---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

# FORM 10-Q

QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

# For the quarterly
period ended March 31, 2005

Commission File Number
0-20945

# ANTARES PHARMA, INC.

A Delaware Corporation
                                                IRS Employer ID No. 41-1350192

707 Eagleview
Boulevard, Suite 414 Exton, Pennsylvania 19341

(610) 458-6200

_________________

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

Indicate by check mark whether the
 registrant  is an  accelerated  filer (as defined in Rule 12b-2 of the Exchange  Act).
 Yes    No X

The number of shares outstanding of
the Registrants Common Stock, $.01 par value, as of May 10, 2005, was 40,493,606.

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1

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# ANTARES PHARMA, INC.

# INDEX

|                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | PAGE                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------
|PART I.        
         ITEM 1
               
               
               
               
         ITEM 2
         ITEM 3
         ITEM 4
PART II. | FINANCIAL INFORMATION         Financial Statements (Unaudited)



         Consolidated Balance Sheets, as of March 31, 2005 and December 31, 2004
         Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004
         Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004
         Notes to Consolidated Financial Statements
         Management's Discussion and Analysis of Financial Condition and Results of Operations
         Quantitative and Qualitative Disclosures About Market Risk
         Controls and Procedures
         OTHER INFORMATION                                                     
         SIGNATURES | 3
4
5
6
11
15
15
17
18

2

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# ANTARES PHARMA, INC. CONSOLIDATED BALANCE
SHEETS (UNAUDITED)

|                                                                             | March 31,
2005 | December 31,
2004
|---------------------------------------------------------------------------- | -------------- | -----------------
|Assets                                                                       |                |                  
|Current Assets:                                                              |                |                  
|Cash  and cash equivalents                                                   |                |                  
|Short-term investments                                                       |                |                  
|Accounts receivable, net of allowances of $21,900 and  $22,500, respectively |                |                  
|Other receivables                                                            |                |                  
|Inventories                                                                  |                |                  
|Prepaid expenses and other assets                                            |                |                  
|                                                                             |                |                  
|Total current assets                                                         |                |                  
|                                                                             |                |                  
|Equipment, furniture and fixtures, net                                       |                |                  
|Patent rights, net                                                           |                |                  
|Goodwill                                                                     |                |                  
|Other assets                                                                 |                |                  
|                                                                             |                |                  
|Total Assets                                                                 |                |                  
|                                                                             |                |                  
|Liabilities and Shareholders' Equity                                         |                |                  
|Current Liabilities:                                                         |                |                  
|Accounts payable                                                             |                |                  
|Accrued expenses and other liabilities                                       |                |                  
|Deferred revenue                                                             |                |                  
|                                                                             |                |                  
|Total current liabilities                                                    |                |                  
|                                                                             |                |                  
|Deferred revenue - long term                                                 |                |                  
|                                                                             |                |                  
|Total liabilities                                                            |                |                  
|                                                                             |                |                  
|Shareholders' Equity:                                                        |                |                  
|Series A Convertible Preferred Stock:  $0.01 par; authorized 10,000 shares;  |                |                  
|1,500 issued and outstanding at March 31, 2005 and December 31, 2004         |                |                  
|Series D Convertible Preferred Stock:  $0.01 par; authorized 245,000 shares; |                |                  
|63,588 issued and outstanding at March 31, 2005 and December 31, 2004        |                |                  
|Common Stock:  $0.01 par; authorized 100,000,000 shares; 40,493,606          |                |                  
|and 40,418,406 issued and outstanding at March 31, 2005 and                  |                |                  
|December 31, 2004, respectively                                              |                |                  
|Additional paid-in capital                                                   |                |                  
|Prepaid license discount                                                     |                |                  
|Accumulated deficit                                                          |                |                  
|Deferred compensation                                                        |                |                  
|Accumulated other comprehensive loss                                         |                |                  
|                                                                             |                |                  
|                                                                             |                |                  
|                                                                             |                |                  
|Total Liabilities and Shareholders' Equity                                   |                |                  
|                                                                             |                |                  

