UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 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 June 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  1-10581

                            BENTLEY PHARMACEUTICALS, INC.   
--------------------------------------------------------------------------------
              (Exact name of registrant as  specified in its charter)


           FLORIDA                                    No. 59-1513162
----------------------------------                 -----------------------------
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                      Identification No.)

4830 W. Kennedy Blvd., Suite 548, Tampa, FL               33609
---------------------------------------------       ----------------------------
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code:           (813) 286-4401
                                                         -----------------------

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 [ ]

The number of shares of the Registrant's  common stock  outstanding as of August
4, 1998 was 8,427,694.
<PAGE>


                          BENTLEY PHARMACEUTICALS, INC.
                          ----------------------------
                  FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998
                  ---------------------------------------------
                                      INDEX
                                      -----

<TABLE>
<CAPTION>


Part I. FINANCIAL INFORMATION                                                          PAGE
        ---------------------                                                          ----

<S>                                                                                    <C>                                   
        Item 1.  Consolidated Financial Statements:

                 Consolidated Balance Sheets as of June 30, 1998 (unaudited)
                 and December 31, 1997                                                     3

                 Consolidated Statements of Operations (unaudited) for the
                 three months ended June 30, 1998 and 1997, and the six months
                 ended June 30, 1998 and 1997                                              4

                 Consolidated Statement of Changes in Common Stockholders'
                 Equity (unaudited) for the six months ended June 30, 1998                 5

                 Consolidated Statements of Cash Flows (unaudited) for the six
                 months ended June 30, 1998 and 1997                                       6

                 Notes to Consolidated Financial Statements (unaudited)                    8


        Item 2.  Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                                      11


Part II. OTHER INFORMATION                                                                17
         -----------------



</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                          BENTLEY PHARMACEUTICALS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                                                   (unaudited)
(In thousands, except per share data)                                June 30,          December 31,
                                                                       1998               1997
                                                                    ---------         ------------
ASSETS
------

<S>                                                                 <C>            <C>                  
Current assets:
 Cash and cash equivalents                                             $9,471         $11,117           
 Receivables                                                            2,218           2,428           
 Inventories                                                              757             714           
 Prepaid expenses and other                                             1,244             750
                                                                      -------         -------         
                                                                                                        
  Total current assets                                                 13,690          15,009
                                                                      -------         -------           
                                                                                                        
Fixed assets, net                                                       2,849           2,918           
Drug licenses and related costs, net                                      928             691 
Other non-current assets, net                                           1,778           2,425         
                                                                      -------         -------  
                                                                      $19,245         $21,043  
                                                                      =======         =======

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
 Accounts payable                                                      $1,829          $1,493
 Accrued expenses                                                       1,848           1,723
 Short term borrowings                                                    496           1,140
 Current portion of long term debt                                          5               5     
                                                                      -------         -------                           
                                                                                        
  Total current liabilities                                            4,178            4,361
                                                                      -------         -------       
                                                                                      
Long term debt, net                                                    5,381            5,329              
                                                                      -------         -------               

Other non-current liabilities                                            299              110      
                                                                      -------         -------                  
                                                                                      
Commitments and contingencies

Redeemable preferred stock, $1.00 par value,
 authorized 2,000 shares:
  Series A, issued and outstanding, 60 shares                          2,406            2,338
                                                                      ------          -------
Common Stockholders' Equity:
 Common stock, $.02 par value, authorized 35,000 shares,
  issued and outstanding, 8,428 and 8,426 shares                         168              168
 Stock purchase warrants                                                 556              192
 Paid-in capital in excess of par value                               81,322           81,382
 Accumulated deficit                                                 (73,186)         (70,982)
 Cumulative foreign currency translation adjustment                   (1,879)          (1,855)
                                                                     -------          -------
                                                                       6,981            8,905
                                                                     -------          -------
                                                                     $19,245          $21,043
                                                                     =======          =======
</TABLE>


           The accompanying Notes to Consolidated Financial Statements
               are an integral part of these financial statements.
                                                        

                                        3
<PAGE>
         
                          BENTLEY PHARMACEUTICALS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)
<TABLE>
<CAPTION>


(In thousands, except per share data)                               For the Three                          For the Six
                                                                   Months Ended                           Months Ended
                                                                      June 30,                              June 30,
                                                                  --------------------                 ---------------
                                                                  1998              1997             1998              1997
                                                                  ----              ----             ----              ----

<S>                                                          <C>               <C>               <C>              <C>   
Sales                                                          $3,358            $4,309            $6,858           $8,387

Cost of sales                                                   1,385             2,440             2,895            4,728
                                                                -----             -----             -----            -----

 Gross margin                                                   1,973             1,869             3,963            3,659
                                                                -----             -----             -----            -----

Operating expenses:

 Selling, general and administrative                            2,171             2,076             4,095            3,980

 Research and development                                          32               110                65              176

 Depreciation and amortization                                     66                88               126              172

 Nonrecurring charge                                            1,176                -              1,176                -
                                                                -----             ------            -----            -----

  Total operating expenses                                      3,445             2,274             5,462            4,328
                                                                -----             -----             -----            -----

 Loss from operations                                          (1,472)             (405)           (1,499)            (669)

Other (income) expenses:

 Interest expense                                                 265               325               535              645

 Interest income                                                 (134)               (3)              (282)            (20)

 Loss on disposition of subsidiary                                  -               348                  -             591
                                                                    
 Other (income) expense, net                                        -                13                  -              29
                                                             --------         ---------           -------          -------
                                                                 
Loss before income taxes                                       (1,603)            (1,088)           (1,752)         (1,914)

Provision for income taxes                                        218                  -               452               -
                                                              -------          ---------          --------          ------

Net loss                                                       (1,821)            (1,088)           (2,204)         (1,914)

Other comprehensive (income) loss:

  Foreign currency translation (gains) losses                     (92)                 2                24             265     
                                                              -------          ---------          --------           -----

Comprehensive loss                                            ($1,729)           ($1,090)          ($2,228)        ($2,179)
                                                             ========          =========          ========         =======

Basic net loss per common share                                ($0.22)            ($0.33)           ($0.27)         ($0.59)
                                                             ========          =========          ========         =======

Weighted average common shares outstanding                      8,428              3,356             8,428           3,351
                                                             ========          =========          ========         =======

</TABLE>

           The accompanying Notes to Consolidated Financial Statements
               are an integral part of these financial statements.

                                        4
<PAGE>

                            
                          BENTLEY PHARMACEUTICALS, INC.
        CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
                                   (unaudited)
<TABLE>
<CAPTION>

(In thousands, except per share data)

                                                 $.02 Par Value    
                                                  Common Stock     Additional                       Other
                                                  -------------     Paid-In      Accumulated       Equity
                                             Shares       Amount    Capital        Deficit     Transactions        Total
                                             ------       ------    -------        -------     ------------        -----        


<S>                                        <C>        <C>         <C>            <C>             <C>           <C>
Balance at December 31, 1997                  8,426          $168       $81,382      ($70,982)      ($1,663)       $8,905

Exercise of stock options/warrants                2             -             8             -             -             8

Issuance of stock options/warrants                -             -             -             -           364           364

Accrual of dividends-preferred stock              -             -           (68)            -             -           (68)

Foreign currency translation                                
adjustment                                        -             -             -             -          (24)           (24)

Net loss                                          -             -             -        (2,204)           -         (2,204) 
                                              -----          ----       -------      --------      -------         ------

Balance at June 30, 1998                      8,428          $168       $81,322      ($73,186)     ($1,323)        $6,981
                                              =====          ====       =======      =========     ========        ======

</TABLE>


          The accompanying Notes to Consolidated Financial Statements
               are an integral part of these financial statements


                                        5
<PAGE>

                             
                          BENTLEY PHARMACEUTICALS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
                                                                       
<TABLE>
<CAPTION>

                                                                                                                For the Six
                                                                                                                Months Ended
                                                                                                                  June 30,
                                                                                                               --------------
(In thousands)                                                                                                 1998      1997
                                                                                                               ----      ----
<S>                                                                                                   <C>           <C>
Cash flows from operating activities:            
 Net loss                                                                                                 ($2,204)      ($1,914)
 Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization                                                                              126           172
   Nonrecurring charges                                                                                       158             -
   Loss on disposition of subsidiary                                                                            -           591
   Other non-cash items                                                                                       211           155
   (Increase) decrease in assets and increase (decrease) in liabilities:
   Receivables                                                                                                199           589
   Inventories                                                                                                (48)           88
   Prepaid expenses and other current assets                                                                 (368)         (414)
   Other assets                                                                                               105           117
   Accounts payable and accrued expenses                                                                      474          (509)
   Other liabilities                                                                                           77           (42)
   Capitalized acquisition costs                                                                              448             -
                                                                                                            -----         -----
          Net cash used in operating activities                                                              (822)       (1,167)
                                                                                                            -----         -----
                                                                                                    

Cash flows from investing activities:
 Acquisition of Spanish drug licenses                                                                       (138)          (40)
 (Additions to) disposals of fixed assets, net                                                               (24)            7
 Proceeds from sale of investments                                                                             -           166      
 Receivable related to disposition of subsidiary                                                               -        (3,093)
                                                                                                           -----         -----      
          Net cash used in investing activities                                                            (162)        (2,960)
                                                                                                           -----         ----- 

</TABLE>


           The accompanying Notes to Consolidated Financial Statements
               are an integral part of these financial statements.

