U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                       - - - - - - - - - - - - - - - - - -

                                   FORM 10-QSB
(MARK ONE)

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998


   [ ]            TRANSITION REPORT UNDER SECTION 13 OR 15 (D)
                               OF THE EXCHANGE ACT

      FOR THE TRANSITION PERIOD FROM _______________ TO __________________

                         COMMISSION FILE NUMBER: 0-23055
             - - - - - - - - - - - - - - - - - - - - - - - - - - - -

                            OMEGA ORTHODONTICS, INC.
                     (EXACT NAME OF SMALL BUSINESS ISSUER AS
                            SPECIFIED IN ITS CHARTER)

          DELAWARE                                              95-4596853
(STATE OR OTHER JURISDICTION                                 (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                           IDENTIFICATION NO.)

                               3621 SILVER SPUR LANE
                                ACTON, CALIFORNIA                  93510
                     (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)   (ZIP CODE)  

          ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: 805-269-2841

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

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 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 [ ]

As of July 31, 1998, there were 4,807,232 shares of Common Stock outstanding and
2,070,000 Redeemable Common Stock Purchase Warrants outstanding.








<PAGE>



                            OMEGA ORTHODONTICS, INC.
                            FORM 10-QSB REPORT INDEX

Part I - Financial Information

     Item 1 -  Financial Statements

               Condensed  Consolidated  Balance Sheets June 30, 1998 (Unaudited)
               and December 31, 1997

               Condensed  Consolidated  Statements of  Operations  for the Three
               Months  and Six  Months  Ended  June 30,  1998 and June 30,  1997
               (Unaudited)

               Condensed Consolidated Statement of Stockholders' Equity June 30,
               1998 (Unaudited)

               Condensed  Consolidated  Statements  of  Cash  Flows  for the Six
               Months Ended June 30, 1998 and June 30, 1997 (Unaudited)

               Notes to Condensed Consolidated Financial Statements

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

Part II -- Other Information

     Item 1 - Legal Proceedings

     Item 2 - Changes in Securities and Use of Proceeds

     Item 3 - Defaults upon Senior Securities

     Item 4 - Submission of Matters to a Vote of Security Holders

     Item 5 - Other Information

     Item 6 - Exhibits and Reports on Form 8-K

Signatures




                         PART I - FINANCIAL INFORMATION

ITEM 1.        FINANCIAL STATEMENTS




<PAGE>



                            OMEGA ORTHODONTICS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                             June 30,   December 31,
                                                               1998         1997
                                                           (Unaudited)    (Audited)
                                                           -----------  ------------
<S>                                                        <C>           <C>        
ASSETS
Current assets:
  Cash and cash equivalents                                $ 2,406,678   $ 5,421,721
  Receivable from affiliated practices, net                  2,084,407       926,271
  Notes and interest receivable from affiliated practice        25,333        50,000
  Notes and interest receivable from related parties           125,058       120,859
  Prepaid expenses                                              88,732        55,791
                                                           -----------   -----------
    Total current assets                                     4,730,208     6,574,642

Property and equipment, net                                    738,660       503,339
Due from affiliated practices                                  172,563        53,194
Intangible assets, net                                       8,395,554     5,099,043
Other assets                                                   124,688        80,303
                                                           -----------   -----------

        Total Assets                                       $14,161,673   $12,310,521
                                                           ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                         $   171,908   $   155,671
  Accrued expenses                                             359,578       354,513
  Patient prepayments                                        1,520,400       775,699
  Current portion of long-term debt                            232,153        76,130
  Due to affiliated practices                                  180,652       147,955
  Due to related parties                                          --         305,000
                                                           -----------   -----------
    Total current liabilities                                2,464,691     1,814,968

Long-term debt, less current portion                           902,870       468,551
                                                           -----------   -----------

        Total Liabilities                                    3,367,561     2,283,519
                                                           -----------   -----------

Commitments and contingencies

Stockholders' equity:
Common stock, $.01 par value 9,500,000 shares
  authorized - 4,807,232 and 4,338,823 shares issued
  and outstanding at June 30, 1998 and December 31,
  1997, respectively                                            48,072        43,388
Additional paid-in capital                                  14,785,824    13,858,851
Accumulated deficit                                         (4,039,784)   (3,875,237)
                                                           -----------   -----------
    Total stockholders' equity                              10,794,112    10,027,002
                                                           -----------   -----------

