<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549
                                   FORM  10-Q
                                        
(MARK ONE)

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended    September 30, 1998
                                    ----------------------

                                       or

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from ____________________  to ___________________

Commission File Number                0-6533
                       ---------------------------------------------------------

                           BOSTON LIFE SCIENCES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

     Delaware                                             87-0277826
--------------------------------------------------------------------------------
     (State or other jurisdiction of                    (IRS Employer
     incorporation or organization)                   Identification No.)

     31 Newbury Street, Suite 300, Boston, Massachusetts     02116
--------------------------------------------------------------------------------
      (Address of principal executive offices)             (Zip code)


                                 (617) 425-0200
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not Applicable
--------------------------------------------------------------------------------
             (Former name, former address and former fiscal year, 
                         if changed since last report)

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.

                   (X)    Yes                     ( )    No

As of November 13, there were 13,271,728 shares of Common Stock outstanding.
<PAGE>
 
                           BOSTON LIFE SCIENCES, INC.

                               INDEX TO FORM 10-Q
                                        

                                                            Page (s)
                                                            --------

Part I - Financial Information:

  Item 1 - Financial Statements (unaudited)
<TABLE>
<CAPTION>
 
<S>                                                            <C>
       Condensed Consolidated Balance Sheet as of                   1
       September 30, 1998 and December 31, 1997
 
       Condensed Consolidated Statement of Operations               2
       for the three and nine months ended September 30, 1998
       and 1997, and for the period from inception (October 16,
       1992) to September 30, 1998
 
       Condensed Consolidated Statement of Cash Flows               3
       for the nine months ended September 30, 1998 and 1997,
       and for the period from inception (October 16, 1992) to
       September 30, 1998
 
       Notes to Condensed Consolidated Financial Statements        4-5 
 
  Item 2 - Management's Discussion and Analysis of                     
           Financial Condition and Results of Operations           6-9
 
 
Part II - Other Information
 
  Item 1 - Legal Proceedings                                       10
 
  Item 2 - Changes in Securities                                   10
 
  Item 3 - Defaults Upon Senior Securities                         10
 
  Item 4 - Submission of Matters to a Vote of                      10
           Security Holders
 
  Item 5 - Other Information                                       10
 
  Item 6 - Exhibits and Reports on Form 8-K                        11

Signature(s)                                                       12
</TABLE>
<PAGE>
 
Part I -- Financial Information
Item 1 -- Financial Statements

                          Boston Life Sciences, Inc.
                       (A Development Stage Enterprise)

                          Consolidated Balance Sheet
                          --------------------------
                                  (Unaudited)
<TABLE>  
<CAPTION>   
                                                                     30-Sep-98                 31-Dec-97
                                                                ------------------       -------------------
<S>                                                              <C>                       <C> 
Assets                                                        
Current assets:                                               
  Cash and cash equivalents                                         $ 2,800,110               $ 1,713,975
  Short-term investments                                              7,001,314                12,338,496
  Prepaid sponsored research & development expenses                     100,000                   150,000
  Other current assets                                                  178,333                   508,208
                                                                  --------------           --------------
    Total current assets                                             10,079,757                14,710,679
                                                              
Fixed assets, net                                                        39,476                    95,061
Acquired technology                                                   3,500,000                 3,500,000
Other assets                                                            286,053                   273,229
                                                                  --------------           --------------
    Total assets                                                   $ 13,905,286              $ 18,578,969
                                                                  ==============           ==============
                                                              
                                                              
                                                              
Liabilities and Stockholders' Equity                          
Current liabilities:                                          
  Accounts payable and accrued expenses                               1,496,625                 1,991,804
                                                                  --------------           --------------
    Total current liabilities                                         1,496,625                 1,991,804
                                                                  --------------           --------------
                                                              
