<PAGE>


================================================================================

                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 June 30, 2002

Commission File Number 0-20945

                              ANTARES PHARMA, INC.

A Minnesota 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
                                         ---         ---

The number of shares outstanding of the Registrant's Common Stock, $.01 par
value, as of July 31, 2002, was 9,790,325.

================================================================================


                                       1

<PAGE>

                              ANTARES PHARMA, INC.

                                      INDEX
<TABLE>
<CAPTION>
                                                                                     PAGE
                                                                                     ----

PART I.        FINANCIAL INFORMATION


       ITEM 1. Financial Statements (Unaudited)
<S>                                                                                  <C>
               Consolidated Balance Sheets, as of December 31, 2001 and
               June 30, 2002 .........................................................3

               Consolidated Statements of Operations for the three months and six
               months ended June 30, 2001 and 2002 ...................................4

               Consolidated Statements of Cash Flows for the six months
               ended June 30, 2001 and 2002 ..........................................5

               Notes to Consolidated Financial Statements ............................6


       ITEM 2. Management's Discussion and Analysis of Financial Condition
               and Results of Operations ............................................14

       ITEM 3. Quantitative and Qualitative Disclosures About Market Risk ...........19


PART II.       OTHER INFORMATION ....................................................20


               SIGNATURES ...........................................................21
</TABLE>

                                       2

<PAGE>

                              ANTARES PHARMA, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                          December 31,         June 30,
                                                                                              2001               2002
                                                                                         ----------------   ----------------
<S>                                                                                      <C>                <C>
                                                          Assets
Current Assets:
       Cash .......................................................................      $    1,965,089     $      442,678
       Accounts receivable, less allowance for doubtful accounts of $18,000 .......             535,461            909,176
       VAT and other receivables ..................................................             331,660            131,306
       Inventories ................................................................             655,691            697,863
       Prepaid expenses and other assets ..........................................              55,041            236,252
                                                                                         ----------------   ----------------
              Total current assets ................................................           3,542,942          2,417,275

Equipment, furniture and fixtures, net ............................................           1,924,675          1,816,117
Patent rights, net ................................................................           2,464,336          2,612,175
Goodwill, net .....................................................................           3,095,355          3,095,355
Other assets ......................................................................             101,142            131,524
                                                                                         ----------------   ----------------

              Total Assets ........................................................      $   11,128,450     $   10,072,446
                                                                                         ================   ================

                                           Liabilities and Shareholders' Equity

Current Liabilities:
       Accounts payable ...........................................................      $      637,794     $      644,429
       Accrued expenses and other liabilities .....................................           1,070,916            739,230
       Deferred revenue ...........................................................           1,511,198          2,486,538
       Capital lease obligations - current maturities .............................              91,054            136,171
       Due to related parties .....................................................             243,692            427,187
                                                                                         ----------------   ----------------
              Total current liabilities ...........................................           3,554,654          4,433,555

Capital lease obligations, less current maturities ................................             105,629             65,308
                                                                                         ----------------   ----------------
              Total liabilities ...................................................           3,660,283          4,498,863
                                                                                         ----------------   ----------------


Shareholders' Equity:
       Series A Convertible Preferred Stock:  $0.01 par; authorized 10,000
          shares; 1,250 and 1,300 issued and outstanding at December 31, 2001 and
          June 30, 2002, respectively .............................................                  13                 13
       Common Stock:  $0.01 par; authorized 30,000,000 shares;
          9,161,188 and 9,790,325 issued and outstanding at
          December 31, 2001 and June 30, 2002, respectively .......................              91,612             97,903
       Additional paid-in capital .................................................          37,464,531         39,846,233
       Accumulated deficit ........................................................         (29,457,033)       (33,570,557)
       Deferred compensation ......................................................            (251,016)          (366,628)
       Accumulated other comprehensive loss .......................................            (379,940)          (433,381)
                                                                                         ----------------   ----------------
                                                                                              7,468,167          5,573,583
                                                                                         ----------------   ----------------
              Total Liabilities and Shareholders' Equity ..........................      $   11,128,450     $   10,072,446
                                                                                         ================   ================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       3

<PAGE>

                              ANTARES PHARMA, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                           For the Three Months Ended           For the Six Months Ended
                                                                     June 30,                           June 30,
                                                       ----------------------------------  ---------------------------------
                                                            2001              2002              2001             2002
                                                       ----------------  ----------------  ---------------- ----------------
<S>                                                    <C>               <C>               <C>              <C>
Revenues:
     Product sales ...............................     $     813,354     $      990,555    $   1,284,731    $    1,528,568
     Licensing and product development ...........           292,799            138,058          408,591           269,016
                                                       ----------------  ----------------  ---------------- ----------------
                                                           1,106,153          1,128,613        1,693,322         1,797,584

Cost of product sales ............................           426,054            559,285          719,926         1,220,709
                                                       ----------------  ----------------  ---------------- ----------------
Gross margin .....................................           680,099            569,328          973,396           576,875
                                                       ----------------  ----------------  ---------------- ----------------

Operating Expenses:
     Research and development ....................           823,828            813,692        1,394,779         1,544,820
     In-process research and development .........                 -                  -          948,000                 -
     Sales and marketing .........................           383,709            240,748          644,007           399,169
     General and administrative ..................         1,200,865          1,338,448        2,385,040         2,615,777
                                                       ----------------  ----------------  ---------------- ----------------
                                                           2,408,402          2,392,888        5,371,826         4,559,766
                                                       ----------------  ----------------  ---------------- ----------------

Net operating loss ...............................        (1,728,303)        (1,823,560)      (4,398,430)       (3,982,891)
                                                       ----------------  ----------------  ---------------- ----------------

Other income (expense):
     Interest income .............................            70,223              6,735          158,184             9,967
     Interest expense ............................            (6,747)           (44,901)         (90,951)          (53,263)
     Foreign exchange gains (losses) .............            19,486            (55,180)          (7,609)          (36,642)
     Other, net ..................................           (33,382)                22            6,136              (695)
                                                       ----------------  ----------------  ---------------- ----------------
                                                              49,580            (93,324)          65,760           (80,633)
                                                       ----------------  ----------------  ---------------- ----------------

Net loss .........................................        (1,678,723)        (1,916,884)      (4,332,670)       (4,063,524)

In-the-money conversion feature-preferred
   stock dividend ................................                 -                  -       (5,314,125)                -

Preferred stock dividends ........................           (50,000)           (50,000)         (50,000)          (50,000)
                                                       ----------------  ----------------  ---------------- ----------------

Net loss applicable to common shares .............     $  (1,728,723)    $   (1,966,884)   $  (9,696,795)   $   (4,113,524)
                                                       ================  ================  ================ ================

Basic and diluted net loss per common share ......     $       (0.20)    $        (.21)    $       (1.22)   $        (.45)
                                                       ================  ================  ================ ================

Basic and diluted weighted average common
   shares outstanding ............................         8,840,448          9,286,359        7,931,333         9,228,539
                                                       ================  ================  ================ ================
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4

<PAGE>



                              ANTARES PHARMA, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                               For the Six Months Ended
                                                                                                       June 30,
                                                                                           ---------------------------------
                                                                                                2001              2002
                                                                                           ----------------  ---------------
<S>                                                                                        <C>               <C>
Cash flows from operating activities:
     Net loss ..........................................................................   $   (4,332,670)   $   (4,063,524)
     Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization .....................................................          563,323           397,166
     Loss on disposal and abandonment of assets ........................................              126                 -
     In-process research and development ...............................................          948,000                 -
     Stock-based compensation expense ..................................................           18,063           185,833
     Changes in operating assets and liabilities, net of effect of business acquisition:
       Accounts receivable .............................................................         (365,026)         (373,715)
       VAT and other receivables .......................................................          126,834           200,354
       Inventories .....................................................................         (110,936)          (42,172)
       Prepaid expenses and other assets ...............................................          (42,205)         (181,211)
       Accounts payable ................................................................         (739,626)            6,635
       Accrued expenses and other ......................................................         (568,820)         (295,136)
       Deferred revenue ................................................................         (174,313)          975,340
       Due to related parties ..........................................................            9,302          (116,505)
       Other ...........................................................................           (4,545)          (30,382)
                                                                                           ----------------  ---------------
Net cash used in operating activities ..................................................       (4,672,493)       (3,337,317)
                                                                                           ----------------  ---------------

Cash flows from investing activities:
     Purchases of equipment, furniture and fixtures ....................................         (230,022)         (123,181)
     Proceeds from sale of equipment, furniture & fixtures .............................           91,699                 -
     Additions to patent rights ........................................................          (59,267)         (161,977)
     Increase in notes receivable and due from Medi-Ject ...............................         (602,756)                -
     Acquisition of Medi-Ject, including cash acquired .................................          355,578                 -
                                                                                           ----------------  ---------------
Net cash used in investing activities ..................................................         (444,768)         (285,158)
                                                                                           ----------------  ---------------

Cash flows from financing activities:
     Proceeds from loans from shareholders .............................................        1,188,199         2,300,000
     Principal payments on capital lease obligations ...................................         (125,768)          (55,722)
     Proceeds from issuance of common stock, net .......................................       10,016,268                 -
                                                                                           ----------------  ---------------
Net cash provided by financing activities ..............................................       11,078,699         2,244,278
                                                                                           ----------------  ---------------

Effect of exchange rate changes on cash and cash equivalents ...........................         (285,765)         (144,214)
                                                                                           ----------------  ---------------

Net increase (decrease) in cash and cash equivalents ...................................        5,675,673        (1,522,411)
Cash and cash equivalents:
     Beginning of period ...............................................................          243,222         1,965,089
                                                                                           ----------------  ---------------
     End of period .....................................................................   $    5,918,895    $      442,678
                                                                                           ================  ===============

Supplemental cash flow information:
     Cash paid during the period for interest ..........................................   $       90,951    $       16,290
</TABLE>

-----------
Schedule of non-cash investing and financing activities: See information
regarding non-cash investing and financing activities in Notes 1, 2, 7 and 8.