        Total Liabilities and Stockholders' Equity         $14,161,673   $12,310,521
                                                           ===========   ===========
</TABLE>


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


<PAGE>




                            OMEGA ORTHODONTICS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                           Three Months Ended             Six Months Ended
                                                June 30,                      June 30,
                                       --------------------------    --------------------------

                                           1998           1997           1998           1997
                                           ----           ----           ----           ----
<S>                                    <C>            <C>            <C>            <C>         
Revenues:
  Service fees                         $ 1,741,037    $      --      $ 3,360,478    $      --
  Consulting fees                            3,929         21,345         21,795         44,571
                                       -----------    -----------    -----------    -----------
      Total revenues                     1,744,966         21,345      3,382,273         44,571
                                       -----------    -----------    -----------    -----------

Costs and expenses:
  Employee costs                           879,289         53,347      1,659,047        107,578
  Other direct costs                       298,357         36,571        547,388         43,856
  General and administrative               662,215        122,428      1,194,621        277,553
  Depreciation and amortization             86,754            914        183,921          1,828
  Non-recurring consulting
    expense                                   --        2,867,400           --        2,867,400
                                       -----------    -----------    -----------    -----------
      Total costs and expenses           1,926,615      3,080,660      3,584,977      3,298,215
                                       -----------    -----------    -----------    -----------

Loss from operations                      (181,649)    (3,059,315)      (202,704)    (3,253,644)

Interest expense                           (26,250)       (49,799)       (46,217)       (81,145)
Interest income                             34,376            896         84,374          2,324
                                       -----------    -----------    -----------    -----------

      Net loss                         ($  173,523)   ($3,108,218)   ($  164,547)   ($3,332,465)
                                       ===========    ===========    ===========    ===========

Basic and diluted net loss per share   ($     0.04)   ($     1.84)   ($     0.03)   ($     1.98)
                                       ===========    ===========    ===========    ===========

Weighted average and diluted
  shares outstanding                     4,803,318      1,685,000      4,779,401      1,685,000
                                       ===========    ===========    ===========    ===========
</TABLE>












SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


<PAGE>



                            OMEGA ORTHODONTICS, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)






<TABLE>
<CAPTION>
                                    COMMON STOCK       ADDITIONAL                       TOTAL
                                 NUMBER OF  $.01 PAR     PAID-IN     ACCUMULATED    STOCKHOLDERS'
                                  SHARES      VALUE      CAPITAL       DEFICIT         EQUITY
                                  ------      -----      -------       -------         ------

<S>                             <C>         <C>       <C>           <C>            <C>         
Balance, December 31,
  1997                          4,338,823   $43,388   $13,858,851   ($3,875,237)   $ 10,027,002
Issuance of common stock
  to new affiliated practices     462,159     4,622       918,598          --           923,220
Issuance of common stock
  to consultant                     6,250        62         8,375          --             8,437
Net loss                             --        --            --        (164,547)       (164,547)
                                ---------   -------   -----------   -----------    ------------
Balance, June 30,
  1998                          4,807,232   $48,072   $14,785,824   ($4,039,784)   $ 10,794,112
                                =========   =======   ===========   ===========    ============
</TABLE>

















SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


<PAGE>



                            OMEGA ORTHODONTICS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                            Six Months Ended
                                                                                June 30,
                                                                            ----------------

                                                                           1998          1997
                                                                           ----          ----

<S>                                                                    <C>            <C>      
Net Cash used in operating activities                                  ($  829,072)   ($307,203)

Cash flows from investing activities:
         Purchases of property and equipment                              (218,810)      (1,425)
         Increase in notes receivable from affiliated practice             (25,333)        --
         Increase in other assets                                          (44,385)        --
         Acquisition of management services agreements
                  and related assets                                    (1,828,639)        --
                                                                       -----------    ---------
Net cash used in investing activities                                   (2,117,167)      (1,425)
                                                                       -----------    ---------

Cash flows from financing activities:
    Repayment of borrowings                                                (77,241)        --
    Deferred offering costs                                                   --       (296,426)
    Debt financing costs                                                      --        (18,900)
    Proceeds from issuance of notes payable                                   --        350,000
    Issuance of common stock to consultant                                   8,437         --
                                                                       -----------    ---------
Net cash provided/used by financing activities                             (68,804)      34,674
                                                                       -----------    ---------

