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, 1997

                                       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
14, 1997 was 3,448,195.


<PAGE>




                          BENTLEY PHARMACEUTICALS, INC.
                  FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
                                      INDEX



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


         Item 1.   Consolidated Financial Statements:

                   Consolidated Balance Sheets as of June 30, 1997
                     (unaudited) and December 31, 1996                        3

                   Consolidated Statements of Operations (unaudited)
                     for the three months ended June 30, 1997 and 1996,
                     and the six months ended June 30, 1997 and 1996          4

                   Consolidated Statement of Changes in Common
                     Stockholders' Equity (unaudited) for the
                     six months ended June 30, 1997                           5

                   Consolidated Statements of Cash Flows
                     (unaudited) for the six months ended
                     June 30, 1997 and 1996                                   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                                                   18
         -----------------


                                        2

<PAGE>

                          BENTLEY PHARMACEUTICALS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                                         (unaudited)
(In thousands, except per share data)                      June 30, December 31,
                                                             1997        1996
                                                           --------    --------
   ASSETS

Current assets:
 Cash and cash equivalents                                 $    509    $  4,425
 Investments available for sale                                --           166
 Receivables                                                  5,690       3,632
 Inventories                                                    764         945
 Prepaid expenses and other                                     899         644
                                                           --------    --------
  Total current assets                                        7,862       9,812
                                                           --------    --------

Fixed assets, net                                             3,033       3,544
Drug licenses and related costs, net                            761       1,475
Other non-current assets, net                                 1,711       1,727
                                                           --------    --------
                                                           $ 13,367    $ 16,558
                                                           ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

 Accounts payable                                          $  2,181    $  2,998
 Accrued expenses                                             1,135       1,530
 Short term borrowings                                        1,330       1,014
 Current portion of long term debt                                5           5
                                                           --------    --------
  Total current liabilities                                   4,651       5,547
                                                           --------    --------

Long term debt, net                                           5,258       5,164
                                                           --------    --------

Other non-current liabilities                                   272         349
                                                           --------    --------

Commitments and contingencies

Redeemable preferred stock, $1.00 par value,
 authorized 2,000 shares:
 Series A, issued and outstanding, 60 shares                  2,271       2,203
                                                           --------    --------
Common Stockholders' Equity:

 Common stock, $.02 par value, authorized 35,000 shares
  issued and outstanding, 3,448 and 3,345 shares                 69          67

 Stock purchase warrants (to purchase 8,228 and 8,304
  shares of common stock)                                       285         435

 Paid-in capital in excess of par value                      71,479      71,146
 Stock subscriptions receivable                                (105)       (105)

 Accumulated deficit                                        (69,081)    (67,167)

 Cumulative foreign currency translation adjustment          (1,732)     (1,081)
                                                           --------    --------
                                                                915       3,295
                                                           --------    --------
                                                           $ 13,367    $ 16,558
                                                           ========    ========

                     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>
                                                     For the Three             For the Six
(in thousands, except per share data)                 Months Ended             Months Ended
                                                        June 30,                 June 30,
                                                  --------------------    --------------------
                                                    1997        1996        1997        1996
                                                  --------    --------    --------    --------
<S>                                               <C>         <C>         <C>         <C>     
Sales                                             $  4,309    $  4,678    $  8,387    $ 14,376

Cost of sales                                        2,440       2,894       4,728      10,530
                                                  --------    --------    --------    --------

 Gross margin                                        1,869       1,784       3,659       3,846
                                                  --------    --------    --------    --------

Operating expenses:

 Selling, general and administrative                 2,076       1,995       3,980       3,895

 Research and development                              110           8         176          26

 Depreciation and amoritization                         88         119         172         253
                                                  --------    --------    --------    --------

  Total operating expenses                           2,274       2,122       4,328       4,174
                                                  --------    --------    --------    --------

Loss from operations                                  (405)       (338)       (669)       (328)

Other (income) expenses:

 Interest expense                                      325         323         645         566

 Interest income                                        (3)        (36)        (20)        (45)

Loss on disposition of subsidiary                      348        --           591        --

 Other (income) expense, net                            13          71          29          80
                                                  --------    --------    --------    --------

Loss before extraordinary item                      (1,088)       (696)     (1,914)       (929)