See
accompanying notes to consolidated financial statements. 3

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# ANTARES PHARMA, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)

|                                                             | For the Three Months Ended
March 31,
|------------------------------------------------------------ | ------------------------------------
|
|Revenues:                                                    |                                     
|Product sales                                                |                                     
|Development revenue                                          |                                     
|Licensing fees                                               |                                     
|Royalties                                                    |                                     
|                                                             |                                     
|Total revenue                                                |                                     
|                                                             |                                     
|Cost of revenues:                                            |                                     
|Cost of product sales                                        |                                     
|Cost of development revenue                                  |                                     
|                                                             |                                     
|Total cost of revenues                                       |                                     
|                                                             |                                     
|Gross profit                                                 |                                     
|                                                             |                                     
|Operating expenses:                                          |                                     
|Research and development                                     |                                     
|Sales, marketing and business development                    |                                     
|General and administrative                                   |                                     
|                                                             |                                     
|                                                             |                                     
|                                                             |                                     
|Operating loss                                               |                                     
|                                                             |                                     
|Other income (expense):                                      |                                     
|Interest income                                              |                                     
|Interest expense                                             |                                     
|Foreign exchange losses                                      |                                     
|Other, net                                                   |                                     
|                                                             |                                     
|                                                             |                                     
|                                                             |                                     
|Net loss                                                     |                                     
|                                                             |                                     
|Basic and diluted net loss per common share                  |                                     
|                                                             |                                     
|Basic and diluted weighted average common shares outstanding |                                     
|                                                             |                                     

See
accompanying notes to consolidated financial statements. 4

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# ANTARES PHARMA, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                             | For the Three Months Ended
March 31,
|------------------------------------------------------------ | ------------------------------------
|
|Cash flows from operating activities:                        |                                     
|Net loss                                                     |                                     
|                                                             |                                     
|Adjustments to reconcile net loss to net                     |                                     
|cash used in operating activities:                           |                                     
|Depreciation and amortization                                |                                     
|Noncash interest expense                                     |                                     
|Stock-based compensation expense                             |                                     
|Amortization of prepaid license discount                     |                                     
|Changes in operating assets and liabilities:                 |                                     
|Accounts receivable                                          |                                     
|Other receivables                                            |                                     
|Inventories                                                  |                                     
|Prepaid expenses and other assets                            |                                     
|Other assets                                                 |                                     
|Accounts payable                                             |                                     
|Accrued expenses and other                                   |                                     
|Deferred revenue                                             |                                     
|                                                             |                                     
|Net cash used in operating activities                        |                                     
|                                                             |                                     
|Cash flows from investing activities:                        |                                     
|Purchases of equipment, furniture and fixtures               |                                     
|Purchases of short-term investments                          |                                     
|Proceeds from maturity of short-term investments             |                                     
|Additions to patent rights                                   |                                     
|                                                             |                                     
|Net cash provided by (used in) investing activities          |                                     
|                                                             |                                     
|Cash flows from financing activities:                        |                                     
|Proceeds from sales of common stock, net                     |                                     
|Proceeds from exercise of warrants                           |                                     
|Principal payments on capital lease obligations              |                                     
|                                                             |                                     
|Net cash provided by financing activities                    |                                     
|                                                             |                                     
|Effect of exchange rate changes on cash and cash equivalents |                                     
|                                                             |                                     
|Net increase in cash and cash equivalents                    |                                     
|Cash and cash equivalents:                                   |                                     
|Beginning of period                                          |                                     
|                                                             |                                     
|End of period                                                |                                     
|                                                             |                                     
|Cash paid during the period for interest                     |                                     