           See accompanying notes to consolidated financial statements

                                       5

<PAGE>


                              ANTARES PHARMA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                             June 30, 2001 and 2002




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, 2001.
     Operating results for the six-month period ended June 30, 2002, are not
     necessarily indicative of the results that may be expected for the year
     ending December 31, 2002.

     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 and inventory reserves, 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, 2001. Based upon the Company's review, it has determined that
     these policies remain its most critical accounting policies for the six
     months ended June 30, 2002, and the Company has made no changes to these
     policies during 2002.

     On January 31, 2001, Medi-Ject Corporation, now known as Antares Pharma,
     Inc. ("Antares" or "the Company") purchased from Permatec Holding AG
     ("Permatec") all of the outstanding shares of Permatec Pharma AG, Permatec
     Technology AG, and Permatec NV (the "Share Transaction"). In exchange,
     Antares issued 2,900,000 shares of Antares common stock to Permatec. Upon
     the issuance, Permatec and its affiliates owned approximately 67% of the
     outstanding shares of Antares common stock. For accounting purposes,
     Permatec is deemed to have acquired Antares. The acquisition has been
     accounted for by the purchase method of accounting.

     Upon closing of the Share Transaction on January 31, 2001, the full
     principal amount of Permatec's shareholders' loans to the three Permatec
     subsidiaries which were included in the Share Transaction, of $13,069,870,
     was converted to equity.

     Also on January 31, 2001, promissory notes issued by Medi-Ject to Permatec
     between January 25, 2000 and January 15, 2001, in the aggregate principal
     amount of $5,500,000, were converted into Series C Convertible Preferred
     Stock ("Series C"). Permatec, the holder of the Series C stock, immediately
     exercised its right to convert the Series C stock, and Antares issued
     2,750,000 shares of common stock to Permatec upon such conversion. Also on
     that date, the name of the corporation was changed to Antares Pharma, Inc.

                                       6

<PAGE>
                              ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002


1.   Basis of Presentation (Continued)

     The total consideration paid, or purchase price, for Medi-Ject was
     $6,889,974, which represents the fair market value of Medi-Ject and related
     transaction costs of $480,095. For accounting purposes, the fair value of
     Medi-Ject is based on the 1,424,729 shares of Medi-Ject common stock
     outstanding on January 25, 2000, at an average closing price three days
     before and after such date of $2.509 per share plus the estimated fair
     value of the Series A convertible preferred stock and the Series B
     mandatorily redeemable convertible preferred stock plus the fair value of
     outstanding stock options and warrants representing shares of Medi-Ject
     common stock either vested on January 25, 2000, or that became vested at
     the close of the Share Transaction plus the capitalized acquisition cost of
     Permatec.

     The purchase price allocation, based on an appraisal by an independent
     third-party appraisal firm, was as follows:

          Cash acquired ..............................   $        394,535
          Current assets .............................            900,143
          Equipment, furniture and fixtures ..........          1,784,813
          Patents ....................................          1,470,000
          Other intangible assets ....................          2,194,000
          Goodwill ...................................          1,276,806
          Other assets ...............................              3,775
          Current liabilities ........................         (2,026,723)
          Debt .......................................            (55,375)
          In-process research and development ........            948,000
                                                         ----------------
          Purchase price .............................   $      6,889,974
                                                         ================

     In connection with the Share Transaction on January 31, 2001, the Company
     acquired in-process research and development projects having an estimated
     fair value of $948,000, that had not yet reached technological feasibility
     and had no alternative future use. Accordingly, this amount was immediately
     expensed in the Consolidated Statements of Operations.

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's external auditors issued their report on the December 31, 2002
     financial statements, which express substantial doubt about the Company's
     ability to continue as a going concern. The Company had negative working
     capital of $2,016,280 at June 30, 2002, 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,
     2002, 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 and the
     receipt of revenues from sales of products.

                                       7

<PAGE>
                              ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

2.   Going Concern (Continued)

     The Company believes it has sufficient cash through September 2002 and will
     be required to raise additional working capital to continue to exist.
     Management's intentions are to raise this additional capital through
     alliances with strategic corporate partners, equity offerings, and/or
     borrowing from the Company's majority shareholder. The Company received
     $1,000,000 on March 12, 2002 and $1,000,000 on April 24, 2002 from the
     Company's majority shareholder, Dr. Jacques Gonella, under a Term Note
     agreement dated February 20, 2002. The Term Note agreement allowed for
     total advances to the Company of $2,000,000 and was interest bearing at the
     three month Euribor Rate as of the date of each advance, plus 5%. The
     principal of $2,000,000 and accrued interest of $36,550 was converted into
     509,137 shares of common stock on June 10, 2002 at $4.00 per share. In June
     2002, the Company borrowed an additional $300,000 from the Company's
     majority shareholder on a short-term basis with interest at the three month
     Euribor Rate as of the date of the advance, plus 5%.

     On July 12, 2002 the Company entered into a Securities Purchase Agreement
     (the "Agreement") for the sale and purchase of up to $2,000,000 aggregate
     principal amount of the Company's 10% Convertible Debentures. The
     debentures are convertible into shares of the Company's common stock at a
     conversion price which is the lower of $2.50 or 75% of the average of the
     three lowest intraday prices of the Company's common stock, as reported on
     the Nasdaq SmallCap Market. Within 15 days of the closing, the Company was
     obligated to file a registration statement with the Securities and Exchange
     Commission to register the shares issuable upon conversion of the
     debentures. Under the terms of the Agreement, the Company received $700,000
     upon closing of the transaction on July 12, 2002, an additional $700,000
     after the Company filed the registration statement on July 19, 2002 to
     register the shares issuable upon conversion of the debentures, and will
     receive an additional $600,000 when such registration statement is declared
     effective. Additionally, the Company intends to hold a special meeting of
     its shareholders on August 23, 2002, to approve the issuance of the shares
     issuable upon conversion of the debentures. Upon conversion of the
     debentures, existing common shareholders could experience substantial
     dilution of their investment. In addition, as the per share conversion
     price of the debentures into common stock was substantially lower than the
     market price of the common stock on the dates the debentures were sold, the
     Company will be recording an accounting charge for the beneficial
     in-the-money conversion feature of the debentures in the third quarter.
     This charge will be material to the financial statements and could equal
     the principal amount of the converted debentures.

     There can be no assurance that the Company will ever become profitable or
     that adequate funds will be available when needed or on acceptable terms.

     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.

                                       8

<PAGE>
                              ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

3.   Comprehensive Loss

<TABLE>
<CAPTION>
                                                       Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                ---------------------------------  ---------------------------------
                                                     2001             2002              2001             2002
                                                ---------------- ----------------  ---------------- ----------------
        <S>                                     <C>              <C>               <C>              <C>
        Net loss ...........................    $  (1,678,723)   $  (1,916,884)    $  (4,332,670)   $  (4,063,524)
        Change in cumulative translation
        adjustment .........................          (32,350)         (51,815)         (340,755)         (53,441)
                                                ---------------- ----------------  ---------------- ----------------
        Comprehensive loss .................    $  (1,711,073)   $  (1,968,699)    $  (4,673,425)   $  (4,116,965)
                                                ================ ================  ================ ================
</TABLE>

4.   Inventories

     Inventories consist of the following:

                                      December 31,            June 30,
                                         2001                   2002
                                  -------------------    ------------------
        Raw material ..........   $       294,643        $       342,323
        Work in-process .......            29,611                264,705
        Finished goods ........           436,437                170,835
                                  -------------------    ------------------
                                          760,691                777,863
        Inventory reserve .....          (105,000)               (80,000)
                                  -------------------    ------------------
                                  $       655,691        $       697,863
                                  ===================    ==================

5.   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 table:

     We have operating assets located on two continents as follows:

<TABLE>
<CAPTION>
                                                             December 31,             June 30,
                                                                 2001                   2002
                                                         -------------------    ------------------
        <S>                                              <C>                    <C>
        Switzerland ................................     $      2,388,337       $      2,230,732
        United States of America ...................            8,740,113              7,841,714
                                                         -------------------    ------------------
                                                         $     11,128,450       $     10,072,446
                                                         ===================    ==================
</TABLE>

                                       9

<PAGE>
                              ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

5.   Industry Segment and Operations by Geographic Areas (Continued)

     Revenues by region of origin are summarized as follows:

<TABLE>
<CAPTION>
                                                                For the Three Months Ended
                                                                         June 30,
                                                         ------------------------------------------
                                                                2001                  2002
                                                         -------------------    ------------------
        <S>                                              <C>                    <C>
        United States of America ..................      $        141,236       $        429,095
        Europe ....................................               955,943                675,196
        Other .....................................                 8,974                 24,322
                                                         -------------------    ------------------
                                                         $      1,106,153       $      1,128,613
                                                         ===================    ==================
<CAPTION>
                                                                 For the Six Months Ended
                                                                         June 30,
                                                         ------------------------------------------
                                                                2001                  2002
                                                         -------------------    ------------------
        <S>                                              <C>                    <C>
        United States of America ..................      $        251,226       $        684,001
        Europe ....................................             1,369,656              1,065,319
        Other .....................................                72,440                 48,264
                                                         -------------------    ------------------
                                                         $      1,693,322       $      1,797,584
                                                         ===================    ==================
</TABLE>

6.   Accounting for License Revenues

     During the quarter ended December 31, 2000 and effective January 1, 2000,
     the Company adopted the cumulative deferral method for accounting for
     license revenues. The adoption of this accounting principle resulted in a
     $1,059,622 cumulative effect adjustment in the first quarter 2000.

     During the quarter and six-month periods ended June 30, 2001 and for the
     same periods ending June 30, 2002, the Company recognized $69,301,
     $138,601, $36,714 and $75,942, respectively, of license revenues that were
     previously recognized by the Company prior to the adoption of the
     cumulative deferral method.

