<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

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

                   For quarterly period ended August 31, 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: 33-78022

                              FUTUREBIOTICS, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

               Delaware                                 11-3205937
-------------------------------                 -------------------------
(State or other jurisdiction of                 (State or I.R.S. Employer
 incorporation of organization)                  Identification Number)

                               145 Ricefield Lane
                              Hauppauge, New York
                    ----------------------------------------
                    (Address of principal executive offices)

                                     11788
                             ---------------------
                                   (Zip Code)

                                 (516) 273-2630
              ---------------------------------------------------
              (Registrant's telephone number including area code)

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 and (2) has been subject to such filing
requirements for the past 90 days.
                                                    Yes   X        No
                                                        ------        ------

    Class                                 Outstanding at October 7, 1998
------------                              ------------------------------
Common Stock                                         1,350,000

<PAGE>

                              FUTUREBIOTICS, INC.
                                   FORM 10-Q
                                QUARTERLY REPORT
                   For the Nine Months Ended August 31, 1998

                               TABLE OF CONTENTS

                                                                    Page to Page
                                                                    ------------
         Financial Statements:

         Condensed balance sheets...................................     1

         Condensed statements of operations.........................     2

         Condensed statements of cash flows.........................     3

         Notes to condensed financial statements....................    4-5

         Management's discussion and analysis
         of financial condition and results
         of operations..............................................    6-7

         Legal proceedings..........................................     8

         Signatures.................................................     9

<PAGE>

                              FUTUREBIOTICS, INC.
                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       August 31, 1998             November 30, 1997
                                                                       ---------------             -----------------
                                                                        (Unaudited)
<S>                                                                    <C>                         <C>
                   ASSETS

 CURRENT ASSETS:
  Cash and cash equivalents                                              $    423,977                $     614,617
  Investment in marketable securities
    at fair value                                                             -                          1,088,093
  Accounts receivable (less allowance for doubtful
     accounts of $12,000)                                                     863,308                    1,256,639
  Inventories (Note 3)                                                      3,797,938                    3,288,417
  Due from parent                                                             903,796                    2,387,739
  Prepaid income taxes                                                         21,662                      153,617
  Prepaid expenses and other current assets                                   290,629                      450,420
  Deferred income tax asset (Note 7)                                          327,000                      215,000
                                                                         ------------                 ------------
  Total current assets                                                      6,628,310                    9,454,542
                                                                         ------------                 ------------

INVESTMENT IN MARKETABLE SECURITIES                                           -                            199,312

PROPERTY, PLANT AND EQUIPMENT, net
  of accumulated depreciation and amortization
  of $200,686 and $187,128, respectively                                      208,720                      256,217

INTANGIBLE ASSETS, net (Note 4)                                               460,517                      561,717
OTHER ASSETS                                                                  435,691                      503,550
                                                                         ------------                 ------------
                                                                          $ 7,733,238                  $10,975,338
                                                                         ============                 ============

               LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
 Accounts payable and accrued expenses                                    $    64,398                  $   127,478
                                                                         ------------                 ------------
 Total current liabilities                                                $    64,398                  $   127,478
                                                                         ------------                 ------------

LONG-TERM DEBT (Note 5)                                                       -                          3,000,000
DEFERRED INCOME TAX LIABILITY (Note 7)                                        -                             50,000
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Common stock, $.0001 par value;
     authorized 40,000,000 shares;
     1,350,000 issued and outstanding                                              135                         135
  Preferred stock, $.0001 par value;
    authorized 8,335,000 shares; 8,335,000
     issued and outstanding                                                       834                          834
  Additional paid-in capital                                                9,395,265                    9,395,265
  Unearned compensation                                                    (1,318,906)                  (1,535,095)
  Unrealized loss on marketable securities                                    -                             (1,050)
  Deficit                                                                    (408,488)                     (62,229)
                                                                          -----------                  -----------
                                                                            7,668,840                    7,797,860
                                                                          -----------                  -----------
                                                                          $ 7,733,238                  $10,975,338
                                                                          ===========                  ===========
</TABLE>

                                      - 1 -

<PAGE>

                              FUTUREBIOTICS, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                               Nine Months Ended                         Three Months Ended
                                                               -----------------                         ------------------
                                                                  August 31,                                 August 31,
                                                                  ----------                                 ----------
                                                         1998                    1997              1998                     1997
                                                         ----                    ----              ----                     ----
<S>                                                  <C>                    <C>                    <C>                 <C>        
NET SALES                                             $ 7,655,802          $ 8,753,561             $ 2,550,362         $ 2,725,500

