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, 1996

                                       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
11, 1996 was 3,345,095.



<PAGE>



                          BENTLEY PHARMACEUTICALS, INC.
               FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
                                      INDEX



Part I.    FINANCIAL INFORMATION                                           PAGE


           Item 1.   Consolidated Financial Statements:

                     Consolidated Balance Sheets as of September 30, 1996
                                (unaudited) and December 31, 1995             3

                     Consolidated Statements of Operations (unaudited)
                                for the three months  ended  September
                                30, 1996 and 1995, and the nine months
                                ended September 30, 1996 and 1995             4

                     Consolidated Statement of Changes in Common
                                Stockholders' Equity (unaudited) for the
                                nine months ended September 30, 1996          5

                     Consolidated Statements of Cash Flows
                                (unaudited) for the nine months ended
                                September 30, 1996 and 1995                   6

                     Notes to Consolidated Financial Statements (unaudited)   8


           Item 2.   Management's Discussion and Analysis of
                     Financial Condition and Results of
                     Operations                                              12


Part II.   OTHER INFORMATION                                                 19

                                        2

<PAGE>
                          BENTLEY PHARMACEUTICALS, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                      (unaudited)
(In thousands, except per share data)                                 September 30,      December 31,
                                                                          1996               1995
                                                                        --------           --------
<S>                                                                     <C>                <C>     
ASSETS
------
Current assets:                                                                         
 Cash and cash equivalents                                              $    661           $  1,120
 Investments available for sale                                            4,747                161
 Receivables                                                               3,566              6,836
 Inventories                                                                 787              1,054
 Prepaid expenses and other                                                  459                596
                                                                        --------           --------
  Total current assets                                                    10,220              9,767
                                                                        --------           --------
Fixed assets, net                                                          3,596              4,084
Drug licenses and related costs, net                                         974              1,120
Other non-current assets, net                                              2,096              1,319
                                                                        --------           --------
                                                                        $ 16,886           $ 16,290
                                                                        ========           ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:                                                                    
 Accounts payable                                                       $  1,730           $  3,883
 Accrued expenses                                                          1,716              1,572
 Short term borrowings                                                     1,239              1,197
 Current portion of long term debt                                             5                  2
                                                                        --------           --------
  Total current liabilities                                                4,690              6,654
                                                                        --------           --------
Long term debt, net                                                        5,117              1,354
                                                                        --------           --------
Other non-current liabilities                                                574                898
                                                                        --------           --------
                                                                                        
Commitments and contingencies                                                           
                                                                                        
Redeemable preferred stock, $1.00 par value, authorized 2,000 shares:                   
  Series A, issued and outstanding, 60 shares                              2,170              2,068
                                                                        --------           --------
                                                                                        
Common Stockholders' Equity:
 Common stock, $.02 par value, authorized 35,000 shares,                                
  issued and outstanding, 3,345 and 3,330 shares                              67                 66
 Stock purchase warrants (to purchase 8,309 and 547                                     
  shares of common stock)                                                    457                150
 Paid-in capital in excess of par value                                   71,269             70,047
 Stock subscriptions receivable                                             (105)              (105)
 Accumulated deficit                                                     (66,333)           (64,248)
 Cumulative foreign currency translation adjustment                       (1,020)              (594)
                                                                        --------           --------
                                                                           4,335              5,316
                                                                        --------           --------
                                                                        $ 16,886           $ 16,290
                                                                        ========           ========
                                                                                 
</TABLE>

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

                                        3
<PAGE>



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

(In thousands, except per share data)            For the Three           For the Nine
                                                 Months  Ended           Months Ended
                                                 September 30,           September 30,
                                             --------------------    --------------------
                                               1996        1995        1996        1995
                                             --------    --------    --------    --------
<S>                                          <C>         <C>         <C>         <C>     
Sales                                        $  4,049    $  8,169    $ 18,425    $ 24,368
Cost of sales                                   2,349       7,029      12,879      19,985
                                             --------    --------    --------    --------

Gross margin                                    1,700       1,140       5,546       4,383
                                             --------    --------    --------    --------