Net decrease in cash and cash equivalents                               (3,015,043)    (273,954)
Cash and cash equivalents, beginning of period                          (5,421,721)     321,057
                                                                       -----------    ---------
Cash and cash equivalents, end of period                               ($2,406,678)   $  47,103
                                                                       ===========    =========

Supplemental disclosure of cash flow information:
         Cash paid during the period for interest                      $    47,413    $  52,273
                                                                       ===========    =========

Supplemental disclosure of cash flows related to affiliations:
      Fair value of assets acquired, excluding cash                    $ 3,614,774
      Issuance of common stock                                            (923,220)
      Issuance of notes payable                                           (583,100)
      Cash paid                                                         (1,828,639)
                                                                       -----------

Liabilities assumed                                                    $   279,815
                                                                       ===========

Supplemental disclosure of non cash items from investing activities:
    Issuance of debt in connection with affiliations                   $   583,100
                                                                       ===========

    Transfer of note receivable in connection with
      affiliation                                                      $    50,000
                                                                       ===========
</TABLE>




SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


<PAGE>


                            OMEGA ORTHODONTICS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.  BASIS OF PRESENTATION

    The condensed consolidated balance sheet at June 30, 1998, the condensed
    consolidated statements of operations for the three months and six months
    ended June 30, 1998 and June 30, 1997 and the condensed consolidated
    statements of cash flows for the six months ended June 30, 1998 and June 30,
    1997 are unaudited, but, in the opinion of management, include all
    adjustments (consisting of normal recurring adjustments) necessary for a
    fair presentation of results for the interim periods. The results of
    operations for the three and six months ended June 30, 1998 are not
    necessarily indicative of results to be expected for the entire year. For
    further information, refer to the consolidated financial statements and
    footnotes thereto included in the Company's Annual Report on Form 10-KSB for
    the year ended December 31, 1997.

    REVENUE RECOGNITION

    The Company's services are provided under management services agreements
    (Management Services Agreements) and interim management agreements with
    affiliated practices (Affiliated Practices). Net revenue earned by the
    Company under the management agreements is equal to approximately 25% of new
    patient contract balances in the first month of new patient contracts plus a
    portion of existing contract balances recorded by the Affiliated Practices,
    less amounts retained by the Affiliated Practices. The Company provides
    practice management and marketing services, facilities and non-professional
    personnel and receives 65% to 75% of the Affiliated Practices' gross patient
    fee collections as a management fee. The Affiliated Practices retain all
    revenue not paid to the Company as the management fee. The amounts retained
    by the Affiliated Practices are dependent on their financial performance,
    based in significant part on their cash receipts and disbursements. If total
    expenses of an Affiliated Practice are below prescribed percentages, the
    Affiliated Practice is entitled to retain 50% of the difference. Under the
    terms of the management agreements, the Affiliated Practices assign their
    receivables to the Company in payment of their management fees. The Company
    is responsible for collection. The Company also assumes its portion of
    patient prepayments, which are deposits from patients for dental care to be
    performed in future periods.

    INCOME (LOSS) PER SHARE

    In March 1997, the Financial Accounting Standards Board (FASB) issued
    Statement of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER
    SHARE. This statement established standards for computing and presenting
    earnings per share and applies to entities with publicly traded common stock
    or potential common stock. This statement is effective for fiscal years
    ending after December 15, 1997. In February 1998, the Securities and
    Exchange Commission (SEC) issued Staff Accounting Bulletin No. 98 (SAB 98).
    This bulletin revises the SEC's guidance for calculating earnings per share
    for fiscal years ending after December 15, 1997.

    Basic loss per share was determined by dividing net loss by the weighted
    average common shares outstanding during the period. Diluted loss per share
    is the same as basic loss per share as the effects of the Company's
    potential common stock (options to purchase 508,333 shares of common stock
    and 2,070,000 warrants as of June 30, 1998) are antidilutive. During the
    period preceding the Company's initial public offering (IPO), the Company
    issued 185,000 shares of common stock that have been treated as "nominal
    issuances" in accordance with SAB 98.