Stockholders' equity:                                         
  Series A convertible preferred stock, $.01 par value;                     170                       284
    1,000,000 shares authorized;                              
    16,996 shares outstanding on September 30, 1998 and       
    28,372 shares outstanding on December 31, 1997            
  Common stock, $0.01 par value;                                        132,717                   129,938
    25,000,000 shares authorized;                             
    13,271,728 shares outstanding on September 30, 1998 and   
    12,993,838 shares outstanding on December 31, 1997        
  Additional paid-in-capital                                         50,333,179                49,624,386
  Unrealized gains on investments                                       188,798                    99,029
  Deficit accumulated during development stage                      (38,246,203)              (33,266,472)
                                                                  --------------           --------------
    Total stockholders' equity                                       12,408,661                16,587,165
                                                                  --------------           --------------
    Total liabilities and stockholders' equity                     $ 13,905,286              $ 18,578,969
                                                                  ==============           ==============

</TABLE> 

                See notes to consolidated financial statements

                                       1
<PAGE>
 
                          Boston Life Sciences, Inc.
                       (A Development Stage Enterprise)

                     Consolidated Statement of Operations
                     ------------------------------------
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                                                                         
                                                    Three Months Ended           Nine Months Ended           From inception  
                                                       September 30,               September 30,           (October 16, 1992)
                                                 ------------------------       ----------------------       to September 30,  
                                                    1998          1997             1998        1997               1998
                                                 ----------    ----------       ---------- -----------     ------------------
<S>                                              <C>           <C>             <C>         <C>              <C> 
Revenues                                                $ 0           $ 0             $ 0     $ 83,060         $    700,000
                                                 ----------    ----------      ----------   ----------         ------------
                                                                                                          
Operating Expenses                                                                                        

 Research and development expenses                1,169,010     1,191,702       3,414,362    3,521,456           15,311,475

 Licensing fees                                           0        20,000          55,000       20,000              708,683

 THERAFECTIN(R) related expenses                     31,339       581,830         292,121    1,761,962            4,028,952

 General and administrative expenses                587,831       554,370       1,854,909    1,550,950           10,022,870

 Purchased research and development in-process            0             0               0            0           10,421,544
                                                 ----------    ----------      ----------   ----------         ------------
                                                                                                          
  Total operating expenses                        1,788,180     2,347,902       5,616,392    6,854,368           40,493,524
                                                 ----------    ----------      ----------   ----------         ------------
  Loss from operations                           (1,788,180)   (2,347,902)     (5,616,392)  (6,771,308)         (39,793,524)

 Net interest income                                191,802       261,786         636,661      872,168            1,547,321
                                                 ----------    ----------      ----------   ----------         ------------
                                                                                                          
 Net loss                                        $(1,596,378) $(2,086,116)    $(4,979,731) $(5,899,140)        $(38,246,203)
                                                 ===========   ==========      ==========   ==========         ============
                                                                                          
                                                                                          
                                                                                          
  Basic and diluted net                                                                   
     loss per common share                           $ (0.12)     $ (0.17)        $ (0.38)     $ (0.48)
                                                 ===========   ==========      ==========   ==========         
                                                                                          
                                                                                          
                                                                                          
                                                                                          
  Weighted average shares outstanding             13,221,610   12,578,134      13,094,321   12,217,993
                                                 ===========   ==========      ==========   ==========        
                                         
 </TABLE>
<PAGE>
 
                          BOSTON LIFE SCIENCES, INC.

                       (A Development Stage Enterprise)

                     Consolidated Statement of Cash Flows
                     ------------------------------------
                                  (Unaudited)


<TABLE>  
<CAPTION>                                                                                                         
                                                                                                             Period from       
                                                                     Nine Months Ended September 30       inception (October
                                                                 --------------------------------------   16, 1992) through  
                                                                        1998                1997          September 30, 1998
                                                                 ------------------  ------------------   ------------------
<S>                                                              <C>                  <C>                  <C> 
Cash flows from operating activities:
Net loss                                                              $(4,979,731)        $(5,899,140)      $ (38,246,203)
Adjustments to reconcile net loss to net cash                                                           
    used for operating activities:                                                                      
        Purchased research and development in-process                          0                   0           10,421,544
        Compensation charge related to options and warrants grant        555,000             192,330            1,429,540
        Amortization and depreciation                                     60,000              56,693            1,415,583
        Loss on disposal of fixed assets                                       0                   0               15,589
        Changes in assets and liabilities:                                                              
                Prepaid sponsored research & development expenses         50,000             431,000             (100,000)
                Other current assets                                     329,875             413,667              317,195
                Accounts payable and accrued expenses                   (495,179)           (462,865)             548,960
                Deferred revenue                                               0             (83,060)                   0
                                                                      ----------          ----------        -------------
                Net cash used for operating activities                (4,480,035)         (5,351,375)         (24,197,792)
                                                                      ----------          ----------        -------------
                                                                                                        