See
accompanying notes to consolidated financial statements. 5

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) March 31, 2005 and 2004

# 1.         Basis of Presentation

| | The
accompanying unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. 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 (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The accompanying financial
statements and notes should be read in conjunction with our Annual Report on Form 10-K for
the year ended December 31, 2004. 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
ending December 31, 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stock
Based Compensation
| | ------------------------

| | The
Company applies Accounting Principles Board, Opinion 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for stock plans. Accordingly,
compensation expense has been recognized for restricted stock granted to employees, as
discussed in Note 4, but has not been recognized for employee stock options other than
the intrinsic value of options when the exercise price of the options was below their fair value on the date of grant. In
September 2003 the Company issued stock options to employees at $1.77 per share when the
fair value of the stock was $2.20 per share. In the first quarters of 2005 and 2004 the
Company recognized compensation expense of $41,298 and $42,866, respectively, in
connection with the employee stock options granted in September 2003. Had compensation
cost been determined based on the fair value at the grant date for stock options under
SFAS No. 123, Accounting and Disclosure of Stock-Based Compensation, the
net loss applicable to common shares and loss per common share would have increased to the
pro-forma amounts shown below:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             | Three Months Ended March 31,
|-------------------------------------------- | ----------------------------
|
|Net loss:                                    |                             
|As reported                                  |                             
|Intrinsic value of stock options granted     |                             
|Fair-value method compensation expense       |                             
|                                             |                             
|Pro forma                                    |                             
|                                             |                             
|Basic and diluted net loss per common share: |                             
|As reported                                  |                             
|Intrinsic value of stock options granted     |                             
|Fair-value method compensation expense       |                             
|                                             |                             
|Pro forma                                    |                             
|                                             |                             

6

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Continued) (UNAUDITED) March 31, 2005 and 2004

# 2.         Inventories

| | Inventories
consist of the following:
| | -------------------------------------

|               | March 31, 2005 | December 31, 2004
|-------------- | -------------- | -----------------
|Raw material   |                |                  
|Finished goods |                |                  
|               |                |                  
|               |                |                  
|               |                |                  

# 3.         Product Warranty

| | The
Company recognizes the estimated cost of warranty obligations at the time the products are
shipped based on historical claims incurred by the Company. Actual warranty claim costs
could differ from these estimates. Warranty liability activity is as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     | Balance at
Beginning of
Year | Warranty
Provisions | Warranty
Claims | Balance at
March 31
|---- | ---------------------------- | ------------------- | --------------- | -------------------
|2005 |                              |                     | $               | 30,000             
|2004 |                              |                     | $               | 50,000             

# 4.         Shareholders
Equity

Common
Stock, Options and Warrants

| | Warrant
exercises during the first quarters of 2005 and 2004 resulted in proceeds of $61,700 and
$821,100, respectively, and in the issuance of 75,200 and 2,932,500 shares of common
stock, respectively.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the first quarter of 2005 the Company granted options to purchase a total of 225,000
shares of its common stock. Members of the Companys board of directors received
options to purchase 120,000 shares of common stock at an exercise price of $1.40 per
share; James Hattersley, hired as Vice-President of Corporate Business Development during
the first quarter, received options to purchase 65,000 shares of common stock at an
exercise price of $1.32 per share; and Jack Stover, Chief Executive Officer of the
Company, received options to purchase 40,000 shares of common stock at an exercise price
of $1.21 per share. All options were granted at an exercise price that equaled the fair
value of the Companys common stock on the date of the grant.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the quarter ended March 31, 2004 the Company received net proceeds of $13,853,400 in three
private placements of its common stock. A total of 15,120,000 shares of common stock were
sold to investors at a price of $1.00 per share. The Company also issued to the investors
five-year warrants to purchase an aggregate of 5,039,994 shares of common stock at an
exercise price of $1.25 per share. Additionally, warrants for the purchase of 1,512,000
shares of common stock at an exercise price of $1.00 per share were issued to the
placement agent as a commission.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Continued) (UNAUDITED) March 31, 2005 and 2004

# 4.         Shareholders
Equity (Continued)

| | During
the first quarter of 2004 the Company recognized expense of $17,750 in connection with the
issuance of 15,000 shares of common stock to a consultant as compensation for services.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the first quarter of 2004 the Company issued warrants to purchase 250,000 shares of the
Companys common stock at an exercise price of $1.10 per share as compensation to
non-employees for professional services. The Company recognized expense of $212,320 in
2004 in connection with these warrants.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the first quarter of 2004 the Company granted to members of the Companys board of
directors options to purchase 101,500 shares of its common stock at exercise prices
ranging from $1.06 to $1.45.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Stock-Based
Compensation to Chief Executive Officer

