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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549





FORM 10-K





Annual Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For this fiscal year ended
December 31, 2009

Commission File Number: 000-51954





DCP HOLDING COMPANY

(Exact name of Registrant as
specified in its Charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Ohio                                                           |  | 20-1291244                       
|(State or Other Jurisdiction of Incorporation or Organization) |  | (IRS Employer Identification No.)
|                                                               | 
|100 Crowne Point Place                                         |  | 45241                            
|Sharonville, Ohio (Address of Principal Executive Office)      |  | (Zip Code)                       

Registrants telephone number, including area code: (513) 554-1100





Securities to be
registered pursuant to section 12(b) of the Act:



|                                        |  |                                                              
|--------------------------------------- |  | -------------------------------------------------------------
|TITLE OF EACH CLASS TO BE SO REGISTERED |  | NAME OF EACH EXCHANGE ON WHICH EACH CLASS IS TO BE REGISTERED
|NOT APPLICABLE                          |  | NOT APPLICABLE                                               

Securities to be registered pursuant to section 12(g) of the act:

Class A Redeemable Common Shares, no
par value

Class B Redeemable Common Shares, no par value

(Title of Class)





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES   ̈    NO  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES   ̈    NO  x

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulations during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   ̈    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.   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer     ̈    Accelerated filer     ̈    Non-accelerated filer    x    Smaller reporting Company     ̈

(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    YES   ̈    NO  x

As of June 30, 2009, the aggregate book value of the registrants Redeemable Common Shares, without par value, held
by non-affiliates of the registrant was approximately $5.4 million. The value of a redeemable common share is based on the book value per share in accordance with the Companys Articles of Incorporation and Code of Regulations. As of
June 30, 2009, the number of Class A and Class B Redeemable Common Shares outstanding was 622 and 7,641, respectively.

The number of Class A and Class B Redeemable Common Shares, without par value, outstanding as of March 5, 2010 was 618 and 7,571, respectively.

DOCUMENTS INCORPORATED BY REFERENCE

Definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 28, 2010, into Part III, Items 10, 11, 12, 13 and 14









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TABLE OF CONTENTS



|                  |  |                                                                                                              |  |     
|----------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|                  |  |                                                                                                              |  | PAGE
|                  |  | PART I                                                                                                       |  |     
|ITEM 1.           |  | Business                                                                                                     |  | 2   
|ITEM 1A.          |  | Risk Factors                                                                                                 |  | 12  
|ITEM 1B.          |  | Unresolved staff comments.                                                                                   |  | 16  
|ITEM 2.           |  | Properties                                                                                                   |  | 16  
|ITEM 3.           |  | Legal proceedings                                                                                            |  | 16  
|ITEM 4.           |  | (Reserved)                                                                                                   |  | 16  
|                  |  |                                                                                                             
|                  |  | PART II                                                                                                      |  |     
|ITEM 5.           |  | Market for registrants common equity, related stockholder matters and issuer purchases of equity securities |  | 18  
|ITEM 6.           |  | Selected financial data                                                                                      |  | 19  
|ITEM 7.           |  | Managements discussion and analysis of financial condition and results of operations                        |  | 19  
|ITEM 7A.          |  | Quantitative and qualitative disclosures about market risk                                                   |  | 41  
|ITEM 8.           |  | Financial statements and supplementary data.                                                                 |  | 42  
|ITEM 9.           |  | Changes in and disagreements with accountants on accounting and financial disclosure.                        |  | 66  
|ITEM 9A.          |  | Controls and procedures                                                                                      |  | 66  
|ITEM 9B.          |  | Other information                                                                                            |  | 66  
|                  |  |                                                                                                             
|                  |  | PART III                                                                                                     |  |     
|ITEM 10.          |  | Directors, executive officers and corporate governance.                                                      |  | 67  
|ITEM 11.          |  | Executive compensation.                                                                                      |  | 67  
|ITEM 12.          |  | Security ownership of certain beneficial owners and management and related stockholder matters.              |  | 67  
|ITEM 13.          |  | Certain relationships and related transactions.                                                              |  | 67  
|ITEM 14.          |  | Principal accounting fees and services.                                                                      |  | 67  
|ITEM 15.          |  | Exhibit, financials statement schedules.                                                                     |  | 68  
|SIGNATURES        |  | 75                                                                                                          
|INDEX TO EXHIBITS |  | 77                                                                                                          



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FORWARD LOOKING STATEMENTS

This report contains forward-looking statements. The forward-looking statements are contained principally in the sections
entitled Item 1. Business and Item 7. Financial InformationManagements Discussion and Analysis of Financial Condition and Results of Operations. You can identify forward-looking statements by words such as
may, might, will, should, could, would, expect, plan, anticipate, believe, estimate, project,
predict, intend, potential, likely will result, or the negative of such words or other similar expressions.

These forward-looking statements reflect our current expectations and views about future events and speak only as of the date of this report. The forward-looking statements are
subject to risks, uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ
materially from those in the forward-looking statements, include, among others: claims costs exceeding our estimates, a downgrade in our financial strength rating, competitive pressures, changes in demand for dental benefits and other economic
conditions, the loss of a significant customer or broker, the occurrence or non-occurrence of circumstances beyond our control, and those items contained in the section entitled Item 1A. Risk Factors. We do not undertake any obligation
to update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this report.



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PART I



|ITEM 1. | BUSINESS
|------- | --------

Overview

Headquartered in Cincinnati, Ohio, DCP Holding Company, doing business as the Dental Care Plus Group (DCPG or the
Company), offers to employer groups of all sizes dental health maintenance organization (HMO), participating provider organization (PPO) and indemnity plans for dental care services and vision benefit plans. As of
December 31, 2009, we had approximately 261,600 members in our dental benefits plans with 2,441 dentists participating in our two provider networks in Southwestern Ohio, Northern Kentucky, Central Kentucky and Southeastern Indiana. In addition
we had approximately 15,600 members in our vision benefit plans. We market our products through a network of independent brokers.

DCP Holding Company is the parent holding company, which includes wholly-owned subsidiaries Dental Care Plus, Inc., or Dental Care Plus, an Ohio corporation, Insurance Associates Plus, Inc., or Insurance
Associates Plus, an Ohio corporation, and Adenta, Inc., or Adenta, a Kentucky corporation. We are owned and controlled primarily by approximately 621 dentists who participate in our Dental Care Plus plans.

As an Ohio-domiciled insurance company dually licensed as a life and health insurer and a specialty health insuring
corporation, Dental Care Plus is able to underwrite dental indemnity, dental PPO, dental HMO, and vision benefit products as well as other life and health oriented products in Ohio.

Business Segments

We manage our business with three
reportable segments: fully-insured dental, self-insured dental, and corporate, all other. Corporate, all other consists of revenue associated with our dental PPO and vision products underwritten by third-party insurance carriers and certain
corporate activities. The segment information aggregates products with similar economic characteristics. These characteristics include the nature of employer groups and pricing, benefits and underwriting requirements.

The results of our fully-insured dental and self-insured dental segments are measured by gross profit, which is premium
revenue less healthcare services expense. We do not measure the results of our Corporate, All Other segment. We do not allocate insurance expenses, investment and other income, interest expense, or other assets or liabilities to our fully-insured
dental and self-insured dental segments. These items are retained in our Corporate, all other segment. Our segments do not share overhead costs and assets.

Managed Dental Benefits Market

According to the National
Association of Dental Plans (NADP), in 2008 approximately 8.7 million persons residing in Ohio and Kentucky were covered by some form of dental benefit through employer-sponsored group plans, other group or individual plans, or
publicly funded dental coverage. This represents approximately 54% of the combined population of these states. This enrollment level represents an increase of approximately 1.7% from the estimated 2007 enrollment level in these states. These
enrollment increases are primarily due to the increases in dental HMO and dental PPO in Ohio and in dental HMO and publicly funded dental in Kentucky in 2008.



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The following table shows the estimated 2008 and 2007 dental enrollment
statistics for Ohio and Kentucky, the two states where we primarily have group dental business:



|                     |  |                         |  |           |   |  |                         |  |           |   |  |                     |  
|-------------------- |  | ----------------------- |  | --------- | - |  | ----------------------- |  | --------- | - |  | ------------------- | -
|                     |  | Ohio                    | 
|                     |  | Estimated2008Enrollment |  | % ofTotal |   |  | Estimated2007Enrollment |  | % ofTotal |   |  | %Change2007 to 2008 |  
|Dental HMO           |  | 388,513                 |  | 6         | % |  | 376,297                 |  | 6         | % |  | 3                   | %
|Dental PPO           |  | 3,692,124               |  | 57        | % |  | 3,569,720               |  | 56        | % |  | 3                   | %
|Dental Indemnity     |  | 643,865                 |  | 10        | % |  | 668,501                 |  | 11        | % |  | -4                  | %
|Discount Dental      |  | 440,129                 |  | 7         | % |  | 449,570                 |  | 7         | % |  | -2                  | %
|Direct Reimbursement |  | 33,435                  |  | 1         | % |  | 33,435                  |  | 1         | % |  | 0                   | %
|Publicly Funded      |  | 1,231,850               |  | 19        | % |  | 1,226,151               |  | 19        | % |  | 0                   | %
|                     |  |                         |  |           |   |  |                         |  |           |   |  |                     |  
|Total Dental         |  | 6,429,916               |  | 100       | % |  | 6,323,674               |  | 100       | % |  | 2                   | %
|                     | 
|                     |  | Kentucky                | 
|                     |  | Estimated2008Enrollment |  | % ofTotal |   |  | Estimated2007Enrollment |  | % ofTotal |   |  | %Change2007 to 2008 |  
|Dental HMO           |  | 167,010                 |  | 7         | % |  | 172,033                 |  | 8         | % |  | -3                  | %
|Dental PPO           |  | 982,898                 |  | 44        | % |  | 960,450                 |  | 44        | % |  | 2                   | %
|Dental Indemnity     |  | 175,664                 |  | 8         | % |  | 198,640                 |  | 9         | % |  | -12                 | %
|Discount Dental      |  | 150,521                 |  | 7         | % |  | 153,750                 |  | 7         | % |  | -2                  | %
|Direct Reimbursement |  | 16,134                  |  | 1         | % |  | 16,134                  |  | 1         | % |  | 0                   | %
|Publicly Funded      |  | 740,000                 |  | 33        | % |  | 691,000                 |  | 31        | % |  | 7                   | %
|                     |  |                         |  |           |   |  |                         |  |           |   |  |                     |  
|Total Dental         |  | 2,232,227               |  | 100       | % |  | 2,192,007               |  | 100       | % |  | 2                   | %



|Source: | NADP & Delta Dental Association, Ohio Department of Jobs and Family Services and the Kentucky Cabinet for Health and Family Services
|------- | ------------------------------------------------------------------------------------------------------------------------------------

Total dental HMO enrollment in Ohio increased 3% in 2008 compared to 2007, and total dental
HMO enrollment in Kentucky decreased 3% in 2008 compared to 2007. Our dental enrollment increased 9% in 2008 compared to 2007 and 2% in 2009 compared to 2008. Approximately 88.3% of our total revenues for 2009 were derived from dental HMO products.

Our Products

The following table presents our product membership, premiums and administrative services only (ASO) fees in our respective business segments for the three years ended December 31:



|                     |  |            |  |                 |        |     |                 |   |       |                              |  |                                 |        |  |        |  
|-------------------- |  | ---------- |  | --------------- | ------ | --- | --------------- | - | ----- | ---------------------------- |  | ------------------------------- | ------ |  | ------ | -
|2009                 |  | Membership |  | Premiums(000s) |        |     | ASO Fees(000s) |   |       | Total PremiumRevenue (000s) |  | Percent of TotalPremium Revenue |       
|Fully-Insured Dental |  | 171,100    |  | $               | 45,355 |     |                 |   |       |                              |  | $                               | 45,355 |  | 64.4   | %
|Self-Insured Dental  |  | 87,600     |  |                 | 23,451 | (1) |                 | $ | 1,252 | (2)                          |  |                                 | 24,703 |  | 35.0   | %
|Other Products       |  | 18,500     |  |                 |       |     |                 |   | 417   |                              |  |                                 | 417    |  | 0.6    | %
|                     |  |            |  |                 |        |     |                 |   |       |                              |  |                                 |        |  |        |  
|Total                |  | 277,200    |  | $               | 68,806 |     |                 | $ | 1,669 |                              |  | $                               | 70,475 |  | 100.00 | %
|                     |  |            |  |                 |        |     |                 |   |       |                              |  |                                 |        |  |        |  
|                     |  |            |  |                 |       
|2008                 |  | Membership |  | Premiums(000s) |        |     | ASO Fees(000s) |   |       | Total PremiumRevenue (000s) |  | Percent of TotalPremium Revenue |       
|Fully-Insured Dental |  | 155,000    |  | $               | 40,321 |     |                 |   |       |                              |  | $                               | 40,321 |  | 60.9   | %
|Self-Insured Dental  |  | 98,100     |  |                 | 24,102 | (1) |                 | $ | 1,349 | (2)                          |  |                                 | 25,451 |  | 38.4   | %
|Other Products       |  | 14,700     |  |                 |       |     |                 |   | 435   |                              |  |                                 | 435    |  | 0.7    | %
|                     |  |            |  |                 |        |     |                 |   |       |                              |  |                                 |        |  |        |  
|Total                |  | 267,800    |  | $               | 64,423 |     |                 | $ | 1,784 |                              |  | $                               | 66,207 |  | 100.00 | %
|                     |  |            |  |                 |        |     |                 |   |       |                              |  |                                 |        |  |        |  



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|                     |  |            |  |                 |        |     |                |   |       |                            |  |                               |        |  |        |  
|-------------------- |  | ---------- |  | --------------- | ------ | --- | -------------- | - | ----- | -------------------------- |  | ----------------------------- | ------ |  | ------ | -
|                     |  |            |  |                 |       
|2007                 |  | Membership |  | Premiums(000s) |        |     | ASOFees(000s) |   |       | TotalPremiumRevenue(000s) |  | Percentof TotalPremiumRevenue |       
|Fully-Insured Dental |  | 143,900    |  | $               | 39,682 |     |                |   |       |                            |  | $                             | 39,682 |  | 66.2   | %
|Self-Insured Dental  |  | 84,300     |  |                 | 18,724 | (1) |                | $ | 1,044 | (2)                        |  |                               | 19,768 |  | 33.0   | %
|Other Products       |  | 16,800     |  |                 |       |     |                |   | 500   |                            |  |                               | 500    |  | 0.8    | %
|                     |  |            |  |                 |        |     |                |   |       |                            |  |                               |        |  |        |  
|Total                |  | 245,000    |  | $               | 58,406 |     |                | $ | 1,544 |                            |  | $                             | 59,950 |  | 100.00 | %
|                     |  |            |  |                 |        |     |                |   |       |                            |  |                               |        |  |        |  



|(1) | Self-insured dental premium revenue or premium equivalent revenue is based on the gross amount of claims incurred by self-insured members and is
recognized as revenue when those claims are incurred.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Self-insured ASO fees are the administrative fees we charge to self-insured employers to manage their provider network and process and pay claims.
ASO fees are recognized as revenue when they are earned.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our products primarily consist of
dental HMO, dental PPO and dental indemnity plans, with dental HMO products constituting 88.3% of our total revenues for 2009. Substantially all of our products are marketed to employer groups through insurance brokers and consultants. Our business
model allows us to offer dental benefit products including broad networks of participating dentists while at the same time promoting the use of private practice fee-for-service dentistry, a primary interest of our participating dentists. The dental
benefit products we offer currently vary depending on geographic markets. Our ability to offer either a dental indemnity plan or dental PPO plan has had a positive impact on our membership growth. Our objective is to offer our dental HMO products in
all markets we serve, in both fully-insured and self-insured forms.Similar to our competitors dental PPO products, our dental HMO products provide members with access to a broad provider network.

We currently market our dental HMO, dental PPO, and dental indemnity plans to employers in select Ohio and Kentucky
counties.

In general, our other, non-HMO products are offered in all counties in Ohio, Kentucky and Indiana.
We do not, however, offer our PPO product in the eight county area Dental Care Plus has been serving since 1986. This area, which we refer to as our original eight county service area, includes Butler, Clermont, Hamilton and Warren counties in Ohio,
and Boone, Campbell, Kenton and Pendleton counties in Kentucky.

In the markets outside of our original eight
county service area our products are often offered to employer groups as bundles, where the subscribers are offered a combination of dental HMO, dental PPO and dental indemnity options, with various employer contribution strategies as
determined by the employer.

Individuals become subscribers of our dental plans through their employers.
Qualified family members of these subscribers become members through such individuals. Employers may pay for all or part of the premiums, and make payroll deductions for any premiums payable by the employees.

Fully-Insured Dental

Our fully-insured dental products segment includes our Dental Care Plus dental HMO plan, our DentaSelect dental PPO plan and our DentaPremier dental indemnity plan.

Dental Care PlusUnder our dental plans, premiums are paid to Dental Care Plus by the employer, and members receive
access to our dentist network in their region. Plan designs range from full premium payouts by the employer to shared contributions of varying proportions by the employer and its employees to full payment by the employees. There are no waiting
periods and there is no balance billing in our fully-insured dental HMO, however it includes cost-sharing with the member, through premium contributions, co-payments and annual deductibles. Covered dental services are segmented into three
categories: preventive, basic and major services,



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typically covered at 100%, 80% and 50%, respectively. In most cases, each member has a $1,000 annual maximum benefit and $1,000 lifetime orthodontia maximum benefit. For the year ended
December 31, 2009, fully-insured dental HMO premiums totaled approximately $37.8 million, or 53.7% of our total premiums and ASO fees.

DentaSelectOur dental PPO product, DentaSelect, is underwritten by Dental Care Plus and has been administered by Dental Care Plus and by an independent third party administrator (TPA).
DentaSelect includes some elements of managed health care; however, it includes more cost-sharing with the member, through premium contributions, co-payments and annual deductibles. Employers and their participating employees typically share the
cost of premiums in various contribution proportions. For the year ended December 31, 2009, fully-insured dental PPO premiums totaled approximately $6.2 million, or 8.8% of our total premiums and ASO fees. The Company will continue to gradually
transition the administration of this product in house.

DentaPremierWe offer DentaPremier, our dental
indemnity product underwritten by Dental Care Plus, to employers who participate in our Dental Care Plus HMO fully-insured and self-insured plans with out-of-area members or members that require complete freedom of provider access. We introduced
this plan because many Ohio, Kentucky and Indiana employer groups have employees in other states performing sales or service functions. DentaPremier is a traditional dental indemnity plan that allows members to use any dentist they wish. Employers
and their participating employees typically share the cost of premiums in various contribution proportions. As with our dental HMO products, members are responsible for paying standard deductible amounts and co-payments. Premium rates for
DentaPremier are generally higher than premium rates for our dental HMO products. When the DentaPremier product was introduced in 2003, the product was underwritten by a third party insurance carrier. As of December 31, 2009, approximately 81%
of these dental indemnity members have been transitioned to Dental Care Plus insurance policies. For the year ended December 31, 2009, fully-insured dental indemnity premiums totaled approximately $1.3 million, or 1.9% of our total premiums and
ASO fees. Approximately 19% of our dental indemnity members are still underwritten by a third-party insurance carrier and we received administrative fees of approximately $49,000 in 2009.

Self-insured Dental

Our self-insured dental segment includes only our ASO dental HMO, dental PPO products and dental Indemnity, which we offer through Dental Care Plus to employers who self-insure their employee dental plans. These employers pay all claims
from network dentists according to our fee schedules. In the case of our dental PPO product, employers pay claims from non-network dentists based on a maximum allowed fee schedule. The Company provides administrative and claims processing services,
benefit plan design, and access to its provider networks for an administrative fee, generally to self-insured groups. This product is offered only to employer groups that have chosen to bear the claims risk for the dental benefits of
employees and their family members. Self-insured employers retain the risk of financing substantially all of the cost of dental benefits. For the year ended December 31, 2009, self-insured revenue totaled approximately $24.7 million, or 35.0%
of our total premiums and ASO fees.

Corporate, All Other

We offer dental PPO, dental indemnity and vision PPO benefit plans that are underwritten by third-party insurance carriers that are included in our corporate, all other segment. Our
subsidiary, Insurance Associates Plus, is an insurance agency licensed in Ohio, Kentucky and Indiana that markets our third-party dental PPO and vision benefit products. Insurance Associates Plus earns commissions and administrative fees based on
members enrolled in the dental PPO and vision benefit plans. Our vision benefit PPO product, Vision Care Plus, is underwritten by a third-party insurance carrier and administered by an independent TPA. Members can access both network and
out-of-network vision care providers and are subject to fixed co-payments and benefit limits. Premium cost is typically shared by employers and their participating employees in various contribution proportions. We began offering Vision Care Plus in
2005 to Dental Care Plus employer groups whose existing contracts are up for renewal as well as to new employer groups.



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The commission and administrative fee revenue that we earned related to the
dental PPO, dental indemnity and vision benefit product lines underwritten by third-party insurance carriers collectively aggregated approximately $417,000, or less than 1% of total premiums and ASO fees, for the year ended December 31, 2009.

Seasonality of Dental Service Utilization

Based on our healthcare service expense on a per member per month (PMPM) basis that adjusts the quarterly healthcare service expense for membership volume changes, our
dental plan members have historically used their dental plan benefits according to a seasonal pattern. In 2007 and 2008 our quarterly healthcare services expense was highest in the first quarter, slightly below average in the second quarter,
slightly above average in the third quarter and lowest in the fourth quarter. However, in 2009 our quarterly healthcare services expense was slightly above average in the first quarter, above average in the second quarter, significantly higher than
average in the third quarter and lowest in the fourth quarter. The following table shows these trends in tabular form:



|               |  |                            |  |       |  |        |  |       |  |        |  |      
|-------------- |  | -------------------------- |  | ----- |  | ------ |  | ----- |  | ------ |  | -----
|               |  | Healthcare Service Expense
|               |  | 2009                       |  | 2008  |  | 2007  
|               |  | $000s                     |  | $PMPM |  | $000s |  | $PMPM |  | $000s |  | $PMPM
|First Quarter  |  | 14,326                     |  | 19.43 |  | 12,922 |  | 18.87 |  | 12,144 |  | 18.78
|Second Quarter |  | 14,437                     |  | 19.54 |  | 13,017 |  | 18.32 |  | 11,356 |  | 17.96
|Third Quarter  |  | 15,557                     |  | 20.69 |  | 14,157 |  | 18.52 |  | 12,620 |  | 18.39
|Fourth Quarter |  | 13,721                     |  | 17.77 |  | 13,030 |  | 17.49 |  | 11,383 |  | 17.44

Claims are high in the first and second quarter because almost all of our employer-sponsored benefits reset on January 1. The third quarter claim level is primarily due to the high level of dental services used in July and August by
student members prior to returning to school. Use of dental services is lowest in the fourth quarter due to the holiday season and the fact that a portion of our members have already reached their maximum annual benefit level for the year.

Business Strategy

Our objective is to become one of the largest providers of dental benefits in the Midwest. Our strategy is to continue increasing membership in all of our plans by gaining new employer group customers,
acquiring other similar dental plans, adding more participating dentists to our provider networks and increasing our product offerings. We intend to further develop the use of dental indemnity and PPO products as a means to grow membership
sufficient to recruit dentists into our dental provider network.

Our Dental Care Plus HMO plans offer both
the broad provider access ordinarily attributed to a dental PPO and the utilization review and cost control features of a dental HMO. The combination of a large provider network, competitive pricing and renewal practices, and an emphasis on
outstanding customer service have allowed us to effectively compete with dental PPOs. Because we are primarily owned by dentists who participate in our Dental Care Plus plans, and our dentists are reimbursed on a fee-for-service basis, we often have
a competitive advantage in recruiting and retaining dentists for our networks.

Membership
RetentionEmployers generally contract with our dental HMO plans for a period of one year. Continuous marketing and sales efforts are made to obtain contract renewals on an annual basis. The ability to obtain contract renewals depends on our
premium schedules, competitive bids received by employers from our competitors, and employee satisfaction with our plans, among other factors. The cost of replacing lost members is higher than retaining members. Accordingly, membership retention is
a primary focus of our marketing efforts. We strive for consistent employer and broker contacts and fair, justified renewal pricing in order to increase



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retention rates. Due to these membership retention efforts, we achieved a fully-insured retention rate of approximately 91.7% in 2009, compared to retention rates of 99.0% and 97.3% in 2008 and
2007, respectively.

Group Billing and CollectionWe dedicate significant resources to achieving prompt
and accurate billing for premiums, reimbursement for self-insured claims and ASO fees. We also have a structured process for monitoring and collecting our accounts receivable.

Customer ServiceWe provide customer service to employer group administrators, members, and dentists. Customer service representatives respond promptly to employer, member and
provider staff inquiries regarding member identification cards, benefit determinations, eligibility, benefit verification and claims payments. We strive to answer questions in one phone call. We monitor key customer service statistics in order to
maintain positive customer relationships with all constituencies.

Information TechnologyOur
dental plan administration system allows us to easily adapt to benefit changes sought by employer groups. Our system also allows for increased efficiencies and costs savings in the functional areas of group marketing, enrollment, billing,
collections, cash application, claims adjudication and claims payment by reducing manual processing and facilitating the development of electronic membership enrollment, electronic group billing, and automated cash application. With this system, we
have experienced an increase in the percentage of claims that can be electronically loaded and adjudicated. We are also focused on the importance of data integrity, security, ease of data extraction, and interfacing with banks, clearinghouses, and
other business partners.

Dentist Networks

We maintain dental networks comprised of dentists who have contracted with Company subsidiaries. As of December 31, 2009, we had provider contracts with 2,441 dentists operating
out of 2,529 dentist office locations. Of these participating dentist office locations, there are 1,258 in Ohio, 945 in Kentucky, 133 in Indiana, and 193 in other states. Of the 2,441 participating dentists, 621 are shareholders who each own one
Class A voting redeemable common share.

We actively recruit dentist providers in each of our markets. In
some instances, we identify expansion area counties where additional providers are needed and locate dentists in these expansion area counties by reviewing state dental licensure records. In other cases, new employer group customers request that we
work to recruit specific dentists to which their employees desire to have access.

Before a dentist can become
a participating provider, we engage in extensive due diligence on the dentists professional licenses, training and experience, and malpractice history. The dentist must also be recommended by our Clinical Affairs Committee consisting of five
experienced dentists who are members of our Board of Directors (the Board).

Our provider
contracts require that participating dentists participate in periodic fee surveys for the purpose of establishing our fee schedule, to participate in and be bound by our utilization review and credentialing plans (see Utilization Control and
Quality Assurance Policies below), to maintain a state license in good standing to practice dentistry, to maintain professional liability insurance coverage in amounts determined by our Board, and to maintain patient records in a confidential
manner. Our provider contracts are for a term of one year and may be automatically renewed for successive one year periods unless a written termination notice is given by either party on 30 days notice.

Participating dentists are reimbursed for services provided to members of our dental plans on a fee-for-service
basis based on a maximum allowable fee schedule we have developed or the actual fee charged by the dentist, whichever is less. In the case of our dental HMO, reimbursements to dentists are subject to a percentage withhold of the amount payable to
the dentist. At the end of each fiscal year, our Board evaluates the



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performance of our dental HMO plans, capital and surplus requirements prescribed by the Ohio Department of Insurance, factors impacting our financial strength rating, funding needed to support
strategic objectives for the coming years and any other factors deemed relevant by the Board and, based on that evaluation, determines the amount of the withhold that should be returned to dentists, if any. If we have met our capital and surplus
requirements as prescribed by the Ohio Department of Insurance (see State Regulations and Federal Regulations below) and have the necessary funding to support our strategic objectives, the Board may authorize a provider
withhold payment, although there is no requirement to authorize such withhold return.

Our networks are
important to the success of our dental HMO and dental PPO plans. We have a dedicated provider relations department that communicates with network dentists and performs periodic credentialing and re-credentialing of each participating dentist.

Employees

At December 31, 2009 we employed 59 employees. We have no collective bargaining agreements with any unions and believe that our overall relations with our employees are good.

Sales and Marketing

Many of our employer group customers are represented by insurance brokers and consultants who assist these groups in the design and purchase of health care products. We generally pay brokers a commission based on premiums collected, with
commissions varying by market and premium volume, pursuant to our standard broker agreement. In addition to commissions based directly on premium volume for sales to particular customers, we also have programs that pay brokers and agents on other
bases. These include commission bonuses based on sales that attain certain levels or involve particular products. We also pay additional commissions based on aggregate volumes of sales involving multiple customers.

Utilization Control and Quality Assurance Policies

Utilization control and quality assurance policies are essential to our success. Our reimbursement structure limits the frequency of various procedures in order to control utilization of dental care by
members of our fully-insured and self-insured dental plans.

Each dentist in our networks is obligated to
adhere to our utilization review program. Non-compliance or continued deviations from the utilization review program will result in sanctions against a dentist. Such sanctions may include probation, suspension or expulsion as a participating
dentist, and may also affect the dentists ability to receive compensation from the plan for services provided to members. We believe that a stringent utilization review program is necessary to provide adequate cost containment.

Our Board of Directors appoints a committee of dentists to determine that the utilization review program is being adhered to
and updated as appropriate. The Clinical Affairs Committee is charged with reviewing service patterns of providers and requests for pretreatment estimates that do not clearly meet Company standards.

The Clinical Affairs Committee is also charged with retrospective review of covered services provided by dentists to
determine whether the frequency and nature of the services are in compliance with standards adopted by the Clinical Affairs Committee. The Clinical Affairs Committee may recommend that the participating agreement of a dentist who is not in
compliance with these standards be terminated, suspended or not renewed, or that benefits paid to the provider for particular services rendered by him or her be reduced.

Credentialing

The Clinical Affairs Committee also has
oversight over the credentialing of new dentist providers that apply to be participating providers in our provider networks. This committee oversees the periodic re-credentialing of



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dentist providers already in one of our existing provider networks and evaluates whether a dentist should be terminated from one of the provider networks if an action is filed against the dentist
with a state department of insurance or other regulatory agency or the provider loses his medical malpractice insurance coverage due to an adverse claim. The Clinical Affairs Committee is also charged in part with determining whether all
participating dentists maintain good standing with regulatory agencies. The recommendations of the Clinical Affairs Committee are forwarded to our Board of Directors for consideration and appropriate action.

Risk Management

We assess risks that may affect the Companys financial results, operational capability, delivery of service and products to employer groups and plan members, and other significant risks. We evaluate industry trends, information
technology changes and our operating efficiencies and results. The Company performs ongoing risk assessments and implements various measures to manage and mitigate identified risks. The Board of Directors has delegated responsibility for risk
oversight to the Audit Committee. Periodically, the Audit Committee reviews the Companys risk assessment and discusses with Company management, significant financial and non-financial risks and the steps management has taken to monitor and
mitigate such risks (See Item 1A-Risk Factors).