                                        6


<PAGE>
                          BENTLEY PHARMACEUTICALS, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)
                                   (unaudited)
<TABLE>
<CAPTION>
(In thousands)                                                                                                   For the Six
                                                                                                                Months Ended
                                                                                                                   June 30,
                                                                                                                ------------

                                                                                                            1998             1997
                                                                                                            ----             ----
<S>                                                                                                      <C>             <C>       
Cash flows from financing activities:
 Net (decrease) increase in short term borrowings                                                          ($641)          $498
 Proceeds from exercise of stock options/warrants, net                                                         8            251
 Payments on capital leases                                                                                   (2)            (2)
                                                                                                          ------           ----

         Net cash (used in) provided by financing activities                                                (635)           747
                                                                                                          ------           ----

Effect of exchange rate changes on cash                                                                      (27)          (536)
                                                                                                          ------           ----

Net decrease in cash and cash equivalents                                                                 (1,646)       (3,916)

Cash and cash equivalents at beginning of period                                                          11,117         4,425
                                                                                                         -------         -----

Cash and cash equivalents at end of period                                                                $9,471          $509
                                                                                                          ======         =====



SUPPLEMENTAL  DISCLOSURES  OF CASH FLOW  INFORMATION  
The  Registrant  paid cash during the period for (in thousands):

 Interest                                                                                                   $460          $477
                                                                                                          ======         =====
 Taxes                                                                                                      $406           $12
                                                                                                          ======         =====



SUPPLEMENTAL DISCOUSURES OF NON-CASH FINANCING ACTIVITIES
The  Registrant  has issued Common Stock in exchange for services as follows (in
thousands):

 Shares issued                                                                                                 -             1
                                                                                                           =====      ========
 Amount                                                                                                        -         $   2
                                                                                                           =====      ========
</TABLE>

The  Registrant  issued  Warrants  during the six months  ended June 30, 1998 to
purchase 425,000 shares of Common Stock in exchange for services.



           The accompanying Notes to Consolidated Financial Statements
               are an integral part of these financial statements.

                                        7

<PAGE>



                          BENTLEY PHARMACEUTICALS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

BASIS OF CONSOLIDATED FINANCIAL STATEMENTS:

The  consolidated  financial  statements of Bentley  Pharmaceuticals,  Inc. (the
"Registrant"),  at June 30, 1998 and 1997 included herein, have been prepared by
the  Registrant,  without  audit,  pursuant to the rules and  regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with Generally
Accepted  Accounting  Principles have been condensed or omitted. It is suggested
that these  consolidated  financial  statements be read in conjunction  with the
summary  of  significant   accounting  policies  and  the  audited  consolidated
financial  statements  and notes  thereto  included in the  Registrant's  Annual
Report on Form 10-K for the year ended December 31, 1997.

The consolidated financial statements include the accounts of the Registrant and
its wholly owned  subsidiaries:  Bentley  Healthcare  Corporation  (f/k/a Belmac
Healthcare  Corporation) and its wholly owned subsidiary - Belmac Hygiene, Inc.,
Belmac Health Corp., B.O.G.  International  Finance, Inc., Belmac Jamaica, Ltd.,
Bentley  Pharma,  Inc.,  Pharma de  Espana,  Inc.,  Laboratorios  Belmac,  S.A.,
Chimos/LBF  S.A. until its divestiture in June 1997, and Belmac  Holdings,  Inc.
and its wholly owned subsidiary - Belmac A.I., Inc. All significant intercompany
balances have been  eliminated  in  consolidation.  The  financial  position and
results of  operations of the  Registrant's  foreign  subsidiaries  are measured
using local  currency as the  functional  currency.  Assets and  liabilities  of
foreign subsidiaries are translated at the rate of exchange in effect at the end
of the period. Revenues and expenses are translated at the average exchange rate
for the period. Foreign currency translation gains and losses not impacting cash
flows are credited to or charged against Common  Stockholders'  Equity.  Foreign
currency  translation  gains  and  losses  arising  from cash  transactions  are
credited to or charged against current earnings.

The Registrant  divested its French  subsidiary,  Chimos/LBF,  S.A. (referred to
herein as Chimos/LBF), in June 1997 for approximately $3,650,000. An escrow fund
in the  amount of  approximately  $350,000,  representing  the  balance  due the
Registrant,   has  been  established  for  certain  contingent   obligations  or
liabilities. In the opinion of management, the resolution of these contingencies
will not have a  material  effect  on the  Registrant's  financial  position  or
results of operations.  The  Registrant's  operations in France consisted of the
low  margin  brokerage  of  fine  chemicals,   sourcing  of  raw  materials  and
pharmaceutical  intermediaries  and the  distribution of biotechnology or orphan
drugs.