| | Jack
E. Stover was appointed President and Chief Operating Officer on July 22, 2004, and was
appointed Chief Executive Officer on September 1, 2004, upon the resignation of Roger G.
Harrison, Ph.D. The terms of the employment agreement with Mr. Stover included the
issuance of options to purchase 500,000 shares of common stock at $0.70 per share and an
additional issuance of options to purchase 40,000 shares of common stock at $1.21 per
share in January of 2005, with all options vesting over four years. The employment
agreement also included the issuance of 100,000 shares of common stock, of which 50,000
shares vested immediately and the remaining 50,000 shares will become fully vested on the
first anniversary of his employment. The Company recorded compensation expense of $35,000
related to the shares with immediate vesting and deferred compensation expense of $35,000
related to the shares vesting over one year. The amounts recorded were based on the market
value of the stock on the measurement date. The deferred compensation expense is being
recognized ratably over the one-year vesting period. Compensation expense of $8,750 was
recognized in connection with these shares during the quarter ended March 31, 2005. Mr.
Stover can earn up to an additional 459,999 shares of common stock upon the occurrence of
various triggering events. The Company will begin recognizing expense in connection with
these additional shares when it becomes probable that a triggering event will be reached.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Roger
G. Harrison, Ph.D., was appointed Chief Executive Officer of Antares Pharma, Inc.,
effective March 12, 2001. Under the terms of the employment agreement with Dr. Harrison,
the Company issued 88,000 restricted shares of common stock with a three-year vesting
period that became fully vested on March 12, 2004. The Company had recorded deferred
compensation expense of $341,000, the aggregate market value of the 88,000 shares at the
measurement date. Compensation expense was recognized ratably over the three-year vesting
period. Compensation expense of $23,688 was recognized in connection with these shares
during the quarter ended March 31, 2004. Dr. Harrison resigned as Chief Executive Officer
effective September 1, 2004, and on that date entered into an agreement with the Company
under which he has provided consulting services.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Continued) (UNAUDITED) March 31, 2005 and 2004

# 5.         Net Loss Per Share

| | Basic
loss per common share is computed by dividing net loss applicable to common shareholders
by the weighted-average number of common shares outstanding for the period. Diluted loss
per common share reflects the potential dilution from the exercise or conversion of
securities into common stock. The table below discloses the basic and diluted loss per
share.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                             | Three Months Ended
March 31,
|------------------------------------------------------------ | ----------------------------
|
|Net loss                                                     |                             
|Basic and diluted weighted average common shares outstanding |                             
|                                                             |                             
|Basic and diluted net loss per common share                  |                             
|                                                             |                             

| | Potentially
dilutive stock options and warrants excluded from dilutive loss per share because their
effect was anti-dilutive totaled 20,406,391 and 19,319,869 at March 31, 2005 and 2004,
respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
weighted average exercise price of the stock options and warrants outstanding at March 31,
2005 and 2004 was $1.49.
| | -----------------------------------------------------------------------------------------------------------------------

# 6.         Industry Segment and
Operations by Geographic Areas

| | The
Company is primarily engaged in development of drug delivery transdermal and transmucosal
pharmaceutical products and drug delivery injection devices and supplies. These operations
are considered to be one segment. The geographic distributions of the Companys
identifiable assets and revenues are summarized in the following tables:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has operating assets located in two countries as follows:
| | ---------------------------------------------------------------------

|                         | March 31,
2005 | December 31,
2004
|------------------------ | -------------- | -----------------
|Switzerland              |                |                  
|United States of America |                |                  
|                         |                |                  
|                         |                |                  
|                         |                |                  

| | Revenues
by customer location are summarized as follows:
| | --------------------------------------------------------

|                         | For the Three Months Ended
March 31,
|------------------------ | ------------------------------------
|
|United States of America |                                     
|Europe                   |                                     
|Other                    |                                     
|                         |                                     
|                         |                                     
|                         |                                     

9

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Continued) (UNAUDITED) March 31, 2005 and 2004