Cash flows from investing activities:
Cash acquired through the merger with                                                                   
   Greenwich Pharmaceuticals                                                   0                   0            1,758,037
Increase in fixed assets                                                  (4,415)            (47,421)            (261,116)
Proceeds from sale of fixed assets                                             0                   0                9,800
Increase in other assets                                                 (12,824)                  0             (286,053)
Short term investments:                                                                                 
     Purchases                                                        (8,850,358)         (7,346,130)         (40,408,312)
     Sales and maturities                                             14,277,309           8,231,759           33,595,796
                                                                      ----------          ----------        -------------
                Net cash provided by (used in) investing 
                 activities                                            5,409,712             838,208           (5,591,848)
                                                                      ----------          ----------        -------------

Cash flows from financing activities:
Proceeds from issuance of common stock                                   156,458             150,651           13,166,203
Proceeds from issuance of convertible preferred stock                          0                   0           20,872,170
Proceeds from issuance of notes payable                                        0                   0            2,585,000
Proceeds from issuance of convertible debt                                     0                   0            1,000,000
Principal payments of notes payable                                            0             (61,752)          (2,796,467)
Payment of note issuance costs                                                 0                   0             (399,702)
Payment of stock issuance and merger transaction costs                         0                   0           (1,837,454)
                                                                      ----------          ----------        -------------
                Net cash provided by financing activities                156,458              88,899          32,589,750
                                                                      ----------          ----------        -------------
Net increase (decrease) in cash and cash equivalents                   1,086,135          (4,424,268)           2,800,110
Cash and cash equivalents at beginning of period                       1,713,975           8,580,206                    0
                                                                      ----------          ----------        -------------
Cash and cash equivalents at end of period                           $ 2,800,110         $ 4,155,938          $ 2,800,110
                                                                      ==========          ==========        =============
</TABLE>

                See notes to consolidated financial statements.

                                       3
<PAGE>
 
                          BOSTON LIFE SCIENCES, INC.
                       (a development stage enterprise)

              Notes to Unaudited Consolidated Financial Statements
                              (September 30, 1998)

1. BASIS OF PRESENTATION

   The accompanying unaudited condensed consolidated financial statements have
   been prepared in accordance with generally accepted accounting principles for
   interim financial information and pursuant to the rules and regulations of
   the Securities and Exchange Commission. Accordingly, these financial
   statements do not include all of the information and footnotes required by
   generally accepted accounting principles for complete financial statements.

   The interim unaudited consolidated financial statements contained herein
   include, in management's opinion, all adjustments (consisting of normal
   recurring adjustments) necessary for a fair presentation of the financial
   position, results of operations, and cash flows for the periods presented.
   The results of operations for the interim period shown on this report are not
   necessarily indicative of results for a full year. These financial statements
   should be read in conjunction with the Company's consolidated financial
   statements and notes for the year ended December 31, 1997, appearing in the
   Company's Annual Report on Form 10-K for such year.


2. NET LOSS PER SHARE

   Net loss per share has been calculated by dividing net loss by the weighted
   average number of common shares outstanding during the period. All common
   stock equivalents have been excluded from the calculation of weighted average
   common shares outstanding since their inclusion would be anti-dilutive.


3. SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

   During the nine months ended September 30, 1998, the Company issued 199,509
   shares of common stock resulting from the conversion of 11,376 shares of
   preferred stock. During the nine months ended September 30, 1997, the Company
   issued 1,501,246 shares of common stock resulting from the conversion of
   85,601 shares of preferred stock.