Competition

The marketing and sale of fully-insured and self-insured dental benefit plans is highly competitive. Rising health care
benefit premiums and changes in the economy have had an impact on the number of companies able to offer dental benefits to their employees. We primarily compete with full-line dental only plans, other dental HMO carriers and national insurance
companies that offer dental or vision coverage. Many of the companies with whom we compete are larger, have well-established local, regional, and/or national reputations, and have substantially greater brand recognition and financial and sales
resources. It is possible that other competitors will emerge as the market for dental plans continues to develop. Our primary competitors are Delta Dental of Ohio and Delta Dental of Kentucky that operate as dental HMOs and dental PPOs in which
members receive certain benefit incentives to receive services from network dentists. Additional major competitors include national insurance companies such as Guardian, Met Life, Humana and Anthem. These companies offer dental indemnity and dental
PPO plans. Most of these dental plans are similar to those offered by us in design, and they also pay providers on a fee-for-service basis. Dental indemnity plans lack the basic characteristics of a dental HMO plan, including contractually enforced
utilization and quality assurance standards and limitations on dentists fees, and members are not restricted to participating dentists. Dental PPO plans include both in-network benefits similar to those of a dental HMO plan and out-of-network
benefits like those associated with a dental indemnity plan. Our main competitors in the fully-insured vision benefit area are Vision Service Plan and EyeMed, a subsidiary of Lenscrafters. We believe that our vision benefit plans are competitively
priced and include sufficient benefits to compete effectively.

In 2009, our dental membership in Southwestern
Ohio decreased from approximately 211,000 members as of December 31, 2008 to approximately 203,600 members as of December 31, 2009. Dental membership in Northern Kentucky decreased from approximately 21,000 members at December 31,
2008 to approximately 18,700 at December 31, 2009. Our dental benefits market share of approximately 15% to 20% in the Southwestern Ohio and Northern Kentucky market gives us a strong competitive position. This market share is due to our large
provider network, competitive pricing and customer service.

We have approximately 23,400 total members in the
Dayton and Springfield, Ohio market. We have developed a provider network in Dayton, Ohio that includes approximately 78% of the licensed dentists in the area. Since the introduction of the DentaSelect PPO product in 2005, our relationships with
brokers in this area have improved, and we have added a significant number of employer groups. As of December 31, 2009, we had approximately 17,300 dental PPO members and approximately 6,100 dental HMO and indemnity members in the Dayton and
Springfield market. As of December 31, 2008, we had approximately 11,600 dental PPO members and approximately 1,900 dental HMO and indemnity members in the Dayton and Springfield market.



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As of December 31, 2009 we have a network of approximately 900 dentists
which represents approximately 42% of the licensed dentists in Central Kentucky. In addition, we have been building insurance broker relationships in Central Kentucky and have been quoting on new employer groups in this market. As of
December 31, 2009, we had approximately 800 group dental HMO members and approximately 13,400 group dental PPO members in our Central Kentucky market.

Customers

During 2009, approximately 9% of our total
revenue was generated by four fully-insured employers. Also during 2009, approximately 11% of our total revenue was generated by two self-insured employers. As we continue to increase the number of employers and members in our dental plans, these
employers as a source of revenue and enrollment will lessen in proportion to our total revenue and size.

Each
of our customers signs a standard form agreement, which differs depending on whether the customer is fully-insured or self-insured. There are two standard form agreements for fully-insured customersone for employer-sponsored plans, and one for
voluntary employee plans. Most of our standard form agreements are for one year terms and automatically renew for additional one-year terms. Certain agreements extend for a two-year term. The employer group customers may terminate our fully-insured
customer contracts by giving 30 days prior written notice, yet the fully-insured customer contracts are non-cancelable by the Company during the one-year or two-year contract term unless the contract coverage terminates due to non-payment of
premium when due. Our self-insured customer contracts can be canceled by the Company or employer group by giving 60 days prior written notice. The premium rates set forth in each fully-insured customer contract remain in effect during each one
year term, and may only be increased at renewal.

Insurance Regulations

State insurance laws and other governmental regulations establish various licensing, operational, financial and other
requirements relating to our business. State insurance departments in Ohio, Kentucky and Indiana are empowered to interpret such laws of their respective states and promulgate regulations applicable our business. The National Association of
Insurance Commissioners (NAIC) is a voluntary association of all of the state insurance commissioners in the United States. The primary function of the NAIC is to develop model laws on key insurance regulatory issues that can be used as
guidelines for individual states in adopting or enacting insurance legislation. While NAIC model laws are accorded substantial deference within the insurance industry, these laws are not binding and variations from the model laws from state to state
are common.

Dental Care Plus is dually licensed as a life and health insurance company and a health insuring
corporation providing specialty health care services under Ohio law, as a limited health service benefit plan in Kentucky and as a life and as a health insurance company and a dental HMO in Indiana. The regulations of each state insurance department
include specific requirements with regard to such matters as minimum capital and surplus, reserves, permitted investments, contract terms, policy forms, claims processing requirements and annual reports. If Dental Care Plus fails to maintain
compliance with all material regulations, regulatory authorities are empowered to take certain actions against it, such as revoking its license, imposing monetary penalties, or taking over supervision of its operations, or seeking a court order for
the rehabilitation, liquidation or conservation of Dental Care Plus.

DCP Holding Company is a licensed third
party administrator (TPA) in Ohio, Kentucky and Indiana. Insurance Associates Plus is licensed in Ohio, Kentucky, Indiana and Illinois as an insurance agency. As such, it is required to have at least one insurance agent licensed in each
of those states. If Insurance Associates Plus fails to meet this requirement in Ohio, Kentucky, Indiana or Illinois, its license could be revoked by the state. Adenta is licensed as a life and health insurance agency in Kentucky and Indiana. Recent
changes to Kentucky law have lessened the regulatory requirements applicable to Adenta, including elimination of the requirement to file annual reports with the Kentucky Office of Insurance.



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NAIC Accounting PrinciplesIn 1998, the NAIC adopted the
Codification of Statutory Accounting Principles that became the NAICs primary guidance on statutory accounting. The Ohio Department of Insurance has adopted the Codification. Statutory Accounting Practices (SAP) differ in some
respects from accounting principles generally accepted in the United States (GAAP). The significant differences for the Company are:



| |  |  | Similar to GAAP, deferred income taxes are provided on temporary differences between the statutory and tax bases of assets and liabilities for SAP;
however, statutory deferred tax assets are limited based upon tests that determine what is an admitted asset under SAP. Under SAP, the change in deferred taxes is recorded directly to surplus as opposed to GAAP where the change is recorded to
current operations.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Deferred acquisition costs are those costs that vary with and are primarily related to the acquisition of new and renewal business. Such costs
include commissions, costs of contract issuance and underwriting, premium taxes and other costs the Company incurs to acquire new business or renew existing business. For GAAP purposes, the Company defers acquisition costs and amortizes them over
the estimated life of the contracts in proportion to premiums earned. Under SAP, these acquisition costs are expensed as incurred.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Risk Based CapitalThe NAICs Risk-Based Capital for Life and/or Health Insurers Model Act (the Model Act) provides a tool for insurance regulators to determine the levels of
statutory capital and surplus an insurer must maintain in relation to its insurance and investment risks and whether there is a need for possible regulatory action. The Model Act (or similar legislation or regulation) has been adopted in states
where Dental Care Plus does business. The Model Act provides for three levels of regulatory action, varying with the ratio of the insurance companys total adjusted capital (defined as the total of its statutory capital and surplus, asset
valuation reserve and certain other adjustments) to its authorized control level risk-based capital (RBC):



| |  |  | If a companys total adjusted capital is less than or equal to 200 percent but greater than 150 percent of its RBC (the Company Action
Level), the company must submit a comprehensive plan aimed at improving its capital position to the regulatory authority proposing corrective actions.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If a companys total adjusted capital is less than or equal to 150 percent but greater than 100 percent of its RBC (the Regulatory Action
Level), the regulatory authority will perform a special examination of the company and issue an order specifying the corrective actions that must be followed.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If a companys total adjusted capital is less than or equal to 100 percent but greater than 70 percent of its RBC (the Authorized Control
Level), the regulatory authority may place the company under the regulatory authoritys control.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If a companys total adjusted capital is less than or equal to 70 percent of its RBC (the Mandatory Control Level), the regulatory
authority must place the company under the regulatory authoritys control.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition
to the levels of regulatory action described above, the regulatory authority may impose restrictions, reporting or other requirements on companies whenever the regulatory authority determines that the financial condition of the company warrants such
action, notwithstanding the fact the company meets the requirements of the Model Act. A regulatory authority may also seek an order of the courts placing the company in rehabilitation, liquidation or conservation whenever the regulatory authority
determines that the companys financial condition is hazardous, notwithstanding the fact that the company may be in compliance with the requirements of the Model Act.

Dental Care Pluss statutory annual statements for the year ended December 31, 2009 filed with the Ohio Department of Insurance reflected total adjusted capital in excess
of Company Action Level RBC.



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Government Regulations

Our management proactively monitors compliance with governmental laws and regulations affecting our Company. We are unable to predict how existing federal or state laws and
regulations may be changed, what additional laws or regulations affecting our business may be enacted or proposed, when and which of the proposed laws will be adopted or the effect of any such new laws and regulations will have on our results of
operations, financial position, or cash flows. For a description of material current activities in the federal and state legislative areas, see the Item 1ARisk Factors in this report.

AVAILABLE INFORMATION

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, and other filings with the Securities and Exchange Commission
(SEC) are available on the SECs website (www.sec.gov). Copies of these documents will be available without charge to any shareholder upon request. Request should be directed in writing to the Company at 100 Crowne Point Place,
Sharonville, Ohio 45241. In addition, the public may read and copy any materials we file with the SEC at the SECs Public Reference Room at 100 F. Street, NE, Washington, DC 20549. The public may obtain information on the operations of the
Public Reference Room by calling the SEC at 1-800-SEC-0330.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected, and the value of our shares could decline. The risks and uncertainties described below
are those that we currently believe may materially affect our Company.

The current state of the
national economy and adverse changes in economic conditions could adversely affect the Companys business and results of operations.

The current state of the national economy and any adverse changes in the market conditions that are exacerbated by the financial credit situation could adversely affect our customers. As a result, our
employer group customers may seek to control their employee benefit costs including their dental plan benefits, which may lead to limited rate increases, fewer new sales and the loss of some dental plan membership. These factors may affect the
Companys revenue in the near-term.

Our business is dependent upon a limited number of customers, and
the loss of any one such customer could result in a loss of substantial premium revenue.

During 2009,
approximately 9% of our total revenue was generated by four fully-insured employer groups and approximately 11% of our total revenue was generated by two self-insured employer groups. If our relationship with any one of these employers were to
terminate, our dental membership and the related premium revenue would decrease, which could lead to lower net income.

A small number of independent brokers source a substantial portion of our business, and the loss of any one such broker could result in a loss of substantial premium revenue.

During 2009, approximately 51% of our business was generated by five independent brokers, one of which was responsible for
generating approximately 28% of our total premium revenue. If our relationship with any of these brokers were to terminate, our premium revenue could decrease materially. As a result, we could experience significant net losses.



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Because our premiums are fixed by contract, we are unable to increase our
premiums during the contract term if our claims costs exceed our estimates. Dental services utilization by members of our fully-insured dental plans may be higher than expected, resulting in higher than anticipated healthcare services expense and a
reduction in our net income.

The fully-insured dental plans offered by Dental Care Plus, our largest
subsidiary, are pre-paid by participating employers in amounts based on our actuarial projections that are used to establish premium rates for such plans. As a result, the premiums received by Dental Care Plus from participating employers do not
fluctuate based on quantity or cost of services utilized by members. We bear the risk that premiums we have established will not be adequate to cover the cost of services provided to members of our fully-insured dental plans and our related
operating expenses. If our claims costs exceed our estimates, we will be unable to adjust the premiums we receive under our current contracts, which may result in a decrease in our net income.

Our customers decisions to transition from a fully-insured to a self-insured dental plan or from a self-insured to
a fully-insured dental plan could result in lower gross margins and increased costs.

During 2009, a number
of fully-insured dental members shifted to our self-insured dental products. Additionally, a number of self-insured members shifted to our fully-insured dental products. If our customers continue to shift from a fully-insured dental product to a
self-insured dental product, our dental gross margin may decrease. If our customers shift from a self-insured dental product to a fully-insured dental product, our capital and surplus requirements will increase. In both instances, we may incur
significant transitioning cost.

The financial strength rating assigned to Dental Care Plus may be
downgraded, which could result in a loss of employer groups and insurance brokers, which may, in turn, cause our premium revenue to decline.

A.M. Best assigns a rating to companies that have, in their opinion, an ability to meet their ongoing obligations to policyholders, but are financially vulnerable to adverse changes in underwriting and
economic conditions. Our B- (Fair) rating was affirmed in January 2006, April 2007, May 2008 and again in June 2009. Our A.M. Best rating is a measure of our financial strength relative to other insurance companies and is not a
recommendation to buy, sell or hold securities. The rating assigned by A.M. Best Company is based, in part, on the ratio of our fully-insured premium revenue to our statutory capital and surplus. If Dental Care Plus continues to experience growth in
its fully-insured premium revenue but does not retain enough of its earnings or obtain new sources of capital, the rating assigned to Dental Care Plus may be downgraded. If a downgrade were to occur, employer groups may decline to renew their annual
or multi-year contract with us, and insurance brokers may refuse to market our dental HMO products. In addition, a downgrade may make it difficult for us to contract with new employer groups and new brokers. The loss of existing employer groups, and
the loss of insurance brokers may lead to a loss of premium revenue.

If we fail to maintain contracts with
an adequate number of dentists, it may be difficult to attract and retain employer groups, which may lead to a loss of premium revenue.

Our business strategy is dependent to a large extent upon our continued maintenance of our dentist networks. Generally, our participating provider contracts allow either party to terminate on limited
notice (generally 30 days prior to annual renewal). If we are unable to continue to establish and maintain contracts with an adequate number of dentists in our networks, employer groups may not renew their contracts with us and it may be difficult
to attract new employer groups, which may lead to a loss of premium revenue.

We encounter significant
competition that may limit our ability to increase or maintain membership in the markets we serve, which may harm our growth and our operating results.

We operate in a highly competitive environment. We compete for employer groups principally on the basis of the size, location and quality of our provider network, premium rates, benefits provided, quality
of service and reputation. A number of these competitive elements are partially dependent upon and can be positively affected by financial resources available to a dental plan. Many other organizations with which we compete have



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substantially greater financial and other resources than we do. For example, our competitors include Delta Dental of Ohio, which has an A.M. Best rating of A- (Excellent) and Delta Dental of
Kentucky, which has an A.M. Best rating of NR-5 (Not Formally Followed). In addition, we compete with national insurance carriers such as Metropolitan Life and Guardian, which have A.M. Best ratings of A+ (Superior) and A++ (Superior), respectively.
Given the higher ratings and financial strength of many of our competitors, we may encounter difficulty in increasing or maintaining our dental membership in the future.

We are subject to substantial government regulation. New laws or regulations, changes in existing laws or regulations and changes in public policy could adversely affect the
markets for our products and our profitability.

Public PolicyIt is not possible to predict with
certainty the effect of fundamental public policy changes that could adversely affect the Company. These policy changes could include the federal or state governments assuming a larger role in the health care industry or reforms such as
universal health care regulation or the availability of a government sponsored health plan. Legislative and regulatory proposals that would significantly reform the health care system are currently pending in many states and could be advanced
at the federal level by the executive branch or U.S. Congress as early as 2010. Changes in public policy could materially affect our profitability and cash flow, our ability to retain or grow our business and our financial position even if we
correctly predict their occurrence.

HIPAAThe Health Insurance Portability and Accountability Act of
1996 (HIPAA) authorized the U.S. Department of Health and Human Services (HHS) to adopt a series of regulations designed to simplify the exchange of information electronically between health plans and health care providers
and to promote efficiency within the health care industry, as well as to protect the confidentiality and security of individually identifiable health information. Pursuant to this authority, HHS has adopted a series of regulations which are
applicable to Covered Entities, which include health care providers, health plans and health care clearinghouses (collectively the HIPAA Regulations). Failing to comply with these HIPAA Regulations could result in significant
civil penalties.

ARRAThe American Recovery and Reinvestment Act of 2009 (ARRA) contained
several changes to the privacy and security rules under HIPAA. These changes are contained in the Health Information Technology for Economic and Clinical Health Act (the HITECH Act) provisions of the ARRA, and apply to all entities
subject to the HIPAA privacy rules, including group health plans sponsored by employers. First the HITECH Act makes several provisions of the HIPAA privacy and security rules directly applicable to the business associates of a group health plan. In
addition, the HITECH Act contains notification rules that apply when there is a breach of the privacy rules due to an improper disclosure of unsecured PHI. Generally, if a covered entity such as a group health plan discovers that an improper
disclosure of unsecured protected health information (PHI) has occurred, the covered entity must notify the affected individuals whose PHI was breached. Covered entities must also notify the Department of Health and Human Services
(HHS) of breaches and, if a breach affects more than 500 residents of a State or jurisdiction, the covered entity must provide notice of the breach to a prominent media outlet serving the State or jurisdiction. In addition, a business
associate must notify a covered entity when it discovers a breach of unsecured PHI. Failing to comply with the breach notification rules could result in significant civil penalties.

GLBAThe Financial Services Modernization Act of 1999 (the Gramm-Leach-Bliley Act, or GLBA)
contains privacy provisions and introduced new controls over the use of an individuals nonpublic personal data by financial institutions, including insurance companies, insurance agents and brokers licensed by state insurance regulatory
authorities. Numerous pieces of federal and state legislation aimed at protecting the privacy of nonpublic personal financial and health information are pending. The privacy provisions of GLBA that became effective in July 2001 require a financial
institution to provide written notice of its privacy practices to all of its customers. In addition, a financial institution is required to provide its customers with an opportunity to opt out of certain uses of their non-public personal
information. Failing to comply with GLBA Regulations could result in significant civil penalties.



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Our business is heavily regulated by the states in which we do business,
and our failure to comply with regulatory requirements could lead to a loss of our authority to do business in such states.

Our business is subject to substantial government regulation, principally under the insurance laws of Ohio, Kentucky and Indiana. We will also become subject to the insurance laws and regulations of other
states in which our subsidiaries may in the future conduct business. These laws, which vary from state to state, generally require our subsidiaries to be licensed by the relevant state insurance commission. With respect to our fully-insured dental
products, these laws and regulations also establish operational, financial and other requirements. Dental Care Plus is currently required to maintain a minimum capital and surplus of approximately $2.5 million according to the regulations for the
state of Ohio. The ability of Dental Care Plus to maintain such minimum required capital and surplus is directly dependent on the ability of Dental Care Plus to maintain a profitable business. Failure to maintain compliance with the minimum required
capital and surplus of each state could result in Dental Care Plus becoming subject to supervision by the Ohio, Kentucky and Indiana insurance regulatory agencies, and could further result in the suspension or revocation of Dental Care Pluss
Certificate of Authority in Ohio, Kentucky and Indiana, monetary penalties, or the rehabilitation or liquidation of Dental Care Plus.

A decrease in the working capital and liquidity of our business may have an adverse affect on our ability to meet debt service requirements.

If the working capital of our business were to decrease significantly due to an increase in accounts receivable or the loss
of a significant number of employer groups, we may be forced to liquidate portfolio investments in order to meet debt service requirements which would result in a reduction of our investment income. If we were to experience a period of continuing
operating losses and working capital were not restored to levels sufficient to meet our debt service requirements, we may need to use surplus cash for debt service, which could result in a material reduction in our capital and surplus balance. If
the accounts receivable balances from certain employer groups are greater than 90 days past due, these accounts receivable become non-admitted assets for statutory accounting purposes, leading to a decrease in our capital and surplus balance. If our
capital and surplus is lowered materially, the Ohio Department of Insurance may commence adverse regulatory action against us, ranging from requesting corrective action to assuming control of Dental Care Plus, and A.M. Best may consider lowering our
financial strength rating.

Our business is highly concentrated in a limited geographic area and adverse
economic conditions within the markets in which we do business could impair or reverse our growth trends and have a negative affect on our premium revenue and net income.

The operations of our subsidiaries are concentrated in the Southwestern Ohio, Northern Kentucky and Central Kentucky markets, although our primary operations are in Southwestern
Ohio. A prolonged regional economic downturn could cause employers to stop offering dental coverage as an employee benefit or elect to offer dental on a voluntary, employee-funded basis as a means to reduce their operating costs. A decrease in
employer groups offering dental coverage on an employer sponsored basis could lead to a decrease in our membership, premium revenue and net income.



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|ITEM 1B. | UNRESOLVED STAFF COMMENTS.
|-------- | --------------------------

None



|ITEM 2. | PROPERTIES
|------- | ----------

We currently maintain our principal place of business at 100 Crowne Point Place, Sharonville, Ohio 45241, which we own. We occupy approximately 60% of this property. The remaining amount, approximately 40%, is leased to third-party tenants.
We believe that our existing facility is adequate to support our business.



|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

We are not a party to any pending legal proceedings that we believe would, individually or in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.



|ITEM 4. | (RESERVED)
|------- | ----------

EXECUTIVE OFFICERS

Each of our executive officers is appointed to serve a one-year term. Anthony A. Cook is the only executive
officer that has an employment agreement with the Company.

The name and age of each of the present officers
of the Company follows along with a brief professional biography.

Anthony A. Cook, MS, MBA, 59, President,
Chief Executive Officer and Director. Mr. Cook has been President and Chief Executive Officer since February 2001 of Dental Care Plus and, upon reorganization of Dental Care Plus, also assumed the role of President and Chief Executive Officer
for the Company. In November 2008, Mr. Cook became a Director of the Company. Mr. Cook has over 30 years of management experience in the health care industry. He has HMO experience as a Plan Administrator, the Director of Health
Systems for the largest Blue Cross and Blue Shield HMO in Ohio, as well as the Executive Director of a provider owned health plan. Before arriving at Dental Care Plus, Mr. Cook consulted with executives of health care organizations in
developing capabilities to succeed in a managed care environment. Mr. Cook has a bachelors degree in psychology and a masters degree in guidance and counseling from Youngstown State University as well as a Master of Business
Administration degree from Baldwin-Wallace College in Cleveland, Ohio.

Robert C. Hodgkins, Jr., CPA, MBA, 50,
Vice President-Chief Financial Officer. Mr. Hodgkins has been Vice President-Chief Financial Officer of Dental Care Plus since July 2003 and, upon reorganization of Dental Care Plus, became Vice President-Chief Financial Officer of the Company.
Previously, Mr. Hodgkins was a Senior Manager in the Cincinnati office of PriceWaterhouseCoopers LLP, specializing in financial management and consulting to the health care industry from 1997 through 2002. Mr. Hodgkins also was a Director
in the



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Finance Division of Blue Cross Blue Shield of Massachusetts (BCBSMA) from 1995 through 1997. He is a Certified Public Accountant licensed in Ohio and a past President of the Southwestern Ohio
Chapter of the Healthcare Financial Management Association. He holds a Bachelor of Science degree in Industrial Engineering from Northwestern University and a Master of Business Administration from the J.L. Kellogg Graduate School of Management at
Northwestern University.

In addition to the foregoing executive officers, Ann Young is a significant employee
of the Company:

Ann Young, 47, Chief Sales and Marketing Officer. Ms. Young has been Chief Sales and
Marketing Officer of the Company and Dental Care Plus since October 2004. Prior to joining the Company, Ms. Young managed her own consulting firm, COACHLOGIC, from 2002 to 2004. She was also Senior Vice President of Sales and Marketing at
Emerald Health Network in Cleveland, Ohio from 1999 to 2002 and Vice President of National Sales at The Chandler Group from 1991 to 1998. Ms. Young is a graduate of Kent State University and holds dual degrees in psychology and business
administration. She is an active member of the International Coach Federation, the International Association of Coaching, and the Greater Cincinnati Professional Coaches Association.



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##### Table of Contents

PART II



|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ------------------------------------------------------------------------------------------------------------

Market for Redeemable Common Shares

There is no established public trading market for the Class A Redeemable Common Shares or Class B Redeemable Common Shares. In addition, there are significant restrictions
contained in the Companys Code of Regulations on the ability to transfer the Class A and Class B Redeemable Common Shares.

Holders

As of December 31, 2009, there were 621
holders of Class A Redeemable Common Shares and 643 holders of Class B Redeemable Common Shares.

Dividend Policy

We have not declared or paid cash dividends relative to our Class A
Redeemable Common Shares or our Class B Redeemable Common Shares and do not anticipate paying cash dividends on these shares.

See Item 12 under PART III for securities authorized for issuance under equity compensation plans.

Recent sales of unregistered securities

In December 2009,
the Company sold 10 Class B redeemable common shares to one participating dentist at a price of $633.21 per share, the book value of a redeemable common share at November 30, 2009.

Performance of Redeemable Common Shares

Pursuant to our Code of Regulations, the Companys redeemable common shares are sold and repurchased by the Company at book value. The book value of a Company redeemable common
share was $636, $672, $601, $532, and $518 at December 31, 2009, 2008, 2007, 2006, and 2005, respectively.

Purchases of Equity Securities

We repurchased and retired one Class A Redeemable Common
Share and 35 Class B Redeemable Common Shares during the three months ended December 31, as follows:



|                               |  |                              |     |  |                              |     |  |                            |        |                                                                                |   |                                                                             |    
|------------------------------ |  | ---------------------------- | --- |  | ---------------------------- | --- |  | -------------------------- | ------ | ------------------------------------------------------------------------------ | - | --------------------------------------------------------------------------- | ---
|Period                         |  | Total Class Asharespurchased |     |  | Total Class Bsharespurchased |     |  | Average pricepaidper share |        | Total Number ofShares Purchased asPart of a PubliclyAnnounced Plans orPrograms |   | Maximum Number ofShares that May YetBe Purchased Underthe Plans or Programs
|October 1 October 31, 2009    |  | 0                            |     |  | 12                           | (a) |  | $                          | 601.78 |                                                                                | 0 |                                                                             | N/A
|November 1  November 30, 2009 |  | 1                            | (a) |  | 11                           | (a) |  | $                          | 614.73 |                                                                                | 0 |                                                                             | N/A
|December 1  December 31, 2009 |  | 0                            |     |  | 12                           | (a) |  | $                          | 633.21 |                                                                                | 0 |                                                                             | N/A



|(a) | Repurchased from provider shareholder retirees in accordance with the Companys obligations under its Amended and Restated Code of Regulations.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|ITEM 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

The following table sets forth selected consolidated financial information for the Company and its subsidiaries for the years indicated. The financial information should be read together with
Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes included elsewhere in this registration statement.



|                                                    |  |                                                                         |        |   |      |   |        |      |  |      |        |      |   |        |  |   |       
|--------------------------------------------------- |  | ----------------------------------------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                                    |  | (All amounts in thousands, except earnings per RedeemableCommon Share.)
|                                                    |  | 2009                                                                    |        |   | 2008 |   |        | 2007 |  | 2006 |        | 2005
|Premium revenue                                     |  | $                                                                       | 70,475 |   |      | $ | 66,207 |      |  | $    | 59,950 |      | $ | 51,587 |  | $ | 44,857
|Investment income                                   |  |                                                                         | 99     |   |      |   | 223    |      |  |      | 269    |      |   | 198    |  |   | 104   
|Other income                                        |  |                                                                         | 72     |   |      |   | 80     |      |  |      | 94     |      |   | 305    |  |   | 221   
|Net income (loss) on redeemable shares              |  |                                                                         | (289   | ) |      |   | 615    |      |  |      | 604    |      |   | 103    |  |   | 467   
|Total assets                                        |  |                                                                         | 34,537 |   |      |   | 35,521 | (1)  |  |      | 12,285 |      |   | 12,799 |  |   | 12,250
|Mortgage and capital lease obligations              |  |                                                                         | 1,020  |   |      |   | 1,159  |      |  |      | 1,576  |      |   | 1,631  |  |   | 1,889 
|Redeemable preferred shares                         |  |                                                                         | 196    |   |      |   |       |      |  |      |       |      |   |       |  |   |      
|Cash dividends declared, common                     |  |                                                                         |       |   |      |   |       |      |  |      |       |      |   |       |  |   |      
|Basic earnings (loss) per redeemable common share   |  | $                                                                       | (37.27 | ) |      | $ | 72.71  |      |  | $    | 72.88  |      | $ | 12.59  |  | $ | 55.14 
|Diluted earnings (loss) per redeemable common share |  | $                                                                       | (37.27 | ) |      | $ | 72.71  |      |  | $    | 72.50  |      | $ | 12.59  |  | $ | 55.14 



|(1) | Total assets increased to approximately $35,521 in 2008 from approximately $12,285 in 2007, which is the result of the amendment of its
fully-insured customer contracts to be non-cancelable by the Company.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Overview

Headquartered in Cincinnati, Ohio, Dental Care Plus Group offers to employer groups of all sizes dental HMO, dental PPO, dental indemnity and vision PPO benefit plans and related services. As of December 31, 2009, we had approximately
277,200 members in our dental and vision benefit programs with 2,441 dentists participating in our networks of providers.

We manage our business with three segments: fully-insured dental, self-insured dental, and corporate, all other. Corporate, all other consists of revenue associated with our dental PPO and vision products
underwritten by third-party insurance carriers and certain corporate activities. Our dental HMO, PPO and indemnity products and our vision product line are marketed to employer groups.

The results of our fully-insured and self-insured dental segments are measured by gross profit. We do not measure the
results of our corporate, all other segment. We do not allocate investment and other income, insurance expenses, or other assets or liabilities to our fully-insured and self-insured segments. These items are retained in our corporate, all other
segment. Our segments do not share overhead costs and assets. We do, however, measure the gross profit of each of our fully-insured and self-insured segments to costs retained in our corporate, all other segment.

Many factors have an effect on our results, but most notably our results are influenced by our ability to establish and
maintain a competitive and efficient cost structure, and to accurately and consistently establish competitive premiums, ASO fees, and plan benefit levels that are commensurate with our dental and administrative costs. Dental costs are subject to a
high rate of inflation due to many forces, including new higher priced technologies and dental procedures, new dental service techniques and therapies, an aging population, the tort liability system, and government regulations.



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Profitability Strategy

Our strategy focuses on providing solutions for employers to the rising cost of dental care by leveraging our growing networks of participating dentists and deploying a variety of
products that give employer groups and members more choices. Additionally, we have increased the diversification of our membership base, not only through our newer products, but also by entering new geographic territories. We expect our dental PPO
and indemnity products to be important drivers of growth in the years ahead.

In our markets, there has been
limited growth in recent years in the number of individuals enrolled in dental benefit plans. However, there has been a shift of membership out of the more expensive dental indemnity products into the dental PPO products that offer both less
expensive in-network benefits and out-of-network benefits. At the same time, members have migrated away from dental HMO products with very limited provider networks. While these dental HMO products are the least expensive, employers and members have
focused their attention on the dental PPO products that offer broad provider access with the cost control associated within a contracted provider network for the in-network portion of the dental services rendered.

In our original eight county service area, our non-exclusive dental HMO provider network includes approximately 95% of the
dental providers in the market. In that market our dental HMO provides the broad provider access of a dental PPO along with effective utilization and cost control features. Because of the broad provider network and our professional support services
to employers, our fully-insured dental HMO is priced higher than other dental HMOs and has premium rates more equivalent to competitor dental PPOs.

We have experienced steady growth in membership and revenue in both the fully-insured and self-insured dental HMO product during the last five years. We attribute this growth to our broad provider
network, competitive premium rates for our fully-insured business and ASO fees for our self-insured business, and our commitment to providing outstanding customer service to all of our constituencies (employer groups, members, insurance brokers, and
dentists). The introduction of the DentaPremier dental indemnity product in 2003 created new business opportunities for us with employer groups in our original eight county service area. The introduction of the DentaSelect dental PPO product has
been instrumental to our new sales in the Dayton, Ohio and Central Kentucky markets.