# 6.         Industry Segment and
Operations by Geographic Areas (Continued)

| | The
following summarizes significant customers comprising 10% or more of total revenue for the
three months ended March 31:
| | ---------------------------------------------------------------------------------------------------------------------------

|          | 2005 | 2004
|--------- | ---- | ----
|Ferring   |      |     
|Solvay    |      |     
|Proskelia |      |     

# 7.         Comprehensive Loss

|                                            | Three Months Ended
March 31,
|------------------------------------------- | ----------------------------
|
|Net loss                                    |                             
|Change in cumulative translation adjustment |                             
|                                            |                             
|Comprehensive loss                          |                             
|                                            |                             

10

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ITEM 2.          MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# Overview

The Company develops, produces and
markets pharmaceutical delivery products, including transdermal gels, oral fast melting
tablets and reusable needle-free and disposable mini-needle injector systems. In addition,
the Company has several products and compound formulations under development. The Company
has operating facilities in the U.S. and Switzerland. The U.S. operation develops reusable
needle-free and disposable mini-needle injector systems and manufactures and markets
reusable needle-free injection devices and related disposables. These operations,
including all manufacturing and some U.S. administrative activities, are located in
Minneapolis, Minnesota and are referred to as Antares/Minnesota. The Company also has
operations located in Basel, Switzerland, which consists of administration and facilities
for the research and development of transdermal gels and oral fast melt tablet products.
The Swiss operations, referred to as Antares/Switzerland, focus on research, development
and commercialization. Antares/Switzerland has signed a number of license agreements with
pharmaceutical companies for the application of its drug delivery systems and began
generating revenue in 1999 with the recognition of license revenues. The Companys
corporate offices are located in Exton, Pennsylvania (near Philadelphia).

The Company operates as a specialty
pharmaceutical company in the broader pharmaceutical industry. Companies in this sector
generally bring technology and know-how in the area of drug formulation and/or delivery
devices to pharmaceutical product marketers through licensing and development agreements
while actively pursuing development of their own products. The Company currently views
pharmaceutical and biotechnology companies as primary customers. The Company has
negotiated and executed licensing relationships in the growth hormone segment (reusable
needle-free devices in Europe and Asia) and the transdermal hormone gels segment (several
development programs in place worldwide, including the United States and Europe). In
addition, the Company continues to market reusable needle-free devices for the home or
alternate site administration of insulin in the U.S. through distributors, and has
licensed its reusable needle-free technology in the fields of diabetes and obesity to Eli
Lilly and Company on a worldwide basis.

The Company is reporting a net loss
of $2,272,872 for the quarter ended March 31, 2005 and expects to report a net loss for
the year ending December 31, 2005, as marketing and development costs related to bringing
future generations of products to market continue. Long-term capital requirements will
depend on numerous factors, including the status of collaborative arrangements, the
progress of research and development programs, the receipt of revenues from sales of
products and the ability to control costs.

11

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# Results of Operations

Critical Accounting
Policies

The Company has identified certain of
its significant accounting policies that it considers particularly important to the
portrayal of the Companys results of operations and financial position and which may
require the application of a higher level of judgment by the Companys management,
and as a result are subject to an inherent level of uncertainty. These are characterized
as critical accounting policies and address revenue recognition, foreign
currency translation, valuation of long-lived and intangible assets and goodwill and
accounting for debt and equity instruments, each more fully described under
Managements Discussion and Analysis of Financial Condition and Results of
Operations in the Companys Annual Report on Form 10-K for the year ended
December 31, 2004. The Company has made no changes to these policies during 2005.

Three Months Ended March
31, 2005 and 2004

Revenues

Total revenues for the three months
ended March 31, 2005 and 2004 were $554,385 and $725,821, respectively. The decrease in
revenues of $171,436, or 24% is primarily the result of decreases in product sales,
development revenue and licensing fees in the amounts of $65,193, $27,402 and $79,776,
respectively. The product sales decrease was mainly due to a decrease in sales of
Medi-Ject Vision disposable components to the Companys major European customer. The
decrease in development revenue was primarily due to one project that originated and ended
in 2004. The licensing fees decrease was primarily due to spreading revenue over longer periods of time as a result of increasing
 the estimated
revenue recognition periods of certain existing license agreements.

