - None during the three months ended June 30,
            1997.

                                    SIGNATURE

Pursuant to the requirements 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.

                                               DENTLCARE MANAGEMENT, INC.


Date: August 10, 1998                          By: /s/ Ron Stoeppelwerth
                                                   -----------------------------
                                                   Ron Stoeppelwerth
                                                   Chief Financial Officer and
                                                   Principal Accounting Officer


                                    16 of 17