ADG, Inc. Responds to Birner Dental Management Services, Inc. Rejection of its Offer to Purchase 100% of Common Stock at $12 Per Share.

Business Editors

On June 25, 2002 Birner Dental Management Services (the Company) released to the press a statement that it received an unsolicited offer to buy 100% of the Company's common stock for $12 per share.

The Company did not disclose the prospective purchaser but did state that after an internal review of the offer by its Board of Directors, the Company concluded that it was not in the best interest of the shareholders to accept the offer.

ADG, Inc., a Detroit, Michigan based Dental Practice Management Company made the offer to the Company. Attached to this press release is a letter response to the Board of Directors which was delivered to each Board member on July 9, 2002. The letter states the position of ADG, Inc. as to why the offer should be reconsidered and accepted by the Board.

ADG, Inc. manages 55 dental offices in five states offering general, orthodontic and specialty care all under the Great Expressions Dental Centers name.

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  THIS IS AN OPEN LETTER ADDRESSED TO EACH DIRECTOR OF BIRNER DENTAL
                MANAGEMENT SERVICES, INC. ("COMPANY").
 THIS LETTER IS NOT AN OFFER TO PURCHASE, OR A SOLICITATION OF OFFERS
 TO SELL, ANY SECURITIES OF COMPANY. THIS LETTER IS NOT A PROPOSAL TO
  SHAREHOLDERS OF COMPANY NOR IS IT THE SOLICITATION OF ANY VOTE OF
SHARES OF COMPANY FOR ANY CURRENT OR FUTURE PROPOSAL TO SHAREHOLDERS.
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July 8, 2002

Frederic W.J. Birner
Mark A. Birner, D.D.S.
Dennis N. Genty
James M. Ciccarelli
Steven M. Bathgate
Paul E. Valuck, D.D.S.

Dear Board Member:

   I respect your support of management's efforts over the past six
quarters to achieve positive Company earnings and increased EBITDA, as
well as to reduce the Company's long-term debt. However, based on the
factors outlined below, I do not agree with this strategy as a means
to maximize shareholder value and I urge each Company director to
reconsider, and accept, the offer to acquire the Company at a cash
purchase price of $12 per share.
   On June 24, 2002 nearly three weeks after ADG, Inc.'s offer dated
June 6, 2002, Chairman Fred Birner replied in a letter with a one
sentence rejection, concluding that the bid price of $12 per share did
not reflect the value of the Company. The one sentence response was
timed to reach me just before the Company's press release on June 25,
2002 setting forth the more detailed explanation for your rejection of
the offer. The explanation essentially repeats Company management's
announced belief that "over the next few years, the Company has the
potential to generate annual patient revenues of $60.0 to
$65.0 million and possible earnings before interest, taxes,
depreciation and amortization ("EBITDA") of $7.5 to $9.0 million."
(Emphasis added). Your decision also was based on your internal
analysis of other publicly traded dental practice management and other
health care companies. On this basis, you concluded that the $12 per
share offer did not reflect the value of the company.
   On the bases stated in the Company's press release, rejection of
the $12 offer is unsupportable.

   Why is Birner management's projected revenue and EBITDA growth not
a good reason to reject $12 per share?

1.  There is no evidence that the Company's projections are
    achievable. The Company's recent earnings and EBITDA improvement
    has resulted from extensive cuts in expenses. While laudable for
    improving earnings and cash flow, cost cutting cannot, and will
    not result in revenue growth. As you are aware, for the last six
    quarters, the Company's revenue growth is essentially flat.

2.  If growth expectations are met, such growth may come at the
    expense of lower margins. The type of expense cuts instituted by
    the Company are not conducive to growth. In a letter dated May 23,
    2001, to Richard E. Beckman, C.E.O. of ADG, Inc., Fred Birner
    cited three actions to increase EBITDA. These actions included
    layoffs of corporate employees, cessation of discretionary
    matching 401k contributions and other expenses and the reduction
    of office hours for certain under-performing offices. While these
    actions in the short term have increased EBITDA, the actions
    appear to have eliminated revenue growth. In addition your stated
    strategy of "adding dentists and hygienists to offices without
    adding a single incremental office" (quote from the Company's
    June 25, 2002 press release) may result in an incremental decline
    in the Company's operating margins until such time the Company can
    attract sufficient patient revenue to offset payroll costs and
    other operating expenses associated with adding additional
    professional personnel. In fact one of the actions the Company has
    taken to increase EBITDA was to reduce office hours and personnel
    costs in selected offices.