Operating expenses:
 Selling, general and administrative            1,976       1,667       5,871       5,516
 Research and development                           2          94          28         341
 Depreciation and amortization                    133         140         386         408
                                             --------    --------    --------    --------
  Total operating expenses                      2,111       1,901       6,285       6,265
                                             --------    --------    --------    --------
Loss from operations                             (411)       (761)       (739)     (1,882)

Other (income) expenses:
 Interest expense                                 331          89       1,343         215
 Interest income                                  (34)       --           (79)         (1)
 Other (income) expense, net                        2        (720)         82        (577)
                                             --------    --------    --------    --------
Net loss                                     ($   710)   ($   130)   ($ 2,085)   ($ 1,519)
                                             ========    ========    ========    ========
                                             ($  0.22)   ($  0.06)   ($  0.66)   ($  0.55)
                                             ========    ========    ========    ========
Net loss per common share

Weighted average common shares outstanding      3,332       2,978       3,331       2,978
                                             ========    ========    ========    ========
</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, 1995                 3,330   $     66   $ 70,047    ($64,248)   ($   549)   $  5,316
Public offering of units                      --         --        1,274        --           307       1,581
Common stock issued as compensation
 for services rendered                          15          1         50        --          --            51
Accrual of dividends-preferred stock          --         --         (102)       --          --          (102)
Foreign currency translation adjustment       --         --         --          --          (426)       (426)
Net loss                                      --         --         --        (2,085)       --        (2,085)
                                          --------   --------   --------    --------    --------    --------
Balance at September 30, 1996                3,345   $     67   $ 71,269    ($66,333)   ($   668)   $  4,335
                                          ========   ========   ========    ========    ========    ========
</TABLE>

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

                                        5

<PAGE>



                          BENTLEY PHARMACEUTICALS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                             For the Nine
                                                             Months Ended
                                                             September 30,
                                                          ------------------
                                                           1996       1995
                                                          -------    -------
<S>                                                       <C>        <C>     
Cash flows from operating activities:
 Net loss                                                 ($2,085)   ($1,519)
 Adjustments to reconcile net loss to
  net cash provided by (used in) operating activities:
 Depreciation and amortization                                386        408
 Gain on sale of Belmacina(R)                                --         (380)
 Cancellation of stock subscription receivable               --          533
 Loss on disposal of fixed assets                              79       --
 Other non-cash items                                         838        117
 (Increase) decrease in assets and
   Increase (decrease) in liabilities:
   Receivables                                              3,087     (1,007)
   Inventories                                                213        199
   Prepaid expenses and other current assets                  (46)       (44)
   Other assets                                                 3         66
   Accounts payable and accrued expenses                   (1,879)      (795)
   Other liabilities                                         (261)       154
                                                          -------    -------

    Net cash provided by (used in) operating activities       335     (2,268)
                                                          -------    -------
Cash flows from investing activities:
 Proceeds from sale of investments                          3,115        214
 Purchase of investments                                   (7,853)      --
 Net change in fixed assets                                   (80)      (507)
 Proceeds from sale of Belmacina(R)                          --          922
 Investment in partnership                                   --          (13)
                                                          -------    -------

    Net cash (used in) provided by investing activities    (4,818)       616
                                                          -------    -------
</TABLE>

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

                                        6

<PAGE>

                          BENTLEY PHARMACEUTICALS, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                      For the Nine
                                                                      Months Ended
                                                                      September 30,
                                                                     1996       1995
                                                                   -------    -------
<S>                                                                <C>        <C>    
Cash flows from financing activities:
  Net increase in short term borrowings                            $   107    $   444
  Proceeds from public offering of units                             6,900       --
  Offering costs                                                    (1,163)       (56)
  Collection of stock subscription receivable, net                    --          562
  Repayment of long term debt                                       (1,784)      --
  Payments on capital leases                                           (27)       (25)
                                                                   -------    -------
    Net cash provided by financing activities                        4,033        925
                                                                   -------    -------
  Effect of exchange rate changes on cash                               (9)       (14)
                                                                   -------    -------
  Net decrease in cash and cash equivalents                           (459)      (741)

  Cash and cash equivalents at beginning of period                   1,120      1,321
                                                                   -------    -------
  Cash and cash equivalents at end of period                       $   661    $   580
                                                                   =======    =======
  Supplemental Disclosures of Cash Flow Information

  The Registrant paid cash during the period for (in thousands):
   Interest                                                        $   660    $   220
                                                                   =======    =======
   Taxes                                                              --         --
                                                                   =======    =======
  Supplemental Schedule of Non-Cash Financing Activities
  The Registrant has issued Common Stock
   in exchange for services as follows (in thousands):

   Shares issued                                                        15          1
                                                                   =======    =======
   Amount                                                          $    51    $     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  September  30,  1996 and 1995  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, 1995.

