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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
--------------------------------------------------------------------------------

                                    FORM 10-K
     (Mark One)

         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended
                  December 31, 2000

                                       OR

         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 For the transition period
                  from________ to _________

                          Commission File No. 000-21501
                           COAST DENTAL SERVICES, INC.
             (Exact name of registrant as specified in its charter)

                      DELAWARE                                   59-3136131
           (State or other jurisdiction of                    (I.R.S. Employer
            incorporation or organization)                   Identification No.)

2502 ROCKY POINT DRIVE NORTH, SUITE 1000, TAMPA, FLORIDA           33607
         (Address of principal executive offices)                (Zip Code)


                                 (813)-288-1999
              (Registrant's telephone number, including area code)

                              Securities registered
                     pursuant to Section 12(b) of the Act:
                                      NONE

                              Securities registered
                     pursuant to section 12(g) of the Act:
                     COMMON STOCK, PAR VALUE $.001 PER SHARE
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]  No [ ].

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

                       DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement to be used in connection
with the Registrant's 2001 Annual Meeting of Stockholders, which will be filed
on or before April 30, 2001, are incorporated by reference in Part III, Items
10-13 of this Form 10-K. Except with respect to information specifically
incorporated by reference in this Form 10-K, the Proxy Statement is not deemed
to be filed as a part hereof.

The aggregate market value of the voting stock held by non-affiliates of the
Registrant on March 2, 2001, was approximately $4 million based upon the closing
price of such shares on such date on the NASDAQ Stock Market's National Market.
As of March 2, 2001, there were 6,286,384 shares of outstanding Common Stock.
<PAGE>   2

                           COAST DENTAL SERVICES, INC.
                         2000 ANNUAL REPORT ON FORM 10-K
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE
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<S>                                                                                                   <C>
PART I

Item 1.     Business........................................................................            3

Item 2.     Properties......................................................................            8

Item 3.     Legal Proceedings...............................................................            8

Item 4.     Submission of Matters to a Vote of Security Holders.............................            8

PART II

Item 5.     Market of Registrant's Common Equity and Related Stockholder Matters............            8

Item 6.     Selected Financial Data.........................................................            9

Item 7.     Management's Discussion and Analysis of Financial Condition and
             Results of Operations..........................................................           10

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk......................           19

Item 8.     Financial Statements and Supplementary Data.....................................           22

Item 9.     Changes in and Disagreements with Accountants on Accounting and
             Financial Disclosure...........................................................           39

PART III

Item 10.    Directors and Officers of the Registrant........................................           39

Item 11.    Executive Compensation..........................................................           39

Item 12.    Security Ownership of Certain Beneficial Owners and Management..................           39

Item 13.    Certain Relationships and Related Transactions..................................           39

PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K.................           39
</TABLE>


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                                  INTRODUCTION

         Unless the context otherwise requires, references in this document to
"Coast Dental" or the "Company" refer to Coast Dental Services, Inc., and its
predecessor; "Dental Centers" refer to dental offices managed or to be managed
by the Company pursuant to a services and support agreement; "Coast Florida,
P.A.", "Coast Dental Services, P.A.", "Coast Dental of Georgia, P.C.", "Coast
Dental Services of Tennessee P.C." and "Adam Diasti, D.D.S. & Associates, P.C."
refer to the Florida, Georgia, Tennessee and Virginia professional associations,
respectively, which employ the dentists and hygienists providing dental services
at the Dental Centers pursuant to a services and support agreement with the
Company; "Coast P.A." refers collectively to the Coast Florida P.A., Coast
Dental Services, P.A., Coast Dental Services of Georgia, P.C., Coast Dental
Services of Tennessee, P.C., Adam Diasti, D.D.S. & Associates, P.C. and any
professional association or corporation, with which the Company has entered, or
may enter, into a services and support agreement ("Services and Support
Agreement"); "internally developed Dental Centers" refers to Dental Centers
which are initially opened, developed and managed by the Company pursuant to a
Services and Support Agreement with the Coast P.A.; "acquired Dental Centers"
refers to Dental Centers resulting from the acquisition of an existing dental
facility by the Company, combined with the acquisition by the Coast P.A. of the
existing dental practice located at that facility; "Coast Dentists" refers to
the licensed dentists employed by the Coast P.A. who provide dental services at
the Dental Centers; and "Coast Dental Network" refers collectively to the Dental
Centers and the Coast Dentists.

                                     PART I

ITEM 1.  BUSINESS

GENERAL

         Coast Dental Services, Inc. (the "Company") was incorporated in August
1992 as Sunshine Health Services, Inc., a Florida corporation, and changed its
name to Coast Dental, Inc. in August 1994. Effective March 31, 1996, Coast
Dental, Inc. was merged into Coast Dental Services, Inc., a Delaware
corporation, for the purpose of reincorporating the Company in the State of
Delaware and changing its corporate name. The Company obtains its revenue from
Coast P.A. for providing management services and support to the general
dentistry practices at the Dental Centers. As of December 31, 2000, the Company
provided management services to 124 Dental Centers located in Florida, Georgia,
Tennessee and Virginia and 114 Coast Dentists were employed by the Coast P.A.,
serving approximately 700,000 patients.

         The Company's goal is to develop a leadership position in the
management of general dentistry practices throughout Florida, Georgia,
Tennessee, Virginia and in the future, additional select states in the
southeastern United States. A uniform operating model (the "Coast Operating
Model") developed by the Company is utilized at the Dental Centers. The key
elements of the Coast Operating Model are: (i) affiliating with general dental
providers that focus on the most common, high volume dental products and
procedures which lend themselves to cost-effective delivery; (ii) centralizing
management and administrative responsibilities, thus allowing the Dentists to
concentrate on delivering high quality dental care; (iii) facilitating the
training of the Dental Center staff, including Dentists and hygienists, in the
most efficient techniques for managing the delivery of high volume, quality
dental services; and (iv) assisting with the implementation of marketing
programs designed to meet the needs of each Dental Center. In the near future,
the Company plans to grow by utilizing excess capacity in existing Dental
Centers. Once this excess capacity is optimized, the Company expects to expand
the Coast Dental Network in new and existing markets through the addition of
internally developed and strategically opportunistic acquired Dental Centers.

RECENT DEVELOPMENTS

  Potential Recapitalization Abandoned

         Recently, an offer was presented to the Board of Directors to consider
a potential recapitalization transaction with a proposed corporate redemption of
substantially all of the shares representing the unaffiliated public float. An
independent committee of the Board ("independent committee") was formed to
consider the offer. The offer was evaluated and given due consideration by the
independent committee. The independent committee hired legal counsel and other
advisors and negotiated terms in connection with the offer which, upon
completion, would have provided a premium to current market value for
these unaffiliated stockholders and would have resulted in the company going
private.

         As of December 31, 2000, the Company had incurred approximately
$127,000 related to this potential transaction. This amount is reflected in the
prepaid expenses and other assets and other accrued expenses classifications on
the Company's balance sheet at December 31, 2000.

         In late March 2001, this potential transaction was abandoned due to
difficulties in obtaining financing necessary to consummate the potential
transaction. The total cost incurred by the Company is expected to be
approximately $800,000, including the amounts recorded on the balance sheet at
December 31, 2000, and will be reflected as an expense of the Company during the
first quarter of 2001.

  Managed Care Update

         During the latter part of 2000, the Coast P.A. began notifying managed
care companies that it would continue to provide service to existing members but
would not accept new members to the managed care roster (known as "panels") in
any of the offices until re-negotiations had occurred. A thorough review of
utilization data revealed that the majority of


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patient visits consisted of managed care patients, yet the fees earned in
connection with this business were below that of discounted fee-for-service
patients. This resulted in in-depth discussions with each of the managed care
companies. In some cases, agreements were reached whereby the panels were
reopened. In other situations, agreements could not be reached and the panels
remain closed as discussions continue. At December 31, 2000, the panels had been
reopened for two of the more significant managed care relationships.

         One managed care company chose to terminate the agreement with the
Coast P.A. effective December 31, 2000, pending a written request from the Coast
P.A. to renew the contract. Upon analysis of the existing business and the
revenue and low margins associated with specific contracts, the Coast P.A. chose
not to seek renewal. The loss of this portion of the business represents
estimated annual gross revenue of approximately $7.5 million and net revenue of
approximately $5.0 million. Management believes that higher margin revenues can,
over time, be developed at the affected Dental Centers by focusing on other
business opportunities within the current patient mix. Focus will be directed
toward attracting fee-for-service, indemnity and PPO patients to the Dental
Centers. Due to the discounting associated with managed care contracts,
especially the terminated contract, management believes that the revenue can be
replaced with a smaller number of patient visits. Management recognizes that the
replacement of these patients will take time and is not assured and the loss of
this contract represents a risk to near-term revenue, profitability and cash
flow of the Company.

  New Dentist Equity Model

         Due to issues apparent in the dental practice management sector
relative to maximizing dentists' long-term productivity and commitment to the
success of such relationships, the Company has begun to structure with the Coast
P.A., a proposed significant change in the overall Dental Center business model.
During the first quarter of 2001 the Coast P.A., with the assistance of the
Company, has developed a Dentist Equity Model (the "Model") whereby a dentist
has the opportunity to acquire a 50% ownership interest in a Dental Center and
participate in the potential profits of that Dental Center, which opportunity
was unavailable to a dentist under the current model. The purpose of this change
in operating model is to provide affiliated dentists the opportunity to satisfy
certain long-term career goals and thereby curtail the significant retention and
motivational concern that the Coast P.A., and the industry in general, is
facing. Dentist retention has been a concern for the Coast P.A., the Company,
and the industry as a whole, in recent years. Hygienist retention, while once a
point of concern as well, has been mitigated by a change in the compensation
structure. Since the date of compensation structure conversion, hygienist
retention and productivity has been at an all-time high for the Coast P.A.

         The Company's goal is to finalize arrangements with the Coast P.A. and
commence the roll-out of the Model beginning in the second quarter of 2001. It
is expected that certain assets of the Company and the Coast P.A., located at
participating Dental Centers, would be sold in return for cash. The effect of
the potential new relationships on the current Services and Support Agreements
are currently under discussion. While the Company is excited about the prospects
of moving forward on the Model, it is important to note that finalization of
this general plan is subject to agreement by the Company, the Coast P.A. and the
selected dentists as well as achieving a financing package for dentists to
consummate each transaction. The number of Dental Centers that could be affected
is unknown at this time. It is uncertain at this time what ultimate effect the
Model would have, if implemented, on asset mix, liquidity or performance of the
Company. The Company expects to incur substantial costs during the first and
second quarters of 2001 for services provided in connection with certain
business opportunities that arose or exist, including the development,
structuring, execution and implementation of this Model. If the roll-out of
the Model is successful, the Company expects to improve its liquidity and cash
position as well as to create an environment where select Dentists with a
meaningful ownership stake will have a more significant personal and financial
interest in the productivity and success of the Dental Center.

  Cost Reduction Program Instituted

         In agreement with the Coast P.A., the Company has taken steps to reduce
costs through reductions in staff, the elimination of duplicative and
unnecessary positions and realignment of compensation structures. These steps
were implemented late in 2000 and early in 2001. The effects of these cost
reductions will begin to take effect in the latter part of the first quarter of
2001. The Company is going to evaluate future performance based on these
reductions and, should the Coast P.A.'s production not falter as a result of
these reductions, the Company should realize from those reduced costs, a
positive impact on financial performance.

  Nasdaq National Market Delisting Threatened

         On March 15, 2001, the Company received notification from NASDAQ that
its stock had failed to meet the minimum market value of public float over the
past 30 days. Under the rules, the Company has until June 13, 2001, to regain
compliance or the Staff of the NASDAQ will provide the Company with written
notification that its securities will be delisted. Absent meeting the criteria
to maintain its listing, the Company has the option to apply for listing of its
securities on the NASDAQ SmallCap Market if it satisfies the requirements for
listing on that market or in the alternative listing its securities on the
NASD's over-the-counter bulletin board. The Company will be evaluating its
options relative to this notification, and will take actions undetermined as of
this time, prior to June 13, 2001.

ACQUISITIONS AND DEVELOPMENTS OF DENTAL CENTERS

         When the Company acquires an existing dental office, the Company
acquires the assets to the extent permitted by law. Typically, the Company
acquires the dental office lease as well as all dental and office equipment. The
Coast P.A. acquires the patient lists and related assets, and typically enters
into employment agreements with the acquired practice's dentists and hygienists
to staff the Dental Center. When the Company internally develops Dental Centers,
the Company


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provides the dental office location and the necessary equipment and support
staff while the Coast P.A. provides dentists and dental hygienists. The patient
lists are the property of the Coast P.A.

         The Company opened 25 internally developed Dental Centers in 1998, 17
in 1999 and none in 2000. These Dental Centers were opened in Florida, Georgia,
and Tennessee. In 1998, the Company and the Coast P.A. added 22 acquired Dental
Centers located in Florida. The purchase price for these acquired Dental centers
was $9.2 million, consisting of $6.9 million in cash and $2.3 million in
promissory notes. During 1998, the Company consolidated two of its acquired
Dental Centers into one Dental Center. During 1999, the Company and the Coast
P.A. added 11 acquired Dental Centers in Virginia. The purchase price of these
acquired Dental Centers was $2.1 million consisting of $1.2 million in cash and
$.9 million in promissory notes and certain assumed liabilities. Additionally in
1999, the Company consolidated one of its acquired Dental Centers into an
existing Dental Center. The Company did not acquire or open any new Dental
Centers during 2000. The Company, did, however, consolidate twelve (12) existing
Dental Centers into six (6) Dental Centers during 2000 to take better advantage
of changing patient and population demographics. The Company also relocated one
(1) Dental Center during 2000. Of the 124 Dental Centers currently managed by
the Company, 61 were internally developed and 63 were acquired by the Company.

SERVICES AND OPERATIONS

         The Company is primarily responsible for the management and
administrative functions of its Dental Centers, but does not provide dental
care. The Company provides financial, accounting, billing, training, marketing
assistance and collection services for the Coast P.A. and employs the Dental
Center's management and administrative personnel. The Coast P.A. maintains full
control over the dental practices of the Coast Dentists, employs the Coast
Dentists and their hygienists and sets standards of care in order to promote the
provision of quality dental care. The Coast P.A. is also responsible for
compliance with state and local regulations of the practice of dentistry and
with license or certification requirements. Each Coast Dentist is responsible
for acquiring and maintaining professional liability insurance.

         The Company has entered into Services and Support Agreements with the
Coast P.A. pursuant to which the Company is the exclusive business manager, to
the extent allowable by law, of the Dental Centers. As Dental Centers are
acquired or internally developed by the Company and the Coast P.A., the Dental
Centers are generally expected to be governed by the existing Services and
Support Agreements, subject to possible future modifications or amendments.

         As compensation for its management services under the current Services
and Support Agreements, the Coast P.A. pays the Company a monthly services and
support fee based upon a percentage of the gross revenue, net of refunds and
discounts, of the Dental Center. Dental Center expenses paid by the Company from
the services and support fee include all operating and non-operating expenses
incurred at the Dental Center except for the salaries and benefits of the Coast
Dentists and dental hygienists. The Company's sole customers are the Coast P.A.,
each of which are owned, controlled and managed by Dr. Adam Diasti, a major
stockholder, director and executive officer of the Company. See Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Item 10 "Directors and Executive Officers of the Registrant."
Modifications, amendments or revisions to the Services and Support Agreements
are approved by the Audit Committee of the Company's Board of Directors, which
consists of all the independent outside directors of the Company. The Company is
dependent on the Coast P.A. and the loss of compensation received from them
pursuant to the Services and Support Agreements would have a material adverse
effect on the Company. See Note 2 to the Financial Statements for further
information.