COSTS AND EXPENSES:
   Cost of sales                                        4,521,730            4,049,656               1,490,601           1,439,666
   Selling, general and administrative                  3,581,925            5,405,311               1,110,728           1,686,659
                                                     ------------          -----------             -----------         -----------
                                                        8,103,655            9,454,967               2,601,329           3,126,325

OPERATING LOSS                                           (447,853)            (701,406)                 (50,967)          (400,825)

OTHER:
    Loan cost expense                                     -                     51,097                  -                    51,097
    Interest income                                       (51,202)            (111,906)                 (14,137)            (28,606)
    Interest expense                                      120,896              219,319                   22,320              97,745
    Other                                                  (9,288)            -                          (4,482)                -
                                                     ------------          -----------              -----------          ----------
                                                           60,406              158,510                    3,701             120,236
                                                     ------------          -----------              -----------          ----------
LOSS BEFORE PROVISION
   FOR INCOME TAXES                                      (508,259)            (859,916)                 (54,668)           (521,061)

INCOME TAX BENEFIT                                       (162,000)            (252,000)                 (27,500)           (122,000)
                                                     ------------           ----------              -----------          ----------

NET LOSS                                             $   (346,259)          $ (607,916)             $   (27,168)         $ (399,061)
                                                     ============           ==========              ===========          ==========

LOSS PER COMMON SHARE                                $       (.26)         $      (.45)             $      (.02)         $     (.30)
                                                     ------------          -----------             ------------          ----------

WEIGHTED AVERAGE NUMBER
    OF COMMON SHARES
    OUTSTANDING                                         1,350,000            1,350,000                1,350,000           1,350,000
                                                     ------------          -----------             ------------          ----------
</TABLE>

                                      - 2 -

<PAGE>

                              FUTUREBIOTICS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                    Nine Months Ended
                                                                                                    -----------------
                                                                                                       August 31,
                                                                                                       ----------
                                                                                              1998                   1997
                                                                                              ----                   ----
<S>                                                                                         <C>                <C>          
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                                  $   (346,259)      $   (607,916)
  Adjustments to reconcile net (loss) to net
     cash provided by/(used in) operating activities:
     Depreciation and amortization                                                               385,104          1,259,940
     Deferred income tax benefit                                                                (162,000)          (104,848)
     Loan cost expense                                                                             -                 51,097
     Loss on sale of equipment                                                                     4,525             -
     Changes in operating assets and liabilities:
        (Increase) decrease in assets:
        Accounts receivable                                                                      393,331            242,947
        Inventories                                                                             (509,521)        (1,374,511)
        Due to/from parent                                                                     1,483,943           (576,352)
        Prepaid income taxes                                                                     131,955            263,068
        Prepaid expenses and other current assets                                                159,791             29,466
        Other assets                                                                              67,859             38,801
       Increase (decrease) in liabilities:
        Accounts payable and accrued expenses                                                    (63,081)             2,874
                                                                                            ------------       ------------
       Total adjustments                                                                       1,891,906           (167,518)
                                                                                            ------------       ------------
       Net cash provided by/(used in) operating activities                                     1,545,647           (775,434)
                                                                                            ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Decrease in investments                                                                    1,288,455           1,328,380
   Purchase of property, plant and equipment                                                    (39,742)             (7,295)
   Disposal of property, plant and equipment                                                      -                   2,904
   Acquisition of intangible assets                                                               -                  (2,037)
   Proceeds from sale of equipment                                                               15,000              -
                                                                                            -----------        ------------
Net cash provided by investing activities                                                     1,263,713           1,321,952
                                                                                            -----------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from revolving credit line                                                            -              3,000,000
   Repayment of debt                                                                         (3,000,000)        (3,000,000)
                                                                                            -----------        -----------
   Net cash used in financing activities                                                     (3,000,000)             -
                                                                                            -----------        -----------

   Net (decrease)/increase in cash and cash equivalents                                        (190,640)           546,518
   Cash and cash equivalents at beginning of period                                             614,617            484,285
                                                                                            -----------        -----------