Cost of Sales

The cost of product sales of $282,628
and $344,808 for the first quarter of 2005 and 2004, respectively, are related to reusable
needle-free injector devices and disposable components. Cost of sales as a percentage of
product sales decreased 3% to 70% in the first quarter of 2005 from 73% in the first
quarter of 2004. This decrease was mainly due to a slightly different mix of products sold
in 2005 compared to 2004.

The cost of development revenue
consists of labor costs and an allocation of certain research and development expenses.
Substantially all of the development revenue costs for the first quarter of 2004 were
recorded in the second quarter of 2004 in a year-to-date expense allocation adjustment.

Research and Development

Research and development expenses
increased $302,148, or 46%, to $966,121 in the three months ended March 31, 2005 from
$663,973 in the prior year period. The increase was primarily related to gel development
projects and consisted mainly of increases in studies and analysis work and patent related
expenses of approximately $164,000 and $70,000, respectively. The increase was also due to
an increase in clinical studies of approximately $60,000 related to device development.

12

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Sales, Marketing and
Business Development

Sales and marketing expenses totaled
$286,744 and $110,052 in the three months ended March 31, 2005 and 2004, respectively. The
increase was primarily due to increases in payroll and travel expenses resulting from the
hiring of a vice president of corporate business development during the first quarter of
2005. In addition, the increase in 2005 was due to clinical studies related to sales and
marketing and to the utilization of a consultant for various business development
projects.

General and Administrative

General and administrative expenses
totaled $1,295,325 and $1,429,175 in the three months ended March 31, 2005 and 2004,
respectively. The decrease of $133,850, or 9%, is primarily due to a decrease in
professional services.

Other Income (Expense)

Other income (expense) changed from
net expense of $71,565 in the first quarter of 2004 to income of $28,421 in the first
quarter of 2005. The first quarter 2005 other income (expense) is comprised of interest
income of $42,568, foreign exchange losses of $12,785 and other expense of $1,362. The net
expense in the first quarter of 2004 consists of interest expense of $78,119, foreign
exchange losses of $1,467 and other expenses of $4,648, partially offset by interest
income of $12,669. The increase in interest income is due to a higher level of cash and
short-term investments throughout the quarter in 2005 than in 2004. The interest expense
in 2004 consisted primarily of $75,388 recognized in connection with warrants originally
issued to convertible debenture holders that were exercised at a discounted exercise
price.

# Liquidity and Capital
Resources

The Company has not historically, and
does not currently, generate enough revenue to provide the cash needed to support its
operations, and has continued to operate primarily by raising capital and issuing debt. In
order to better position the Company to take advantage of potential growth opportunities
and to fund future operations, the Company raised additional capital in 2004. The Company
received net proceeds of $13,753,400 in three private placements of its common stock in
which a total of 15,120,000 shares of common stock were sold at a price of $1.00 per
share. During 2004 the Company also received proceeds of $1,472,500 in connection with the
exercise of warrants for 3,480,500 shares of common stock.

The Company believes that the
combination of these equity financings and projected product sales and product development
and license revenues will provide sufficient funds to support operations into at least
the first quarter of 2006. The Company does not currently have any bank credit lines.
If the Company does need additional financing and is unable to
obtain such financing when needed, or obtain it on favorable terms, the Company may be
required to curtail development of new drug technologies, limit expansion of operations or
accept financing terms that are not as attractive as the Company may desire.

Total cash and cash equivalents and
short-term investments at March 31, 2005 were $7,005,415 compared to $9,624,033 at
December 31, 2004. This decrease resulted primarily from funding operating activities in
the first quarter of 2005.

13

---

Cash Flows

Operating
Activities

Net cash used in operating activities
increased by $1,154,619, to $2,641,887 for the first quarter of 2005 from $1,487,268 for
the first quarter of 2004. This increase in cash used was the result of a larger net loss
in the first quarter of 2005 compared to 2004 along with lower noncash expenses and an
increase in cash used due to changes in operating assets and liabilities.