<PAGE>


                            OMEGA ORTHODONTICS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


    INTANGIBLE ASSETS

    The value assigned to the Management Services Agreements with the
    acquisition of the assets and liabilities of the management services
    organizations (MSO) and concurrent Management Services Agreements with the
    Affiliated Practices has been accounted for by the Company in accordance
    with the Emerging Issues Task Force ("EITF") Issue 97-2. Substantially all
    of the intangible assets on the Company's condensed consolidated balance
    sheet as of June 30, 1998 are related to the affiliations with the
    Affiliated Practices. The Company evaluates each affiliation and establishes
    an appropriate amortization period based on the underlying facts and
    circumstances. Currently, the Company uses an amortization period ranging
    from 25 to 40 years, consistent with the extended terms of the Management
    Services Agreements. For all new affiliations subsequent to the IPO, the
    Company used a 25-year amortization period. Subsequent to each affiliation,
    the Company reevaluates such facts and circumstances to determine if the
    related intangible assets continue to be realizable and if the amortization
    period continues to be appropriate.

    Amortization of the intangible assets on the Company's condensed
    consolidated balance sheet as of June 30, 1998 produced amortization expense
    of approximately $120,000 for the six months ended June 30, 1998.
    Affiliations with additional Affiliated Practices will result in the
    recognition of additional intangible assets and will cause amortization
    expense to increase further. Although the net unamortized balance of
    intangible assets on the Company's condensed consolidated balance sheet as
    of June 30, 1998 was not considered to be impaired, any future determination
    that a significant impairment has occurred would require the write-off of
    the impaired portion of unamortized intangible assets, which would have a
    material adverse effect on the Company's business, financial condition and
    results of operations.


    NEW ACCOUNTING STANDARD

    In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
    INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 133 is effective for fiscal
    years beginning after June 15, 1999. The Company does not believe the
    adoption of this accounting standard will have any impact on the Company's
    financial position or results of operations.

 .   NEW AFFILIATED PRACTICES

    During the six months ended June 30, 1998, the Company completed
    affiliations with six new Affiliated Practices, three of which merged with
    existing Affiliated Practices.

    Total consideration related to the new Affiliated Practices is summarized as
follows:

         Value of common stock                           $       923,220
         Cash paid                                             1,828,639
         Notes payable                                           583,100
                                                         ---------------

             Total                                       $     3,334,959
                                                         ===============


<PAGE>




    The cost of the above new Affiliated Practices has been allocated on the
    basis of the estimated fair value of the assets acquired and liabilities
    assumed, resulting in management contract intangibles of approximately $3.4
    million. These allocations may be adjusted to the extent that management
    becomes aware of additional information within one reporting year of the
    affiliation date which results in a material change in the amount of any
    contingency or changes in the estimated fair value of assets acquired and
    liabilities assumed.

    The allocation of the purchase price of the new Affiliated Practices,
    including acquisition costs of approximately $123,000, is as follows:

         Property and equipment                               $     77,530
         Management service contract intangibles                 3,373,970
         Patient receivables and patient prepayments               163,274
         Assumed liabilities                                  (    279,815)
                                                               -----------

                                                              $  3,334,959
                                                              ============

    In addition, during the six months ended June 30, 1998, the Company entered
    into an interim management agreement with two additional practices, pursuant
    to which the Company provides management services under essentially the same
    terms as its Management Services Agreements.



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

    THE FOLLOWING CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS REGARDING THE
    PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS INCLUDING PLANS AND
    OBJECTIVES RELATING TO THE DEVELOPMENT OF THE AFFILIATED PRACTICES. THE
    FORWARD-LOOKING STATEMENTS INCLUDED HEREIN ARE BASED ON CURRENT EXPECTATIONS
    THAT INVOLVE NUMEROUS RISKS AND UNCERTAINTIES. THE COMPANY'S PLANS AND
    OBJECTIVES ARE BASED ON A SUCCESSFUL EXECUTION OF THE COMPANY'S EXPANSION
    STRATEGY AND ASSUMPTIONS THAT THE AFFILIATED PRACTICES WILL BE PROFITABLE,
    THAT THE ORTHODONTIC INDUSTRY WILL NOT CHANGE MATERIALLY OR ADVERSELY, AND
    THAT THERE WILL BE NO UNANTICIPATED MATERIAL ADVERSE CHANGE IN THE COMPANY'S
    OPERATIONS OR BUSINESS. ASSUMPTIONS RELATING TO THE FOREGOING INVOLVE
    JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC, COMPETITIVE
    AND MARKET CONDITIONS AND FUTURE BUSINESS DECISIONS, ALL OF WHICH ARE
    DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE BEYOND
    THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT ITS
    ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, ANY OF
    THE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE, THERE CAN BE NO
    ASSURANCE THAT THE FORWARD-LOOKING STATEMENTS INCLUDED IN THE FOLLOWING WILL
    PROVE TO BE ACCURATE. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN
    THE FORWARD-LOOKING STATEMENTS INCLUDED HEREIN, PARTICULARLY IN VIEW OF THE


