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

Form 10-QSB

(Mark One)

| | [X] | QUARTERLY REPORT UNDER SECTION
    13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | --- | -------------------------------------------------------------------------------------
| |     |                                                                                      

For the quarterly period ended: March 31, 2005

| | [ ] | TRANSITION REPORT UNDER SECTION
    13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | --- | --------------------------------------------------------------------------------------
| |     |                                                                                       

For the transition period from to

Commission file number: 000-49635

MINRAD INTERNATIONAL, INC.(Exact name of small business issuer as specified in its
      charter)Delaware
      
      870299034(State or other jurisdiction of incorporation or
      organization)
      
      (I.R.S. Employer Identification No.)847 Main Street, Buffalo, New York
      
      14203(Address of principal executive offices)
      
      (Zip Code)


(716) 855-1068Issuer's Telephone Number(Former name, former address and former fiscal year if
      changed since last report)






Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

Transitional Small Business Disclosure Format (Check one): Yes [ ]
No [ X ]



MINRAD INTERNATIONAL, INC.
Form 10-QSB
For the Quarterly Period Ended March 31, 2005



|TABLE OF CONTENTS |     
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|PART I.           |     
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|ITEM 1.           |     
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|ITEM 2.           |     
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|ITEM 3.           |     
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|PART II.          |     
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|ITEM 2.           |     
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|ITEM 5.           |     
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|ITEM 6.           |     
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PART I

Item 1. Financial Statements.

MINRAD INTERNATIONAL, INC. AND
      SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (UNAUDITED)






|                                      |                                         | March 31,   |           | December 31,
|------------------------------------- | --------------------------------------- | ----------- | --------- | ------------
|ASSETS                                |                                         | 2005        |           | 2004        
|                                      |                                         |             |           |             
|Current Assets:                       |                                         |             |           |             
|                                      | Cash                                    | $           | 134,557   | $           
|                                      | Accounts receivable, net                |             | 1,661,965 |             
|                                      | Inventories, net                        |             | 1,004,192 |             
|                                      | Prepaid expenses                        |             | 405,392   |             
|                                      | Total current assets                    |             | 3,206,106 |             
|                                      |                                         |             |           |             
|Property and Equipment:               |                                         |             |           |             
|                                      | Machinery and equipment                 |             | 1,080,530 |             
|                                      | Computers                               |             | 144,895   |             
|                                      | Furniture and fixtures                  |             | 22,641    |             
|                                      | Construction in progress                |             | -         |             
|                                      |                                         |             | 1,248,066 |             
|                                      | Less accumulated depreciation           |             | 712,688   |             
|                                      |                                         |             |           |             
|Total property and equipment          |                                         | 535,378     |           | 499,206     
|                                      |                                         |             |           |             
|Other Assets                          |                                         | 368,293     |           | 112,798     
|                                      |                                         |             |           |             
|                                      | $                                       | 4,109,777   | $         | 2,762,777   
|                                      |                                         |             |           |             
|LIABILITIES AND STOCKHOLDERS' DEFICIT |                                         |            
|                                      |                                         |             |           |             
|Current Liabilities:                  |                                         |             |           |             
|Demand notes payable                  |                                         |             |           |             
|                                      | Stockholders' and affiliates            | $           | 1,739,538 | $           
|                                      | Wachovia Bank and others                |             | 997,533   |             
|Accounts payable                      |                                         | 1,800,385   |           | 2,433,859   
|Accrued expenses                      |                                         | 811,179     |           | 824,812     
|Due
    to affiliates                 |                                         | 307,465     |           | 374,740     
|Current portion of long-term debt,    |                                         |             |           |             
|                                      | including
    default reclassifications |             | 842,976   |             
|                                      | Total current
    liabilities           |             | 6,499,076 |             
|                                      |                                         |             |           |             
|Stockholders' deficit                 |                                         | (2,389,299) |           | (3,364,068) 
|                                      |                                         |             |           |             
|                                      | $                                       | 4,109,777   | $         | 2,762,777   
|                                     
|See
    accompanying notes.          



3

MINRAD INTERNATIONAL, INC. AND
      SUBSIDIARIESCONSOLIDATED STATEMENTS OF
      OPERATIONS (UNAUDITED)





|                                                              |                                 |                   
|------------------------------------------------------------- | ------------------------------- | ------------------
|                                                              | Three Months Ended              | Three Months Ended
|                                                              | March 31, 2005                  | March 31, 2004    
|                                                              |                                 |                   
|Revenue                                                       | $                               | 2,428,728         
|                                                              |                                 |                   
|Cost of
    goods sold                                        |                                 | 1,270,272         
|                                                              |                                 |                   
|Gross profit                                                  |                                 | 1,158,456         
|                                                              |                                 |                   
|Operating expenses:                                           |                                 |                   
|                                                              | Sales
    and marketing         |                   
|                                                              | Research and development        |                   
|                                                              | Finance
    and administrative  |                   
|Total operating expense                                       |                                 | 1,299,771         
|                                                              |                                 |                   
|Operating loss                                                | $                               | (141,315)         
|                                                              |                                 |                   
|Non-operating expenses:                                       |                                 |                   
|                                                              | Interest expense:               |                   
|                                                              | Stockholders and
    affiliates |                   
|                                                              | Other                           |                   
|Debt conversion
    costs                                     |                                 | -                 
|Total non-operating expense                                   |                                 | (753,973)         
|                                                              |                                 |                   
|Net
    Loss                                                  | $                               | (895,288)         
|                                                              |                                 |                   
|Net
    Loss per share, basic and diluted                     | $                               | (.03)             
|                                                              |                                 |                   
|Weighted average common shares outstanding, basic and diluted |                                 | 28,236,653        
|                                                              |                                 |                   
|See
    accompanying notes.                                  