                                       4
<PAGE>
 
                          BOSTON LIFE SCIENCES, INC.
                       (a development stage enterprise)

             Notes to Unaudited Consolidated Financial Statements
                             (September 30, 1998)


4. COMPREHENSIVE NET LOSS

   The Company adopted FASB Statement No. 130, "Reporting Comprehensive Income",
   in the first quarter of 1998.  This statement establishes standards for the
   reporting and display of comprehensive income or loss and its components in
   the financial statements.  Comprehensive net loss for the nine months ended
   September 30, 1998 and 1997, was as follows:
 
<TABLE>
<CAPTION>
                                                             1998                   1997
<S>                                                 <C>                    <C>
     Net loss                                           $(4,979,731)            $(5,899,140)
     Unrealized gain  on investments                         89,769                  82,125
                                                        -----------             -----------
     Comprehensive net loss                             $(4,889,962)            $(5,817,015)
                                                        ===========             ===========
</TABLE>
                                                                                

5. INVESTMENTS

   At September 30, 1998, the fair value of short-term investments exceeded
   their cost basis by approximately $188,798.  These investments, which are
   classified as available-for-sale, are reported at fair value, with the
   unrealized gain excluded from the statement of operations and reported as a
   separate component of stockholders' equity.

                                       5
<PAGE>
 
ITEM 2.               MANAGEMENT'S DISCUSSION AND ANALYSIS
                of Financial Condition and Results of Operations
                              (September 30, 1998)


     This Quarterly Report on Form 10-Q contains forward-looking statements.
Specifically, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements.  Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"
and similar expressions are intended to identify forward-looking statements.
There are a number of meaningful factors that could cause the Company's actual
results to differ materially from those indicated by any such forward-looking
statements.  These factors include, without limitation, the duration and results
of clinical trials and their effect on the FDA regulatory process, uncertainties
regarding receipt of approvals for any possible products and any commercial
acceptance of such products, possible difficulties with obtaining necessary
patent protection, and uncertainties regarding the outcome of any of the
Company's collaborations or alliances with third parties.  Other factors include
those set forth under the caption "Forward-Looking Statements" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 and the
documents referred to under such caption.

RESULTS OF OPERATIONS
 Overview

     The Company is a biotechnology company engaged in the research and
development of novel therapeutic and diagnostic products to treat chronic
debilitating diseases such as cancer, central nervous system disorders and
autoimmune diseases.  The Company expects that its research and development
costs will increase as the Company attempts to gain regulatory approval for
commercial introduction of its proposed products.  At September 30, 1998, the
Company is considered a "development stage enterprise" as defined in Statement
of Financial Accounting Standards No. 7.


 Three Months Ended September 30, 1998 and 1997

     The Company's net loss was $1,596,378 during the three months ended
September 30, 1998 as compared with $2,086,116 during the three months ended
September 30, 1997.  Net loss per common share equaled $.12 per share for the
1998 period as compared to $.17 per share for the 1997 period.  The lower net
loss in the 1998 period was primarily due to lower THERAFECTIN/(R) / related
expenses,  partially offset by higher general and administrative expenses and a
reduction in net interest income.

     Revenue was zero during each of the three months ended September 30, 1998
and 1997.
 
     Research and development expenses were $1,169,010 during the three months
ended September 30, 1998 as compared with $1,191,702 during the three months
ended September 30, 1997. The decrease was primarily attributable to lower
expenditures for one of the technologies currently under pre-clinical
development, partially offset by increased expenditures related to the clinical
trials for Altropane.  The majority of the Company's research and development
expenses were sponsored research obligations paid to Harvard University and its
affiliated hospitals.  The Company expects to incur total research and
development costs between $4 million and $5 million during 1998.

     Licensing fees were zero during the three months ended September 30, 1998
as compared with $20,000 during the three months ended September 30, 1997.  The
Company entered into one new licensing agreement during the 1997 period.  The
Company did not execute any new licensing agreements during the 1998 period.  In
addition to an initial licensing fee payment, the Company is obligated to pay
additional amounts upon the attainment of development milestones, as defined in
each respective licensing agreement, as well as royalties upon the sales of any
resulting products. 