<PAGE>



    COMPANY'S EARLY STAGE OF OPERATIONS, THE INCLUSION OF SUCH INFORMATION
    SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER
    PERSON THAT THE OBJECTIVES AND PLANS OF THE COMPANY WILL BE ACHIEVED. THE
    FOLLOWING SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND
    NOTES APPEARING ELSEWHERE IN THIS REPORT AND THE COMPANY'S PRIOR FILINGS
    WITH THE SECURITIES AND EXCHANGE COMMISSION.

    GENERAL
    -------

    Omega was incorporated in Delaware in August 1996. Following its initial
    public offering ("IPO") on October 6, 1997, the Company began to offer its
    services primarily under an "affiliate" relationship whereby it purchases,
    pursuant to an affiliation agreement ("Affiliation Agreement"), the equity
    interests of the management services organization ("MSO") that holds certain
    assets and is associated with an orthodontic or other dental specialty
    practice ("Affiliated Practice") and enters into a long term management
    services agreement ("Management Services Agreement") with the Affiliated
    Practice of the selling orthodontist or other dental specialist ("Affiliated
    Practitioner"). Pursuant to the Management Services Agreement, the Company
    receives a monthly management fee for providing all of the Affiliated
    Practice's practice needs, including facilities, support staff and supplies,
    as well as a program of systems, methods and procedures designed to enhance
    the growth, efficiency and profitability of the Affiliated Practice.

    Pursuant to the Affiliation Agreement, the Affiliated Practitioner typically
    converts his existing professional corporation into a general corporation
    that will function as the MSO and creates a new professional corporation
    (the Affiliated Practice) through which the Affiliated Practitioner will
    continue to provide orthodontic or other dental specialty care. The MSO
    retains certain assets and liabilities which typically include the lease for
    the Affiliated Practice's office space, clinical supplies and equipment and
    office furniture, supplies and equipment. The Affiliated Practice retains
    certain other assets and liabilities (if any) which typically include all
    cash and cash equivalents, real property, automobiles, patient records,
    related patient information and notes payable unrelated to assets purchased.
    The Company generally acquires all of the equity interest of the MSO from
    the Affiliated Practitioner, the purchase price for which is determined
    through an assessment of immediate and future return on investment. The MSO
    typically is acquired for a combination of cash, five year notes and
    unregistered Common Stock or stock options. As of June 30, 1998, the Company
    had completed 14 affiliations with an average MSO purchase price of
    approximately $655,000, of which the cash portion was approximately
    $315,000.

    The Management Services Agreement provides that the Affiliated Practice will
    utilize the facility and the Company's services for a period of 20 years,
    with two ten year extensions. While each Management Services Agreement is
    negotiated based on specific circumstances, the management fees charged
    typically range between 65% to 75% of the Affiliated Practice's gross
    income, which is expected to be sufficient to pay all of the MSO's expenses
    and provide a return on the Company's investment. If the Affiliated
    Practice's expenses payable by the MSO are less than an agreed target amount
    of expenses, the difference between the target amount and the actual
    expenses will typically be shared equally by the MSO and the Affiliated
    Practice. At the retirement, disability or death of the Affiliated
    Practitioner, the Company will identify a replacement Affiliated
    Practitioner to purchase the Affiliated Practice and assume the Management
    Services Agreement.


<PAGE>




    Concurrent with the IPO, the Company executed Affiliation Agreements with
    seven initial Affiliated Practices. In addition, between October and
    December 31, 1997 the Company entered into Affiliation Agreements with two
    additional Affiliated Practices. During the first six months of 1998, the
    Company entered into Affiliation Agreements with six additional practices
    (three of which merged with existing Affiliated Practices). Pursuant to
    those collective agreements, the Company acquired the equity interests in
    the MSOs of 14 Affiliated Practices (two of which merged with existing
    Affiliated Practices). Each of the Affiliated Practices is typically
    operated with one practitioner, who is typically supported by a staff of
    three dental assistants and three office personnel. As of June 30, 1998, the
    Company had 14 affiliated practices operating with 17 doctors in 10 states;
    which includes interim management agreements with two practices under terms
    similar to its Affiliation Agreements.