Healthcare services
expense has increased for both the fully-insured dental segment and the self-insured dental segment. We have reviewed and adjusted our provider fee schedules where appropriate. Insurance expenses increased significantly in 2009, 2008 and 2007 in
connection with our expansion into Dayton, Ohio and Central Kentucky with new dental indemnity and dental PPO products. Other important factors that have an impact on our profitability are both the competitive pricing environment and market
conditions. With respect to pricing, there is a tradeoff between sustaining or increasing underwriting margins versus increasing enrollment. With respect to market conditions, economies of scale have an impact on our administrative overhead. As a
result of a decline in preference for more closely managed dental HMO products, dental costs have become increasingly comparable among our larger competitors. Product design and consumer involvement have become more important drivers of dental
services consumption, and administrative expense efficiency is becoming a more significant driver of margin sustainability. Consequently, we continually evaluate our administrative expense structure and attempt to realize administrative expense
savings through productivity and technology improvements.

Highlights



| |  |  | We had a net loss of approximately $(289,000) for the year ended December 31, 2009 compared to net income of approximately $615,000 for the
year ended December 31, 2008. The decrease in net income is primarily the result of a 2.5% increase in fully-insured healthcare services utilization. The fully-insured healthcare services utilization increase was primarily due to a 4.7%
increase in preventive dental services utilization and a 1.4% increase in basic dental services utilization. A higher percentage
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | of our fully-insured members received dental services in 2009. Given this higher level of utilization that may continue, we are reevaluating our rating and underwriting practices to achieve a
loss ratio consistent with our historical performance. In addition, we believe some employees of our existing employer group customers and their dependents utilized preventive and basic dental services prior to losing their coverage. We incurred
healthcare service expense for those services with no subsequent premium revenue for these members, which adversely affected our gross profit level.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our dental and vision products grew by approximately 9,400 members, or 3.5%, from 267,800 members at December 31, 2008 to 277,200 members at
December 31, 2009. Despite the loss of a large self-insured employer group effective January 1, 2009 that represented approximately 15,700 members and the loss of approximately 12,700 fully-insured dental HMO members due to employer groups
that did not renew their contracts and employee reductions at renewed employer groups, our marketing and sales team obtained approximately 37,800 new dental and vision members in 2009. Our membership at December 31, 2009 includes approximately
32,400 members in our DentaSelect dental PPO offering.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We intend for the discussion of our
financial condition and results of operations that follows to assist in the understanding of our financial statements and related changes in certain key items in those financial statements from year to year, and the primary factors that accounted
for those changes, as well as how certain critical accounting policies and estimates have an impact on our financial statements.

Comparison of Results of Operations for 2009 and 2008

The following chart shows membership
totals and revenues and expenses for our three business segments for the years ended December 31, 2009 and 2008 (in thousands, except for membership data and percentage change):



|                                 |  |      |         |   |      |   |         |  |        |   
|-------------------------------- |  | ---- | ------- | - | ---- | - | ------- |  | ------ | --
|                                 |  | 2009 |         |   | 2008 |   | CHANGE  | 
|Membership:                      |  |      |         |   |      |   |         |  |        |   
|Fully-insured dental             |  |      | 171,100 |   |      |   | 155,000 |  | 10.4   | % 
|Self-insured dental              |  |      | 87,600  |   |      |   | 98,100  |  | (10.7  | )%
|Corporate, All Other             |  |      | 18,500  |   |      |   | 14,700  |  | 25.9   | % 
|                                 |  |      |         |   |      |   |         |  |        |   
|Total membership                 |  |      | 277,200 |   |      |   | 267,800 |  | 3.5    | % 
|                                 |  |      |         |   |      |   |         |  |        |   
|                                 |  |      |        
|Premium revenue:                 |  |      |         |   |      |   |         |  |        |   
|Fully-insured dental             |  | $    | 45,355  |   |      | $ | 40,321  |  | 12.5   | % 
|Self-insured dental              |  |      | 24,703  |   |      |   | 25,451  |  | (2.9   | )%
|Corporate, All Other             |  |      | 417     |   |      |   | 435     |  | (4.1   | )%
|                                 |  |      |         |   |      |   |         |  |        |   
|Total premium revenue            |  |      | 70,475  |   |      |   | 66,207  |  | 6.4    | % 
|                                 |  |      |         |   |      |   |         |  |        |   
|Investment income:               |  |      |         |   |      |   |         |  |        |   
|Corporate, All Other             |  |      | 99      |   |      |   | 223     |  | (55.6  | )%
|                                 |  |      |         |   |      |   |         |  |        |   
|Other income:                    |  |      |         |   |      |   |         |  |        |   
|Corporate, All Other             |  |      | 72      |   |      |   | 80      |  | (10.0  | )%
|                                 |  |      |         |   |      |   |         |  |        |   
|Healthcare service expense:      |  |      |         |   |      |   |         |  |        |   
|Fully-insured dental             |  |      | 37,018  |   |      |   | 31,576  |  | 17.2   | % 
|Self-insured dental              |  |      | 21,288  |   |      |   | 22,014  |  | (3.3   | )%
|                                 |  |      |         |   |      |   |         |  |        |   
|Total healthcare service expense |  |      | 58,306  |   |      |   | 53,590  |  | 8.8    | % 
|                                 |  |      |         |   |      |   |         |  |        |   
|Insurance expenses:              |  |      |         |   |      |   |         |  |        |   
|Corporate, All Other             |  |      | 12,735  |   |      |   | 11,946  |  | 6.6    | % 
|                                 |  |      |         |   |      |   |         |  |        |   
|Income tax (benefit) expense:    |  |      |         |   |      |   |         |  |        |   
|Corporate, All Other             |  |      | (106    | ) |      |   | 359     |  | (129.5 | )%
|                                 |  |      |         |   |      |   |         |  |        |   



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Summary

Net income (loss) on redeemable shares was approximately $(289,000) and $615,000 for the years ended December 31, 2009 and 2008, respectively. Basic earnings (loss) per redeemable common share was
$(37.27) and $72.71 at December 31, 2009 and 2008, respectively. The decrease in net income on redeemable shares primarily resulted from an increase in total healthcare services expense as a percentage of total premium revenue from 80.9% in
2008 to 82.7% in 2009. In addition, insurance expense as a percentage of total premium revenue increased from 18.0% in 2008 to 18.1% in 2009.

Membership

Our fully-insured membership increased approximately 16,100 in 2009. Our
fully-insured dental HMO membership increased approximately 4,200 members, or 3.2%, from 131,200 at December 31, 2008 to 135,400 at December 31, 2009. This membership increase is attributable to new fully-insured dental HMO sales in the
Cincinnati and Northern Kentucky market of approximately 16,900 members, offset by a decrease in fully-insured dental HMO membership of 12,700 members that did not renew their contracts with Dental Care Plus in the last 12 months. Our fully-insured
indemnity membership increased by approximately 600 members, or 13.3%, from approximately 4,500 members at December 31, 2008 to approximately 5,100 members at December 31, 2009. In addition, our fully-insured dental PPO membership
increased by approximately 11,300 members, from approximately 19,300 members at December 31, 2008 to approximately 30,600 members at December 31, 2009.

Our self-insured dental membership decreased approximately 10,500 members, or 10.7%, from approximately 98,100 members at December 31, 2008 to approximately 87,600 members at
December 31, 2009. This membership decrease was primarily due to the loss of one large self-insured employer group with approximately 15,700 members, offset by new self-insured sales of approximately of 5,200 members.

Our corporate, all other membership increased by approximately 3,800 members. This membership was primarily due to the
increase in our vision membership underwritten by a third-party insurance carrier.

Revenue



|                                 |  |                            |        |      |   |                    |  |                      |       |                    |   |       |  |   |    
|-------------------------------- |  | -------------------------- | ------ | ---- | - | ------------------ |  | -------------------- | ----- | ------------------ | - | ----- |  | - | ---
|                                 |  | (All amounts in thousands)
|                                 |  | 2009                       |        | 2008 |   | Total DollarChange |  | Revenue ChangeVolume |       | Revenue ChangeRate
|Fully-Insured DHMO Premium       |  | $                          | 37,842 |      | $ | 36,149             |  | $                    | 1,693 |                    | $ | 957   |  | $ | 736
|Fully-Insured Dindemnity Premium |  |                            | 1,341  |      |   | 1,192              |  |                      | 149   |                    |   | 103   |  |   | 46 
|Fully-Insured DPPO Premium       |  |                            | 6,172  |      |   | 2,980              |  |                      | 3,192 |                    |   | 3,075 |  |   | 117
|                                 |  |                            |        |      |   |                    |  |                      |       |                    |   |       |  |   |    
|Total Fully-Insured Premium      |  | $                          | 45,355 |      | $ | 40,321             |  | $                    | 5,034 |                    | $ | 4,135 |  | $ | 899

Fully-insured dental premium increased approximately $5,034,000 in 2009. An increase in fully-insured membership volume in 2009 resulted in an increase in fully-insured dental premiums of $4,135,000. Fully-insured dental premium rate
increases negotiated with employer groups at their renewals resulted in an increase of approximately $899,000 in fully-insured dental premium.

Fully-insured dental HMO premium revenue increased approximately $1,693,000 in 2009, from approximately $36,149,000 in 2008 to approximately $37,842,000 in 2009. This increase is primarily due to the 2009
new sales of the fully-insured dental HMO product discussed above, offset by the fully-insured dental HMO membership decrease due to employer groups that did not renew their contracts in 2009. Fully-insured dental indemnity premium revenue increased
by approximately $149,000, or 12.5%, from approximately $1,192,000 in 2008 to approximately $1,341,000 in 2009. Fully-insured dental PPO premium revenue increased by $3,192,000, or 107.1%, from approximately $2,980,000 in 2008 to approximately
$6,172,000 in 2009 primarily due to the increase in fully-insured dental PPO membership discussed above.



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|                           |  |                            |        |      |   |                    |  |   |                                            |   |  |                         |        |            |  |   |       |  |   |      
|-------------------------- |  | -------------------------- | ------ | ---- | - | ------------------ |  | - | ------------------------------------------ | - |  | ----------------------- | ------ | ---------- |  | - | ----- |  | - | -----
|                           |  | (All amounts in thousands)
|                           |  | 2009                       |        | 2008 |   | Total DollarChange |  |   | Volume Change(Loss of LargeEmployer Group) |   |  | VolumeChange(New Sales) |        | RateChange
|Self-Insured Claim Revenue |  | $                          | 23,451 |      | $ | 24,102             |  | $ | (651                                       | ) |  | $                       | (4,848 | )          |  | $ | 2,131 |  | $ | 2,066
|Self-Insured ASO Fees      |  |                            | 1,252  |      |   | 1,349              |  |   | (97                                        | ) |  |                         | (271   | )          |  |   | 119   |  |   | 55   
|                           |  |                            |        |      |   |                    |  |   |                                            |   |  |                         |        |            |  |   |       |  |   |      
|Total Self-Insured Revenue |  | $                          | 24,703 |      | $ | 25,451             |  | $ | (748                                       | ) |  | $                       | (5,119 | )          |  | $ | 2,250 |  | $ | 2,121

Total
self-insured revenue decreased approximately $748,000 in 2009 compared to 2008. Self insured revenue decreased by approximately $5,119,000 due to the loss of the member month volume associated with the large self-insured employer group discussed
above. This decrease was offset by an increase in self-insured revenue of approximately $2,250,000 due to new self-insured sales and by an increase of approximately $2,121,000 attributable to an increase in self-insured ASO fee rates, a provider fee
schedule increase implemented in April of 2009, an increase in dental service utilization by our self-insured members in 2009 compared to 2008 and the run out claims of the self-insured group that did not renew its contract. The self-insured segment
revenue has two components:

Self-Insured Claim RevenueSelf-insured claim revenue
decreased approximately $651,000, or 2.7%, from approximately $24,102,000 in 2008 to approximately $23,451,000 in 2009. Self-insured claim revenue decreased by approximately $4,848,000 due to the loss of the member month volume associated with the
large self-insured employer group discussed above. This decrease was offset by an increase of approximately $2,131,000 related to new self-insured sales and an increase of approximately $2,066,000 related to an increase in dental service utilization
by our self-insured members in 2009 compared to 2008, a provider fee schedule increase implemented in April of 2009 and the run out claims of the self-insured group that did not renew its contract.

Self-Insured ASO FeesSelf-insured ASO fees decreased approximately $97,000, or 7.2%, from
approximately $1,349,000 in 2008 to approximately $1,252,000 in 2009. This decrease is primarily attributable to the decrease of approximately $271,000 related to the loss of the member month volume associated with the large self-insured employer
group discussed above. This decrease was offset by an increase of approximately $119,000 related to new self-insured sales and an increase of approximately $55,000 related to a small increase in the average self-insured ASO fee rates.

Corporate, all other premium revenue is primarily derived from the non-DCP dental indemnity product, dental PPO product and
vision product underwritten by third party insurance carriers. In aggregate, Corporate, all other premium revenue decreased by approximately $18,000, or 4.1%, from approximately $435,000 in 2008 to approximately $417,000 in 2009.

Investment Income

Investment income decreased approximately $124,000, or 55.6%, from approximately $223,000 in 2008 to approximately $99,000 in 2009. This decrease is primarily attributable to a decrease in short-term investment interest rates during 2009.
In 2008 and 2009, we invested in Federal Deposit Insurance Corporation (FDIC) insured certificates of deposit and money market funds.

Healthcare Service Expenses



|                                               |  |                            |        |      |   |                    |  |               |       |                   |   |       |  |   |      
|---------------------------------------------- |  | -------------------------- | ------ | ---- | - | ------------------ |  | ------------- | ----- | ----------------- | - | ----- |  | - | -----
|                                               |  | (All amounts in thousands)
|                                               |  | 2009                       |        | 2008 |   | Total DollarChange |  | Volume Change |       | UtilizationChange
|Total Fully-Insured Healthcare Service Expense |  | $                          | 37,018 |      | $ | 31,576             |  | $             | 5,442 |                   | $ | 3,455 |  | $ | 1,987



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##### Table of Contents

Fully-insured healthcare services expense increased approximately $5,442,000
in 2009 compared to 2008. A net increase in fully-insured membership volume of 10.4% in 2009 resulted in an increase in fully-insured dental healthcare services expense of approximately $3,455,000. An increase in fully-insured dental healthcare
services of approximately $1,987,000 is primarily the result of an increase in fully-insured dental healthcare services expense on a per member per month basis of approximately 4.7% in 2009 for both our new and existing fully-insured membership. A
higher percentage of our fully-insured members received dental services in 2009. Also, we believe that certain of our subscribers and their dependents received preventive and basic dental services in 2009 prior to losing their coverage. The
fully-insured segment represents approximately 64% of our total dental business in 2009.

Fully-insured dental
HMO healthcare services expense increased by approximately $1,979,000, or 7.1%, from approximately $27,953,000 in 2008 to approximately $29,932,000 in 2009. This increase is attributable to the 2.6% increase in fully-insured dental HMO member months
in 2009 compared to 2008 and an increase in fully-insured dental HMO healthcare services expense on a per member per month basis of approximately 4.3% in 2009 for both our new and existing fully-insured membership.

Fully-insured dental indemnity healthcare services expense increased by approximately $178,000, or 16.4%, from approximately
$1,084,000 in 2008 to approximately $1,262,000 in 2009. Approximately $94,000 of this increase is attributable to the 8.7% increase in fully-insured dental indemnity member months in 2009 compared to 2008. Approximately $84,000 of this increase is
attributable to an increase in fully-insured dental indemnity healthcare services expense on a per member per month basis of approximately 7.2% in 2009.

The fully-insured dental PPO healthcare services expense increased by approximately $3,285,000, or 129.4%, from approximately $2,539,000 in 2008 to approximately $5,824,000 in 2009. Approximately
$2,620,000 of this increase is attributable to the 103.2% increase in fully-insured dental PPO member months in 2009 compared to 2008. Approximately $665,000 of this increase is attributable to an increase in fully-insured dental PPO healthcare
services expense on a per member per month basis of approximately 12.9% in 2009.



|                                        |  |                            |        |      |   |                    |  |   |                                            |   |  |                                   |        |                   |  |   |       |  |   |      
|--------------------------------------- |  | -------------------------- | ------ | ---- | - | ------------------ |  | - | ------------------------------------------ | - |  | --------------------------------- | ------ | ----------------- |  | - | ----- |  | - | -----
|                                        |  | (All amounts in thousands)
|                                        |  | 2009                       |        | 2008 |   | Total DollarChange |  |   | Volume Change(Loss of LargeEmployer Group) |   |  | Volume Change(New EmployerGroups) |        | UtilizationChange
|Self-Insured Healthcare Service Expense |  | $                          | 21,288 |      | $ | 22,014             |  | $ | (726                                       | ) |  | $                                 | (4,428 | )                 |  | $ | 1,946 |  | $ | 1,756

Self-insured healthcare services expense decreased by approximately $726,000 in 2009. Self-insured healthcare services expense decreased by approximately $4,428,000 due to the loss of the member month volume associated with the large
self-insured employer group discussed above. This decrease in self-insured healthcare services expense was offset by an increase of approximately $1,946,000 related to new self-insured employer groups and an increase of approximately $1,756,000
related to an increase in dental service utilization by our self-insured members in 2009 compared to 2008, a provider fee schedule increase implemented in April of 2009 and the run out claims of the self-insured group that did not renew its
contract.

Corporate, all other healthcare services expense is not recognized by the Company due to the fact
that our other dental indemnity, dental PPO and vision PPO products are underwritten by third party insurance carriers.

Insurance Expenses

Consolidated insurance expenses increased approximately $789,000 in 2009. Total insurance expenses as a
percentage of total premium revenue, or the insurance expense ratio, was 18.1% for 2009, increasing 0.1% from the 2008 ratio of 18.0%. Salaries and benefits increased by approximately $160,000, or 4.5%, due to staff pay increases implemented in 2009
and the addition of certain new employees in staff positions. Commissions expense increased approximately $426,000, or 16.9%, due to the higher level of new membership sales. Accounting and auditing expense increased by $47,000, or 20.4%, in 2009
due to additional costs related to our



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##### Table of Contents

anticipated Sarbanes Oxley Act of 2002 Section 404 (SOX) attestation and a new audit of our administrative system based on Statement on Auditing Standards No. 70. Legal fees
increased by $81,000, or 39.5%, in 2009 as a result of required state insurance department filings and new product development.

Income
Taxes

Our effective tax rate for 2009 of 26.8% decreased 10.0% compared to the 36.8% effective tax rate in
2008. Our 2009 effective tax rate was lower than the federal statutory rate primarily due to permanent tax differences and applicable state and local taxes. See Note 5 to the consolidated financial statements included in Item 8-Financial
Statements and Supplementary Data for a complete reconciliation of the federal statutory rate to the effective tax rate.

Comparison of
Results of Operations for 2008 and 2007

The following chart shows membership totals and revenues and
expenses for our three business segments for the years ended December 31, 2008 and 2007 (in thousands, except for membership data and percentage change):



|                                 |  |      |         |      |   |         |  |       |   
|-------------------------------- |  | ---- | ------- | ---- | - | ------- |  | ----- | --
|                                 |  | 2008 |         | 2007 |   | CHANGE  | 
|Membership:                      |  |      |         |      |   |         |  |       |   
|Fully-insured dental             |  |      | 155,000 |      |   | 143,900 |  | 7.7   | % 
|Self-insured dental              |  |      | 98,100  |      |   | 84,300  |  | 16.4  | % 
|Corporate, All Other             |  |      | 14,700  |      |   | 16,800  |  | (12.5 | )%
|                                 |  |      |         |      |   |         |  |       |   
|Total membership                 |  |      | 267,800 |      |   | 245,000 |  | 9.3   | % 
|                                 |  |      |         |      |   |         |  |       |   
|Premium revenue:                 |  |      |         |      |   |         |  |       |   
|Fully-insured dental             |  | $    | 40,321  |      | $ | 39,682  |  | 1.6   | % 
|Self-insured dental              |  |      | 25,451  |      |   | 19,768  |  | 28.7  | % 
|Corporate, All Other             |  |      | 435     |      |   | 500     |  | (13.0 | )%
|                                 |  |      |         |      |   |         |  |       |   
|Total premium revenue            |  |      | 66,207  |      |   | 59,950  |  | 10.4  | % 
|                                 |  |      |         |      |   |         |  |       |   
|Investment income:               |  |      |         |      |   |         |  |       |   
|Corporate, All Other             |  |      | 223     |      |   | 269     |  | (17.1 | )%
|                                 |  |      |         |      |   |         |  |       |   
|Other income:                    |  |      |         |      |   |         |  |       |   
|Corporate, All Other             |  |      | 80      |      |   | 94      |  | (14.9 | )%
|                                 |  |      |         |      |   |         |  |       |   
|Healthcare service expense:      |  |      |         |      |   |         |  |       |   
|Fully-insured dental             |  |      | 31,576  |      |   | 31,236  |  | 1.1   | % 
|Self-insured dental              |  |      | 22,014  |      |   | 6,916   |  | 30.1  | % 
|                                 |  |      |         |      |   |         |  |       |   
|Total healthcare service expense |  |      | 53,590  |      |   | 48,152  |  | 11.3  | % 
|                                 |  |      |         |      |   |         |  |       |   
|Insurance expenses:              |  |      |         |      |   |         |  |       |   
|Corporate, All Other             |  |      | 11,946  |      |   | 11,244  |  | 6.2   | % 
|                                 |  |      |         |      |   |         |  |       |   
|Income tax expense:              |  |      |         |      |   |         |  |       |   
|Corporate, All Other             |  |      | 359     |      |   | 313     |  | 14.7  | % 
|                                 |  |      |         |      |   |         |  |       |   

Summary

Net income available for redeemable common shares was approximately $615,000 and $604,000 for the years ended December 31, 2008 and 2007, respectively. Basic earnings per redeemable common share was
$72.71 and $72.88 at December 31, 2008 and 2007, respectively. The increase in net income available for redeemable common shares primarily resulted from increased premium revenue and decreased insurance expense as a percentage of total premium
revenue from 18.8% in 2007 to 18.0% in 2008, offset by an increase in total healthcare services expense as a percentage of total premium revenue from 80.3% in 2007 to 80.9% in 2008.



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##### Table of Contents

Membership

Our fully-insured membership increased approximately 11,100 in 2008. Our fully-insured dental HMO membership decreased approximately 2,600 members, or 1.9%, from 133,800 at
December 31, 2007 to 131,200 at December 31, 2008. This membership decrease is attributable to the reduction of approximately 9,000 fully-insured dental HMO members due to the conversion of the membership of one employer group from our
fully-insured dental HMO product to our self-insured dental HMO product effective January 1, 2008, offset by new fully-insured dental HMO sales in the Cincinnati and Northern Kentucky market of approximately 8,500 members. In addition,
fully-insured dental HMO membership decreased by an additional 2,100 members due to a limited number of employer groups that did not renew their contracts with Dental Care Plus in the last 12 months. Our fully-insured indemnity membership
increased by approximately 500 members, or 12.5%, from approximately 4,000 members at December 31, 2007 to approximately 4,500 members at December 31, 2008. In addition, our fully-insured dental PPO membership increased by approximately
13,200 members, from approximately 6,100 members at December 31, 2007 to approximately 19,300 members at December 31, 2008.

Our self-insured dental HMO membership increased approximately 13,800 members primarily due to the conversion of 9,000 members of one employer group from our fully-insured dental HMO product to our
self-insured dental HMO product effective January 1, 2008. The remaining 4,800 member increase was the result of our adding a number of large new self-insured groups in Southwestern Ohio and Northern Kentucky.As of January 1, 2009,
one self-insured employer group that represented approximately 6% of the Companys total revenue in 2008 elected not to renew its contract with the Company. However, the Company has replaced the majority of this membership loss with new
fully-insured membership effective January 1, 2009.

Dental indemnity membership underwritten by a third
party insurance carrier increased by approximately 400 members, or 50.0%, from approximately 800 members at December 31, 2007 to approximately 1,200 members as of December 31, 2008. Dental PPO membership underwritten by a third party
insurance carrier decreased by approximately 6,900 members, or 75.0%, from approximately 9,200 members at December 31, 2007 to approximately 2,300 members at December 31, 2008. Fully-insured vision membership increased by approximately
4,200 members, or 60.9%, from approximately 6,900 members at December 31, 2007 to approximately 11,100 members at December 31, 2008.

Revenue



|                            |  |                        |     |                                 |   |                                               |  |   |        |      
|--------------------------- |  | ---------------------- | --- | ------------------------------- | - | --------------------------------------------- |  | - | ------ | -----
|                            |  | (Amounts in thousands) |    
|                            |  | Fully-InsuredChange    |     | New SalesVolume                 |   | Volume toSelf-Insured                         | 
|Claims Change  Volume      |  | $                      | 612 |                                 | $ | 5,096                                         |  | $ | (4,484 | )    
|                            |  |                        |    
|                            |  |                        |     | Renewal andNew SalesRate Change |   | Rate Change dueto Volume movedto Self-Insured | 
|Claims Change  Utilization |  | $                      | 27  |                                 | $ | 666                                           |  | $ |        | (639)

Fully-insured dental premium increased approximately $639,000 in 2008. Approximately $612,000 of this premium revenue increase is attributable to net membership volume increases in the fully-insured dental product lines. New fully-insured
sales resulted in an increase in fully-insured premium revenue of approximately $5.1 million in 2008 that was offset by a decrease in fully-insured revenue of approximately $4.5 million due to the conversion of employer groups to the
self-insured product line in 2007 and 2008. Approximately $27,000 of this premium revenue increase is associated with fully-insured dental premium rates during 2008. Fully-insured premium revenue increased by approximately $666,000 as a result of
higher premium rates in 2008 on new sales and employer group renewals. This increase was offset by a decrease in premium revenue of approximately $639,000 due to the shift of employer groups with higher than average premium rates to the self-insured
product.



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##### Table of Contents

Fully-insured dental HMO premium revenue decreased approximately $2,348,000
in 2008. This decrease is primarily due to the shift of employer groups to the self-insured dental HMO product in 2008 that were in the fully-insured dental HMO product in 2007, offset by the 2008 new sales of the fully-insured dental HMO product
discussed above. Fully-insured dental indemnity premium revenue increased by approximately $918,000, or 335.0%, from approximately $274,000 in 2007 to approximately $1,192,000 in 2008. In 2006, the Company entered into a quota share group dental
reinsurance agreement with a third party insurance company. The third party insurance company has agreed to indemnify the Company relative to its share of the insurance risk. This group dental reinsurance agreement that expired May 31, 2008
applied to certain group dental PPO policies underwritten by DCP in our expansion market. The fully-insured PPO premium revenue for the portion retained by DCP increased $2,067,000, or 226.4%, from approximately $913,000 in 2007 to approximately
$2,980,000 in 2008.

Total self-insured revenue increased approximately $5,638,000 in 2008. This increase is
attributable to the 24.2% increase in self-insured dental member months, an increase in self-insured ASO fee rates and a 3.7% increase in self-insured claim revenue on a per member per month basis in 2008 as compared to 2007. The self-insured
segment revenue has two components:

Self-Insured Claim RevenueSelf-insured claim
revenue increased approximately $5,378,000, or 28.7%, from approximately $18,724,000 in 2007 to approximately $24,102,000 in 2008. This increase is due to the 24.2% increase in self-insured dental member months along with a 3.7% increase in
self-insured claim revenue on a per member per month basis in 2008 as compared to 2007.

Self-Insured ASO FeesSelf-insured ASO fees increased approximately $305,000, or 29.2%, from approximately $1,044,000 in 2007 to approximately $1,349,000 in 2008. These increases are primarily attributable to the 24.2% increase
in self-insured dental member months and a significant increase in the average self-insured ASO fee rates. We provide administrative and claims processing services, benefit plan design, and access to our provider networks for an administrative fee,
generally to self-insured groups. Our ASO fee revenue is recognized monthly when earned and is normally based on annual contracts with the self-insured groups.

Corporate, all other premium revenue is primarily derived from the non-DCP dental indemnity product, dental PPO product and vision product underwritten by third party insurance
carriers. In aggregate, Corporate, all other premium revenue decreased by approximately $65,000, or 13.0%, from approximately $500,000 in 2007 to approximately $435,000 in 2008. During the first nine months of 2007, the dental indemnity product was
underwritten by a third party insurance carrier and we were paid a portion of its premium in the form of administrative fees that cover our related costs and broker commissions. These dental indemnity administrative fees were approximately $124,000
for 2007 and approximately $42,000 for 2008. Our other dental PPO product is underwritten by third party insurance carriers and we are paid a portion of its premium in the form of administrative fees that cover our related costs and broker
commissions. These dental PPO administrative fees decreased by approximately $21,000, or 11.5%, from approximately $182,000 in 2007 to approximately $161,000 in 2008. In addition, our fully-insured vision product is underwritten by a third party
insurance carrier and we are paid a portion of its premium in the form of administrative fees that cover our related costs and broker commissions. These vision product administrative fees decreased by approximately $59,000, or 36.2%, from
approximately $163,000 in 2007 to approximately $104,000 in 2008.

Investment Income

Investment income decreased approximately $46,000, or 17.1%, from approximately $269,000 in 2007 to approximately $223,000 in
2008. This decrease is primarily attributable to a decrease in prevailing interest rates during 2008.



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##### Table of Contents

Other Income

Other income decreased approximately $14,000 in 2008. Dental provider network leasing revenue decreased approximately $15,000 in 2008 from approximately $28,000 in 2007 to
approximately $13,000 in 2008 primarily due to the conversion of fully-insured dental PPO membership policies underwritten by Dental Care Plus, Inc. in 2008. Rental revenue earned from leasing a portion of the office building owned by our subsidiary
Dental Care Plus decreased by approximately $11,000, or 19.0%, from approximately $58,000 in 2007 to approximately $47,000 in 2008 due to a vacancy in a portion of the office building in 2008. These decreases in other income were offset by certain
increases in other income of approximately $12,000.

Healthcare Service Expenses



|                     |  |                            |      |   |                                 |   |                                               |  |   |        |  
|-------------------- |  | -------------------------- | ---- | - | ------------------------------- | - | --------------------------------------------- |  | - | ------ | -
|                     |  | (All amounts in thousands) |     
|                     |  | Fully-InsuredChange        |      |   | New SalesVolume                 |   | Volume toSelf-Insured                         | 
|Claims ChangeVolume |  | $                          | 481  |   |                                 | $ | 4,010                                         |  | $ | (3,529 | )
|                     |  |                            |     
|                     |  |                            |      |   | Renewal andNew SalesRate Change |   | Rate Change dueto Volume movedto Self-Insured | 
|Claims ChangeRate   |  | $                          | (141 | ) |                                 | $ | 345                                           |  | $ | (486   | )

Fully-insured healthcare services expense increased approximately $340,000 in 2008. Approximately $481,000 of this healthcare service expense is attributable to net membership volume increases in the fully-insured dental product lines. New
fully-insured sales resulted in an increase in fully-insured healthcare services expense of approximately $4.0 million in 2008 that was offset by a decrease in fully-insured revenue of approximately $3.5 million due to the conversion of employer
groups to the self-insured product line in 2007 and 2008. This increase was offset by a decrease in healthcare services expense of approximately $141,000 due to a decrease in healthcare services expense on a per member per month basis. Fully-insured
healthcare services expense increased by approximately $345,000 as a result of higher healthcare services expense for existing and new business. This increase was offset by a decrease in healthcare services expense of approximately $486,000 due to
the shift of employer groups with higher than average healthcare services expense per member per month to the self-insured product.