Extradordinary item-extinguishment of debt            --          --          --           446
                                                  --------    --------    --------    --------

Net loss                                          ($ 1,088)   ($   696)   ($ 1,914)   ($ 1,375)
                                                  ========    ========    ========    ========

Loss per common share before extraordinary item   ($   .33)   ($   .22)   ($   .59)   ($   .30)

Extraordinary item-extinguishment of debt             --          --          --          (.13)

Net loss per common share                         ($   .33)   ($  0.22)       (.59)   ($  0.43)
                                                  ========    ========    ========    ========

Weighted average common shares outstanding           3,356       3,331       3,351       3,331
                                                  ========    ========    ========    ========
</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)

(In thousands, except per share data)
<TABLE>
<CAPTION>
                                             $.02 Par Value     
                                              Common Stock      Additional                 Other 
                                           -------------------   Paid-in    Accumulated   Equity
                                            Shares     Amount    Capital     Deficit   Transactions    Total
                                           --------   --------   --------    --------    --------    --------
<S>                 <C> <C>                   <C>     <C>        <C>         <C>         <C>         <C>     
Balance at December 31, 1996                  3,345   $     67   $ 71,146    ($67,167)   ($   751)   $  3,295

 Common stock issued as compensation              1       --            2        --          --             2

 Exercise of stock options/warrants             102          2        399        --          (150)        251

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

 Foreign currency translation adjustment       --         --         --          --          (651)       (651)

 Net loss                                      --         --         --        (1,914)       --        (1,914)
                                           --------   --------   --------    --------    --------    --------

Balance at June 30, 1997                      3,448   $     69   $ 71,479    ($69,081)   ($ 1,552)   $    915
                                           ========   ========   ========    ========    ========    ========
</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)

(In thousands)                                                   For the Six
                                                                Months Ended
                                                                  June 30,
                                                             ------------------
                                                              1997       1996
                                                             -------    -------

Cash flows from operating activities:

 Loss before extraordinary item                              ($1,914)   ($  929)

 Adjustments to reconcile loss before extraordinary item

  to net cash used in operating activities:

  Depreciation and amortization                                  172        253

  Extraordinary item-extinguishment of debt                     --         (446)

  Loss on disposition of subsidiary                              591       --

  Cancellation of stock subscription receivable                 --           78

  Other non-cash items                                           155        609

  (Increase) decrease in assets and

   increase (decrease) in liabilities:

   Receivables                                                   589       (223)

   Inventories                                                    88         (8)

   Prepaid expenses and other current assets                    (414)      (318)

   Other assets                                                  117        (26)

   Accounts payable and accrued expenses                        (509)      (707)

   Other liabilities                                             (42)      (241)
                                                             -------    -------

   Net cash used in operating activities                      (1,167)    (1,958)
                                                             -------    -------



Cash flows from investing activities:

 Proceeds from sale of investments                               166        328

 Purchase of investments                                        --       (2,795)

 Receivable related to disposition of subsidiary              (3,093)      --

 Net change in fixed assets                                        7        (37)

 Acquistion of Spanish drug license                              (40)      --
                                                             -------    -------

   Net cash used in investing activities                      (2,960)    (2,504)
                                                             -------    -------



                     The accompnaying 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,
                                                              ------------------
                                                               1997       1996
                                                              -------    -------
<S>                                                           <C>        <C>    
Cash flows from financing activities:

 Net increase in short term borrowings                        $   498    $    40

 Proceeds from public offering of units                          --        6,900

 Offering costs                                                  --       (1,151)

 Proceeds from exercise of stock options/warrants, net            251       --

 Repayments of long term debt                                    --       (1,770)

 Payments on capital leases                                        (2)       (18)
                                                              -------    -------

    Net cash provided by financing activities                     747      4,001
                                                              -------    -------



Effect of exchange rate changes on cash                          (536)         8
                                                              -------    -------



Net decrease in cash and cash equivalents                      (3,916)      (453)



Cash and cash equivalents at beginning of period                4,425      1,120
                                                              -------    -------



Cash and cash equivalents at end of period                    $   509    $   667
                                                              =======    =======



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

Interest                                                      $   477    $   207
                                                              =======    =======

Taxes                                                         $    12       --
                                                              =======    =======

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

Shares issued                                                       1          1
                                                              =======    =======

Amount                                                        $     2    $     3
                                                              =======    =======

</TABLE>

                     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, 1997 and 1996 included herein, have been prepared by
the  Registrant,  without  audit,  pursuant to the rules and  regulations of the
Securities  and Exchange  Commission.  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, 1996.

