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 September 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 November
14, 1997 was 5,293,327.


<PAGE>




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



Part I.    FINANCIAL INFORMATION
                                                                            PAGE


           Item 1.   Consolidated Financial Statements:

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

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

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

                     Consolidated Statements of Cash Flows
                           (unaudited) for the nine months ended
                           September 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)                 September 30, December 31,
                                                          1997        1996
                                                        --------    --------
   ASSETS

Current assets:

 Cash and cash equivalents                              $  1,975    $  4,425

 Investments available for sale                             --           166

 Receivables                                               2,789       3,632

 Inventories                                                 680         945

 Prepaid expenses and other                                  756         644
                                                        --------    --------

  Total current assets                                     6,200       9,812
                                                        --------    --------

Fixed assets, net                                          2,970       3,544

Drug licenses and related costs, net                         728       1,475

Other non-current assets, net                              1,938       1,727
                                                        --------    --------

                                                        $ 11,836    $ 16,558
                                                        ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

 Accounts payable                                       $  1,810    $  2,998

 Accrued expenses                                            861       1,530

 Short term borrowings                                     1,102       1,014

 Current portion of long term debt                             5           5
                                                        --------    --------

  Total current liabilities                                3,778       5,547
                                                        --------    --------

Long term debt, net                                        5,305       5,164
                                                        --------    --------

Other non-current liabilities                                266         349
                                                        --------    --------

Commitments and contingencies

Redeemable preferred stock, $1.00 par value,
 authorized 2,000 shares:

 Series A, issued and outstanding, 60 shares               2,305       2,203
                                                        --------    --------

Common Stockholders' Equity:

 Common stock, $.02 par value, authorized 
  35,000 shares issued and outstanding, 3,455
  and 3,345 shares                                            69          67

 Stock purchase warrants (to purchase 8,214 and 8,304
  shares of common stock)                                    335         435

 Paid-in capital in excess of par value                   71,411      71,146

 Stock subscriptions receivable                             (105)       (105)

 Accumulated deficit                                     (69,740)    (67,167)

 Cumulative foreign currency translation adjustment       (1,788)     (1,081)
                                                        --------    --------

                                                             182       3,295
                                                        --------    --------

                                                        $ 11,836    $ 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 Nine
(in thousands, except per share data)                 Months Ended             Months Ended
                                                      September 30,            September 30,
                                                  --------------------    --------------------
                                                     1997        1996        1997        1996
                                                  --------    --------    --------    --------
<S>                                               <C>         <C>         <C>         <C>     
Sales                                             $  3,141    $  4,049    $ 11,528    $ 18,425

Cost of sales                                        1,617       2,349       6,345      12,879
                                                  --------    --------    --------    --------

 Gross margin                                        1,524       1,700       5,183       5,546
                                                  --------    --------    --------    --------

Operating expenses:

 Selling, general and administrative                 1,666       1,976       5,646       5,871

 Research and development                              130           2         306          28

 Depreciation and amortization                          60         133         232         386
                                                  --------    --------    --------    --------

  Total operating expenses                           1,856       2,111       6,184       6,285
                                                  --------    --------    --------    --------

Loss from operations                                  (332)       (411)     (1,001)       (739)

Other (income) expenses:

 Interest expense                                      318         331         963         897

 Interest income                                       (14)        (34)        (34)        (79)

 Loss on disposition of subsidiary                    --          --           591        --

 Other (income) expense, net                            23           2          52          82
                                                  --------    --------    --------    --------

Loss before extraordinary item                        (659)       (710)     (2,573)     (1,639)

Extraordinary item-extinguishment of debt             --          --          --           446
                                                  --------    --------    --------    --------

Net loss                                          ($   659)   ($   710)   ($ 2,573)   ($ 2,085)
                                                  ========    ========    ========    ========


Loss per common share before extraordinary item   ($   .20)   ($   .22)   ($   .79)   ($   .53)

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

Net loss per common share                         ($   .20)   ($  0.22)   ($   .79)   ($  0.66)
                                                  ========    ========    ========    ========

Weighted average common shares outstanding           3,453       3,332       3,385       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>     
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             109          2        365    _               (101)        266

 Accrual of dividends-preferred stock          --         --         (102)   _                  _        (102)

 Foreign currency translation adjustment       --         --            _    _               (706)       (706)

 Net loss                                      --         --         --        (2,573)       --        (2,573)
                                           --------   --------   --------    --------    --------    --------