                                       6
<PAGE>
 
     The Company expects to pay future licensing fees, the timing and amounts of
which will depend upon the terms of agreements which may be executed for
technologies currently being developed or which may be developed in the future.
There can be no assurance regarding the likelihood or materiality of any such
future licensing agreements.

     THERAFECTIN(R) related expenses were $31,339 during the three months ended
September 30, 1998 as compared with $581,830 during the three months ended
September 30, 1997. This decrease reflects differences in the status of the
Phase III clinical trial for Therafectin during each respective period.  Costs
incurred during the 1997 period related to the Phase III trial, which began in
March 1996, and was completed in August 1997.  Costs incurred during the 1998
period related to the preparation and submission, on June 30, 1998, of an
amendment to its previously filed New Drug Application ("NDA") with the Food and
Drug Administration ("FDA") seeking marketing approval for Therafectin.  There
can be no assurance, however, that such approval will be obtained by the
Company.  If the Company is ultimately unsuccessful in obtaining regulatory
approval for Therafectin, the Company may be required to write off all or some
portion of the $3.5 million asset value represented by the THERAFECTIN(R)
technology acquired in the June 1995 merger with Greenwich Pharmaceuticals, Inc.
as reflected on the Company's balance sheet.

     General and administrative expenses were $587,831 during the three months
ended September 30, 1998 as compared with $554,370 during the comparable 1997
period.  This increase was primarily due to  higher professional services costs
and a non-cash charge related to certain changes in the provisions of the
Company's stock option plans.

     Net interest income was $191,802  during the three months ended September
30, 1998 as compared with net interest income of $261,786 during the three
months ended September 30, 1997. The higher level of interest income recognized
during the 1997 period primarily related to higher average short-term
investment, cash and cash equivalent balances.

 Nine Months Ended September 30, 1998 and 1997

     The Company's net loss was $4,979,731 during the nine months ended
September 30, 1998 as compared with $5,899,140 during the nine months ended
September 30, 1997.  Net loss per common share equaled $.38 per share for the
1998 period as compared to $.48 per share for the 1997 period. The lower net
loss in the 1998 period was primarily due to lower THERAFECTIN/(R) / related
expenses, and to a lesser degree, a reduction in research and development
expenses.  These expenses were partially offset by higher general and
administrative expenses and a reduction in net interest income.

     Revenue was zero during the nine months ended September 30, 1998 as
compared with $83,060 during the nine months ended September 30, 1997.  Revenue
for the 1997 period was attributable to a research and development agreement
(the "Agreement") entered into with Zeneca Pharmaceuticals, Ltd. ("Zeneca
Pharmaceuticals") in 1995. Under the terms of the Agreement (which originally
would have expired in June 1997), Zeneca provided funds for a two-year period to
support the research and development of certain technology. In addition to
providing funding, Zeneca, at its own expense, undertook the screening of its
molecule collection, in order to generate potential inhibitors of the Company's
transcription factor.  Zeneca requested, and was granted, an extension, until
January 1, 1998, to continue the screening of its molecule collection before
deciding if it would exercise its product development rights.  Following the
refusal by the Company to grant Zeneca a further extension, Zeneca has informed
the Company that it will not continue product development.  The Company believes
that this technology has substantial value and plans to continue to pursue
alternative potential joint venture and collaborative opportunities in this
sector.

                                       7
<PAGE>
 
     Research and development expenses were $3,414,362 during the nine months
ended September 30, 1998 as compared with $3,521,456 during the nine months
ended September 30, 1997. The decrease was primarily attributable to lower
expenditures for one of the technologies currently under pre-clinical
development, partially offset by increased expenditures related to the
preparation for and initiation of clinical trials for Altropane.  The majority
of the Company's research and development expenses were sponsored research
obligations paid to Harvard University and its affiliated hospitals.  The
Company expects to incur research and development costs between $4 million and
$5 million during 1998.