7.   In-The-Money Conversion Feature Preferred Stock Dividend

     During 2000 and 2001, prior to the closing of the Share Transaction on
     January 31, 2001, Medi-Ject borrowed a total of $5,500,000 in convertible
     promissory notes from Permatec. At the closing of the Share Transaction,
     the principal amount of convertible promissory notes converted to 27,500
     shares of Series C preferred stock. At the option of the holder, these
     shares were immediately converted into 2,750,000 shares of Antares common
     stock. As the conversion feature to common stock was contingent upon the
     closing of the Share Transaction, the measurement of the stated conversion
     feature as compared to the Company's common stock price of $4.56 at January
     31, 2001, resulted in an in-the-money conversion feature of $5,314,125,
     which is a deemed dividend to the Series C preferred shareholder. This
     dividend increases the net loss applicable to common shareholders in the
     Antares' net loss per share calculation.

                                       10

<PAGE>

                              ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

8.   Shareholders' Equity

     Roger G. Harrison, Ph.D., was appointed to the position of Chief Executive
     Officer of Antares Pharma, Inc., effective March 12, 2001. In accordance
     with the terms of the employment agreement with Dr. Harrison, 40,000
     restricted shares of common stock were granted to him on March 12, 2002,
     his first anniversary with the Company.

     During the second quarter of 2002 the Company issued 80,000 shares of fully
     vested common stock valued at $283,000 to two consultants for services to
     be performed. Of the 80,000 shares issued, 20,000 were issued as
     compensation directly related to the closing on July 12, 2002 of $2,000,000
     of the Company's 10% Convertible Debentures. Expense related to 20,000
     shares will be recognized as interest expense over the term of the
     debentures. Expense related to 60,000 shares is being recognized as the
     consulting services are provided to the Company. Through June 30, 2002
     approximately $61,000 has been recognized as expense.

     On June 10, 2002 the principal balance of $2,000,000 and accrued interest
     of $36,550 under a term note agreement with the Company's majority
     shareholder, Dr. Jacques Gonella, was converted into 509,137 shares of
     common stock at $4.00 per share.

9.   New Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board issued SFAS 141,
     "Business Combinations," and SFAS 142, "Goodwill and Other Intangible
     Assets." SFAS 141 requires that the purchase method of accounting be used
     for all business combinations initiated after June 30, 2001. SFAS 142
     changes the accounting for goodwill from an amortization method to an
     impairment-only approach. Thus, amortization of goodwill, including
     goodwill recorded in past business combinations, ceased upon adoption of
     that Statement. The Company adopted SFAS 142 in the first quarter of fiscal
     2002 and accordingly evaluated its existing intangible assets and goodwill
     that were acquired in a prior purchase business combination, and determined
     that $1,935,588 representing the unamortized portion of the amount
     allocated to other intangible assets on the date of adoption, should be
     reclassified as goodwill. These amounts were previously classified as
     workforce, ISO certification and clinical studies. Upon adoption of SFAS
     142, the Company reassessed the useful lives and residual values of all
     intangible assets acquired in purchase business combinations, and
     determined that there were no amortization period adjustments necessary.

     The Company adopted SFAS 141 during 2001 and adopted SFAS 142 effective
     January 1, 2002. As of the date of adoption of SFAS 142, after
     reclassification of other intangible assets as goodwill, the Company had
     approximately $3,095,355 of unamortized goodwill subject to the transition
     provisions of SFAS 141 and 142. The Company engaged a third-party valuation
     firm to complete an evaluation of goodwill in accordance with the
     provisions of SFAS 142 and concluded that no impairment existed. Adoption
     of SFAS 142 is expected to decrease amortization expenses in 2002 by
     approximately $410,000 as a result of ceasing amortization of goodwill and
     other intangible assets reclassified as goodwill.


                                       11

<PAGE>
                              ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

9.   New Accounting Pronouncements (Continued)

     For the three and six-month periods ended June 30, 2001 and 2002, the
     goodwill amortization, adjusted net loss and basic and diluted loss per
     share are as follows:
<TABLE>
<CAPTION>
                                                       Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                ---------------------------------  ---------------------------------
                                                     2001             2002              2001             2002
                                                ---------------- ----------------  ---------------- ----------------
<S>                                             <C>              <C>               <C>              <C>
        Net loss as reported ...............    $  (1,728,723)   $  (1,966,884)    $  (9,696,795)   $  (4,113,524)
        Addback goodwill amortization ......          102,396                -           170,660                -
                                                ---------------- ----------------  ---------------- ----------------
        Adjusted net loss ..................    $  (1,626,327)   $  (1,966,884)    $  (9,526,135)   $  (4,113,524)
                                                ================ ================  ================ ================

        Basic and diluted loss per share:
            Net loss as reported ...........    $       (0.20)   $       (0.21)    $       (1.22)   $       (0.45)
            Goodwill amortization ..........             0.01                -              0.02                -
                                                ---------------- ----------------  ---------------- ----------------
         Adjusted net loss .................    $       (0.19)   $       (0.21)    $       (1.20)   $       (0.45)
                                                ================ ================  ================ ================
</TABLE>

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
     Associated with Exit or Disposal Activities," which nullifies EITF 94-3 and
     requires that a liability for a cost associated with an exit or disposal
     activity be recognized when the liability is incurred. The Company plans to
     adopt SFAS No. 146 in January 2003. Management believes that the adoption
     of this statement will not have a material effect on the Company's future
     results of operations.

10.  Reconciliation of Loss and Share Amount Used in EPS Calculation

     Basic loss per common share is computed by dividing net loss available 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 509,137 shares of common stock issued on June 10, 2002 to
     the Company's majority shareholder, Dr. Jacques Gonella, in connection with
     conversion of $2,036,550 in notes payable and accrued interest had only a
     minor effect on the loss per share for the three and six-month periods
     ended June 30, 2002, and the full impact from issuance of these shares will
     not be reflected in the loss per share calculations until future periods.
     The following table discloses the basic and diluted loss per share. In
     addition, as the Company is in a loss position, the table discloses the
     stock options and warrants outstanding at the end of each period which were
     excluded from the weighted average shares outstanding as their impact is
     anti-dilutive.

<TABLE>
<CAPTION>
                                                       Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                ---------------------------------  ---------------------------------
                                                     2001             2002              2001             2002
                                                ---------------- ----------------  ---------------- ----------------
        <S>                                     <C>              <C>               <C>              <C>
        Net loss .............................. $  (1,728,723)   $  (1,966,884)    $  (9,696,795)   $  (4,113,524)
        Basic and diluted weighted average
        common shares outstanding .............     8,840,448        9,286,359         7,931,333        9,228,539
                                                ---------------- ----------------  ---------------- ----------------
        Basic and diluted net loss per common
        share ................................. $       (0.20)   $       (0.21)    $       (1.22)   $       (0.45)
                                                ================ ================  ================ ================
</TABLE>

                                       12

<PAGE>

                              ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

10.  Reconciliation of Loss and Share Amount Used in EPS Calculation (Continued)

<TABLE>
<CAPTION>
                                                       Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                ---------------------------------  ---------------------------------
                                                      2001             2002              2001             2002
                                                ---------------- ----------------  ---------------- ----------------
        <S>                                         <C>              <C>               <C>              <C>
        Antidilutive stock options and
        warrants ..............................     1,666,103        1,748,107         1,666,103        1,748,107
                                                ================ ================  ================ ================
</TABLE>

11.  Related Party Transactions

     Effective February 1, 2001, the Company entered into a consulting agreement
     with JG Consulting AG, a company owned by the Company's majority
     shareholder, Dr. Jacques Gonella. In connection with this agreement the
     Company recognized expense of $77,500 and $93,000 for the six-month periods
     ended June 30, 2001 and 2002, respectively. Amounts owed to JG Consulting
     AG at December 31, 2001 and June 30, 2002 were $90,532 and $15,500,
     respectively. In addition, in 2001 the Company sold equipment, furniture
     and fixtures to JG Consulting AG for $91,699, which approximated the book
     value of the assets sold.

     During the six months ended June 30, 2001 the Company recognized expense of
     $92,500 for feasibility study and market research services performed by a
     company in which Dr. Gonella has an ownership interest of approximately
     25%. At December 31, 2001 and June 30, 2002 the Company had a payable to
     this company of $92,500.

     During the six months ended June 30, 2002 the Company recognized expense of
     approximately $67,000 for consulting services provided by John Gogol, one
     of the Company's board members. The Company had a payable to Mr. Gogol at
     December 31, 2001 and June 30, 2002 of $6,363 and $15,000, respectively.

     At June 30, 2002 the Company has an outstanding payable of $4,187 to
     another board member for board meeting travel expenses.

                                       13

<PAGE>


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

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 and inventory
reserves, 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, 2001. Based upon the Company's
review, it has determined that these policies remain its most critical
accounting policies for the six months ended June 30, 2002, and the Company has
made no changes to these policies during 2002.

Three and Six Months Ended June 30, 2001 and 2002

Revenues

Total revenues for the three and six months ended June 30, 2002 were $1,128,613
and $1,797,584, respectively, reflecting increases over the same periods of the
prior year of $22,460 and $104,262, or 2% and 6%, respectively. The increase in
revenues is due mainly to increases in product sales in the three and six-month
periods of $177,201 and $243,837, respectively, offset by decreases in licensing
and product development revenue. The increased product sales result primarily
from increased sales made to licensees in connection with clinical studies and
other development activities under license agreements.

Licensing and product development fee income decreased by $154,741 or 53%, and
$139,575 or 34% in the three and six-month periods ended June 30, 2002,
respectively, as compared to the prior-year periods. The decreases are primarily
due to a $150,000 Antares/Minnesota one-time development fee earned in the
second quarter of 2001 under a discrete contract. The balance of the licensing
and product development revenue is attributable to the recognition of previously
deferred revenue related to licensing and product development contracts.

During the quarter ended December 31, 2000 and effective January 1, 2000, the
Company adopted the cumulative deferral method for accounting for license
revenues. The adoption of this accounting principle resulted in a $1,059,622
cumulative effect adjustment in the first quarter of 2000.

During the quarter and six-month periods ended June 30, 2001 and for the same
periods ending June 30, 2002, the Company recognized $69,301, $138,601, $36,714
and $75,942, respectively, of license revenues that were previously recognized
by the Company prior to the adoption of the cumulative deferral method.