         The Company plans to continue to use the current form of its Services
and Support Agreements to the extent possible as it enters into new states in
the future or into arrangements with other dental practices. However, the terms
of future agreements may differ according to market conditions and the statutory
or regulatory requirements of the particular state in which the dental practice
is located.

GOVERNMENTAL AND STATE REGULATIONS

         The Company's operations and relationships are subject to a variety of
governmental and regulatory requirements relating to the conduct of its business
and business corporations in general. The Company believes that it exercises
care in an effort to structure its practices and arrangements with dental
practices to comply with relevant federal and state law and believes that such
arrangements and practices comply in all material respects with all applicable
statutes and regulations. The health care industry and dental practices are
highly regulated, and there can be no assurance that the regulatory environment
in which the Company operates will not change significantly and adversely in the
future. In general, regulation of health care providers and companies is
increasing.


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         The laws of many states prohibit corporations that are not owned
entirely by dentists from employing dentists (and in some states, dental
hygienists and dental assistants), having control over clinical decision-making,
or engaging in other activities that are deemed to constitute the practice of
dentistry. Florida Law specifically prohibits non-professional corporations from
employing dentists and dental hygienists, exercising control over patient
records and making decisions relating to clinical matters, office personnel,
hours of practice, pricing, credit, refunds, warranties and advertising. Under
Georgia law, dentists may be employed by corporations only if the entity is
organized as a professional corporation or association whose stockholders or
members are licensed dentists. Georgia dentists must maintain patient records
that document the course of treatment and may not waive co-payment or bill a
third party for more than the usual fee. The Company does not employ dentists or
dental hygienists and does not exercise control over any prohibited areas. While
Dr. Adam Diasti, a sole stockholder of Coast P.A., is also a major stockholder,
director and officer of the Company, he acts independently when making decisions
in these areas on behalf of the Coast P.A. and the Company has no control over
his decisions in these areas.

         Some states, including Florida and Georgia, also prohibit
non-professional corporations from owning, maintaining or operating an office
for the practice of dentistry. These laws have generally been construed to
permit arrangements under which the dentists are not employed by or otherwise
controlled as to clinical matters by the party supplying facilities and
non-professional services. Florida law specifically requires that dentists or
their professional corporations maintain complete care, custody and control of
all equipment and materials used in the practice of dentistry. The Services and
Support Agreements between the Company and the Coast P.A. expressly provide that
the Company shall not exercise control over any matters that would violate the
requirements of the applicable state law.

         Many states also prohibit "fee-splitting" by dentists with any party
except other dentists in the same professional corporation or practice entity.
In most cases, these laws have been construed as applying to the practice of
paying a portion of a fee to another person for referring a patient or otherwise
generating business, and not to prohibit payment of reasonable compensation for
facilities and services (other than the generation of referrals), even if the
payment is based on a percentage of the practice's revenues. The Florida
fee-splitting law prohibits paying or receiving any commission, bonus, kickback
or rebate, or engaging in any split-fee arrangement in any form with a dentist
for patient referrals to dentists or other providers of health care goods and
services. According to Florida court of appeals decision interpreting this law,
it does not prohibit a management fee that is based on a percentage of gross
income of a professional practice if the manager does not refer patients to the
practice. Regulatory boards can come to different conclusions than those reached
by a judicial body in analyzing laws. For example, the Florida Board of Medicine
has recently made a determination in applying the Florida fee-splitting law,
that under certain circumstances, a management fee based upon a percentage of
revenue will be found by them to be illegal. The Florida Board of Medicine,
however, does not have jurisdiction over dentistry.

         Many states, including Florida, prohibit dentists from using
advertising which includes any name other than their own, or from advertising in
any manner that is likely to lead a person to believe that a non-dentist is
engaged in the practice of dentistry. The Services and Support Agreements
provide that all advertising shall conform to these requirements. Florida law
also requires all advertising to identify the Florida dentist who assumes total
responsibility for the advertisement and may not include the name of a person
who is not either actually involved in the practice of dentistry at the
advertised location or an owner of the practice being advertised. Georgia law
requires that advertising must contain the name of at least one dentist
practicing at the location unless the Georgia Board of Dentistry has approved
the use of a trade name.

         These laws have civil and criminal penalties and have been subject to
limited judicial and regulatory interpretation. They are enforced by regulatory
agencies that are vested with broad discretion in interpreting their meaning.
The Company's agreements and activities have not been examined by federal or
state authorities under these laws and regulations. For these reasons, there can
be no assurance that review of the Company's business arrangements or the
operation of the Dental Centers will not result in determinations that adversely
affect the Company's operations or that the long-term Services and Support
Agreements or certain of its provisions will not be held invalid and
unenforceable.

         In addition, these laws and their interpretation vary from state to
state. The laws and regulations of certain states into which the Company may
seek to expand in the future and may require the Company to change the form of
relationships entered into with dentists in a manner that restricts the
Company's operations in those states.

         The Company believes that health care regulations will continue to
change, and as a result, the Company regularly monitors developments in health
care law. The Company expects to modify its agreements and operations from time
to time, if necessary, as the business and regulatory environment change.
However, there can be no assurance that any such changes will not adversely
affect the ability of the Company to operate as it currently does or to remain
profitable in doing so.


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COMPETITION

         The Company is aware of several other companies which are actively
engaged in the consolidation of existing dental practices and providing
management services to dental practices, some of which may have longer operating
histories than the Company. The Company assumes that additional companies with
similar objectives may enter the Company's markets and compete with the Company.
The primary basis of competition between dental practice management companies
include, but are not limited to availability and cost of financing growth,
extent of working capital, liquidity, the extent of the dental care network,
management expertise and experience, sophistication of management information
systems, the elements of its operating system, the relative motivation and
productivity of affiliated dentists, the availability and profitability of
managed care business and practice management, and opportunity for career
enhancement agreements.

         The business of providing dental practice management services is highly
competitive in each of the markets in which the Dental Centers operate. The
primary basis of competition within the dental services industry are price of
services, marketing exposure, convenience of location and traffic flow of
location, hours of operation, reputation, managed care contracts, quality of
care and appearance and usefulness of facility and equipment. Coast Dentists
compete with other dentists who maintain group practices or operate in multiple
offices. Many of those dentists have more established practices in their
markets.

SEASONALITY

         The Company has traditionally experienced its highest volume of patient
visits during the first and last quarters of the year and its lowest volume of
patient visits in the summer. Individual Dental Centers typically experience
increased patient visits during the period from October through March, when the
population of Florida increases for the winter, and decreased patient visits
during the summer months. Seasonality for the period since January 1, 1995, has
been mitigated by the increase in monthly capitation revenue from managed care
contracts to the Coast P.A., which represented 18.8%, 22.5% and 24.9% of total
revenue to the Coast P.A. for the years ended December 31, 1998, 1999, and 2000
respectively. The Company expects that capitation, as a percent of total revenue
will decline in 2001 as a result of the negotiations discussed previously in the
Recent Developments section. In addition, the growth of the Company's operations
has also served to mitigate the effects of seasonality. It is anticipated that
the seasonality will be more evident in the future as new Dental Center growth
is slowed down and negotiations with managed care companies, as previously
discussed, result in the cancellation or modification of certain contracts.

         During 2000, the Company began discussions with each of the managed
care companies with which it does business. As of March 2, 2001, these
discussions have resulted in continued (and improved) relationships with two
companies and the loss of one such contract. In addition, the rates with the
remainder of the managed care companies has remained stable while the addition
of members to the rosters of these companies has been frozen.

SERVICE MARKS

         The Company believes its service marks are important to the Company.
The Company has registered the service marks "Coast Dental" and the Company logo
with the United States Patent and Trademarks Office.

EMPLOYEES

         As of December 31, 2000, the Company had approximately 715 full-time
and part-time employees, of which approximately 57 were employed at the
Company's headquarters and 658 employed at the Dental Centers. None of the
Company's employees are employed under a collective bargaining agreement. The
number of people employed by the Company has declined from the level maintained
in 1999. The reduction was part of a cost reduction plan to maintain the proper
level of costs associated with the level of revenue achieved. The Company
believes that its relationship with its employees is good.


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ITEM 2.           PROPERTIES

         The Company presently leases an average of 2,100 square feet of office
space for each of the Dental Centers. The typical lease for office space is for
a term of approximately five years and generally provides for renewal options
for additional years. The Company estimates that the renewal options will be
exercised and the average lease term will be ten years. The average rental
payments for a leased Dental Center are approximately $3,100 per month. The
Company plans to continue to lease rather than purchase space for the Dental
Centers to preserve the Company's available capital.

         The Company leases 10,000 square feet of office space in Tampa, Florida
for its corporate headquarters. This lease is for a term of five years and
expires January 31, 2003.

         The Company anticipates no future problems in renewing or obtaining
suitable leases for its principal properties. The Company believes that its
principal leased properties are adequate for the purposes for which they are
used and are suitably maintained for such purposes. The Company will enter into
new leases when it determines to open new Dental Centers.

<TABLE>
<CAPTION>
CURRENT LOCATIONS                                       NUMBER OF LOCATIONS
-----------------                                       -------------------
<S>                                                     <C>
Southwest Florida ................................               14
West Central Florida .............................               24
Central Florida ..................................               22
Northeast Florida ................................               10
Northwest Florida ................................               12
Atlanta, Georgia .................................               23
Nashville, Tennessee .............................                8
Virginia .........................................               11
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

         There are no material pending legal proceedings other than routine
litigation arising in the ordinary course of business. The Company does not
believe that the results of such litigation, even if the outcome were
unfavorable to the Company, would have a material adverse effect on its
financial position.

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

         None.
                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         The Common Stock of the Company is quoted on the National Association
of Securities Dealers Automated Quotation System ("Nasdaq"). The Common Stock of
the Company has been trading publicly under the symbol CDEN on the Nasdaq since
the Company's initial public offering on February 11, 1997. The following table
sets forth the high and low closing sale price of the Company's Common Stock as
reported by Nasdaq for the periods indicated:

<TABLE>
<CAPTION>
YEAR                                                         HIGH       LOW
----                                                        ------     ------
<S>      <C>                                                <C>        <C>
1999     First Quarter                                      $10.25     $6.031
         Second Quarter                                      7.375      4.500
         Third Quarter                                       5.375      3.063
         Fourth Quarter                                      4.063      2.313

2000     First Quarter                                       2.875      2.063
         Second Quarter                                      2.313      1.719
         Third Quarter                                       1.969      1.438
         Fourth Quarter                                      1.938      1.125
</TABLE>


                                       8
<PAGE>   9

         The bid prices reported for these periods reflect inter-dealer prices,
without retail markup, markdown or commissions, and may not represent actual
transactions.

         The closing bid price per share as of March 2, 2001 was $1.16 and there
were approximately 59 stockholders of record as of that date. The number of
record holders was determined from the records of the Company's transfer agent
and does not include beneficial owners of Common Stock whose shares are held in
the names of various securities brokers, dealers and registered clearing
agencies.

         Except for an S Corporation distribution during 1996, the Company has
never paid cash dividends on its Common Stock. The Company presently intends to
retain all future earnings for the operation and expansion of its business and,
accordingly, the Company does not anticipate that any dividends will be declared
or paid on the Common Stock for the foreseeable future. In addition, the
Company's existing bank credit facility restricts the Company's ability to
declare or pay cash dividends on its common stock. Any future determination to
pay cash dividends will be at the discretion of the Board of Directors and will
be dependent upon the Company's financial condition, results of operations,
capital requirements and such other factors as the Board of Directors deem
relevant.

ITEM 6.  SELECTED FINANCIAL DATA

         The following selected financial data with respect to the Company's
statements of income (loss) for the years ended December 31, 1996, 1997, 1998,
1999 and 2000 and the balance sheet data as of December 31, 1996, 1997, 1998,
1999 and 2000 are derived from the Financial Statements of the Company which
have been audited by Deloitte & Touche, LLP, independent accountants. The
following data should be read in conjunction with the Financial Statements of
the Company and the related notes thereto and Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
                                                                                              DECEMBER 31,
                                                                       -----------------------------------------------------------
                                                                        1996         1997         1998          1999          2000
                                                                       ------      -------      -------       -------      -------
                                                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                                    <C>         <C>          <C>           <C>          <C>
STATEMENT OF INCOME DATA FOR THE YEAR:
Net revenue .....................................................      $8,128      $20,035      $34,540       $44,598      $45,826
Income (loss) before cumulative effect of a change
     in accounting principle ....................................       1,403        3,409        4,171           656       (1,264)
Cumulative effect of a change in accounting principle ...........          --           --          634            --           --
Net income (loss) ...............................................       1,403        3,409        3,537           656       (1,264)
Pro forma net income (loss)(1) ..................................         856        3,267        3,537           656       (1,264)
Basic earnings (loss) per common share:
Income (loss) before cumulative effect of a change in
     accounting principle(2) ....................................          --      $   .57      $   .55       $   .10      $  (.20)
Cumulative effect of a change in accounting principle(2) ........          --           --      $  (.08)           --           --
Net income (loss)(2) ............................................          --      $   .57      $   .47       $   .10      $  (.20)
Pro forma net income (loss)(1)(2) ...............................          --      $   .55      $   .47       $   .10      $  (.20)
Diluted earnings (loss) per common share:
Income (loss) before cumulative effect of a change in
     accounting principle(2) ....................................          --      $   .56      $   .54       $   .10      $  (.20)
Cumulative effect of a change in accounting principle(2) ........          --           --      $  (.08)           --           --
Net income(loss)(2) .............................................          --      $   .56      $   .46       $   .10      $  (.20)
Pro forma net income (loss)(1)(2) ...............................          --      $   .54      $   .46       $   .10      $  (.20)
Weighted average shares outstanding:
Basic(2) ........................................................          --        5,935        7,615         6,906        6,293
Diluted(2) ......................................................          --        6,051        7,718         6,906        6,293
BALANCE SHEET DATA AT YEAR END:
Total assets ....................................................      $7,969      $64,836      $71,502       $64,657      $64,204
Long-term debt including current maturities .....................      $4,649      $ 1,495      $ 2,920       $ 1,853      $ 2,214
</TABLE>

(1)      Pro forma adjusted to reflect a 39% income tax rate as if the Company
         were taxed for the entire year as a C Corporation for 1996 and 1997.
(2)      The Company's initial public offering of stock was on February 11,
         1997, accordingly, earnings per share and average share data are only
         provided for the years ended December 31, 1997, 1998, 1999 and 2000.


                                       9
<PAGE>   10

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

A.  OVERVIEW

         The Company opened its first Dental Center in May 1992 and since then,
has added 60 internally developed and 63 acquired Dental Centers net of
consolidations. The Company derives its revenue through fees earned from the
Coast P.A. for providing management services and support at the Dental Centers,
located in Florida, Georgia, Tennessee and Virginia. As of December 31, 2000,
114 Coast Dentists were employed by the Coast P.A., serving approximately
700,000 patients. In the near future, the Company plans to grow by utilizing
existing excess capacity. Once the excess capacity is optimized, the Company
expects to expand the Coast Dental Network in new and existing markets through
the addition of internally developed and strategically opportunistic acquired
Dental Centers.