3.  Even if revenues and EBITDA are doubled in "the next few years"
    the present value of the Company's stock price may not exceed the
    $12 offer of ADG, Inc.. Given the lack of a convincing revenue
    growth record in the last six quarters, the projection for
    substantial revenue and EBITDA growth must be discounted at a rate
    to reflect the considerable risk that the Company may not achieve
    the projection. For example, even at the relatively modest
    risk-adjusted discount rate of 15%, doubling EBITDA in 5 years
    results in a lower present value of EBITDA than current results!
    In other words, in today's dollars, waiting five years to double
    current EBITDA at a 15% discount rate translates to a present
    value share price (at today's multiple) of approximately $8.00.
    Compare this to the current offer of $12. How can you responsibly
    conclude that this strategy "represents a low-risk, non-capital
    intensive strategy" superior to a current cash transaction at
    $12 per share?

   Why is $12 a fair price compared to comparable public company
values?

1.  An offer of $12 per share exceeds the highest valuation in the
    industry by more than 50%. At a little over $8 per share (BDMS'
    recent closing price), the Company currently trades at more than
    19 times earnings. At the office price of $12 the price earnings
    ratio would be over 27 times today's current earnings. The
    Company's strongest comparable companies, American Dental Partners
    (NasdaqNM:ADPI) and Orthodontic Centers of America (NYSE:OCA)
    trade at about 16 times, and 15 times earnings, respectively. The
    $12 per share offer is a 50% premium to the Company's current P/E
    ratio, which is already one of the highest in the industry despite
    stronger comparable companies with proven growth track records.

2.  My $12 per share offer is only possible because of the synergies
    available from combining the Company's business with that of ADG,
    Inc. As a successful entrepreneur, owner and agent for increased
    shareholder wealth in the industry, I could not offer a
    transaction valued at $12 cash per share for the Company except
    for the synergies available from combining the Company with ADG,
    Inc. The suggestion that current management can realize a higher
    value without dramatic revenue growth is unsupportable.

   The directors' evaluation of the offer is apparently incomplete
and inadequate.

1.  While certain employees of the Company are former investment
    bankers, they are employed by the Company or are otherwise not
    independent, and their valuation analysis cannot be relied upon as
    fair to unaffiliated shareholders. The Board's failure to engage
    independent investment bankers to evaluate and advise the Board on
    the financial fairness and adequacy of the $12 per share offer is
    irresponsible and fails to represent the interests of
    non-management stockholders.

2.  Despite taking nearly three weeks to respond to the offer, the
    Board has neither described a detailed, rational basis for
    rejecting the offer, nor has it countered with a proposal to
    better enhance shareholder value. You have not shared your
    analysis of why the dramatic growth and potential competitive
    advantage of remaining independent is more attractive then selling
    the Company to ADG, Inc. at a 50% premium. Shareholders are
    entitled to an explanation of why this obvious enhancement to
    value should not be pursued by the Company. If as the Company has
    said in your proxy statement, your concern is that this potential
    increase in value would not be enjoyed by current stockholders,
    why have you not pursued a merger or other form of transaction
    designed to realize this potential more rapidly and to share
    future growth with your shareholders?

   I expect you to live up to your fiduciary duty and to your
shareholder value orientation. This is what the law requires of you.
You are turning your back on a low-risk realization of a large premium
to market value in favor of continuing a riskier plan that may produce
much lower results.
   I urge you to reconsider and reverse your ill-advised rejection of
ADG, Inc.'s offer.

                              Sincerely,


                              Walter Knysz, Jr.
                              Chairman of the Board