The Registrant's  previously  announced  negotiations whereby the Registrant was
considering the purchase of domestic and international  rights to a portfolio of
branded drugs and a  manufacturing  facility  located in Mequon,  Wisconsin from
Schwarz Pharma and whereby  Schwarz  Pharma was to acquire  control of Bentley's
Spanish  subsidiary,  Laboratorios  Belmac  came to an end in May  1998  without
consummation of an agreement. Consequently, the Registrant has recorded a charge
during the quarter  ended June 30,  1998 for all  previously 

                                       8

<PAGE>

capitalized  costs  specific to this and other  related  potential  acquisitions
totaling approximately $1,176,000, including $158,000 of non-cash items.

In the opinion of management,  the accompanying unaudited consolidated financial
statements  for the period ended June 30, 1998 and 1997 are presented on a basis
consistent with the audited consolidated financial statements for the year ended
December  31,  1997 and  contain  all  adjustments,  consisting  only of  normal
recurring  adjustments,  necessary to present fairly the Registrant's  financial
position  as of June 30,  1998 and the  results of its  operations  and its cash
flows for the six months ended June 30, 1998 and 1997. The results of operations
for the six months ended June 30, 1998 should not be  considered  indicative  of
the results to be expected for the year.

CASH AND CASH EQUIVALENTS:

The Registrant  considers all highly liquid investments with original maturities
of three months or less when  purchased to be cash  equivalents  for purposes of
the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows.

INVENTORIES:

Inventories are stated at the lower of cost or market,  cost being determined on
the first in, first out ("FIFO")  method and are  comprised of the following (in
thousands):

                                             June 30, 1998     December 31, 1997
                                             -------------     -----------------
Raw Materials                                          $349         $338  
Finished goods                                          517          501  
                                                       ----          ---  
                                                        866          839  
Less: Allowance for slow moving or obsolete inventory  (109)        (125) 
                                                       -----        ----- 
                                                       $757         $714   
                                                       =====        =====  
                                                                     
PROVISION FOR INCOME TAXES:

The  Registrant  has  utilized  all  of  its  Spanish  tax  net  operating  loss
carryforwards. As a result, the Registrant recorded a provision for income taxes
totaling  $452,000  for the six months  ended  June 30,  1998 as a result of its
taxable  income in Spain.  This  amount  differs  from the  amount  computed  by
applying the U.S. federal income tax rate of 34% to pretax income as a result of
certain nondeductible  expenses in Spain. The Registrant paid $126,000 in income
taxes  during the six months  ended June 30, 1998  related to taxable  income in
Spain and $280,000 in U.S. income taxes related to amounts accrued at December
31, 1997.

BASIC NET LOSS PER COMMON SHARE:

Basic net loss per common  share is presented in  accordance  with  Statement of
Financial  Accounting Standards No. 128, "Earnings per Share" (FAS 128). FAS 128
provides for new accounting  principles  for use in the  calculation of earnings
per share and is effective for financial  statements for both interim and annual
periods ended after December 15, 1997. The Registrant has recalculated


                                       9
<PAGE>

the basic net loss per common share for all periods  presented to give effect to
FAS 128.

Basic  net loss per  common  share is based on the  weighted  average  number of
shares of common stock outstanding during each period adjusted for actual shares
issued during the period. Diluted loss per common share is not presented,  as it
is antidilutive. The effect of the Registrant's outstanding stock options, stock
warrants and  convertible  debentures  were  considered  in the diluted loss per
share calculation.


                                       10
<PAGE>


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

RESULTS OF OPERATIONS:
---------------------

Three Months Ended June 30, 1998 versus Three Months Ended June 30, 1997
------------------------------------------------------------------------

The Registrant  reported  revenues of $3,358,000 and a net loss of $1,821,000 or
$.22 per common  share for the three  months  ended June 30,  1998  compared  to
revenues of $4,309,000 and a net loss of $1,088,000 or $.33 per common share for
the same  period in the prior  year.  Excluding  the effect of the  nonrecurring
charge of  $1,176,000,  representing  the  write-off of  previously  capitalized
acquisition  costs,  the  Registrant's net loss would have been $645,000 or $.08
per common share for the three months ended June 30, 1998.

The 22%  decrease  in  revenues  is  primarily  attributable  to the  June  1997
divestiture of the Registrant's French subsidiary,  Chimos/LBF,  which generated
approximately  $803,000 in revenues  during the quarter ended June 30, 1997. The
Registrant's Spanish subsidiary,  Laboratorios Belmac S.A., reported an increase
in revenues of 2% in local currency;  however,  fluctuations in foreign currency
exchange  rates  resulted in a 3% decrease to $3,308,000 in U.S.  dollars in the
quarter ended June 30, 1998 compared to the same period in the prior year.