4



MINRAD INTERNATIONAL, INC. AND
      SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN
      STOCKHOLDERS' DEFICIT (UNAUDITED)
      For the Quarter Ended March 31, 2005








|                                       |            |            |            
|-------------------------------------- | ---------- | ---------- | -----------
|                                       |            |            |            
|                                       | Common     | Additional |            
|                                       | Stock      | Paid-In    | Accumulated
|                                       | Shares     | Amount     | Capital    
|                                       |            |            |            
|Balance at December 31, 2004           | 28,019,153 | $          | 280,192    
|                                       |            |            |            
|Sale
    of common stock, net of costs | 321,714    |            | 3,217      
|                                       |            |            |            
|Stock options exercised                | 5,000      |            | 50         
|                                       |            |            |            
|Warrants issued with demand notes      | -          |            | -          
|                                       |            |            |            
|Warrants issued on Wachovia guarantee  | -          |            | -          
|                                       |            |            |            
|Net
    loss                           |            |            |            
|                                       |            |            |            
|Balance at March 31, 2005              | 28,345,867 | $          | 283,459    
|                                       |            |            |            
|See
    accompanying notes.           



5



MINRAD INTERNATIONAL, INC. AND
      SUBSIDIARIESCONSOLIDATED STATEMENT OF CHANGES IN
      STOCKHOLDERS' DEFICIT (UNAUDITED)
      For the Quarter Ended March 31, 2004






|                                                       | Series B    |        |            |            
|------------------------------------------------------ | ----------- | ------ | ---------- | -----------
|                                                       | Convertible |        |            |            
|                                                       | Preferred   | Common | Additional |            
|                                                       | Stock       | Stock  | Paid-In    | Accumulated
|                                                       | Shares      | Amount | Shares     | Amount     
|                                                       |             |        |            |            
|Balance at December 31, 2003                           | 950,000     | $      | 475,000    | 14,155,485 
|                                                       |             |        |            |            
|Beneficial conversion feature of demand notes payable  | -           |        | -          | -          
|                                                       |             |        |            |            
|Debt
    conversion costs                              | -           |        | -          | -          
|                                                       |             |        |            |            
|Conversion of liabilities to equity                    | -           |        | -          | 2,846,049  
|                                                       |             |        |            |            
|Sale
    of common stock, net of costs                 | -           |        | -          | 1,216,084  
|                                                       |             |        |            |            
|Conversion of series B preferred stock to common stock | (950,000)   |        | (475,000)  | 1,140,000  
|                                                       |             |        |            |            
|Net
    loss                                           | -           |        | -          | -          
|                                                       |             |        |            |            
|Balance at March 31, 2004                              | -           | $      | -          | 19,357,618 
|                                                      
|See accompanying notes.                               



6



MINRAD INTERNATIONAL, INC. AND
      SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)








|                                      | Three Months                                     | Three Months   
|------------------------------------- | ------------------------------------------------ | ---------------
|                                      | Ended March 31                                   | Ended March 31,
|                                      | 2005                                             | 2004           
|Cash flows from operating activities: |                                                  |                
|Net loss                              | $                                                | (895,288)      
|                                      | Adjustments to reconcile net loss to net         |                
|                                      | cash
    used by operating activities:           |                
|                                      | Depreciation                                     | 38,563         
|                                      | Decrease in allowance for doubtful accounts      | (50,000)       
|                                      | Debt conversion costs                            | -              
|                                      | Amortization of note discount                    | 164,726        
|                                      | Warrants issued for guarantee                    | 500,937        
|                                      | (Increase) decrease in assets:                   |                
|                                      | Accounts receivable- trade                       | (1,005,737)    
|                                      | Inventory                                        | 65,373         
|                                      | Prepaid expenses                                 | 66,657         
|                                      | Increase (decrease) in liabilities:              |                
|                                      | Accounts payable                                 | (633,472)      
|                                      | Accrued expenses                                 |                
|                                      |                                                  |                
|                                      | Net cash used by operating activities            |                
|                                      |                                                  |                
|Cash flows from investing activities: |                                                  |                
|                                      | Purchases of property and equipment              | (74,734)       
|                                      | Acquisition of other assets                      | (33,650)       
|                                      |                                                  |                
|                                      | Net cash  used by investing activities           | (108,384)      
|                                      |                                                  |                
|Cash flows from financing activities: |                                                  |                
|                                      | Net decrease (increase) in restricted deposits   | (3,634)        
|                                      | Net  repayments to affiliates                    | (67,275)       
|                                      | Borrowings under demand notes payable            | 2,500,000      
|                                      | Repayments under demand notes payable            | (473,592)      
|                                      | Repayment under long term debt                   | (179,333)      
|                                      | Proceeds from sale of common stock, net of costs | 435,182        
|                                      | Proceeds from options exercised                  | 8,750          
|                                      | Deferred financing costs                         |                
|                                      | Net cash provided by financing activities        |                
|                                      |                                                  |                
|Net increase (decrease) in cash       |                                                  | 131,627        
|                                      |                                                  |                
|Cash-beginning of period              |                                                  | 2,930          
|Cash-end of period                    | $                                                | 134,557        
|                                      |                                                  |                
|See accompanying notes.              