   Cash and cash equivalents at end of period                                               $   423,977        $ 1,030,803
                                                                                            ===========        ===========
</TABLE>

                                      - 3 -

<PAGE>

                              FUTUREBIOTICS, INC.
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                       NINE MONTHS ENDED AUGUST 31, 1998

1.       Basis of Presentation:

         The interim unaudited condensed financial statements furnished reflect
all adjustments which are, in the opinion of management, necessary to present
fairly its financial position as of August 31, 1998 and the results of
operations and statements of cash flows for the nine months ended August 31,
1998 and 1997. The balance sheet as of November 30, 1997 has been derived from
the audited balance sheet as of that date. This report should be read in
conjunction with the Company's annual report filed on Form 10-K for the fiscal
year ended November 30, 1997. The results of operations and cash flows for the
nine months ended August 31, 1998 are not necessarily indicative of the results
to be expected for the full year.

2.       Concentration of Credit Risk:

         Financial instruments which potentially expose the Company to
concentrations of credit risk, as defined by Statement of Accounting Standards
No. 105, include trade accounts receivable. Wholesale distributors of
nutritional supplements account for a substantial portion of trade receivables.
The risk associated with this concentration is limited due to the large number
of distributors and their geographic dispersion.

3.       Inventories:

         Inventories, consisting principally of finished goods, at August 31,
1998 have been estimated using the gross profit method.

4.       Intangible Assets:

         Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                                          Nine Months Ended                Year Ended
                                                                          -----------------                ----------
                                                                             August 31,                   November 30,
                                                                             ----------                   ------------
                                                                                1998                          1997
                                                                                ----                          ----
                                                                             (Unaudited)
<S>                                                                       <C>                             <C>
         Customer lists                                                      $   384,212                    $  384,212
         Covenants not to compete                                                845,000                       845,000
         Goodwill                                                                300,000                       300,000
         Other                                                                    25,000                        25,000
                                                                             -----------                    ----------
                                                                               1,554,212                     1,554,212
         Less accumulated amortization                                        (1,093,695)                     (992,495)
                                                                             -----------                    ----------

                                                                             $   460,517                    $  561,717
                                                                             ===========                    ========== 
</TABLE>

                                     - 4 -

<PAGE>

                              FUTUREBIOTICS, INC.
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                       NINE MONTHS ENDED AUGUST 31, 1998
                                  (Continued)

5.       Long-Term Debt:

         The Company and its parent maintain credit facilities with a bank
which provide for borrowings under a revolving credit agreement (the "Revolving
Agreement") and a term loan (the "Term Agreement").

         The Revolving Agreement which extends through September 2000, provides
for aggregate borrowings of up to $15,000,000 with a sublimit of $4,000,000 for
the Company and $11,000,000 for the parent. Borrowings under the Revolving
Agreement bear interest at the bank's prime rate or the Eurodollar rate plus
1.75%, at the Company's option.

         The Term Agreement provides for aggregate borrowings of up to
$8,500,000 for the Company and its parent on a combined basis.

         The Company and its parent are jointly and severally liable for the
unpaid balance of the credit facilities. The agreement contains various
covenants pertaining to the maintenance of certain financial ratio
restrictions, limitations on dividends, and restrictions on borrowings.

         The prime rate at August 31, 1998 was 8 1/2%.

6.       Stockholders' Equity:

         The Company has adopted Financial Accounting Standards Board ("FASB")
Statement No. 128, "Earnings Per Share." Loss per common share is computed by
dividing the net loss by the average number of common shares and common stock
equivalents outstanding during the period. Common stock equivalents are
excluded from the calculation as the effect is antidilutive. The loss per share
was retroactively restated to reflect FASB No. 128 for the nine and three
months ended August 31, 1997.