Gross  margins for the quarter  ended June 30, 1998  improved to 59% compared to
43% in the  comparable  period of the prior year,  primarily as a result of: (i)
improvement in  Laboratorios  Belmac's gross margin from 49% to 59% and (ii) the
low gross margins associated with Chimos/LBF, which was divested in June 1997.

Selling,  general  and  administrative  expenses  increased  $95,000,  or  5% to
$2,171,000  for the three months ended June 30, 1998 compared to $2,076,000  for
the same period in the prior year. A significant  portion of these  expenses are
marketing and selling costs,  which are necessary for the Registrant's  plans to
increase sales and market share in Spain. To the extent practical,  however, the
Registrant intends to continue its efforts to control general and administrative
expenses as part of its  austerity  program in its effort to reach and  maintain
profitability.

Research and  development  expenses  were $32,000 for the quarter ended June 30,
1998  compared  to $110,000  for the same period of the prior year.  The minimal
expenditures in research and  development  reflects the  Registrant's  continued
de-emphasis of basic research and redirection of its resources to  developmental
expenses  necessary  for expansion of its  portfolio of marketed  products.  The
Registrant  intends to continue to carefully manage its research and development
expenditures in the future.

Included in  operating  expenses  for the three  months ended June 30, 1998 is a
nonrecurring charge of $1,176,000,  which represents the previously  capitalized
costs specific to the abandoned  Schwarz Pharma and other related  acquisitions.
These  costs  were  written  off  


                                       11
<PAGE>

during the second quarter of 1998 after negotiations ended during May of 1998.

Interest  expense  totaled  $265,000  for the three  months  ended June 30, 1998
compared to $325,000 for the same period of the prior year.  Interest income was
$134,000 for the three  months  ended June 30, 1998,  compared to $3,000 for the
same period of the prior year. The increase was with respect to interest  earned
on higher  short-term  interest  bearing  investment  balances during the second
quarter  of  1998,   which  resulted  from  the  proceeds  of  the  exercise  of
approximately 4,900,000 Class A Warrants during the fourth quarter of 1997. As a
result of the June 1997 sale of Chimos/LBF,  the Registrant recorded a provision
for  loss on  disposition  of  subsidiary,  which  totaled  $348,000,  including
realized exchange loss of $143,000, and a loss of $205,000 in the second quarter
of 1997. The Registrant  recorded a provision for income taxes totaling $218,000
for the three months ended June 30, 1998 as a result of taxable income earned in
Spain.

The  Registrant  reported a loss from  operations of $1,472,000  for the quarter
ended June 30,  1998  compared to $405,000 in the same period of the prior year,
primarily due to the 1998  nonrecurring  charge of $1,176,000  representing  the
write-off of previously  capitalized  costs  specific to the  abandoned  Schwarz
Pharma and other related acquisitions.  Excluding the effect of the nonrecurring
charge,  the  Registrant's  loss from operations for the three months ended June
30, 1998 would have been $296,000. The effect of combining  non-operating items,
primarily  interest  expense  of  $265,000,  interest  income  of  $134,000  and
provision for income taxes of $218,000 resulted in a net loss of $1,821,000,  or
$.22 per common share for the quarter  ended June 30, 1998,  compared to the net
loss in the  comparable  period of the prior year,  of  $1,088,000,  or $.33 per
common share.  Excluding the nonrecurring  charge,  the net loss would have been
$645,000 or $.08 per common share for the three months ended June 30, 1998.

Six Months Ended June 30, 1998 versus Six Months Ended June 30, 1997
--------------------------------------------------------------------

The Registrant  reported  revenues of $6,858,000 and a net loss of $2,204,000 or
$.27 per  common  share for the six  months  ended  June 30,  1998  compared  to
revenues of $8,387,000 and a net loss of $1,914,000 or $.59 per common share for
the same  period in the prior  year.  Excluding  the effect of the  nonrecurring
charge of  $1,176,000,  representing  the  write-off of  previously  capitalized
acquisition  costs, the Registrant's net loss would have been $1,028,000 or $.13
per common share for the six months ended June 30, 1998.

The 18%  decrease  in  revenues  is  primarily  attributable  to the  June  1997
divestiture of the Registrant's French subsidiary,  Chimos/LBF,  which generated
approximately  $1,898,000 in revenues during the six months ended June 30, 1997.
The  Registrant's  Spanish  subsidiary,  Laboratorios  Belmac S.A.,  reported an
increase in revenues of 15% in local  currency in the six months  ended June 30,
1998  compared to the same period in the prior year;  however,  fluctuations  in
foreign  currency  exchange rates reduced the increase to 7% or $6,763,000  when
expressed in U.S. dollars.