     Licensing fees were $55,000 during the nine months ended September 30, 1998
as compared with $20,000 during the nine months ended September 30, 1997. The
Company paid $15,000 during the 1998 period to license one new technology as
compared to $20,000 paid to license one new technology during the 1997 period.
In addition to an initial licensing fee payment, the Company is obligated to pay
additional amounts upon the attainment of development milestones, as defined in
each respective licensing agreement, as well as royalties upon the sales of any
resulting products. During the 1998 period, the Company made a milestone payment
of $40,000 related to the development of one of its technologies.  The Company
expects to pay future licensing fees, the timing and amounts of which will
depend upon the progress attained in developing existing technologies and the
terms of agreements which may be executed for technologies currently being
developed or which may be developed in the future. There can be no assurance
regarding the likelihood or materiality of any such future licensing agreements.

     THERAFECTIN(R)  related expenses were $292,121 during the nine months ended
September 30, 1998 as compared with $1,761,962 during the nine months ended
September 30, 1997. This decrease reflects differences in the status of the
Phase III clinical trial for Therafectin during each respective period.  The
Phase III trial, which began in March 1996, was completed in August 1997.
Expenses during the 1998 period primarily related to patients enrolled in the
extension phase of the trial in which fewer patients were enrolled, and per-
patient clinical costs were lower.  The Company filed, in June 1998, an
amendment to its previously filed New Drug Application ("NDA") with the Food and
Drug Administration ("FDA") seeking marketing approval for Therafectin.  There
can be no assurance, however, that such approval will be obtained by the
Company.  If the Company is ultimately unsuccessful in obtaining regulatory
approval for Therafectin, the Company may be required to write off all or some
portion of the $3.5 million asset value represented by the THERAFECTIN(R)
technology acquired in the Merger with Greenwich Pharmaceuticals, Inc. as
reflected on the Company's balance sheet.

     General and administrative expenses were $1,854,909 during the nine months
ended September 30, 1998 as compared with $1,550,950 during the nine months
ended September, 1997.  This increase was primarily due to  higher professional
services costs and a non-cash charge related to certain changes in the
provisions of the Company's stock option plans.

     Net interest income was $636,661 during the nine months ended September 30,
1998 as compared with net interest income of $872,168 during the nine months
ended September 30, 1997. The higher level of interest income recognized during
the 1997 period primarily related to higher average short-term investment, cash
and cash equivalent balances.

                                       8
 
<PAGE>
 
YEAR 2000 COMPLIANCE

     The Company uses a significant number of computer software programs and
operating systems in its internal operations, including applications used in
product development, financial business systems and various administrative
functions. To the extent that these software applications contain source code
that is unable to appropriately interpret the upcoming calendar year "2000",
some level of modifications or even possibly replacement of such source code or
applications will be necessary. The Company is currently in the process of
completing its identification of software applications that are not "Year 2000"
compliant and expects to make appropriate responses to address any issue
identified by the end of 1998. Given the information known at this time about
the Company's systems, coupled with the Company's ongoing, normal course-of-
business efforts to upgrade or replace business critical systems as necessary,
it is currently not anticipated that these "Year 2000" costs will have any
material adverse effect on the Company's business, financial condition or
results of operations. However, the Company is still in the preliminary stages
of analyzing its software applications and, to the extent that they are not
fully "Year 2000" compliant, there can be no assurance that the costs necessary
to update software, or potential systems interruptions, would not have a
material adverse effect on the Company's business, financial condition or
results of operations. However, if the Company and third parties upon which it
relies are unable to address this issue in a timely manner, it could result in a
material financial risk to the Company. In order to assure that this does not
occur, the Company plans to devote all resources required to resolve any
significant Year 2000 issues in a timely manner. The Company does not have a
contingency plan in the event that it is unable to resolve any Year 2000 issues
in a timely manner. The Company expects to establish a contingency plan upon
completion of its identification of software applications that are not Year 2000
compliant. At such time, the Company will be able to ascertain the most
reasonably likely worst case scenario.
 