7



MINRAD INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTS






NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of MINRAD
International, Inc. and its wholly owned Subsidiaries (the "Company") have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments considered necessary for fair presentation have been included. All
such adjustments are of a normal recurring nature. Operating results for the
three-month period ended March 31, 2005 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2005. For further
information, refer to the Company's consolidated financial statements and
footnotes as of and for the periods ended December 31, 2004 and September 30,
2004 and 2003 as filed with the Securities and Exchange Commission on Form
10-KSB on March 31, 2005.



NOTE 2: MERGER

As fully disclosed in the December 31, 2004 Form 10-KSB, on December 16, 2004, MINRAD Inc.
consummated a Merger Agreement with Technology Acquisition Corporation (TAC, now
MINRAD INTERNATIONAL, INC.) and its subsidiary. As of that date, the operations
of the consolidated financial statements include the activity of the merged
entities. The
financial statements presented for the three months ended March 31, 2004 reflect the
operations of only MINRAD Inc.



NOTE 3: MINRAD EU

MINRAD EU, a wholly owned subsidiary of MINRAD, Inc., was formed in February
2005 to hold existing and obtain future European pharmaceutical or image guidance
registrations.  Also, acting as a sales headquarters for several of our future international
sales managers, the office will be used to support our various distribution
partners. This includes E. Merck with whom the Company signed a pharmaceutical
distribution agreement in February 2005 and various other current and future
distributors.  MINRAD EU will set up a laboratory to conduct finished product testing of our
pharmaceutical products according to the European requirements.



NOTE 4: DEMAND NOTES PAYABLE

In February 2005, the Company obtained financing of $2.5 million, which
includes (1) convertible promissory notes with an aggregate principal amount of
$2.5 million which bear interest at 6% and matures in October 2005; and (2)
warrants to purchase, at any time prior to January 30, 2007, an aggregate of
375,000 shares of the

8



Company common stock
at $1.75 per share. These warrants were valued using the Black Scholes pricing model at $925,188 which was
recorded as a note discount and is being amortized into non cash interest over
the life of the note. During the three months ended March 31, 2005 the amortization
totaled $164,726.  The remaining unamortized balance of $760,462 is
reflected as a reduction to the face value of the note on the accompanying
balance sheet.

On May 11, 2005, the parties amended provisions of the convertible notes
relating to optional prepayment, optional acceleration, and optional conversion
rights. As amended, each of these provisions, which were formerly triggered by
the completion of $5 million of equity funding, is now triggered by the
existence of aggregate outstanding indebtedness owed by the Company and its
subsidiaries (on a consolidated basis) to one or more banks ("Bank Borrowing")
in excess of $5 million. If Bank Borrowing in excess of $5 million occurs, then
(1) commencing 7 business days thereafter the Company will have the option to
prepay the notes, (2) commencing 7 business days thereafter the lenders will
have the right to accelerate the maturity date of the notes, and (3) commencing
on that date the lenders will have the right to convert all or any portion of
the outstanding notes into shares of the Company's Common Stock at $1.75 per
share.  In the event the lenders obtain the ability to convert their notes
into shares of the Company's common stock based on the terms of the agreement,
the Company will be required to record an interest charge of approximately $1.6
million attributed to the beneficial conversion feature at $1.75 per share.

In connection with the continuing guarantee agreement related to the Wachovia
Bank demand note, an additional 150,000 warrants to purchase common stock at
$.75 per share were granted to Kevin Kimberlin Partners L.P. (KKP) in the three
months ended March 31, 2005.  The warrants, which vest immediately and

expire on various dates through May 2010, were valued using the Black Scholes pricing model, resulting in $500,937 being recorded and included in
interest expense for the three months ended March 31, 2005.  As of the date
of this report the debt continued to remain outstanding resulting in the grant
of an additional 100,000 warrants subsequent to March 31, 2005.

NOTE 5: EQUITY

During the three months ended March 31, 2005 the Company sold 321,714 shares of
the Company's stock at the price of $1.75 per share with the net proceeds of
$435,182. The Company granted 32,171 warrants exercisable at $1.75 per share in connection with this sale which
vested immediately and expire after seven years.