The consolidated financial statements include the accounts of the Registrant and
its wholly owned  subsidiaries:  Belmac  Healthcare  Corporation  and its wholly
owned  subsidiary  -  Belmac  Hygiene,   Inc.,   Belmac  Health  Corp.,   B.O.G.
International  Finance,  Inc.,  Belmac  Jamaica,  Ltd.,  Chimos/LBF S.A. and its
wholly owned subsidiary - 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.

In the opinion of management,  the accompanying unaudited consolidated financial
statements at September  30, 1996 and 1995 are  presented on a basis  consistent
with the audited  consolidated  financial statements for the year ended December
31,  1995 and  contain  all  adjustments,  consisting  only of normal  recurring
adjustments,  necessary to present fairly the Registrant's financial position as
of September 30, 1996,  the results of its operations and its cash flows for the
nine months ended September 30, 1996 and 1995. The results of operations for the
nine months ended September 30, 1996 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.  Investments  available for sale of $4,747,000 at September 30, 1996 are
reported at approximate market value.


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,
                                                          1996          1995
                                                        -------       -------
Raw materials                                           $   354       $   374
Work in process                                            --               1
Finished goods                                            1,265         1,498
                                                        -------       -------
                                                          1,619         1,873
Less: Allowance for slow moving or obsolete inventory      (832)         (819)
                                                        -------       -------
                                                        $   787       $ 1,054
                                                        =======       =======


DEBT:


The  Registrant  completed a public  offering  (the  "Public  Offering")  of its
securities  in February  1996,  whereby it sold 6,900 Units.  Each Unit ("Unit")
consisted of a One Thousand  Dollars  ($1,000)  Principal Amount 12% Convertible
Senior  Subordinated  Debenture  due February 13, 2006  ("Debenture")  and 1,000
Class A Redeemable  Warrants, each to purchase one share of Common Stock and one
Class B Redeemable Warrant.  Two Class B Redeemable Warrants entitle a holder to
purchase  one share of Common  Stock.  Interest  on the  Debentures  is  payable
quarterly.


                                        9

<PAGE>



On May 29, 1996, the  Debentures  and Class A Redeemable  Warrants began trading
separately.  The  characteristics  of the  Debentures and the Class A Redeemable
Warrants are consistent with their description as components of the Units.

The Debentures are convertible prior to maturity, unless previously redeemed, at
any time commencing  February 14, 1997 (the  "Anniversary  Date") into shares of
Common  Stock at a  conversion  price per share of the lesser of $2.50 or 80% of
the average closing price of the Common Stock on the American Stock Exchange for
the 20 consecutive trading days immediately preceding the Anniversary Date.

Gross and net proceeds (after deducting  underwriting  commissions and the other
expenses  of  the  offering),  were  approximately  $6,900,000  and  $5,700,000,
respectively,  a  portion  of which  were used to  retire  $1,770,000  principal
balance of debt incurred in the October 1995 private placements.

Of the Unit purchase  price of $1,000,  for financial  reporting  purposes,  the
consideration  allocated to the Debenture was $722, to the  conversion  discount
feature of the  Debenture  was $224 and to the 1,000  Class A Warrants  was $54.
None of the Unit  purchase  price was  allocated  to the Class B Warrants.  Such
allocation  was based upon the relative fair values of each security on the date
of issuance.  Such allocation resulted in recording a discount on the Debentures
of $1,918,000.

The  original  issue  discount  and the costs  related  to the  issuance  of the
Debentures are being amortized to interest expense using the effective  interest
method over the lives of the related Debentures.  The effective interest rate on
the Debentures is 18.1%.


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.


