---

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 September 30, 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

Indicate by check mark whether the
 registrant  is a  shell  company (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 November 10, 2005, was
42,379,486.

_________________

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 September 30, 2005 and December 31, 2004
         Consolidated Statements of Operations for the three months and nine months ended September 30, 2005 and 2004
         Consolidated Statements of Cash Flows for the nine months ended September 30, 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
12
17
17
19
20

2

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

|                                                                             | September 30,
2005 | December 31,
2004
|---------------------------------------------------------------------------- | ------------------ | -----------------
|Assets                                                                       |                    |                  
|Current Assets:                                                              |                    |                  
|Cash  and cash equivalents                                                   |                    |                  
|Short-term investments                                                       |                    |                  
|Accounts receivable, net of allowances of $21,000 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 Stockholders' Equity                                         |                    |                  
|Current Liabilities:                                                         |                    |                  
|Accounts payable                                                             |                    |                  
|Accrued expenses and other liabilities                                       |                    |                  
|Deferred revenue                                                             |                    |                  
|                                                                             |                    |                  
|Total current liabilities                                                    |                    |                  
|                                                                             |                    |                  
|Deferred revenue - long term                                                 |                    |                  
|                                                                             |                    |                  
|Total liabilities                                                            |                    |                  
|                                                                             |                    |                  
|Stockholders' Equity:                                                        |                    |                  
|Series A Convertible Preferred Stock:  $0.01 par; authorized 10,000 shares;  |                    |                  
|1,500 issued and outstanding at December 31, 2004                            |                    |                  
|Series D Convertible Preferred Stock:  $0.01 par; authorized 245,000 shares; |                    |                  
|63,588 issued and outstanding at December 31, 2004                           |                    |                  
|Common Stock:  $0.01 par; authorized 100,000,000 shares; 42,379,486          |                    |                  
|and 40,418,406 issued and outstanding at September 30, 2005 and              |                    |                  
|December 31, 2004, respectively                                              |                    |                  
|Additional paid-in capital                                                   |                    |                  
|Prepaid license discount                                                     |                    |                  
|Accumulated deficit                                                          |                    |                  
|Deferred compensation                                                        |                    |                  
|Accumulated other comprehensive loss                                         |                    |                  
|                                                                             |                    |                  
|                                                                             |                    |                  
|                                                                             |                    |                  
|Total Liabilities and Stockholders' 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
September 30, | For the Nine Months Ended
September 30,
|------------------------------------------- | ---------------------------------------- | ---------------------------------------
|
|Revenues:                                   |                                          |                                        
|Product sales                               |                                          |                                        
|Development revenue                         |                                          |                                        
|Licensing fees                              |                                          |                                        
|Royalties                                   |                                          |                                        
|                                            |                                          |                                        
|Total revenues                              |                                          |                                        
|                                            |                                          |                                        
|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                                    |                                          |                                        
|Preferred stock dividends                   |                                          |                                        
|                                            |                                          |                                        
|Net loss applicable to common shares        |                                          |                                        
|                                            |                                          |                                        
|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 Nine Months Ended
September 30,
|------------------------------------------------------------ | ---------------------------------------
|
|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                                             |                                        
|Due to related parties                                       |                                        
|                                                             |                                        
|Net cash used in operating activities                        |                                        
|                                                             |                                        
|Cash flows from investing activities:                        |                                        
|Purchases of equipment, furniture and fixtures               |                                        
|Purchase 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              |                                        
|Payment of preferred stock dividends                         |                                        
|                                                             |                                        
|Net cash provided by financing activities                    |                                        
|                                                             |                                        
|Effect of exchange rate changes on cash and cash equivalents |                                        
|                                                             |                                        
|Net increase (decrease) 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) September 30, 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 the Companys Annual Report
on Form 10-K for the year ended December 31, 2004. Operating results for the three and
nine-month periods ended September 30, 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 nine months of 2005 and 2004 the Company recognized compensation expense of $117,820
and $127,700, 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 Sept. 30, | Nine Months Ended Sept. 30,
|-------------------------------------------- | ---------------------------- | ---------------------------
|
|Net loss applicable to common shares:        |                              |                            
|As reported                                  |                              |                            
|Stock based employee compensation expense    |                              |                            
|recognized                                   |                              |                            
|Fair-value method compensation expense       |                              |                            
|                                             |                              |                            
|Pro forma                                    |                              |                            
|                                             |                              |                            
|Basic and diluted net loss per common share: |                              |                            
|As reported                                  |                              |                            
|Stock based employee compensation expense    |                              |                            
|recognized                                   |                              |                            
|Fair-value method compensation expense       |                              |                            
|                                             |                              |                            
|Pro forma                                    |                              |                            
|                                             |                              |                            