Gross margins for the six months ended June 30, 1998 improved to 58% compared to
gross margins of 44% in the comparable period of the prior year,  primarily as a
result of: (i)

                                       12
<PAGE>

improvement in  Laboratorios  Belmac's gross margin from 51% to 58% and (ii) the
low gross margins associated with Chimos/LBF, which was divested in June 1997.

Selling,  general and  administrative  expenses  increased  by $115,000 or 3% to
$4,095,000 for the six months ended June 30, 1998 compared to $3,980,000 for the
same period in the prior  year.  A  significant  portion of these  expenses  are
marketing and selling costs,  which are necessary for the Registrant's  plans to
increase sales and market share in Spain. To the extent practical,  however, the
Registrant intends to continue its efforts to control general and administrative
expenses as part of its  austerity  program in its effort to reach and  maintain
profitability.

Research and development expenses were $65,000 for the six months ended June 30,
1998  compared  to $176,000  for the same period of the prior year.  The minimal
expenditures  in research and  development  reflect the  Registrant's  continued
de-emphasis of basic research and redirection of its resources to  developmental
expenses  necessary  for expansion of its  portfolio of marketed  products.  The
Registrant  intends to continue to carefully manage its research and development
expenditures.

Included  in  operating  expenses  for the six months  ended June 30,  1998 is a
nonrecurring charge of $1,176,000,  which represents the previously  capitalized
costs specific to the abandoned  Schwarz Pharma and other related  acquisitions.
These  costs  were  written  off  during  the  second   quarter  of  1998  after
negotiations ended during May of 1998.

Interest  expense  totaled  $535,000  for the six  months  ended  June 30,  1998
compared to $645,000 for the same period of the prior year.  Interest income was
$282,000 for the six months ended June 30, 1998 compared to $20,000 for the same
period of the prior year.  The increase  was with respect to interest  earned on
higher  short-term  interest bearing  investment  balances during the six months
ended June 30,  1998,  which  resulted  from the  proceeds  of the  exercise  of
approximately 4,900,000 Class A Warrants during the fourth quarter of 1997. As a
result of the June 1997 sale of Chimos/LBF,  the Registrant recorded a provision
for  loss on  disposition  of  subsidiary,  which  totaled  $591,000,  including
realized exchange loss of $386,000, and a loss of $205,000 during the six months
ended June 30,  1997.  The  Registrant  recorded a  provision  for income  taxes
totaling  $452,000 for the six months ended June 30, 1998 as a result of taxable
income earned in Spain.

The Registrant  reported a loss from operations of $1,499,000 for the six months
ended June 30,  1998  compared to $669,000 in the same period of the prior year,
primarily due to the 1998  nonrecurring  charge of $1,176,000  representing  the
write-off of previously  capitalized  costs  specific to the Schwarz  Pharma and
other related acquisitions. Excluding the effect of the nonrecurring charge, the
Registrant's  loss from operations for the six months ending June 30, 1998 would
have been  $323,000.  The effect of  combining  non-operating  items,  primarily
interest  expense of $535,000,  interest  income of $282,000 and  provision  for
income  taxes of  $452,000  resulted  in a net loss of  $2,204,000,  or $.27 per
common share for the six months ended June 30, 1998, compared to the net loss in
the  comparable  period of the prior  year,  of  $1,914,000,  or $.59 per common
share.  Excluding  the  nonrecurring  charge,  the  net  loss  would  have  been
$1,028,000 or $.13 per common share for the six months ended June 30, 1998.


                                       13
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES:
-------------------------------

Total assets  decreased from  $21,043,000 at December 31, 1997 to $19,245,000 at
June 30, 1998,  while Common  Stockholders'  Equity decreased from $8,905,000 at
December  31,  1997 to  $6,981,000  at June 30,  1998.  The  decrease  in Common
Stockholders'  Equity reflects primarily the loss incurred by the Registrant for
the six months ended June 30, 1998.

The Registrant's working capital decreased from $10,648,000 at December 31, 1997
to  $9,512,000  at June  30,  1998,  primarily  as a  result  of the  loss  from
operations incurred by the Registrant during the period.

Cash and cash  equivalents  decreased  from  $11,117,000 at December 31, 1997 to
$9,471,000  at June 30, 1998,  primarily as a result of using cash for operating
activities  (including costs associated with the abandoned acquisition attempt),
repayment of short-term borrowings during the period and the acquisition of drug
licenses in Spain.  Included in cash and cash  equivalents  at June 30, 1998 are
approximately  $9,109,000  of  short-term  investments  considered  to  be  cash
equivalents.