NEW ACCOUNTING PRONOUNCEMENTS:


In  March  1995,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standards  No.  121,  "Accounting  for the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of"
("FAS 121")  effective for fiscal years  beginning  after December 15, 1995. FAS
121 requires that long-lived assets and certain  identifiable  intangibles to be
held and used by an entity be reviewed for impairment whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.

                                       10

<PAGE>



The  Registrant  adopted FAS 121 effective  January 1, 1996. The adoption of FAS
121 did not have a material impact on the financial  condition or the results of
operations  of the  Company.

           In October 1995,  the FASB issued  Statement of Financial  Accounting
Standards  No.  123,  "Accounting  for  Stock-Based  Compensation"  ("FAS  123")
effective  for  transactions  entered  into after  December  15,  1995.  FAS 123
provides  alternatives  for the methods used by entities to record  compensation
expense associated with its stock-based  compensation plans.  Additionally,  FAS
123  provides  further  guidance  on the  disclosure  requirements  relating  to
stock-based compensation plans. The Registrant adopted FAS 123 effective January
1, 1996. The adoption of FAS 123 did not have a material impact on the financial
condition or the results of operations of the Company.



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.

                                       11

<PAGE>



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


RESULTS OF OPERATIONS:

Three Months Ended  September  30, 1996 versus Three Months Ended  September 30,
1995


The  Registrant  reported  revenues of $4,049,000  and a net loss of $710,000 or
$.22 per common share for the three months ended  September 30, 1996 compared to
revenues of  $8,169,000  and a net loss of $130,000 or $.06 per common share for
the same period in the prior year.

The 50%  decrease in revenues is  primarily  attributable  to an 85% decrease in
sales by the Registrant's French subsidiary, Chimos/LBF S.A., to $997,000, which
was  partially  offset by a 76%  increase in sales by the  Registrant's  Spanish
subsidiary,  Laboratorios  Belmac S.A., to $2,999,000.  As previously  reported,
revenues declined  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 the  Registrant's  revenues  in  1995  and
approximately 54% of its revenues in the quarter ended March 31, 1996.  Ceredase
gross margins,  as a percent of sales, were  approximately 5% during the quarter
ended  March 31,  1996;  therefore,  the  impact  on  operating  profits  is not
considered to be material. Overall gross margins for the quarter ended September
30, 1996 improved to 42%,  compared to 14% in the comparable period of the prior
year,  primarily  as a  result  of the more  rapid  rate of  growth  in sales at
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 distribution operations in France, Chimos/LBF,  generate relatively
low gross margins  (approximately  18% for the quarter ended September 30, 1996)
compared to the Registrant's  Spanish subsidiary,  Laboratorios Belmac, which is
experiencing  substantially  higher margins  (approximately  50% for the quarter
ended September 30, 1996).

Selling,  general and administrative expenses were $1,976,000,  or 49% of sales,
for the three months ended September 30, 1996 compared to $1,667,000,  or 20% of
sales,  for the same period in the prior year. As a direct result of the decline
in  revenues,  selling,  general  and  administrative  expenses  as a percent of
revenues  increased  during the quarter ended September 30, 1996, as compared to
the same period in the prior year. A significant  portion of these  expenses are
marketing and selling costs,  which are necessary for the Registrant's  plans to
increase sales and market share in Spain. To the extent practical,  however, the
Registrant intends to continue its efforts to control general and administrative
expenses as part of its  austerity  program in its effort to reach and  maintain
profitability.

Research and  development  expenses were $2,000 for the quarter ended  September
30, 1996  compared  to $94,000  for the same  period of the prior year.  The 98%
decrease reflects the

                                       12

<PAGE>



Registrant's  elimination of basic research and  redirection of its resources to
expand its portfolio of marketed  products.  During this period,  the Registrant
did not  commence  any new research and  development  programs.  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 decreased by 5% to $133,000 for the three
months ended September 30, 1996, compared to $140,000 for the same period of the
prior year,  primarily  due to 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 was $331,000 for the three  months  ended  September  30, 1996
compared to $89,000 for the same period of the prior year. The $242,000 increase
reflects  interest  expense  arising  primarily from the Debentures  sold in the
February 1996 Public Offering.  Interest income was $34,000 for the three months
ended September 30, 1996,  compared to no such income for the same period of the
prior year. The increase was with respect to interest  earned on the proceeds of
the Public Offering which have been temporarily  invested in short-term interest
bearing investments.