Balance at September 30, 1997                 3,455   $     69   $ 71,411    ($69,740)   ($ 1,558)   $    182
                                           ========   ========   ========    ========    ========    ========






</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 Nine
                                                               Months Ended
                                                               September 30,
                                                            ------------------
                                                             1997       1996
                                                            -------    -------

Cash flows from operating activities:

 Loss before extraordinary item                             ($2,573)   ($1,639)

 Adjustments to reconcile loss before extraordinary item

  to net cash (used in) provided by operating activities:

  Depreciation and amortization                                 232        386

  Loss on disposition of subsidiary                             591       --

  Extraordinary item - extinguishment of debt                  --         (446)

  Loss on disposal of fixed assets                             --           79

  Other non-cash items                                          305        838

  (Increase) decrease in assets and

   increase (decrease) in liabilities:

   Receivables                                                  803      3,087

   Inventories                                                  143        213

   Prepaid expenses and other current assets                   (230)       (46)

   Other assets                                                (136)         3

   Accounts payable and accrued expenses                     (1,203)    (1,879)

   Other liabilities                                            (45)      (261)
                                                            -------    -------

   Net cash (used in) provided by operating activities       (2,113)       335
                                                            -------    -------



Cash flows from investing activities:

 Proceeds from sale of investments                              166      3,115

 Purchase of investments                                       --       (7,853)

 Receivable related to disposition of subsidiary               (501)      --

 Net change in fixed assets                                      (2)       (80)

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

   Net cash used in investing activities                       (377)    (4,818)
                                                            -------    -------


          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)
(In thousands)                                                 For the Nine
                                                               Months Ended
                                                               September 30,
                                                             ------------------
                                                              1997       1996
                                                             -------    -------


Cash flows from financing activities:

 Net increase in short term borrowings                       $   255    $   107

 Proceeds from exercise of stock options/warrants, net           266       --

 Proceeds from public offering of units                         --        6,900

 Offering costs                                                 --       (1,177)

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

 Payments on capital leases                                       (4)       (27)
                                                             -------    -------

    Net cash provided by financing activities                    517      4,033
                                                             -------    -------



Effect of exchange rate changes on cash                         (477)        (9)
                                                             -------    -------



Net decrease in cash and cash equivalents                     (2,450)      (459)



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



Cash and cash equivalents at end of period                   $ 1,975    $   661
                                                             =======    =======



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

Interest                                                     $   717    $   660
                                                             =======    =======

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         15
                                                             =======    =======

Amount                                                       $     2    $    51
                                                             =======    =======

       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  September  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 the sale of its French subsidiary,  Chimos/LBF S.A. to
the Marsing Group, a European conglomerate, for approximately $3,600,000 on June
26, 1997. The Registrant has since received approximately  $3,200,000,  of which
approximately  $500,000 was used to repay indebtedness to the former subsidiary.
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 related to this divestiture.

In the opinion of management,  the accompanying unaudited consolidated financial
statements at September  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 September 30, 1997 and the results of its  operations  and its cash flows for
the nine months ended September 30, 1997 and 1996. The results of operations for
the nine months ended September 30, 1997 should not be considered  indicative of
the results to be expected for the year.


                                        8

<PAGE>



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):


                                                      September 30, December 31,
                                                          1997         1996
                                                         -------      -------
                                                                   
                                                                   
  Raw materials                                          $   325      $   515
                                                                   
  Work in process                                           --           --
                                                                   
  Finished goods                                             484        1,257
                                                         -------      -------
                                                                   
                                                             809        1,772
                                                                   
  Less:  Allowance for slow moving or obsolete inventory    (129)        (827)
                                                         -------      -------
                                                                   
                                                         $   680      $   945
                                                         =======      =======

PROPOSED ACQUISITION:

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
Mequon,  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 execution of the letter of intent, the Registrant was required to
remit a  non-refundable  deposit in the amount of $100,000.  The  Registrant has
also  capitalized  other costs totaling  approximately  $398,000 related to this
proposed acquisition and has included them in other non-current assets, net.

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.


                                        9

<PAGE>



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.