Fully-insured dental HMO healthcare services expense decreased by approximately $2,283,000, or 7.6%, from approximately $30,236,000 in 2007 to approximately $27,953,000 in 2008. This decrease is primarily
attributable to the 6.6% decrease in fully-insured dental HMO member months in 2008 compared to 2007 and a slight decrease in utilization on a per member per month basis and a less expensive mix of services provided in 2008 compared to 2007
primarily due to the shift of employer groups with higher than average healthcare services expense on a per-member-per-month basis out of the fully-insured product line. The fully-insured Dental Care Plus dental indemnity product was introduced in
the fourth quarter of 2007. The fully-insured Dental Care Plus dental indemnity healthcare services expense increased by approximately $841,000, or 346.1%, from $243,000 in 2007 to approximately $1,084,000 in 2008. The fully-insured Dental Care Plus
dental PPO healthcare services expense for the portion of the risk retained by DCP increased by approximately $1,781,000, or 235.0%, from approximately $758,000 in 2007 to approximately $2,539,000 in 2008.

Self-insured healthcare services expense increased in 2008. This increase is attributable to both the 24.2% increase in
self-insured dental HMO member months in 2008 compared to 2007, the provider fee schedule increase implemented at the beginning of 2008, and the shift of employer groups with higher than average healthcare services expense on a per-member-per-month
basis into the self-insured product line.

Corporate, all other healthcare services expense is not recognized
by the Company due to the fact that our other dental indemnity, dental PPO and vision PPO products are underwritten by third party insurance carriers.



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##### Table of Contents

Reinsurance

In the normal course of business, the Company ceded portions of its written premium revenue. As such, the Company limits its loss exposure to that portion of the insurable risk that
it retains. However, if a reinsurer fails to honor its obligations, the Company could suffer additional losses as the reinsurance contracts do not relieve the Company of its obligations to policyholders. The Company terminated its reinsurance
contracts effective May 31, 2008. Dental insurance premiums ceded were approximately $121,000 and $228,000 for the years ended December 31, 2008 and 2007, respectively. The healthcare services expense ceded was approximately $106,000 and
$189,000 for the years ended December 31, 2008 and 2007, respectively. The Company has approximately $5,000 and $27,000 of reinsurance recoverable and prepaid reinsurance premium net of reinsurance payable as of December 31, 2008 and 2007,
respectively.

Insurance Expenses

Consolidated insurance expenses increased approximately $702,000 in 2008. Total insurance expenses as a percentage of total premium revenue, or the insurance expense ratio, was 18.0% for 2008, decreasing
80 basis points from the 2007 ratio of 18.8%. Salaries and benefits increased by approximately $271,000, or 6.6%, due to staff pay increases implemented in 2008 and the addition of one full-time employee in the claims and customer service
department. Commissions expense increased approximately $150,000, or 6.3%, due to the increases in membership. Advertising expense for 2008 increased by approximately $128,000, or 45.9%, compared to 2007. This increase was primarily due to a
significant advertising campaign in the Louisville, Kentucky market during 2008. Depreciation and amortization expense for 2008 increased approximately $41,000, or 10.1%, compared to 2007. This increase was due primarily to the purchase of new
depreciable equipment and computer software in 2008. In 2008, board of directors expense increased approximately $59,000, or 11.3%, as a result of director compensation increases. Interest expense decreased $26,000, or 27.4%. The decrease is
primarily attributable to a decrease in the interest expense associated with our capital lease and mortgage obligations as these obligations decreased. The remaining amount of approximately $79,000 is due to various operating expense increases in
2008 as compared to 2007.

Income Taxes

Our effective tax rate for 2008 of 36.8% increased 2.7% compared to the 34.1% effective tax rate in 2007. Our 2008 effective tax rate was higher than the federal statutory rate due to applicable state and
local taxes. In addition, in 2007 the Company had a one time decrease due to the change in the uncertain tax positions liability due to settlement of state income taxes and the elimination of certain non-deductible reorganization costs associated
with acquiring the Dental Care Plus Life Insurance license. See Note 5 to the consolidated financial statements included in Item 8-Financial Statements and Supplementary Data for a complete reconciliation of the federal statutory rate to the
effective tax rate.



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##### Table of Contents

Liquidity and Capital Resources and changes in Financial Condition

Our primary sources of cash are premiums, ASO fees, investment and other income, as well as the proceeds from the sale or
maturity of our investment securities and from borrowings. Our primary uses of cash include disbursements for claims payments, insurance expense, interest expense, taxes, purchases of investment securities, capital expenditures, redeemable common
shares redemptions, and payments on borrowings. Because premiums are collected in advance of claims payments, our business should normally produce positive cash flows during a period of increasing enrollment. Conversely, cash flows would be
negatively impacted during a period of shrinking enrollment. However, we have used more cash than expected for claim payments in 2009 due to higher than expected dental services utilization in 2009 and the decrease in the elapsed time from dental
claims submission to claims payment. Cash increased approximately $4.2 million, or 168.0%, for the year ended December 31, 2009 to approximately $6.7 million at December 31, 2009 from approximately $2.5 million at December 31, 2008.
Cash increased approximately $265,000 or 11.7%, to approximately $2.5 million at December 31, 2008 from approximately $2.3 million at December 31, 2007. The change in cash for the years ended December 31, 2009, 2008 and 2007 is
summarized as follows (in thousands):



|                                                    |  |      |       |   |      |   |        |      |  |   |        |  
|--------------------------------------------------- |  | ---- | ----- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                    |  | 2009 |       |   | 2008 |   |        | 2007 | 
|Net cash provided by (used in) operating activities |  | $    | 37    |   |      | $ | 1,660  |      |  | $ | (398   | )
|Net cash provided by (used in) investing activities |  |      | 4,294 |   |      |   | (1,642 | )    |  |   | (2,365 | )
|Net cash provided by (used in) financing activities |  |      | (90   | ) |      |   | 247    |      |  |   | (182   | )
|                                                    |  |      |       |   |      |   |        |      |  |   |        |  
|Increase (decrease) in cash                         |  | $    | 4,241 |   |      | $ | 265    |      |  | $ | (2,945 | )
|                                                    |  |      |       |   |      |   |        |      |  |   |        |  

Cash flow from Operating Activities

In 2009, we generated approximately $37,000 of cash in operating activities. This level of cash flow from operating activities is lower than the cash flow generated from operating
activities in 2008. We had a net loss of approximately $(289,000) in 2009, primarily due to a 2.5% increase in fully-insured healthcare service utilization. In addition to our 2009 net loss, other uses of cash include: a decrease in claims payable
of approximately $315,000, and a decrease in unearned premium of approximately $647,000 that was offset by a decrease in unbilled accounts receivable of approximately $860,000. The decrease in our claims payable is primarily due to the fact that
there was a provider withhold return liability of $464,000 at December 31, 2008 and no provider withhold return liability at December 31, 2009. The decrease in unbilled accounts receivable and a corresponding decrease in unearned premium
revenue of approximately $860,000 are the result of some large two-year fully insured dental contracts that expired December 31, 2009. The unearned premium decrease was offset by an increase in unearned premiums received in advance of
approximately $213,000. Additional uses of cash included an increase in deferred acquisition costs and an increase in other assets totaling approximately $180,000. Also, we had a non-cash tax benefit related to deferred income taxes of approximately
$292,000. These uses of operating cash were offset by non-cash depreciation and amortization expense of approximately $468,000, an increase in deferred compensation liabilities of approximately $275,000, along with a decrease in accrued investment
income, a decrease in accounts receivable and an increase in other payables and accruals totaling approximately $156,000.

In 2008, we generated approximately $1,660,000 of cash in operating activities. This level of cash flow from operating activities is consistent with the cash flow generated from operating activities in
2006. We realized net income of approximately $615,000. In addition to our 2008 net income, we recognized depreciation and amortization of approximately $446,000. With the conversion of our fully-insured employer group contracts to be non-cancelable
by the Company, there was an increase in unearned premium of approximately $20.9 million that was offset by an increase in accounts receivable of approximately $20.8 million. Other sources of cash include: an increase in deferred income taxes, a
decrease in accounts receivable, an increase in claims payable, an increase in accounts payable and other accrued expenses, an increase in deferred compensation and other minor changes to operating assets and liabilities totaling approximately
$1,701,000. These sources of operating cash were offset by an increase in deferred policy acquisition costs of approximately $1,196,000.



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##### Table of Contents

In 2007, we used approximately $398,000 of cash in operating activities
mainly due to the reduction of our claims payable liability that resulted from the payment of the majority of our dental claims inventory by the end of 2007. We realized net income of approximately $604,000. In addition to our 2007 net income, we
recognized depreciation and amortization of approximately $405,000. Other sources of cash include: increases in our unearned premium, other payables and deferred compensation totaling approximately $598,000. These sources of operating cash were
offset by a decrease in our claims payable liability of approximately $1.5 million due to the payments to dental providers on December 31, 2007 that reduced our inventory of reported claims in process, increases in accounts receivable, accrued
investment income and other assets totaling approximately $339,000, and deferred income taxes of approximately $144,000.

Cash flow from
Investing Activities

In 2009, we invested approximately $245,000 in building improvements, office
equipment and computer equipment and software. Also in 2009, approximately $19.2 million of our investments in FDIC insured certificates of deposit and money market funds either matured or were liquidated to fund operations. We also invested
approximately $14.6 million in additional FDIC insured certificates of deposit and money market funds. Collectively, this resulted in an increase in cash from investment activities of approximately $4.3 million. Approximately $4.5 million of the
increase in cash flows from investing activities was the result of our decision in the fourth quarter to move funds out of money market mutual funds yielding less than 0.1% interest to our checking account where the earnings credit of approximately
0.4% was used to offset bank fees.

In 2008, we invested approximately $321,000 in building improvements,
office equipment and computer equipment and software. Our investment in a new telephone system represented approximately $133,000 of this amount. Also in 2008, approximately $18.9 million of our investments in FDIC insured certificates of deposit
and money market funds either matured or were liquidated to fund operations. We also invested approximately $20.2 million in additional FDIC insured certificates of deposit and money market funds.

In 2007, we invested approximately $137,000 in building improvements, office equipment and computer equipment. Also in 2007,
approximately $18.0 million of our investments in FDIC insured certificates of deposit and money market funds either matured or were liquidated to fund operations. We also invested approximately $20.2 million in additional FDIC insured certificates
of deposit and money market funds.

Cash flow from Financing Activities

In 2009, we paid $120,000 of our outstanding mortgage balance and approximately $19,000 in capital lease payments for our
dental administration software. During 2009, we repurchased redeemable common shares with a value of approximately $172,000, which was offset by the issuance of redeemable common shares and provider preferred shares related to our current share
offerings with a value of approximately $222,000.

In 2008, we executed a revolving note with a commercial
bank in the amount of $650,000 collateralized by a second mortgage on our office building. As of December 31, 2008, there was a principal balance outstanding of $630,000 related to this revolving note. In 2008, we paid $120,000 of our
outstanding mortgage balance and approximately $224,000 in capital lease payments for our dental administration software. During 2008, we repurchased redeemable common shares with a value of approximately $68,000, which was offset by the issuance of
redeemable commons shares with a value of approximately $28,000.

In 2007, we paid $120,000 of our outstanding
mortgage balance, approximately $210,000 in capital lease payments for our dental administration software, and approximately $55,000 of the principal balance of the Adenta debt assumed in 2005. During 2007, we repurchased redeemable common shares
with a value of approximately $62,000, which was offset by the issuance of redeemable commons shares with a value of approximately $266,000. There were no new financing commitments executed in 2007.



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Our mortgage note matures in June 2013. The note requires us to make
principal payments of $10,000 per month, and bears interest at a variable rate of 30-day LIBOR plus 1.75%. Our revolving note matures on December 15, 2010 and requires us to make monthly interest payments at a variable rate of 30-day LIBOR plus
1.75%.

Provider Withhold Payments

In most cases, our reimbursement to our participating providers for covered dental services under the dental HMO are subject to a 10% withhold by us. The amounts withheld are not retained in a separate
fund and we have no obligation to pay any portion of the amounts withheld to the providers. The dental providers have no vested rights in the amounts withheld unless our Board of Directors authorizes any amounts withheld to be paid to the providers,
and then vesting is only to the extent of such amounts authorized to be paid. Once authorized for payment by the Board, such amounts are recorded as claims payable liabilities until paid.

In December of each year our Board evaluates the projected pre-tax income of our dental HMO plans, capital and surplus
requirements prescribed by the Ohio Department of Insurance and factors impacting our A.M. Best financial strength rating, such as the ratio of our projected fully-insured premium revenue to our projected capital and surplus level. In addition, the
Board considers the capital expenditures needed to support strategic objectives for the coming years (such as the implementation and improvements to the dental plan administration system, expansion of office space and acquisition of office equipment
for new employees) and our estimated federal income tax liability. After considering these and any other factors deemed relevant, the Board determines the amount of the provider withhold that may be paid to participating dental providers, if any.
Each participating dental providers share of the provider withhold payment is based on the proportionate amount of claims submitted by such participating dental provider in relation to the total claims submitted by all participating dental
providers in a given year, expressed as a percentage, and is not related to or dependent upon any such providers holdings of shares in the Company. Payments authorized by the Board are accrued in the fourth quarter of the fiscal year. The
Board authorized amounts of return of withhold amounting to $0, $464,000, and $650,000 for the years ended December 31, 2009, 2008 and 2007, respectively.

The Board may authorize aggregate provider withhold payments for calendar years 2011 through 2013 in amounts between 0% and 45% of the total provider withhold returns for future
years in relation to the total provider withhold amount for those years. However, the Board will not authorize an aggregate provider withhold payment for any year that would result in an operating loss for the year in review. These forecasted
amounts are based on projections of future claims revenues and certain planning assumptions and estimates currently being made with respect to future application of the factors historically considered by the Board in making its determination to
authorize the payment of withhold amounts. These planning assumptions reflect managements current expectations and views about future events and are subject to risks, uncertainties and other factors that could cause actual withhold payment
amounts to differ materially from these stated assumptions. Important factors that could cause actual results to differ materially from those being planned for, include, among others: claims exceeding or not meeting our estimates, a threatened or
actual downgrade in our financial strength rating, the loss of a significant customer or broker, the loss of a large employer group and an unexpected increase or decrease in dental service utilization by our dental members.



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Contractual Obligations and Other Commitments

A summary of our future commitments as of December 31, 2009 is as follows:



|                               |  |                 |           |           |   |           |  |                  |         |       |   |  |   |          
|------------------------------ |  | --------------- | --------- | --------- | - | --------- |  | ---------------- | ------- | ----- | - |  | - | ---------
|Contractual Obligations        |  | Less than1 year |           | 1-2 years |   | 3-5 years |  | More than5 years |         | Total
|Long-term debt and interest(1) |  | $               | 172,026   |           | $ | 318,863   |  | $                | 674,921 |       |  |  | $ | 1,165,810
|Revolving note and interest    |  |                 | 641,893   |           |   |          |  |                  |        |       |  |  |   | 641,893  
|Operating Leases               |  |                 | 172,098   |           |   | 68,193    |  |                  | 22,290  |       |  |  |   | 262,581  
|Claims Payable                 |  |                 | 2,316,515 |           |   |          |  |                  |        |       |  |  |   | 2,316,515
|                               |  |                 |           |           |   |           |  |                  |         |       |   |  |   |          
|Total                          |  | $               | 3,302,532 |           | $ | 387,056   |  | $                | 697,211 |       |  |  | $ | 4,386,799
|                               |  |                 |           |           |   |           |  |                  |         |       |   |  |   |          



|(1) | Our swap interest payments are based on a fixed rate of 4.95%. We estimate that we will receive swap interest payments totaling approximately
$35,000 based on a variable rate of LIBOR plus 1.75% or 1.98%, as of December 31, 2009.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Off-balance sheet
Arrangements

At December 31, 2009, future approximate minimum annual lease payments under
non-cancelable operating leases are as follows:



|                         |  |   |        
|------------------------ |  | - | -------
|Years Ending December 31 |  |  
|2010                     |  | $ | 172,000
|2011                     |  |   | 52,000 
|2012                     |  |   | 17,000 
|2013                     |  |   | 15,000 
|2014 and thereafter      |  |   | 7,000  
|                         |  |   |        
|Total                    |  | $ | 263,000
|                         |  |   |        

Financial Condition

Our consolidated cash and short term investments were approximately $8.0 million at December 31, 2009. Our consolidated
cash and short term investments decreased by approximately $200,000 from approximately $8.2 million as of December 31, 2008.

This decrease in cash and short term investments from December 31, 2008 to December 31, 2009 is primarily due to the net cash used in by financing activities of $90,000, the cash invested in
property, plant and equipment of $245,000, offset by the cash generated by operating activities of $37,000. In addition to this decrease in cash and short term investments there was a shift of approximately $100,000 in FDIC insured certificate of
deposit investment from long term investments to short term investments during this period.

In 2006 we
entered into an annually renewable agreement with a commercial bank for a $500,000 working capital line of credit. Interest was payable on the prime rate of borrowing rate of 3.25% at December 31, 2008. In July 2009, we renewed the $500,000
working capital line of credit. Interest was payable at a variable rate of LIBOR plus 2.50% and was 2.75% at December 31, 2009. The Company did not have any interest expense for the line of credit in 2009 or 2008. As of December 31, 2009
and 2008 there was no amount outstanding on this line of credit.

In 2008 we entered into an annually
renewable agreement with a commercial bank for a $1,000,000 working capital line of credit. Interest was payable on the prime rate of borrowing rate of 3.25% at December 31, 2008. In August 2009, we renewed the $1,000,000 working capital line
of credit. Interest was payable at a variable rate of



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LIBOR plus 2.50% and was 2.75% at December 31, 2009. The Company did not have any interest expense for the line of credit in 2009 or 2008. As of December 31, 2009 and 2008 there was no
amount outstanding on this line of credit.

On December 15, 2009, we renewed a revolving note with a
commercial bank in the amount of $650,000 collateralized by a second mortgage on our office building. As of December 31, 2009, there was a principal balance outstanding of $630,000 related to this revolving note. This revolving note matures on
December 15, 2010, is annually renewable and requires us to make monthly interest payments at a variable rate of 30-day LIBOR plus 1.75%.

We believe our cash, short term investments and working capital lines of credit together are sufficient to meet our short term and long term liquidity needs. In the short term, we are obligated to make
payments related to our contractual obligations such as our building mortgage and our operating leases and other commitments (see contractual obligations and other commitments). In the long term, we will continue to be obligated to make payments
related to our contractual obligations delineated above. We will also be obligated in certain circumstances to repurchase the redeemable shares of our provider shareholders who die, are permanently disabled, or retire. Our Board of Directors
establishes limitations on the amount of share redemptions each year. While we are not able to estimate future redeemable share redemptions, we repurchased approximately $172,000, $68,000, and $62,000 of redeemable common shares in the years ended
December 31, 2009, 2008 and 2007, respectively. We believe our cash balances, investment securities, operating cash flows, and borrowing capacity, taken together, provide adequate resources to fund ongoing operating and regulatory requirements
and fund future expansion opportunities and capital expenditures in the foreseeable future.

We operate as a
holding company in a highly regulated industry. We are primarily dependent upon management fees that we receive from our subsidiaries. We receive over 99% of our management fees from our subsidiary Dental Care Plus. We also receive dividends from
our subsidiaries from time to time. The dividends from our subsidiary, Dental Care Plus, are subject to regulatory restrictions.

Regulatory RBC Requirements

Our largest subsidiary, Dental Care Plus, operates in states that
regulate its payment of dividends and debt service on inter-company loans, as well as other inter-company cash transfers and require minimum levels of equity as well as limit investments to approved securities. The amount of dividends that may be
paid by Dental Care Plus, without prior approval by state regulatory authorities, is limited based on statutory income and statutory capital and surplus. Even if prior approval is not required, prior notification must be provided to state agencies
in Ohio, Kentucky and Indiana before paying a dividend.

Dental Care Plus, Inc., an Ohio-domiciled insurance
company dually licensed as a life and health insurer and a specialty health insuring corporation, is able to underwrite dental indemnity, dental PPO, dental HMO, and vision benefit products as well as other life and health insurance products in
Ohio. The required capital and surplus for Dental Care Plus licensed as a life and health insurance company in Ohio was $2.5 million at December 31, 2009.

We maintained aggregate statutory capital and surplus of approximately $4.9 million as of December 31, 2009 and were in compliance with applicable statutory requirements.
Although the minimum required levels of equity are largely based on premium volume, product mix, and the quality of assets held, minimum requirements can vary significantly from state to state. Given our anticipated premium growth in 2010 resulting
from the expansion of our networks and membership, capital requirements will increase. We expect to fund these increased requirements through the retention of earnings, investment in Dental Care Plus of the earnings of other subsidiaries and capital
raised in future redeemable common and preferred share offerings.

Most states rely on risk-based capital
requirements, or RBC, to define the required levels of equity. RBC is a model developed by the NAIC to monitor an entitys solvency. This calculation indicates recommended



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minimum levels of required capital and surplus and signals regulatory measures should actual surplus fall below these recommended levels. RBC has been adopted by Ohio, Kentucky and Indiana, the
three states in which we currently do business. We file our annual statement and RBC reporting with the Ohio Department of Insurance and the NAIC. Dental Care Pluss statutory annual statements for the year ended December 31, 2009 filed
with the Ohio Department of Insurance reflected total adjusted capital in excess of Company Action Level RBC.

Other Matters

The differences between our net income and comprehensive income include the changes in the unrealized
gains or losses on marketable securities and changes in the fair value of our interest rate swap agreement. For the years ended December 31, 2009, 2008 and 2007, respectively, such changes increased or (decreased), net of related income tax
effects, by the following amounts:



|                                                                    |  |                              |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                    |  | For Years ended December 31, |        
|                                                                    |  | 2009                         |         |   | 2008 |   |         | 2007 | 
|Changes in:                                                         |  |                              |         |   |      |   |         |      |  |   |         |  
|Unrealized gain (loss) on investments, net of tax                   |  | $                            | (10,088 | ) |      | $ | 27,235  |      |  | $ | 5,030   |  
|Increase (decrease) in fair value of interest rate swap, net of tax |  |                              | 9,462   |   |      |   | (42,885 | )    |  |   | (30,096 | )
|                                                                    |  |                              |         |   |      |   |         |      |  |   |         |  
|Total                                                               |  | $                            | (626    | ) |      | $ | (15,650 | )    |  | $ | (25,066 | )
|                                                                    |  |                              |         |   |      |   |         |      |  |   |         |  

The fair market value of the variable-to-fixed interest rate swap contract (net of income
tax effects) increased by $9,462 at December 31, 2009 due to a slight increase in expected interest rates during 2009. The fair market value of the variable-to-fixed interest rate swap contract (net of income tax effects) decreased by $42,885
at December 31, 2008 due to a decrease in prevailing interest rates during 2008. The fair market value of the variable-to-fixed interest rate swap contract (net of income tax effects) decreased by $30,096 at December 31, 2007 due to a
decrease in prevailing interest rates during 2007. The fair market value of the variable-to-fixed interest rate swap contract was a liability of $23,633 and is included in other payables and accruals at December 31, 2009. The fair market value
of the variable-to-fixed interest rate swap contract was a liability of $37,969 as of December 31, 2008 and an asset of $27,009 as of December 31, 2007 and is included in other payables and accruals and other assets at December 31,
2008 and 2007, respectively.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Application of those accounting
principles includes the use of estimates and assumptions that are made by management, and that we believe are reasonable based on the information available. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues
and expenses in the accompanying consolidated financial statements. We believe the most critical accounting policies used to prepare the accompanying consolidated financial statements are the following:

Investments

We have classified all of our investments as available-for-sale. Accordingly, investments are carried at fair value, based on quoted market prices, and unrealized gains and losses, net of
applicable income taxes, are reported in a separate caption of shareholders equity. We invest our excess cash in FDIC insured bank certificates of deposit and money market funds. Each certificate of deposit with an original cost of $100,000 to
$200,000 is invested with a separate FDIC-insured financial institution. The quoted market prices of these certificates of deposit are the amounts we would receive if we liquidated them prior to maturity. We follow a consistent and systematic
process for recognizing impairments on securities that sustain other-than-temporary declines in value. The decision to impair a security incorporates both quantitative criteria and qualitative information. The impairment review process considers a
number of factors including, but not limited to the length of time and the extent to which the fair value has been less than cost, our intent to sell for a period of time



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sufficient to allow for any anticipated recovery in value, and general market conditions. As of December 31, 2009, there were no other-than-temporary impairments. In the event there was an
unrealized loss on an investment that we believed to be other-than-temporary, the loss would be reported in the consolidated statement of operations, instead of in a separate caption of shareholders equity. The Company maintains its cash in
bank deposit accounts, which at times exceed federally insured limits. The Company has not experienced any losses in such accounts.

Accounts Receivable

Accounts receivable represent uncollected premiums related to
coverage periods prior to the balance sheet date, and are stated at the estimated collectible amounts, net of an allowance for bad debts. We regularly monitor the timing and amount of our premium collections, and maintain a reserve for estimated bad
debt losses. The amount of the reserve is based primarily on our historical experience and any customer-specific collection issues that are identified.

Unbilled accounts receivable represents the accounts receivable for all remaining future months related to our noncancelable fully-insured dental contracts with a corresponding unearned premium revenue
liability. With monthly premium billing, the billed amount is recorded as accounts receivable, and the unbilled accounts receivable is adjusted for the billing of new or renewed contracts.

Goodwill and Intangible Assets

Goodwill arises in business combinations when the purchase price of assets acquired net of liabilities assumed exceeds the fair value. As with tangible and other intangible assets, periodic impairment
reviews are required, at least annually, as well as when events or circumstances change. Management uses judgment in assessing goodwill for impairment. We review the recorded value of our goodwill annually or sooner if events or changes in
circumstances indicate that the carrying amount may exceed fair value. Considerable judgment must be exercised in determining future cash flows and their timing and choosing business value comparables or selecting discount rates to be used in any
value computations.

Business acquisitions often result in recording intangible assets. Intangible assets are
recognized at the time of an acquisition, based upon their fair value. Similar to long-lived tangible assets, intangible assets are subject to amortization and periodic impairment reviews whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The review for impairment of our intangible assets requires management to predict the estimated cash flows that will be generated by the long-lived asset over its remaining estimated useful life.
As with tangible assets, considerable judgment must be exercised.

Liability for Claims Payable

Our estimated liability for claims payable and corresponding healthcare service expense includes claims incurred but not
reported (IBNR), claims reported but not yet processed and paid and other healthcare services expenses incurred, including estimated costs of processing outstanding claims and actual amounts of accrued but unpaid payments in respect of
our Dental Care Plus provider withhold, if any, which is authorized by our Board of Directors. Our estimated liability for claims payable is based primarily on the average historical lag time between the date of service and the date the related
claim is paid, taking into account recent trends in payment rates and the average number of incurred claims per covered individual over a rolling 12 month period.



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The following table shows our total claims payable liability for the periods
indicated and its three components. IBNR represents a substantial portion of our claims payable liability.



|                                           |  |      |           |  |      |   |  |   |           |  |      |  
|------------------------------------------ |  | ---- | --------- |  | ---- | - |  | - | --------- |  | ---- | -
|                                           |  | 2009 |           |  | 2008 |  
|IBNR                                       |  | $    | 1,332,283 |  | 57.5 | % |  | $ | 1,134,818 |  | 43.1 | %
|Reported claims in process                 |  |      | 939,137   |  | 40.5 | % |  |   | 976,113   |  | 37.1 | %
|Other healthcare services expenses payable |  |      | 45,095    |  | 1.9  | % |  |   | 520,139   |  | 19.8 | %
|                                           |  |      |           |  |      |   |  |   |           |  |      |  
|Total claims payable liability             |  | $    | 2,316,515 |  | 100  | % |  | $ | 2,631,070 |  | 100  | %
|                                           |  |      |           |  |      |   |  |   |           |  |      |  

No provider withhold liability was recognized in December 2009 due to the fact no provider
withhold return was authorized by our Board of Directors in December 2009. A provider withhold liability amounting to $464,000 was recognized at December 31, 2008 and is included in other healthcare service expense payable at December 31,
2008.

Between December 31, 2008 and December 31, 2009, our IBNR estimate increased by approximately
$197,000 or 17.4%, primarily due to a 10.4% increase in the number of fully-insured members at December 31, 2009 compared to December 31, 2008 and an increase in fully-insured claims on a per member per month basis of approximately 4.7%.
Reported claims in process decreased by approximately $37,000, or 3.8%, from December 31, 2008 to December 31, 2009 due to a decrease in the number of days of reported claims in process from 9 days at December 31, 2008 to 6 days at
December 31, 2009, offset by the 10.4% increase in the fully-insured members at December 31, 2009 compared to December 31, 2008 and the increase in fully-insured claims on a per member per month basis of approximately 4.7%. The number
of days of reported claims in process at year end varies with the timing of our weekly provider claim payment cycle. Other healthcare services expense payable decreased by approximately $475,000, primarily due to the fact that no provider withhold
payment was authorized by our Board of Directors in December of 2009. The unpaid provider withhold amount was $464,000 at December 31, 2008.

IBNR and Reported Claims in Process Estimates

We
estimate liabilities for both IBNR and reported claims in process by employing actuarial methods that are commonly used by health insurance actuaries and meet actuarial standards of practice. These actuarial standards of practice require that claim
liabilities estimates be adequate under moderately adverse circumstances. The Companys consulting actuary assists us in making these estimates.

Since our liability for claims payable is based on actuarial estimates, the amount of claims eventually paid for services provided prior to the balance sheet date could differ from the estimated
liability. Any such differences are recognized in the consolidated statement of operations for the period in which the differences are identified.

We develop our estimate for claims payable liability using actuarial methodologies primarily based on historical claim payments and claim receipt patterns, as well as historical dental cost trends.
Depending on the period for which incurred claims are estimated, we apply a different method in determining our estimate. For periods prior to the most recent month, we calculate a completion factor which indicates the percentage of
claims payable estimated for a prior period that have been paid as of the end of the current reporting period. We use the completion factor to determine historical patterns over a rolling 12-month period, made consistent period over period by making
adjustments for known changes in claim inventory levels and known changes in claim payment processes. For the most recent month, we calculate a claims trend factor that estimates incurred claims primarily from a trend analysis based upon
per member per month claims trends developed from our historical experience in the preceding months, adjusted for known provider contracting changes, changes in benefit levels and seasonality.

We have not changed the key actuarial methodologies used by management to estimate the IBNR and reported claims in process
components of our claims payable liability during the periods presented, and



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management has not adjusted any of the key methodologies used in calculating the most recent estimate of the IBNR and reported claims in process components of our claims payable liability.

The table set forth below illustrates how our operating results are impacted when there is a variance between
estimated claims expense and actual claims expense. The table shows the sensitivity of the estimated fully-insured incurred claims payable liability to fluctuations in the expected completion factors and claims trend factors that were used to
estimate the claims payable liability as of December 31, 2009 within variance ranges historically experienced.



|                             |  |                         |  |                                                     |  |                               |  |                 |  |                                                    
|---------------------------- |  | ----------------------- |  | --------------------------------------------------- |  | ----------------------------- |  | --------------- |  | ---------------------------------------------------
|Completion Factor (a)        |  | Claims Trend Factor (b)
|(Decrease)Increase In Factor |  |                         |  | Estimated claims payable liability as of 12/31/2009 |  | (Decrease) Increase In
Factor |  |                 |  | Estimated claims payable liability as of 12/31/2009
|(0.50%)                      |  |                         |  | 2,434,657                                           |  | (5%)                          |  |                 |  | 2,164,783                                          
|0%                           |  | (estimate used)         |  | 2,316,515                                           |  | 0%                            |  | (estimate used) |  | 2,316,515                                          
|0.50%                        |  |                         |  | 2,238,179                                           |  | 5%                            |  |                 |  | 2,475,891                                          



|(a) | Reflects estimated potential changes in incurred claims payable liability caused by changes in completion factors for months prior to the most
recent month.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Reflects estimated potential changes in incurred claims payable liability caused by annualized claims trend used for the estimation of the per
member per month incurred claims for the most recent month.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Based on historical experience,
the completion factors we use to estimate outstanding IBNR and reported claims in process are highly reliable for predicting actual claims paid at future times, with a variance range of approximately one-half of one percent, plus or minus. The
claims trend factors we use to estimate outstanding IBNR and reported claims in process for the most recent month are somewhat less reliable based on historical experience, with a variance range of approximately five percent, plus or minus. We have
found that the estimated claims trend factor can be higher or lower than what the paid claims data indicates with the passage of time primarily because of factors beyond our control, such as the level of utilization of services by dental members and
the expected and actual mix of the types of services received by dental members.