NOTE 6: SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest during the three-month period ended March 31, 2005
amounted to $61,629 (compared to $363,505 in 2004). There was no cash paid for income taxes
during the three-month period ended March 31, 2005 and 2004.



|                                                                             |   | 2005    |   | 2004     
|---------------------------------------------------------------------------- | - | ------- | - | ---------
|Noncash investing and financing activities:                                  |   |         |   |          
|                                                                             |   |         |   |          
|Conversion of demand notes and accrued interest
    into common stock        | $ | -       | $ | 2,347,592
|                                                                             |   |         |   |          
|Conversion of accounts payable into common
    stock                         | $ | -       | $ | 51,852   
|                                                                             |   |         |   |          
|Series B preferred stock converted to common
    stock                       | $ | -       | $ | 475,000  
|                                                                             |   |         |   |          
|Note discount for value of detachable warrants
    granted with demand notes | $ | 925,188 | $ | -        

9



NOTE 7: STOCK OPTIONS

The Company  adopted a 2004 Stock Option Plan, which authorizes the
grant of up to 7,170,500 options to officers and other employees. To date,
options granted under
this plan have been incentive stock options with an exercise price of not less than 110% of the market value on
the day of grant. The options may be exercised in specific increments usually
beginning one or two years after the date of grant, and generally expire two to
five years from their respective vesting dates or earlier if the employment is
terminated.

A summary of the status of options granted under the  stock option
plan for the three months ended March 31, 2005 is presented below:





|                                        |                                  |         | Weighted
|--------------------------------------- | -------------------------------- | ------- | --------
|                                        | Number of                        |         | Average 
|                                        | Shares Subject                   |         | Exercise
|                                        | To Options                       |         | Price   
|                                        |                                  |         |         
|Outstanding as of December 31,
    2004 | 2,360,917                        | $       | 1.50    
|                                        | Granted to employees 1/1-3/31/05 | 352,000 | $       
|                                        | Forfeited in period 1/1-3/31/05  | (2,000) | $       
|                                        | Exercised in period 1/1-3/31/05  | (5,000) | $       
|                                        |                                  |         |         
|Outstanding as of March 31, 2005        | 2,705,917                        | $       | 1.80    
|                                        |                                  |         |         
|Exercisable as of March 31, 2005        | 618,548                          | $       | 1.58    



Options outstanding as of March 31, 2005 had exercise prices ranging from
$1.40 to $4.50

The Company applies APB Opinion No. 25 in accounting for its stock option
plan. Accordingly, no compensation expense has been charged to earnings for
options granted to employees for the period ended March 31, 2005 since all such
options have an exercise price greater than the market value on the date of
grant.

The weighted average fair value of the options granted to employees during
the period ended March 31, 2005 was $2.34 per share ($.17 for 2004).

If the Company had elected to recognize compensation cost based on the fair
value of the options granted at grant date as prescribed by SFAS No. 123, net
loss would have increased as follows.

10





|                                |   | Three-Month  |   | Three-Month 
|------------------------------- | - | ------------ | - | ------------
|                                |   | Period Ended |   | Period Ended
|                                |   | March 31,    |   | March 31,   
|                                |   | 2005         |   | 2004        
|                                |   |              |   |             
|Net loss as reported            | $ | (895,288)    | $ | (1,529,437) 
|                                |   |              |   |             
|Total stock-based employee      |   |              |   |             
|compensation expense determined |   |              |   |             
|under fair value method for all |   |              |   |             
|awards                          | $ | (61,647)     | $ | (1,462)     
|                                |   |              |   |             
|Net loss- pro forma             | $ | (956,935)    | $ | (1,530,899) 





Management has valued the options at their date of grant utilizing the Black
Scholes pricing model.  The
following weighted-average assumptions were utilized in the fair value
calculations:





|                                | March 31,
    2005 | March 31,
    2004
|------------------------------- | ------------------ | ------------------
|                                |                    |                   
|Expected dividend yield         | 0                  |                   
|Expected stock price volatility | 34                 |                   
|Risk-free interest rate         | 4                  |                   
|Expected life of options        | 8                  |                   





NOTE 8: RELATED PARTY TRANSACTIONS

A related party is generally defined as (i) any person that holds 10% or more
of the Company's securities and their immediate families, (ii) the Company's
management, (iii) someone that directly or indirectly controls, is controlled by
or is under common control with the Company, or (iv) anyone who can
significantly influence the financial and operating decisions of the Company. A
transaction is considered to be a related party transaction when there is a
transfer of resources or obligations between related parties.

The Company is indebted to Biosight, Inc., a currently inactive healthcare consulting firm, and Biovision, Inc., a medical products firm also currently
inactive. Certain executive officers and greater than 10% stockholders of the Company are also stockholders in these companies,
and certain greater than 10% stockholders of the Company are also stockholders
of Kevin Kimberlin Partners, L.P. The amounts outstanding are unsecured.