Accounts receivable decreased from $2,428,000 at December 31, 1997 to $2,218,000
at June 30, 1998 as a result of collection of  receivables.  The  Registrant has
not experienced any material delinquent accounts. Inventories increased slightly
to $757,000 at June 30, 1998 compared to $714,000 at December 31, 1997.  Prepaid
expenses and other current  assets  increased from $750,000 at December 31, 1997
to  $1,244,000  at June 30,  1998,  primarily as the result of issuance of stock
purchase  warrants and prepayment of marketing costs in Spain.  The value of the
warrants  are  being  amortized  over the life of the  underlying  contract  for
services.

Although the combined total of accounts payable and accrued  expenses  increased
from  $3,216,000 at December 31, 1997 to $3,677,000 at June 30, 1998,  primarily
as a result of the costs  incurred  relating  to the  abandoned  Schwarz  Pharma
acquisition,  short-term  borrowings  decreased from  $1,140,000 at December 31,
1997 to $496,000 at June 30, 1998, as a result of lower outstanding  balances on
lines of credit  used for  operating  purposes in Spain,  resulting  in 4% lower
total current liabilities at June 30, 1998 than at December 31, 1997.

Fixed assets,  net decreased from  $2,918,000 at December 31, 1997 to $2,849,000
at June 30, 1998, due primarily to recurring depreciation charges.

Drug licenses and related  costs,  net  increased  from $691,000 at December 31,
1997 to  $928,000  at June  30,  1998,  primarily  due to the  purchase  of drug
licenses in Spain, offset by recurring amortization charges.

Other  non-current  assets  decreased  from  $2,425,000  at December 31, 1997 to
$1,778,000  at June 30,  1998,  primarily  due to the  write-off  of  previously
capitalized acquisition costs specific to the abandoned Schwarz Pharma and other
related acquisitions and recurring amortization charges.

                                       14
<PAGE>


Long term debt increased  from  $5,329,000 at December 31, 1997 to $5,381,000 at
June 30, 1998, due primarily to accretion  recorded on the Debentures  issued in
the Registrant's  February 1996 public offering.  Other non-current  liabilities
increased  from  $110,000  at December  31,  1997 to $299,000 at June 30,  1998,
primarily  as a result of  recording an  obligation  to issue  62,000  shares of
Common Stock to a consulting firm for services rendered.

Investing activities, primarily the purchase of drug licenses in Spain, used net
cash  of  $162,000  during  the  six  months  ended  June  30,  1998.  Financing
activities,  primarily  repayment of short-term  borrowings,  for the six months
ended June 30, 1998  required  net cash of  $635,000  and  operating  activities
including the write off of  pre-acquisition  costs for the six months ended June
30, 1998 used net cash of $822,000.

A substantial amount of the Registrant's  business is conducted in Europe and is
therefore affected by the extent to which there are fluctuations in the dollar's
value against other currencies.  The effect of foreign currency  fluctuations on
long  lived  assets for the six months  ended  June 30,  1998 was a decrease  of
$24,000 and the cumulative  historical  effect was a decrease of $1,879,000,  as
reflected in the  Registrant's  Consolidated  Balance Sheets in the "Liabilities
and   Stockholders'   Equity"  section.   Although   exchange  rates  fluctuated
significantly  in recent years,  the Registrant does not believe that the effect
of foreign  currency  fluctuation  is  material to the  Registrant's  results of
operations as the expenses related to much of the Registrant's  foreign currency
revenues are in the same currency as such revenues.  However, the carrying value
of assets and reported  values can be  materially  impacted by foreign  currency
translation.  The Registrant relies primarily upon financing  activities to fund
the  operations of the  Registrant in the United  States.  In the event that the
Registrant is required to fund United States operations or cash needs with funds
generated  in Spain,  currency  rate  fluctuations  in the  future  could have a
significant  impact  on the  Registrant.  However,  at  the  present  time,  the
Registrant  does not  anticipate  altering its business  plans and  practices to
compensate for future currency fluctuations.

Given the  Registrant's  current  liquidity  and  significant  cash balances and
considering its future strategic  plans,  the Registrant  should have sufficient
liquidity to fund operations and further its immediate strategic objectives. The
Registrant,  however, continues to explore alternative sources for financing its
business. In appropriate situations,  that will be strategically determined, the
Registrant  may  seek  financial   assistance  from  other  sources,   including
contribution  by others to joint ventures and other  collaborative  or licensing
arrangements  for the  development,  testing,  manufacturing  and  marketing  of
products.

The  Registrant  utilizes  software  and  related  technologies  throughout  its
business  that will be  affected by the "Year 2000  problem"  which is common to
most businesses,  and concerns the inability of information  systems,  primarily
computer software programs,  to recognize and process date sensitive information
properly as the year 2000  approaches.  An internal study is currently under way
to determine the full scope and related costs of the Year 2000 problem to ensure
that the  Registrant's  systems continue to meet its internal needs and those of
its customers.  The Registrant  currently  believes it will be able to modify or
replace its  affected  systems in time to minimize  any  detrimental  effects on
operations.