Net noncash expenses in the first
quarter of 2005 totaled $201,756, due to depreciation and amortization of $104,860,
stock-based compensation expense of $47,834 and amortization of prepaid license discount
of $49,062. The noncash expenses in the first quarter of 2004 totaled $596,430, consisting
of depreciation and amortization of $175,357, noncash interest expense of $75,388,
stock-based compensation expense of $296,623 and amortization of prepaid license discount
of $49,062. Depreciation and amortization decreased due to a number of assets that became
fully depreciated after the first quarter of 2004. Stock-based compensation expense
decreased $248,789 due mainly to the fact that the first quarter of 2004 included warrants
issued to nonemployees that were valued at $212,320.

The change in operating assets and
liabilities in the first quarter of 2005 resulted in a net decrease in cash of $570,771,
primarily due to increases in other receivables, inventories and prepaid expenses and
other assets of $146,710, $27,341 and $246,526, respectively, and a decrease in accounts
payable, accrued expenses and deferred revenue of $33,855, $142,696 and $124,940,
respectively, offset by a decrease in accounts receivable of $144,624. In the first
quarter of 2004, the change in operating assets and liabilities caused a net decrease in
cash of $189,271, primarily due to increases in other receivables and prepaid expenses and
other assets of $119,802 and $291,701, respectively, and decreases in accrued expenses,
deferred revenue, and other of $114,689, $218,139 and $9,240, respectively, partially
offset by decreases in accounts receivable and inventories of $231,313 and $74,847,
respectively, and an increase in accounts payable of $258,140. For the first quarter of
each year the increase in prepaid expenses and other assets was primarily due to payment
of the annual premium for directors and officers insurance, the decrease in deferred
revenue was due to previously deferred amounts that was recognized as revenue, and the
accounts receivable decreases were due mainly to the timing of collections, shipments and
billings. The decrease in accrued expenses in 2005 was due primarily to payment of
year-end accruals related to employee benefits along with normal fluctuations in the
timing of expenses incurred and payments made. The decrease in accrued expenses in 2004
was due primarily to payment of amounts accrued at December 31, 2003 for consulting
services provided by related parties. The increase in accounts payable in 2004 was due to
professional fees incurred during the first quarter in connection with the year-end audit
and the private placement as well as the timing of the payment of various other expenses.

Investing
Activities

The first quarter of 2005 resulted in
net cash provided by investing activities of $2,959,736, which consisted primarily of
proceeds from the maturity of short-term investments of $6,000,000, partially offset by
purchases of short-term investments of $2,976,913 and purchases of equipment, furniture
and fixtures of $63,351. The first quarter of 2004 resulted in net cash used in investing
activities of $50,987, which consisted primarily of purchases of equipment, furniture and
fixtures of $8,753 and capitalized patent costs of $42,234.

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Financing
Activities

Net cash provided by financing
activities decreased to $61,700 for the first quarter of 2005 from $14,655,520 in the same
period of 2004. The first quarter of 2005 included proceeds from the exercise of warrants
of $61,700, while the first quarter of 2004 included net proceeds of $13,853,400 received
in three private placements of common stock and warrants and proceeds of $821,100 received
from the exercise of warrants. The first quarter of 2004 also included the payment of
$18,980 in principal payments on capital lease obligations, which ended during 2004.

# New Accounting
Pronouncements

In December 2004, the FASB issued
FASB Statement No. 123R, Share-Based Payment.Among other items, the standard
requires that the compensation cost relating to share-based payment transactions be
recognized in the consolidated statement of operations. Note 1 to the Consolidated
Financial Statements contains pro forma disclosures regarding the effect on net loss
and net loss per share as if the fair value method of accounting for stock-based
compensation had been applied.   The new standard was originally effective for
the first interim or annual reporting period that begins after June 15, 2005. 
However, the SEC has deferred the effective date of Statement 123R to allow companies to
implement the new standard at the beginning of their next fiscal year. The Company expects
to implement the new standard beginning with the first quarter of 2006, and to use the
modified prospective transition method. Under this method, awards that are granted,
modified, or settled after the date of adoption will be measured and accounted for in
accordance with Statement 123R, and unvested equity awards granted prior to the effective
date will continue to be accounted for in accordance with Statement 123 as they have been
for purposes of pro forma disclosures, except that amounts will be recognized in the
statement of operations.