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:

The  Registrant  has  temporarily  reduced the exercise  price of its  currently
outstanding  Series A and  Series B  redeemable  warrants  to $2.00  and  $3.00,
respectively.  This  adjustment to the exercise price commenced on September 16,
1997 and will be in effect until 5:00 p.m. on November 17, 1997 for the Series A
warrants  and until 5:00 p.m. on January 13, 1998 for the Series B warrants.  In
each case, if the warrants are not  exercised  during these  periods,  the terms
will  revert  back to the  original  exercise  price of $3.00  for the  Series A
warrants,  due to expire  on  February  14,  1999,  and  $5.00 for the  Series B
warrants,  due to expire on February 14, 2001.  Subsequent to September 30, 1997
and through the date of filing this document,  1,832,000  Series A warrants have
been exercised, generating $3,664,000 in gross proceeds, the effect of which has
been to increase cash and Common  Stockholder's Equity by the same amounts. As a
result,  1,832,000  Series B warrants have been issued and are  outstanding.  No
Series B warrants have been exercised.















                                       10

<PAGE>



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


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

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


The  Registrant  reported  revenues of $3,141,000  and a net loss of $659,000 or
$.20 per common share for the three months ended  September 30, 1997 compared to
revenues of  $4,049,000  and a net loss of $710,000 or $.22 per common share for
the same period in the prior year.

The 22% decrease in revenues is primarily attributable to the divestiture of the
Registrant's  French  subsidiary,  Chimos/LBF,  which occurred on June 26, 1997,
which contributed no sales during the third quarter. This decrease was partially
offset by a 17%  increase in sales (using  local  currency) by the  Registrant's
Spanish  subsidiary,  Laboratorios  Belmac S.A. However,  fluctuation in foreign
currency  exchange  rates offset the  increase.  Overall  gross  margins for the
quarter  ended  September  30,  1997  improved  to 49%,  compared  to 42% in the
comparable  period of the prior year,  as the third  quarter of the current year
included primarily  Laboratorios  Belmac's sales,  which generate  significantly
higher  gross  margins  than  sales  of  Chimos/LBF.   The  Registrant's  former
distribution  operations in France,  Chimos/LBF,  generated relatively low gross
margins  (approximately  20% for the quarter ended June 30, 1997,  the last full
quarter in which it had sales) compared to the Registrant's  Spanish subsidiary,
Laboratorios  Belmac,   which  is  experiencing   substantially  higher  margins
(approximately 50% for the quarter ended September 30, 1997).

Selling, general and administrative expenses decreased to $1,666,000,  or 53% of
sales, for the three months ended September 30, 1997 compared to $1,976,000,  or
49% of sales,  for the same period in the prior year.  As a direct result of the
decline in revenues,  selling,  general and  administrative  expenses,  although
$310,000 lower in total, increased as a percent of revenues,  during the quarter
ended  September 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 $130,000 for the quarter ended September
30, 1997 compared to $2,000 for the same period of the prior year.  The research
and  development  expenditures  in the  quarter  ended  September  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

                                       11

<PAGE>



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 $60,000 for the three months ended
September 30, 1997,  compared to $133,000 for the same period of the prior year.
The decrease is primarily due to (i) the  divestiture of its French  subsidiary,
Chimos/LBF;  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 $318,000 for the three months
ended  September  30, 1997 compared to $331,000 for the same period of the prior
year.  Interest  expense is primarily  comprised of interest  payable  under the
Debentures  sold in the  February  1996  public  offering.  Interest  income was
$14,000 for the three months ended  September 30, 1997,  compared to $34,000 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  September 30, 1997 were $23,000
compared  to  $2,000  for the same  period  of the prior  year.  Other  (income)
expenses for the three months ended September 30, 1997 primarily  includes a net
realized  exchange loss of  approximately  $28,000,  due to  fluctuations in the
currency  exchange  rates used to translate the funds received by the Registrant
from the sale of Chimos/LBF.

The Registrant  reported a loss from  operations for the quarter ended September
30, 1997 of $332,000  compared to a loss from operations of $411,000 in the same
period of the prior year,  which was the combined result of lower sales,  higher
gross   margins  and  lower   operating   expenses.   The  effect  of  combining
non-operating items,  primarily interest expense of $318,000,  resulted in a net
loss of $659,000,  or $.20 per common share for the quarter ended  September 30,
1997.  Non-operating  items in the comparable  period of the prior year included
primarily  interest expense of $331,000,  which when combined with the loss from
operations, resulted in a net loss of $710,000, or $.22 per common share.