6

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)(UNAUDITED) September 30, 2005 and
2004

|2. | Going Concern
|-- | -------------

| | The  accompanying  financial  statements  have  been  prepared  on  a  going-concern  basis,  which  contemplates  the
         realization  of assets and the  satisfaction  of liabilities  and other  commitments in the normal course of business.
         The Company  had  working  capital of  $2,083,073  and  $8,489,253  at  September  30,  2005 and  December  31,  2004,
         respectively, and has had net losses and negative cash flows from operating activities since inception.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company  expects to report a net loss for the year ending  December 31, 2005, as development  and marketing  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 and the receipt of revenues from sales of products.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Based on the current level of activity,  the Company's  cash position is sufficient to fund  operations  only into the
         first quarter of 2006.  However,  as discussed in Note 9, on October 19, 2005, the Company's  largest  shareholder and
         Chairman of the Board,  Dr. Jacques  Gonella,  provided a line of credit of up to $4,000,000,  of which  $2,000,000 is
         available to support general working capital needs of the Company.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 and the  Company's  ability to execute  its  business  plan and remain a going
         concern may be significantly impaired.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The  financial  statements  do not include  any  adjustments  relating to the  recoverability  and  classification  of
         recorded  asset amounts or the amounts and  classification  of  liabilities  that might be necessary if the Company is
         unable to continue as a going concern.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Inventories
|-- | -----------

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

|               | September 30,
2005 | December 31,
2004
|-------------- | ------------------ | -----------------
|Raw material   |                    |                  
|Finished goods |                    |                  
|               |                    |                  
|               |                    |                  
|               |                    |                  

7

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)(UNAUDITED) September 30, 2005 and
2004

|4. | 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
(Reductions) | Warranty
Claims | Balance at
September 30
|---- | ---------------------------- | -------------------------------- | --------------- | -----------------------
|2005 |                              |                                  | $               | 30,000                 
|2004 |                              |                                  | $               | 50,000                 

|5. | Stockholders
Equity
|-- | --------------------

| | Common
Stock, Options and Warrants
| | ----------------------------------

| | Warrant
exercises during the first nine months of 2005 and 2004 resulted in proceeds of $61,700
and $847,500, respectively, and in the issuance of 75,200 and 2,980,500 shares of common
stock, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the first nine months 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 nine-month period ended September 30, 2004 the Company received net proceeds of
$13,753,400 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 1,612,000 shares of common stock at an exercise price of $1.00 per share were
issued to the placement agent as a commission.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the first nine months of 2004 the Company issued options and/or warrants to purchase
558,250 shares of the Companys common stock at a weighted average exercise price of
$1.14 per share as compensation to directors and non-employees. The Company recognized
expense of $329,205 during the first nine months of 2004 in connection with the options
and warrants issued to non-employees.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)(UNAUDITED) September 30, 2005 and
2004

|5. | Stockholders
Equity (Continued)
|-- | --------------------------------

| | During
the first nine months of 2005 and 2004 the Company recognized expense of $1,833 and
$78,600 in connection with the issuance of 50,000 and 80,000 shares of common stock,
respectively, to directors and consultants as compensation for services.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Preferred
Stock Conversions
| | ---------------------------