Provider Withhold Payments

We do not estimate an accrued liability on a quarterly basis for provider withhold payments because we have no
obligation to pay any portion of the amount withheld to the providers and providers have no vested rights in the amounts withheld unless our Board of Directors authorizes a payment to them. Our Board makes a decision annually in December as to
whether or not to authorize any payment in respect of the withhold amount for the current year at which time the Company records a liability for the authorized withhold amount. Given the uncertainties associated with the factors considered by the
Board and the discretionary nature of these payments, we are not able to estimate the liability for provider withhold payments prior to Board authorization. The actual amount authorized by our Board for payment to the providers is added to the
accrued liability for claims payable in the month the authorization occurs.

The amount of the annual
provider withhold payment authorized by our Board varies from year to year depending on, among other factors deemed relevant from time to time, the amount of pre-tax income projected for the year then ending, our estimated income tax liability for
the year, the amount of retained earnings needed to satisfy the risk-based capital requirements of the Ohio Department of Insurance, factors impacting our financial strength rating with A.M. Best, such as the ratio of our projected fully-insured
premium revenue to our projected capital and surplus level, and the amount of capital needed for anticipated future capital expenditures.

The annual provider withhold payment authorized by the Board is recorded in December of the applicable year, resulting in a corresponding increase of claims expense and claims payable liability. Depending
on the amount of the provider withhold payment authorized, there may be a material increase in the claims payable



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liability at year end. At December 31, 2009, our claims payable liability remained at $2,316,515 after no provider withhold payment was authorized by the Board. Safeguarding the financial
condition and liquidity of the Company is a material factor considered in the provider withhold payment practices adopted by the Board.

Deferred Acquisition Costs

Deferred acquisition
costs are those costs that vary with and are primarily related to the acquisition of new and renewal business. Such costs include commissions, costs of contract issuance and underwriting, premium taxes and other costs the Company incurs to acquire
new business or renew existing business. Effective May 1, 2008, the Company began deferring policy acquisition costs and amortizing them over the estimated life of the contracts, which are short-duration in nature, in proportion to premiums
earned. The Company capitalized deferred acquisition costs of approximately $2,787,000 and $2,632,000 and amortized approximately $2,742,000 and $1,436,000 of these capitalized costs for the year ended December 31, 2009 and 2008, respectively.
These amounts are recorded in commission expense and other acquisition costs included in the consolidated statements of operations. Prior to the dates of the amendment of our contracts to be non-cancelable, all costs were expensed as incurred.

Redeemable Preferred Shares

The Board of Directors authorized and approved for issuance the redeemable Provider Preferred Shares-2009 (Provider Preferred Shares) Series that includes 5,000 preferred
shares of the 100,000 preferred shares authorized. These Provider Preferred Shares may only be purchased by participating dentists in the Companys dental plans or retired participating dentists that own at least 12 Redeemable Common Shares
(Class A and/or B). The Provider Preferred Shares are considered to be redeemable preferred shares due to the fact that the shareholders have the option to require the Company to repurchase these shares upon their death, permanent disability or
retirement. The Company records the Provider Preferred Shares as redeemable Provider Preferred Shares in the consolidated balance sheets outside of shareholders equity at the redemption value of the preferred shares. Accordingly, Provider
Preferred Shares are participating securities that share in the net income (loss) or other comprehensive income (loss) as a change to the redemption value of the redeemable Provider Preferred Shares to accrete (dilute) the carrying value to the
redemption value at the end of each reporting period. Under this method, the end of the reporting period is treated as if it were also the redemption date for the security. Redeemable Provider Preferred Shares are entitled to a cumulative cash
dividend equal to 5% of the year end book value of the redeemable Provider Preferred Shares.

Redeemable Common Shares

The Companys Class A and Class B redeemable common shares are owned by
participating providers, Company directors and employees. Only participating providers in our service area that includes all counties located in Ohio and Kentucky are eligible to own Class A voting redeemable common shares (See Note 10). All
participating providers, Company directors and Company employees are eligible to own the Class B non-voting redeemable common shares. The Companys Class A and Class B common shares are considered to be redeemable common shares due to the
fact that the shareholders have the option to require the Company to repurchase these shares upon their death, permanent disability or retirement. The Company records Class A and Class B common shares as Redeemable Common Shares in the
consolidated balance sheet outside of permanent shareholders equity at the redemption value of the common shares. Accordingly, the Company records any net income (loss) or other comprehensive income (loss) that formerly was recorded as a
change to Shareholders Equity as a change to the redemption value of the Redeemable Common Shares to accrete (dilute) the carrying value of the Redeemable Common Shares to the redemption value at the end of each reporting period. Under
this method, the end of the reporting period is treated as if it were also the redemption date for the security.

Recognition of Premium Revenue

Premium revenue is recognized in the period during which
dental or vision coverage is provided to the covered individuals. Payments received from customers in advance of the related period of coverage, as well as



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unbilled accounts receivable, are reflected on the accompanying consolidated balance sheet as unearned premium revenue. The Companys unearned premium revenue was approximately $19,985,000
at December 31, 2009 for the estimated premium revenue associated with the remaining contract periods and related amounts recorded in unbilled accounts receivable.

Healthcare Services Expense

Healthcare services
expense is recognized on a monthly basis. In the case of the fully-insured dental segment, healthcare services expense is calculated by taking the paid claims associated with the fully-insured membership and adjusting this amount for the change in
the claims payable liability determined using the actuarial estimates discussed above. For the self-insured dental segment, the healthcare services expense is based solely on the paid claims for the self-insured membership. In most cases, our
reimbursement to our participating providers for covered dental services under the dental HMO are subject to a 10% withhold by us. The amounts withheld are not retained in a separate fund and we have no obligation to pay any portion of the amounts
withheld to the providers. At the end of each year, our Board of Directors determines, in its sole discretion, how much if any of the provider withhold can be paid out to participating providers. Provider withhold payments authorized by our Board
during the fiscal year are recorded as an increase to healthcare services expense. Based on our 2009 operating results, a 1% increase in dental services utilization above the anticipated level would translate into an increase in our claims payable
liability of approximately $370,000.

Income Taxes

Our accounting for income taxes requires the recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that are recognized in our financial statements in different periods than those in which the events are recognized in our tax returns. The measurement of deferred tax liabilities and assets is based on current tax laws as of
the balance sheet date. We record a valuation allowance related to deferred tax assets in the event that available evidence indicates that the future tax benefits related to deferred tax assets may not be realized. A valuation allowance is required
when it is more likely than not that the deferred tax assets will not be realized. Our determination of whether a valuation allowance is required is subject to change based on future estimates of the recoverability of our net deferred tax assets.

Effective January 1, 2007, the Company adopted Accounting for Uncertainty in Income Taxes, which
clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. Accounting for Uncertainty in Income Taxes also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

New Accounting Standards

In April 2009, FASB issued guidance for determining whether an impairment is other-than-temporary for debt securities, requires bifurcation of any other-than-temporary impairment between the amount
representing credit loss and the amount related to all other factors and requires additional disclosures on other-than-temporary impairment of debt and equity securities. Under the guidance, an other-than-temporary impairment is triggered if a
Company has the intent to sell the security, if is more likely than not that it will be required to sell the security before recovery or it does not expect to recover the entire amortized cost basis. This guidance is effective for interim and annual
reporting periods ending after June 15, 2009. This guidance did not have a material effect on the Companys consolidated financial position or results of operations.

In April 2009, FASB issued guidance that provides additional guidance on estimating fair value when the volume and level of activity for an asset or liability have significantly
decreased in relation to normal market activity for the asset or liability, provides guidance on circumstances that may indicate that a transaction is not



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orderly and requires additional disclosures about fair value measurements in annual and interim reporting periods. This guidance is effective for interim and annual periods ending after
June 15, 2009. This new guidance did not have a material effect on the Companys consolidated financial position or results of operations.

In May 2009, FASB issued guidance that sets forth general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or
are available to be issued. The guidance is effective for periods ending after June 15, 2009. This guidance did not have a material effect on our consolidated financial condition, results of operations or related
disclosures.

In June 2009, FASB issued guidance that establishes the FASB Accounting Standards
Codification as the single source of authoritative accounting principles in the preparation of financial statements in conformity with GAAP. The guidance explicitly recognizes rules and interpretive releases of the Securities and Exchange
Commission (SEC) under federal securities laws as authoritative GAAP for SEC registrants. This guidance is effective for financial statements issued for periods ending after September 15, 2009. This guidance changed the
Companys disclosures, primarily related to references to U.S. GAAP, but did not have a material effect on the Companys consolidated financial condition and results of operations.

In August 2009, FASB issued guidance that provides additional assistance on measuring the fair value of liabilities. The
guidance clarifies that the quoted price for the identical liabilities when traded as an asset in an active market is also a Level 1 measurement for that liability when no adjustment to the quoted price is required. In the absence of a Level 1
measurement, an entity must use a valuation technique that uses quoted prices or another valuation technique based on the amount an entity would pay to transfer or enter into an identical liability. This guidance did not have a material effect on
the Companys consolidated financial position, results of operations or related disclosures.

Impact of Inflation

We do not consider the impact of the changes in prices due to inflation to be material in the analysis of our overall
operations.



|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

Market risk is the risk that we will incur investment losses or increased interest expense due to adverse changes in market rates and prices. Our market risk exposures are
substantially related to our investment portfolio and the impact of interest rate changes on these securities. In addition, interest rate changes can impact future interest expense for debt obligations that have a variable rate of interest
associated with them.

At December 31, 2009, our investment portfolio consisted solely of FDIC insured
bank certificates of deposit and U.S. government security mutual funds. We have evaluated the impact on the fixed maturity portfolios fair value considering an immediate 100 basis point change in interest rates. A 100 basis point increase in
interest rates would result in an approximate $11,873 decrease in fair value, whereas a 100 basis point decrease in interest rates would result in an approximate $5,914 increase in fair value. The certificates of deposit with a cost of $1.8 million
December 31, 2009 are all classified as available for sale.

At December 31, 2009, we had a mortgage
note with a bank with an outstanding principal balance of $1,020,000 with a variable rate based on LIBOR plus 1.75%. However, in June of 2003 we entered into a variable-to-fixed interest rate swap contract that effectively eliminated the interest
rate risk exposure on all but $300,000 of the outstanding loan principal. Management estimates that a 100 basis point increase in interest rates would decrease our annual pre-tax earnings by $3,000.

At December 31, 2009, we had a revolving note collateralized by a second mortgage with a bank with an outstanding
principal balance of $630,000 with a variable rate based on LIBOR plus 1.75%. Management estimates that a 100 basis point increase in interest rates would decrease our annual pre-tax earnings by $6,300.



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|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|------- | --------------------------------------------

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of DCP
Holding Company:

We have audited the accompanying consolidated balance sheets of DCP Holding Company and subsidiaries (the
Company) as of December 31, 2009 and 2008, and the related consolidated statements of operations, shareholders equity and redeemable shares, and cash flows for each of the three years in the period ended December 31,
2009. Our audits also included the financial statement schedules included in Item 15(a)2. These consolidated financial statements and financial statement schedules are the responsibility of the Companys management. Our responsibility is
to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, such financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/    Deloitte & Touche LLP

Cincinnati, OH

March 16, 2010



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DCP HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2009 AND 2008



|                                                                                                                                                                                                            |  |      |            |      |   |           
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                                                                                                                                                                            |  | 2009 |            | 2008
|ASSETS                                                                                                                                                                                                      |  |      |            |      |   |           
|INVESTMENTS:                                                                                                                                                                                                |  |      |            |      |   |           
|Fixed maturities at fair value, cost of $800,000 and $900,000 at December 31, 2009 and 2008, respectively                                                                                                   |  | $    | 807,461    |      | $ | 909,987   
|Short-term investments at fair value, cost of $1,204,000 and $5,643,000 at December 31, 2009 and 2008,
respectively                                                                                         |  |      | 1,213,471  |      |   | 5,655,920 
|                                                                                                                                                                                                            |  |      |            |      |   |           
|Total investments                                                                                                                                                                                           |  |      | 2,020,932  |      |   | 6,565,907 
|CASH AND CASH EQUIVALENTS                                                                                                                                                                                   |  |      | 6,769,186  |      |   | 2,527,946 
|ACCRUED INVESTMENT INCOME                                                                                                                                                                                   |  |      | 4,980      |      |   | 21,384    
|ACCOUNTS RECEIVABLE, net of allowance of $10,863 and $17,172 at December 31, 2009 and 2008, respectively                                                                                                    |  |      | 411,676    |      |   | 455,626   
|UNBILLED ACCOUNTS RECEIVABLE                                                                                                                                                                                |  |      | 19,985,267 |      |   | 20,845,634
|DEFERRED ACQUISITION COSTS                                                                                                                                                                                  |  |      | 1,241,141  |      |   | 1,196,060 
|PROPERTY AND EQUIPMENT, net of depreciation and amortization of $2,254,131 and $1,805,789 at December 31, 2009 and 2008,
respectively                                                                       |  |      | 2,626,033  |      |   | 2,833,495 
|OTHER ASSETS                                                                                                                                                                                                |  |      | 1,477,693  |      |   | 1,075,258 
|                                                                                                                                                                                                            |  |      |            |      |   |           
|TOTAL ASSETS                                                                                                                                                                                                |  | $    | 34,536,908 |      | $ | 35,521,310
|                                                                                                                                                                                                            |  |      |            |      |   |           
|                                                                                                                                                                                                            |  |     
|LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS EQUITY                                                                                                                                                     |  |      |            |      |   |           
|CLAIMS PAYABLE                                                                                                                                                                                              |  | $    | 2,316,515  |      | $ | 2,631,070 
|UNEARNED PREMIUM REVENUE                                                                                                                                                                                    |  |      | 20,959,114 |      |   | 21,605,647
|OTHER PAYABLES AND ACCRUALS                                                                                                                                                                                 |  |      | 3,226,253  |      |   | 3,164,403 
|REVOLVING NOTE                                                                                                                                                                                              |  |      | 630,000    |      |   | 630,000   
|MORTGAGE LOAN PAYABLE                                                                                                                                                                                       |  |      | 1,020,000  |      |   | 1,140,000 
|CAPITAL LEASE OBLIGATION                                                                                                                                                                                    |  |      |            |      |   | 19,253    
|DEFERRED COMPENSATION                                                                                                                                                                                       |  |      | 959,720    |      |   | 684,363   
|                                                                                                                                                                                                            |  |      |            |      |   |           
|TOTAL LIABILITIES                                                                                                                                                                                           |  |      | 29,111,602 |      |   | 29,874,736
|                                                                                                                                                                                                            |  |      |            |      |   |           
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                               |  |      |            |      |   |           
|                                                                                                                                                                                                            |  |      |            |      |   |           
|                                                                                                                                                                                                            |  |     
|REDEEMABLE SHARES:                                                                                                                                                                                          |  |      |            |      |   |           
|Provider Preferred-2009 Series Redeemable Preferred Shares, no par value, cumulative 5% dividendauthorized, 5,000 shares;
issued and outstanding, 330 and none at December 31, 2009 and 2008, respectively |  |      | 196,095    |      |   |           
|Class A, Redeemable Common Shares, no par valueauthorized, 7,500 shares; issued and outstanding, 621 and 630 at
December 31, 2009 and 2008, respectively                                                   |  |      | 394,813    |      |   | 423,241   
|Class B Redeemable Common Shares, no par valueauthorized, 95,000 shares; issued and outstanding, 7,604 and 7,775 at
December 31, 2009 and 2008, respectively                                               |  |      | 4,834,398  |      |   | 5,223,333 
|                                                                                                                                                                                                            |  |      |            |      |   |           
|Total redeemable shares                                                                                                                                                                                     |  |      | 5,425,306  |      |   | 5,646,574 
|                                                                                                                                                                                                            |  |      |            |      |   |           
|SHAREHOLDERS EQUITYPreferred Shares; no par valueauthorized, 95,000 shares; issued, none                                                                                                                 |  |      |            |      |   |           
|                                                                                                                                                                                                            |  |      |            |      |   |           
|TOTAL LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS EQUITY                                                                                                                                               |  | $    | 34,536,908 |      | $ | 35,521,310
|                                                                                                                                                                                                            |  |      |            |      |   |           

See notes to consolidated financial statements.



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DCP HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2009



|                                                      |  |      |            |   |      |   |            |  |   |            |  
|----------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- |  | - | ---------- | -
|                                                      |  | 2009 |            |   | 2008 |   | 2007       | 
|REVENUES                                              |  |      |            |   |      |   |            |  |   |            |  
|Premium revenue                                       |  | $    | 70,474,510 |   |      | $ | 66,207,207 |  | $ | 59,949,897 |  
|Investment income                                     |  |      | 98,951     |   |      |   | 223,135    |  |   | 269,343    |  
|Other income                                          |  |      | 71,613     |   |      |   | 79,890     |  |   | 94,012     |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|Total revenues                                        |  |      | 70,645,074 |   |      |   | 66,510,232 |  |   | 60,313,252 |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|                                                      |  |      |           
|EXPENSES                                              |  |      |            |   |      |   |            |  |   |            |  
|Healthcare services expense                           |  |      | 58,305,401 |   |      |   | 53,590,135 |  |   | 48,152,505 |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|Insurance expense:                                    |  |      |            |   |      |   |            |  |   |            |  
|Salaries and benefits expense                         |  |      | 4,607,185  |   |      |   | 4,383,987  |  |   | 4,112,522  |  
|Commission expenses and other acquisition costs       |  |      | 3,198,130  |   |      |   | 2,591,254  |  |   | 2,659,984  |  
|Other insurance expense                               |  |      | 4,929,325  |   |      |   | 4,970,788  |  |   | 4,471,169  |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|Total insurance expense                               |  |      | 12,734,640 |   |      |   | 11,946,029 |  |   | 11,243,675 |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|Total expenses                                        |  |      | 71,040,041 |   |      |   | 65,536,164 |  |   | 59,396,180 |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|INCOME (LOSS) BEFORE INCOME TAX (BENEFIT)             |  |      | (394,967   | ) |      |   | 974,068    |  |   | 917,072    |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|                                                      |  |      |           
|PROVISION (BENEFIT) FOR INCOME TAX:                   |  |      |            |   |      |   |            |  |   |            |  
|Current                                               |  |      | 186,293    |   |      |   | 252,740    |  |   | 456,244    |  
|Deferred                                              |  |      | (291,997   | ) |      |   | 106,277    |  |   | (143,657   | )
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|INCOME TAX EXPENSE (BENEFIT)                          |  |      | (105,704   | ) |      |   | 359,017    |  |   | 312,587    |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|NET INCOME (LOSS) ON REDEEMABLE SHARES                |  | $    | (289,263   | ) |      | $ | 615,051    |  | $ | 604,485    |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|BASIC EARNINGS (LOSSES) PER REDEEMABLE COMMON SHARE   |  | $    | (37.27     | ) |      | $ | 72.71      |  | $ | 72.88      |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  
|DILUTED EARNINGS (LOSSES) PER REDEEMABLE COMMON SHARE |  | $    | (37.27     | ) |      | $ | 72.71      |  | $ | 72.50      |  
|                                                      |  |      |            |   |      |   |            |  |   |            |  





See notes to consolidated financial statements.



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DCP HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND REDEEMABLE SHARES

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2009



|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------ | - |  | --------------------------- | ------- | - | -------------------- | ----- | - | ---------------- | - | --------- | ------------------------------------------ |  | ------ | ----- | - | ------- | -------------------------- |  | - | -------- | - |  | - | ------- | - |  | - | -------- | - |  | - | -------- | -
|                                                                                  |  | Redeemable Common Shares |   |  | Redeemable Preferred Shares |         |   | Shareholders Equity |      
|                                                                                  |  | Class A                  |   |  | Class B                     |         |   | Provider Preferred   |       |   | RetainedEarnings |   |           | OtherAccumulatedComprehensiveIncome (Loss) |  |        | Total |   |         | ComprehensiveIncome (Loss) | 
|                                                                                  |  | Number ofShares          |   |  | Amount                      |         |   | Number ofShares      |       |   | Amount           |   |           | Number ofShares                            |  | Amount |       |   |         |                            | 
|BALANCEDecember 31, 2006                                                         |  | 681                      |   |  | $                           | 362,853 |   |                      | 7,438 |   |                  | $ | 3,963,138 |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Net income                                                                        |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  | $ | 604,485  |   |  |   |         |   |  | $ | 604,485  |   |  | $ | 604,485  |  
|Change in fair value of interest rate swap (net of income tax benefit of $15,504) |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  | $ | (30,096 | ) |  |   | (30,096  | ) |  |   | (30,096  | )
|Unrealized gain on investments (net of income tax of $2,591)                      |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   | 5,030   |   |  |   | 5,030    |   |  |   | 5,030    |  
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Total comprehensive income                                                        |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  | $ | 579,419  |  
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Cumulative effect of change in accounting principle (Uncertain Tax Positions)     |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   | (5,997   | ) |  |   |         |   |  |   | (5,997   | ) |  |   |          |  
|Class A and B Common Shares issued                                                |  | 1                        |   |  |                             | 603     |   |                      | 490   |   |                  |   | 265,260   |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Class A Common Shares exchanged for Class B Common Shares                         |  | (20                      | ) |  |                             | (10,527 | ) |                      | 20    |   |                  |   | 10,527    |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Common shares redemptions                                                         |  | (9                       | ) |  |                             | (4,644  | ) |                      | (133  | ) |                  |   | (69,421   | )                                          |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Accretion of common shares to redemption value                                    |  |                          |   |  |                             | 44,318  |   |                      |       |   |                  |   | 529,104   |                                            |  |        |       |   |         |                            |  |   | (598,488 | ) |  |   | 25,066  |   |  |   | (573,422 | ) |  |   |          |  
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|BALANCEDecember 31, 2007                                                         |  | 653                      |   |  | $                           | 392,603 |   |                      | 7,815 |   |                  | $ | 4,698,608 |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Net income                                                                        |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  | $ | 615,051  |   |  |   |         |   |  | $ | 615,051  |   |  | $ | 615,051  |  
|Change in fair value of interest rate swap (net of income tax benefit of $22,093) |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  | $ | (42,885 | ) |  |   | (42,885  | ) |  |   | (42,885  | )
|Unrealized gain on investments (net of income tax of $14,032)                     |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   | 27,235  |   |  |   | 27,235   |   |  |   | 27,235   |  
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Total comprehensive income                                                        |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  | $ | 599,401  |  
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Class B Common Shares issued                                                      |  |                          |   |  |                             |         |   |                      | 93    |   |                  | $ | 53,145    |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Class A Common Shares exchanged for Class B Common Shares                         |  | (17                      | ) |  | $                           | (10,353 | ) |                      | 17    |   |                  |   | 10,353    |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Common shares redemptions                                                         |  | (6                       | ) |  |                             | (3,648  | ) |                      | (150  | ) |                  |   | (93,535   | )                                          |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Accretion of common shares to redemption value                                    |  |                          |   |  |                             | 44,639  |   |                      |       |   |                  |   | 554,762   |                                            |  |        |       |   |         |                            |  |   | (615,051 | ) |  |   | 15,650  |   |  |   | (599,401 | ) |  |   |          |  
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|BALANCEDECEMBER 31, 2008                                                         |  | 630                      |   |  | $                           | 423,241 |   |                      | 7,775 |   |                  | $ | 5,223,333 |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Net loss                                                                          |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  | $ | (289,263 | ) |  |   |         |   |  | $ | (289,263 | ) |  | $ | (289,263 | )
|Change in fair value of interest rate swap (net of income tax of $4,874)          |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  | $ | 9,462   |   |  |   | 9,462    |   |  |   | 9,462    |  
|Unrealized loss on investments (net of income tax benefit of $5,198)              |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   | (10,088 | ) |  |   | (10,088  | ) |  |   | (10,088  | )
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Total comprehensive loss                                                          |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  | $ | (289,889 | )
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Redeemable Provider Preferred dividend payable liability                          |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   | (10,519  | ) |  |   |         |   |  |   | (10,519  | ) |  |   |          |  
|Redeemable Shares issued, net of issuance cost                                    |  |                          |   |  |                             |         |   |                      | 40    |   |                  | $ | 24,398    |                                            |  | 330    |       | $ | 197,136 |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Class A Common Shares exchanged for Class B Common Shares                         |  | (3                       | ) |  | $                           | (2,012  | ) |                      | 3     |   |                  |   | 2,012     |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Class B Common Share exchanged for Class A Common Share                           |  | 1                        |   |  |                             | 590     |   |                      | (1    | ) |                  |   | (590      | )                                          |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Redeemable Shares repurchased                                                     |  | (7                       | ) |  |                             | (4,579  | ) |                      | (213  | ) |                  |   | (137,815  | )                                          |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|Dilution of shares to redemption value                                            |  |                          |   |  |                             | (22,427 | ) |                      |       |   |                  |   | (276,940  | )                                          |  |        |       |   | (1,041  | )                          |  |   | 299,782  |   |  |   | 626     |   |  |   | 300,408  |   |  |   |          |  
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  
|BALANCEDECEMBER 31, 2009                                                         |  | 621                      |   |  | $                           | 394,813 |   |                      | 7,604 |   |                  | $ | 4,834,398 |                                            |  | 330    |       | $ | 196,095 |                            |  | $ |          |   |  | $ |         |   |  | $ |          |   |  |   |          |  
|                                                                                  |  |                          |   |  |                             |         |   |                      |       |   |                  |   |           |                                            |  |        |       |   |         |                            |  |   |          |   |  |   |         |   |  |   |          |   |  |   |          |  

See notes to consolidated financial statements.



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DCP HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2009



|                                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|-------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                                   |  | 2009 |             |   | 2008 |   |             | 2007 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |  |      |             |   |      |   |             |      |  |   |             |  
|Net income (loss) on redeemable shares                                                             |  | $    | (289,263    | ) |      | $ | 615,051     |      |  | $ | 604,485     |  
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |      |             |   |      |   |             |      |  |   |             |  
|Depreciation and amortization                                                                      |  |      | 467,650     |   |      |   | 446,403     |      |  |   | 405,186     |  
|Deferred income taxes (benefit)                                                                    |  |      | (291,997    | ) |      |   | 106,277     |      |  |   | (143,657    | )
|Deferred compensation                                                                              |  |      | 275,357     |   |      |   | 292,956     |      |  |   | 288,704     |  
|Effects of changes in operating assets and liabilities:                                            |  |      |             |   |      |   |             |      |  |   |             |  
|Accrued investment income                                                                          |  |      | 16,404      |   |      |   | 13,208      |      |  |   | (16,934     | )
|Accounts receivable                                                                                |  |      | 43,950      |   |      |   | 105,254     |      |  |   | (173,084    | )
|Unbilled accounts receivable                                                                       |  |      | 860,367     |   |      |   | (20,845,634 | )    |  |   |             |  
|Reinsurance recoverable on paid losses                                                             |  |      |             |   |      |   | 26,500      |      |  |   | (25,733     | )
|Deferred acquisition costs                                                                         |  |      | (45,081     | ) |      |   | (1,196,060  | )    |  |   |             |  
|Other assets                                                                                       |  |      | (134,665    | ) |      |   | 37,542      |      |  |   | (149,279    | )
|Claims payable                                                                                     |  |      | (314,555    | ) |      |   | 140,819     |      |  |   | (1,497,340  | )
|Unearned premium revenue                                                                           |  |      | (646,533    | ) |      |   | 20,939,236  |      |  |   | 78,448      |  
|Other payables and accruals                                                                        |  |      | 95,774      |   |      |   | 978,694     |      |  |   | 231,270     |  
|                                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Net cash provided by (used in) operating activities                                                |  |      | 37,408      |   |      |   | 1,660,246   |      |  |   | (397,934    | )
|                                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |  |      |             |   |      |   |             |      |  |   |             |  
|Purchases of investments                                                                           |  |      | (14,613,318 | ) |      |   | (20,229,471 | )    |  |   | (20,245,906 | )
|Sales and maturities of investments                                                                |  |      | 19,152,207  |   |      |   | 18,908,491  |      |  |   | 18,018,286  |  
|Acquisition of property and equipment                                                              |  |      | (244,850    | ) |      |   | (321,212    | )    |  |   | (137,497    | )
|                                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Net cash provided by (used in) investing activities                                                |  |      | 4,294,039   |   |      |   | (1,642,192  | )    |  |   | (2,365,117  | )
|                                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |  |      |             |   |      |   |             |      |  |   |             |  
|Borrowing of revolving note                                                                        |  |      |             |   |      |   | 630,000     |      |  |   |             |  
|Mortgage loan repayments                                                                           |  |      | (120,000    | ) |      |   | (120,000    | )    |  |   | (120,000    | )
|Repayment of capital lease                                                                         |  |      | (19,253     | ) |      |   | (223,624    | )    |  |   | (210,486    | )
|Repayment of note payable                                                                          |  |      |             |   |      |   |             |      |  |   | (55,417     | )
|Repurchase of redeemable shares                                                                    |  |      | (172,488    | ) |      |   | (67,550     | )    |  |   | (62,174     | )
|Redeemable shares issued, net of issuance costs                                                    |  |      | 221,534     |   |      |   | 28,178      |      |  |   | 265,863     |  
|                                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Net cash provided by (used in) financing activities                                                |  |      | (90,207     | ) |      |   | 247,004     |      |  |   | (182,214    | )
|                                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                   |  |      | 4,241,240   |   |      |   | 265,058     |      |  |   | (2,945,265  | )
|CASH AND CASH EQUIVALENTSBeginning of period                                                      |  |      | 2,527,946   |   |      |   | 2,262,888   |      |  |   | 5,208,153   |  
|                                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|CASH AND CASH EQUIVALENTSEnd of period                                                            |  | $    | 6,769,186   |   |      | $ | 2,527,946   |      |  | $ | 2,262,888   |  
|                                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|SUPPLEMENTAL CASH FLOW INFORMATION                                                                 |  |      |             |   |      |   |             |      |  |   |             |  
|Cash paid for interest                                                                             |  | $    | 61,000      |   |      | $ | 69,000      |      |  | $ | 95,000      |  
|Cash paid for income taxes                                                                         |  |      | 391,000     |   |      |   | 218,000     |      |  |   | 335,000     |  
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                                       |  |      |             |   |      |   |             |      |  |   |             |  
|Redeemed common shares (in other payables and accruals)                                            |  | $    | 62,170      |   |      | $ | 97,183      |      |  | $ | 62,644      |  
|Dividends payable (in other payables and accruals)                                                 |  |      | 10,519      |   |      |   |             |      |  |   |             |  
|Redeemable common shares issued in lieu of cash payment of deferred compensation                   |  |      |             |   |      |   | 24,967      |      |  |   |             |  
|Class A redeemable common shares exchanged for Class B redeemable common shares                    |  |      | 2,012       |   |      |   | 10,353      |      |  |   | 10,527      |  
|Class B redeemable common shares exchanged for Class A redeemable common shares                    |  |      | 590         |   |      |   |             |      |  |   |             |  

See notes to consolidated financial statements.