Due to affiliates is comprised of the following:

11





|                               |   | March 31 |   | December 31
|------------------------------ | - | -------- | - | -----------
|                               |   | 2005     |   | 2004       
|                               |   |          |   |            
|Biosight, Inc.                 | $ | 159,533  | $ | 187,809    
|Biovision, Inc.                |   | 91,300   |   | 88,600     
|Employee advances and notes    |   | 28,936   |   | 73,774     
|Kevin Kimberlin Partners, L.P. |   | 27,696   |   | 24,557     
|                               |   |          |   |            
|                               | $ | 307,465  | $ | 374,740    





NOTE 9: SUBSEQUENT EVENTS

In April 2005, the  Board of Directors and shareholders of the Company approved
the Directors Compensation Plan effective April 21, 2005. The plan's purpose is to
compensate the Outside Directors for attending meetings of the Board at the rate
of $1,000 per meeting, and Committee meetings at the rate of $500. Payment will
be made 50% in cash and 50% in Company stock. The aggregate number of shares
that may be issued under the plan must not exceed 50,000.



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

Forward-Looking Statements

All statements, other than statements of historical fact, contained in this
Form 10-QSB constitute forward-looking statements. In some cases you can
identify forward-looking statements by terms such as "may," "intend," "might,"
"will," "should," "could," "would," "expect," "believe," "estimate,"
"anticipate," "predict," "project," "potential," or the negative of these terms
and similar expressions intended to identify forward-looking statements.

Forward-looking statements are based on assumptions and estimates and are
subject to risks and uncertainties. Reference is made to the information
appearing under the heading "Risk Factors" in Item 1 of our Form 10-KSB filed
with the SEC on March 31, 2005 (the "Risk Factors"), which is incorporated
herein by reference. We have identified in the Risk Factors and elsewhere in
this Form 10-QSB some of the factors that may cause actual results to differ
materially from those expressed or assumed in any of our forward-looking
statements. There may be other factors not so identified. You should not place
undue reliance on our forward-looking statements. Further, any forward-looking
statement speaks only as of the date on which it is made and, except as required
by law, we undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which it is made or to reflect
the occurrence of anticipated or unanticipated events or circumstances. New
factors emerge from time to time that may cause our business not to develop as
we expect and it is not possible for us to predict all of them. Factors that may
cause actual results to differ materially from those expressed or implied by our
forward-looking statements include, but are not limited to, those described in
the Risk Factors, including the following:

| | • | our limited operating history and business
    development associated with being a growth stage company;
| | - | --------------------------------------------------------------------------------------------------------
| |   |                                                                                                         
| | • | our history of operating losses, which we
    expect to continue;                                       

12



| |   |                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | our need to obtain future funding through
    equity or debt financings;                                                                                                      
| |   |                                                                                                                                                                               
| | • | our dependence on key personnel;                                                                                                                                              
| |   |                                                                                                                                                                               
| | • | our need to attract and retain technical and
    managerial personnel;                                                                                                        
| |   |                                                                                                                                                                               
| | • | our ability to execute our business strategy;                                                                                                                                 
| |   |                                                                                                                                                                               
| | • | our dependence on our strategic partnerships;                                                                                                                                 
| |   |                                                                                                                                                                               
| | • | intense competition with established leaders in
    the medical devices industry;                                                                                             
| |   |                                                                                                                                                                               
| | • | our reliance on third-party suppliers;                                                                                                                                        
| |   |                                                                                                                                                                               
| | • | our exposure to product liability claims
    resulting from the use of our products;                                                                                          
| |   |                                                                                                                                                                               
| | • | our exposure to unanticipated and
    uncontrollable business interruptions;                                                                                                  
| |   |                                                                                                                                                                               
| | • | changes in international economic, political
    and regulatory conditions, interest rates and currency movements;                                                            
| |   |                                                                                                                                                                               
| | • | the costs and effects of complying with changes
    to existing laws and regulations;                                                                                         
| |   |                                                                                                                                                                               
| | • | the effect of failing to receive regulatory
    approval for new and existing products;                                                                                       
| |   |                                                                                                                                                                               
| | • | the costs and effects of complying with laws
    and regulations relating to the environment and to the manufacture, storage,
    distribution and regulation of our products;
| |   |                                                                                                                                                                               
| | • | our ability to successfully complete the
    integration of any future acquisitions;                                                                                          
| |   |                                                                                                                                                                               
| | • | our ability to project the market for our
    products based upon estimates and assumptions;                                                                                  
| |   |                                                                                                                                                                               
| | • | our exposure to undisclosed liabilities of the
    public shell corporation and the lack of established broker-dealer
    relationships for our stock;                        
| |   |                                                                                                                                                                               
| | • | our ability to generate enough positive cash
    flow to pay our creditors;                                                                                                   
| |   |                                                                                                                                                                               
| | • | the increase in legal, accounting and insurance
    expenses related to being a public company;                                                                               
| |   |                                                                                                                                                                               
| | • | our ability to achieve and maintain adequate
    internal controls necessary to comply with regulations governing financial
    reporting;                                    
| |   |                                                                                                                                                                               
| | • | our ability to protect our intellectual
    property and proprietary technologies;                                                                                            
| |   |                                                                                                                                                                               
| | • | costs associated with potential intellectual
    property infringement claims asserted by a third party; and                                                                  

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| |   |                                                                                     
| | - | ------------------------------------------------------------------------------------
| | • | our ability to protect, and build
    recognition of, our trademarks and tradenames.