         Pursuant to the Services and Support Agreements with the Coast P.A.,
the Company provides management services and support to facilitate the
development and growth of Dental Centers. Operating expenses at the Dental
Centers, with the exception of compensation paid to the Coast Dentists and
dental hygienists, are expenses of the Company and are recognized as incurred.
The services and support fees paid to the Company by the Coast P.A. have
historically ranged from 65% to 76% of the Dental Centers' gross revenue, net of
refunds and discounts. The Company is dependent upon the future success of the
Coast P.A. and the ability of the Coast P.A. to grow with the Company. The
services and support fees between the parties may be revised from time to time
based upon negotiations between the Audit Committee and the Coast P.A. The
Company pays, out of the services and support fee, all of the operating and
non-operating expenses incurred by the Coast P.A. at the Dental Centers, except
for the salaries and benefits of the Coast Dentists and dental hygienists. For
the period June 1, 1997, through January 31, 1999, the Company paid the Coast
P.A. the sum of $50,000 in connection with each internally developed Dental
Center it committed to open, in consideration for the Coast P.A.'s agreement to
expand the Services and Support Agreements to include the new internally
developed Dental Centers. Effective February 1, 1999, the Services and Support
Agreements were modified to discontinue the payment of this fee, and the
services and support fees were adjusted to 73% of the Dental Centers' gross
revenue. The Audit Committee approved a further adjustment to the services and
support fees beginning in January 1, 2000, to 67%. The service and support fees
are expected to average between 66% and 72% over the next several years. See
Note 2 to the Financial Statements for further information.

RECENT DEVELOPMENTS

  Potential Recapitalization Abandoned

         Recently, an offer was presented to the Board of Directors to consider
a potential recapitalization transaction, with a proposed corporate redemption
of substantially all of the shares representing the unaffiliated public float.
An independent committee of the Board ("independent committee") was formed to
consider the offer. The offer was evaluated and given due consideration by the
independent committee. The independent committee hired legal counsel and other
advisors and negotiated terms in connection with the offer which, upon
completion, would have provided a premium to current market value for
these unaffiliated stockholders and it would have resulted in the Company going
private.

         As of December 31, 2000, the Company had incurred approximately
$127,000 related to this potential transaction. This amount is reflected in the
prepaid expenses and other assets and other accrued expenses classifications on
the Company's balance sheet at December 31, 2000.

         In late March 2001, this potential transaction was abandoned due to
difficulties in obtaining financing necessary to consummate the potential
transaction. The total cost incurred by the Company is expected to be
approximately $800,000, including the amounts recorded on the balance sheet at
December 31, 2000, and will be reflected as an expense of the Company during the
first quarter of 2001.

  Managed Care Update

         During the latter part of 2000, the Coast P.A. began notifying managed
care companies that it would continue to provide service to existing members but
would not accept new members to the managed care roster (known as "panels") in
any of the offices until re-negotiations had occurred. A thorough review of
utilization data revealed that the majority of patient visits consisted of
managed care patients, yet the fees earned in connection with this business were
below that of discounted fee-for-service patients. This resulted in in-depth
discussions with each of the managed care companies. In some cases, agreements
were reached whereby the panels were reopened. In other situations, agreements
could not be reached and the panels remain closed as discussions continue. At
December 31, 2000, the panels had been reopened for two of the more significant
managed care relationships.

         One managed care company chose to terminate the agreement with the
Coast P.A. effective December 31, 2000, pending a written request from the Coast
P.A. to renew the contract. Upon analysis of the existing business and the
revenue and low margins associated with specific contracts, the Coast P.A. chose
not to seek renewal. The loss of this portion of the business represents
estimated annual gross revenue of approximately $7.5 million and net revenue of
approximately $5.0 million. Management believes that higher margin revenues can,
over time, be developed at the affected Dental Centers by focusing on other
business opportunities within the current patient mix. Focus will be directed
toward attracting fee-for-service, indemnity and PPO patients to the Dental
Centers. Due to the discounting associated with managed care contracts,
especially the terminated contract, management believes that the revenue can be
replaced with a smaller number of patient visits. Management recognizes that the
replacement of these patients will take time and is not assured and the loss of
this contract represents a risk to near-term revenue, profitability and cash
flow of the Company.


                                       10
<PAGE>   11

  New Dentist Equity Model

         Due to issues apparent in the dental practice management sector
relative to maximizing dentists' long-term productivity and commitment to the
success of such relationships, the Company has begun to structure with the Coast
P.A., a proposed significant change in the overall Dental Center business model.
During the first quarter of 2001, the Coast P.A., with the assistance of the
Company, has developed a Dentist Equity Model (the "Model") whereby a dentist
has the opportunity to acquire a 50% ownership interest in a Dental Center and
participate in the potential profits of that Dental Center, which opportunity
was unavailable to a dentist under the current model. The purpose of this change
in operating model is to provide affiliated dentists the opportunity to satisfy
certain long-term career goals and thereby curtail the significant retention and
motivational concern that the Coast P.A., and the industry in general, is
facing. Dentist retention has been a concern for the Coast P.A., the Company,
and the industry as a whole, in recent years. Hygienist retention, while once a
point of concern as well, has been mitigated by a change in the compensation
structure. Since the date of compensation structure conversion, hygienist
retention and productivity has been at an all-time high for the Coast P.A.

         The Company's goal is to finalize arrangements with the Coast P.A. and
commence the roll-out of the Model beginning in the second quarter of 2001. It
is expected that certain assets of the Company and the Coast P.A., located at
participating Dental Centers, would be sold in return for cash. The effect of
the potential new relationships on the current Services and Support Agreements
are currently under discussion. While the Company is excited about the prospects
of moving forward on the Model, it is important to note that finalization of
this general plan is subject to agreement by the Company, the Coast P.A. and the
selected dentists as well as achieving a financing package for dentists to
consummate each transaction. The number of Dental Centers that could be affected
is unknown at this time. It is uncertain at this time what ultimate effect the
Model would have, if implemented, on asset mix, liquidity or performance of the
Company. The Company expects to incur substantial costs during the first and
second quarters of 2001 for services provided in connection with certain
business opportunities that arose or exist, including the development,
structuring, execution and implementation of this Model. If the roll-out of the
Model is successful, the Company expects to improve its liquidity and cash
position as well as to create an environment where select Dentists with a
meaningful ownership stake will have a more significant personal and financial
interest in the productivity and success of the Dental Center.

  Cost Reduction Program Instituted

         In agreement with the Coast P.A., the Company has taken steps to reduce
costs through reductions in staff, the elimination of duplicative and
unnecessary positions and realignment of compensation structures. These steps
were implemented late in 2000 and early in 2001. The effects of these cost
reductions will begin to take effect in the latter part of the first quarter of
2001. The Company is going to evaluate future performance based on these
reductions and, should the Coast P.A.'s production not falter as a result of
these reductions, the Company should realize, from those reduced costs, a
positive impact on financial performance.

  Nasdaq National Market Delisting Threatened

         On March 15, 2001, the Company received notification from NASDAQ that
its stock had failed to meet the minimum market value of public float over the
past 30 days. Under the rules, the Company has until June 13, 2001, to regain
compliance or the Staff of the NASDAQ will provide the Company with written
notification that its securities will be delisted. Absent meeting the criteria
to maintain its listing, the Company has the option to apply for listing of its
securities on the NASDAQ SmallCap Market if it satisfies the requirements for
listing on that market or in the alternative listing its securities on the
NASD's over-the-counter bulletin board. The Company will be evaluating its
options relative to this notification, and will take actions undetermined as of
this time, prior to June 13, 2001.

GROWTH INFORMATION

         The Company took a very significant step beginning in 1998, shifting
from an acquisition model to a development model. At that time, management
determined that it would go in a different direction, and a plan of opening
internally developed Dental Centers from scratch was adopted. The Company has
since placed less emphasis on acquiring Dental Centers. While the ramp-up of
these brand new Dental Centers has been slower than anticipated, which has
negatively impacted its financial performance, management is committed to this
strategy and continues to believe it is the best long range strategy. Overall,
the Company's acquired Dental Centers have averaged annualized gross revenue of
$550,000 per Dental Center compared to $850,000 for the Company's mature
internally developed Dental Centers (opened for more than sixty months). Only
eleven (11) Dental Centers meet the characteristics of a mature Dental Center.
Additionally, internally developed Dental Centers open between two (2) and three
(3) years average $500,000 per year in gross revenue; internally developed
Dental Centers open between one (1) and two (2) years average $370,000 per year
in gross revenue and internally developed Dental Centers open less than one (1)
year average $113,000 per year in average gross revenue. The average annualized
gross revenue for Dental Centers open three (3) years or less is $270,000 per
year. Currently, the Company manages 61 internally developed Dental Centers less
than 36 months old which exemplifies the internal growth opportunity associated
with the de novo model with minimal additional capital investment. The Company
believes that as a result of its cost effective growth, principally through the
development model, cash position, and relatively debt free balance sheet, it is
in the financial position to maintain a reduced level of external growth in
2001, and to achieve long term growth in a more cost effective and productive
manner.


                                       11
<PAGE>   12

         The Company opened 25 internally developed Dental Centers in 1998 and
17 in 1999 in Florida, Georgia and Tennessee. The Company did not open any
internally developed Dental Centers in 2000. The average cost to the Company of
an internally developed Dental Center has been approximately $225,000, which
includes the cost of equipment, leasehold improvements, working capital and in
years prior to 1999, an agreed upon $50,000 payment (per Dental Center, see Note
2 to the Financial Statements) to the Coast P.A. to open the additional Dental
Centers thus expanding the Services and Support Agreements to include the new
internally developed Dental Centers. The Company anticipates opening a minimal
number of new Dental Centers during 2001.

         During 1998, the Company and the Coast P.A. added 22 acquired Dental
Centers located in Florida and Tennessee. The purchase price for these acquired
Dental Centers was $9.2 million, consisting primarily of $6.9 million in cash
and $2.3 million in promissory notes. During 1998, the Company consolidated two
of its acquired Dental Centers into one Dental Center.

         During 1999, the Company and Coast P.A. added 11 acquired Dental
Centers located in Virginia. The purchase price for these acquired Dental
Centers was $2.1 million, consisting primarily of $1.2 million in cash and $.9
million in promissory notes and certain assumed liabilities. During 1999, the
Company consolidated one of its acquired Dental Centers into existing Dental
Centers.

         The Company and Coast P.A. added no additional acquired Dental Centers
during 2000.

         The Coast P.A. derives the majority of its revenue from a combination
of sources, including fees paid by private patients, indemnity insurance
reimbursements and capitation payments from managed care companies.

         The following table outlines the historical payor mix for the Coast
P.A.'s revenue for the periods presented, which is not necessarily indicative
of the Company's expected future performance (see Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Recent
Developments):

<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                                                    ----------------------------
                                                    1998        1999        2000
                                                    ----        ----        ----
<S>                                                 <C>         <C>         <C>
Self-pay ...................................         31%         33%         25%
HMOs .......................................         50          55          57
Private insurers ...........................         18          12          18
Medicaid ...................................          0           1           0
                                                    ---         ---         ---
     Total .................................        100%        100%        100%
                                                    ===         ===         ===
</TABLE>


                                       12
<PAGE>   13

B.  RESULTS OF OPERATIONS

         The following table sets forth, as a percentage of net revenue
(consisting of management fees derived pursuant to the Services and Support
Agreements), certain items in the Company's statements of operations for the
years indicated. The performance of the Company during these years are not
indicative of future financial results or conditions (See Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Recent Developments).

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                             -----------------------------
                                                              1998        1999        2000
                                                             -----       -----       -----
<S>                                                            <C>         <C>         <C>
Net revenue ...........................................      100.0%      100.0%      100.0%
Dental Center expenses:
     Staff salaries ...................................       32.7        37.6        42.0
     Dental supplies and lab fees .....................       14.2        15.6        18.4
     Advertising ......................................        5.9         6.6         4.0
     Rent .............................................       12.1        15.2        15.8
     Depreciation .....................................        3.6         5.5         6.8
     Other ............................................        2.9         2.9         3.4
                                                             -----       -----       -----
       Total Dental Center expenses ...................       71.4        83.5        90.4
                                                             -----       -----       -----
       Gross profit ...................................       28.6        16.5         9.6
General and administrative ............................        8.8        12.6        11.9
Development costs .....................................        5.3          --          --
Depreciation and amortization .........................        2.0         2.9         2.8
                                                             -----       -----       -----
     Operating profit .................................       12.5         1.0        (5.1)
Interest income, net ..................................        4.8         1.3         0.7
                                                             -----       -----       -----
Income before income tax expense (benefit) ............       17.3         2.3        (4.4)
Income tax expense (benefit) ..........................       2.52         0.9        (1.8)
                                                             -----       -----       -----
Income before cumulative effect of a change in
     accounting principle .............................       12.1         1.4        (2.6)
Cumulative effect of a change in accounting
     principle ........................................        1.9          --          --
                                                             -----       -----       -----
Net income ............................................       10.2%        1.4%       (2.6)%
                                                             =====       =====       =====
</TABLE>


                                       13
<PAGE>   14

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

         Net Revenue. Net revenue increased 2.8% from $44.6 million for the year
ended December 31, 1999, to $45.8 million for the year ended December 31, 2000.
Gross revenue increased 12.0% to approximately $68.4 million in 2000. The
increase in revenue is attributable to management's focus on the improvement in
productivity and the number of patient visits. Patient visits increased by 12.0%
from 602,736 in 1999 to 674,920 in 2000. The difference in the percentages of
increase for Net Revenue and Gross Revenue is due to the change in the
management fee effective January 1, 2000. The Company and the Coast P.A.
recognize that there is a downward pressure on the average patient transaction.
This downward pressure has been created over time by an increased concentration
of managed care patients and the drive by the Coast P.A. to provide service to a
greater number of patients. To counteract this pressure, the Coast P.A. has
begun to hold and continues to hold, discussions with managed care companies.
The purpose of these discussions is to increase the revenue derived from managed
care patients and to find the proper balance between these and other types of
patients.

         Staff Salaries. Staff salaries increased 14.9% from $16.8 million for
the year ended December 31, 1999, to $19.3 million for the year ended December
31, 2000. This increase in staff salaries was caused, in part, by annual
increases and in part by an increase in Dental Center regional management and
Dental Center staffing. During 1999, the Company introduced a new level of
management. The Regional Vice President of Operations position was created
midway through the year. As of December 31, 1999, three such positions had been
filled. One for half the year and the remaining two for the fourth quarter. As
of December 31, 1999, one such position was vacant. Early in 2000, the fourth
position was filled and all four positions remained filled throughout 2000.
While no new Dental Centers were added during 2000, the Company continued to
staff existing Dental Centers in anticipation of increased patient visits. This
additional staffing also contributed to the increased level of Dental Center
salaries. However, in the last quarter of 2000 and early 2001, the Company
reduced Dental Center staffing, which is expected to have a positive effect on
the overall costs related to staffing in 2001.

         Dental Supplies and Lab Fees. Dental supplies and lab fees increased
21.1%, from $7.0 million for the year ended December 31, 1999, to $8.4 million
for the year ended December 31, 2000. This increase was caused by the increase
in patient visits and dental services provided at the 124 Dental Centers. This
increase is due, in part, to the introduction of new affiliated Dentists to the
Coast Operating Model, as well as the addition of several new products to the
formulary. The Company continuously strives to research and analyze new products
as a means of providing the highest quality products and services to patients.
Often times, these products carry a higher cost initially, however they
generally tend to be more efficient and effective for the affiliated dentists
and patients, respectively.