| | In
June and September of 2005, 30,000 and 33,588 shares of Series D Preferred Stock,
respectively, were converted into 300,000 and 335,880 shares of common stock. Also in June
2005, all 1,500 previously outstanding shares of Series A Preferred Stock were converted
into 1,200,000 shares of common stock.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 became 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 was
recognized ratably over the one-year vesting period. Compensation expense of $20,417 and
$5,833 was recognized in connection with these shares during the nine-month periods ended
September 30, 2005 and 2004, respectively. 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Under
the terms of the employment agreement with the former CEO, compensation expense of $23,688
was recognized during the nine-month period ended September 30, 2004 in connection with
88,000 restricted shares of common stock previously issued.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)(UNAUDITED) September 30, 2005 and
2004

|6. | Net Loss Per Share
|-- | ------------------

| | Basic
loss per common share is computed by dividing net loss applicable to common stockholders
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
September 30, | Nine Months Ended
September 30,
|------------------------------------------- | -------------------------------- | -------------------------------
|
|Net loss applicable to common shares        |                                  |                                
|Basic and diluted weighted avg              |                                  |                                
|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 20,374,891 and 20,108,950 at September 30, 2005 and 2004,
respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
weighted average exercise price of the stock options and warrants outstanding at September
30, 2005 and 2004 was $1.48 and $1.47, respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------

|7. | 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:
| | ---------------------------------------------------------------------

|                         | September 30,
2005 | December 31,
2004
|------------------------ | ------------------ | -----------------
|United States of America |                    |                  
|Switzerland              |                    |                  
|                         |                    |                  
|                         |                    |                  
|                         |                    |                  

10

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# ANTARES PHARMA, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)(UNAUDITED) September 30, 2005 and
2004

|7. | Industry Segment and
Operations by Geographic Areas (Continued)
|-- | ---------------------------------------------------------------

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

|                         | Three Months Ended
September 30, | Nine Months Ended
September 30,
|------------------------ | -------------------------------- | -------------------------------
|
|Europe                   |                                  |                                
|United States of America |                                  |                                
|Other                    |                                  |                                
|                         |                                  |                                
|                         |                                  |                                
|                         |                                  |                                

| | The
following summarizes significant customers comprising 10% or more of total revenue for the
three months and nine months ended September 30:
| | -----------------------------------------------------------------------------------------------------------------------------------------------

|                    | Three Months Ended
September 30, | Nine Months Ended
September 30,
|------------------- | -------------------------------- | -------------------------------
|
|Ferring             |                                  |                                
|JCR Pharmaceuticals |                                  |                                
|Biosante            |                                  |                                
|Solvay              |                                  |                                

|8. | Comprehensive Loss
|-- | ------------------

|                                            | Three Months Ended
September 30, | Nine Months Ended
September 30,
|------------------------------------------- | -------------------------------- | -------------------------------
|
|Net loss                                    |                                  |                                
|Change in cumulative translation adjustment |                                  |                                
|                                            |                                  |                                
|Comprehensive loss                          |                                  |                                
|                                            |                                  |                                

|9. | Subsequent Event with
Related Party
|-- | -----------------------------------

| | On
October 19, 2005, the Companys largest stockholder and Chairman of the Board, Dr.
Jacques Gonella, provided a line of credit of up to $4,000,000, of which $2,000,000 is
available to support general working capital needs of the Company. Borrowings under the
line of credit will be at prime plus 2%. Principal and interest are convertible into
shares of the Companys common stock at the lesser of $1.26 per share or the per
share price at which common shares are issued or the exercise or conversion price of
securities issued during the term of the agreement. Borrowings will generally be secured
by a security interest in license, milestone payments, and royalties to the Company from
licensing of its ATD gel products and/or technology. As additional consideration for this
line of credit, the Company agreed to issue to Dr. Gonella common stock warrants that will
be issued at rates ranging from 18% to 32% of each borrowing. A total of 1,000,000
warrants will be issued if the Company borrows the entire $4,000,000.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

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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 $6,577,230 for the nine-month period ended September 30, 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.