Nine Months Ended September 30, 1997 versus Nine Months Ended September 30, 1996
--------------------------------------------------------------------------------

The Registrant  reported revenues of $11,528,000 and a net loss of $2,573,000 or
$.79 per common share for the nine months ended  September  30, 1997 compared to
revenues of  $18,425,000  and a net loss of  $2,085,000 or $.66 per common share
for the same period in the prior year.

The 37%  decrease in revenues is  primarily  attributable  to a 79%  decrease in
sales by the Registrant's  French  subsidiary,  Chimos/LBF,  to $2,028,000.  The
divestiture  of Chimos/LBF  occurred on June 26,  1997,thereby  contributing  no
sales during the third  quarter.  This  decrease was  partially  offset by a 25%
increase in sales (using local currency) by the Registrant's Spanish subsidiary,
Laboratorios Belmac. However, fluctuation in foreign currency exchange rates

                                       12

<PAGE>



reduced  the  increase  in  sales  to 8% in  U.S.  dollars,  to  $9,253,000.  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 nine months ended  September 30, 1997 improved to 45% when compared to gross
margins of 30% 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 nine months  ended  September  30,  1997)  compared to the  Registrant's
Spanish subsidiary,  Laboratorios  Belmac,  which is experiencing  substantially
higher margins (approximately 50% for the nine months ended September 30, 1997).

Selling, general and administrative expenses were $5,646,000 for the nine months
ended September 30, 1997 compared to $5,871,000 for the same period in the prior
year.  The decrease over the prior year can be  attributed  to a combination  of
factors,  including  decreased selling,  general and administrative  expenses by
Chimos/LBF,  primarily due to the Registrant's  divestiture of Chimos/LBF during
the  second  quarter  of 1997 and the loss of  Ceredase  sales,  during the nine
months ended September 30, 1997. This decrease was partially offset by 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 nine months ended September 30, 1997 and  establishment of a reserve for the
Registrant's  investment  in  the  Belmac/Maximed  Partnership.  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  $306,000  for the nine months  ended
September  30,  1997  compared to $28,000 for the same period of the prior year.
The research and  development  expenditures  in the quarter ended  September 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 $232,000 for the nine months ended
September 30, 1997,  compared to $386,000 for the same period of the prior year.
The decrease is primarily due to (i) the  divestiture of its French  subsidiary,
Chimos/LBF;  and (ii) the  disposal  of certain  fixed  assets  during 1996 as a
result of the Registrant's move to smaller, more cost effective office space.

Interest  expense was  $963,000  for the nine months  ended  September  30, 1997
compared  to  $897,000  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 nine

                                       13

<PAGE>



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 $34,000  for the nine months  ended  September  30, 1997  compared to
$79,000 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 nine months ended  September 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 nine  months  ended
September 30, 1997 of $1,001,000  compared to a loss from operations of $739,000
in the same period of the prior  year,  which was the  combined  result of lower
sales,  higher  gross  margins  and  lower  operating  expenses.  The  effect of
combining  non-operating items,  primarily (i) interest expense of $963,000, and
(ii)  the  loss  of  $591,000  on the  disposition  of the  Registrant's  French
subsidiary  resulted in a net loss of  $2,573,000,  or $.79 per common share for
the nine months ended September 30, 1997.  Non-operating items in the comparable
period of the prior year included  primarily  (i) interest  expense of $897,000,
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  $2,085,000,  or $.66 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 $11,836,000 at
September 30, 1997, while Common  Stockholders' Equity decreased from $3,295,000
at December 31, 1996 to $182,000 at September  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 nine months ended September 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  $2,422,000  at  September  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
$1,975,000 at September 30, 1997,  primarily as the combined  result of (i) cash
used for  operational  purposes  and,  (ii) the effect of foreign  exchange rate
changes,   offset   by   proceeds   from   short-term   borrowings   and   stock
options/warrants   exercises.   Included  in  cash  and  cash   equivalents  are
approximately  $1,617,000  of  short-term  investments  considered  to  be  cash
equivalents.

Accounts receivable decreased from $3,632,000 at December 31, 1996 to $2,789,000
at  September  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 $680,000 at September 30, 1997 compared to $945,000 at December 31,
1996,  due to the  disposition  of the  Registrant's  French  subsidiary and the
fluctuation of foreign currency  exchange rates,  which were partially offset by
an increase in inventory  levels in Spain to  accommodate  the increase in sales
volume.