ITEM 3.          QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys primary market
risk exposure is foreign exchange rate fluctuations of the Swiss Franc to the U.S. dollar
as the financial position and operating results of the Companys subsidiaries in
Switzerland are translated into U.S. dollars for consolidation. The Companys
exposure to foreign exchange rate fluctuations also arises from transferring funds to its
Swiss subsidiaries in Swiss Francs. Most of the Companys sales and licensing fees
are denominated in U.S. dollars, thereby significantly mitigating the risk of exchange
rate fluctuations on trade receivables. The effect of foreign exchange rate fluctuations
on the Companys financial results for the quarters ended March 31, 2005 and 2004 was
not material. The Company also has exposure to exchange rate fluctuations between the Euro
and the U.S. dollar. The licensing agreement entered into in January 2003 with Ferring
established pricing in Euros for products sold under the supply agreement and for all
royalties. The Company does not currently use derivative financial instruments to hedge
against exchange rate risk. Because exposure increases as intercompany balances grow, the
Company will continue to evaluate the need to initiate hedging programs to mitigate the
impact of foreign exchange rate fluctuations on intercompany balances.

ITEM 4.          CONTROLS AND PROCEDURES

Disclosure Controls and
Procedures.

The Companys management, with
the participation of the Companys Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Companys disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as

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amended) as of the end of the period covered by this report.
Based on such evaluation, the Companys Chief Executive Officer and Chief Financial
Officer have concluded that, as of the end of such period, the Companys disclosure
controls and procedures are effective.

Internal Control over
Financial Reporting.

There have not been any changes in
the Companys internal control over financial reporting during the fiscal quarter to
which this report relates that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting.

The Companys management,
including the CEO and CFO, does not expect that its disclosure controls and procedures
will prevent all errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within the Company have been detected. The design of any
system of controls also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions; over time, control may become
inadequate because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a cost-effective
control system, misstatements due to error or fraud may occur and not be detected.

# Cautionary Statement for
Purposes of the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995

Certain statements in this Quarterly
Report on Form 10-Q are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on
Form 10-Q, the words may, should, expects,
plans, anticipates, believes, estimates,
predicts, intends, potential or continue
and similar expressions are generally intended to identify forward-looking statements.
Because these forward-looking statements involve risks and uncertainties, actual results
could differ materially from those expressed or implied by these forward-looking
statements. These statements are only predictions. Although the Company believes that the
expectations reflected in the forward-looking statements are reasonable, it cannot
guarantee future results, levels of activity, performance and/or achievements.

Forward-looking statements represent
the Companys expectations or beliefs concerning future events, including statements
regarding the Companys current cash situation, need for additional capital, ability
to continue operations, whether the Company will be successful in entering into new
strategic relationships, the Companys ability to attract and retain customers, the
Companys ability to adapt to changing technologies, the impact of competition and
pricing pressures from actual and potential competitors with greater financial resources,
the Companys ability to hire and retain competent employees, the Companys
ability to protect and reuse its intellectual property, changes in general economic
conditions, and other factors identified in the Companys filings with the Securities
and Exchange Commission. The Company disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information, future
events or otherwise.

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# PART II  OTHER
INFORMATION

Item 6.    Exhibits

(a)           Exhibits

|Exhibit No.    |  | Description                                                                                    
|-------------- |  | -----------------------------------------------------------------------------------------------
|               |  |                                                                                                
|31.1
31.2
32.0 |  | Section 302 CEO CertificationSection 302 CFO CertificationSection 906 CEO and CFO Certification

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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.

|May 10, 2005 
             
             
             
May 10, 2005 |  | ANTARES PHARMA, INC. 
/s/ Jack E. Stover

Jack E. Stover
President and Chief Executive Officer
/s/ Lawrence M. Christian

Lawrence M. Christian
Vice President - Finance, Secretary and
Chief Financial Officer
|-------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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