7.       Income Taxes:

         The tax effects of temporary differences that give rise to the net
deferred income tax asset (liability) are comprised of the following:

<TABLE>
<CAPTION>
                                                                   August 31, 1998                      November 30, 1997
                                                                   ---------------                      -----------------
                                                                     (Unaudited)

                                                                        Net                                  Net
                                                                     Deferred                             Deferred
                                                                    Income Tax                           Income Tax
                                                                 Asset (Liability)                    Asset (Liability)
                                                                 -----------------                    -----------------
<S>                                                              <C>                                  <C>
         Inventories                                                $  39,600                             $  39,600
         Property, plant and
           equipment                                                  (40,100)                              (32,900)
         Tax carryforwards                                            201,000                               349,600
         Unearned compensation                                       (163,100)                             (204,900)
         Other                                                         73,400                                 1,000
         Intangibles                                                  216,200                               187,600
         Valuation allowance                                           -                                   (175,000)
                                                                 ------------                           -----------
                                                                    $ 327,000                             $ 165,000
                                                                 ============                           ===========
</TABLE>

                                      - 5 -

<PAGE>

                              FUTUREBIOTICS, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         Net sales for the nine and three months ended August 31, 1998
approximated $7,656,000 and $2,550,000, respectively, as compared to $8,754,000
and $2,726,000 in the corresponding periods. Gross profit on these sales
approximated $3,134,000 (41% of sales) and $1,060,000 (42% of sales) for the
nine and three month periods ended August 31, 1998 as compared to $4,704,000
(54% of sales) and $1,286,000 (47% of sales) in the corresponding period. The
decrease in the gross profit percentage is attributable to changes being
implemented to the Company's price structure and a change in the mix of sales.

         Selling, general and administrative expenses approximated $3,582,000
and $1,111,000 for the nine and three months ended August 31, 1998,
respectively. As a percentage of sales, these amounts represent 47% and 44%
respectively, as compared to 62% and 62% in the corresponding period. The
decrease is primarily attributable to a decrease in promotional costs
associated with a marketing program which was discontinued.

         The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures. Software failures due to
processing errors potentially arising from calculations using the Year 2000
date are a known risk. The Company is addressing this risk to the availability
and integrity of financial systems and the reliability of operational systems.
The Company has engaged computer consultants and is establishing processes for
evaluating and managing the risk and cost associated with this problem. In the
opinion of management, the costs of addressing this problem will not materially
affect the financial position of the Company.

Liquidity and Capital Resources

         The Company had net working capital of approximately $6,564,000 at
August 31, 1998.

         The Company's statement of cash flows reflects cash provided by
operations of approximately $1,546,000, which reflects a net loss of
approximately ($346,000), decreases in accounts receivable ($393,000), due from
parent ($1,484,000), prepaid income taxes ($132,000), prepaid expenses and
other current assets ($160,000) and an adjustment for depreciation and
amortization ($385,000), offset by an increase in inventories ($509,000),
accounts payable and accrued expenses ($63,000) and an adjustment for deferred
income tax benefit ($162,000).

         Net cash provided by investing activities approximated $1,264,000
principally attributable to the sale and maturity of securities ($1,288,000),
proceeds from sale of property, plant and equipment ($15,000), net of
acquisition of property, plant and equipment ($40,000).

                                      - 6 -

<PAGE>

                              FUTUREBIOTICS, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)

         The statement also reflects net cash used in financing activities of
($3,000,000), representing repayments on the revolving credit line.

         The Company and its parent maintain credit facilities with a bank
which provide for borrowings under a revolving credit agreement (the "Revolving
Agreement") and a term loan (the "Term Agreement").

         The Revolving Agreement which expires in September 2000 provides for
aggregate borrowings of up to $15,000,000 with a sublimit of $4,000,000 for the
Company and $11,000,000 for the parent. Borrowings under the Revolving
Agreement bear interest at the bank's prime rate or Eurodollar rate plus 1.75%,
at the Company's option.

         The term agreement provides for aggregate borrowings of up to
$8,500,000 for the Company and its parent on a combined basis.

         The Company and its parent are jointly and severally liable for the
unpaid balance of the credit facilities. Borrowings are secured by the assets
of the Company and its parent.

         The credit facilities contain various covenants pertaining to the
maintenance of certain financial ratio restrictions, limitations on dividends,
and restrictions on borrowings.

         The Company expects to meet its cash requirements from operations,
current cash reserves, and existing financial agreements.

                                      - 7 -

<PAGE>

PART II - OTHER INFORMATION

         Item 1. - Legal Proceedings

         Reference is made to Item 3 in the Company's Form 10-K for the year
ended November 30, 1997.

                                      - 8 -

<PAGE>

                                   Signatures

         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.

                                           FUTUREBIOTICS, INC.

Dated: October 13, 1998                    By:   /Karine Hollander/
                                               ------------------------------
                                                 Karine Hollander
                                                 Chief Financial Officer

                                      - 9 -