Cost of Sales

The costs of product sales are primarily related to injection devices and
disposable products. Cost of sales as a percentage of product sales increased
from 52% for the second quarter of 2001 to 56% for the second quarter of 2002,
and increased from 56% for the first half of 2001 to 80% for the first half of


                                       14

<PAGE>

2002. The significant increase during the first half of 2002 was primarily due
to approximately $282,000 of inventory write-offs and inventory reserve
adjustments in the first quarter related to the launch of the Medi-Ject Vision
("MJ7") device into new markets. Approximately $171,000 of this amount related
to a disposable component found to have a design defect, which was immediately
corrected. The remaining $111,000 of inventory written-off was due to a
production problem encountered in connection with another disposable component.
The Company has incurred only minor additional expenses associated with testing
and making the required production modifications.

Research and Development

Research and development expenses totaled $813,692 and $1,544,820 in the three
and six-month periods ended June 30, 2002, respectively, compared to $823,828
and $1,394,779 in the same prior-year periods. The increase in the six-month
period of $150,041 is primarily due to the inclusion of six months of
Antares/Minnesota expenses in 2002 compared with only five months in 2001
following the business combination on January 31, 2001.

Sales and Marketing

Sales and marketing expenses totaled $240,748 and $399,169 in the three and
six-month periods ended June 30, 2002, respectively, compared to $383,709 and
$644,007 in the same periods of the prior year. The decreases in the current
year three and six-month periods as compared to the prior-year periods of
$142,961 or 37%, and $244,838 or 38%, respectively, are primarily due to a
decrease in consulting expenses, offset in the six-month period by six months of
Antares/Minnesota expenses in 2002 compared with only five months in 2001
following the business combination on January 31, 2001. The decrease in
consulting expenses results from a management decision to reduce utilization of
outside consulting services.

General and Administrative

General and administrative expenses totaled $1,338,448 and $2,615,777 in the
three and six-month periods ended June 30, 2002, respectively, compared to
$1,200,865 and $2,385,040 in the same periods of the prior year. The increases
in the current year three-month and six-month periods as compared to the same
prior-year period of $137,583 or 11% and $230,737 or 10%, respectively, are
primarily due to the opening of the corporate office in Exton, PA in December of
2001 and expenses related to our equity advisor agreements. The increase in the
six-month period is also due to the inclusion of six months of Antares/Minnesota
expenses in 2002 compared with only five months in 2001 following the business
combination on January 31, 2001, offset by decreases in expenses related to the
business combination and amortization expense due to the adoption of SFAS 142.

Other Income (Expense)

Net other income (expense) changed to expense of $93,324 and $80,633 in the
three and six-month periods of 2002, respectively, from income of $49,580 and
$65,760, in the same periods ended June 30, 2001. The changes resulted primarily
from decreased interest income due to lower average cash balances in 2002
compared to 2001 and increased currency exchange losses in 2002 compared to
2001. In addition, interest expense in the three-month period of 2002 increased
by $38,154 over the same period in 2001 due to borrowings of $2,300,000 during
the second quarter of 2002 from the Company's major shareholder. Interest
expense for the six-months of 2001 of $90,951 resulted primarily from interest
expense on outstanding notes incurred by Antares/Switzerland in January 2001
prior to the business

                                       15

<PAGE>

combination, while interest expense for the six-months of 2002 of $53,263 is
primarily due to the interest on the borrowings from the Company's major
shareholder. The conversion of $2,000,000 of debt into common stock by the
Company's major shareholder in June will decrease quarterly interest expense in
the future by approximately $42,000, while the issuance of $2,000,000 of 10%
Convertible Debentures in July will increase quarterly interest expense by
approximately $50,000 until maturity or conversion.

The 509,137 shares of common stock issued on June 10, 2002 to the Company's
majority shareholder, Dr. Jacques Gonella, in connection with conversion of
$2,036,550 in notes payable and accrued interest had only a minor effect on the
loss per share for the three and six-month periods ended June 30, 2002, and the
full impact from issuance of these shares will not be reflected in the loss per
share calculations until future periods.

Upon conversion of the 10% Convertible Debentures, existing common shareholders
could experience substantial dilution of their investment. In addition, as the
per share conversion price of the debentures into common stock was substantially
lower than the market price of the common stock on the dates the debentures were
sold, the Company will be recording an accounting charge for the beneficial
in-the-money conversion feature of the debentures in the third quarter. This
charge will be material to the financial statements and could equal the
principal amount of the converted debentures.

Cash Flows

Operating Activities

Net cash used in operating activities decreased by $1,335,176, from $4,672,493
for the first half of 2001 to $3,337,317 for the first half of 2002. This was
the result of net losses of $4,332,670 and $4,063,524 in the first half of 2001
and 2002, respectively, adjusted by noncash expenses and changes in operating
assets and liabilities.

Net noncash expenses of $1,529,512 in the first half of 2001 were mainly due to
depreciation and amortization of $563,323 and in-process research and
development of $948,000. Noncash expenses in the first half of 2002 totaled
$582,999, consisting primarily of depreciation and amortization of $397,166 and
stock-based compensation expense of $185,833.

The change in operating assets and liabilities in the first half of 2001
resulted in a net decrease to cash of $1,869,335, comprised mainly of reductions
in accounts payable and accrued expenses of $739,626 and $568,820, respectively,
as a result of improved liquidity from the sale of common stock in the first
half of 2001. In addition, an increase in accounts receivable used $365,026 in
the 2001 period. In the first half of 2002, the change in operating assets and
liabilities caused an increase in cash of $143,208, primarily due to the
increase in deferred revenue of $975,340 and decrease in VAT and other
receivables of $200,354, offset by increases in accounts receivable and prepaid
expenses of $373,715 and $181,211, respectively, and decreases in accrued
expenses and liabilities to related parties of $295,136 and $116,505,
respectively. The increase in deferred revenue of $975,340 resulted mainly from
milestone payments of approximately $750,000 related to existing license
agreements, along with approximately $300,000 related to agreements originating
in 2002.

Investing Activities

Net cash used in investing activities decreased $159,610, from $444,768 in the
first half of 2001 to $285,158 in the same period of 2002. In 2001, $602,756 was
loaned to Medi-Ject before the business

                                       16

<PAGE>

combination and was offset by the cash balance of $355,578 in Medi-Ject at the
time of the business combination. In addition, in 2001 the Company received
proceeds of $91,699 from the sale of equipment, furniture and fixtures.
Purchases of equipment, furniture and fixtures in the first half of 2001 and
2002 totaled $230,022 and $123,181, respectively, and expenditures for patent
acquisition and development totaled $59,267 and $161,977, respectively.

Financing Activities

Net cash provided by financing activities decreased $8,834,421 from $11,078,699
in the first half of 2001 to $2,244,278 in the same period of 2002, due
primarily to net proceeds of $10,016,268 received during the first half of 2001
from issuance of common stock, of which $9,994,549 was received in the private
placement of common stock.

The Company received $1,000,000 on March 12, 2002 and $1,000,000 on April 24,
2002 from the Company's majority shareholder, Dr. Jacques Gonella, under a Term
Note agreement dated February 20, 2002. The Term Note agreement allowed for
total advances to the Company of $2,000,000. The note was interest bearing at
the three month Euribor Rate as of the date of each advance, plus 5%. The
principal and accrued interest of $36,550 was converted into 509,137 shares of
common stock on June 10, 2002 at $4.00 per share. In June 2002 the Company
borrowed an additional $300,000 from the Company's majority shareholder on a
short-term basis, with interest at the three month Euribor Rate as of the date
of the advance, plus 5%.

Liquidity

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's external auditor issued its report on the December 31, 2001 financial
statements, which expressed substantial doubt about the Company's ability to
continue as a going concern. The Company had negative working capital of
$2,016,280 at June 30, 2002, 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, 2002,
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 and the receipt of revenues from
sales of products.

The Company believes it has sufficient cash to continue operations through
September 2002 and will be required to raise additional working capital to
continue to exist. Management's intentions are to raise this additional capital
through alliances with strategic corporate partners, equity offerings, and/or
debt financing. The Company received $1,000,000 on March 12, 2002 and $1,000,000
on April 24, 2002 from the Company's majority shareholder, Dr. Jacques Gonella,
under a Term Note agreement dated February 20, 2002. The Term Note agreement
allowed for total advances to the Company of $2,000,000 and was interest bearing
at the three month Euribor Rate as of the date of each advance, plus 5%. The
principal of $2,000,000 and accrued interest of $36,550 was converted into
509,137 shares of common stock on June 10, 2002 at $4.00 per share. In June 2002
the Company borrowed an additional $300,000 from the Company's majority
shareholder on a short-term basis with interest at the three month Euribor Rate
as of the date of the advance, plus 5%.

                                       17

<PAGE>

On July 12, 2002 the Company entered into a Securities Purchase Agreement (the
"Agreement") for the sale and purchase of up to $2,000,000 aggregate principal
amount of the Company's 10% Convertible Debentures. The debentures are
convertible into shares of the Company's common stock at a conversion price
which is the lower of $2.50 or 75% of the average of the three lowest intraday
prices of the Company's common stock during the 20 trading days prior to the
date of conversion, as reported on the Nasdaq SmallCap Market. Within 15 days of
the closing, the Company was obligated to file a registration statement with the
Securities and Exchange Commission to register the shares issuable upon
conversion of the debentures. Under the terms of the Agreement, the Company
received $700,000 upon closing of the transaction on July 12, 2002, an
additional $700,000 after the Company filed a registration statement on July 19,
2002 to register the shares issuable upon conversion of the debentures, and will
receive an additional $600,000 when such registration statement is declared
effective. Additionally, the Company intends to hold a special meeting of its
shareholders to approve the issuance of the shares issuable upon conversion of
the debentures. Upon conversion of the debentures, existing common shareholders
could experience substantial dilution of their investment. In addition, as the
per share conversion price of the debentures into common stock was substantially
lower than the market price of our common stock on the dates the debentures were
sold, we will be recording an accounting charge for the beneficial in-the-money
conversion feature of the debentures in the third quarter. This charge will be
material to our financial statements and could equal the principal amount of the
converted debentures.