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.,
Laboratorios  Belmac  S.A.,  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 completed,  on June 26, 1997,  previously announced  negotiations
regarding  the sale of its French  subsidiary,  Chimos/LBF  S.A.  to the Marsing
Group, a European conglomerate, for approximately $3,600,000. The Registrant has
received  approximately  $3,000,000  subsequent  to  June  30,  1997,  of  which
approximately  $500,000 was used to repay indebtedness to the former subsidiary.
The Registrant  will also receive three monthly  installments in the second half
of  1997  of  aproximately  $90,000  each.  An  escrow  fund  in the  amount  of
approximately  $370,000 has been established for certain contingent  obligations
or liabilities.  The Registrant recorded a loss of $591,000 on this transaction,
including  $348,000 in the qurarter  ended June 30, 1997 and $243,000  which was
recognized in the quarter ended March 31, 1997.

In the opinion of management,  the accompanying unaudited consolidated financial
statements  at June 30, 1997 and 1996 are presented on a basis  consistent  with
the audited  consolidated  financial  statements for the year ended December 31,
1996  and  contain  all   adjustments,   consisting  only  of  normal  recurring
adjustments,  necessary to present fairly the Registrant's financial position as
of June 30, 1997 and the results of its operations and its cash flows for the

                                        8

<PAGE>



six months ended June 30, 1997 and 1996.  The results of operations  for the six
months ended June 30, 1997 should not be considered indicative of the results to
be expected for the year.

CASH AND CASH EQUIVALENTS/INVESTMENTS AVAILABLE FOR SALE:

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.
Investments in securities  which do not meet the definition of cash  equivalents
are classified as  investments  available for sale in the  Consolidated  Balance
Sheets.

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,   December 31,
                                                           1997       1996
                                                          -------    -------

Raw materials                                             $   355    $   515

Work in process                                              --         --

Finished goods                                                547      1,257
                                                          -------    -------

                                                              902      1,772

Less:  Allowance for slow moving or obsolete inventory       (138)      (827)
                                                          -------    -------

                                                          $   764    $   945
                                                          =======    =======


EXTRAORDINARY ITEM:

The Registrant recorded an extraordinary charge of $446,000,  or $.13 per common
share, in February 1996 upon the  extinguishment of debt that it had incurred in
its October  1995  private  placements,  representing  unamortized  discount and
issuance costs at the date of repayment.

NET LOSS PER COMMON SHARE:

Primary loss per common share is computed by dividing the net loss (adjusted for
accrued dividends on redeemable  preferred stock) by the weighted average number
of  shares  of  Common  Stock  outstanding  during  each  period.  Common  Stock
equivalents  were not included in the  calculation  of primary loss per share as
they were determined to be antidilutive.





                                        9

<PAGE>



RECLASSIFICATIONS:

Certain prior period amounts have been  reclassified to conform with the current
period's  presentation format. These  reclassifications  are not material to the
consolidated financial statements.

SUBSEQUENT EVENTS:

Upon the  Registrant's  sale of its French  subsidiary,  Chimos/LBF  S.A. to the
Marsing Group,  a European  conglomerate,  for  approximately  $3,600,000,  this
amount was reflected on the balance sheet of the  Registrant at June 30, 1997 as
a receivable.  Subsequent  to June 30, 1997,  and through  August 13, 1997,  the
Registrant had received approximately $3,000,000 of this receivable.

The  Registrant  has  entered  into a  negotiated  letter of intent to  purchase
domestic  and  international  rights to a portfolio  of branded  drugs,  with an
emphasis in gastrointestinal  products,  and a manufacturing facility located in
Meqon, Wisconsin, from Schwarz Pharma, Inc. The letter of intent, dated July 21,
1997, will serve as the basis for  negotiations  for the definitive  agreements.
The  transaction is subject to the execution of such  definitive  agreements and
the  Registrant  securing the funds  necessary to complete  the  purchase.  Upon
executing  the  letter  of  intent,  the  Registrant  was  required  to  remit a
non-refundable $100,000 deposit.