         Advertising. Advertising expense decreased 38.2% from $3.0 million for
the year ended December 31, 1999, to $1.8 million for the year ended December
31, 2000. This decrease is due to the Company's decision, effective January 1,
2000, to curtail the use of television advertising as a means of attracting
customers. The Company entered into the television advertising arena on a test
basis during the third quarter of 1998 and on a company-wide basis during the
fourth quarter of 1998. The television campaign remained in effect during all of
1999.

         Rent. Rent expense increased 6.9% from $6.8 million for the year ended
December 31, 1999, to $7.2 million for the year ended December 31, 2000. This
increase was caused primarily by the full year impact of the 11 acquired and 17
internally developed Dental Centers added in 1999. Minor amounts of increased
rent have been incurred for relocated Dental Centers and Dental Centers where
lease options have been accepted and additional space added to allow for
expansion. The latter situation has only been executed for Dental Centers where
the location is suitable to the business, growth is strongly anticipated, but
the existing capacity is not adequate. Generally, these expansion situations
relate to other, smaller Dental Centers.

         Depreciation. Depreciation expense at the Dental Centers increased
27.2% from $2.5 million for the year ended December 31, 1999, to $3.1 million
for the year ended December 31, 2000. The increase was primarily associated with
the full year depreciation impact from the 11 acquired and 17 internally
developed Dental Centers added during 1999. In addition, a portion of the
increase relates to additional equipment added to Dental Centers during 2000 to
allow them to meet patient volume demands and additional equipment and leasehold
improvements associated with relocation, expansions, and remodels during 2000.
Generally, Dental Center consolidations require little or no additional capital
expenditures when the remaining location is suitable to properly handle the
increased patient volume.

         Other Expenses. Other expenses increased 22.3% from $1.3 million for
the year ended December 31, 1999, to $1.6 million for the year ended December
31, 2000. This increase was caused primarily by increases in insurance costs,
credit card discounts and other costs associated with the growth of the
business.


                                       14
<PAGE>   15

         General and Administrative Expenses. General and administrative
expenses decreased 3.3% from $5.6 million for the year ended December 31, 1999,
to $5.4 million for the year ended December 31, 2000. This decrease was due to
the increased focus on corporate costs including administrative salaries,
professional fees, rent and insurance costs. In addition, certain staff
reductions were made during December 2000. The impact of these reductions is not
expected until 2001. During 1999, the Company recognized certain one-time
charges related to the resignation of certain officers which was included in
general and administrative expenses. There was no such recognition in 2000. This
also contributed to the decline from the year ended December 31, 1999.

         Depreciation and Amortization. Depreciation and amortization expenses
decreased 0.9% from December 31, 1999. The cost approximated $1.3 million for
both the year ended December 31, 1999, and December 31, 2000.

         Interest Income, Net. Interest income, net, decreased 48.2% from $0.6
million for the year ended December 31, 1999, to $0.3 million for the year ended
December 31, 2000. This decrease was caused primarily by a decrease of the
Company's invested cash balances. This decline was partially offset by a
reduction of interest paid due to the repayment of notes payable issued as part
of the consideration for certain acquisitions.

         Income Taxes. Income taxes decreased 307.5% from the year ended
December 31, 1999. For the year ended December 31, 1999, the Company incurred
income tax expense of approximately $0.4 million compared to an income tax
benefit of approximately $0.8 million for the year ended December 31, 2000. This
decrease was primarily attributable to the reduced level of earnings by the
Company during 2000 as compared to 1999. The effective tax rate increased from
37.4% for the year ended December 31, 1999, to 39.1% for the year ended December
31, 2000.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

         Net Revenue. Net revenue increased 29.1%, from $34.5 million for the
year ended December 31, 1998, to $44.6 million for the year ended December 31,
1999. This increase was primarily due to the increase in net revenue
attributable to the 54 comparable Dental Centers (Dental Centers that were open
throughout the periods being compared), the 22 acquired Dental Centers in 1998,
the 25 internally developed Dental Centers in 1998, the 11 acquired Dental
Centers in 1999 (including the one consolidated acquired Dental Center) and the
17 internally developed Dental Centers in 1999. Increases in net revenue are
primarily driven by increases in patient visits. Patient visits increased 35.2%,
from 445,945 for the year ended December 31, 1998, to 602,736 for the year ended
December 31, 1999.

         Staff Salaries. Staff salaries increased 48.3% from $11.3 million for
the year ended December 31, 1998, to $16.8 million for the year ended December
31, 1999. This increase in staff salaries was primarily caused by an increase in
Dental Center regional management and Dental Center staffing due to the addition
of the 11 acquired and 17 internally developed Dental Centers. In addition, the
second year impact of the 22 acquired and 25 internally developed Dental Centers
opened in 1998 also contributed to the increase. While an internally developed
Dental Center can operate with a relatively limited dental staff in the early
stages of its development, the services of a dentist, dental hygienist, dental
assistants and front desk manager are still necessary. As a result, staff
salaries as a percentage of net revenue will typically be higher in the first
six months of operation until patient visits increase. In addition, for acquired
Dental Centers, staff salaries as a percentage of net revenue will typically be
higher in the first three to six months following an acquisition as the Company
implements the Coast Operating Model to increase productivity and efficiency.
Staff salaries include the compensation paid to regional management and
administrative staff at each Dental Center, including dental assistants, office
managers, sterilization technicians and front desk managers.

         Dental Supplies and Lab Fees. Dental supplies and lab fees increased
41.9%, from $4.9 million for the year ended December 31, 1998, to $7.0 million
for the year ended December 31, 1999. This increase was caused by the increase
in patient visits and dental services provided at the 130 Dental Centers. Dental
supplies and lab fees as a percent of net revenue will typically be higher in
the first three to six months following an acquisition as the Company implements
the Coast Operating Model to increase productivity and efficiency.

         Advertising. Advertising expense increased 43.9% from $2.1 million for
the year ended December 31, 1998, to $3.0 million for the year ended December
31, 1999. This increase was caused primarily by implementation of a more
aggressive advertising program, including television, in markets where
internally developed Dental Centers were open. The Company entered into the
television advertising arena on a test basis during the third quarter of 1998
and on a company-wide basis during the fourth quarter of 1998. The television
campaign remained in effect during all of 1999.


                                       15
<PAGE>   16

         Rent. Rent expense increased 62.1% from $4.2 million for the year ended
December 31, 1998, to $6.8 million for the year ended December 31, 1999. This
increase was caused primarily by the addition of the 11 acquired and 17
internally developed Dental Centers in 1999, as well as the full year impact of
the 22 acquired and 25 internally developed Dental Centers in 1998.

         Depreciation. Depreciation expense at the Dental Centers increased
96.1% from $1.3 million for the year ended December 31, 1998, to $2.5 million
for the year ended December 31, 1999. The increase was primarily associated with
the increase in fixed assets from the 11 acquired and 17 internally developed
Dental Centers and the increased depreciation in year two of the 22 acquired and
25 internally developed Dental centers added during 1998.

         Other Expenses. Other expenses increased 35.5% from $1.0 million for
the year ended December 31, 1998, to $1.3 million for the year ended December
31, 1999. This increase was caused primarily by increases in insurance costs,
credit card discounts and other costs associated with the growth of the
business.

         General and Administrative Expenses. General and administrative
expenses increased 84.0% from $3.1 million for the year ended December 31, 1998,
to $5.6 million for the year ended December 31, 1999. This increase was caused
primarily by the increase in corporate administrative salaries, professional
fees, rent and insurance costs due to the growth of the Company. In addition,
the Company incurred certain one time charges related to the resignation of
certain officers of the Company, a change in the vacation policy for all
employees and the write-off of costs associated with certain contemplated
transactions which will not be consummated. General and administrative expenses
primarily consist of expenses incurred at the corporate office.

         Development Costs. Development costs decreased $1.8 million for the
year ended December 31, 1999, in comparison to the prior year. This decrease was
caused by the recognition of all such costs in 1998, as per the Company's early
adoption of AICPA Statement of Position No. 98-5, Reporting on the Costs of
Start-Up Activities ("SOP 98-5") effective January 1, 1998. SOP 98-5 requires
all costs associated with the development of internally developed Dental Centers
be expensed as incurred. See Notes 2 and 12 to the Financial Statements for
further information.

         Depreciation and Amortization. Depreciation and amortization expenses
increased 90.2% from $.7 million for the year ended December 31, 1998, to $1.3
million for the year ended December 31, 1999. This increase was caused primarily
by the expansion of the corporate headquarters infrastructure and the
amortization of Service and Support Agreements and other acquired intangible
assets.

         Interest Income, Net. Interest income, net, decreased 63.6% from $1.6
million for the year ended December 31, 1998, to $.6 million for the year ended
December 31, 1999. This decrease was caused primarily by a decrease of the
Company's invested cash balances. This decline was partially offset by a
reduction of interest paid due to the repayment of notes payable issued as part
of the consideration for certain acquisitions.

         Income Taxes. Income taxes decreased 78.1% from $1.8 million for the
year ended December 31, 1998, to $.4 million for the year ended December 31,
1999. This decrease was primarily attributable to the reduced level of earnings
by the Company during 1999 as compared to 1998. The effective tax rate increased
from 28.7% for the year ended December 31, 1998 to 37.4% for the year ended
December 31, 1999. The increase was primarily caused by the full year tax impact
of certain permanent differences arriving from an acquisition during the latter
part of 1998.

         Cumulative Effect of a Change in Accounting Principle. Development
costs paid to Coast P.A., beginning in June 1997 related to the expansion of
dental offices into new and existing markets. These costs had been accounted for
as deferred development costs. In 1998, the Company adopted SOP 98-5, changed
its accounting to charge such costs to expense as incurred, and recorded the
cumulative effect on retained earnings as of January 1, 1998, of approximately
$1.0 million ($.6 million net of tax). No such cumulative effect was required in
1999.


                                       16
<PAGE>   17

C.  LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2000, the Company had cash and cash equivalents of $2.5
million. The Company also had approximately $5.4 million in available-for-sale
investments which are invested in tax-free instruments with interest rates
ranging between 4.0% to 5.0%. Since the investments have ratings ranging from A1
to AAA, the Company believes that these investments have a low market risk and
can easily be converted to cash, if needed. Cash provided by operating
activities for the year ended December 31, 2000, totaled $3.2 million.

         The Company has a revolving credit facility with Bank of America, N.A.
d/b/a Nations Bank, N.A. f/k/a Barnett Bank of Florida, which provides an
aggregate of $20.0 million for general working capital needs and expansion of
Dental Centers. The Credit Facility is a revolver, maturing November 4, 2002,
with interest at LIBOR plus a margin percentage ranging from 1.25% to 1.75%. The
margin percentage, as well as certain performance covenants, are based upon
funded debt to EBITDA ratios. As of December 31, 2000, the Company had drawn
$1.0 million. At December 31, 2000, the Company was in compliance with all
covenants associated with this facility. However, the funds available under the
facility have significantly been reduced as a result of the Company's reduced
cash position and recent performance. At December 31, 2000, the Company
estimates that it could draw an additional $3.4 million on this facility and
remain in compliance with required financial and performance covenants. The
Company expects to reduce the amount of its facility in the near future to save
on costs associated with maintaining the same.

         Available-for-sale securities are stated at fair value with unrealized
gains and losses included in comprehensive income. The amortized cost of debt
securities is adjusted for amortization of premiums and accretion of discounts
to maturity. Such amortization is included in interest income. Realized gains
and losses, if any, would be included in the Statement of Income. The cost of
securities sold is based on the specific identification method. As of December
31, 2000, the investments are recorded at the fair market value with an
unrealized loss of $132,779. At December 31, 2000, the Company's position in
debt related securities had been completely eliminated. The remainder of the
available for-sale portfolio consisted of equity securities which carry an
inherent market value risk.

         During 2000, the Company incurred approximately $4.1 million in
capital expenditures, primarily related to the renovation, relocation and
consolidation of existing Dental Centers. The Company expects that capital
expenditures during 2001 will approximate $1.0 million. As such, the Company
expects that it will generate positive cash flow for the year.

         Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ("Statement 133") is effective for
all fiscal years beginning after June 15, 2000. Statement 133, as amended,
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. Under Statement 133, certain contracts that were not
formerly considered derivatives may now meet the definition of a derivative. The
company will adopt Statement 133 effective January 1, 2001. The adoption of
Statement 133 will not have a significant impact on the financial position,
results of operations, or cash flows of the Company.

         During 1998, the Company and the Coast P.A. added 22 acquired Dental
Centers located in Florida and Tennessee. The purchase price for these acquired
Dental Centers was $9.2 million, consisting of $6.9 million in cash and $2.3
million in promissory notes. Had these acquisitions occurred at the beginning of
1996, the additional net revenue earned by the Company would have been $9.8
million, $9.8 million and $5.2 million for 1996, 1997 and 1998, respectively.
During 1998, the Company consolidated two of its acquired Dental Centers into
one Dental Center.

         During 1999, the company and the Coast P.A. added 11 acquired Dental
Centers in Virginia. The purchase price for these acquired Dental Centers was
$2.1 million, consisting of $1.2 million in cash and $.9 million in promissory
notes and certain assumed liabilities. Had these acquisitions occurred at the
beginning of 1997, the additional net revenue earned by the Company would have
been $0.8 million, $1.0 million and $0.4 million for 1997, 1998 and 1999,
respectively. Additionally during 1999, the Company consolidated one of its
acquired Dental Centers into existing Dental Centers.

         The Company added nine internally developed Dental Centers in 1997, 25
in 1998 and 17 in 1999 in Florida, Georgia and Tennessee, at an average cost of
approximately $225,000, which includes the cost of equipment, leasehold
improvements and working capital. See Note 2 to the Financial Statements for
further information.

         The cost of an acquired Dental Center is typically based upon a
negotiated percentage of the Dental Center's historical gross revenue. Acquired
Dental Centers typically generate sufficient cash flow to fund their operations.
The Company plans to finance the addition of internally developed and
strategically opportunistic acquired Dental Centers for the foreseeable future
principally through existing cash and expected cash flow from operations.


                                       17
<PAGE>   18

         On March 6, 1998, the Company announced that it had reached an
agreement with Mid Coast Dental Services, Inc., a Virginia corporation ("MCDS")
to provide financing for the development of Dental Centers in Virginia. The
Company utilized a small portion of its cash reserves to build, equip and lease
fully equipped Dental Centers to MCDS. The Company's loans to MCDS were on a
senior secured basis with interest and rentals providing income to the Company.
In exchange for providing financing for the building and acquisition of Dental
Centers, the Company received an option to acquire MCDS beginning on December
31, 1999. The purchase price under the option agreement was to be based on an
agreed upon formula which approximated the fair value of MCDS. Effective April
1, 1999, the Company exercised this option and acquired nine Dental Centers from
MCDS. The total purchase price was $1.4 million, consisting of $.8 million in
cash and $.6 million in promissory notes and certain assumed liabilities. See
Note 8-Related Party Transactions in the Notes to Financial Statements for
further information.

         On February 10, 1999, the Company announced that its Board of Directors
authorized the repurchase of up to 500,000 shares of its outstanding common
stock. On March 25, 1999, the Company announced that its Board of Directors
authorized the increase of the previously announced share repurchase program
from 500,000 to 1,500,000 shares. The Company will repurchase for cash these
shares in the open market or in privately negotiated transactions, from time to
time, subject to market conditions. The repurchase program began promptly and
will continue until such time as the Company has acquired all of the shares
authorized for repurchase, unless sooner terminated by the Board of Directors.
No shares will be repurchased from the Company's officers or directors. The
Company has canceled these shares. As of December 31, 2000, the Company has
repurchased 1,331,800 shares for approximately $6.9 million. Additional
repurchases of stock would further reduce cash levels.