    In consideration for acquiring the six MSOs during the six months ended June
    30, 1998, the Company paid the aggregate of approximately $1.8 million in
    cash, issued an aggregate of approximately $583,000 in notes bearing
    interest at 8.5%, assumed approximately $280,000 of liabilities and issued
    an aggregate of 462,159 shares of Common Stock.

    The Company expects that its future growth will come from implementing its
    Omega Exceptional Practice Model with Affiliated Practices and entering into
    Affiliation Agreements with new Affiliated Practices. The ability of the
    Company to achieve its expansion will depend upon a number of factors,
    including (i) the Company's ability to attract orthodontic and other dental
    specialists to affiliate with the Company, (ii) the availability of suitable
    markets and the Company's ability to obtain suitable locations within those
    markets; (iii) the Company's ability to locate existing practices for
    affiliation, affiliate with such practices on favorable terms and
    successfully integrate the affiliated operations into the Company's existing
    operations; and (iv) the availability of adequate financing to fund
    affiliations with orthodontic and other dental specialty practices. A
    shortage of available orthodontists and other dental specialists with the
    skills and experience required by the Company would have a material adverse
    effect on the Company's expansion plans. There can be no assurance that the
    Company's expansion strategy will be successful, that modifications to the
    Company's strategy will not be required or that the Company will be able to
    manage effectively and enhance the profitability of its Affiliated
    Practices.


    RESULTS OF OPERATIONS
    ---------------------

    FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE
    THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997.

    REVENUES
    --------

    Total revenues for the three months and six months ended June 30, 1998 were
    approximately $1.7 million and $3.4 million, respectively, and consisted of
    approximately $1.7 million and $3.4 million of service fees revenue from
    twelve and fourteen Affiliated Practices, respectively, and approximately
    $4,000 and $22,000 of other consulting fee revenue on a fee for service
    basis from non-Affiliated Practices, respectively. For the three and six
    months ended June 30, 1997, the Company did not have any service fees
    revenue because it had not yet affiliated with any Affiliated Practices.
    During the three and six months ended June 30, 1997, the Company earned
    approximately $21,000 and $45,000, respectively, for consulting services
    provided on a fee for service basis.


<PAGE>




    COST AND EXPENSES
    -----------------

    The Company incurred operating costs and expenses of approximately $1.9
    million and $3.6 million for the three and six months ended June 30, 1998,
    respectively. The Company's costs and expenses consist primarily of salaries
    and benefits, orthodontic supplies, rent, advertising and marketing, general
    and administrative and depreciation and amortization. The Company incurred
    operating costs and expenses of approximately $3.1 million and $3.3 million
    for the three and six months ended June 30, 1997, respectively, which
    represented corporate office expense, the cost of providing certain
    management consulting services and the value ascribed to certain stock
    compensation earned by consultants.

    The Company's costs and expenses include:

         EMPLOYEE COSTS. Includes all salaries, payroll taxes and fringe
         benefits of the dental assistants, office staff and corporate office
         personnel.

         OTHER DIRECT COSTS. Includes dental and office supplies, laboratory
         costs, facilities and equipment for the Affiliated Practices and
         corporate office.

         GENERAL ADMINISTRATIVE. Includes all other operating expenses,
         including advertising, repairs and maintenance, computer support,
         telephone, utilities, taxes and licenses for the Affiliated Practices
         and corporate office, as well as the cost of consultants, professional
         fees and travel related to providing support to the Affiliated
         Practices and corporate office.

         DEPRECIATION AND AMORTIZATION. Includes depreciation of equipment and
         leasehold improvements of the Affiliated Practices and amortization of
         intangible assets related to the Management Services Agreement.

    INTEREST EXPENSE
    ----------------

    Interest expense of approximately $26,000 and $46,000 for the three and six
    months ended June 30, 1998, respectively, reflected the cost of borrowings
    under notes payable to Affiliated Practices issued as part of the purchase
    price for affiliating with those practices. Interest expense of
    approximately $50,000 and $81,000 for the three and six months ended June
    30, 1997, respectively, reflects the cost of borrowing under bridge
    financing outstanding at that time used to finance the cost of operations
    and IPO costs. The bridge financing notes were paid in full with a portion
    of the proceeds of the IPO.