                                       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, 1997 versus Three Months Ended June 30, 1996
------------------------------------------------------------------------


The Registrant  reported  revenues of $4,309,000 and a net loss of $1,088,000 or
$.33 per common  share for the three  months  ended June 30,  1997  compared  to
revenues of  $4,678,000  and a net loss of $696,000 or $.22 per common share for
the same period in the prior year.

The 8% decrease in revenues is primarily attributable to a 50% decrease in sales
by the Registrant's  French  subsidiary,  Chimos/LBF (which was divested on June
26, 1997),  to $802,000,  which was partially  offset by a 26% increase in sales
(using local  currency) by the  Registrant's  Spanish  subsidiary,  Laboratorios
Belmac S.A. However,  fluctuation in foreign currency exchange rates reduced the
increase in sales to 11% in U.S. dollars,  to $3,407,000.  Overall gross margins
for the  quarter  ended June 30, 1997  improved  to 43%,  compared to 38% in the
comparable  period  of the  prior  year,  primarily  as a result  of the  higher
proportion of sales from Laboratorios Belmac, whose sales generate significantly
higher gross margins than sales Chimos/LBF  generated.  The Registrant's  former
distribution  operations in France,  Chimos/LBF,  generated relatively low gross
margins  (approximately 20% for the quarter ended June 30, 1997) compared to the
Registrant's  Spanish  subsidiary,  Laboratorios  Belmac,  which is experiencing
substantially  higher margins  (approximately 49% for the quarter ended June 30,
1997).

Selling, general and administrative expenses increased to $2,076,000,  or 48% of
sales,  for the three months ended June 30, 1997 compared to $1,995,000,  or 43%
of sales,  for the same  period in the prior year.  The  increase in general and
administrative  expenses is primarily the result of  establishment  of a reserve
for the  Registrant's  investment in the  Belmac/Maximed  Partnership.  With the
passage of time, the Registrant  beleives that this  investment is becoming less
valuable due to progress being made in development of competitive technology. As
a direct result of the decline in revenues,  selling, general and administrative
expenses, as a percent of revenues,  increased during the quarter ended June 30,
1997, when compared to the same period in the prior year. A significant  portion
of selling, general and administrative 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 $110,000 for the quarter ended June 30,
1997 compared to $8,000 for the same period of the prior year.  The research and
development  expenditures  in the  quarter  ended June 30,  1997 were  primarily
related  to  bio-equivalency  studies  which  are  necessary  in order to obtain
approval to export products from Spain to other

                                       11

<PAGE>



countries.  The modest  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  in the  future in view of its  limited
resources.

Depreciation and  amortization  expenses were $88,000 for the three months ended
June 30, 1997,  compared to $119,000 for the same period of the prior year.  The
decrease is primarily  due to (i) the December 31, 1996  provision  for goodwill
impairment which terminated future related  amortization;  and (ii) the disposal
of certain fixed assets during the quarters ended June 30 and September 30, 1996
as a result of the  Registrant's  move to smaller,  more cost  effective  office
space.

Interest expense remained  relatively  constant at $325,000 for the three months
ended June 30, 1997  compared to $323,000 for the same period of the prior year.
Interest expense is primarily  comprised of interest arising from the Debentures
sold in the February 1996 public  offering.  Interest  income was $3,000 for the
three months ended June 30, 1997, compared to $36,000 for the same period of the
prior year. The decrease is due to higher short-term interest bearing investment
balances  in the prior  year,  which  resulted  from the  proceeds of the public
offering.

Other (income)  expenses for the quarter ended June 30, 1997 include a provision
for  loss on  disposition  of  subsidiary  which  totalled  $348,000,  including
realized exchange loss of $143,000, due to fluctuations in the currency exchange
rates used to translate the foreign currency financial statements, and a loss of
$205,000  recognized  upon the sale of  Chimos/LBF.  Prior year's other (income)
expenses are primarily comprised of the loss of approximately $71,000 recognized
upon  the  disposition  of  certain   unnecessary  fixed  assets  and  leasehold
improvements  associated with the Registrant's  relocation to smaller, more cost
effective office space in April 1996.