There can be no assurance that the Company will ever become profitable or that
adequate funds will be available when needed or on acceptable terms. If for any
reason the Company is unable to obtain additional financing it may not be able
to continue as a going concern, which may result in material asset impairments,
other material adverse changes in the business, results of operations or
financial condition, or the loss by shareholders of all or a part of their
investment in the Company.

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.

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued SFAS 141,
"Business Combinations," and SFAS 142, "Goodwill and Other Intangible Assets."
SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. SFAS 142 changes the
accounting for goodwill from an amortization method to an impairment-only
approach. Thus, amortization of goodwill, including goodwill recorded in past
business combinations, ceased upon adoption of that Statement. The Company
adopted SFAS 142 in the first quarter of fiscal 2002 and accordingly evaluated
its existing intangible assets and goodwill that were acquired in a prior
purchase business combination, and determined that $1,935,588 representing the
unamortized portion of the amount allocated to other intangible assets on the
date of adoption, should be reclassified as goodwill. These amounts were
previously classified as workforce, ISO certification and clinical studies. Upon
adoption of SFAS 142, the Company reassessed the useful lives and residual
values of all intangible assets acquired in purchase business combinations, and
determined that there were no amortization period adjustments necessary.

The Company adopted SFAS 141 during 2001 and adopted SFAS 142 effective January
1, 2002. As of the date of adoption of SFAS 142, after reclassification of other
intangible assets as goodwill, the Company had approximately $3,095,355 of
unamortized goodwill subject to the transition provisions of SFAS 141 and 142.
The Company engaged a third-party valuation firm to complete an evaluation of

                                       18

<PAGE>

goodwill in accordance with the provisions of SFAS 142 and concluded that no
impairment exists. Adoption of SFAS 142 is expected to decrease amortization
expenses in 2002 by approximately $410,000 as a result of ceasing amortization
of goodwill and other intangible assets reclassified as goodwill.

For the three and six month periods ended June 30, 2001 and 2002, the goodwill
amortization, adjusted net loss and basic and diluted loss per share are as
follows:

<TABLE>
<CAPTION>
                                                    Three Months Ended                    Six Months Ended
                                                         June 30,                             June 30,
                                             ----------------------------------   ----------------------------------
                                                  2001              2002               2001              2002
                                             ----------------  ----------------   ----------------  ----------------
<S>                                          <C>               <C>                <C>               <C>
Net loss as reported                         $  (1,728,723)    $  (1,966,884)     $  (9,696,795)    $  (4,113,524)
Addback goodwill amortization                      102,396                 -            170,660                 -
                                             ----------------  ----------------   ----------------  ----------------
Adjusted net loss                            $  (1,626,327)    $  (1,966,884)     $  (9,526,135)    $  (4,113,524)
                                             ================  ================   ================  ================

Basic and diluted loss per share:
    Net loss as reported                     $       (0.20)    $       (0.21)     $       (1.22)    $       (0.45)
    Goodwill amortization                             0.01                 -               0.02                 -
                                             ----------------  ----------------   ----------------  ----------------
 Adjusted net loss                           $       (0.19)    $       (0.21)     $       (1.20)    $       (0.45)
                                             ================  ================   ================  ================
</TABLE>

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred and nullifies EITF 94-3. The Company plans to adopt SFAS No. 146 in
January 2003. Management believes that the adoption of this statement will not
have a material effect on the Company's future results 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. For the three and six-months ended June 30, 2002, the
Company recorded an increase to cumulative comprehensive loss of $51,815 and
$53,441, respectively, and $32,350 and $340,755, respectively, for the same
prior-year periods related to foreign currency translation adjustments. 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 three and six-months ended June 30, 2001 and 2002 was
not material. 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.

The Company's exposure to interest rate risk is not believed to be material. The
Company does not use derivative financial instruments to manage interest rate
risk. All existing debt agreements of the Company bear interest at fixed rates,
and are therefore not subject to exposure from fluctuating interest rates.

                                       19

<PAGE>

PART II - OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

(c)      On June 10, 2002 Dr. Jacques Gonella, majority shareholder and chairman
         of the Company, converted his $2,000,000 loan to the Company and
         related accrued interest of $36,550 into 509,137 shares of unregistered
         common stock at a price of $4.00 per share. The Company used the
         proceeds of the loan for working capital. The stock issued to Dr.
         Gonella was exempt from registration under Rule 506 of the Securities
         Act of 1933. Dr. Gonella is an accredited investor and was the only
         recipient of shares in this offering.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         Exhibit No.                         Description
         -----------          --------------------------------------------------
              99.1            Section 906 CEO and CFO Certification

(b)      Reports on Form 8-K

         Form 8-K was filed on June 25, 2002, which describes the conversion of
         a $2,000,000 Term Note with the Company's majority shareholder, Dr.
         Jacques Gonella, into 509,137 shares of common stock.

                                       20

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized

                               ANTARES PHARMA, INC.

August 14, 2002                 /s/ Roger G. Harrison, Ph.D.
                               -------------------------------------------------
                               Roger G. Harrison, Ph.D.
                               Chief Executive Officer and President

August 14, 2002                 /s/ Lawrence M. Christian
                               -------------------------------------------------
                               Lawrence M. Christian
                               Chief Financial Officer, Vice President - Finance
                               and Secretary

                                       21
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================================================================================

                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 June 30, 2002

Commission File Number 0-20945

                              ANTARES PHARMA, INC.

A Minnesota 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
                                         ---         ---

The number of shares outstanding of the Registrant's Common Stock, $.01 par
value, as of July 31, 2002, was 9,790,325.

================================================================================

                                       1
ANTARES PHARMA, INC.

                                      INDEX
PAGE
                                                                                     ----

PART I.        FINANCIAL INFORMATION

       ITEM 1. Financial Statements (Unaudited)
Consolidated Balance Sheets, as of December 31, 2001 and
               June 30, 2002 .........................................................3

               Consolidated Statements of Operations for the three months and six
               months ended June 30, 2001 and 2002 ...................................4

               Consolidated Statements of Cash Flows for the six months
               ended June 30, 2001 and 2002 ..........................................5

               Notes to Consolidated Financial Statements ............................6

       ITEM 2. Management's Discussion and Analysis of Financial Condition
               and Results of Operations ............................................14

       ITEM 3. Quantitative and Qualitative Disclosures About Market Risk ...........19

PART II.       OTHER INFORMATION ....................................................20

               SIGNATURES ...........................................................21
2
ANTARES PHARMA, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
December 31,         June 30,
                                                                                              2001               2002
                                                                                         ----------------   ----------------
Assets
Current Assets:
       Cash .......................................................................      $    1,965,089     $      442,678
       Accounts receivable, less allowance for doubtful accounts of $18,000 .......             535,461            909,176
       VAT and other receivables ..................................................             331,660            131,306
       Inventories ................................................................             655,691            697,863
       Prepaid expenses and other assets ..........................................              55,041            236,252
                                                                                         ----------------   ----------------
              Total current assets ................................................           3,542,942          2,417,275

Equipment, furniture and fixtures, net ............................................           1,924,675          1,816,117
Patent rights, net ................................................................           2,464,336          2,612,175
Goodwill, net .....................................................................           3,095,355          3,095,355
Other assets ......................................................................             101,142            131,524
                                                                                         ----------------   ----------------

              Total Assets ........................................................      $   11,128,450     $   10,072,446
                                                                                         ================   ================

                                           Liabilities and Shareholders' Equity

Current Liabilities:
       Accounts payable ...........................................................      $      637,794     $      644,429
       Accrued expenses and other liabilities .....................................           1,070,916            739,230
       Deferred revenue ...........................................................           1,511,198          2,486,538
       Capital lease obligations - current maturities .............................              91,054            136,171
       Due to related parties .....................................................             243,692            427,187
                                                                                         ----------------   ----------------
              Total current liabilities ...........................................           3,554,654          4,433,555

Capital lease obligations, less current maturities ................................             105,629             65,308
                                                                                         ----------------   ----------------
              Total liabilities ...................................................           3,660,283          4,498,863
                                                                                         ----------------   ----------------

Shareholders' Equity:
       Series A Convertible Preferred Stock:  $0.01 par; authorized 10,000
          shares; 1,250 and 1,300 issued and outstanding at December 31, 2001 and
          June 30, 2002, respectively .............................................                  13                 13
       Common Stock:  $0.01 par; authorized 30,000,000 shares;
          9,161,188 and 9,790,325 issued and outstanding at
          December 31, 2001 and June 30, 2002, respectively .......................              91,612             97,903
       Additional paid-in capital .................................................          37,464,531         39,846,233
       Accumulated deficit ........................................................         (29,457,033)       (33,570,557)
       Deferred compensation ......................................................            (251,016)          (366,628)
       Accumulated other comprehensive loss .......................................            (379,940)          (433,381)
                                                                                         ----------------   ----------------
                                                                                              7,468,167          5,573,583
                                                                                         ----------------   ----------------
              Total Liabilities and Shareholders' Equity ..........................      $   11,128,450     $   10,072,446
                                                                                         ================   ================
See accompanying notes to consolidated financial statements.