Other (income) expense,  net was $2,000 for the three months ended September 30,
1996 and is substantially  lower than other  (income)expense,  net of ($720,000)
for the same period of the prior year.  The prior year's  other income  expense,
net was primarily  comprised of  ($360,000)  related to settlement of litigation
and the effect of a reversal of an  overaccrual  of a  liability  related to the
proposed sale of Biolid(R), which did not occur, in the amount of ($368,000).

Although the  Registrant  reported a 50% decrease in sales,  the improved  gross
margins of 42% and controlled spending with respect to operating expenses in the
quarter ended September 30, 1996, resulted in a $350,000 improvement in its loss
from  operations  from $761,000 in the same period of the prior year to $411,000
for the  current  quarter.  This  improvement,  however was offset by a $930,000
increase in other  (income)  expenses,  resulting in a net loss of $710,000,  or
$.22 per common share for the quarter ended  September  30, 1996,  compared to a
net loss of $130,000,  or $.06 per common share for the same period in the prior
year.


Nine Months Ended September 30, 1996 versus Nine Months Ended September 30, 1995

The Registrant  reported revenues of $18,425,000 and a net loss of $2,085,000 or
$.66 per common share for the nine months ended  September  30, 1996 compared to
revenues of  $24,368,000  and a net loss of  $1,519,000 or $.55 per common share
for the same period in the prior year.

The 24%  decrease in revenues is  primarily  attributable  to a 50%  decrease in
sales by the Registrant's French subsidiary,  Chimos/LBF,  to $9,706,000,  which
was  partially  offset by a 74%  increase in sales by the  Registrant's  Spanish
subsidiary,  Laboratorios  Belmac,  to  $8,562,000,  for the nine  months  ended
September 30, 1996. As previously reported, revenues declined beginning

                                       13

<PAGE>



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 the  Registrant's  revenues in the year ended December 31,
1995.  Ceredase gross margins,  as a percent of sales,  were  approximately  5%;
therefore,  the impact on operating  profits is not  considered  to be material.
Gross margins for the nine months ended  September 30, 1996 improved to 30% when
compared  to gross  margins of 18% in the  comparable  period of the prior year,
primarily as a result of the more rapid rate of growth in sales at  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
distribution  operations in France,  Chimos/LBF,  generate  relatively low gross
margins  (approximately  11% for the nine months  ended  September  30, 1996) as
opposed to the Registrant's  Spanish subsidiary,  Laboratorios  Belmac, which is
experiencing substantially higher margins (approximately 52% for the nine months
ended September 30, 1996).

Selling, general and administrative expenses were $5,871,000 for the nine months
ended September 30, 1996 compared to $5,516,000 for the same period in the prior
year. Overall,  selling,  general and administrative  expenses increased and the
composition  changed as a result of increased  selling expenses  incurred by the
Spanish  subsidiary,  which are  necessary  in order to sustain the  increase in
sales volume that the Spanish sales force has generated in the nine months ended
September 30, 1996.  This increase was offset by a decrease in selling,  general
and administrative expenses by Chimos/LBF, primarily due to the loss of Ceredase
sales,  during the nine months ended September 30, 1996. 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  $28,000  for the nine  months  ended
September  30, 1996  compared to $341,000 for the same period of the prior year.
The 92% decrease  reflects the results of a thorough  review of all research and
development  activities  and the  establishment  of  priorities  based upon both
technical and commercial  criteria.  During this period,  the Registrant did not
commence any new research and development  programs.  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 decreased by 5% to $386,000 for the nine
months ended September 30, 1996, compared to $408,000 for the same period of the
prior year,  primarily  due to 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 was  $1,343,000  for the nine months ended  September 30, 1996
compared to  $215,000  for the same  period of the prior  year.  The  $1,128,000
increase  reflects interest expense arising primarily from (i) the Notes sold by
the  Registrant in its October 1995 private  placements  (including  $446,000 of
unamortized  discount and issuance costs at the date of repayment),  which Notes
were paid with the proceeds of the Public  Offering  completed in February 1996,
(ii) the Debentures  sold in the February 1996 Public  Offering,  and (iii) to a
lesser degree,  higher  outstanding  balances on short term borrowings which are
used to finance working capital needs.  Interest income was $79,000 for the nine
months ended September 30, 1996 compared to $1,000

                                       14

<PAGE>



for the same period of the prior year. The increase was with respect to interest
earned on the  proceeds  of the  Public  Offering  which  have been  temporarily
invested in short-term interest bearing investments.