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DCP HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2009 AND 2008 AND FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2009, 2008 and 2007

1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DCP Holding Company (the Company) is the parent holding company of three wholly-owned subsidiaries which include Dental Care Plus, Inc., an Ohio corporation, Insurance Associates Plus, Inc.,
an Ohio corporation, and Adenta, Inc., a Kentucky corporation. The Company is owned and controlled by 621 dentists who participate in our Dental Care Plus products. The Company offers to employer groups of all sizes dental health maintenance
organization (HMO), participating provider organization (PPO) and indemnity plans and vision benefit plans. As of December 31, 2009, the Company had approximately 261,600 members in its dental benefits programs with
2,441 dentists participating in its two provider networks in Southwestern Ohio, Northern Kentucky, Central Kentucky and Southeastern Indiana. In addition, the Company had approximately 15,600 members in its vision benefit programs. The Company
markets its products through a network of independent brokers.

The Companys products consist primarily
of dental HMO, PPO and indemnity plans, with dental HMO products constituting 88.3% of its total revenues. Substantially, all of the Companys products are marketed to employer groups. The Companys business model allows it to offer dental
benefit products including broad networks of participating dentists while at the same time promoting the use of private practice fee-for-service dentistry, a primary interest of the Companys participating dentists. The dental benefit products
the Company offers currently vary depending on geographic market.

As an Ohio-domiciled insurance company
dually licensed as a life and health insurer and a specialty health insuring corporation, Dental Care Plus is able to underwrite dental indemnity, dental PPO, dental HMO, and vision benefit products as well as other life and health insurance
products. Beginning October 1, 2007, the Company transitioned the majority of its employer groups with dental indemnity products underwritten by a third-party insurance carrier to dental indemnity products underwritten by Dental Care Plus. As
of June 1, 2008, the Company transitioned the majority of its employer groups with dental PPO products underwritten by a third-party insurance carrier to dental PPO products underwritten by Dental Care Plus.

The accounting policies of the Company conform to accounting principles generally accepted in the United States of America.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements
and accompanying notes. The accompanying financial statements include estimates for items such as claims payable, deferred acquisition costs, income taxes and various other liability accounts. Actual results could differ from those estimates.
Policies that affect the more significant elements of the financial statements are summarized below.

Basis of PresentationThe accompanying consolidated financial statements include the accounts of the Company and subsidiaries, each of which is wholly-owned, and have been prepared in conformity with accounting principles
generally accepted in the United States of America. All significant intercompany accounts and balances have been eliminated in consolidation. The Company presents its financial statements to conform with Article 7 of the Securities and Exchange
Commission Regulation S-X pursuant to Section 13-15(d) of the Securities Exchange Act of 1934.

Cash and Cash EquivalentsThe Company defines cash as cash held in operating accounts at financial institutions. The Company considers highly liquid investments with maturities of three months or less at the date of
acquisition as cash equivalents in the accompanying consolidated financial statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



InvestmentsThe Company invests primarily in
certificates of deposit and a money market mutual fund. The Company classifies all investments as available-for-sale. Such investments are recorded at fair value, with unrealized gains and losses recorded as a component of other comprehensive
income. The Company recognizes gains and losses when these securities mature or are sold using the specific identification method. Management follows a consistent and systematic process for recognizing impairments on securities that sustain
other-than-temporary declines in value. The decision to impair a security incorporates both quantitative criteria and qualitative information. The impairment review process considers a number of factors including, but not limited to the length of
time and the extent to which the fair value has been less than cost, the Companys intent and ability to retain a security for a period adequate to recover its cost, and general market conditions. The Companys impairment policy for
fixed-maturity securities states that other-than-temporary impairment is considered to have occurred (1) if the Company intends to sell the impaired fixed maturity security; (2) if it is more likely than not the Company will be required to
sell the fixed maturity security before recovery of its amortized cost basis; or (3) the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis.

Property and EquipmentProperty and equipment is carried at cost less accumulated depreciation.
Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The building and the building improvements have useful lives of 27 years and 15 years, respectively. Furniture and fixtures have useful lives of
5 years, and computer equipment and software have useful lives of up to 3 years. Maintenance and repair cost are expensed as incurred. If an impairment exists, a loss is recorded as the amount by which the carrying value of the asset exceeds its
fair value.

The Company reviews property and equipment for impairment whenever events or changes in
circumstances, such as significant decreases in market values of assets, changes in legal factors or in the business climate, and accumulation of costs significantly in excess of the amount originally expected to acquire or construct an asset, or
other such factors indicate that the carrying amount may not be recoverable.

State Guarantee Fund
DepositsThe Company maintains funds on deposit with state insurance departments in those states where the Company is licensed to do business. These funds amounted to approximately $291,000 and $298,000 at December 31, 2009 and
2008, respectively. These funds are restricted and not available to the Company for normal operations and are included in other assets in the accompanying consolidated balance sheets.

Goodwill and Intangible AssetsGoodwill arises in business combinations when the purchase price of net
assets less liabilities assumed acquired exceeds the fair value. As with tangible and other intangible assets, periodic impairment reviews are required, at least annually, as well as when events or circumstances change. Management uses judgment in
assessing goodwill for impairment. Management reviews the recorded value of our goodwill annually, or sooner if events or changes in circumstances indicate that the carrying amount may exceed fair value. Professional judgment must be exercised in
determining future cash flows, timing and business valuation comparables or selecting discount rates to be used in any valuation assessments.

Business acquisitions often result in recording identifiable intangible assets. Identifiable intangible assets are recognized at the time of an acquisition, based upon their fair value. Similar to
long-lived tangible assets, identifiable intangible assets are subject to amortization and periodic impairment reviews whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review for
impairment of the Companys intangible assets requires management to predict the estimated cash flows that will be generated by the long-lived asset over its remaining estimated useful life.

Deferred Acquisition CostsDeferred acquisition costs are those costs that vary with and are primarily
related to the acquisition of new and renewal business. Such costs include commissions, costs of contract



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



issuance and underwriting, premium taxes and other costs the Company incurs to acquire new business or renew existing business. Effective May 1, 2008, the Company began deferring policy
acquisition costs and amortizing them over the estimated life of the contracts, which are short-duration in nature, in proportion to premiums earned. The Company capitalized deferred acquisition costs of approximately $2,787,000 and $2,632,000 and
amortized approximately $2,742,000 and $1,436,000 of these capitalized costs for the year ended December 31, 2009 and 2008, respectively. These amounts are recorded in commission expense and other acquisition costs included in the consolidated
statements of operations. Prior to the dates of the amendment of our contracts to be non-cancelable, all costs were expensed as incurred.

Redeemable Preferred SharesThe Board of Directors (Board) authorized and approved for issuance Provider Preferred Shares-2009 Series (Provider Preferred Shares)
that includes 5,000 preferred shares of the 100,000 preferred shares authorized. These Provider Preferred Shares may only be purchased by participating dentists in the Companys dental plans or retired participating dentists that own at least
12 redeemable Common Shares (Class A and/or B). The Provider Preferred Shares are considered to be redeemable preferred shares due to the fact that the shareholders have the option to require the Company to repurchase these shares upon their death,
permanent disability or retirement. The Company records the Provider Preferred Shares as redeemable Provider Preferred Shares in the consolidated balance sheets outside of shareholders equity at the redemption value of the preferred shares.
Accordingly, Provider Preferred Shares are participating security that share in the net income (loss) or other comprehensive income (loss) as a change to the redemption value of the redeemable Provider Preferred Shares to accrete (dilute) the
carrying value to the redemption value at the end of each reporting period. Under this method, the end of the reporting period is treated as if it were also the redemption date for the security. Redeemable Provider Preferred Shares are entitled to a
cumulative cash dividend equal to 5% of the year end book value of the redeemable Provider Preferred Shares.

Redeemable Common SharesThe Companys Class A and Class B redeemable common shares are owned by participating providers and Company directors and employees. Only participating providers in our service area that
includes all counties located in Ohio and Kentucky are eligible to own Class A voting redeemable common shares (See Note 10). All participating providers, Company directors and Company employees are eligible to own the Class B non-voting
redeemable common shares. The Companys Class A and Class B common shares are considered to be redeemable common shares due to the fact that the shareholders have the option to require the Company to repurchase these shares upon their
death, permanent disability or retirement. The Company records Class A and Class B common shares as Redeemable Common Shares in the consolidated balance sheets outside of shareholders equity at the redemption value of the common shares.
Accordingly, the Company records any net income (loss) or other comprehensive income (loss) as a change to the redemption value of the Redeemable Common Shares to accrete (dilute) the carrying value of the Redeemable Common Shares to the redemption
value at the end of each reporting period. Under this method, the end of the reporting period is treated as if it were also the redemption date for the security.

Premium Revenue

Fully-InsuredMembership contracts are written on an annual basis and are subject to cancellation by the employer group upon thirty days written notice. The Company amended its fully-insured dental HMO contracts and dental
indemnity contracts to be non-cancelable by the Company effective May 1, 2008 and its fully-insured dental PPO contracts to be non-cancelable by the Company effective June 1, 2008. The Companys unearned premium revenue was
approximately $20,959,000 and $21,606,000 at December 31, 2009 and 2008, respectively, and relates to the estimated premium revenue associated with the remaining contract periods. Related amounts recorded in unbilled accounts receivable were
approximately $19,985,000 and $20,845,000 at December 31, 2009 and 2008, respectively. Premiums are due monthly in advance and are recognized evenly as revenue during the period in which the Company is obligated to provide services to members.
Any amounts not



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



received by the end of a reporting period are recorded as accounts receivable by the Company. Any premiums received prior to the beginning of a reporting period are recognized as premiums
received in advance and are included in unearned premium revenue in the accompanying consolidated balance sheets. Premiums received in advance were approximately $974,000 and $761,000 at December 31, 2009 and 2008, respectively. Management has
determined that as of December 31, 2009 and 2008, respectively, no premium deficiency reserve is required. The Companys premium deficiency reserve analysis includes an allocation of investment income.

Self-InsuredThe Company provides administrative and claims processing services, benefit plan design, and access
to its provider networks for an administrative fee to self-insured groups. The Company has no underwriting risk arising from the provision or cost of any services provided to the self-insured groups. The Company recognizes and records self-insured
premiums on a gross basis because: (i) the Company is the primary obligor in its contractual relationships with self-insured employers and dental service providers, (ii) the Company establishes the pricing for the services provided,
(iii) the Company controls the selection of and the relationships with the dental service providers, and (iv) the Company is involved in the determination of dental service specifications. Self-insured premium revenue is recognized upon
the payment of claims for self-insured members in accordance with agreements with self-insured employers and is included in premium revenue in the accompanying consolidated statements of operations.

Third-party administration fee revenue (ASO fees) is recognized monthly when earned and is normally based on
annual contracts with the self-insured groups. ASO fees are charged to self-insured employer groups monthly on a per subscriber per month basis. ASO fees also include the administrative fees the Company earns relative to the dental PPO, dental
indemnity and vision products that are underwritten by third-party insurance carriers.

Investment
IncomeInvestment income of approximately $99,000, $223,000, and $269,000, during 2009, 2008, and 2007, respectively, is comprised of approximately $25,000, $122,000, and $175,000, of interest income earned from money market accounts
and cash in operating accounts in 2009, 2008 and 2007, respectively, and approximately $74,000, $101,000, and $94,000, of investment income earned from certificates of deposit in 2009, 2008, and 2007, respectively.

Other IncomeOther income is comprised primarily of rental income from the rental of space in the
building owned and partially occupied by the Company (See Note 14) as well as revenues earned from the leasing of the Companys dental provider network to other dental benefit providers.

Healthcare Service ExpenseThe Company compensates its providers based on contractual reimbursement for
various services. With respect to the dental HMO product, the Company generally retains 10% of this reimbursement (including payments on self-insured claims) in accordance with the Companys provider agreements. Healthcare services expense is
recorded net of any amounts withheld in the accompanying consolidated statements of operations. Under the terms of the Companys provider agreements, the Company is not obligated to return to providers any amounts withheld. Withheld amounts are
retained by the Company but not reserved or retained in a separate fund. Participating providers have no interest in the amounts withheld unless the Companys Board authorizes any amount to be paid to the providers.

The cost of healthcare services provided to members is accrued in the period such services are provided based on the
accumulation of estimates of claims reported prior to the end of a reporting period and of estimates of dental services provided but not reported to the Company, net of the amounts withheld in accordance with the provider agreements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



Managements estimates of dental services provided are based on the
Companys historical experience and current trends, with assistance from the Companys consulting actuary. Estimated dental claims payable are reviewed monthly by management and are adjusted based on current information, actual paid claims
data, dental utilization statistics and other pertinent information. However, final claim payments may differ from the established reserves. Any resulting adjustments are reflected in current operations.

The Company incurred claim costs related to dental care providers amounting to approximately $58,305,000, $53,590,000, and
$48,153,000 for the years ended December 31, 2009, 2008, and 2007, respectively. These costs include approximately $42,152,000, $41,666,000, and $38,941,000 of claims incurred by participating providers who are also holders of redeemable common
shares in 2009, 2008, and 2007, respectively. In 2008 and 2007, the Companys incurred claim costs also included provider withhold return of $464,000 and $650,000, respectively.

Each year the Board evaluates the performance of the Companys dental plans, capital and surplus requirements
prescribed by the Ohio Department of Insurance, factors affecting the Companys financial strength rating, funding needed to support strategic objectives for the coming years and any other factors deemed relevant by the Board and, based on that
evaluation, determines whether or not to authorize the payment to the providers of any portion of the provider withhold. Once authorized by the Board, such amounts are recorded as additional healthcare services expense in the period authorized and
shown as additional claims payable liability until paid. There was no withhold return authorized for 2009.

ReinsuranceIn 2008 and prior years, the Company ceded portions of its written premiums. As such, the Company limited its loss exposure to that portion of the insurable risk that it retained. However, if a reinsurer
failed to honor its obligations, the Company could suffer additional losses as the reinsurance contracts did not relieve the Company of its obligations to policyholders. The Company terminated its reinsurance contracts effective May 31, 2008.
Dental insurance premiums ceded were approximately $121,000 and $228,000 for the years ended December 31, 2008 and 2007, respectively. The healthcare services expense ceded was approximately $106,000 and $189,000 for the years ended
December 31, 2008 and 2007, respectively. The Company had approximately $5,000 of reinsurance recoverable and prepaid reinsurance premium net of reinsurance payable as of December 31, 2008. The Company did not have any reinsurance
recoverable and prepaid reinsurance premium net of reinsurance payable as of December 31, 2009.

Derivative InstrumentsAll derivative financial instruments are recorded on the balance sheet at fair value. The changes in fair value of derivatives that are designated and qualify as cash flow hedges are recorded in
other comprehensive income, with subsequent reclassification to earnings when the hedged transaction asset or liability impacts earnings. Any ineffectiveness is recognized in earnings immediately.

Federal Income TaxDeferred federal income tax is provided in the accompanying financial statements for
the tax effects of temporary differences between the carrying values and tax bases of assets and liabilities. Differences result primarily from items such as discounting on claims payable, accrued commissions, deferred compensation, bonus accruals,
depreciation and deferred acquisition costs.

The Company reviews the deferred tax assets to determine the
necessity of a valuation allowance. Valuation allowances are provided to the extent it is more likely than not that deferred tax assets will not be realized. The Company files a consolidated federal income tax return which includes all subsidiaries.

Earnings Per ShareBasic and diluted earnings per share is computed by taking the total of
net income (loss) attributable to redeemable common shares divided by the weighted average number of redeemable common shares outstanding during the period.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



Concentrations of Credit RiskFinancial instruments
which potentially subject the Company to concentrations of credit risk consist primarily of premiums receivable. Other than as discussed below, concentrations of credit risk with respect to premiums receivable are limited because of the large number
of employer groups comprising the Companys client base and contracts are cancelled if premiums are not paid within 90 days.

During 2009, 2008, and 2007, four fully-insured customers accounted for approximately 9%, 9%, and 14%, respectively, of the Companys total revenue. Additionally, two self-insured customers accounted
for approximately 11%, 13%, and 16%, of the Companys total revenue during 2009, 2008, and 2007, respectively.

At December 31, 2009, premium receivables did not have any balance greater than 10% of the total balance from any one customer. At December 31, 2008, premiums receivable from two customers totaled approximately 23% of the premiums
receivable balance.

The Company maintains its cash in bank deposit accounts, which at times exceed federally
insured limits. The Company has not experienced any losses in such accounts.

Fair Value of Financial
InstrumentsCertain financial instruments are required to be recorded at fair value. The estimated fair values of such financial instruments have been determined using market information and valuation methodologies, primarily discounted
cash flow analysis. Changes in assumptions or estimation methods could affect the fair value estimates. However, we do not believe any such changes would have a material impact on our financial condition, results of operations or cash flows.

New Accounting StandardsIn April 2009, FASB issued guidance for determining whether
an impairment is other-than-temporary for debt securities, requires bifurcation of any other-than-temporary impairment between the amount representing credit loss and the amount related to all other factors and requires additional disclosures on
other-than-temporary impairment of debt and equity securities. Under the guidance, an other-than-temporary impairment is triggered if a Company has the intent to sell the security, if is more likely than not that it will be required to sell the
security before recovery or it does not expect to recover the entire amortized cost basis. This guidance is effective for interim and annual reporting periods ending after June 15, 2009. This guidance did not have a material effect on the
Companys consolidated financial position or results of operations.

In April 2009, FASB issued
guidance that provides additional guidance on estimating fair value when the volume and level of activity for an asset or liability has significantly decreased in relation to normal market activity for the asset or liability, provides guidance on
circumstances that may indicate that a transaction is not orderly and requires additional disclosures about fair value measurements in annual and interim reporting periods. This guidance is effective for interim and annual periods ending after
June 15, 2009. This new guidance did not have a material effect on the Companys consolidated financial position or results of operations.

In May 2009, FASB issued guidance that sets forth general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or
are available to be issued. The guidance is effective for periods ending after June 15, 2009. This guidance did not have a material effect on our consolidated financial condition, results of operations or related
disclosures.

In June 2009, FASB issued guidance that establishes the FASB Accounting Standards
Codification as the single source of authoritative accounting principles in the preparation of financial statements in conformity with GAAP. The guidance explicitly recognizes rules and interpretive releases of the Securities and Exchange
Commission (SEC) under federal securities laws as authoritative GAAP for SEC registrants. This guidance is effective for financial statements issued for periods ending after September 15, 2009. This guidance changed the



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Companys disclosures, primarily related to references to U.S. GAAP, but did not have a material effect on the Companys consolidated financial condition and results of operations.

In August 2009, FASB issued guidance that provides additional assistance on measuring the fair value of
liabilities. The guidance clarifies that the quoted price for the identical liabilities when traded as an asset in an active market is also a Level 1 measurement for that liability when no adjustment to the quoted price is required. In the absence
of a Level 1 measurement, an entity must use a valuation technique that uses quoted prices or another valuation technique based on the amount an entity would pay to transfer or enter into an identical liability. This guidance did not have a material
effect on the Companys consolidated financial position, results of operations or related disclosures.

2. INTANGIBLE ASSETS

Goodwill and intangible assets were recorded as a result of the acquisition of Adenta, Inc in 2005 related
to goodwill, an acquired contract, memberships and a provider network. Goodwill amounted to approximately $136,000 at December 31, 2009 and December 31, 2008. There has not been any cumulative impairment on goodwill. Identifiable and
amortizable intangible assets amounted to approximately $158,000 net of approximately $82,000 of accumulated amortization at December 31, 2009 and to approximately $173,000 net of approximately $67,000 of accumulated amortization at
December 31, 2008. Amortization expense was approximately $15,000 for each of the three years ended December 2009, 2008 and 2007. The provider network intangible asset of approximately $85,000 at December 31, 2009 is being amortized over a
period of 20 years, a period during which the Company expects that all of these providers will have retired from the network. Membership intangible assets (net of individual memberships written-off in the year of acquisition) of approximately
$73,000 at December 31, 2009 is being amortized over its 11 year useful life in accordance with the Companys expectation for the membership retention. The remaining weighted-average amortization period for these intangible assets is
approximately 12 years. Goodwill and intangible assets are included in other assets in the accompanying consolidated balance sheets at December 31, 2009 and 2008.

3. INVESTMENTS

The Company owned certificates of deposit
insured by the Federal Deposit Insurance Corporation (FDIC) with a cost of $1,800,000 and $1,909,000 as of December 31, 2009 and 2008, respectively. The Company also invests in a money market fund with a cost of $204,111 and
$4,634,000 as of December 31, 2009 and 2008, respectively. These short-term and fixed maturities investments are classified as available-for-sale and are carried at fair value, which is based on quoted market prices. The unrealized gains and
losses on investment activity are due to a change in the quoted market prices for these certificates of deposit caused by any changes in prevailing interest rates since they were purchased. There were no realized gains or losses for the three years
ended December 31, 2009, 2008 and 2007.



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At December 31, 2009 and 2008, maturity dates for fixed maturity
and short-term maturities were:

Maturity dates occurring:



|                                                |  |      |           |            |   |                |  |       |  
|----------------------------------------------- |  | ---- | --------- | ---------- | - | -------------- |  | ----- | -
|2009                                            |  | Cost |           | Fair Value |   | % ofFair Value | 
|Less than 1 year (ten certificates of deposit)  |  | $    | 1,000,000 |            | $ | 1,009,360      |  | 55.6  | %
|Years 1-2 (six certificates of deposit)         |  |      | 800,000   |            |   | 807,461        |  | 44.4  | %
|                                                |  |      |           |            |   |                |  |       |  
|Total investments                               |  | $    | 1,800,000 |            | $ | 1,816,821      |  | 100.0 | %
|                                                |  |      |           |            |   |                |  |       |  
|                                                |  |      |          
|2008                                            |  | Cost |           | Fair Value |   |                | 
|Less than 1 year (nine certificates of deposit) |  |      | 1,009,000 |            |   | 1,021,920      |  | 52.9  | %
|Years 1-2 (eleven certificates of deposit)      |  |      | 900,000   |            |   | 909,987        |  | 47.1  | %
|                                                |  |      |           |            |   |                |  |       |  
|Total investments                               |  | $    | 1,909,000 |            | $ | 1,931,907      |  | 100.0 | %
|                                                |  |      |           |            |   |                |  |       |  

Investments classified at December 31, 2009 and 2008, as fixed maturities and
short-term assets were as follows:



|                                         |  |      |           |                     |   |                     |  |            |  |  |   |          
|---------------------------------------- |  | ---- | --------- | ------------------- | - | ------------------- |  | ---------- |  |  | - | ---------
|2009                                     |  | Cost |           | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | Fair Value
|Money market                             |  | $    | 204,111   |                     |   |                     |  |            |  |  | $ | 204,111  
|Certificates of depositshort term       |  |      | 1,000,000 |                     | $ | 9,360               |  |            |  |  |   | 1,009,360
|Certificates of depositfixed maturities |  |      | 800,000   |                     |   | 7,461               |  | $          |  |  |   | 807,461  
|                                         |  |      |           |                     |   |                     |  |            |  |  |   |          
|Total investments                        |  | $    | 2,004,111 |                     | $ | 16,821              |  | $          |  |  | $ | 2,020,932
|                                         |  |      |           |                     |   |                     |  |            |  |  |   |          
|                                         |  |      |           |                    
|2008                                     |  | Cost |           | GrossUnrealizedGain |   | GrossUnrealizedLoss |  | Fair Value
|Money market                             |  | $    | 4,634,000 |                     |   |                     |  |            |  |  | $ | 4,634,000
|Certificates of depositshort term       |  |      | 1,009,000 |                     | $ | 12,920              |  | $          |  |  |   | 1,021,920
|Certificates of depositfixed maturities |  |      | 900,000   |                     |   | 9,987               |  |            |  |  |   | 909,987  
|                                         |  |      |           |                     |   |                     |  |            |  |  |   |          
|Total investments                        |  | $    | 6,543,000 |                     | $ | 22,907              |  | $          |  |  | $ | 6,565,907
|                                         |  |      |           |                     |   |                     |  |            |  |  |   |          



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



4. LIABILITY FOR CLAIMS PAYABLE

Activity in the liability for claims payable for members is summarized as follows:



|                         |  |      |            |   |      |   |            |      |  |   |            |  
|------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                         |  | 2009 |            |   | 2008 |   |            | 2007 | 
|BalanceJanuary 1        |  | $    | 2,631,070  |   |      | $ | 2,490,251  |      |  | $ | 3,987,591  |  
|                         |  |      |            |   |      |   |            |      |  |   |            |  
|Net incurred related to: |  |      |            |   |      |   |            |      |  |   |            |  
|Current year             |  |      | 37,041,939 |   |      |   | 31,663,781 |      |  |   | 31,623,756 |  
|Prior years              |  |      | (24,879    | ) |      |   | (65,452    | )    |  |   | (363,791   | )
|                         |  |      |            |   |      |   |            |      |  |   |            |  
|Net incurred claims      |  |      | 37,017,060 |   |      |   | 31,598,329 |      |  |   | 31,259,965 |  
|                         |  |      |            |   |      |   |            |      |  |   |            |  
|Net paid related to:     |  |      |            |   |      |   |            |      |  |   |            |  
|Current year             |  |      | 34,725,933 |   |      |   | 29,032,916 |      |  |   | 29,133,504 |  
|Prior years              |  |      | 2,605,682  |   |      |   | 2,424,594  |      |  |   | 3,623,801  |  
|                         |  |      |            |   |      |   |            |      |  |   |            |  
|Net paid claims          |  |      | 37,331,615 |   |      |   | 31,457,510 |      |  |   | 32,757,305 |  
|                         |  |      |            |   |      |   |            |      |  |   |            |  
|BalanceDecember 31      |  | $    | 2,316,515  |   |      | $ | 2,631,070  |      |  | $ | 2,490,251  |  
|                         |  |      |            |   |      |   |            |      |  |   |            |  

5. FEDERAL INCOME TAXES

The components of the provision (benefit) for income taxes are summarized as follows as of December 31, 2009, 2008 and 2007, respectively:



|                                           |  |      |          |   |      |   |         |      |  |   |          |  
|------------------------------------------ |  | ---- | -------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                           |  | 2009 |          |   | 2008 |   |         | 2007 | 
|Current tax expense:                       |  |      |          |   |      |   |         |      |  |   |          |  
|Federal                                    |  | $    | 180,765  |   |      | $ | 231,316 |      |  | $ | 447,502  |  
|State and local                            |  |      | 5,528    |   |      |   | 21,424  |      |  |   | 8,742    |  
|                                           |  |      |          |   |      |   |         |      |  |   |          |  
|Total current tax expense                  |  |      | 186,293  |   |      |   | 252,740 |      |  |   | 456,244  |  
|                                           |  |      |          |   |      |   |         |      |  |   |          |  
|Deferred tax expense (benefit):            |  |      |          |   |      |   |         |      |  |   |          |  
|Federal                                    |  |      | (288,039 | ) |      |   | 109,927 |      |  |   | (141,193 | )
|State and local                            |  |      | (3,958   | ) |      |   | (3,650  | )    |  |   | (2,464   | )
|                                           |  |      |          |   |      |   |         |      |  |   |          |  
|Total deferred tax expense (benefit)       |  |      | (291,997 | ) |      |   | 106,277 |      |  |   | (143,657 | )
|                                           |  |      |          |   |      |   |         |      |  |   |          |  
|Total provision (benefit) for income taxes |  | $    | (105,704 | ) |      | $ | 359,017 |      |  | $ | 312,587  |  
|                                           |  |      |          |   |      |   |         |      |  |   |          |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



Deferred tax assets and liabilities are comprised of the following:



|                                  |  |      |         |      |   |        
|--------------------------------- |  | ---- | ------- | ---- | - | -------
|                                  |  | 2009 |         | 2008
|Deferred tax assets:              |  |      |         |      |   |        
|Unearned premiums                 |  | $    | 66,222  |      | $ | 51,681 
|Net operating loss                |  |      | 49,838  |      |   | 66,157 
|Discounting on claims payable     |  |      | 15,518  |      |   | 17,625 
|Accrued vacation                  |  |      | 46,821  |      |   | 40,024 
|Accrued commissions               |  |      | 112,102 |      |   | 85,956 
|Deferred compensation             |  |      | 326,305 |      |   | 225,822
|Accrued professional fees         |  |      | 31,892  |      |   | 17,748 
|Other, net                        |  |      | 25,772  |      |   | 22,255 
|                                  |  |      |         |      |   |        
|Gross deferred tax assets         |  |      | 674,470 |      |   | 527,268
|                                  |  |      |         |      |   |        
|                                  |  |     
|Deferred tax liabilities:         |  |      |         |      |   |        
|Unrealized gain                   |  |      | 979     |      |   | 1,240  
|Deferred policy acquisition costs |  |      | 95,828  |      |   | 64,969 
|Prepaid insurance                 |  |      | 40,608  |      |   | 38,508 
|Accelerated depreciation          |  |      | 45,683  |      |   | 218,081
|Identifiable intangible assets    |  |      | 53,465  |      |   | 58,882 
|                                  |  |      |         |      |   |        
|Gross deferred tax liabilities    |  |      | 236,563 |      |   | 381,680
|                                  |  |      |         |      |   |        
|Net deferred tax asset            |  | $    | 437,907 |      | $ | 145,588
|                                  |  |      |         |      |   |        

Management believes it is more likely
than not that deferred tax assets will reduce future income tax payments. Significant factors considered by management in its determination of the probability of the realization of the deferred tax benefits include the historical operating results
and the expectations of future earnings. The Company had $146,582, $194,580, and $242,579 of net operating loss carry forwards to utilize in future years at December 31, 2009, 2008 and 2007, respectively. These losses will expire between 2011
and 2022. Deferred tax assets are included in other assets in the accompanying consolidated balance sheets at December 31, 2009 and 2008.

The Companys effective tax rate was different from the U.S statutory rate due to the following:



|                                                     |  |      |          |   |      |   |         |  |   |                       |   |  |                       |    |  |                       |   |  |      |  
|---------------------------------------------------- |  | ---- | -------- | - | ---- | - | ------- |  | - | --------------------- | - |  | --------------------- | -- |  | --------------------- | - |  | ---- | -
|                                                     |  | 2009 |          |   | 2008 |   | 2007    |  |   | 2009Effective TaxRate |   |  | 2008Effective TaxRate |    |  | 2007Effective TaxRate |  
|Provision computed at statutory rate                 |  | $    | (134,289 | ) |      | $ | 331,183 |  | $ | 311,804               |   |  | (34.0                 | )% |  | 34.0                  | % |  | 34.0 | %
|State and local taxes                                |  |      | 3,941    |   |      |   | 19,774  |  |   | 3,007                 |   |  | 1.0                   |    |  | 2.0                   |   |  | 0.3  |  
|Uncertain tax positions                              |  |      |          |   |      |   |         |  |   | (5,757                | ) |  |                       |    |  |                       |   |  | (0.6 | )
|Nondeductible meals, entertainment and legal expense |  |      | 14,681   |   |      |   | 8,060   |  |   | 3,533                 |   |  | 3.7                   |    |  | 0.8                   |   |  | 0.4  |  
|Othernet                                            |  |      | 9,963    |   |      |   |         |  |   |                       |   |  | 2.5                   |    |  |                       |   |  |      |  
|                                                     |  |      |          |   |      |   |         |  |   |                       |   |  |                       |    |  |                       |   |  |      |  
|Provision for income taxes                           |  | $    | (105,704 | ) |      | $ | 359,017 |  | $ | 312,587               |   |  | (26.8                 | )% |  | 36.8                  | % |  | 34.1 | %
|                                                     |  |      |          |   |      |   |         |  |   |                       |   |  |                       |    |  |                       |   |  |      |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



6. ACCOUNTING FOR UNCERTAIN TAX POSITIONS

In 2007, the Company recorded a cumulative effect adjustment of a change in accounting principle which reduced retained
earnings by approximately $6,000. The amount of unrecognized tax benefits from uncertain tax positions at January 1, 2007 was $4,300. The Company accrued approximately $1,700 in interest and penalties as of January 1, 2007. For the year
ended December 31, 2009 and 2008, the Company did not have any significant uncertain tax position liability or expense.