         Based upon the Company's anticipated capital needs for operations of
its business, general corporate purposes, the addition of Dental Centers,
repayment of certain debts and share repurchases, management believes that the
combination of the funds expected to be available under the Company's current
cash reserves, revolving line of credit and expected cash flow from operations
should be sufficient to meet the Company's funding requirements to conduct its
operations and for further implementation of its growth strategy and current
plans through at least 2001. Thereafter, it is anticipated by the Company that
future acquisitions and expansion will be funded primarily with available cash
on hand, expected cash flow from operations and anticipated borrowings under the
revolving line of credit. Additionally, the Company could finance growth and
future operations through other credit sources to the extent they become
available, and where desirable or necessary, through funding from the sale of
debt or equity securities to the extent such funding is available. Additionally,
to the extent the Company's joint Dentist Equity Model initiative with the Coast
P.A., is successful, significant additional cash could become available to the
Company through the proceeds from the sale of certain of its assets at Dental
Centers to Dentists and through payment of the Coast P.A. receivables by the
Coast P.A. through its sale of certain Coast P.A. assets to the Dentists.
However, there can be no assurance at this time that such initiative will be
successful.

         In the event the Company continues to operate at losses and incurs
negative future cash flows, the Company could face future liquidity and working
capital problems which could adversely impact growth strategy and future
operations. These problems could be enhanced in the event the Company is unable
to utilize its credit facility, particularly given the improbability of
achieving, in the foreseeable future, any or acceptable additional public
financing and perhaps private financing, under current market and sector
conditions.


                                       18
<PAGE>   19

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         See Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation, Section C. Liquidity and Capital Resources for
further information.

         The Company has only a minimal amount of long-term debt, and expects to
finance future capital needs through available capital, anticipated future
earnings, if obtained, and bank lines of credit. The Company's exposure to
market risk for changes in interest rates is primarily in its investment
portfolio. The Company, pursuant to investing guidelines, mitigates exposure by
limiting maturity, placing investments with high credit quality issuers and
limiting the amount of credit exposure to any one issuer. During the year ended
December 31, 2000, the Company earned investment income of approximately
$276,000. If interest rates had been 1% lower than they were during the year,
investment income would have been approximately $50,000 lower. The market risks
associated with the investment portfolio exposure have not changed materially
during the year.

               SPECIAL NOTICE REGARDING FORWARD LOOKING STATEMENTS

         This Form 10-K annual report, press releases and certain information
provided periodically in writing or orally by the Company's officers or its
agents may contain statements which constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act, as amended and Section
21E of the Securities Exchange Act of 1934. The terms "Coast Dental Services,"
"Company," "we," "our" and "us" refer to Coast Dental Services, Inc. The words
"expect," "believe," "goal," "plan," "intend," "estimate" and similar
expressions and variations thereof, if used, are intended to specifically
identify forward-looking statements. Those statements appear in a number of
places in this Form 10-K and in other places, particularly, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
include statements regarding the intent, belief or current expectations of the
company, its directors or its officers with respect to, among other things:

         (i)      the successful expansion of the Coast Dental Network through
                  the focus on existing Dental Centers in accordance with the
                  Company's growth strategy;

         (ii)     our anticipated future cash flows

         (iii)    our liquidity and capital resources;

         (iv)     our financing opportunities and plans;

         (v)      our future performance and operating results;

         (vi)     the Company's future management fee; and

         (vii)    the potential effect of the introduction of the Dentist Equity
                  Model.


                                       19
<PAGE>   20

         Investors and prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. The factors that might cause such differences include, among others,
the following:

         (i)      any material inability to successfully and fully optimize the
                  opportunities at existing Dental Centers;

         (ii)     any material inability to successfully identify, consummate
                  and integrate any future acquisitions at reasonable and
                  anticipated costs;

         (iii)    continued reductions in the Company's liquidity and working
                  capital;

         (iv)     any adverse effect or limitations caused by any governmental
                  regulations or actions;

         (v)      any continued losses, or any future ability to access current
                  financing or to obtain acceptable financing, where desirable
                  in the future, in connection with our operating plans;

         (vi)     any increased competition in business and in acquisitions;

         (vii)    any negative results recognized with a change from the
                  Company's previous principal supplier of dental products and
                  supplies;

         (viii)   any continued difficulty to successfully conduct our business
                  in newer markets and concentrate in existing geographic
                  markets;

         (ix)     effect of reduced cash position and losses on our ability to
                  access borrowings in current credit facility;

         (x)      any adverse impacts on our revenue or operating margins due to
                  the costs associated with increased growth at existing Dental
                  Centers or from managed care business having lower margins;

         (xi)     the continued relationship with and success of our
                  professional association customers and their continued ability
                  to grow in conjunction with our growth and the impact of such
                  professional association compensation plan;

         (xii)    expected future reduction of credit facility and current
                  reduced accessibility to current facility;

         (xiii)   any inability to meet or exceed analysts expectations in any
                  future period;

         (xiv)    any inability to achieve additional revenue or earnings from
                  the internally developed Dental Centers or new or combined
                  internally developed Dental Centers;

         (xv)     any material decrease in the services and support fees
                  negotiated between the audit committee and the Coast P.A.;

         (xvi)    unanticipated costs and expenses resulting from our focus on
                  internal efficiencies which impact margins;

         (xvii)   any slow down in the number of patients or the services
                  performed by Dentists which impacts revenue;

         (xviii)  any material decrease in the number of Dentists available to
                  service patients, would adversely affect productivity and
                  impact overall revenue;

         (xix)    resulting costs and any negatives incurred with implementing
                  the Dental Equity Model;

         (xx)     any inability of the Coast P.A. to incentivize, motivate,
                  retain and attract dentists;

         (xxi)    any future inability to substantially achieve the successful
                  implementation of the Dental Equity Model;

         (xxii)   the impact of the Coast P.A.'s revised compensation plan on
                  the performance of the Coast P.A.;



                                       20
<PAGE>   21

         (xxiii)  the combined decline of public market interest in the
                  Company's business sector and the Company's stock;

         (xxiv)   the likely loss of the Company's listing under the Nasdaq
                  National Market;

         (xxv)    general economic and market conditions and combined general
                  downturn in economy;

         (xxvi)   impact of recent loss of managed care business and any
                  inability to replace with higher margin business; and

         (xxvii)  inability to generate positive cash flows and continuation of
                  or increased negative cash flow.

         (xxviii) the potential impact of negative market influences on the
                  Company's portfolio of investments that are classified as
                  held-for-sale;

         (xxix)   inability to improve dentist retention at the Coast P.A.

         (xxx)    continued decline of patient visits.

         We undertake no obligation to publicly update or revise the forward
looking statements made in this Form 10-K to reflect events or circumstances
after the date of this Form 10-K or to reflect the occurrence of unanticipated
events.


                                       21
<PAGE>   22


Item 8. Financial Statements and Supplementary Data

                           COAST DENTAL SERVICES, INC.
                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----

<S>                                                                         <C>
Independent Auditors' Report........................................         23

Balance Sheets......................................................         24

Statements of Income (Loss) and Comprehensive Income (Loss).........         25

Statements of Stockholders' Equity..................................         26

Statements of Cash Flows............................................         27

Notes to Financial Statements.......................................         28
</TABLE>


                                       22
<PAGE>   23

INDEPENDENT AUDITORS' REPORT

Coast Dental Services, Inc.
Board of Directors

We have audited the accompanying balance sheets of Coast Dental Services, Inc.
(the "Company") as of December 31, 1999 and 2000, and the related statements of
income (loss) and comprehensive income (loss), stockholders' equity and cash
flows for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Coast Dental Services, Inc. as of December
31, 1999 and 2000, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
Certified Public Accountants

Tampa, Florida
March 2, 2001
  (March 15, 2001 as to Note 12)


                                       23
<PAGE>   24

                           COAST DENTAL SERVICES, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                    DECEMBER 31,
                                                                                               1999              2000
                                                                                           ------------      ------------

<S>                                                                                        <C>               <C>
                                                           ASSETS

Current assets:
     Cash and cash equivalents ......................................................      $  1,019,618      $  2,453,614
     Available-for-sale investments .................................................         8,126,505         5,353,381
     Management fee receivable from Coast P.A .......................................         9,864,060        10,451,761
     Note receivable from Coast P.A., non-interest bearing ..........................           529,218           229,218
     Supplies, inventory and small tools ............................................         3,596,614         3,793,409
     Prepaid expenses and other assets ..............................................           539,008           705,957
     Deferred tax asset .............................................................                --           184,655
                                                                                           ------------      ------------
        Total current assets ........................................................        23,675,023        23,171,995
Property and equipment, net .........................................................        20,657,147        21,082,037
Non-compete agreements, net of amortization $455,558
     and $579,030, respectively .....................................................           687,487           532,220
Dental services agreements, net of amortization of $1,438,161
     and $2,211,156, respectively ...................................................        17,791,326        17,143,459
Other assets ........................................................................         1,846,113         2,274,481
                                                                                           ------------      ------------
     Total assets ...................................................................      $ 64,657,096      $ 64,204,192
                                                                                           ============      ============

                                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable ...............................................................      $  2,105,807      $  3,014,053
     Other accrued expenses .........................................................         1,524,474         1,519,153
     Current maturities of debt and capital lease obligations .......................           642,029         1,863,495
                                                                                           ------------      ------------
        Total current liabilities ...................................................         4,272,310         6,396,701
Long-term debt and capital lease obligations, excluding current maturities ..........         1,211,086           350,065
Deferred tax liability ..............................................................           180,092                --
                                                                                           ------------      ------------

        Total liabilities ...........................................................         5,663,488         6,746,766
                                                                                           ------------      ------------
Commitments and Contingencies
Stockholders' equity:
     Preferred stock, $.001 par value; 2,000,000 shares authorized,
        none issued .................................................................                --                --
     Common stock, $.001 par value; 50,000,000 share authorized,
        6,402,958 and 6,289,958 shares issued and 6,399,384 and
        6,286,384 shares outstanding, respectively ..................................             6,404             6,291
     Additional paid-in capital .....................................................        54,427,749        54,991,320
     Retained earnings ..............................................................         6,195,430         4,926,261
     Unrealized loss on securities held for sale ....................................          (106,393)          (82,323)
                                                                                           ------------      ------------
                                                                                             60,523,190        59,841,549
        Less: Stock option receivable from Coast P.A ................................        (1,440,833)       (2,295,374)
              Treasury stock, 3,574 and 3,574 shares, respectively ..................           (88,749)          (88,749)
                                                                                           ------------      ------------
        Total stockholders' equity ..................................................        58,993,608        57,457,426
                                                                                           ------------      ------------
        Total liabilities and stockholders' equity ..................................      $ 64,657,096      $ 64,204,192
                                                                                           ============      ============
</TABLE>

                       See Notes to Financial Statements.


                                       24
<PAGE>   25

                          COAST DENTAL SERVICES, INC.
          STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                                                              YEARS ENDED DECEMBER 31,
                                                                  ------------------------------------------------
                                                                      1998              1999              2000
                                                                  ------------      ------------      ------------

<S>                                                               <C>               <C>               <C>
Net revenue ................................................      $ 34,539,837      $ 44,597,715      $ 45,825,978
                                                                  ------------      ------------      ------------
Dental Center expenses:
     Staff salaries ........................................        11,302,530        16,762,218        19,251,805
     Dental supplies and lab fees ..........................         4,915,558         6,975,182         8,449,766
     Advertising ...........................................         2,053,969         2,955,959         1,826,490
     Rent ..................................................         4,179,571         6,775,521         7,244,695
     Depreciation ..........................................         1,258,212         2,466,744         3,137,217
     Other .................................................           950,695         1,288,417         1,576,126
                                                                  ------------      ------------      ------------
       Total Dental Center expenses ........................        24,660,535        37,224,041        41,486,099
                                                                  ------------      ------------      ------------
     Gross profit ..........................................         9,879,302         7,373,674         4,339,879
General and administrative expenses ........................         3,056,477         5,622,786         5,435,995
Development costs ..........................................         1,821,515                --                --
Depreciation and amortization ..............................           683,950         1,300,690         1,289,645
                                                                  ------------      ------------      ------------
     Operating profit (loss) ...............................         4,317,360           450,198        (2,385,761)
Interest income, net .......................................         1,643,754           597,605           309,504
                                                                  ------------      ------------      ------------
Income (loss) before income tax expense (benefit) ..........         5,961,114         1,047,803        (2,076,257)
Income tax expense (benefit) ...............................         1,789,857           391,478          (812,317)
                                                                  ------------      ------------      ------------
Income (loss) before cumulative effect of a change in
     accounting principle ..................................         4,171,257           656,325        (1,263,940)
                                                                  ------------      ------------      ------------
Cumulative effect of a change in accounting principle,
     net of income tax benefit of $382,403 .................           633,813                --                --
                                                                  ------------      ------------      ------------
Net income (loss) ..........................................         3,537,444           656,325        (1,263,940)
                                                                  ------------      ------------      ------------

Unrealized (loss)/gain on available-for-sale investments ...                --          (106,393)           24,070
                                                                  ------------      ------------      ------------
Comprehensive income (loss) ................................      $  3,537,444      $    549,932      $ (1,239,870)
                                                                  ============      ============      ============

Basic earnings (loss) per share:
Income (loss) before cumulative effect of a change in
     accounting principle ..................................      $        .55      $        .10      $       (.20)
Cumulative effect of a change in accounting principle ......              (.08)               --                --
                                                                  ------------      ------------      ------------
Net income (loss) ..........................................      $        .47      $        .10      $       (.20)
                                                                  ============      ============      ============

Diluted earnings (loss) per share:
Income (loss) before cumulative effect of a change in
     accounting principle ..................................      $        .54      $        .10      $       (.20)
Cumulative effect of a change in accounting principle ......              (.08)               --                --
                                                                  ------------      ------------      ------------
Net income (loss) ..........................................      $        .46      $        .10      $       (.20)
                                                                  ============      ============      ============
Weighted average number of shares outstanding:
     Basic .................................................         7,615,324         6,906,163         6,292,832
                                                                  ============      ============      ============
     Diluted ...............................................         7,718,198         6,906,163         6,292,832
                                                                  ============      ============      ============
</TABLE>

                       See Notes to Financial Statements.