Other (income)  expense,  net of $82,000 for the nine months ended September 30,
1996 is substantially  lower than other (income) expense,  net of ($577,000) for
the same period of the prior year,  which is primarily  comprised of  ($360,000)
related to settlement of litigation,  a ($380,000) gain recognized upon the sale
of the Registrant's Belmacina trademark in Spain and the effect of a reversal of
an overaccrual of a liability  related to the proposed sale of Biolid(R),  which
did not occur, in the amount of ($368,000),  offset by a charge for cancellation
of the stock subscription  receivable and related interest from a former officer
of the Registrant.

Although the  Registrant  reported a 24% decrease in sales,  the improved  gross
margins of 30% and controlled spending with respect to operating expenses in the
nine months ended  September 30, 1996,  resulted in a $1,143,000  improvement in
its loss from operations from $1,882,000 in the same period of the prior year to
$739,000 for the nine months ended  September  30, 1996.  This  improvement  was
offset by interest expense  associated with (i) the Notes sold by the Registrant
in its October 1995 private  placements (ii) the Debentures sold in the February
1996 Public Offering,  and (iii) to a lesser degree, higher outstanding balances
on short  term  borrowings  which are used to  finance  working  capital  needs,
resulting  in a net loss of  $2,085,000,  or $.66 per common  share for the nine
months ended September 30, 1996,  compared to a net loss of $1,519,000,  or $.55
per common share for the same period in the prior year.


LIQUIDITY AND CAPITAL RESOURCES:


Total assets  increased from  $16,290,000 at December 31, 1995 to $16,886,000 at
September 30, 1996, while Common  Stockholders' Equity decreased from $5,316,000
at December 31, 1995 to $4,335,000 at September 30, 1996. The decrease in Common
Stockholders'  Equity  reflects  primarily the February 1996 Public  Offering of
Units,  offset by a  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, 1996.

The Registrant's  working capital increased from $3,113,000 at December 31, 1995
to  $5,530,000  at  September  30,  1996.  The  increase  in working  capital is
primarily attributable to the proceeds from the February 1996 Public Offering of
Units.

Cash and cash  equivalents  decreased  from  $1,120,000  at December 31, 1995 to
$661,000 at  September  30,  1996;  however,  the  Registrant  invested  cash of
$4,738,000 in short term investments, resulting in a balance of $4,747,000 which
is reflected on the  Registrant's  Consolidated  Balance  Sheets as  investments
available for sale at September 30, 1996.

Receivables  decreased  from  $6,836,000  at December 31, 1995 to  $3,566,000 at
September  30,  1996,  primarily  as the  result of the  decline in sales by the
French subsidiary as a result of the

                                       15

<PAGE>



expiration  of the  Ceredase  distribution  contract as of March 31,  1996.  The
Registrant  reduced its  receivables by $5,605,000  since that date primarily by
collecting  receivables  for sales of  Ceredase,  which were  utilized to reduce
accounts  payable  balances by $2,501,000 and to reduce the amount of short-term
borrowings  by  $319,000  during the six months  ended  September  30,  1996.  A
significant  portion of the Registrant's  trade  receivables arise from sales of
pharmaceutical and health care products to the French government.  Payment terms
for such sales are typically 90 to 100 days. The Registrant has not  experienced
any material  delinquent  accounts.  Inventories  also  decreased to $787,000 at
September 30, 1996 compared to $1,054,000 at December 31, 1995, primarily due to
the decline in sales by the French subsidiary and the corresponding reduction in
inventory  levels.  Prepaid  expenses and other current  assets  decreased  from
$596,000 at December 31, 1995 to $459,000 at September 30, 1996.

Although the combined total of accounts payable and accrued  expenses  decreased
from  $5,455,000  at December 31, 1995 to  $3,446,000  at September 30, 1996 and
short term borrowings increased slightly from $1,197,000 at December 31, 1995 to
$1,239,000  at  September  30,  1996,  as  discussed  above,  such  balances are
significantly  reduced  below  their  March 31,  1996  balances,  as a result of
application  of cash  collected  from  receivables  during the six months  ended
September 30, 1996.