The Company is primarily subject to U.S. federal and various U.S. state and local tax authorities. Tax years subsequent to 2005 remain open to examination by the Internal Revenue Service, and 2004 remains
open to other state and local tax authorities. As of December 31, 2009, there are no U.S. federal or state returns under examination.

7. PROPERTY AND EQUIPMENT

Property and equipment at December 31 were summarized as
follows:



|                                   |  |      |            |   |      |   |            |  
|---------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                   |  | 2009 |            |   | 2008 |  
|Land                               |  | $    | 364,000    |   |      | $ | 364,000    |  
|Building and building improvements |  |      | 2,338,481  |   |      |   | 2,267,576  |  
|Furniture and equipment            |  |      | 2,177,683  |   |      |   | 2,007,708  |  
|                                   |  |      |            |   |      |   |            |  
|Total property and equipment       |  |      | 4,880,164  |   |      |   | 4,639,284  |  
|Less accumulated depreciation      |  | $    | (2,254,131 | ) |      | $ | (1,805,789 | )
|                                   |  |      |            |   |      |   |            |  
|Total property and equipmentnet   |  | $    | 2,626,033  |   |      | $ | 2,833,495  |  
|                                   |  |      |            |   |      |   |            |  

8. DEFERRED COMPENSATION PLAN

Share-based compensation cost is measured at the grant date based on the fair value of the liability awards and is recognized as expense ratably over the vesting periods. The fair
value of the liability awards are remeasured at the end of each reporting period through the remaining vesting period with the change in fair value recognized in earnings currently.

In accordance with the 2006 Dental Care Plus Management Equity Incentive Plan and the Dental Care Plus, Inc. and DCP Holding
Company Deferred Compensation Plan (the Plans), Company directors and certain key employees elected to defer portions of their director fees and employee compensation, as applicable. The Company recorded expense of approximately $93,000,
$106,000, and $90,000 related to deferred director fees and deferred employee compensation for the years ended December 31, 2009, 2008 and 2007, respectively. Directors and key employees who elect to defer cash compensation may request that the
Company invest this compensation in a mutual fund investment or phantom shares of the Company. The Plans also provide for the directors and key employees to receive share awards based on the book value of the Redeemable Common Shares and to elect to
defer receiving such amounts until termination of board membership or employment and vesting requirements are met. If a director or key employee does not elect to defer receiving his or her share awards, the individual will receive Class B
Redeemable Common Shares upon vesting. If the share awards are deferred, these deferred amounts will be paid in cash at redemption. An individual directors award vests 100% at the end of each year if the director meets certain attendance
requirements. The key employee awards vest 10%, 20%, 30% and 40% at the end of each respective year in a four-year period following the grant date. There are no performance criteria associated with the vesting of the awards for key employees and the
only requirement for vesting is that the individual is an employee of the Company at the end of the vesting year in question. The



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deferred compensation expense related to these awards is recorded ratably during the applicable vesting period. The Company recorded deferred compensation expense of approximately $186,000,
$278,000 and $183,000 related to deferred share awards and the change in the value of phantom shares for the years ended December 31, 2009, 2008 and 2007, respectively. As of December 31, 2009 there is approximately $120,000 of total
unrecognized compensation cost related to non-vested award compensation under the Plans. That cost is expected to be recognized over a weighted average period of 1.8 years.

The expected fair value of the awards are calculated by applying the three year historical average growth rate of the book value per redeemable common share over the respective
vesting period. The weighted average grant date fair value of the awards granted in the three years ended December 31, 2009, 2008, and 2007 were $801, $680, and $556, respectively. The fair value of the awards converted to Class B Redeemable
Common Shares in May 2008 was approximately $25,000. There were no awards converted in 2009 or 2007. The fair value of the awards paid in 2007 was approximately $11,000. There were no award payments in 2009 or 2008. The total fair value of the
awards that vested during the three years ended December 31, 2009, 2008 and 2007 were approximately $232,000, $247,000, and $170,000, respectively. At December 31, 2009 and 2008, the deferred compensation liability was approximately
$960,000 and $684,000. The increase of the deferred compensation liability of approximately $276,000 is the result of deferred compensation expense offset by current year disbursements and changes in unrealized investment activity.

The following is a summary of activity of nonvested awards for the year ended December 31, 2009:



|                                      |  |                            |  |                                     |     |                    |       |                                      |   |    
|------------------------------------- |  | -------------------------- |  | ----------------------------------- | --- | ------------------ | ----- | ------------------------------------ | - | ---
|                                      |  | IndividualDirectorsAwards |  | WeightedAverage GrantDate FairValue |     | Key EmployeeAwards |       | WeightedAverage GrantDate Fair Value
|Nonvested awards at January 1, 2009   |  |                            |  |                                     |     |                    | 145.4 |                                      | $ | 705
|Granted                               |  | 324.0                      |  | $                                   | 753 |                    | 87.0  |                                      |   | 998
|Vested                                |  | 297.0                      |  |                                     | 753 |                    | 68.9  |                                      |   | 736
|Forfeited                             |  | 27.0                       |  |                                     |     |                    |       |                                      |   |    
|                                      |  |                            |  |                                     |     |                    |       |                                      |   |    
|Nonvested awards at December 31, 2009 |  |                            |  | $                                   |     |                    | 163.5 |                                      | $ | 894
|                                      |  |                            |  |                                     |     |                    |       |                                      |   |    

The following is a summary of activity of vested awards for the year ended
December 31, 2009:



|                                   |  |                            |   |  |                             |     |                    |       |                             |   |    
|---------------------------------- |  | -------------------------- | - |  | --------------------------- | --- | ------------------ | ----- | --------------------------- | - | ---
|                                   |  | IndividualDirectorsAwards |   |  | WeightedAverageVested price |     | Key EmployeeAwards |       | WeightedAverage Vestedprice
|Vested awards at January 1, 2009   |  | 638.0                      |   |  | $                           | 672 |                    | 56.6  |                             | $ | 794
|Vested during year                 |  | 297.0                      |   |  |                             | 636 |                    | 68.9  |                             |   | 680
|Distributed during year            |  | (27.0                      | ) |  |                             | 648 |                    |       |                             |   |    
|                                   |  |                            |   |  |                             |     |                    |       |                             |   |    
|Vested awards at December 31, 2009 |  | 908.0                      |   |  | $                           | 636 |                    | 125.5 |                             | $ | 668
|                                   |  |                            |   |  |                             |     |                    |       |                             |   |    



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



9. EARNINGS (LOSS) PER REDEEMABLE COMMON SHARE

Detail supporting the computation of earnings (loss) per redeemable common share was as follows for the years ended
December 31, 2009, 2008, and 2007:



|                                                                                                                        |  |      |          |   |      |   |         |  |   |        
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | ------- |  | - | -------
|                                                                                                                        |  | 2009 |          |   | 2008 |   | 2007   
|Net income (loss) on redeemable shares                                                                                  |  | $    | (289,263 | ) |      | $ | 615,051 |  | $ | 604,485
|Less dividend payable to redeemable preferred shareholders                                                              |  |      | (10,519  | ) |      |   |         |  |   |        
|Less accretion to redeemable preferred shareholders                                                                     |  |      | (9,478   | ) |      |   |         |  |   |        
|                                                                                                                        |  |      |          |   |      |   |         |  |   |        
|Net income (loss) accretive (dilutive) to redeemable common shareholders                                                |  | $    | (309,260 | ) |      | $ | 615,051 |  | $ | 604,485
|                                                                                                                        |  |      |          |   |      |   |         |  |   |        
|Weighted average outstanding redeemable common shares used to compute basic income (loss) per redeemable common
share   |  |      | 8,297    |   |      |   | 8,459   |  |   | 8,294  
|                                                                                                                        |  |      |          |   |      |   |         |  |   |        
|Basic earnings (loss) per redeemable common share                                                                       |  | $    | (37.27   | ) |      | $ | 72.71   |  | $ | 72.88  
|                                                                                                                        |  |      |          |   |      |   |         |  |   |        
|Weighted average outstanding redeemable common shares used to compute diluted income (loss) per redeemable common
share |  |      | 8,297    |   |      |   | 8,459   |  |   | 8,338  
|                                                                                                                        |  |      |          |   |      |   |         |  |   |        
|Diluted earnings (loss) per redeemable common share                                                                     |  | $    | (37.27   | ) |      | $ | 72.71   |  | $ | 72.50  
|                                                                                                                        |  |      |          |   |      |   |         |  |   |        

The Company reported diluted earnings
per share for the year ended December 31, 2007 as a result of 44 restricted share awards granted that had a dilutive effect on the Companys earnings per share. The restricted share awards were redeemed and shares were issued in May of
2008. There have been no restricted share awards granted that would have a dilutive effect on the Companys basic earnings per share for the years ended December 31, 2009 and 2008.

10. REDEEMABLE SHARES, SHAREHOLDERS EQUITY AND DIVIDEND RESTRICTIONS

Providers in the Companys service area have the option to purchase one share of voting Class A Redeemable Common Shares of the Company. The area we refer to as our service
area includes all counties located in Ohio and Kentucky. All participating providers along with Company directors and employees have the option to purchase one or more non-voting Class B Redeemable Common Shares of the Company. Accordingly,
prospective shareholders may make a subscription payment per share equal to the book value of a common share, which was approximately $636 and $672 at December 31, 2009 and 2008, respectively.

The Board authorized and approved for issuance the Provider Preferred Shares-2009 Series that includes 5,000 preferred
shares authorized of the 100,000 authorized. These Provider Preferred Shares may only be purchased by a participating dentist in the Companys dental plans or retired participating dentists that own at least 12 Redeemable Common Shares.
Redeemable Provider Preferred Shares are entitled to a cumulative cash dividend equal to 5% of the year end book value of the redeemable Provider Preferred Shares. This dividend payable liability of approximately $11,000 was established in
accordance with the Companys Amended and Restated Articles of Incorporation for shareholders of record as of December 31, 2009 and is included in other accruals in the accompanying consolidated balance sheets. Prospective shareholders may
make a subscription payment per share equal to the book value of a preferred share, which was approximately $594 at December 31, 2009.

The Company has authorized 95,000 preferred shares, without par value. As of December 31, 2009 and 2008, none of these preferred shares were issued or are outstanding. The preferred shares do not
have voting rights except to the extent required by law or designated by the Board of Directors.



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Dividends restrictions vary among the subsidiaries. Dental Care Plus is
restricted by regulatory requirements of its domiciliary state, which limit by reference to statutory net income and net worth, the dividends that can be paid without prior regulatory approval. Dividends paid by Dental Care Plus cannot, without
prior approval of the Department, exceed in any one year the lesser of: (i) 10% of net worth (as of the preceding December 31), or (ii) net income for the prior year, and only if net worth exceeds $250,000 and only out of positive retained earnings.
Under these restrictions, no dividends may be paid by Dental Care Plus in 2010 without prior regulatory approval. There were no dividends declared or paid by any subsidiaries during 2009, 2008 or 2007.

Generally accepted accounting principles differ in certain respects from the accounting practices prescribed or permitted by
state insurance regulatory authorities (statutory-basis). The statutory-basis net income (loss) of Dental Care Plus was approximately $(374,600), $641,000, and $494,000 for the years ended December 31, 2009, 2008, and 2007, respectively.
Statutory-basis net worth was approximately $4,921,000 and $5,174,000 at December 31, 2009 and 2008, respectively.

11. DEBT

In 2003, the Company purchased land and an office building and in connection therewith, the Company
executed a mortgage note, secured by the land and the office building, with a bank in the amount of $1,800,000. Interest is payable based on the 30-day LIBOR rate plus 1.75% and was 1.98% and 3.19% at December 31, 2009 and 2008, respectively. At the
maturity date of the mortgage note in 2013, the expected outstanding balance of the note of $600,000 must be repaid or refinanced.

The Company entered into an interest rate swap agreement (Note 12) that effectively changed the interest rate related to $1,500,000 of the Companys $1,800,000 mortgage note with a commercial bank
from a variable rate based on the 30-day LIBOR rate plus 1.75% to a fixed rate of approximately 4.95% for the 10-year period through June 12, 2013. The Companys effective interest expense on the mortgage note was 4.08%, 4.49%, and 5.22% at
December 31, 2009, 2008 and 2007, respectively.

At December 31, 2009, the fair value of the mortgage note is
approximately $1,097,000.

Required principal repayments under the mortgage loan payable are as follows:



|                            |  |   |          
|--------------------------- |  | - | ---------
|2010                        |  | $ | 120,000  
|2011                        |  |   | 120,000  
|2012                        |  |   | 120,000  
|2013                        |  |   | 660,000  
|                            |  |   |          
|Total mortgage loan payable |  | $ | 1,020,000
|                            |  |   |          

On December 15, 2009, the Company
renewed its revolving note with a commercial bank in the amount of $650,000 collateralized by a second mortgage on the office building. As of December 31, 2009, there was a principal balance outstanding of $630,000 related to this revolving note. At
December 31, 2009, the carrying value of the revolving note approximates fair value. This revolving note matures on December 15, 2010, is annually renewable and requires monthly interest payments at a variable rate of 30-day LIBOR plus 1.75%, which
was 1.98% at December 31, 2009.

In 2004, the Company entered into a Master Equipment Lease Agreement with a
leasing company related to the computer hardware and software for its dental insurance administration system. The Master Equipment Lease Agreement includes a four year capital lease for computer software and implementation costs which totaled



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approximately $823,000. The net book value of this computer software and related implementation costs is approximately $165,000 and $329,000 at December 31, 2009 and 2008, respectively. The
required payments under the capital lease were completed in January 2009.

12. DERIVATIVE

In 2003, the Company entered into an interest rate swap agreement (Agreement) (cash flow hedge) with a original
notional amount of $1,500,000. The Agreement is used to manage the Companys interest rate risk. The swap agreement effectively changed the interest rate related to $1,500,000 of the Companys $1,800,000 mortgage note with a commercial
bank from a variable rate based on the 30-day LIBOR rate plus 1.75% to a fixed rate of approximately 4.95% for the 10-year period through June 12, 2013. The Companys risk management policy is to not enter into any trading activities
related to the Agreement. The notional amount decreases $10,000 per month in direct correlation to the principal reduction of the mortgage. The Company believes that the risk of nonperformance by the counter party in conjunction with this
arrangement is not material to the financial statements. The fair value of this Agreement at December 31, 2009 and 2008 was a liability of approximately $24,000 and $38,000, respectively. These amounts are included in other payables and
accruals in the accompanying consolidated balance sheet. The amount included in other comprehensive income (loss) related to the interest rate swap was $9,462, ($42,885), and ($30,096), net of income tax expense (benefit) of $4,874, ($22,093), and
($15,504) during 2009, 2008, and 2007, respectively. The agreement will terminate upon termination of the mortgage loan payable (Note 11).

13. COMMITMENTS AND CONTINGENCIES

LeasesThe Company leases certain
equipment and office space under non-cancelable operating leases. Rent expense under all operating leases was approximately $176,000, $181,000, and $211,000 for the years ended December 31, 2009, 2008, and 2007, respectively.

At December 31, 2009, future approximate minimum annual lease payments under non-cancelable operating leases are as
follows:



|                         |  |   |        
|------------------------ |  | - | -------
|Years Ending December 31 |  |  
|2010                     |  | $ | 172,000
|2011                     |  |   | 52,000 
|2012                     |  |   | 17,000 
|2013                     |  |   | 15,000 
|2014 and thereafter      |  |   | 7,000  
|                         |  |   |        
|Total                    |  | $ | 263,000
|                         |  |   |        

LitigationIn the
normal course of business, the Company is subject to various regulatory proceedings, lawsuits, claims and other matters. Such matters are subject to many uncertainties and outcomes are not reasonably predictable. In the opinion of the Companys
management, the eventual resolution of such matters for amounts above those reflected in the consolidated financial statements would not likely have a materially adverse effect on the financial condition or results of operations of the Company.



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14. LEASE INCOME

The Company leases space in its building to unrelated parties under non-cancelable leases. Income recorded by the Company under non-cancelable leases amounted to approximately
$66,000, $47,000, and $58,000 for the years ended December 31, 2009, 2008 and 2007, respectively. Such amounts are recorded as other income in the accompanying consolidated financial statements. As of December 31, 2009, approximate future
minimum annual lease income under non-cancelable leases are as follows: 2010$62,000 and 2011$44,000.

15. RETIREMENT PLAN

Employees of the Company are covered by a defined contribution 401(k) plan sponsored by the Company.
Discretionary contributions of a certain percentage of each employees contribution, which may not exceed a limit set annually by the Internal Revenue Service, are contributed by the Company each year and vest ratably over a five-year period.
Company contributions, including administration fees paid by the Company, amounted to approximately $56,000, $51,000, and $50,000 in 2009, 2008, and 2007, respectively.

16. LINES OF CREDIT

In 2006 the Company entered into an
annually renewable agreement with a commercial bank for a $500,000 working capital line of credit. Interest was payable on the prime rate of borrowing rate of 3.25% at December 31, 2008. In July 2009, we renewed the $500,000 working capital
line of credit. Interest was payable at a variable rate of LIBOR plus 2.50% and was 2.75% at December 31, 2009. The Company did not have any interest expense for the line of credit in 2009 or 2008. As of December 31, 2009 and 2008 there
was no amount outstanding on this line of credit.

In 2008 Dental Care Plus entered into an annually renewable
agreement with a commercial bank for a $1,000,000 working capital line of credit. Interest was payable on the prime rate of borrowing rate of 3.25% at December 31, 2008. In August 2009, we renewed the $1,000,000 working capital line of credit.
Interest was payable at a variable rate of LIBOR plus 2.50% and was 2.75% at December 31, 2009. The Company did not have any interest expense for the line of credit in 2009 or 2008. As of December 31, 2009 and 2008 there was no amount
outstanding on this line of credit.

17. SEGMENT INFORMATION

The Company manages its business with three reportable segments: fully-insured dental, self-insured dental and corporate, all other. Fully-insured dental consists of the
fully-insured dental HMO, fully-insured dental PPO and fully-insured dental indemnity products. Self-insured dental consists of the self-insured dental HMO, self-insured dental PPO and self-insured dental indemnity products. Corporate, all other
consists of revenue associated with the Companys dental PPO and vision products underwritten by third-party insurance carriers and certain other corporate activities. These segments are consistent with information used by the Chief Executive
Officer (the chief operating decision maker) in managing the business. The segment information aggregates products with similar economic characteristics. These characteristics include the nature of employer groups, pricing, benefits and underwriting
requirements.

The results of the fully-insured and self-insured dental segments are measured by gross profit.
The Company does not allocate insurance expense, investment and other income, goodwill, or other assets or liabilities to these segments. These items are assigned to the remainder of the Companys business, which it identifies as corporate, all
other. The Companys gross profit was approximately $12,169,000, $12,617,000, and $11,798,000 for the years ended December 31, 2009, 2008 and 2007, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



Listed below is financial information required for each industry segment
for the years ended December 31, 2009, 2008, and 2007 (amounts in thousands):



|                                |  |                                    |        |                           |                                    |        |  |   |                            |   |                           |   |        |  |   |        |  |   |       
|------------------------------- |  | ---------------------------------- | ------ | ------------------------- | ---------------------------------- | ------ |  | - | -------------------------- | - | ------------------------- | - | ------ |  | - | ------ |  | - | ------
|                                |  | Fiscal Year EndedDecember 31,
2009 |        |                           | Fiscal Year EndedDecember 31,
2008
|                                |  | Revenues-ExternalCustomers         |        | HealthcareServicesExpense |                                    | Total  |  |   | Revenues-ExternalCustomers |   | HealthcareServicesExpense |   | Total 
|Reportable segments:            |  |                                    |        |                           |                                    |        |  |   |                            |   |                           |   |        |  |   |        |  |   |       
|Fully-insured dental            |  | $                                  | 45,355 |                           | $                                  | 37,018 |  | $ | 8,337                      |   |                           | $ | 40,321 |  | $ | 31,576 |  | $ | 8,745 
|Self-insured dental             |  |                                    | 24,703 |                           |                                    | 21,288 |  |   | 3,415                      |   |                           |   | 25,451 |  |   | 22,014 |  |   | 3,437 
|Corporate, All Other            |  |                                    | 417    |                           |                                    |       |  |   | 417                        |   |                           |   | 435    |  |   |       |  |   | 435   
|                                |  |                                    |        |                           |                                    |        |  |   |                            |   |                           |   |        |  |   |        |  |   |       
|Total                           |  | $                                  | 70,475 |                           | $                                  | 58,306 |  |   | 12,169                     |   |                           | $ | 66,207 |  | $ | 53,590 |  |   | 12,617
|                                |  |                                    |        |                           |                                    |        |  |   |                            |   |                           |   |        |  |   |        |  |   |       
|Investment income               |  |                                    |        |                           |                                    |        |  |   | 99                         |   |                           |   |        |  |   |        |  |   | 223   
|Other income                    |  |                                    |        |                           |                                    |        |  |   | 72                         |   |                           |   |        |  |   |        |  |   | 80    
|Insurance expense               |  |                                    |        |                           |                                    |        |  |   | 12,735                     |   |                           |   |        |  |   |        |  |   | 11,946
|                                |  |                                    |        |                           |                                    |        |  |   |                            |   |                           |   |        |  |   |        |  |   |       
|Income (loss) before income tax |  |                                    |        |                           |                                    |        |  | $ | (395                       | ) |                           |   |        |  |   |        |  | $ | 974   
|                                |  |                                    |        |                           |                                    |        |  |   |                            |   |                           |   |        |  |   |        |  |   |       
|Total assets-corporate          |  |                                    |        |                           |                                    |        |  | $ | 34,537                     |   |                           |   |        |  |   |        |  | $ | 35,521
|                                |  |                                    |        |                           |                                    |        |  |   |                            |   |                           |   |        |  |   |        |  |   |       



|                         |  |                                    |        |                           |   |        |  |   |        |  |  |  |  |  | 
|------------------------ |  | ---------------------------------- | ------ | ------------------------- | - | ------ |  | - | ------ |  |  |  |  |  | 
|                         |  | Fiscal Year EndedDecember 31,
2007 |        |                           |   |        |  |  
|                         |  | Revenues-ExternalCustomers         |        | HealthcareServicesExpense |   | Total  |  |   |        |  |  | 
|Reportable segments:     |  |                                    |        |                           |   |        |  |   |        |  |  |  |  |  | 
|Fully-insured dental     |  | $                                  | 39,682 |                           | $ | 31,236 |  | $ | 8,446  |  |  |  |  |  | 
|Self-insured dental      |  |                                    | 19,768 |                           |   | 16,916 |  |   | 2,852  |  |  |  |  |  | 
|Corporate, All Other     |  |                                    | 500    |                           |   |       |  |   | 500    |  |  |  |  |  | 
|                         |  |                                    |        |                           |   |        |  |   |        |  |  |  |  |  | 
|Total                    |  | $                                  | 59,950 |                           | $ | 48,152 |  |   | 11,798 |  |  |  |  |  | 
|                         |  |                                    |        |                           |   |        |  |   |        |  |  |  |  |  | 
|Investment income        |  |                                    |        |                           |   |        |  |   | 269    |  |  |  |  |  | 
|Other income             |  |                                    |        |                           |   |        |  |   | 94     |  |  |  |  |  | 
|Insurance expense        |  |                                    |        |                           |   |        |  |   | 11,244 |  |  |  |  |  | 
|                         |  |                                    |        |                           |   |        |  |   |        |  |  |  |  |  | 
|Income before income tax |  |                                    |        |                           |   |        |  | $ | 917    |  |  |  |  |  | 
|                         |  |                                    |        |                           |   |        |  |   |        |  |  |  |  |  | 
|Total assets-corporate   |  |                                    |        |                           |   |        |  | $ | 12,285 |  |  |  |  |  | 
|                         |  |                                    |        |                           |   |        |  |   |        |  |  |  |  |  | 

Inter-segment revenues were not
significant for 2009, 2008, or 2007.

18. RELATED PARTIES

All of the Companys Class A, Class B and Provider Preferred Redeemable Shareholders are related parties, either as a participating provider, director or an employee of the
Company.

The Companys providers who are also shareholders submitted claims of approximately
$42,152,000, $41,666,000, and $38,941,000 in 2009, 2008 and 2007, respectively. The Company had claims payable liability to related party providers of approximately $1,705,000 and $2,142,000 at December 31, 2009 and 2008, respectively.

Seven of our Board members are also participating providers and as a group received approximately $155,000,
$151,000, and $151,000 in directors fees for the years ended December 31, 2009, 2008 and 2007, respectively.



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DCP HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



19. FAIR VALUE MEASUREMENTS

The Company classifies the assets and liabilities that require measurement of fair value on a recurring basis based on the
priority of the observable and market-based sources of data into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest
priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are as follows:



| |  |  | Level 1  Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2  Valuations based on significant other observable inputs other than those included in Level 1 such as quoted prices for similar assets
or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  Valuations based on unobservable inputs such as when observable inputs are not available or inputs that are supported by little or no
market activity and that are significant to the fair value of the assets or liabilities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table presents for each of the fair value levels, the Companys assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2009 and 2008
(amounts in thousands).



|                                      |  |         |     |         |   |              |  |         |       |         |   |              |  |   |       |  |   |      
|------------------------------------- |  | ------- | --- | ------- | - | ------------ |  | ------- | ----- | ------- | - | ------------ |  | - | ----- |  | - | -----
|                                      |  | 2009    |     | 2008   
|                                      |  | Level 1 |     | Level 2 |   | TotalBalance |  | Level 1 |       | Level 2 |   | TotalBalance
|Assets                                |  |         |     |         |   |              |  |         |       |         |   |              |  |   |       |  |   |      
|Fixed maturities (a)                  |  |         |     |         | $ | 807          |  | $       | 807   |         |   |              |  | $ | 910   |  | $ | 910  
|Short-term investments (b)            |  | $       | 204 |         |   | 1,009        |  |         | 1,213 |         | $ | 4,634        |  |   | 1,022 |  |   | 5,656
|Deferred compensation investments (c) |  |         | 226 |         |   |              |  |         | 226   |         |   | 127          |  |   |       |  |   | 127  
|State guarantee fund deposits (c)     |  |         | 241 |         |   | 50           |  |         | 291   |         |   | 248          |  |   | 50    |  |   | 298  
|                                      |  |         |     |         |   |              |  |         |       |         |   |              |  |   |       |  |   |      
|Total                                 |  |         | 671 |         |   | 1,866        |  |         | 2,537 |         |   | 5,009        |  |   | 1,982 |  |   | 6,991
|                                      |  |         |     |         |   |              |  |         |       |         |   |              |  |   |       |  |   |      
|                                      |  |         |     |         |   |             
|Liabilities                           |  |         |     |         |   |              |  |         |       |         |   |              |  |   |       |  |   |      
|Interest rate swap (d)                |  |         |     |         |   | 24           |  |         | 24    |         |   |              |  |   | 38    |  |   | 38   
|                                      |  |         |     |         |   |              |  |         |       |         |   |              |  |   |       |  |   |      
|Total                                 |  | $       |     |         | $ | 24           |  | $       | 24    |         | $ |              |  | $ | 38    |  | $ | 38   
|                                      |  |         |     |         |   |              |  |         |       |         |   |              |  |   |       |  |   |      



| | (a) | Invested in Federally-Insured certificates of deposits
| | --- | ------------------------------------------------------

| | (b) | Invested in Federally-Insured certificates of deposits and actively traded money market funds
| | --- | ---------------------------------------------------------------------------------------------

| | (c) | Included in other assets
| | --- | ------------------------

| | (d) | Included in other payables and accruals
| | --- | ---------------------------------------

The Company measures fair value using the following valuation methodologies. The Company uses quoted market prices to determine the fair value of the deferred compensation
investments and certain state fund guarantee fund deposits; such items are classified as Level 1 of the fair-value hierarchy. Examples include government securities and exchange-traded equity securities. The Company obtains prices from independent
vendors to determine the fair value of the majority of its short-term investments and investments portfolio. The remainder of the short-term investments and investments portfolio and the remainder of the state fund guarantee deposits are fair valued
using a discounted cash flow method whereby the significant observable inputs include the maturity date and the interest rate yield; such items are classified as Level 2 of the fair-value hierarchy. Examples include brokered and non-brokered
certificates of deposit. The Company obtains a price from an



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)



independent vendor to determine the fair value of the interest rate swap. The independent vendor uses a discounted cash flow method whereby the significant observable inputs include the
replacement interest rates of similar swap instruments in the market and swap curves; such items are classified as Level 2 of the fair value hierarchy.

Certain assets and liabilities are measured at fair value on a non-recurring basis. These include long-lived assets such as certain plant, property and equipment items, intangible assets and goodwill, as
well as assets measured at cost that are written down to fair value during a period as a result of an impairment. For the year ended December 31, 2009 and 2008, there were no assets or liabilities that were required to be measured at fair value
on a non-recurring basis.

20. QUARTERLY DATA (UNAUDITED)

A summary of our unaudited quarterly results of operations for the years ended December 31, 2009 and 2008 is as follows (amounts in thousands, except for per share results):



|                                                                          |  |          |        |   |         |   |              |  |   |             |   |  |       |        |   |  |   |        |  
|------------------------------------------------------------------------- |  | -------- | ------ | - | ------- | - | ------------ |  | - | ----------- | - |  | ----- | ------ | - |  | - | ------ | -
|                                                                          |  | 2009     |       
|                                                                          |  | March 31 |        |   | June 30 |   | September 30 |  |   | December 31 |   |  | Total |       
|Premium revenue                                                           |  | $        | 17,401 |   |         | $ | 17,610       |  | $ | 18,077      |   |  | $     | 17,387 |   |  | $ | 70,475 |  
|Gross profit                                                              |  |          | 2,824  |   |         |   | 3,164        |  |   | 2,516       |   |  |       | 3,665  |   |  |   | 12,169 |  
|Income (loss) before income taxes                                         |  |          | (235   | ) |         |   | 82           |  |   | (748        | ) |  |       | 506    |   |  |   | (395   | )
|Net income (loss) on redeemable shares                                    |  |          | (152   | ) |         |   | 53           |  |   | (482        | ) |  |       | 292    |   |  |   | (289   | )
|Less declared dividend for provider preferred shares                      |  |          |       |   |         |   |             |  |   |            |   |  |       | (11    | ) |  |   | (11    | )
|Plus (less) accretion (dilution) allocated to redeemable preferred shares |  |          |       |   |         |   | 1            |  |   | (13         | ) |  |       | 21     |   |  |   | 9      |  
|Net income (loss) to redeemable common shares                             |  | $        | (152   | ) |         | $ | 52           |  | $ | (469        | ) |  | $     | 260    |   |  | $ | (309   | )
|Basic and dilutive earnings (loss) perredeemable common share (a)         |  | $        | (18.14 | ) |         | $ | 6.21         |  | $ | (56.88      | ) |  | $     | 31.24  |   |  | $ | (37.27 | )
|                                                                          | 
|                                                                          |  | 2008     |       
|                                                                          |  | March 31 |        |   | June 30 |   | September 30 |  |   | December 31 |   |  | Total |       
|Premium revenue                                                           |  | $        | 15,534 |   |         | $ | 16,126       |  | $ | 17,513      |   |  | $     | 17,034 |   |  | $ | 66,207 |  
|Gross profit                                                              |  |          | 2,612  |   |         |   | 3,109        |  |   | 3,355       |   |  |       | 3,541  |   |  |   | 12,617 |  
|Income (loss) before income taxes                                         |  |          | (457   | ) |         |   | 386          |  |   | 486         |   |  |       | 559    |   |  |   | 974    |  
|Net income (loss) on redeemablecommon shares                              |  | $        | (296   | ) |         | $ | 250          |  | $ | 306         |   |  | $     | 355    |   |  | $ | 615    |  
|Basic and dilutive earnings (loss) perredeemable common share (a)         |  | $        | (35.05 | ) |         | $ | 29.60        |  | $ | 36.04       |   |  | $     | 42.03  |   |  | $ | 72.71  |  



|(a) | The sum of quarterly earnings per redeemable common share may not equal the year end earnings per common share due to rounding.
|--- | -------------------------------------------------------------------------------------------------------------------------------

Based on the Companys healthcare service expense on a per member per month
(PMPM) basis that adjusts the quarterly healthcare service expense for membership volume changes, the dental plan members have historically used their dental plan benefits according to a seasonal pattern. In 2008 the Companys
quarterly healthcare services expense was highest in the first quarter, slightly below average in the second quarter, slightly above average in the third quarter and lowest in the fourth quarter. However, in 2009 the Companys quarterly
healthcare services expense was slightly above average in the first quarter, above average in the second quarter, significantly higher than average in the third quarter and lowest in the fourth quarter.