                                       3
ANTARES PHARMA, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
For the Three Months Ended           For the Six Months Ended
                                                                     June 30,                           June 30,
                                                       ----------------------------------  ---------------------------------
                                                            2001              2002              2001             2002
                                                       ----------------  ----------------  ---------------- ----------------
Revenues:
     Product sales ...............................     $     813,354     $      990,555    $   1,284,731    $    1,528,568
     Licensing and product development ...........           292,799            138,058          408,591           269,016
                                                       ----------------  ----------------  ---------------- ----------------
                                                           1,106,153          1,128,613        1,693,322         1,797,584

Cost of product sales ............................           426,054            559,285          719,926         1,220,709
                                                       ----------------  ----------------  ---------------- ----------------
Gross margin .....................................           680,099            569,328          973,396           576,875
                                                       ----------------  ----------------  ---------------- ----------------

Operating Expenses:
     Research and development ....................           823,828            813,692        1,394,779         1,544,820
     In-process research and development .........                 -                  -          948,000                 -
     Sales and marketing .........................           383,709            240,748          644,007           399,169
     General and administrative ..................         1,200,865          1,338,448        2,385,040         2,615,777
                                                       ----------------  ----------------  ---------------- ----------------
                                                           2,408,402          2,392,888        5,371,826         4,559,766
                                                       ----------------  ----------------  ---------------- ----------------

Net operating loss ...............................        (1,728,303)        (1,823,560)      (4,398,430)       (3,982,891)
                                                       ----------------  ----------------  ---------------- ----------------

Other income (expense):
     Interest income .............................            70,223              6,735          158,184             9,967
     Interest expense ............................            (6,747)           (44,901)         (90,951)          (53,263)
     Foreign exchange gains (losses) .............            19,486            (55,180)          (7,609)          (36,642)
     Other, net ..................................           (33,382)                22            6,136              (695)
                                                       ----------------  ----------------  ---------------- ----------------
                                                              49,580            (93,324)          65,760           (80,633)
                                                       ----------------  ----------------  ---------------- ----------------

Net loss .........................................        (1,678,723)        (1,916,884)      (4,332,670)       (4,063,524)

In-the-money conversion feature-preferred
   stock dividend ................................                 -                  -       (5,314,125)                -

Preferred stock dividends ........................           (50,000)           (50,000)         (50,000)          (50,000)
                                                       ----------------  ----------------  ---------------- ----------------

Net loss applicable to common shares .............     $  (1,728,723)    $   (1,966,884)   $  (9,696,795)   $   (4,113,524)
                                                       ================  ================  ================ ================

Basic and diluted net loss per common share ......     $       (0.20)    $        (.21)    $       (1.22)   $        (.45)
                                                       ================  ================  ================ ================

Basic and diluted weighted average common
   shares outstanding ............................         8,840,448          9,286,359        7,931,333         9,228,539
                                                       ================  ================  ================ ================
See accompanying notes to consolidated financial statements.

                                       4
ANTARES PHARMA, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
For the Six Months Ended
                                                                                                       June 30,
                                                                                           ---------------------------------
                                                                                                2001              2002
                                                                                           ----------------  ---------------
Cash flows from operating activities:
     Net loss ..........................................................................   $   (4,332,670)   $   (4,063,524)
     Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization .....................................................          563,323           397,166
     Loss on disposal and abandonment of assets ........................................              126                 -
     In-process research and development ...............................................          948,000                 -
     Stock-based compensation expense ..................................................           18,063           185,833
     Changes in operating assets and liabilities, net of effect of business acquisition:
       Accounts receivable .............................................................         (365,026)         (373,715)
       VAT and other receivables .......................................................          126,834           200,354
       Inventories .....................................................................         (110,936)          (42,172)
       Prepaid expenses and other assets ...............................................          (42,205)         (181,211)
       Accounts payable ................................................................         (739,626)            6,635
       Accrued expenses and other ......................................................         (568,820)         (295,136)
       Deferred revenue ................................................................         (174,313)          975,340
       Due to related parties ..........................................................            9,302          (116,505)
       Other ...........................................................................           (4,545)          (30,382)
                                                                                           ----------------  ---------------
Net cash used in operating activities ..................................................       (4,672,493)       (3,337,317)
                                                                                           ----------------  ---------------

Cash flows from investing activities:
     Purchases of equipment, furniture and fixtures ....................................         (230,022)         (123,181)
     Proceeds from sale of equipment, furniture & fixtures .............................           91,699                 -
     Additions to patent rights ........................................................          (59,267)         (161,977)
     Increase in notes receivable and due from Medi-Ject ...............................         (602,756)                -
     Acquisition of Medi-Ject, including cash acquired .................................          355,578                 -
                                                                                           ----------------  ---------------
Net cash used in investing activities ..................................................         (444,768)         (285,158)
                                                                                           ----------------  ---------------

Cash flows from financing activities:
     Proceeds from loans from shareholders .............................................        1,188,199         2,300,000
     Principal payments on capital lease obligations ...................................         (125,768)          (55,722)
     Proceeds from issuance of common stock, net .......................................       10,016,268                 -
                                                                                           ----------------  ---------------
Net cash provided by financing activities ..............................................       11,078,699         2,244,278
                                                                                           ----------------  ---------------

Effect of exchange rate changes on cash and cash equivalents ...........................         (285,765)         (144,214)
                                                                                           ----------------  ---------------

Net increase (decrease) in cash and cash equivalents ...................................        5,675,673        (1,522,411)
Cash and cash equivalents:
     Beginning of period ...............................................................          243,222         1,965,089
                                                                                           ----------------  ---------------
     End of period .....................................................................   $    5,918,895    $      442,678
                                                                                           ================  ===============

Supplemental cash flow information:
     Cash paid during the period for interest ..........................................   $       90,951    $       16,290
-----------
Schedule of non-cash investing and financing activities: See information
regarding non-cash investing and financing activities in Notes 1, 2, 7 and 8.

           See accompanying notes to consolidated financial statements

                                       5
ANTARES PHARMA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                             June 30, 2001 and 2002

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, 2001.
     Operating results for the six-month period ended June 30, 2002, are not
     necessarily indicative of the results that may be expected for the year
     ending December 31, 2002.

     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 and inventory reserves, 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, 2001. Based upon the Company's review, it has determined that
     these policies remain its most critical accounting policies for the six
     months ended June 30, 2002, and the Company has made no changes to these
     policies during 2002.

     On January 31, 2001, Medi-Ject Corporation, now known as Antares Pharma,
     Inc. ("Antares" or "the Company") purchased from Permatec Holding AG
     ("Permatec") all of the outstanding shares of Permatec Pharma AG, Permatec
     Technology AG, and Permatec NV (the "Share Transaction"). In exchange,
     Antares issued 2,900,000 shares of Antares common stock to Permatec. Upon
     the issuance, Permatec and its affiliates owned approximately 67% of the
     outstanding shares of Antares common stock. For accounting purposes,
     Permatec is deemed to have acquired Antares. The acquisition has been
     accounted for by the purchase method of accounting.

     Upon closing of the Share Transaction on January 31, 2001, the full
     principal amount of Permatec's shareholders' loans to the three Permatec
     subsidiaries which were included in the Share Transaction, of $13,069,870,
     was converted to equity.

     Also on January 31, 2001, promissory notes issued by Medi-Ject to Permatec
     between January 25, 2000 and January 15, 2001, in the aggregate principal
     amount of $5,500,000, were converted into Series C Convertible Preferred
     Stock ("Series C"). Permatec, the holder of the Series C stock, immediately
     exercised its right to convert the Series C stock, and Antares issued
     2,750,000 shares of common stock to Permatec upon such conversion. Also on
     that date, the name of the corporation was changed to Antares Pharma, Inc.

                                       6
ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

1.   Basis of Presentation (Continued)

     The total consideration paid, or purchase price, for Medi-Ject was
     $6,889,974, which represents the fair market value of Medi-Ject and related
     transaction costs of $480,095. For accounting purposes, the fair value of
     Medi-Ject is based on the 1,424,729 shares of Medi-Ject common stock
     outstanding on January 25, 2000, at an average closing price three days
     before and after such date of $2.509 per share plus the estimated fair
     value of the Series A convertible preferred stock and the Series B
     mandatorily redeemable convertible preferred stock plus the fair value of
     outstanding stock options and warrants representing shares of Medi-Ject
     common stock either vested on January 25, 2000, or that became vested at
     the close of the Share Transaction plus the capitalized acquisition cost of
     Permatec.

     The purchase price allocation, based on an appraisal by an independent
     third-party appraisal firm, was as follows:

          Cash acquired ..............................   $        394,535
          Current assets .............................            900,143
          Equipment, furniture and fixtures ..........          1,784,813
          Patents ....................................          1,470,000
          Other intangible assets ....................          2,194,000
          Goodwill ...................................          1,276,806
          Other assets ...............................              3,775
          Current liabilities ........................         (2,026,723)
          Debt .......................................            (55,375)
          In-process research and development ........            948,000
                                                         ----------------
          Purchase price .............................   $      6,889,974
                                                         ================

     In connection with the Share Transaction on January 31, 2001, the Company
     acquired in-process research and development projects having an estimated
     fair value of $948,000, that had not yet reached technological feasibility
     and had no alternative future use. Accordingly, this amount was immediately
     expensed in the Consolidated Statements of Operations.

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's external auditors issued their report on the December 31, 2002
     financial statements, which express substantial doubt about the Company's
     ability to continue as a going concern. The Company had negative working
     capital of $2,016,280 at June 30, 2002, 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,
     2002, 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 and the
     receipt of revenues from sales of products.

                                       7
ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

2.   Going Concern (Continued)

     The Company believes it has sufficient cash through September 2002 and will
     be required to raise additional working capital to continue to exist.
     Management's intentions are to raise this additional capital through
     alliances with strategic corporate partners, equity offerings, and/or
     borrowing from the Company's majority shareholder. The Company received
     $1,000,000 on March 12, 2002 and $1,000,000 on April 24, 2002 from the
     Company's majority shareholder, Dr. Jacques Gonella, under a Term Note
     agreement dated February 20, 2002. The Term Note agreement allowed for
     total advances to the Company of $2,000,000 and was interest bearing at the
     three month Euribor Rate as of the date of each advance, plus 5%. The
     principal of $2,000,000 and accrued interest of $36,550 was converted into
     509,137 shares of common stock on June 10, 2002 at $4.00 per share. In June
     2002, the Company borrowed an additional $300,000 from the Company's
     majority shareholder on a short-term basis with interest at the three month
     Euribor Rate as of the date of the advance, plus 5%.