12

---

# 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 and Nine Months
Ended September 30, 2005 and 2004

Revenues

Total revenues for the three and nine
months ended September 30, 2005 were $443,978 and $1,490,788, respectively, compared to
revenues for the same prior-year periods of $613,175 and $2,030,376, respectively. The
decreases in the third quarter of $169,197, or 28%, and in the first nine months of
$539,588, or 27%, were primarily due to decreases in product sales of $59,845 and
$172,966, respectively, development revenue of $22,216 and $84,562, respectively, and
licensing fees of $69,032 and $261,190, respectively.

The product sales decrease was
primarily due to a decrease in sales of the Medi-Jector Vision device and disposable
components to the Companys major European customer. Development revenue decreased
for the three months and nine months ended September 30, 2005 as compared to the
prior-year periods primarily due to development fees related to an agreement that
originated and ended in 2004 and changes to the Companys strategy that reduced the
emphasis on licensing early stage technology. Licensing fees decreased mainly due to
amortizing remaining deferred revenue over longer periods of time for accounting purposes
as a result of increasing the estimated revenue recognition periods of certain existing
license agreements.

Cost of Sales

The cost of product sales are related
to injection devices and disposable products. Cost of product sales as a percentage of
product sales increased to 74% in the third quarter of 2005 from 61% for the third quarter
of 2004, mainly due to favorable inventory and warranty reserve adjustments in the prior
year and differences in overhead absorption rates which can occur as a result of
fluctuations in production volumes between quarters during the year. Cost of product sales
as a percentage of product sales changed only slightly in the first nine months of 2005
compared to the same period of 2004, decreasing 2% to 70% for the 2005 period from 72% in
2004.

The cost of development revenue
consists of labor costs, direct external costs and an allocation of certain overhead
expenses. Cost of development revenue as a percentage of development revenue can fluctuate
considerably between periods depending on the development projects in process. In some
cases development projects are substantially labor based, resulting in relatively high
margins, while in other cases development projects include a significant amount of
external cost passed thru to the customer at little or no markup, resulting in very low
margins. Cost of development revenue as a percentage of

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development revenue was 69% and
30% for the nine-month periods ended September 30, 2005 and 2004, respectively, and for
the third quarter of 2004 was 27%. In the third quarter of 2005 the cost of development
revenue exceeded development revenue due to one development project for which external
costs exceeded revenue recognized in the quarter, although total costs for this project,
over several quarters, has not exceeded revenue.

Research and Development

Research and development expenses
totaled $922,178 and $2,971,764 in the three and nine-month periods ended September 30,
2005, respectively, compared to $879,297 and $2,147,260 in the same prior-year periods.
The increases in the third quarter and first nine months of 2005 compared to the same
periods of 2004 were primarily due to development projects related to transdermal gels and
oral fast melt tablet products and consisted mainly of increases in external costs for
studies and analysis work around platform validation and proof-of-concept work.

Sales, Marketing and
Business Development

Sales, marketing and business
development expenses totaled $262,201 and $903,203 in the three and nine-month periods
ended September 30, 2005, respectively, compared to $216,469 and $450,802 in the same
prior-year periods. The increase in the current year three-month period is mainly due to
increases in business development activities, as sales and marketing activities decreased
compared to the prior year due to reductions in advertising and promotional activities
related to the MJ7 insulin market. The increase in the nine-month period was due to
increases in clinical studies related to sales and marketing activities, payroll, travel
and professional services. The increases in payroll and travel expenses resulted primarily
from the addition of a vice president of corporate business development in February of
2005. The professional services increase was mainly due to the utilization of consultants
for various sales and marketing and business development projects.

General and Administrative

General and administrative expenses
totaled $950,478 and $3,378,419 in the three and nine-month periods ended September 30,
2005, respectively, compared to $1,477,672 and $4,180,110 in the same periods of the prior
year. The decrease of $527,194, or 36%, in the third quarter of 2005 and the decrease of
$801,691, or 19%, in the first nine months of 2005 as compared to the same periods in 2004
were due primarily to decreases in professional services and investor relations costs.