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

None.



|ITEM 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Evaluation of Disclosure Controls and Procedures

An
evaluation was performed under the supervision and with the participation of the Companys management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Companys disclosure controls
and procedures (as defined in Securities and Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2009. Based on the evaluation, the Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal
financial officer), concluded that the Companys disclosure controls and procedures were effective as of December 31, 2009.

Changes in Internal Control over Financial Reporting

The
Chief Executive Officer and Chief Financial Officer also have concluded that in the fourth quarter of the fiscal year ended December 31, 2009, there were no changes in the Companys internal controls that materially affected, or are
reasonably likely to materially affect, the Companys internal controls over financial reporting.

Managements Report on Internal Control Over Financial Reporting

Our management is
responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). In evaluating the Companys internal control over financial reporting,
management has adopted the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Under the supervision and with the participation of our management, including the
principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2009. Based on our evaluation under the framework in Internal
Control-Integrated Framework, our management has concluded that our internal control over financial reporting was effective as of December 31, 2009.

The Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements. However, because
of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This
Annual Report Form 10-K does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys
registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only Managements report in this annual report.



|ITEM 9B. | OTHER INFORMATION
|-------- | -----------------

None.



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PART III



|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|-------- | -------------------------------------------------------

Information required by this Item 10 pursuant to Item 401 of Regulation S-K regarding our directors is incorporated by reference to the Companys Proxy Statement
sections and subsections entitled, Election of Directors, Director Nominees, Audit Committee, Section 16(a) Beneficial Ownership Reporting Compliance, Audit Committee Report,
Nominating Committee, Director Nomination Process and Code of Conduct. The information required by Item 10 regarding our executive officers appears as a Supplement Item following Item 4 under Part I
hereof.



|ITEM 11. | EXECUTIVE COMPENSATION.
|-------- | -----------------------

Information required by this Item 11 pursuant to Item 402 of Regulation S-K is incorporated by reference to the information under the sections and subsections Executive Compensation,
Benefits and Compensation Committee and Benefits and Compensation Committee Report contained in the Companys Proxy Statement in connection with its Annual Meeting of Shareholders to be held on April 28, 2010.



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|-------- | -----------------------------------------------------------------------------------------------

The information required by this Item 12 (other than the information by Item 201(d) of Regulation S-K which is set
forth below) is incorporated by reference to the information under the section Security Ownership of Certain Beneficial Owners and Management contained in the Companys Proxy Statement in connection with its Annual Meeting of
Shareholders to be held on April 28, 2010.

In December of 2005, we adopted the 2006 Dental Care Plus
Management Equity Incentive Plan for our directors, Named Executive Officers and other key employees. The maximum aggregate number of restricted shares or restricted share units which may be issued under this plan are 15,000 Class B Common Shares.
In 2009, the directors, Named Executive Officers and other key employees were granted 411 restricted share units. In 2009, one director forfeited 27 restricted share units that became available for future issuances under the Companys equity
incentive plan. As of December 31, 2009, the Company has granted a total of 1,290 restricted share units.



|                                                       |  |                                                                                          |  |                                                                          |  |                                                                                          
|------------------------------------------------------ |  | ---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------
|Plan category                                          |  | Number of securities to beissued upon exercise ofoutstanding options,warrants and rights |  | Weighted-average exerciseprice of outstandingoptions, warrants andrights |  | Number of securitiesremaining available forfuture issuance under equitycompensation plans
|Equity compensation plans approved by shareholders     |  |                                                                                         |  |                                                                         |  |                                                                                         
|Equity compensation plans not approved by shareholders |  |                                                                                         |  |                                                                         |  | 13,710                                                                                   
|                                                       |  |                                                                                          |  |                                                                          |  |                                                                                          
|TOTAL                                                  |  |                                                                                         |  |                                                                         |  | 13,710                                                                                   



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
|-------- | -----------------------------------------------

The information required by this Item 13 pursuant to Item 404 of Regulation S-K is incorporated by reference to the information under the Section Transactions with Related Persons,
Promoters and Certain Control Persons contained in the Companys Proxy Statement in connection with its Annual Meeting of Shareholders to be held on April 28, 2010.



|ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES.
|-------- | ---------------------------------------

The information required by this Item 14 pursuant to Item 9(e) of Schedule 14A relating to auditor fees is incorporated by reference to the information under the Section Other
Matters contained in the Companys Proxy Statement in connection with its Annual Meeting of Shareholders to be held on April 28, 2010.



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PART IV



|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
|-------- | ----------------------------------------

(a) The following documents are filed as part of this Form 10-K.

Page in Form 10-K



|                                                                                                       |  |   
|------------------------------------------------------------------------------------------------------ |  | --
|                                                                                                       | 
|(1)    Consolidated Financial Statements:                                                              |  |   
|                                                                                                       | 
|Report of Independent Registered Public Accounting Firm                                                |  | 42
|Consolidated Balance Sheets as of December 31, 2009 and 2008                                           |  | 43
|Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and
2007             |  | 44
|Consolidated Statements of Shareholders Equity for the Years Ended December 
31, 2009, 2008 and 2007  |  | 45
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and
2007             |  | 46
|Notes to the Consolidated Financial Statements                                                         |  | 47
|                                                                                                       | 
|(2)    Financial Statement Schedules:                                                                  |  |   
|                                                                                                       | 
|Schedule IICondensed Balance Sheets as of December 31, 2009 and 2008                                  |  | 69
|Schedule IICondensed Statements of Operations for the Years Ended December 
31, 2009, 2008 and 2007   |  | 70
|Schedule IICondensed Statements of Cash Flows for the Years Ended December 
31, 2009, 2008 and 2007   |  | 71
|Schedule IIISupplementary Insurance Information for the Years Ended December 
31, 2009, 2008 and 2007 |  | 73
|Schedule IVReinsurance for the Years Ended December 31, 2009, 2008 and 2007                           |  | 74
|Schedule VValuation and Qualifying Accounts for the Years Ended December 
31, 2009, 2008 and 2007     |  | 74



|(3) | Exhibits:
|--- | ---------

See the List of Exhibits on the Index to Exhibits following the signature page.

(b) The exhibits listed on the Index to Exhibits are filed as part of or incorporated by reference into this report.



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DCP HOLDING COMPANY (Parent Only)

Schedule IICondensed Financial Information of Registrant

Condensed Balance Sheets

As of December 31,
2009 and 2008



|                                                                                                                                                                                                            |  |      |           |      |   |          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                                                                                                                                                                            |  | 2009 |           | 2008
|ASSETS                                                                                                                                                                                                      |  |      |           |      |   |          
|                                                                                                                                                                                                            |  |     
|INVESTMENTS:                                                                                                                                                                                                |  |      |           |      |   |          
|Short-term investments                                                                                                                                                                                      |  | $    | 41,716    |      | $ | 492,175  
|CASH AND CASH EQUIVALENTS                                                                                                                                                                                   |  |      | 566,506   |      |   | 87,500   
|ACCRUED INVESTMENT INCOME                                                                                                                                                                                   |  |      |           |      |   | 1,199    
|INTERCOMPANY RECEIVABLES                                                                                                                                                                                    |  |      | 23,593    |      |   | 26,171   
|INTERCOMPANY NOTE RECEIVABLE                                                                                                                                                                                |  |      | 230,000   |      |   | 150,000  
|INVESTMENT IN SUBSIDIARIES                                                                                                                                                                                  |  |      | 5,739,402 |      |   | 5,990,556
|DEFERRED INCOME TAX                                                                                                                                                                                         |  |      | 389,950   |      |   | 268,977  
|OTHER ASSETS                                                                                                                                                                                                |  |      | 414,648   |      |   | 299,459  
|                                                                                                                                                                                                            |  |      |           |      |   |          
|TOTAL ASSETS                                                                                                                                                                                                |  | $    | 7,405,815 |      | $ | 7,316,037
|                                                                                                                                                                                                            |  |      |           |      |   |          
|                                                                                                                                                                                                            |  |     
|LIABILITIES, REEDEMABLE SHARES, AND SHAREHOLDERS EQUITY                                                                                                                                                    |  |      |           |      |   |          
|OTHER PAYABLES AND ACCRUALS                                                                                                                                                                                 |  | $    | 1,020,789 |      | $ | 985,100  
|DEFERRED COMPENSATION                                                                                                                                                                                       |  |      | 959,720   |      |   | 684,363  
|                                                                                                                                                                                                            |  |      |           |      |   |          
|TOTAL LIABILITIES                                                                                                                                                                                           |  |      | 1,980,509 |      |   | 1,669,463
|                                                                                                                                                                                                            |  |      |           |      |   |          
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                               |  |      |           |      |   |          
|                                                                                                                                                                                                            |  |      |           |      |   |          
|                                                                                                                                                                                                            |  |     
|REDEEMABLE SHARES:                                                                                                                                                                                          |  |      |           |      |   |          
|Provider Preferred-2009 Series Redeemable Preferred Shares, no par value, cumulative 5% dividendauthorized, 5,000 shares;
issued and outstanding, 330 and none at December 31, 2009 and 2008, respectively |  |      | 196,095   |      |   |          
|Class A, Redeemable Common Shares, no par valueauthorized, 7,500 shares; issued and outstanding, 621 and 630 at
December 31, 2009 and 2008, respectively                                                   |  |      | 394,813   |      |   | 423,241  
|Class B Redeemable Common Shares, no par valueauthorized, 95,000 shares; issued and outstanding, 7,604 and 7,775 at
December 31, 2009 and 2008, respectively                                               |  |      | 4,834,398 |      |   | 5,223,333
|                                                                                                                                                                                                            |  |      |           |      |   |          
|Total redeemable shares                                                                                                                                                                                     |  |      | 5,425,306 |      |   | 5,646,574
|                                                                                                                                                                                                            |  |      |           |      |   |          
|                                                                                                                                                                                                            |  |     
|SHAREHOLDERS EQUITY:                                                                                                                                                                                       |  |      |           |      |   |          
|Preferred Shares; no par value, 95,000 shares authorized, none issued                                                                                                                                       |  |      |           |      |   |          
|                                                                                                                                                                                                            |  |      |           |      |   |          
|TOTAL LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS EQUITY                                                                                                                                               |  | $    | 7,405,815 |      | $ | 7,316,037
|                                                                                                                                                                                                            |  |      |           |      |   |          

This condensed financial information should be read in
conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8, Page 42



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DCP HOLDING COMPANY (Parent Only)

Schedule IICondensed Financial Information of Registrant

Condensed Statements of Operations

For each of the
Three Years in the Period ended December 31, 2009



|                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                 |  | 2009 |           |   | 2008 |   |           | 2007 | 
|REVENUES                                         |  |      |           |   |      |   |           |      |  |   |           |  
|Management fees from Subsidiaries                |  | $    | 8,005,008 |   |      | $ | 7,887,668 |      |  | $ | 7,429,027 |  
|Investment income                                |  |      | 9,284     |   |      |   | 24,871    |      |  |   | 14,654    |  
|Administrative fees                              |  |      | 173,331   |   |      |   | 106,018   |      |  |   | 5,000     |  
|                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|Total revenues                                   |  |      | 8,187,623 |   |      |   | 8,018,557 |      |  |   | 7,448,681 |  
|                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|                                                 |  |      |          
|EXPENSES                                         |  |      |           |   |      |   |           |      |  |   |           |  
|Insurance expense:                               |  |      |           |   |      |   |           |      |  |   |           |  
|Salaries and benefit expense                     |  |      | 4,674,401 |   |      |   | 4,448,475 |      |  |   | 4,168,723 |  
|Other insurance expense                          |  |      | 3,553,475 |   |      |   | 3,539,354 |      |  |   | 3,297,503 |  
|                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|Total expenses                                   |  |      | 8,227,876 |   |      |   | 7,987,829 |      |  |   | 7,466,226 |  
|                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|INCOME (LOSS) BEFORE INCOME TAX                  |  |      | (40,253   | ) |      |   | 30,728    |      |  |   | (17,545   | )
|                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|                                                 |  |      |          
|PROVISION (BENEFIT) FOR INCOME TAX:              |  |      |           |   |      |   |           |      |  |   |           |  
|Current                                          |  |      | 119,455   |   |      |   | 139,332   |      |  |   | 98,382    |  
|Deferred                                         |  |      | (120,973  | ) |      |   | (105,497  | )    |  |   | (92,116   | )
|                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|Total                                            |  |      | (1,518    | ) |      |   | 33,835    |      |  |   | 6,266     |  
|                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|Loss before undistributed income of subsidiaries |  |      | (38,735   | ) |      |   | (3,107    | )    |  |   | (23,811   | )
|                                                 |  |      |          
|Undistributed income (loss) of subsidiaries      |  |      | (250,528  | ) |      |   | 618,158   |      |  |   | 628,296   |  
|                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|NET INCOME (LOSS) ON REDEEMABLE SHARES           |  | $    | (289,263  | ) |      | $ | 615,051   |      |  | $ | 604,485   |  
|                                                 |  |      |           |   |      |   |           |      |  |   |           |  

This condensed financial information should be read in conjunction with the Consolidated Financial
Statements and Notes included in Part II, Item 8, Page 42



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DCP HOLDING COMPANY (Parent Only)

Schedule IICondensed Financial Information of Registrant

Condensed Statements of Cash Flows

For the Three
Years in the Period ended December 31, 2009



|                                                                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|-------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                                   |  | 2009 |            |   | 2008 |   |            | 2007 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Net income (loss)                                                                                  |  | $    | (289,263   | ) |      | $ | 615,051    |      |  | $ | 604,485    |  
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Undistributed loss (income) of subsidiaries                                                        |  |      | 250,528    |   |      |   | (618,158   | )    |  |   | (628,296   | )
|Deferred income taxes                                                                              |  |      | (120,973   | ) |      |   | (105,497   | )    |  |   | (92,116    | )
|Deferred compensation                                                                              |  |      | 275,357    |   |      |   | 292,956    |      |  |   | 288,704    |  
|Effects of changes in operating assets and liabilities:                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Accrued investment income                                                                          |  |      | 1,199      |   |      |   | 899        |      |  |   | (2,098     | )
|Accounts receivable                                                                                |  |      | 2,578      |   |      |   | 157,525    |      |  |   | (169,915   | )
|Other assets                                                                                       |  |      | (115,189   | ) |      |   | 30,119     |      |  |   | (146,946   | )
|Other payables and accruals                                                                        |  |      | 55,264     |   |      |   | (89,004    | )    |  |   | 177,470    |  
|                                                                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                                          |  |      | 59,501     |   |      |   | 283,891    |      |  |   | 31,288     |  
|                                                                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                                   |  |      |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Purchases of investments                                                                           |  |      | (4,744,541 | ) |      |   | (5,973,315 | )    |  |   | (2,458,861 | )
|Sales of investments                                                                               |  |      | 5,195,000  |   |      |   | 5,830,000  |      |  |   | 2,110,000  |  
|                                                                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by (used in) investing activities                                                |  |      | 450,459    |   |      |   | (143,315   | )    |  |   | (348,861   | )
|                                                                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                                   |  |      |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Issuance of intercompany note receivable                                                           |  |      | (80,000    | ) |      |   | (150,000   | )    |  |   | (80,000    | )
|Collection of intercompany note receivable                                                         |  |      |            |   |      |   | 80,000     |      |  |   |            |  
|Repurchase of redeemable shares                                                                    |  |      | (172,488   | ) |      |   | (67,550    | )    |  |   | (62,174    | )
|Issuance of redeemable shares                                                                      |  |      | 221,534    |   |      |   | 28,178     |      |  |   | 265,863    |  
|                                                                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by (used in) financing activities                                                |  |      | (30,954    | ) |      |   | (109,372   | )    |  |   | 123,689    |  
|                                                                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|INCREASE (DECREASE) IN CASH                                                                        |  |      | 479,006    |   |      |   | 31,204     |      |  |   | (193,884   | )
|CASH AND CASH EQUIVALENTSBeginning of period                                                      |  |      | 87,500     |   |      |   | 56,296     |      |  |   | 250,180    |  
|                                                                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|CASH AND CASH EQUIVALENTSEnd of period                                                            |  | $    | 566,506    |   |      | $ | 87,500     |      |  | $ | 56,296     |  
|                                                                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                                   |  |      |           
|SUPPLEMENTAL CASH FLOW INFORMATION                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|Redeemed common shares (in other payables and accruals)                                            |  | $    | 62,170     |   |      | $ | 97,183     |      |  | $ | 62,644     |  
|Dividends payable (in other payables and accruals)                                                 |  |      | 10,519     |   |      |   |            |      |  |   |            |  
|Redeemed common shares issued in lieu of cash payment of deferred compensation                     |  |      |            |   |      |   | 24,967     |      |  |   |            |  
|Class A redeemable common shares exchanged for Class B redeemable common shares                    |  |      | 2,012      |   |      |   | 10,353     |      |  |   | 10,527     |  
|Class B redeemable common shares exchanged for Class A redeemable common shares                    |  |      | 590        |   |      |   |            |      |  |   |            |  

This condensed financial information should be read in conjunction with the Consolidated Financial
Statements and Notes included in Part II, Item 8, Page 42



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SCHEDULE IIPARENT COMPANY FINANCIAL INFORMATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Parent company financial information has been derived from our consolidated financial statements and excludes the accounts of all operating subsidiaries. This information should be read in conjunction with our consolidated financial
statements.

Parent company maintains its investment in all subsidiaries on the equity method. The investment
in subsidiary is adjusted for the changes in other comprehensive income from the subsidiaries.

2. TRANSACTIONS WITH SUBSIDIARIES

Management Fee

Through intercompany service agreements approved, if required by state regulatory agencies, our parent company charges a management fee for reimbursement of certain centralized services provided to its
subsidiaries including information systems, investment and cash administration, marketing, legal, finance, executive management oversight and other operating expenses.

Salaries and benefit expense

Salary and benefit expense
includes dental benefit expense of approximately $67,000, $65,000 and $56,000 for the years ended December 31, 2009, 2008 and 2007. These amounts eliminate in consolidation.

Dividends

The holders of redeemable Provider Preferred
Shares are entitled to a cumulative cash dividend equal to 5% of the year end book value of the redeemable Provider Preferred Shares. This dividend payable liability of approximately $11,000 was established in accordance with the Companys
Amended and Restated Articles of Incorporation for shareholders of record as of December 31, 2009. There were no dividends declared or paid in 2008 or 2007.



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DCP HOLDING COMPANY AND SUBSIDIARIES

Schedule IIISupplementary Insurance Information

For each of the Three Years in the Period ended December 31, 2009

(amounts in thousands)



|                                                          |  |      |        |      |   |        |  |   |       
|--------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                                          |  | 2009 |        | 2008 |   | 2007  
|Deferred policy acquisition cost (a)                      |  | $    | 1,241  |      | $ | 1,196  |  | $ |       
|                                                          |  |      |        |      |   |        |  |   |       
|Claims payable (a)                                        |  | $    | 2,317  |      | $ | 2,631  |  | $ | 2,490 
|                                                          |  |      |        |      |   |        |  |   |       
|Unearned premium (a)                                      |  | $    | 20,959 |      | $ | 21,606 |  | $ | 666   
|                                                          |  |      |        |      |   |        |  |   |       
|Other policy claims and benefits payable (a)              |  | $    | 1,840  |      | $ | 1,695  |  | $ | 648   
|                                                          |  |      |        |      |   |        |  |   |       
|Premium revenues                                          |  |      |        |      |   |        |  |   |       
|Fully-insured dental                                      |  | $    | 45,355 |      | $ | 40,321 |  | $ | 39,682
|Self-insured dental                                       |  |      | 24,703 |      |   | 25,451 |  |   | 19,768
|Corporate, All Other                                      |  |      | 417    |      |   | 435    |  |   | 500   
|                                                          |  |      |        |      |   |        |  |   |       
|                                                          |  | $    | 70,475 |      | $ | 66,207 |  | $ | 59,950
|                                                          |  |      |        |      |   |        |  |   |       
|Investment income (a)                                     |  | $    | 99     |      | $ | 223    |  | $ | 269   
|                                                          |  |      |        |      |   |        |  |   |       
|Future policy benefits, losses, claims and expense losses |  |      |        |      |   |        |  |   |       
|Fully-insured dental                                      |  | $    | 37,018 |      | $ | 31,576 |  | $ | 31,236
|Self-insured dental                                       |  |      | 21,288 |      |   | 22,014 |  |   | 16,916
|                                                          |  |      |        |      |   |        |  |   |       
|                                                          |  | $    | 58,306 |      | $ | 53,590 |  | $ | 48,152
|                                                          |  |      |        |      |   |        |  |   |       
|Amortization of deferred policy acquisition cost (a)      |  | $    | 2,742  |      | $ | 1,436  |  | $ |       
|                                                          |  |      |        |      |   |        |  |   |       
|Other operating expense (a)                               |  | $    | 9,993  |      | $ | 10,510 |  | $ | 11,244
|                                                          |  |      |        |      |   |        |  |   |       



|(a) | The Company does not allocate insurance expense, investment and other income, or other assets or liabilities to identified segments
|--- | -----------------------------------------------------------------------------------------------------------------------------------



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DCP HOLDING COMPANY AND SUBSIDIARIES

Schedule IVReinsurance

For each of the Three Years in the Period ended December 31, 2009

(amounts in thousands)



|                                                |  |      |        |      |   |        |  |   |       
|----------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                                |  | 2009 |        | 2008 |   | 2007  
|Gross earned premium amounts                    |  |      |        |      |   |        |  |   |       
|Fully-insured dental                            |  | $    | 45,355 |      | $ | 40,442 |  | $ | 39,910
|Self-insured dental                             |  |      | 24,703 |      |   | 25,451 |  |   | 19,768
|Corporate, All Other                            |  |      | 417    |      |   | 435    |  |   | 500   
|                                                |  |      |        |      |   |        |  |   |       
|                                                |  | $    | 70,475 |      | $ | 66,328 |  | $ | 60,178
|                                                |  |      |        |      |   |        |  |   |       
|Ceded earned premium amounts to other companies |  |      |        |      |   |        |  |   |       
|Fully-insured dental                            |  | $    |        |      | $ | 121    |  | $ | 228   
|Self-insured dental                             |  |      |        |      |   |        |  |   |       
|Corporate, All Other                            |  |      |        |      |   |        |  |   |       
|                                                |  |      |        |      |   |        |  |   |       
|                                                |  | $    |        |      | $ | 121    |  | $ | 228   
|                                                |  |      |        |      |   |        |  |   |       
|Net earned premium amounts                      |  |      |        |      |   |        |  |   |       
|Fully-insured dental                            |  | $    | 45,355 |      | $ | 40,321 |  | $ | 39,682
|Self-insured dental                             |  |      | 24,703 |      |   | 25,451 |  |   | 19,768
|Corporate, All Other                            |  |      | 417    |      |   | 435    |  |   | 500   
|                                                |  |      |        |      |   |        |  |   |       
|                                                |  | $    | 70,475 |      | $ | 66,207 |  | $ | 59,950
|                                                |  |      |        |      |   |        |  |   |       

DCP HOLDING COMPANY AND
SUBSIDIARIES

Schedule VValuation and Qualifying Accounts

For the Years Ended December 31, 2009, 2008 and 2007



|                                                |  |                              |        |                             |        |            |        |                        |   |       
|----------------------------------------------- |  | ---------------------------- | ------ | --------------------------- | ------ | ---------- | ------ | ---------------------- | - | ------
|Description                                     |  | Balance atbeginningof period |        | Charged tocosts andexpenses |        | Deductions |        | Balance atend ofperiod
|Year ended December 31, 2009:                   |  |                              |        |                             |        |            |        |                        |   |       
|Allowance for Uncollectible Accounts Receivable |  | $                            | 17,172 |                             | 4,724  |            | 11,033 |                        | $ | 10,863
|Year ended December 31, 2008:                   |  |                              |        |                             |        |            |        |                        |   |       
|Allowance for Uncollectible Accounts Receivable |  | $                            | 3,499  |                             | 33,419 |            | 19,746 |                        | $ | 17,172
|Year ended December 31, 2007:                   |  |                              |        |                             |        |            |        |                        |   |       
|Allowance for Uncollectible Accounts Receivable |  | $                            | 37,403 |                             | 13,840 |            | 47,744 |                        | $ | 3,499 



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|               |  |                                                
|-------------- |  | -----------------------------------------------
|               |  | DCP Holding Company                            
|               | 
|March 10, 2010 |  | /s/    Robert C. Hodgkins, Jr.                 
|               |  | Robert C. Hodgkins, Jr.                        
|               |  | Vice President and Chief Financial Officer     
|               |  | (Principal Financial and Accounting Officer)   
|               | 
|March 10, 2010 |  | /s/    Anthony A. Cook                         
|               |  | Anthony A. Cook                                
|               |  | President, Chief Executive Officer and Director
|               |  | (Principal Executive Officer)                  

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.



|               |  |                                        
|-------------- |  | ---------------------------------------
|March 10, 2010 |  | /s/    Stephen T. Schuler              
|               |  | Stephen T. Schuler                     
|               |  | Chairman of the Board of Directors     
|               | 
|March 10, 2010 |  | /s/    Roger M. Higley                 
|               |  | Roger M. Higley                        
|               |  | Vice Chairman of the Board of Directors
|               | 
|March 10, 2010 |  | /s/    Fred J. Bronson                 
|               |  | Fred J. Bronson                        
|               |  | Secretary                              
|               | 
|March 10, 2010 |  | /s/    Fred H. Peck                    
|               |  | Fred H. Peck                           
|               |  | Treasurer                              
|               | 
|March 10, 2010 |  | /s/    Michael Carl                    
|               |  | Michael Carl                           
|               |  | Director                               
|               | 
|March 10, 2010 |  | /s/    Jack M. Cook                    
|               |  | Jack M. Cook                           
|               |  | Director                               
|               | 
|March 10, 2010 |  | /s/    Ross A. Geiger                  
|               |  | Ross A. Geiger                         
|               |  | Director                               



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|               |  |                           
|-------------- |  | --------------------------
|March 10, 2010 |  | /s/    David A. Kreyling  
|               |  | David A. Kreyling         
|               |  | Director                  
|               | 
|March 10, 2010 |  | /s/    James E. Kroeger   
|               |  | James E. Kroeger          
|               |  | Director                  
|               | 
|March 10, 2010 |  | /s/    Donald J. Peak     
|               |  | Donald J. Peak            
|               |  | Director                  
|               | 
|March 10, 2010 |  | /s/    Molly Meakin-Rogers
|               |  | Molly Meakin-Rogers       
|               |  | Director                  
|               | 
|March 10, 2010 |  | /s/    Mark Zigoris       
|               |  | Mark Zigoris              
|               |  | Director                  



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##### Table of Contents

INDEX TO EXHIBITS



|               |  |                                                                                                                                                                                                                                                                
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DESCRIPTION OF DOCUMENT                                                                                                                                                                                                                                        
|3.1            |  | Amended and Restated Articles of Incorporation (incorporated by reference to the Companys Form 8-K current report filed on May 28, 2009)                                                                                                                      
|               | 
|3.2            |  | Amended and Restated Code of Regulations (incorporated by reference to Exhibit 3.2 to the Companys Form 10 registration statement filed on May 1, 2006)                                                                                                       
|               | 
|10.1           |  | Employment Agreement between DCP Holding Company and Anthony A. Cook effective January 1, 2009, (incorporated by reference to the Companys Form 10-K Annual Report filed on
March 19, 2009 and the Companys Form 8-K current report filed on August 5, 2009)*
|               | 
|10.2           |  | Dental Care Plus, Inc. and DCP Holding Company Deferred Compensation Plan, amended and restated (incorporated by reference to Exhibit 10.2 to the Companys Form 10-K Annual
Report filed on March 25, 2008)*                                                  
|               | 
|10.3           |  | 2006 Dental Care Plus Management Equity Incentive Plan, amended and restated (incorporated by reference to Exhibit 10.3 to the Companys Form 10-K Annual Report filed on March
25, 2008)*                                                                     
|               | 
|10.4           |  | Open-End Mortgage and Security Agreement dated June 12, 2003 in favor of Fifth Third Bank (incorporated by reference to Exhibit 10.5 to the Companys Form 10 registration
statement filed on May 1, 2006)                                                     
|               | 
|10.5           |  | Assignment of Rents and Leases dated June 12, 2003 between Dental Care Plus, Inc. and Fifth Third Bank (incorporated by reference to Exhibit 10.6 to the Companys Form 10
registration statement filed on May 1, 2006)                                        
|               | 
|10.6           |  | Revolving Note and Open-End Mortgage and Security Agreement dated December 18, 2008 between Dental Care Plus, Inc. and Fifth Third Bank (incorporated by reference to Exhibit 10.7 to
the Companys Form 10-K Annual Report filed on March 17, 2009)           
|               | 
|10.7           |  | Amendment No. 1 to Revolving Note dated December 15, 2009 between Dental Care Plus, Inc. and Fifth Third Bank, filed herewith                                                                                                                                  
|               | 
|14.1           |  | Code of Ethics for Senior Financial Officers (incorporated by reference to Exhibit 14.1 to the Companys Form 10-K Annual Report filed on March 30, 2007)                                                                                                      
|               | 
|21.1           |  | List of Subsidiaries. (incorporated by reference to Exhibit 21.1 to the Companys Form 10 registration statement filed on May 1, 2006)                                                                                                                         
|               | 
|31.1           |  | Chief Executive Officer certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002, filed herewith                                                                                                                                                
|               | 
|31.2           |  | Chief Financial Officer certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002, filed herewith                                                                                                                                                
|               | 
|32.1           |  | Chief Executive Officer and Chief Financial Officer certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, filed
herewith                                                                    



|* | Reflects management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of this Annual Report on
Form 10-K.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



77