Management's Discussion and Analysis of Financial Condition
and Results of Operations



You should read the following description of our financial condition and
results of operating in conjunction with the consolidated financial statements
and our Form 10-KSB filed with the SEC on March 31, 2005. All dollar amounts presented in this section
have been rounded to thousands, except per share amounts.



Company Background

Minrad International, Inc. is an acute care company with two
product lines -- real-time image
guidance and anesthesia and analgesia. The real-time image
guidance products have broad applications in orthopedics, neurosurgery,
interventional radiology and pain management. These devices enable medical
professionals to improve the accuracy of interventional procedures and reduce
radiation exposure. Minrad International also manufactures and markets generic
inhalation anesthetics for use in connection with human and veterinary surgical
procedures. The Company is developing a drug/drug delivery system for conscious
sedation, which, similar to nitrous oxide in dental surgery, provides a patient
with pain relief without loss of consciousness.

Key Success Factors

Four factors are the principal drivers of success in the MINRAD business
model:

|1) | Expanded Product Commercialization
    including existing product growth in present and new markets and the
    development and introduction of new products.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Manufacturing Efficiency facilitating
    maximum margin realization.                                                                                        
|3) | The Attraction of Talented Personnel
    accelerating product and market plan implementation.                                                                
|4) | Funding of the Businessto insure
    successful on-going operations.                                                                                         

Progress against these key milestones during the period included the launch
of SabreSourceTM at the American Academy of Orthopedics in February, improved
capacity utilization in the second half of the quarter following a $2.5 million
bridge financing (see liquidity and capital), and the addition of Bill Bednarski
as Executive Vice President & COO.

Each of these success factors will be addressed in the discussion of
operations.

14





RESULTS OF OPERATIONS - QUARTER ENDED MARCH 31, 2005 COMPARED TO QUARTER
ENDED MARCH 31, 2004.



|                           |           |           | Increase/  | Percent    
|-------------------------- | --------- | --------- | ---------- | -----------
|                           | 2005      | 2004      | (Decrease) | Change     
|                           |           |           |            |            
|Revenue                    | $         | 2,429,000 | $          | 878,000    
|                           |           |           |            |            
|Gross Margin               | 1,158,000 | 219,000   | 939,000    | 429        
|Gross Margin %             | 47.7%     | 24.9%     | 22.8 pts   |            
|                           |           |           |            |            
|Research and Development   | 338,000   | 234,000   | 104,000    | 44         
|Sales and Marketing        | 309,000   | 181,000   | 128,000    | 71         
|Finance and Administration | 652,000   | 391,000   | 261,000    | 67         
|                           |           |           |            |            
|Operating Loss             | (141,000) | (587,000) | (446,000)  | (76        
|                           |           |           |            |            
|Interest Expense: Cash     | (89,000)  | (116,000) | (27,000)   | (23        
|                           |           |           |            |            
|Interest Expense: Non-cash | (665,000) | (826,000) | (161,000)  | (19        
|                           |           |           |            |            
|Net Loss                   | $         | (895,000) | $          | (1,529,000)
|                           |           |           |            |            
|EPS                        | $         | (0.03)    | $          | (0.10)     



Revenue

The increase in  revenue of
$1,551,000 came
from both the North American and International sales areas. North American sales
increased to $814,000 in the March 31, 2005 quarter, compared to $181,000 in the
same period in 2004. This represents a $633,000 increase or 350%. International
sales volume grew to $1,615,000, a $918,000 increase or 131% from the same
period a year ago.  The major increase is in China, Venezuela and
Argentina.

Gross Margin

The gross margin improved $939,000
or 22.8 percentage points. In large part this was due to higher
revenue volume  absorbing fixed overhead combined with a more efficient
manufacturing operation in the quarter ended March 31, 2005 compared to the
quarter ended March 31, 2004. Our margins should continue to improve as we
continue to increase our revenue volume from new product sales.

15



Research & Development

The increase
in research and development of $104,000 largely reflects increased headcount related
to the expanding image-guided
product line.

Sales & Marketing

The increase in Sales and
Marketing expense of $128,000 can be primarily attributed to the following: $20,000of the increase was volume
related commissions, incentives and distribution expense; $24,000 was convention
expense incurred in association with the launch of the SabreSourceTM system;
and
$57,000 of the increase was related to headcount additions to support our
anesthesia and analgesia contracts.

Finance & Administration

The year over year increase of $261,000 was largely driven
by outside legal and accounting services,
which can be attributed to the reverse merger consummated in December 2004,
resulting in increased public company compliance costs. 
Wages increased by $68,000 as a result of the addition of administrative
personnel.