                                       15
<PAGE>


CAUTIONARY  STATEMENTS  FOR  PURPOSES  OF THE "SAFE  HARBOR"  PROVISIONS  OF THE
--------------------------------------------------------------------------------
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
------------------------------------------------

The  statements  contained in this  Quarterly  Report on Form 10-Q which are not
historical  facts contain  forward  looking  information  with respect to plans,
projections  or future  performance of the  Registrant,  the occurrence of which
involve certain risks and uncertainties that could cause the Registrant's actual
results to differ  materially from those expected by the  Registrant,  including
the  history of  operating  losses;  uncertainty  of future  financial  results;
possible  negative cash flow from  operating  activities;  additional  financing
requirements; no assurance of successful and timely development of new products;
risks  inherent  in   pharmaceutical   development;   dependence  on  regulatory
approvals;    uncertainty   of   pharmaceutical    pricing   or   profitability;
unpredictability of patent protection;  rapid technological change; competition;
and other uncertainties  detailed in the Registrant's  Registration Statement on
Form  S-3  (SEC  Commission  file  No.  333-28593)  declared  effective  by  the
Securities and Exchange Commission on June 10, 1997 and any amendments thereto.

                                       16

<PAGE>


PART II.          OTHER INFORMATION
                  -----------------

Item 1.   Legal Proceedings
          -----------------

On June 24, 1998, the Circuit Court of the Thirteenth Judicial Circuit, State of
Florida,  Hillsborough  County Civil Division formally dismissed all claims that
had been asserted  against the  Registrant by Michael M.  Harshbarger,  a former
member of the Registrant's Board of Directors and its former President and Chief
Executive Officer. The Circuit Court Judge ordered Harshbarger's  pleadings,  in
which he was seeking alleged monetary damages in excess of $1,400,000,  stricken
after Harshbarger  failed to appear at a court ordered  mediation  conference on
May 14, 1998 and failed to appear at a court ordered Case Management  Conference
on May 27,  1998.  Harshbarger  had also failed to appear at his  deposition  in
January  1998.  Harshbarger  originally  filed suit in  November  1993  alleging
wrongful  termination.  The Registrant has always viewed Harshbarger's claims as
meritless.

The  Judge's  order also set this matter for trial on August 24 through 26, 1998
for the purpose of trying the Registrant's  counterclaims  against  Harshbarger,
which include charges of wrongful  conversion and civil theft, fraud and deceit,
and breach of contract  and seeking the return of  corporate  assets  removed by
Harshbarger as well as for restitution  related to expenses of a personal nature
that Harshbarger charged to the Registrant's  accounts. The Registrant's amended
counterclaim   includes   breach  of  fiduciary  duty  and  seeks  damages  from
Harshbarger in excess of $1,000,000.

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

The Annual Meeting of  Stockholders  of the Registrant was held on July 29, 1998
for the  purpose of electing  three  directors.  Proxies  for the  meeting  were
solicited pursuant to Regulation 14D of the Securities  Exchange Act of 1934, as
amended, and there was no solicitation in opposition. The following members were
elected to the Registrant's Board of Directors.

Nominee                  Term Expiring    Shares Voted For  Shares Voted Against
-------                  -------------    ----------------  --------------------

Charles L. Bolling               2001           8,035,911            50,931
Robert J. Gyurik                 2001           8,035,911            50,931
Michael McGovern, J.D., C.P.A.   2000           8,035,911            50,931

Directors whose terms of office continued after the meeting are as follows:

Name                                                 Term Expiring
----                                                 -------------

James R. Murphy                                          1999
Robert M. Stote                                          1999
Michael D. Price                                         2000


                                       17
<PAGE>


Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------

          (a)Exhibits:

                   27.1 Financial Data Schedule

          (b)Reports on Form 8-K filed during the quarter ended June 30, 1998:

                   None.

          The  Registrant  has not filed any reports on Form 8-K  subsequent  to
June 30, 1998.

All  other  items  required  in Part II have  been  previously  filed or are not
applicable for the quarter ended June 30, 1998.


                                       18
<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.





                                        BENTLEY PHARMACEUTICALS, INC.
                                        ------------------------------------
                                        Registrant





August 11, 1998                By:      /s/ James R. Murphy
                                        -------------------
                                        James R. Murphy
                                        Chairman, President and Chief Executive 
                                        Officer (principal executive officer)




August 11, 1998                By:      /s/ Michael D. Price
                                        --------------------
                                        Michael D. Price
                                        Vice President, Chief Financial Officer,
                                        Treasurer and Secretary (principal 
                                        financial and accounting officer