Fixed assets,  net decreased from  $4,084,000 at December 31, 1995 to $3,596,000
at September 30, 1996,  partly due to a fluctuation in foreign currency exchange
rates and partly due to the  disposal of certain  unnecessary  fixed  assets and
write-off  of  leasehold  improvements  by the  Registrant  associated  with its
relocation to smaller, more cost effective, office space in April 1996.

Other  non-current  assets increased 59% from $1,319,000 at December 31, 1995 to
$2,096,000  at  September  30,  1996 and long  term  debt  increased  278%  from
$1,354,000 at December 31, 1995 to $5,117,000 at September 30, 1996, as a result
of the Public Offering of Units in February 1996.

Investing  activities,  including the purchase of investments available for sale
of  $7,853,000,  used net  cash of  $4,818,000  during  the  nine  months  ended
September 30, 1996.  These purchases of investments were consummated in order to
maximize  the return on cash  collected  by the French  subsidiary  on  Ceredase
accounts  receivable  and cash  received in the February  1996 Public  Offering.
Financing  activities  (primarily  the sale of Units  in a  Public  Offering  in
February  1996 and proceeds  from  borrowings  on lines of credit)  provided net
proceeds of $4,033,000, after repayment of $1,784,000 of long term debt, for the
nine months ended September 30, 1996.  Operating  activities for the nine months
ended September 30, 1996 provided net cash of $335,000. The loss on the disposal
of fixed  assets and  write-off of leasehold  improvements  associated  with the
Registrant's  relocation to smaller,  more cost effective  office space in April
1996 was $79,000.

A  substantial  amount of the  Registrant's  business is conducted in France and
Spain and is therefore  influenced by the extent to which there are fluctuations
in the dollar's value against such countries' currencies.  The effect of foreign
currency  fluctuations  on long lived assets for the nine months ended September
30, 1996 was a decrease of $426,000 and the cumulative historical effect was

                                       16

<PAGE>



a decrease of $1,020,000,  as reflected in the Registrant's Consolidated Balance
Sheets in the "Liabilities and Stockholders' Equity" section.  Although exchange
rates fluctuated  significantly in recent years, the Registrant does not believe
that the effect of foreign currency  fluctuation is material to the Registrant's
results  of  operations  as the  expenses  related  to much of the  Registrant's
foreign  currency  revenues  are in the  same  currency  as such  revenues.  The
Registrant relies primarily upon financing  activities to fund the operations of
the Registrant in the United States and 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
France  or  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.

To finance its operations,  in October 1995 the Registrant conducted two private
placements of its  securities.  In the first  placement,  the Registrant sold to
certain purchasers for an aggregate  purchase price of $720,000,  120,000 shares
of the  Registrant's  Common  Stock and 12%  promissory  notes in the  aggregate
principal  amount of $720,000  which became  payable in full upon the earlier of
July  31,  1996  or  the  closing  of a  public  offering  of  the  Registrant's
securities.  In the second placement,  the Registrant sold to certain purchasers
for an aggregate  purchase price of  $1,050,000,  131,250 shares of Common Stock
and 12% promissory  notes in the aggregate  principal amount of $1,050,000 which
became  payable in full upon the earlier of September 30, 1996 or the completion
of a public  offering.  A Public Offering was completed in February 1996 and all
of such notes were repaid at that time or converted into Units.

An aggregate of 6,900 Units (the  "Units") were sold in the February 1996 Public
Offering.  Each Unit  consisted of a One  Thousand  Dollars  ($1,000)  Principal
Amount 12% Convertible Senior  Subordinated  Debenture due February 13, 2006 and
1,000 Class A  Redeemable  Warrants,  each to purchase one share of Common Stock
and one Class B Redeemable  Warrant.  Two Class B Redeemable  Warrants entitle a
holder to  purchase  one  share of  Common  Stock.  The  Debentures  and Class A
Redeemable Warrants initially traded only as a Unit but began trading separately
on May 29, 1996. Interest on the Debentures is payable quarterly. The Debentures
are  convertible  prior to maturity,  unless  previously  redeemed,  at any time
commencing  February  14,  1997 (the  "Anniversary  Date") into shares of Common
Stock at a  conversion  price  per  share of the  lesser  of $2.50 or 80% of the
average closing price of the Common Stock on the American Stock Exchange for the
20 consecutive  trading days immediately  preceding the Anniversary  Date. Gross
and net  proceeds  (after  deducting  underwriting  commissions  and  the  other
expenses  of  the  offering),  were  approximately  $6,900,000  and  $5,700,000,
respectively,  a  portion  of which  were used to  retire  $1,770,000  principal
balance of debt incurred in the private placements discussed above.