                                       25
<PAGE>   26

                          COAST DENTAL SERVICES, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

<TABLE>
<CAPTION>
                                                                                           UNREALIZED
                                                                                         GAIN/(LOSS) ON                    TOTAL
                                     COMMON   ADDITIONAL PAID-    RETAINED     TREASURY  SECURITIES HELD STOCK OPTION  STOCKHOLDERS'
                                     STOCK       IN CAPITAL       EARNINGS      STOCK        FOR SALE     RECEIVABLE      EQUITY
                                    --------  ----------------  ------------  ---------- --------------- ------------  ------------
<S>                                 <C>       <C>               <C>           <C>        <C>             <C>           <C>
Balance on December 31, 1997 .....  $  7,606    $ 59,023,290    $  3,065,953  $   (2,400)  $        --   $   (701,861) $ 61,392,588
Issuance of common stock upon
exercise of options ..............        16         136,069              --          --            --             --       136,085
Income tax benefit relating
to stock options exercised .......        --         109,608              --          --            --             --       109,608
Issuance of stock options to Coast
    P.A ..........................        --         728,067              --          --            --       (728,067)           --
Net income for the year ended
    December 31, 1998 ............        --              --       3,537,444          --            --             --     3,537,444
Purchase of common stock .........        --              --              --     (86,349)           --             --       (86,349)
                                    --------    ------------    ------------  ----------    ----------   ------------  ------------
Balance on December 31, 1998 .....     7,622      59,997,034       6,603,397     (88,749)           --     (1,429,928)   65,089,376
Issuance of common stock upon
    exercise of options ..........         1           6,127              --          --            --             --         6,128
Issuance of stock options to
    Coast P.A ....................        --          10,905              --          --            --        (10,905)           --
Loss on securities held for
    sale .........................        --              --              --          --      (106,393)            --      (106,393)
Purchase and retirement of
    common stock .................    (1,219)     (5,586,317)     (1,064,292)         --            --             --    (6,651,828)
Net income for the year ended
    December 31, 1999 ............                                   656,325                                                656,325
                                    --------    ------------    ------------  ----------    ----------   ------------    ----------
Balance on December 31, 1999 .....     6,404      54,427,749       6,195,430     (88,749)     (106,393)    (1,440,833)   58,993,608
Issuance of stock options to Coast
     P.A .........................        --         854,541              --          --            --       (854,541)           --
Gain on securities held for
     sale ........................        --              --              --          --        24,070             --        24,070
Purchase and retirement of
     common stock ................      (113)       (290,970)         (5,229)         --            --             --      (296,312)
Net loss for the year ended
     December 31, 2000 ...........        --              --      (1,263,940)         --            --             --    (1,263,940)
                                    --------    ------------    ------------  ----------    ----------   ------------  ------------
Balance on December 31, 2000 .....  $  6,291    $ 54,991,320    $  4,926,261  $  (88,749)   $  (82,323)  $ (2,295,374) $ 57,457,426
                                    ========    ============    ============  ==========    ==========   ============  ============
</TABLE>

                       See Notes to Financial Statements.


                                       26
<PAGE>   27

                           COAST DENTAL SERVICES, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                                     --------------------------------------------
                                                                         1998            1999            2000
                                                                     ------------    ------------    ------------

<S>                                                                  <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss) ............................................    $  3,537,444    $    656,325    $ (1,263,940)
   Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
     Cumulative effect of a change in accounting principle ......         633,813              --              --
     Depreciation ...............................................       1,411,313       2,760,182       3,530,394
     Amortization ...............................................         523,399       1,007,252         896,468
     Other ......................................................              --        (148,750)        196,895
     Deferred income tax (benefit) expense ......................        (737,613)        740,963        (364,747)
   Changes in operating assets and liabilities:
     Increase in management receivable from Coast P.A............      (2,817,850)     (4,629,025)       (587,701)
     (Increase) decrease in note receivable from Coast P.A.......        (529,218)             --         300,000
     Increase in supplies inventory and small tools .............      (1,681,683)     (1,115,062)       (196,795)
     (Increase) decrease in prepaid expenses and other assets ...        (828,618)        557,863        (166,949)
     Increase in accounts payable and other accrued expenses ....       1,849,156         137,645         902,926
                                                                     ------------    ------------    ------------
       NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ......       1,360,143         (32,607)      3,246,551
                                                                     ------------    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures .........................................     (10,620,879)     (6,976,021)     (4,128,110)
   Acquired assets, including intangible assets .................     (11,084,263)     (2,791,688)        (93,334)
   Purchase of available-for-sale investments ...................     (13,785,320)    (20,000,000)       (276,726)
   Sale of available-for-sale investments .......................                      25,552,422       3,049,850
   Increase in other assets .....................................        (106,020)       (601,939)       (428,367)
                                                                     ------------    ------------    ------------
       NET CASH USED IN INVESTING ACTIVITIES ....................     (35,596,482)     (4,817,226)     (1,876,687)
                                                                     ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from exercise of stock options ......................         136,085           6,128              --
   Purchase of treasury stock ...................................         (86,349)     (6,651,828)       (296,312)
   Proceeds from long term debt .................................       2,295,500         374,333       1,000,000
   Payments on long term debt ...................................        (630,273)     (1,359,484)       (596,807)
   Retirement of notes payable ..................................        (141,400)             --              --
   Payments on capital leases ...................................         (99,017)        (81,496)        (42,749)
                                                                     ------------    ------------    ------------
       NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ......       1,474,546      (7,712,347)         64,132
                                                                     ------------    ------------    ------------
       (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS .........     (32,761,793)    (12,562,180)      1,433,996
   Cash and cash equivalents at beginning of period .............      46,343,591      13,581,798       1,019,618
                                                                     ------------    ------------    ------------
   Cash and cash equivalents at end of period ...................    $ 13,581,798    $  1,019,618    $  2,453,614
                                                                     ============    ============    ============

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
   Cash paid for interest .......................................    $    116,970    $    183,941    $    113,242
   Cash paid (received) for income tax ..........................    $  2,427,200    $    540,080    $   (756,732)
   Non-cash stock option receivable from Coast P.A...............    $    728,067    $     10,905    $    854,541
</TABLE>

                       See Notes to Financial Statements.


                                       27
<PAGE>   28

                           COAST DENTAL SERVICES, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS

         Coast Dental Services, Inc. (the "Company"), a Delaware corporation,
provides practice management services to the Coast Florida, P.A. and Coast
Dental Services, P.A. (collectively, the "Florida P.A."), Coast Dental of
Georgia, P.C. ("Coast Georgia P.A."), Coast Dental Services of Tennessee, P.C.
("Coast Tennessee P.A.") and Adam Diasti, D.D.S. & Associates, P.C. ("Coast
Virginia P.A.") (collectively, the "Coast P.A."). The Company has entered into a
services and support agreement with each entity included in the Coast P.A. (the
"Services and Support Agreements") whereby the Company provides certain
management support services to the Coast P.A. in return for a services and
support fee. The Coast P.A. employs Dentists and dental hygienists and provides
all of the dental services to patients. At December 31, 2000, the Company
operated 124 dental centers in Florida, Georgia, Tennessee and Virginia.

         The Company provides administrative and technical support for
professional services rendered by the dental professionals under its Services
and Support Agreements and receives management fees from the Coast P.A. The
Company does not employ Dentists and hygienists and, accordingly, "Dental
Center-Staff Salaries" presented on the face of the Statements of Income (Loss)
do not include the salaries of dentists and hygienists. The fee is equal to a
defined percentage of gross patient revenue, net of refunds and discounts,
ranging from 66% to 72% effective January 1, 2000. The costs incurred by the
Coast P.A. include primarily salaries and benefits of dentists and hygienists,
interest and bad debts.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation. The accompanying financial statements have been
prepared on the accrual basis of accounting. The Company does not own any
interests in, or control the activities of, the Coast P.A. Accordingly, the
financial statements of the Coast P.A. are not consolidated with those of the
Company.

         Cash Equivalents. The Company considers all highly liquid investments
with an original maturity of 90 days or less to be cash equivalents.

         Available-for-Sale Investments. The short-term investments owned by the
Company are comprised of available-for-sale tax free municipal bonds with
effective yields ranging from 4.0% to 5.0%. Available-for-sale securities are
stated at fair value with unrealized gains and losses included in comprehensive
income. The amortized cost of debt securities is adjusted for amortization of
premiums and accretion of discounts to maturity. Such amortization is included
in interest income. Realized gains and losses, if any, would be included in the
Statement of Income (Loss). The cost of securities sold is based on the specific
identification method. As of December 31, 1999 and 2000, respectively, the
investments are recorded at the fair market value with an unrealized loss of
$171,602 and $132,779, respectively. Proceeds from the sale of
available-for-sale investment securities during 1999 and 2000 were $25,500,000
and $3,050,000, respectively. Gross realized losses of $16,000 and $38,000 for
1999 and 2000, respectively were realized on these sales. All of the debt
investments matured during the year 2000.

         Comprehensive Income (Loss). During fiscal 1998, the Company adopted
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income ("Statement 130"). Statement 130 establishes standards for the reporting
and display of comprehensive income and its components. Comprehensive income
(loss) is defined as the change in equity of a business during a period from
transactions and other events and circumstances from non-owner sources. It
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners. Statement 130 requires that
the Company's change in unrealized gains and losses on equity securities
available for sale be included in comprehensive income (loss). The unrealized
gain on securities available for sale is shown net of tax effect of $50,456 for
the year ended December 31, 2000. The unrealized loss on securities available
for sale is shown net of tax benefit of $65,209 for the year ended December
31,1999. The adoption of Statement 130 had no impact on the Company's net income
or stockholders' equity in fiscal 1998.


                                       28
<PAGE>   29

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

         Management Fee Receivable. The management fee receivable represents the
indebtedness of the Coast P.A. for services and support fees payable to the
Company in accordance with the Services and Support Agreements. Also, the
Company may, from time to time, advance funds under the Services and Support
Agreements for purposes of funding the payment of the Coast P.A.'s expenses or
the Coast P.A.'s acquisitions of existing dental practices.

         Supplies, Inventory and Small Tools. Supplies, inventory and small
tools are stated at the lower of first-in, first-out cost or market.

         Property and Equipment, net. Property and equipment are stated at cost.
Equipment held under capital leases is stated at the present value of minimum
lease payments at the inception of the related leases. Depreciation of property
and equipment is calculated using the straight-line method over the estimated
useful lives of the assets ranging from 5 to 15 years. Equipment held under
capital leases and leasehold improvements are amortized on a straight-line basis
over the estimated useful life of the assets.

         When assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts. The difference between
the net book value of the assets and proceeds from disposition is recognized as
a gain or loss. Routine maintenance and repairs are charged to expense as
incurred, while costs of improvements and renewals are capitalized.

         Non-Compete Agreements. Costs incurred in connection with the
non-compete agreements are being amortized over their estimated lives of three
to nine years on a straight line basis.

         Dental Service Agreements. Costs of acquisitions in excess of the
estimated fair value of property and equipment and any non-compete agreements
are allocated to the dental services agreement because the Company has
effectively acquired the right to manage the practice for the Coast P.A. The
dental services agreement with the Coast P.A. represents the Company's exclusive
right to operate the Dental Centers during the term of the agreement. The
assigned value of the dental services agreement is amortized using the
straight-line method over its estimated life of twenty-five years.

         Software Development Costs. Software costs that are incurred in the
preliminary project stage are expensed as incurred. Costs to develop internal
use computer software during the application development stage are capitalized
under a fixed-asset model, as long as those costs meet certain predefined
characteristics. Training and maintenance costs incurred during the
post-implementation operating stage are expensed as incurred.

         Deferred Development Costs. Development costs paid to Coast P.A.
beginning in June 1997 related to the expansion of Dental Offices into new and
existing markets were accounted for as deferred development costs and included
in other assets. In 1998, the Company adopted AICPA Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities ("SOP 98-5"), and changed its
accounting to charge such costs to expense as incurred, and recorded the
cumulative effect on retained earnings as of January 1, 1998, of approximately
$1.0 million ($.6 million net of tax). The effect of adopting SOP 98-5 was to
decrease net income for 1998 by approximately $1.1 million ($.14 per diluted
share). Effective January 31, 1999, the Company and Coast P.A. discontinued this
form of compensation. Any other development costs are expensed as incurred.

         Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimated.

         Relationship with the Coast P.A. and the Coast Dentists. The Company
receives fees for services provided to the Coast P.A. under its Services and
Support Agreements, but does not employ dentists or hygienists or control the
practices of the Coast Dentists. The Company's revenue is dependent on revenue
generated by the Coast Dentists and, therefore, effective and continued
performance of the Coast Dentists during the term of the Services and Support
Agreements is essential to the Company's long term success. Under the Services
and Support Agreements, the Company receives a monthly fee from the Coast P.A.,
ranging from 66% to 72% effective January 1, 2000, of the Dental Centers' gross
revenue, net of refunds and discounts. The Company pays all of the operating and
nonoperating expenses incurred at the Dental Centers, except for the salaries
and benefits of the Coast Dentists and hygienists.


                                       29
<PAGE>   30

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

         Stock-Based Compensation. The Company has elected to continue to
account for stock-based compensation under Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, and has disclosed in the
financial statements the effects as if the recognition provisions of Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("Statement 123"), were adopted. The Company has not adopted the
recognition provisions of Statement 123. The Company has adopted the recognition
provisions of Statement 123 for the Affiliated Professionals Stock Option Plan
for the Coast P.A. The Company recognizes a stock option receivable from the
Coast P.A. when the Coast P.A. purchases stock options at fair value and the
Coast P.A. recognizes the compensation expense.

         Fair Value of Financial Instruments. The estimated fair value of
amounts reported in the financial statements has been determined by using
available market information and appropriate valuation methodologies. The
carrying value of all current assets and current liabilities approximates the
fair value because of their short-term nature. The fair value of long-term debt
approximates its carrying value based on market prices.

         Income Taxes. The Company is required to use Statement of Financial
Accounting Standards No. 109 ("Statement 109"), Accounting for Income Taxes.
Under Statement 109, the asset and liability method is used in accounting for
income taxes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and are
measured using the current enacted tax rates and laws.

         Earnings Per Common Share. The basic earnings per common share is based
on the weighted average number of common shares outstanding during each period
adjusted for actual shares issued during the period. The diluted earnings per
common share is equal to the basic shares plus the incremental shares
outstanding as if all in-the-money options were exercised as of the end of the
period. The number of incremental shares is determined using the treasury stock
methodology. As of December 31, 1999 and 2000, the weighted average number of
common shares are the same for both the basic and diluted per share computation
because inclusion of common stock equivalents would have been anti-dilutive.

         Impairment of Long-Lived Assets -- Periodically, the Company evaluates
the recoverability of the net carrying value of its property and equipment and
its intangible assets by comparing the carrying values to the estimated future
discounted cash flows. A deficiency in these cash flows relative to the carrying
amounts is an indication of the need for a write-down due to impairment. The
impairment write-down would be the difference between the carrying amounts and
the fair value of these assets. A loss on impairment would be recognized by a
charge to earnings.

         New Accounting Standards. Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities
("Statement 133") is effective for all fiscal years beginning after June 15,
2000. Statement 133, as amended, establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. Under Statement 133, certain
contracts that were not formerly considered derivatives may now meet the
definition of a derivative. The Company will adopt Statement 133 effective
January 1, 2001. The adoption of Statement 133 will not have a significant
impact on the financial position, results of operations, or cash flows of the
Company.

         In December 1999, the Securities Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements ("SAB
101"). SAB 101, as amended, provides guidance related to revenue recognition
issues based on interpretations and practices followed by the SEC. Conformity of
the Company's income recognition policy with SAB 101 in 2000 did not have a
material effect on the financial position, results of operations, or cash flows
of the Company.

NOTE 3 - NET REVENUE

         The Company has 40-year evergreen dental services agreements with the
Coast P.A. whereby the Company receives fees for services provided to the Coast
P.A. Net revenue represents the aggregate fees charged to the Coast P.A. under
the agreements during the year. Patient Service Revenue earned at the Dental
Centers is recorded by the Coast P.A. at established rates net of refunds and
adjustments. The costs incurred by the Coast P.A. include primarily dentists and
hygienist salaries, (see Note 1). All arrangements for fees to date have been
agreed between the principal and sole owner of the Coast P.A., Dr. Adam Diasti
(who is also a major stockholder and the President of the Company), and the
Chief Executive Officer of the Company, Terek Diasti, and approved by the Audit
Committee. The factors considered in setting those fees included the Company's
evaluation of the services it provides, the costs incurred by the Company in
connection with providing the services and the Company's negotiated return,
balanced against the Coast P.A.'s requirement for a retained amount which
ensured its financial viability, contemplated an anticipated long-term
relationship with the Company and reflected the future business opportunity
related thereto.