     On July 12, 2002 the Company entered into a Securities Purchase Agreement
     (the "Agreement") for the sale and purchase of up to $2,000,000 aggregate
     principal amount of the Company's 10% Convertible Debentures. The
     debentures are convertible into shares of the Company's common stock at a
     conversion price which is the lower of $2.50 or 75% of the average of the
     three lowest intraday prices of the Company's common stock, as reported on
     the Nasdaq SmallCap Market. Within 15 days of the closing, the Company was
     obligated to file a registration statement with the Securities and Exchange
     Commission to register the shares issuable upon conversion of the
     debentures. Under the terms of the Agreement, the Company received $700,000
     upon closing of the transaction on July 12, 2002, an additional $700,000
     after the Company filed the registration statement on July 19, 2002 to
     register the shares issuable upon conversion of the debentures, and will
     receive an additional $600,000 when such registration statement is declared
     effective. Additionally, the Company intends to hold a special meeting of
     its shareholders on August 23, 2002, to approve the issuance of the shares
     issuable upon conversion of the debentures. Upon conversion of the
     debentures, existing common shareholders could experience substantial
     dilution of their investment. In addition, as the per share conversion
     price of the debentures into common stock was substantially lower than the
     market price of the common stock on the dates the debentures were sold, the
     Company will be recording an accounting charge for the beneficial
     in-the-money conversion feature of the debentures in the third quarter.
     This charge will be material to the financial statements and could equal
     the principal amount of the converted debentures.

     There can be no assurance that the Company will ever become profitable or
     that adequate funds will be available when needed or on acceptable terms.

     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.

                                       8
ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

3.   Comprehensive Loss
Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                ---------------------------------  ---------------------------------
                                                     2001             2002              2001             2002
                                                ---------------- ----------------  ---------------- ----------------
Net loss ...........................    $  (1,678,723)   $  (1,916,884)    $  (4,332,670)   $  (4,063,524)
        Change in cumulative translation
        adjustment .........................          (32,350)         (51,815)         (340,755)         (53,441)
                                                ---------------- ----------------  ---------------- ----------------
        Comprehensive loss .................    $  (1,711,073)   $  (1,968,699)    $  (4,673,425)   $  (4,116,965)
                                                ================ ================  ================ ================
4.   Inventories

     Inventories consist of the following:

                                      December 31,            June 30,
                                         2001                   2002
                                  -------------------    ------------------
        Raw material ..........   $       294,643        $       342,323
        Work in-process .......            29,611                264,705
        Finished goods ........           436,437                170,835
                                  -------------------    ------------------
                                          760,691                777,863
        Inventory reserve .....          (105,000)               (80,000)
                                  -------------------    ------------------
                                  $       655,691        $       697,863
                                  ===================    ==================

5.   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 table:

     We have operating assets located on two continents as follows:
December 31,             June 30,
                                                                 2001                   2002
                                                         -------------------    ------------------
Switzerland ................................     $      2,388,337       $      2,230,732
        United States of America ...................            8,740,113              7,841,714
                                                         -------------------    ------------------
                                                         $     11,128,450       $     10,072,446
                                                         ===================    ==================
9
ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

5.   Industry Segment and Operations by Geographic Areas (Continued)

     Revenues by region of origin are summarized as follows:
For the Three Months Ended
                                                                         June 30,
                                                         ------------------------------------------
                                                                2001                  2002
                                                         -------------------    ------------------
United States of America ..................      $        141,236       $        429,095
        Europe ....................................               955,943                675,196
        Other .....................................                 8,974                 24,322
                                                         -------------------    ------------------
                                                         $      1,106,153       $      1,128,613
                                                         ===================    ==================
For the Six Months Ended
                                                                         June 30,
                                                         ------------------------------------------
                                                                2001                  2002
                                                         -------------------    ------------------
United States of America ..................      $        251,226       $        684,001
        Europe ....................................             1,369,656              1,065,319
        Other .....................................                72,440                 48,264
                                                         -------------------    ------------------
                                                         $      1,693,322       $      1,797,584
                                                         ===================    ==================
6.   Accounting for License Revenues

     During the quarter ended December 31, 2000 and effective January 1, 2000,
     the Company adopted the cumulative deferral method for accounting for
     license revenues. The adoption of this accounting principle resulted in a
     $1,059,622 cumulative effect adjustment in the first quarter 2000.

     During the quarter and six-month periods ended June 30, 2001 and for the
     same periods ending June 30, 2002, the Company recognized $69,301,
     $138,601, $36,714 and $75,942, respectively, of license revenues that were
     previously recognized by the Company prior to the adoption of the
     cumulative deferral method.

7.   In-The-Money Conversion Feature Preferred Stock Dividend

     During 2000 and 2001, prior to the closing of the Share Transaction on
     January 31, 2001, Medi-Ject borrowed a total of $5,500,000 in convertible
     promissory notes from Permatec. At the closing of the Share Transaction,
     the principal amount of convertible promissory notes converted to 27,500
     shares of Series C preferred stock. At the option of the holder, these
     shares were immediately converted into 2,750,000 shares of Antares common
     stock. As the conversion feature to common stock was contingent upon the
     closing of the Share Transaction, the measurement of the stated conversion
     feature as compared to the Company's common stock price of $4.56 at January
     31, 2001, resulted in an in-the-money conversion feature of $5,314,125,
     which is a deemed dividend to the Series C preferred shareholder. This
     dividend increases the net loss applicable to common shareholders in the
     Antares' net loss per share calculation.

                                       10
ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

8.   Shareholders' Equity

     Roger G. Harrison, Ph.D., was appointed to the position of Chief Executive
     Officer of Antares Pharma, Inc., effective March 12, 2001. In accordance
     with the terms of the employment agreement with Dr. Harrison, 40,000
     restricted shares of common stock were granted to him on March 12, 2002,
     his first anniversary with the Company.

     During the second quarter of 2002 the Company issued 80,000 shares of fully
     vested common stock valued at $283,000 to two consultants for services to
     be performed. Of the 80,000 shares issued, 20,000 were issued as
     compensation directly related to the closing on July 12, 2002 of $2,000,000
     of the Company's 10% Convertible Debentures. Expense related to 20,000
     shares will be recognized as interest expense over the term of the
     debentures. Expense related to 60,000 shares is being recognized as the
     consulting services are provided to the Company. Through June 30, 2002
     approximately $61,000 has been recognized as expense.

     On June 10, 2002 the principal balance of $2,000,000 and accrued interest
     of $36,550 under a term note agreement with the Company's majority
     shareholder, Dr. Jacques Gonella, was converted into 509,137 shares of
     common stock at $4.00 per share.

9.   New Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board issued SFAS 141,
     "Business Combinations," and SFAS 142, "Goodwill and Other Intangible
     Assets." SFAS 141 requires that the purchase method of accounting be used
     for all business combinations initiated after June 30, 2001. SFAS 142
     changes the accounting for goodwill from an amortization method to an
     impairment-only approach. Thus, amortization of goodwill, including
     goodwill recorded in past business combinations, ceased upon adoption of
     that Statement. The Company adopted SFAS 142 in the first quarter of fiscal
     2002 and accordingly evaluated its existing intangible assets and goodwill
     that were acquired in a prior purchase business combination, and determined
     that $1,935,588 representing the unamortized portion of the amount
     allocated to other intangible assets on the date of adoption, should be
     reclassified as goodwill. These amounts were previously classified as
     workforce, ISO certification and clinical studies. Upon adoption of SFAS
     142, the Company reassessed the useful lives and residual values of all
     intangible assets acquired in purchase business combinations, and
     determined that there were no amortization period adjustments necessary.

     The Company adopted SFAS 141 during 2001 and adopted SFAS 142 effective
     January 1, 2002. As of the date of adoption of SFAS 142, after
     reclassification of other intangible assets as goodwill, the Company had
     approximately $3,095,355 of unamortized goodwill subject to the transition
     provisions of SFAS 141 and 142. The Company engaged a third-party valuation
     firm to complete an evaluation of goodwill in accordance with the
     provisions of SFAS 142 and concluded that no impairment existed. Adoption
     of SFAS 142 is expected to decrease amortization expenses in 2002 by
     approximately $410,000 as a result of ceasing amortization of goodwill and
     other intangible assets reclassified as goodwill.

                                       11
ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

9.   New Accounting Pronouncements (Continued)

     For the three and six-month periods ended June 30, 2001 and 2002, the
     goodwill amortization, adjusted net loss and basic and diluted loss per
     share are as follows:
Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                ---------------------------------  ---------------------------------
                                                     2001             2002              2001             2002
                                                ---------------- ----------------  ---------------- ----------------
Net loss as reported ...............    $  (1,728,723)   $  (1,966,884)    $  (9,696,795)   $  (4,113,524)
        Addback goodwill amortization ......          102,396                -           170,660                -
                                                ---------------- ----------------  ---------------- ----------------
        Adjusted net loss ..................    $  (1,626,327)   $  (1,966,884)    $  (9,526,135)   $  (4,113,524)
                                                ================ ================  ================ ================

        Basic and diluted loss per share:
            Net loss as reported ...........    $       (0.20)   $       (0.21)    $       (1.22)   $       (0.45)
            Goodwill amortization ..........             0.01                -              0.02                -
                                                ---------------- ----------------  ---------------- ----------------
         Adjusted net loss .................    $       (0.19)   $       (0.21)    $       (1.20)   $       (0.45)
                                                ================ ================  ================ ================
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
     Associated with Exit or Disposal Activities," which nullifies EITF 94-3 and
     requires that a liability for a cost associated with an exit or disposal
     activity be recognized when the liability is incurred. The Company plans to
     adopt SFAS No. 146 in January 2003. Management believes that the adoption
     of this statement will not have a material effect on the Company's future
     results of operations.