Interest Expense: Cash

Interest Expense: Cash declined sharply between periods reflecting the company's
fund raising efforts in calendar 2004, which were undertaken to repay debt. Out-of-pocket interest expense in the
quarter ended March 31, 2005 was $89,000 compared to $116,000 in the same period
a year earlier, a 23% reduction in expense.

Interest Expense: Non-cash

The Company booked $665,000 in imputed (non-cash) interest expense in the
quarter ended March 31, 2005 attributed to beneficial conversion features on
debt and warrants issued in connection with debt instruments. Imputed interest is the
fair market value of the securities, in this case warrants issued. Approximately $500,000 of the imputed interest was
related to warrants issued to Kevin Kimberlin
Partners in association with its guarantee of a $1 million working capital
line; $165,000 was incurred in association with the $2.5 million bridge
financing (see liquidity and capital below).

Net Loss

The Net Loss for the quarter ended March 31, 2005 was $(895,000) a decrease of
$634,000 or 42% from the prior year of $(1,529,000).  This is primarily
attributed to the increase in revenue, volume, and gross margin.



16



Liquidity and Capital

As of March 31, 2005, we had current
assets of approximately $3.2 million, including cash of $135,000, and current
liabilities of approximately $6.5 million.

Net cash used by operating activities increased from $638,000 in the quarter
ended March 31, 2004 to $1,762,000 in the quarter ended March 31, 2005. This
increase of approximately $1,124,000, or 176%, was largely attributable to an
increase in accounts receivable of $1,037,000 due to revenue growth. Net cash used by investing
activities increased from $25,000 in the prior period to $108,000 in the quarter
ended March 31, 2005, an increase of $83,000 or 332%. This was primarily due to
an increase in the purchase of property and equipment of $55,000.

Cash provided by investing activities increased by $1,765,000 from $237,000
to $2,002,000 in the quarter ended March 31, 2005. This included a bridge loan
for $2.5 million partially offset by the repayment of $474,000 in demand notes
payable and legal costs related to the financing of $218,000.

We issued convertible promissory notes to the Tobin Family Trust ($1.5
million aggregate principal amount) and Laird Cagan ($1 million principal
amount) in February 2005. These notes payable of $2,500,000 are due October 7,
2005. They are reflected net of a discount of $760,000 to a net carrying value of $1,739,000
at March 31, 2005. This discount is due to
375,000 detachable warrants issued with the loan with a  value of
$925,000. The discount is being amortized over the life of
the loan, with $165,000 expensed in the first quarter.

In May 2005 the parties to this bridge loan signed an amendment altering
certain terms of the agreement. The Lenders now have the right to accelerate
payment or to convert all or any portion of the outstanding principle and
accrued interest into common stock at the conversion price of $1.75 in the event

the Company's outstanding bank borrowings exceed $5,000,000. The Company has the
right to pre-pay after 7 business days if bank borrowings exceed $5,000,000.

Our future capital requirements
are expected to be substantial. Most notably, we desire
to expand our Bethlehem facility to allow for anticipated future  growth of
production. We expect to incur incremental costs related
to our real time image guidance system and research and development costs for
conscious sedation. Accordingly, we will need to raise additional funds in the
future through the private or public sales of equity securities or the
incurrence of additional indebtedness. Additional funding may not be available
on terms favorable to us, or at all. If we raise additional funds through the
issuance of equity securities, the percentage ownership of our stockholders will
be reduced; stockholders may experience dilution and the issued equity
securities may provide for rights, preferences and privileges senior to those of
the existing holders of our common stock. In addition, any issuance of
indebtedness may require us to comply with restrictive covenants. Our inability
to raise additional capital would have a material adverse effect on our results
of operations and financial condition.

Item 3.     Controls and Procedures.



17



PART II -- OTHER INFORMATION





Item 1.     Legal Proceedings.

Not applicable.

Item 2.     Unregistered Sales of Securities and Use of Proceeds.

Information concerning unregistered sales of securities during the fiscal
quarter ended March 31, 2005 is furnished in our Form 8-K Report filed on
February 17, 2005.

Item 3.     Defaults Upon Senior Securities.

None.

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

None.

Item 5.     Other Information.

Reference is made to the information regarding our sale of $2.5 million of
Convertible Promissory Notes (the "Notes") that is contained in our Form 8-K
filed with the SEC on February 14, 2005, which is incorporated herein by
reference. On May 11, 2005, the parties amended  the Notes to amend provisions
relating to optional prepayment, optional acceleration, and optional conversion
rights of the Notes. As amended, each of these provisions, which were formerly
triggered by the completion of $5 million of equity funding, is now triggered by
the existence of aggregate outstanding indebtedness owed by the Registrant and
its subsidiaries (on a consolidated basis) to one or more banks ("Bank
Borrowing") in excess of $5 million. If Bank Borrowing in excess of $5 million
occurs, then (1) commencing 7 business days thereafter Registrant will have the
option to prepay the Notes, (2) commencing 7 business days thereafter the
lenders will have the right to accelerate the maturity date of the Notes, and
(3) commencing on that date the lenders will have the right to convert all or
any portion of the outstanding Notes into shares of our Common Stock at $1.75
per share.