Of the Unit purchase  price of $1,000,  for financial  reporting  purposes,  the
consideration  allocated to the Debenture was $722, to the  conversion  discount
feature of the  Debenture  was $224 and to the 1,000  Class A Warrants  was $54.
None of the Unit  purchase  price was  allocated  to the Class B Warrants.  Such
allocation  was based upon the relative fair values of each security on the date
of issuance.  Such allocation resulted in recording a discount on the Debentures
of $1,918,000. The effective interest rate on the Debentures is 18.1%.


                                       17

<PAGE>



As  discussed  above,  the  Registrant   completed  private  placements  of  its
securities  totaling  $1,770,000  during  October  1995 in  order  to  fund  its
operations and completed a public offering of its securities totaling $6,900,000
in February  1996 to provide  further  liquidity.  Management  expects that as a
result of completing its recent financings,  by carefully  prioritizing research
and development  activities and continuing its austerity program, the Registrant
should  have  sufficient   liquidity  to  fund  operations   through  1997.  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.

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.


                                       18

<PAGE>



PART II.   OTHER INFORMATION

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

Belmac  Hygiene,  Inc.  ("Hygiene"),  a subsidiary of the  Registrant,  filed an
action on December 9, 1994 in the United States  District Court for the Southern
District  of  New  York  against  Medstar,  Inc.   ("Medstar"),   Maximed,  Inc.
("Maximed") and Robert S. Cohen. The defendants are Hygiene's  partners (or such
partner's  control  persons) in the  Registrant's  partnership with Maximed (the
"Partnership"),  which was  formed  for the  development  and  ultimate  sale of
Maximed's  intra-vaginal  controlled release products.  The action sought (i) to
enjoin the defendants from interfering with the management of the Partnership by
Hygiene's  representatives,   and  (ii)  to  recover  damages  as  a  result  of
defendants'  misrepresentations  and  breach  of  warranty  in  the  Partnership
agreement.  The defendants filed a counterclaim  against  Hygiene.  Medstar also
filed a separate  action on May 4, 1995 in the United States  District Court for
the Southern  District of New York against the Registrant  alleging that Hygiene
failed to fund the  Partnership  and  seeking  $10,000,000  from the  Registrant
pursuant  to its  guaranty  of  Hygiene's  obligations.  The issues  were tried,
without a jury, on August 21 through 23, 1995. Thereafter, post-trial briefs and
proposed  findings of fact and conclusions of law were  submitted,  and argument
was heard on October 25,  1995.  On January 12,  1996,  the Court ruled that the
Registrant's  reliance on  defendants'  misrepresentation  was not justified and
that  the  Registrant  had  performed  its  obligations  under  the  Partnership
agreement.  Accordingly,  the Court rendered its decision  dismissing all claims
and  counter-claims  asserted  by  the  parties.  On  September  25,  1996,  the
Registrant filed an  appeal in the United States Court of Appeals for the Second
Circuit.

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, 1996:

                      None.

           The  Registrant  has not filed any reports on Form 8-K  subsequent to
           September 30, 1996.

All  other  items  required  in Part II have  been  previously  filed or are not
applicable for the quarter ended September 30, 1996.

                                       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




November 12, 1996              By: /s/ James R. Murphy
                                   ------------------------
                               James R. Murphy
                               Chairman, President and Chief Executive Officer
                               (principal executive officer)




November 12, 1996              By: /s/ Michael D. Price
                                   ------------------------
                               Michael D. Price
                               Vice President, Chief Financial Officer,
                               Treasurer and Secretary (principal financial
                               and accounting officer)