LIQUIDITY AND CAPITAL RESOURCES

     Since its inception, the Company has satisfied its working capital
requirements from the sale of the Company's securities through private
placements.  In January and February 1996, the Company raised approximately
$20.7 million of net proceeds by completing a private placement of units
consisting of (i) shares of its Series A convertible preferred stock and (ii)
warrants to purchase shares of the Company's common stock.  In June 1996, the
Company raised approximately $5 million of net proceeds by completing a private
placement of 500,000 shares of common stock (See Notes 8 and 9 of Notes to the
Consolidated Financial Statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997).  In the future, the Company's ability to
meet, and the level of, its working capital and capital requirements will depend
on numerous factors, including the progress of the Company's research and
development activities, the level of resources that the Company devotes to the
developmental, clinical, and regulatory aspects of its products, and the extent
to which the Company enters into collaborative relationships with pharmaceutical
and biotechnology companies.

      At September 30, 1998, the Company had available cash, cash equivalents 
and short term investments of approximately $9.8 million and working capital of 
approximately $8.6 million.  The Company believes that the level of financial 
resources available at September 30, 1998 will provide sufficient working 
capital to meet its anticipated expenditures for more than the next twelve 
months.  The Company may raise additional capital in the future through 
collaboration agreements with other pharmaceutical or biotechnology companies, 
debt financings and equity offerings.  There can be no assurance, however, that 
the Company will be successful in such efforts or that additional funds will be 
available on acceptable terms, if at all.

                                       9
<PAGE>
 
                          PART II--OTHER INFORMATION
                          --------------------------

ITEM 1:  LEGAL PROCEEDINGS.
         -----------------

         None.

ITEM 2:  CHANGES IN SECURITIES.
         ---------------------  

         During the nine months ended September 30, 1998, the Company issued 
         78,381 shares of common stock related to the exercise of outstanding
         warrants and options for which the Company received consideration 
         totaling $156,458.
     
ITEM 3:  DEFAULTS UPON SENIOR SECURITIES.
         ------------------------------- 

         None.

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
         --------------------------------------------------- 
     
         None.       

ITEM 5:  OTHER INFORMATION.
         ----------------- 

         Shareholder Proposals--1999 Annual Meeting:

         The Company's definitive proxy materials dated May 6, 1998 indicated
         that proposals of stockholders intended to be presented at the annual
         meeting of stockholders in 1999 must be received by the Company by
         December 24, 1999 in order to be considered for inclusion in the
         Company's Proxy Statement and form of proxy relating to that annual
         meeting. Such December 24, 1999 timetable applies to shareholder
         proposals submitted pursuant to Rule 14a-8 under the Securities
         Exchange Act of 1934, as amended ("Rule 14a-8"). Alternatively,
         stockholder proposals proposed to be presented at the 1999 Annual
         Meeting of Stockholders, but not submitted in compliance with 
         Rule 14a-8 and therefore not included in the Proxy Statement and form
         of proxy relating to the meeting nevertheless must be received by March
         30, 1999, or there is a possibility that management proxies may use
         their discretionary voting authority if and when any such proposal is
         raised at the 1999 Annual Meeting of Stockholders, without any
         discussion of the matter at the meeting. If the 1999 Annual Meeting
         date is more than 30 days away from the anniversary of the 1998 Annual
         Meeting date, the Company will disclose changes in the December 24 and
         March 30 deadlines above in its earliest possible report on Form 10-Q.
         Stockholder proposals should be directed to the Company's Secretary, at
         the address of the Company set forth on the cover of the Form 10-Q.

                                      10
<PAGE>
 
ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K.
         -------------------------------- 

         (a) Exhibits included with this filing:

             27  Financial Data Schedule

         (b) Reports on Form 8-K:  The Registrant filed the following reports on
             Form 8-K during the quarter ended September 30, 1998 and through
             November 12, 1998.

                  Date of Report                    Item Reported
                  --------------                    -------------

                  Form 8-K filed July 1, 1998            5, 7


                                      11
<PAGE>
 
                                   SIGNATURE
                                   ---------


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                      BOSTON LIFE SCIENCES, INC.
                                      --------------------------
                                         (Registrant)


DATE: November 12, 1998               /s/ S. David Hillson
                                      --------------------
                                      S. David Hillson
                                      President and Chief Executive Officer
                                      (Principal Executive Officer)
 
DATE: November 12, 1998               /s/ Joseph Hernon
                                      ------------------
                                      Joseph Hernon
                                      Chief Financial Officer
                                      (Principal Financial and Accounting
                                        Officer)

                                      12