Other Income (Expense)

Net other income (expense) increased
to $14,132 of income in the third quarter of 2005 from income of $6,751 in the third
quarter of 2004, and changed to income of $61,063 for the first nine months of 2005 from
$(42,446) of expense in 2004. The increase in the third quarter is primarily due to a
reduction in interest expense from $(21,875) in 2004 to none in 2005, partially offset by
a decrease in interest income of $5,956 in 2005 compared to 2004, and increases in the
foreign exchange losses and other expenses of $(3,523) and $(5,015), respectively. In the
first nine months of 2005 compared to 2004 foreign exchange losses increased to $(36,004)
from $(13,467), interest income increased by $27,726 to $108,077 from $80,351, and
interest expense decreased to zero from $(100,959). The foreign exchange losses increased
mainly as a result of the strengthening U.S. dollar against the Swiss Franc and Euro. The
interest income decrease in the third quarter of 2005 compared to 2004 was due to a
reduction in funds available for investment and the increase in the nine month period was
due primarily to higher interest rates in 2005 than in 2004. The interest expense decrease
in the nine-month period was mainly due to expense of

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$75,388 recognized in 2004 in
connection with warrants originally issued to convertible debenture holders that were
exercised at a discounted exercise price.

Net Loss Per Common Share

The net loss per common share for the
three and nine-month periods ended September 30, 2005 of $0.05 and $0.16, respectively,
were basically unchanged from the net loss per common share of $0.06 and $0.17,
respectively, for the same prior-year periods. The slightly smaller loss in the third
quarter of 2005 compared to 2004 resulted in a $0.01 decrease in the net loss per share.
The larger loss in the 2005 nine-month period compared to the same period of 2004 was
spread across a slightly higher number of weighted average shares outstanding, resulting
in a $0.01 decrease in the net loss per share for the period. The increase in weighted
average shares outstanding was mainly due to the private placement that occurred in the
first quarter of 2004.

# 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 the first half of
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 the first nine months of 2004 the Company also received proceeds
of $847,500 in connection with the exercise of warrants for 2,980,500 shares of common
stock. During the first nine months of 2005 the Company received proceeds of $61,700 in
connection with the exercise of warrants for 75,200 shares of common stock.

Total cash and cash equivalents and
short-term investments at September 30, 2005 were $3,264,559 compared to $9,624,033 at
December 31, 2004. This decrease resulted primarily from funding operating activities in
the first nine months of 2005. If the net cash burn continues at this rate, the
Companys cash and investment reserves will be sufficient to fund operations only
into the first quarter of 2006.

On October 19, 2005, the
Companys largest stockholder and Chairman of the Board, Dr. Jacques Gonella,
provided a line of credit of up to $4,000,000, of which $2,000,000 is available to support
general working capital needs of the Company. Borrowings under the line of credit will be
at prime plus 2%. Principal and interest are convertible into shares of the Companys
common stock at the lesser of $1.26 per share or the per share price at which common
shares are issued or the exercise or conversion price of securities issued during the term
of the agreement. Borrowings will generally be secured by a security interest in license,
milestone payments, and royalties to the Company from licensing of its ATD gel products
and/or technology. As additional consideration for this line of credit, the Company agreed
to issue to Dr. Gonella common stock warrants that will be issued at rates ranging from
18% to 32% of each borrowing. A total of 1,000,000 warrants will be issued if the Company
borrows the entire $4,000,000.

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 and the
Companys ability to execute its business plan and remain a going concern may be
significantly impaired.

15

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The financial statements do not
include any adjustments relating to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might be necessary if
the Company is unable to continue as a going concern.

Cash Flows

Operating
Activities

Net cash used in operating activities
increased to $6,253,386 for the first nine months of 2005 from $5,167,732 for the first
nine months of 2004, a change of $1,085,654. This increase in cash used was due to an
increase in net loss net of noncash expenses of $1,518,808 in 2005 compared to 2004 and a
decrease in cash used for operating assets and liabilities of $433,154 in 2005 compared to
2004.

Noncash expenses decreased by
$745,776 to $527,764 in the first nine months of 2005 compared to $1,273,540 in the first
nine months of 2004. The decrease was due to decreases in depreciation and amortization of
$204,309, noncash interest expense of $75,388 and stock-based compensation expense of
$466,079.