Prepaid  expenses and other current  assets  increased from $644,000 at December
31,  1996  to  $756,000  at  September  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 subsidiary 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 $2,671,000  at September 30, 1997 due to the combined  effect of (i) the
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 canceled.

Fixed assets,  net decreased from  $3,544,000 at December 31, 1996 to $2,970,000
at September 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 $728,000 at  September  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  increased  from  $1,727,000  at December 31, 1996 to
$1,938,000  at  September  30,  1997   primarily   due  to   capitalization   of
approximately  $398,000 of  pre-acquisition  costs,  including a  non-refundable
$100,000  deposit  paid for the proposed  acquisition  of Schwarz  Pharma,  Inc.
assets and other possible acquisitions,  offset by amortization costs related to
the 1996 Public Offering. 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 Mequon,  Wisconsin,  from Schwarz Pharma, Inc. The letter of
intent, dated July 21, 1997, will serve as the basis for

                                       15

<PAGE>



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.  Long term debt increased from $5,164,000 at
December  31, 1996 to  $5,305,000  at  September  30,  1997,  due  primarily  to
accretion  recorded  on the  Debentures  issued  in  the  February  1996  public
offering.

Investing  activities  used net cash of $377,000  during the nine  months  ended
September 30, 1997. Financing activities for the nine months ended September 30,
1997 provided net cash of $517,000 and operating  activities for the nine months
ended September 30, 1997 used net cash of $2,113,000.

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 nine months ended September 30, 1997 was a decrease
of $707,000 and the cumulative  historical  effect was a decrease of $1,788,000,
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  and
warrant exercises, by carefully prioritizing research and development activities
and continuing its austerity  program,  the  Registrant  should have  sufficient
liquidity to fund operations through 1998. The Registrant,  is exploring 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.  As discussed above,
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
-----------------

The  Registrant  has  temporarily  reduced the exercise  price of its  currently
outstanding  Series A and  Series B  redeemable  warrants  to $2.00  and  $3.00,
respectively.  This  adjustment to the exercise price commenced on September 16,
1997 and will be in effect until 5:00 p.m. on

                                       16

<PAGE>



November  17, 1997 for the Series A warrants  and until 5:00 p.m. on January 13,
1998 for the Series B warrants.  In each case, if the warrants are not exercised
during these periods,  the terms will revert back to the original exercise price
of $3.00 for the Series A warrants,  due to expire on  February  14,  1999,  and
$5.00 for the Series B warrants,  due to expire on February 14, 2001. Subsequent
to September  30, 1997 and through the date of filing this  document,  1,832,000
Series A warrants have been exercised,  generating $3,664,000 in gross proceeds,
the effect of which has been to increase cash and Common Stockholders' Equity by
the same amounts. As a result,  1,832,000 Series B warrants have been issued and
are outstanding. No Series B warrants have been exercised.


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-3  (SEC  Commission  file  No.  333-28593)  declared  effective  by  the
Securities and Exchange Commission on June 10, 1997 and any amendments thereto.

                                       17

<PAGE>



PART II.    OTHER INFORMATION
            -----------------
Item 1.  Legal Proceedings
         -----------------

In the suit between the Registrant and Medstar,  Inc., Maximed,  Inc. and Robert
Cohen,  on August 22,  1997,  the United  States Court of Appeals for the Second
Circuit  affirmed in part and vacated and  remanded in part the  judgment of the
United  States  District  Court  for the  Southern  District  of New York  which
followed a non-jury  trial.  The appeals court order vacated that portion of the
district  court  judgment  that  dismissed the  Registrant's  claim of fraud and
remanded the claim to the district court for further proceedings. Those portions
of the district court judgment which dismissed the  Registrant's  contract claim
for breach of warranty,  the  defendants'  counterclaim  for fraud and breach of
contract  and  Medstar,  Inc.'s  action for breach of an alleged  guaranty  were
affirmed.

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  September 30,
               1997:

               None

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



                                       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





November 13, 1997                        By:       /s/ James R. Murphy
                                                   -----------------------------
                                                   James R. Murphy
                                                   Chairman, President and Chief
                                                   Executive Officer  (principal
                                                   executive officer)




November 13, 1997                        By:       /s/ Michael D. Price
                                                   -----------------------------
                                                   Michael D. Price
                                                   Vice President, Chief 
                                                   Financial Officer, Treasurer
                                                   and Secretary (principal
                                                   financial and accounting
                                                   officer)