The  Registrant  reported a loss from  operations for the quarter ended June 30,
1997 of  $405,000  compared  to a loss from  operations  of $338,000 in the same
period of the prior year,  which was the combined result of lower sales,  higher
gross  margins  and  higher   operating   expenses.   The  effect  of  combining
non-operating  items,  primarily (i) interest expense of $325,000;  and (ii) the
loss of $348,000  on the  disposition  of the  Registrant's  French  subsidiary,
resulted in a net loss of  $1,088,000,  or $.33 per common share for the quarter
ended June 30, 1997.  Non-operating  items in the comparable period of the prior
year included  primarily interest expense of $323,000 and a loss recognized upon
the disposition of certain  unnecessary fixed assets and leasehold  improvements
of  approximately  $71,000,  which when combined with the loss from  operations,
resulted in a net loss of $696,000, or $.22 per common share.

Six Months Ended June 30, 1997 versus Six Months Ended June 30, 1996
--------------------------------------------------------------------

The Registrant  reported  revenues of $8,387,000 and a net loss of $1,914,000 or
$.59 per  common  share for the six  months  ended  June 30,  1997  compared  to
revenues of  $14,376,000  and a net loss of  $1,375,000 or $.43 per common share
for the same period in the prior year.

                                       12

<PAGE>


The 42%  decrease in revenues is  primarily  attributable  to a 78%  decrease in
sales by the Registrant's  French subsidiary,  Chimos/LBF (which was divested on
June 26, 1997), to $1,897,000,  which was partially  offset by a 29% increase in
sales  (using  local   currency)  by  the   Registrant's   Spanish   subsidiary,
Laboratorios  Belmac.  However,  fluctuation in foreign currency  exchange rates
reduced  the  increase  in  sales  to 14% in U.S.  dollars,  to  $6,322,000.  As
previously  reported,  the Registrant expected its revenues to decline beginning
in the  second  quarter of 1996,  due to the March 31,  1996  expiration  of its
distribution   agreement  for  the  product,   Ceredase,   which  accounted  for
approximately 60% of its revenues in the year ended December 31, 1995.  Ceredase
gross margins,  as a percent of sales, were  approximately 5%. Gross margins for
the six months  ended  June 30,  1997  improved  to 44% when  compared  to gross
margins of 27% in the comparable period of the prior year, primarily as a result
of the higher proportion of sales from Laboratorios Belmac, whose sales generate
significantly higher gross margins than those of Chimos/LBF, as well as the loss
of low-margin Ceredase sales. The Registrant's former distribution operations in
France,  Chimos/LBF,  generated relatively low gross margins  (approximately 21%
for the six months ended June 30,  1997)  compared to the  Registrant's  Spanish
subsidiary,  Laboratorios  Belmac,  which is experiencing  substantially  higher
margins (approximately 51% for the six months ended June 30, 1997).

Selling,  general and administrative expenses were $3,980,000 for the six months
ended June 30,  1997  compared  to  $3,895,000  for the same period in the prior
year.  The increase over the prior year can be  attributed  to a combination  of
factors, including increased selling expenses incurred by the Spanish subsidiary
which are necessary in order to sustain the increase in sales volume the Spanish
sales  force  has   generated  in  the  six  months  ended  June  30,  1997  and
establishment of a reserve for the Registrant's investment in the Belmac/Maximed
Partnership.  With the  passage  of time,  the  Registrant  believes  that  this
investment is becoming less valuable due to progress  being made in  development
of competitive  technology.  This increase was partially offset by a decrease in
selling, general and administrative expenses by Chimos/LBF, primarily due to the
loss of  Ceredase  sales,  during  the six  months  ended  June  30,  1997.  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 $176,000 for the six months ended June
30, 1997 compared to $26,000 for the same period of the prior year. The research
and  development  expenditures in the quarter ended June 30, 1997 were primarily
related  to  bio-equivalency  studies  which  are  necessary  in order to obtain
approval  to  export  products  from  Spain  to  other  countries.   The  modest
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 in view of its limited resources.