    INTEREST INCOME
    ---------------

    Interest income of approximately $34,000 and $84,000 for the three and six
    months ended June 30, 1998, respectively, reflected interest earned on the
    Company's net proceeds from the IPO and notes from related parties. Interest
    income of approximately $900 and $2,000 for the three and six months ended
    June 30, 1997, respectively, reflected interest earned on the net proceeds
    of the bridge financing notes.



<PAGE>



    NET LOSS
    --------

    As a result of the foregoing factors, the Company generated a net loss of
    approximately $174,000 and $165,000, or $0.04 and $0.03 per share, for three
    and six months ended June 30, 1998, respectively, versus a net loss of
    approximately $3.1 million and $3.3 million, or $1.84 and $1.98 per share,
    for the three and six months ended June 30, 1997, respectively.


    LIQUIDITY AND CAPITAL RESOURCES
    -------------------------------

    FINANCING ACTIVITY
    ------------------

    The Company has financed its capital requirements to date with borrowings
    from bridge and interim notes and the issuance of equity securities.

    The Company has experienced operating losses, negative cash flows, a deficit
    in working capital and an accumulated deficit since its inception. The
    Company's accumulated deficit from inception (August 30, 1996) to October 1,
    1997 (the Company's IPO) was approximately $3.9 million. The Company
    reported a significant loss from operations for the year ended December 31,
    1997 due primarily to the value ascribed to certain stock compensation
    earned by consultants in April 1997 and has reported a loss from operations
    for the six months ended June 30, 1998 of $202,704.

    The Company makes routine cash advances from time to time to its Affiliated
    Practices under its Management Services Agreements to fund any deficits in
    monthly cash flows of the Affiliated Practices. Such advances will generally
    be repaid by the Affiliated Practices to the Company without interest as
    adequate funds are generated by the Affiliated Practices. The balance of
    advances to Affiliated Practices as of June 30, 1998 was $172,563.

    The Company's expansion strategy requires substantial capital resources.
    Capital is needed not only for the affiliation with future Affiliated
    Practices, but also for the effective integration, operation and expansion
    of the existing and future Affiliated Practices. In addition, the Affiliated
    Practices may from time to time require capital for renovation and expansion
    and for the addition of equipment and technology.

    The Company anticipates the use of a combination of cash, notes and shares
    of its Common Stock to fund additional affiliations. The extent to which the
    Company is able or willing to use shares of Common Stock to enter into
    future affiliations or provide future financing will depend on the market
    value of the Common Stock from time to time and, in the case of
    affiliations, the willingness of owners of potential Affiliated Practices to
    accept Common Stock as full or partial payment of consideration for their
    affiliations. Using shares of Common Stock for these purposes may result in
    significant dilution to existing stockholders. During the six months ended
    June 30, 1998, the Company issued 462,159 shares of Common Stock in
    connection with affiliations with Affiliated Practices and 6,250 shares of
    Common Stock to an unaffiliated consultant.

    The Company will use cash flows from operations, net proceeds from its IPO
    and will seek to raise capital through bank borrowings and public or private
    debt or equity issuances. The availability of these capital sources will
    depend on prevailing market conditions, interest rates and financial
    condition of the Company. During the six months ended June 30, 1998, the
    Company spent approximately $1.8 million of cash in connection with
    affiliations with Affiliated Practices.


<PAGE>





    WORKING CAPITAL MANAGEMENT
    --------------------------

    The Company had $2.3 million of working capital at June 30, 1998, consisting
    primarily of cash and cash equivalents of approximately $2.4 million as a
    result of the net proceeds remaining from the IPO.


    The Company expects to affiliate with additional dental specialty practices
    during 1998 that will involve the use of cash, Common Stock and notes
    payable. Management believes that the remaining cash proceeds of the IPO
    combined with its cash flow from operations will be sufficient to fund
    planned capital expenditures and ongoing operations of the Company through
    the end of 1998. The Company is also seeking to establish a revolving bank
    credit facility which, when combined with the Company's cash resources, will
    be used in the Company's planned affiliation program. In the event
    additional financing is not available by the end of 1998, the Company
    intends to use its cash reserves to finance ongoing operations and to
    postpone further affiliations in 1999 until additional funds can be
    obtained. There can be no assurance that the Company will be able to obtain
    additional funds when needed on satisfactory terms or at all. Any limitation
    on the Company's ability to obtain additional financing could have a
    material adverse effect on the Company's business, financial condition and
    results of operations.