In the first nine months of 2005
operating assets increased by $87,868 and operating liabilities decreased by $116,052,
resulting in a total reduction in cash of $203,920. The operating asset increase was
primarily related to prepaid expenses, while the decrease in operating liabilities was
mainly related to deferred revenue and accrued expenses. The changes in prepaid expenses
and accrued expenses were mainly the result of ordinary business activities, and the
deferred revenue decrease was due to amortization of previously deferred amounts that
exceeded new amounts received and deferred under license or development agreements.

In the first nine months of 2004 the
cash used to acquire assets and reduce liabilities exceeded the cash provided by the sale
or collection of assets and increases in liabilities by $637,074. The most significant
reason for the decrease in cash was the decrease in deferred revenue of $526,792, which
was due to amortization of previously deferred amounts that exceeded new amounts received
and deferred under license or development agreements. Also, cash was used for the payment
of $141,765 in amounts due to a consulting company owned by the Companys largest
stockholder for services rendered in 2003. These reductions in cash along with others from
changes in operating assets and liabilities were partially offset by a cash increase from
the reduction in accounts receivable of $317,901. Accounts receivable was higher at the
end of 2003 than at the end of the third quarter of 2004 mainly because of an active
development agreement in place at the end of 2003, and because of the timing of product
shipments, billings and collections.

Investing
Activities

In the first nine months of 2005
investing activities resulted in an increase in cash and cash equivalents of $7,875,174.
This increase was due to proceeds from the maturity of short-term investments of
$13,897,477, partially offset by purchases of short-term investments of $5,955,789 and
purchases of equipment, furniture and fixtures of $66,514. Investing activities in the
first nine months of 2004 resulted in a decrease in cash and cash equivalents of
$10,176,809. This was due to purchases of equipment, furniture and fixtures that totaled
$123,981, expenditures for patent acquisition and development of $133,638, and purchases
of short-term investments in the amount of $15,919,190, partially offset by proceeds from
the maturity of short-term investments of $6,000,000.

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Financing
Activities

Net cash provided by financing
activities decreased to $11,700 in the first nine months of 2005 from $14,547,254 in the
first nine months of 2004. In 2005 proceeds of $61,700 from the exercise of warrants was
partially offset by a $50,000 preferred stock dividend payment. The cash provided in 2004
was due primarily to net proceeds of $13,753,400 related to private placements of common
stock in the first quarter of 2004. Cash was also generated in the first half of 2004 from
proceeds from exercise of warrants of $847,500 and was reduced by principal payments on
capital lease obligations of $32,217 and payment of preferred stock dividends of $21,429.

On June 30, 2005 all 1,500 shares of
Series A Convertible Preferred Stock were converted into 1,200,000 shares of common stock
at a conversion price of $1.25 per share. The preferred stock dividends paid in 2005 and
2004 were related to these preferred shares.

# 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. 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 effect of foreign exchange rate fluctuations on the
Companys financial results for the three and nine-month periods ended September 30,
2005 and 2004 was not material. The Company does not currently use derivative financial
instruments to hedge against exchange rate risk.

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

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(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as 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.

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 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

| | On
September 13, 2005, the Company issued 50,000 shares of its common stock to Dawson James
Securities, Inc. or its agents. The shares were issued as compensation pursuant to an
agreement under which Dawson James Securities, Inc. will perform certain services for the
Company. In so much as Dawson James Securities, Inc. and its agents were sophisticated
investors, used access to financial and other relevant information and could bear the
economic risk of the investment, the transaction was exempt from the registration
provision of the Securities Act of 1933 under Section 4(2) of the Act.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 6. | Exhibits
|------- | --------

|(a) | Exhibits
|--- | --------

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

|                  |                                                                                                                 
|----------------- | ----------------------------------------------------------------------------------------------------------------
|                  | ANTARES PHARMA, INC.                                                                                            
|November 14, 2005 | /s/ Jack E. Stover
Jack E. Stover.
President and Chief Executive Officer                                        
|November 14, 2005 | /s/ Lawrence M. Christian

Lawrence M. Christian
Vice President - Finance, Secretary and
Chief Financial Officer

20