Depreciation  and  amortization  expenses were $172,000 for the six months ended
June 30, 1997,  compared to $253,000 for the same period of the prior year.  The
decrease is primarily  due to (i) the December 31, 1996  provision  for goodwill
impairment which terminated future related  amortization;  and (ii) the disposal
of certain fixed assets during the quarters ended June 30 and September 30, 1996
as a result of the  Registrant's  move to smaller,  more cost  effective  office
space.


                                       13

<PAGE>



Interest expense was $645,000 for the six months ended June 30, 1997 compared to
$566,000 for the same period of the prior year. The increase  reflects  interest
expense on (i) the  Debentures  sold in the February 1996 public  offering which
were  outstanding  for a full six months in 1997,  and (ii) to a lesser  degree,
higher  outstanding  balances on short term borrowings which are used to finance
working capital needs. Interest income was $20,000 for the six months ended June
30, 1997 compared to $45,000 for the same period of the prior year. The decrease
is due to  interest  earned on higher  short-term  interest  bearing  investment
balances  in the prior  year,  which  resulted  from the  proceeds of the public
offering.

Other  (income)  expenses  for the six  months  ended  June 30,  1997  include a
provision  for  loss  on  disposition  of  subsidiary,  which  totals  $591,000,
including  realized  exchange  loss  of  $386,000,  due to  fluctuations  in the
currency  exchange  rates  used to  translate  the  foreign  currency  financial
statements and a loss of $205,000 recognized upon the sale of Chimos/LBF.  Prior
year's  other  (income)  expenses  are  primarily   comprised  of  the  loss  of
approximately  $71,000  recognized upon the  disposition of certain  unnecessary
fixed  assets  and  leasehold  improvements  associated  with  the  Registrant's
relocation to smaller, more cost effective, office space in April 1996.

The Registrant recorded an extraordinary charge of $446,000,  or $.13 per common
share, in February 1996 upon the  extinguishment of debt that it had incurred in
its October  1995  private  placements,  representing  unamortized  discount and
issuance costs at the date of repayment.

The Registrant reported a loss from operations for the six months ended June 30,
1997 of  $669,000  compared  to a loss from  operations  of $328,000 in the same
period of the prior year,  which was the combined result of lower sales,  higher
gross  margins,   and  higher  operating  expenses.   The  effect  of  combining
non-operating  items,  primarily (i) interest expense of $645,000,  and (ii) the
loss of  $591,000  on the  disposition  of the  Registrant's  French  subsidiary
resulted  in a net loss of  $1,914,000,  or $.59 per  common  share  for the six
months ended June 30, 1997.  Non-operating items in the comparable period of the
prior year included primarily (i) interest expense of $566,000,  and (ii) a loss
recognized upon the  extinguishment  of debt of approximately  $446,000,  which,
when  combined  with  the  loss  from  operations,  resulted  in a net  loss  of
$1,375,000, or $.43 per common share for the same period in the prior year.

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

Total assets  decreased from  $16,558,000 at December 31, 1996 to $13,367,000 at
June 30, 1997,  while Common  Stockholders'  Equity decreased from $3,295,000 at
December  31,  1996 to  $915,000  at June  30,  1997.  The  decrease  in  Common
Stockholders' Equity reflects primarily the fluctuation in the exchange rates of
European  currencies  compared to the U.S.  Dollar and the loss  incurred by the
Registrant  for the six months  ended  June 30,  1997,  partially  offset by the
effect of warrants and options which were exercised during the period.

The Registrant's  working capital decreased from $4,265,000 at December 31, 1996
to  $3,211,000  at June 30, 1997.  The decrease in working  capital is primarily
attributable to the  fluctuation of foreign  currency  exchange rates,  the loss
incurred  by  the  Registrant  and  disposition  of  the   Registrant's   French
subsidiary, Chimos/LBF.


                                       14

<PAGE>



Cash and cash  equivalents  decreased  from  $4,425,000  at December 31, 1996 to
$509,000 at June 30, 1997,  primarily as the combined  result of (i) the sale of
the Registrant's  French subsidiary,  Chimos/LBF,  which as of December 31, 1996
had cash and cash equivalents balances of $3,200,000. As of June 30, 1997, these
amounts have  effectively  been converted into a receivable  (for the sale price
agreed  to for  the  sale  of  Chimos)  of  $3,600,000  of  which  approximately
$3,000,000  has been  collected  subsequent to June 30, 1997; and (ii) cash used
for operational  purposes.  The terms of the Chimos/LBF sale agreement calls for
collection  of the balance of the sale price by the  Registrant in three monthly
installments in the second half of 1997.  Included in cash and cash  equivalents
are  approximately  $211,000 of  short-term  investments  considered  to be cash
equivalents.