                                       30
<PAGE>   31

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

         Only the fees earned by the Company for its services to the Coast P.A.
and the actual expenses of the Company are reflected in the financial statements
of the Company. Neither the Coast P.A. nor any of the amounts retained by the
Coast P.A. are reflected in the financial statements of the Company. Effective
June 1997, the Company agreed to pay the Coast P.A. the sum of $50,000 in
connection with each internally developed Dental Center opened as inducement to
the Coast P.A. to extend the Services and Support Agreements as each internally
developed Dental Center is opened. Effective January 31,1999, this form of
compensation was discontinued. Any future changes to the Services and Support
Agreements and the related fees must be approved in advance by the independent
outside directors of the Company's Audit Committee. See Note 2 for further
information.

NOTE 4 - ACQUISITIONS AND DEVELOPMENTS

         The Company and the Coast P.A. periodically have jointly entered into
asset purchase agreements with existing dental practices. In all cases, the
Coast P.A. acquires the patient lists and any other professional assets and the
Company acquires certain tangible assets, principally the dental equipment, and
assumes certain liabilities such as the lease agreement for the facility. The
fair value of the patient lists was determined based upon general market
information received from an independent dental practice transition consultant
regarding traditional dental practice acquisitions. In addition to the purchase
price allocations for tangible assets, there are allocations for identifiable
intangible assets and unidentifiable intangible assets. The identifiable
intangible assets allocation relates to non-compete agreements which are
partially allocated to the Company and partially allocated to the Coast P.A.

         The amount allocated to the Coast P.A., on the other hand, is limited
to the value of the patient files and an amount representing the estimated value
of the Coast P.A.'s right to prohibit the selling professional association and
its dentist(s) from competing in the dental business within the specified area
surrounding the acquired Dental Center. After a determination of the value of
the tangible assets and identifiable intangible assets acquired, the total
remaining purchase price representing unidentifiable intangible assets will also
be allocated to the Company and the Coast P.A. (value of the Services and
Support Agreements attributable to the Dental Center). All but one of the
acquisitions were purchases of assets and the operating results of the Company
only include the effects of operations of the acquired Dental Centers from the
date of acquisition.

         During 1998, the Company and the Coast P.A. added 22 acquired Dental
Centers located in Florida and Tennessee. The Company's portion of the purchase
price for these 22 acquired Dental Centers was $9.2 million, consisting
primarily of $6.9 million in cash and $2.3 million in promissory notes. Had
these acquisitions occurred at the beginning of 1998, the additional net revenue
earned by the Company would have been $5.2 million (unaudited) for 1998.

         During 1999, the Company and the Coast P.A. added 11 acquired Dental
Centers located in Virginia. The Company's portion of the purchase price for
these 11 acquired Dental Centers was $2.1 million, consisting primarily of $1.2
million in cash and $.9 million in promissory notes and certain assumed
liabilities. Had these acquisitions occurred at the beginning of 1998, the
additional net revenue earned by the Company would have been $1.0 million
(unaudited), and $0.4 million (unaudited) for 1998 and 1999, respectively.

         The effect on net income and earnings per share, had all acquisitions
occurred on January 1, 1998, would have been insignificant for all periods
presented.

         During 2000, the Company and the Coast P.A. added no additional
acquired or internally developed Dental Centers.


                                       31
<PAGE>   32

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

NOTE 5 - PROPERTY AND EQUIPMENT

         The Company's property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                ------------------------------
                                                                    1999              2000
                                                                ------------      ------------

                  <S>                                           <C>               <C>
                  Furniture, fixtures and equipment ......      $ 14,856,175      $ 16,804,644
                  Leasehold improvements .................        10,724,163        12,263,670
                  Leased equipment .......................           300,387           300,387
                                                                ------------      ------------
                                                                  25,880,725        29,368,701
                       Less accumulated depreciation .....        (5,226,021)       (8,656,887)
                                                                ------------      ------------
                                                                  20,654,704        20,711,814
                  Construction in progress ...............             2,443           370,223
                                                                ------------      ------------
                       Total .............................      $ 20,657,147      $ 21,082,037
                                                                ============      ============
</TABLE>

         Depreciation expense was $1,411,313, $2,760,182, and $3,530,394 for the
years ended December 31, 1998, 1999, and 2000, respectively. Leased equipment
was fully depreciated at December 31, 1999 and 2000.

NOTE 6 - LONG-TERM DEBT AND CAPITAL LEASES

The Company's long-term debt consists of the following:

<TABLE>
                                                                                              DECEMBER 31,
                                                                                     ------------------------------
                                                                                         1999              2000
                                                                                     ------------      ------------
         <S>                                                                         <C>               <C>
         Notes payable issued in connection with various acquisitions
              with varying installments at interest rates ranging
              from 8.0% to 9.0% ...............................................      $  1,797,800      $  1,200,994
         Revolving line of credit, maturing November 4, 2002 with interest
              payable monthly tied to LIBOR ...................................                --         1,000,000
                                                                                     ------------      ------------

         Total long term debt .................................................      $  1,797,800      $  2,200,994
                                                                                     ------------      ------------

         Less current maturities ..............................................          (599,281)       (1,850,929)
                                                                                     ------------      ------------

         Long-term debt, excluding current maturities .........................      $  1,198,519      $    350,065
                                                                                     ============      ============
</TABLE>

         The Company has a revolving credit facility with a bank which provides
an aggregate of $20.0 million for general working capital needs and expansion of
Dental Centers. At December 31, 2000, the Company had borrowed $1.0 million
against this facility. Interest on the outstanding balance accrues at LIBOR plus
a margin percentage. The margin percentage varies between 1.25% and 1.75% based
upon funded debt to EBITDA ratios. At December 31, 2000, the applicable rate was
8.053%. The Company's credit facility contains various covenants which, among
other things, require the maintenance of certain financial ratios related to
fixed charge coverage, total debt to capital and debt to EBITDA. At December 31,
2000, the Company was in compliance with all covenants related to the facility.
The facility restricts the Company's ability to declare or pay cash dividends
on its common stock.

The Company's capital lease obligations are as follows:

<TABLE>
<CAPTION>
                                                                                                    DECEMBER 31,
                                                                                               ----------------------
                                                                                                 1999          2000
                                                                                               --------      --------

         <S>                                                                                   <C>           <C>
         Capital lease obligations, at varying interest rates of imputed interest
                  From 15% to 21%, collateralized by fully amortized lease
                  Equipment .............................................................      $ 55,315      $ 12,567

         Less current portion ...........................................................       (42,748)      (12,567)
                                                                                               --------      --------
         Capital lease obligations, net of current portion ..............................      $ 12,567      $     --
                                                                                               ========      ========
</TABLE>


                                       32
<PAGE>   33

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

Scheduled payments on capital lease obligations and maturities of long-term debt
as of December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                          CAPITAL LEASE   LONG-TERM
                                          OBLIGATIONS        DEBT
                                            --------      ----------
                  <S>                     <C>             <C>
                  2001 ...............      $ 12,567      $1,850,929
                  2002 ...............            --         262,663
                  2003 ...............            --          87,402
                                            --------      ----------
                  Total ..............      $ 12,567      $2,200,994
                                            ========      ==========
</TABLE>

NOTE 7 - INCOME TAXES

         For the years ended December 31, 1998, 1999 and 2000, respectively, the
         provision (benefit) for income taxes consisted of the following:

<TABLE>
<CAPTION>
                                                                            1998           1999           2000
                                                                         -----------    -----------    -----------
         <S>                                                             <C>            <C>            <C>
         Current:
              Federal ...............................................    $ 1,813,254    $  (345,179)   $  (421,162)
              State .................................................        331,813         (4,306)       (26,408)
                                                                         -----------    -----------    -----------
                 Total current income tax expense (benefit) .........      2,145,067       (349,485)      (447,570)
                                                                         -----------    -----------    -----------
         Deferred:
              Federal ...............................................       (629,803)       606,330       (287,792)
              State .................................................       (107,810)       134,633        (76,955)
                                                                         -----------    -----------    -----------
                 Total deferred income tax expense (benefit) ........       (737,613)       740,963       (364,747)
                                                                         -----------    -----------    -----------

         Tax effect of tax benefit allocated to cumulative
              effect of a change in accounting principle ............        382,403             --             --
                                                                         -----------    -----------    -----------
              Total current and deferred - actual ...................    $ 1,789,857    $   391,478    $  (812,317)
                                                                         ===========    ===========    ===========
</TABLE>


                                       33
<PAGE>   34

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

The components of deferred tax assets (liabilities) as of December 31, 1999 and
2000, respectively, are as follows:

<TABLE>
<CAPTION>
                                                                                            DECEMBER 31,
                                                                                    ----------------------------
                                                                                       1999             2000
                                                                                    -----------      -----------

                  <S>                                                               <C>              <C>
                  Deferred tax asset:
                       State taxes ...........................................      $    17,903      $    80,294
                       Minimum tax credit ....................................          114,960          515,383
                       Other accrued expenses ................................          495,138          518,631
                                                                                    -----------      -----------
                          Total deferred tax asset ...........................          628,001        1,114,308


                  Deferred tax liability:
                       Basis difference in fixed assets and intangibles ......         (808,093)        (929,653)
                                                                                    -----------      -----------
                          Net deferred tax (liability) asset .................      $  (180,092)     $   184,655
                                                                                    ===========      ===========
</TABLE>

         A reconciliation of the statutory federal income tax rate to the
         Company's effective income tax rate as of December 31, 1998, 1999 and
         2000, respectively, is as follows:

<TABLE>
<CAPTION>
                                                                                DECEMBER 31,
                                                                         --------------------------
                                                                          1998      1999      2000
                                                                         ------    ------    ------

         <S>                                                             <C>       <C>       <C>
         Statutory federal rate .....................................     34.00%    34.00%    34.00%
         State income taxes, net of federal income tax benefit ......      3.02      8.21      3.29
         Tax exempt interest ........................................     (7.03)   (16.06)     5.06
         Non deductible goodwill ....................................        --      7.28     (2.69)
         Miscellaneous ..............................................     (1.25)     3.93     (0.54)
                                                                         ------    ------    ------
         Effective tax rate .........................................     28.74%    37.36%    39.12%
                                                                         ======    ======    ======
</TABLE>

NOTE 8 - RELATED PARTY TRANSACTIONS

         The Company periodically advances funds to/from the majority
stockholders and the Coast P.A. The Coast P.A. is wholly-owned by a majority
stockholder and director of the Company. See Notes 1 and 3 for a further
description of the relationship with the Coast P.A. Advances to and from the
majority stockholders are insignificant at the balance sheet dates. These
advances to and from the Coast P.A. are reflected on the balance sheets as note
receivable from Coast P.A. for $.5 and $.2 million at December 31, 1999, and
2000, respectively. Notes receivable are non-interest bearing and are due upon
demand. The Company has recorded a receivable from the Coast P.A. in the amount
of $1,440,833 and $2,295,374 as of December 31, 1999, and 2000, respectively, in
accordance with the Affiliated Professionals Stock Plan. See Note 10 for a
further description of the plan.

         As of December 31, 2000, the balance of the management fee receivable
from the Coast P.A. was approximately $10.5 million. This amount is directly
attributable to patient revenues earned by the Coast P.A. for which the Company
is due its management fee ranging from 66% to 72% effective January 1, 2000. In
addition, the Company has paid certain expenses on behalf of the Coast P.A. The
management fee receivable is unsecured and represents a concentration of credit
risk and exposes the Company to risk of loss for these amounts should a Coast
P.A. be unable to pay its debts.

         On March 6, 1998, the Company announced that it had reached an
agreement with Mid-Coast Dental Services, Inc., a Virginia corporation ("MCDS"),
to provide equipped Dental Centers in Virginia. The Company utilized a portion
of its cash reserves to build, equip and lease fully equipped Dental Centers to
MCDS. The Company's loans to MCDS were on a senior secured basis with interest
and rentals providing income to the Company. In exchange for providing financing
for the building and acquisition of Dental Centers, the Company received an
option to acquire MCDS beginning on December 31, 1999. The purchase price under
the option agreement was based on an agreed upon formula which was expected to
approximate the fair value of MCDS. Adam Diasti, President of the Company, was a
major stockholder of Adam Diasti, D.D.S., Kurt M. Obeck, D.D.S. & Andrew S.
Norman, D.D.S., P.C. n/k/a Adam Diasti, D.D.S. & Associates, P.C., the
professional corporation that employs MCDS's doctors and hygienists. Effective
April 1, 1999, the Company exercised this option and acquired nine Dental
Centers from MCDS. The total purchase price was $1.4 million, consisting of $.8
million in cash and $.6 million in promissory notes and certain assumed
liabilities.


                                       34
<PAGE>   35

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

         During 2000, the Company acquired certain dental supplies and equipment
from a company principally owned by a majority shareholder and former employee
of the Company. Additionally, current directors and certain executive officers
of the Company own minority interests in the supply company. The total amount
paid for these products during 2000 was $89,000. It has always been the
Company's intent to enter relationships whereby the highest quality goods and
services can be obtained at the lowest possible price. This relationship will be
evaluated using this same criteria.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

         The Company primarily leases space for operation of its Dental Centers
under non-cancelable operating leases, for generally a five to seven year term
with renewal options. Rental expense for the years ended December 31, 1998,
1999, and 2000, was $4.2 million, $6.8 million and $7.2 million, respectively.

         Future minimum payments under non-cancelable leases are as follows:

<TABLE>
<CAPTION>
                                                      FUTURE MINIMUM
                                                         PAYMENTS
                  YEARS ENDED DECEMBER 31,
                  ------------------------            --------------

                  <S>                                 <C>
                  2001 .........................        $ 3,860,261
                  2002 .........................          3,501,647
                  2003 .........................          2,344,623
                  2004 .........................            934,823
                  2005 .........................            426,939
                  Thereafter ...................            605,862
                                                        -----------
                       Total ...................        $11,674,155
                                                        ===========
</TABLE>

         The Company has entered into employment agreements with five of its
officers, two of whom are the largest stockholders of the Company and together
own a majority of the Company's common stock. The terms of the agreements are
from three to five years.

NOTE 10 - STOCKHOLDERS' EQUITY

         Effective April 1, 1996, the Board of Directors adopted, and the
stockholders of the Company approved, two stock incentive plans: the Employee
Stock Option Plan (the "Incentive Plan") and the Affiliated Professionals Stock
Plan (the "Professionals Plan," together, the "Plans"). The purpose of the Plans
are to provide directors, officers, key employees, advisors and dental
professionals employed by the Coast P.A. (subject to approval and reimbursement
by the Coast P.A.) with additional incentives by increasing their proprietary
interest in the Company or tying a portion of their compensation to increases in
the price of the Company's common stock. The aggregate number of shares of
Common Stock subject to both plans is 750,000 shares and 750,000 shares,
respectively.