<PAGE>



                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

         None

ITEM 2.  Changes in Securities and Use of Proceeds

         (a) Not applicable

         (b) Not applicable

         (c) During the three months ended June 30, 1998, the Company issued an
             aggregate of 6,250 shares of Common Stock to an unaffiliated
             consultant as partial consideration for services rendered. The
             Company relied on Section 4(2) of the Securities Act of 1993, as
             amended (the "Securities Act"), and the rules and regulations
             promulgated thereunder, in issuing these securities without
             registration under the Securities Act.

         (d) The Company's Registration Statement on Form SB-2 (Registration No.
             333-27179), as amended, with respect to the offering of shares of
             the Common Stock and Redeemable Common Stock Purchase Warrants in
             the Company's initial public offering (the "IPO") was declared
             effective on September 30, 1997. The net proceeds to the Company
             from the IPO were $9.5 million. The Company used such net proceeds
             as follows: (i)$1.1 million for the repayment of debt; (ii) $2.1
             million to consummate the affiliations with the seven initial
             Affiliated Practices (the "Initial Affiliated Practices"); (iii)
             $2.3 million to consummate affiliations with additional Affiliated
             Practices; and (iv) $1.6 million for working capital and other
             corporate purposes.


ITEM 3.  Defaults upon Senior Securities

         Not applicable

ITEM 4.  Submission of Matters to a Vote of Security Holders

         The Annual Meeting of Stockholders was held on June 10, 1998. Proxies
         for the Annual Meeting were solicited pursuant to Regulation 14A under
         the Securities Exchange Act of 1934, as amended. There was no
         solicitation of proxies in opposition to management's nominees for
         directors as listed in the proxy statement. All of such nominees were
         elected as directors at the Annual Meeting.

         A total of 3,066,776 shares of Common Stock were represented in person
         or by proxy at the Annual Meeting. The shares of Common Stock
         represented at the Annual Meeting were voted in the following manner on
         the proposals put forth at the Annual Meeting:


<PAGE>



         (1) To elect the following to serve as directors of the Company:

                                          FOR          AGAINST         ABSTAIN
                                          ---          -------         -------

             Robert J. Schulhof         3,065,576         -             1,200
             Dean C. Bellavia           3,065,576         -             1,200
             John J. Clarke, Jr.        3,060,576         -             6,200
             Floyd V. Elliott           3,065,576         -             1,200
             C. Joel Glovsky            3,065,576         -             1,200
             David T. Grove             3,065,576         -             1,200
                                  
         (2) To amend the Company's Incentive Stock Plan to increase from
             450,000 to 700,000, the total number of shares of the Company's
             Common Stock reserved for issuance thereunder:

                 FOR           AGAINST        ABSTAIN       NOT VOTED
                 ---           -------        -------       ---------

              2,208,492         8,300         23,800         826,184

ITEM 5.  Other Information

         Not applicable

ITEM 6.  Exhibits and Reports on Form 8-K

(a)             Exhibit No.
         (Reference to Item 601(b)
             of Regulation S-B)                          Description
         -------------------------                       -----------

                   27                            Financial Data Schedule
                                                 (furnished to the Securities
                                                 and Exchange Commission for
                                                 Electronic Data Gathering,
                                                 Analysis and Retrieval [EDGAR]
                                                 purposes only)

(b)      Reports on Form 8-K
         -------------------

         Not applicable



<PAGE>









                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                            OMEGA ORTHODONTICS, INC.
                                                 (Registrant)


Date: August 14, 1998                       By: /s/ Robert J. Schulhof
                                                ---------------------------
                                                    Robert J. Schulhof
                                                    Chief Executive Officer

Date: August 14, 1998                       By:/s/ Edward M. Mulherin
                                               ----------------------------
                                                   Edward M. Mulherin
                                                   Chief Financial Officer



<PAGE>


                                  EXHIBIT INDEX


Exhibit Number                                   Description
--------------                                   -----------

     27                                          Financial Data Schedule
                                                 (furnished to the Securities
                                                 and Exchange Commission for
                                                 Electronic Data Gathering
                                                 Analysis, and Retrieval {EDGAR}
                                                 purposes only)