Accounts receivable increased from $3,632,000 at December 31, 1996 to $5,690,000
at June 30, 1997 due to a combination  of the  disposition  of the  Registrant's
French  subsidiary and foreign currency exchange rate  fluctuations,  which were
offset  by higher  receivables  resulting  from  increased  sales in Spain.  The
Registrant has not experienced  any material  delinquent  accounts.  Inventories
decreased  to  $764,000 at June 30,  1997  compared to $945,000 at December  31,
1996,  due to the  disposition  of the  Registrant's  French  subsidiary and the
fluctation of foreign currency exchange rates,  which were offset by an increase
in inventory levels in Spain to accomodate the increase in sales volume.

Prepaid  expenses and other current  assets  increased from $644,000 at December
31, 1996 to $899,000 at June 30, 1997 due to a combination of the disposition of
the Registrant's  French  subsidiary and the effect of foreign currency exchange
rate  fluctuations,  which were  offset by a  combination  of  expenditures  for
marketing  and  promotional  items which will be  utilized  by the  Registrant's
Spanish  subisidary during the remainder of the current year and the next fiscal
year,  as well as  pre-payment  for certain  bio-equivalency  studies  which are
scheduled to take place during the remainder of the current year.

Accounts payable and accrued expenses  decreased from $4,528,000 at December 31,
1996 to  $3,316,000  at June 30,  1997  due to the  combined  effect  of the (i)
disposition of the Registrant's  French  subsidiary;  (ii) the effect of foreign
currency  exchange rate  fluctuations;  and (iii) the reversal of an amount owed
for a drug license in Spain,  for which the proposed  purchase by the Registrant
was cancelled.  However,  these  decreases  were partially  offset by an overall
increase in accounts payable in Spain due to the increase in business activity.

Fixed assets,  net decreased from  $3,544,000 at December 31, 1996 to $3,033,000
at June 30, 1997,  due to recurring  depreciation  charges and a fluctuation  in
foreign currency exchange rates.

Drug licenses and related costs,  net decreased from  $1,475,000 at December 31,
1996  to  $761,000  at  June  30,  1997,  due  to  a  combination  of  recurring
amortization  charges, the effect of foreign currency exchange rate fluctuations
and the cancellation of the proposed purchase of a drug license in Spain.

Other non-current assets decreased slightly from $1,727,000 at December 31, 1996
to $1,711,000 at June 30, 1997 and long term debt increased  from  $5,164,000 at
December 31, 1996 to  $5,258,000  at June 30, 1997,  due  primarily to accretion
recorded on the Debentures issued in the February 1996 public offering.

                                       15

<PAGE>




Investing  activities  used net cash of  $2,960,000  during the six months ended
June 30,  1997.  Financing  activities  for the six months  ended June 30,  1997
provided net cash of $747,000 and operating  activities for the six months ended
June 30, 1997 used net cash of $1,167,000.

A substantial  amount of the Registrant's  business is conducted in Spain and is
therefore  influenced  by the  extent  to which  there are  fluctuations  in the
dollar's value against its currency. The effect of foreign currency fluctuations
on long lived  assets for the six months  ended June 30,  1997 was a decrease of
$651,000 and the cumulative  historical effect was a decrease of $1,732,000,  as
reflected in the  Registrant's  Consolidated  Balance Sheets in the "Liabilities
and Stockholders'  Equity" section.  As a result of the sale of Chimos/LBF,  the
Registrant recognized unrealized exchange losses of $386,000.  Although exchange
rates fluctuated  significantly  recently,  the Registrant does not believe that
the  effect  of  foreign  currency  fluctuation  over  time 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.  The  Registrant  has  historically  relied  primarily  upon financing
activities  to fund the  operations  of the  Registrant in the United States and
with the exception of proceeds from the sale of Chimos/LBF,  has not transferred
significant  amounts into or out of the United States in the recent past. In the
event that the  Registrant  is required to fund United  States  operations  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.