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

(a)         The following exhibits are filed as part of this Quarterly Report on
Form 10-QSB:

10.1 † Employment Agreement of William H. Burns, Jr., dated March 1, 2004
(incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 21,
2004).

10.2 † Employment Agreement of John McNeirney, dated March 29, 2004
(incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 21,
2004).

10.3 Lease of 847 Main Street, Buffalo, New York (incorporated by reference
to Exhibit 10.3 to Form 8-K filed on December 21, 2004).

18



10.4 † Contingent Appointment Letter of William L. Bednarski, dated January
25, 2005 (incorporated by reference to Exhibit 99.2 to Form 8-K filed on
February 23, 2005).

10.5 †† Supply Agreement, effective February 11, 2005, between Minrad EU and
Merk Generiques (incorporated by reference to Exhibit 10.1 to Form 8-K filed on
February 24, 2005).

10.6 † Minrad Inc. Patents and Inventions Policy
(incorporated by reference to Exhibit 10.6 to Form 10-KSB filed on March 31,
2005)..

10.7 † Minrad International, Inc. 2004 Stock Option Plan (incorporated by
reference to Appendix C to Schedule 14C filed on September 16, 2004).

10.8 * †† Exclusive Manufacturing and Distribution Agreement, effective June
9, 2004, and Addendum to Distribution Agreement, made as of March 28, 2005,
between Minrad Inc. and RxElite Holdings Inc.

10.9 *Amendment, dated May
11, 2005, to $2.5 million Convertible Promissory
Notes dated February 8, 2005 and February 15, 2005.

10.10 Form of Note Subscription Agreement, dated as of February 8, 2005,
between Minrad International, Inc. and Tobin Family Trust relating to the sale
and purchase of $1.5 million of convertible promissory notes, (incorporated by
reference to Exhibit 99.1 to Form 8-K filed with the SEC on February 14, 2005).

10.11 Form of Note Subscription Agreement, dated as of February 8, 2005,
between Minrad International, Inc. and Laird Cagan relating to the sale and
purchase of $1 million of convertible promissory notes, (incorporated by
reference to Exhibit 99.2 to Form 8-K filed with the SEC on February 14, 2005).

10.12 Form of convertible promissory note used in connection with $2.5
million convertible promissory note offering of February 8, 2005, (incorporated
by reference to Exhibit 99.3 to Form 8-K filed with the SEC on February 14,
2005).

10.13 Form of Warrant Agreement used in connection with $2.5 million
convertible promissory note and warrant offering of February 8, 2005,
(incorporated by reference to Exhibit 99.4 to Form 8-K filed with the SEC on
February 14, 2005).

10.14 Form of Registration Rights Agreement used in connection with $2.5
million convertible promissory note offering of February 8, 2005 (incorporated
by reference to Exhibit 99.5 to Form 8-K filed with the SEC on February 14,
2005).

10.15 Form of Guaranty Agreement used in connection with $2.5 million
convertible promissory note offering of February 8, 2005 (incorporated by
reference to Exhibit 99.6 to Form 8-K filed with the SEC on February 14, 2005).

10.16 † Form of Milestone Stock Option Agreement used in connection with
options approved on April 21, 2005 under 2004 Stock Option Plan (incorporated by
reference to Exhibit 10.1 to Form 8-K filed with the SEC on April 27, 2005).

31.1 *Certification of Principal Executive Officer Pursuant to Rules
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.

19



31.2 *Certification of Principal Financial Officer Pursuant to Rules
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.

32.1 *Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.

________________

* Filed herewith
† Compensation plan or arrangement.
†† Portions of document omitted and filed separately with the SEC under a
request for confidential treatment.

(b)     Reports on Form 8-K. During the fiscal quarter ended March 31,
2005, we filed Form 8-K Reports with the SEC on the following dates with respect
to the following matters.

(1)     February 14, 2005 -- relating to (a) sale of $2.5 million of convertible
promissory notes and warrants to purchase 375,000 shares of common stock, and
(b) sale of 321,714 shares of common stock.

(2)     February 23, 2005 -- relating to confirmation of the appointment of
William L. Bednarski as Chief Operating Officer of the Company.

(3)     February 24, 2005 -- relating to the entry into a material definitive
agreement relating to the distribution of Minrad's inhalation anesthetics in the
human market in eleven European countries between Minrad Inc. and Merck
Generiques.

(4)     March 2, 2005 -- Amendment to Form 8-K filed December 21, 2004, relating
to completion of the acquisition of Minrad Inc. by the Registrant, sales of
unregistered securities, and a change in the Registrant's certifying accountant.

(5)     March 17, 2005 -- relating to a press release of the Registrant, dated
March 16, 2005, relating to its financial results for the quarter ended December
31, 2004.



Signatures



In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report on Form 10-QSB to be signed on its
behalf by the undersigned thereunto duly authorized.

|Date: May 13, 2005 | MINRAD INTERNATIONAL, INC.
|------------------ | --------------------------
|                   |                           
|                   | By:                       
|                   |                           
|                   |                           



20