                                       35
<PAGE>   36

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

         The following tables summarize the stock option transactions for the
Affiliated Professionals Plan and the Incentive Plan for the three years ended
December 31, 2000:

PROFESSIONALS PLAN:

<TABLE>
<CAPTION>
                                                                             WEIGHTED
                                            NUMBER OF                        AVERAGE
                                             SHARES     RANGE PER SHARE   EXERCISE PRICE
                                            ---------   ----------------  --------------

<S>                                         <C>         <C>               <C>
Outstanding as of December 31, 1997 ....     265,775     $ 8.00 - $29.75     $  12.13
     Granted ...........................     121,467     $9.875 - $27.25        14.96
     Exercised .........................      (8,831)    $ 8.00 - $12.25         8.18
                                            --------
Outstanding as of December 31, 1998 ....     378,411     $ 8.00 - $29.75        14.13
     Granted ...........................     153,013     $ 3.25 - $ 9.75         5.60
                                            --------
Outstanding as of December 31, 1999 ....     531,424     $ 3.25 - $29.75         9.54
     Granted ...........................     388,641     $ 1.75 - $2.438         2.13
     Forfeited .........................    (372,940)    $ 5.50 - $15.35         3.65
                                            --------
Outstanding as of December 31, 2000 ....     547,125     $ 1.75 - $29.75     $   5.25
                                            ========
Exercisable as of December 31, 2000 ....     160,853
                                            ========
</TABLE>

The fair value of the options, totaling $2,295,374 issued to the dental
professionals employed by the Coast P.A. is charged to the Coast P.A. and
reimbursed to the Company from the Coast P.A. Stock options which were forfeited
by dental professionals revert to the Coast P.A. under their original terms.

INCENTIVE PLAN:

<TABLE>
<CAPTION>
                                                                                      WEIGHTED
                                               NUMBER OF                               AVERAGE
                                                 SHARES         RANGE PER SHARE     EXERCISE PRICE
                                               ---------        ----------------    --------------

<S>                                            <C>              <C>                 <C>
Outstanding as of December 31, 1997 ....          98,179        $ 8.00 - $ 30.50        $ 14.86
     Granted ...........................         150,382        $9.875 - $26.875          15.83
     Exercised .........................          (7,131)       $ 8.00 - $ 15.25           9.45
     Forfeited .........................         (13,250)       $9.875 - $25.375          23.79
                                                --------
Outstanding as of December 31, 1998 ....         228,180        $ 8.00 - $ 30.50          14.49
     Granted ...........................         184,997        $ 4.00 - $ 10.25           5.59
     Exercised .........................            (766)       $ 8.00                     8.00
     Forfeited .........................         (45,923)       $ 4.50 - $27.875          14.19
                                                --------
Outstanding as of December 31, 1999 ....         366,488        $ 4.50 - $ 30.50          10.26
     Granted ...........................         292,503        $1.531 - $ 2.063           2.06
     Forfeited .........................         (67,865)       $2.063 - $25.375           8.64
                                                --------
Outstanding as of December 31, 2000 ....         591,126        $2.063 - $ 30.50        $  6.38
                                                ========
Exercisable as of December 31, 2000 ....         176,983
                                                ========
</TABLE>

<TABLE>
<CAPTION>

                                                Options Outstanding                       Options Exercisable
                          -----------------------------------------------------------------------------------------
                                               Remaining Life       Exercise Price                  Exercise Price
Ranges of                                         In Years             Weighted                        Weighted
Exercise Prices           Shares              Weighted Average         Average          Shares         Average
                          -----------------------------------------------------------------------------------------
<S>                       <C>                 <C>                   <C>                 <C>         <C>
under $5.00.............  352,504             9.01                  3.27                 26,653         4.50
5.01 to 10.00...........  164,896             7.15                  7.97                 89,236         7.98
10.01 to 15.00..........    5,996             6.90                  8.89                  5,662         8.91
15.01 to 20.00..........   15,744             6.59                 15.01                 15,284        15.01
20.01 to 25.00..........   32,550             6.71                 17.22                 26,840        17.22
25.01 to 30.00..........   19,436             7.25                 25.42                 13,308        25.42
                          -----------------------------------------------------------------------------------------
Total...................  591,126                                                       176,983
                          =======                                                       =======
</TABLE>

         For purposes of pro forma disclosure consistent with the provisions of
Statement 123, the estimated fair value of the options at the date of the grant
is amortized to expense over the vesting period, generally three years. Under
the fair value method, the Company's pro forma net income (loss) and earnings
(loss) per share (both basic and diluted) would have been $3,360,980 and $.44,
$328,293 and $.05, and ($1,657,739) and $(.26) for 1998, 1999 and 2000,
respectively. The Company estimated the fair value of the incentive plan
options utilizing an option pricing model assuming a market price and exercise
price ranging from $1.91 to $30.50 per share, a risk-free interest rate of 4.7%
to 6.5%, a two to four year expected life, a range of 0% to 77.6% expected
volatility, and no dividends.

         The weighted average remaining contractual life for the options
outstanding as of December 31, 2000, for both plans, is approximately 7 years.


                                       36
<PAGE>   37

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

NOTE 11 - BENEFIT PLANS

         The Company has a 401(k) Retirement Savings Plan (the "401(k) Plan")
covering substantially all employees. Matching employer contributions, if any,
are set at the discretion of the Board of Directors or the applicable committee
thereof. For the years ended December 31, 1998, 1999 and 2000, respectively,
there have not been any Company matching contributions.

NOTE 12 - SUBSEQUENT EVENTS

         During the latter part of 2000, an offer was presented to the Board of
Directors. The offer was evaluated by an independent committee of the Board of
Directors and given due consideration by this independent committee and given
due consideration by the Board. Upon consideration, the Board deemed it
necessary to undertake appropriate steps under the circumstances in having
necessary counsel to evaluate the offer presented and advise as to the proper
courses of action. As of December 31, 2000, the Company had incurred
approximately $127,000 related to this transaction. In late March 2001, this
transaction was abandoned due to difficulties in obtaining financing to
consummate the transaction. The total cost incurred by the Company is expected
to be approximately $800,000 and will be reflected as an expense of the Company
during the first quarter of 2001.

         On March 15, 2001, the Company received notification from NASDAQ that
its stock had failed to meet the minimum market value of public float over the
past 30 days. Under the rules, the Company has until June 13, 2001, to regain
compliance or the Staff of the NASDAQ will provide the Company with written
notification that its securities will be delisted. Absent meeting the criteria
to maintain its listing, the Company has the option to apply for listing of its
securities on the NASDAQ SmallCap Market if it satisfies the requirements for
listing on that market or in the alternative listing its securities on the
NASD's over-the-counter bulletin board. The Company will be evaluating its
options relative to this notice and a decision will be made regarding the
proper action prior to June 13, 2001.


                                       37
<PAGE>   38

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

NOTE 13 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

         The following table sets forth the Company's results of operations for
the periods indicated:

<TABLE>
<CAPTION>
Quarter Ended                   March 31,2000     June 30, 2000    September 30, 2000  December 31, 2000
-------------                   -------------     -------------    ------------------  -----------------
<S>                             <C>               <C>              <C>                 <C>
Net revenue                     $ 11,568,944      $ 11,445,570        $ 11,495,638        $ 11,315,826
Gross profit                    $  1,389,510      $  1,322,890        $  1,109,334        $    518,145
Net loss                        $    (29,761)     $    (81,445)       $   (363,725)       $   (764,939)

Net loss per common share:
   Basic                        $       0.00      $      (0.02)       $      (0.06)       $      (0.12)
   Diluted                      $       0.00      $      (0.02)       $      (0.06)       $      (0.12)

<CAPTION>
Quarter Ended                   March 31,1999     June 30, 1999    September 30, 1999   December 31, 1999
-------------                   -------------     -------------    ------------------   -----------------
<S>                             <C>               <C>              <C>                  <C>
Net revenue                     $ 10,912,548      $ 11,166,127        $ 11,290,007        $ 11,229,033
Gross profit                    $  2,719,713      $  2,014,478        $  1,841,613        $    797,870
Net income (loss)               $  1,117,930      $    510,342        $    439,049        $ (1,410,995)

Net income (loss)
per common share:
   Basic                        $       0.15      $       0.07        $       0.07        $      (0.22)
   Diluted                      $       0.15      $       0.07        $       0.07        $      (0.22)
</TABLE>


                                       38
<PAGE>   39

ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE

         None.

                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this Item is incorporated herein by
reference to the information under the headings "Management - Directors and
Executive Officers" in the Company's definitive Proxy Statement to be used in
connection with the Company's Annual Meeting of Stockholders, which will be
filed with the Securities and Exchange Commission on or before April 30, 2001.

ITEM 11.          EXECUTIVE COMPENSATION

         The information required by this Item is incorporated herein by
reference to the information under the headings "Management - Compensation of
Executive Officers and Directors" in the Company's definitive Proxy Statement to
be used in connection with the Company's Annual Meeting of Stockholders, which
will be filed with the Securities and Exchange Commission on or before April 30,
2001.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this Item is incorporated herein by
reference to the information under the headings "Management - Security Ownership
of Management and Others" in the Company's definitive Proxy Statement to be used
in connection with the Company's Annual Meeting of Stockholders, which will be
filed with the Securities and Exchange Commission on or before April 30, 2001.
<PAGE>   40

                           COAST DENTAL SERVICES, INC.
                     NOTES TO FINANCIAL STATEMENTS-CONTINUED

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item is incorporated herein by
reference to the information under the headings "Certain Relationships and
Related Transactions" in the Company's definitive Proxy Statement to be used in
connection with the Company's Annual Meeting of Stockholders, which will be
filed with the Securities and Exchange Commission on or before April 30, 2001.

                                     PART IV

ITEM 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
                  8-K

(A)      FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS

         (1)      Financial Statements: See Item 8.

         (2)      Financial Statement Schedules: See (d) below.

         (3)      Exhibits: See Exhibit Index.

(B)      REPORTS ON FORM 8-K

         None.

(C)      EXHIBITS

         See Exhibit Index.

(D)      FINANCIAL STATEMENT SCHEDULES

         The Financial Statement Schedules required are either included in the
         Notes to Financial Statements, or are otherwise omitted because of the
         absence of the conditions under which they are required.


                                       39
<PAGE>   41

                           COAST DENTAL SERVICES, INC.

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Tampa,
State of Florida on March 30, 2001.

                      COAST DENTAL SERVICES, INC.


                      By: /s/ TEREK DIASTI, DVM
                         -------------------------------------------------------
                              TEREK DIASTI, DVM
                              Chief Executive Officer, Chairman of the Board
                              (Principal Executive Officer)


                      By: /s/ ADAM DIASTI, DDS
                         -------------------------------------------------------
                              ADAM DIASTI, DDS
                              President and Director
                              (Principal Executive Officer)


                      By: /s/ WILLIAM H. GEARY, III
                         -------------------------------------------------------
                              WILLIAM H. GEARY, III
                              Chief Financial Officer, Secretary and Treasurer
                              (Principal Accounting Officer)


                      By: /s/ DONALD R. MILLARD
                         -------------------------------------------------------
                              DONALD R. MILLARD
                              Director


                      By: /s/ JOHN H. KANG
                         -------------------------------------------------------
                              JOHN H. KANG
                              Director


                                       40
<PAGE>   42

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER         EXHIBIT DESCRIPTION
------         -------------------

<S>            <C>
3.1*           Restated Certificate of Incorporation of Coast Dental Services, Inc. [2]

3.2*           Bylaws of Coast Dental Services, Inc. [1]

4.1*           Specimen of Coast Dental Services, Inc. Common Stock Certificate. [1]

4.2*           Business Loan Agreement dated August 15, 1996 between Coast Dental Services, Inc. and Barnett
               Bank, N.A.[1]

4.3*           First Amendment to Business Loan Agreement dated March 7, 1997 between Coast Dental Services, Inc.
               and Barnett Bank, N.A. [3]

4.6*           Amended and Restated Loan Agreement dated November 4, 1999 by and among Coast Dental Services,
               Inc. and Bank of America, N.A. d/b/a Nations Bank, N.A. [7]
               (The Company is not filing any instrument with respect to long-term debt that does not exceed 10
               percent of the total assets of the Company and the Company agrees to furnish a copy of such
               instrument to the Commission upon request.)

10.1*          Employment Agreement between Coast Dental Services, Inc. and Terek Diasti. [2]

10.2*          Employment Agreement between Coast Dental Services, Inc. and Adam Diasti, D.D.S. [2]

10.4*          Coast Dental Services, Inc. Stock Option Plan. [1]

10.5*          Coast Dental Services, Inc. Affiliated Professional Stock Plan. [1]

10.6*          Services and Support Agreement dated October 1, 1996 between Coast Dental Services, Inc.
               and Coast Florida, P.A. [1]

10.10*         Form of Indemnification Agreement with officers and directors. [1]

10.12*         Agreement to Transfer Stock and Stock Pledge dated November 1, 1996, by and between Adam
               Diasti, D.D.S. and Coast Dental Services, Inc. [2]
               (The Company has also entered to similar agreements with Adam Diasti with respect to his stock
               ownership in Coast Dental Southeast, P.A. n/k/a Coast Dental of Georgia, P.C., Coast Dental Services
               of Tennessee, P.C., Coast Dental Services of Florida, P.A. and Adam Diasti, D.D.S. & Associates,
               P.C. and such agreements are not being filed because they are not materially different in form
               from the Agreement to Transfer Stock and Stock Pledge filed by the Company.)

10.14*         Amendment No. 1 to Coast Dental Services, Inc. Stock Option Plan. [4]

10.17*         First Amendment effective June 1997 to Services and Support Agreement between the Company
               and Coast Florida P.A. [5]

10.18*         Second and Third Amendments effective October 1, 1998 and February 1, 1999 to the Services
               and Support Agreement between the Company and the Coast Florida P.A. [6] (The Company has
               also entered into Services and Support Agreements with Coast Dental Services of Tennessee,
               P.C., Coast Dental Services of Florida P.A. and Adam Diasti, D.D.S. & Associates, P.C. in
               Virginia, which agreements with amendments are not being filed because the terms thereof
               are not materially different from the amended Services and Support Agreements previously
               filed by the Company.)

10.19*         First Amendment effective February 1, 1999 to the Services and Support Agreement between the Company
               and Coast Dental Southeast, P.A. [6]

10.20*         Amended and Restated Loan Agreement dated November 4, 1999 by and among Coast Dental  Services,  Inc.
               and Bank of America,  N.A.  d/b/a Nations  Bank,  N.A. and Third  Renewal and  Replacement  revolving
               Promissory  Note by and among Coast Dental  Services,  Inc. and Bank of America,  N.A.  d/b/a Nations
               Bank, N.A. incorporated by reference to Exhibit 4.6.

10.21*         Employment Agreement between Coast Dental Services, Inc. and William H. Geary, III [8]

10.22*         Employment Agreement between Coast Dental Services, Inc. and Ronn S. Kelly [8]

10.23*         Employment Agreement between Coast Dental Services, Inc. and Chris D. Salemi [8]

11.1           Computation of Per Share Earnings (Loss).

23             Consent of Deloitte & Touche LLP.
</TABLE>

* Previously filed as an exhibit in the Company filing identified in the endnote
following the exhibit description and incorporated herein by reference.


                                       41
<PAGE>   43

<TABLE>
         <S>    <C>
         [1]    Registration Statement on Form S-1 filed on October 7, 1996 (File No. 333-13613).
         [2]    Amendment No. 1 to Form S-1 Registration Statement filed on November 12, 1996.
         [3]    Form 10-K filed on March 31, 1997.
         [4]    Form S-8/A filed on July 31, 1997.
         [5]    Amendment No. 2 to S-1 Registration Statement filed on September 19, 1997.
         [6]    Form 10-K filed on March 31, 1999.
         [7]    Form 10-Q filed on November 15, 1999.
         [8]    Form 10-K filed on March 30, 2000.
</TABLE>


                                       42