Management  expects that as a result of  completing  its  financings in the last
fiscal year along with the proceeds from the sale of its French  subsidiary,  by
carefully  prioritizing  research and development  activities and continuing its
austerity  program,  the  Registrant  should have  sufficient  liquidity to fund
operations into 1998. 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  under  development  and the sale of
certain  of the assets of, or one or more of,  its  subsidiaries.  As  discussed
below,   the  Registrant  has  entered  into  a  letter  of  intent  to  acquire
pharmaceutical  products and a manufacturing  facility in the United States. The
Registrant must finance the acquisition of these assets and is exploring various
options intended to secure such financing.

SUBSEQUENT EVENTS

Upon the  Registrant's  sale of its French  subsidiary,  Chimos/LBF  S.A. to the
Marsing Group,  a European  conglomerate,  for  approximately  $3,600,000,  this
amount was reflected on the balance sheet of the  Registrant at June 30, 1997 as
a receivable.  Subsequent to June 30, 1997,  and through the date of filing this
document,  the  Registrant  has  received   approximately   $3,000,000  of  this
receivable.

The  Registrant  has  entered  into a  negotiated  letter of intent to  purchase
domestic  and  international  rights to a portfolio  of branded  drugs,  with an
emphasis in gastrointestinal  products,  and a manufacturing facility located in
Meqon, Wisconsin, from Schwarz Pharma, Inc. The letter

                                       16

<PAGE>



of intent, dated July 21, 1997, will serve as the basis for negotiations for the
definitive  agreements.  The  transaction  is subject to the  execution  of such
definitive  agreements  and the  Registrant  securing  the  funds  necessary  to
complete the purchase.  Upon executing the letter of intent,  the Registrant was
required to remit a non-refundable $100,000 deposit.

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;   dependance  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-1 (SEC Commission file No. 33-65125) declared effective by the Securities
and Exchange Commission on February 14, 1996 and any amendments thereto.

                                       17

<PAGE>



PART II.             OTHER INFORMATION


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

The Annual  Meeting of  Stockholders  of the Registrant was held on June 6, 1997
for the purpose of  electing  two  directors,  and voting on a proposal to adopt
amendments  to  Registrant's  1991 Stock  Option Plan to increase  the number of
shares of Common  Stock for which  options may be granted and to  eliminate  the
Non-Employee  Director  formula  option grants and certain  provisions  relating
thereto.  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.


                          Term           Shares             Shares Voted
   Nominee                Expiring       Voted For             Against
   -------                --------       ---------             -------
Ehud D. Laska               2000         2,900,420            101,387

Michael D. Price            2000         2,911,384             90,423


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

                     Name                        Term Expiring
                     ----                        -------------
            Randolph W. Arnegger                     1998
            Charles L. Bolling                       1998
            James R. Murphy                          1999
            Robert M. Stote, M.D.                    1999

The proposal to adopt amendments to the  Registrant's  1991 Stock Option Plan to
increase the number of shares of Common Stock,  for which options may be granted
under the 1991 plan from  240,000 to 500,000 and to eliminate  the  Non-Employee
Director  formula option grants and certain  provisions  relating thereto as set
forth in the 1991 Plan was approved by the following vote:

                                                            Broker Non-Votes and
              Shares Voted For     Shares Voted Against      Shares Abstaining
              ----------------     --------------------      -----------------
                   917,781               210,168                 26,197
                    79.5%                 18.2%                    2.3%






                                       18

<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, 1997:

                      Report  on  Form  8-K  dated  June  26,   1997   regarding
                      disposition  of  the   Registrant's   French   subsidiary,
                      Chimos/LBF S.A. (Items 2 and 7).

All  other  items  required  in Part II have  been  previously  filed or are not
applicable for the quarter ended June 30, 1997.



                                       19

<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 14, 1997                  By:  /s/ James R. Murphy
                                     ----------------------------------
                                     James R. Murphy
                                     Chairman, President and Chief Executive 
                                     Officer (principal executive officer)




August 14, 1997                  By:       /s/ Michael D. Price
                                     ----------------------------------
                                     Michael D. Price
                                     Vice President, Chief Financial Officer,
                                     Treasurer and Secretary (principal
                                     financial and accounting officer)