10.  Reconciliation of Loss and Share Amount Used in EPS Calculation

     Basic loss per common share is computed by dividing net loss available 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 509,137 shares of common stock issued on June 10, 2002 to
     the Company's majority shareholder, Dr. Jacques Gonella, in connection with
     conversion of $2,036,550 in notes payable and accrued interest had only a
     minor effect on the loss per share for the three and six-month periods
     ended June 30, 2002, and the full impact from issuance of these shares will
     not be reflected in the loss per share calculations until future periods.
     The following table discloses the basic and diluted loss per share. In
     addition, as the Company is in a loss position, the table discloses the
     stock options and warrants outstanding at the end of each period which were
     excluded from the weighted average shares outstanding as their impact is
     anti-dilutive.
Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                ---------------------------------  ---------------------------------
                                                     2001             2002              2001             2002
                                                ---------------- ----------------  ---------------- ----------------
Net loss .............................. $  (1,728,723)   $  (1,966,884)    $  (9,696,795)   $  (4,113,524)
        Basic and diluted weighted average
        common shares outstanding .............     8,840,448        9,286,359         7,931,333        9,228,539
                                                ---------------- ----------------  ---------------- ----------------
        Basic and diluted net loss per common
        share ................................. $       (0.20)   $       (0.21)    $       (1.22)   $       (0.45)
                                                ================ ================  ================ ================
12
ANTARES PHARMA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
                             June 30, 2001 and 2002

10.  Reconciliation of Loss and Share Amount Used in EPS Calculation (Continued)
Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                ---------------------------------  ---------------------------------
                                                      2001             2002              2001             2002
                                                ---------------- ----------------  ---------------- ----------------
Antidilutive stock options and
        warrants ..............................     1,666,103        1,748,107         1,666,103        1,748,107
                                                ================ ================  ================ ================
11.  Related Party Transactions

     Effective February 1, 2001, the Company entered into a consulting agreement
     with JG Consulting AG, a company owned by the Company's majority
     shareholder, Dr. Jacques Gonella. In connection with this agreement the
     Company recognized expense of $77,500 and $93,000 for the six-month periods
     ended June 30, 2001 and 2002, respectively. Amounts owed to JG Consulting
     AG at December 31, 2001 and June 30, 2002 were $90,532 and $15,500,
     respectively. In addition, in 2001 the Company sold equipment, furniture
     and fixtures to JG Consulting AG for $91,699, which approximated the book
     value of the assets sold.

     During the six months ended June 30, 2001 the Company recognized expense of
     $92,500 for feasibility study and market research services performed by a
     company in which Dr. Gonella has an ownership interest of approximately
     25%. At December 31, 2001 and June 30, 2002 the Company had a payable to
     this company of $92,500.

     During the six months ended June 30, 2002 the Company recognized expense of
     approximately $67,000 for consulting services provided by John Gogol, one
     of the Company's board members. The Company had a payable to Mr. Gogol at
     December 31, 2001 and June 30, 2002 of $6,363 and $15,000, respectively.

     At June 30, 2002 the Company has an outstanding payable of $4,187 to
     another board member for board meeting travel expenses.

                                       13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

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 and inventory
reserves, 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, 2001. Based upon the Company's
review, it has determined that these policies remain its most critical
accounting policies for the six months ended June 30, 2002, and the Company has
made no changes to these policies during 2002.

Three and Six Months Ended June 30, 2001 and 2002

Revenues

Total revenues for the three and six months ended June 30, 2002 were $1,128,613
and $1,797,584, respectively, reflecting increases over the same periods of the
prior year of $22,460 and $104,262, or 2% and 6%, respectively. The increase in
revenues is due mainly to increases in product sales in the three and six-month
periods of $177,201 and $243,837, respectively, offset by decreases in licensing
and product development revenue. The increased product sales result primarily
from increased sales made to licensees in connection with clinical studies and
other development activities under license agreements.

Licensing and product development fee income decreased by $154,741 or 53%, and
$139,575 or 34% in the three and six-month periods ended June 30, 2002,
respectively, as compared to the prior-year periods. The decreases are primarily
due to a $150,000 Antares/Minnesota one-time development fee earned in the
second quarter of 2001 under a discrete contract. The balance of the licensing
and product development revenue is attributable to the recognition of previously
deferred revenue related to licensing and product development contracts.

During the quarter ended December 31, 2000 and effective January 1, 2000, the
Company adopted the cumulative deferral method for accounting for license
revenues. The adoption of this accounting principle resulted in a $1,059,622
cumulative effect adjustment in the first quarter of 2000.

During the quarter and six-month periods ended June 30, 2001 and for the same
periods ending June 30, 2002, the Company recognized $69,301, $138,601, $36,714
and $75,942, respectively, of license revenues that were previously recognized
by the Company prior to the adoption of the cumulative deferral method.

Cost of Sales

The costs of product sales are primarily related to injection devices and
disposable products. Cost of sales as a percentage of product sales increased
from 52% for the second quarter of 2001 to 56% for the second quarter of 2002,
and increased from 56% for the first half of 2001 to 80% for the first half of

                                       14
2002. The significant increase during the first half of 2002 was primarily due
to approximately $282,000 of inventory write-offs and inventory reserve
adjustments in the first quarter related to the launch of the Medi-Ject Vision
("MJ7") device into new markets. Approximately $171,000 of this amount related
to a disposable component found to have a design defect, which was immediately
corrected. The remaining $111,000 of inventory written-off was due to a
production problem encountered in connection with another disposable component.
The Company has incurred only minor additional expenses associated with testing
and making the required production modifications.

Research and Development

Research and development expenses totaled $813,692 and $1,544,820 in the three
and six-month periods ended June 30, 2002, respectively, compared to $823,828
and $1,394,779 in the same prior-year periods. The increase in the six-month
period of $150,041 is primarily due to the inclusion of six months of
Antares/Minnesota expenses in 2002 compared with only five months in 2001
following the business combination on January 31, 2001.

Sales and Marketing

Sales and marketing expenses totaled $240,748 and $399,169 in the three and
six-month periods ended June 30, 2002, respectively, compared to $383,709 and
$644,007 in the same periods of the prior year. The decreases in the current
year three and six-month periods as compared to the prior-year periods of
$142,961 or 37%, and $244,838 or 38%, respectively, are primarily due to a
decrease in consulting expenses, offset in the six-month period by six months of
Antares/Minnesota expenses in 2002 compared with only five months in 2001
following the business combination on January 31, 2001. The decrease in
consulting expenses results from a management decision to reduce utilization of
outside consulting services.

General and Administrative

General and administrative expenses totaled $1,338,448 and $2,615,777 in the
three and six-month periods ended June 30, 2002, respectively, compared to
$1,200,865 and $2,385,040 in the same periods of the prior year. The increases
in the current year three-month and six-month periods as compared to the same
prior-year period of $137,583 or 11% and $230,737 or 10%, respectively, are
primarily due to the opening of the corporate office in Exton, PA in December of
2001 and expenses related to our equity advisor agreements. The increase in the
six-month period is also due to the inclusion of six months of Antares/Minnesota
expenses in 2002 compared with only five months in 2001 following the business
combination on January 31, 2001, offset by decreases in expenses related to the
business combination and amortization expense due to the adoption of SFAS 142.

Other Income (Expense)

Net other income (expense) changed to expense of $93,324 and $80,633 in the
three and six-month periods of 2002, respectively, from income of $49,580 and
$65,760, in the same periods ended June 30, 2001. The changes resulted primarily
from decreased interest income due to lower average cash balances in 2002
compared to 2001 and increased currency exchange losses in 2002 compared to
2001. In addition, interest expense in the three-month period of 2002 increased
by $38,154 over the same period in 2001 due to borrowings of $2,300,000 during
the second quarter of 2002 from the Company's major shareholder. Interest
expense for the six-months of 2001 of $90,951 resulted primarily from interest
expense on outstanding notes incurred by Antares/Switzerland in January 2001
prior to the business

                                       15
combination, while interest expense for the six-months of 2002 of $53,263 is
primarily due to the interest on the borrowings from the Company's major
shareholder. The conversion of $2,000,000 of debt into common stock by the
Company's major shareholder in June will decrease quarterly interest expense in
the future by approximately $42,000, while the issuance of $2,000,000 of 10%
Convertible Debentures in July will increase quarterly interest expense by
approximately $50,000 until maturity or conversion.

The 509,137 shares of common stock issued on June 10, 2002 to the Company's
majority shareholder, Dr. Jacques Gonella, in connection with conversion of
$2,036,550 in notes payable and accrued interest had only a minor effect on the
loss per share for the three and six-month periods ended June 30, 2002, and the
full impact from issuance of these shares will not be reflected in the loss per
share calculations until future periods.

Upon conversion of the 10% Convertible Debentures, existing common shareholders
could experience substantial dilution of their investment. In addition, as the
per share conversion price of the debentures into common stock was substantially
lower than the market price of the common stock on the dates the debentures were
sold, the Company will be recording an accounting charge for the beneficial
in-the-money conversion feature of the debentures in the third quarter. This
charge will be material to the financial statements and could equal the
principal amount of the converted debentures.

Cash Flows

Operating Activities

Net cash used in operating activities decreased by $1,335,176, from $4,672,493
for the first half of 2001 to $3,337,317 for the first half of 2002. This was
the result of net losses of $4,332,670 and $4,063,524 in the first half of 2001
and 2002, respectively, adjusted by noncash expenses and changes in operating
assets and liabilities.

Net noncash expenses of $1,529,512 in the first half of 2001 were mainly due to
depreciation and amortization of $563,323 and in-process research and
development of $948,000. Noncash expenses in the first half of 2002 totaled
$582,999, consisting primarily of depreciation and amortization of $397,166 and
stock-based compensation expense of $185,833.

The change in operating assets and liabilities in the first half of 2001
resulted in a net decrease to cash of $1,869,335, comprised mainly of reductions
in accounts payable and accrued expenses of $739,626 and $568,820, respectively,
as a result of improved liquidity from the sale of common stock in the first
half of 2001. In addition, an increase in accounts receivable used $365,026 in
the 2001 period. In the first half of 2002, the change in operating assets and
liabilities caused an increase in cash of $143,208, primarily due to the
increase in deferred revenue of $975,340 and decrease in VAT and other
receivables of $200,354, offset by increases in accounts receivable and prepaid
expenses of $373,715 and $181,211, respectively, and decreases in accrued
expenses and liabilities to related parties of $295,136 and $116,505,
respectively. The increase in deferred revenue of $975,340 resulted mainly from
milestone payments of approximately $750,000 related to existing license
agreements, along with approximately $300,000 related to agreements originating
in 2002.

Investing Activities

Net cash used in investing activities decreased $159,610, from $444,768 in the
first half of 2001 to $285,158 in the same period of 2002. In 2001, $602,756 was
loaned to Medi-Ject before the business

                                       16
combination and was offset by the cash balance of $355,578 in Medi-Ject at the
time of the business combination. In addition, in 2001 the Company received
proceeds of $91,699 from the sale of equipment, furniture and fixtures.
Purchases of equipment, furniture and fixtures in the first half of 2001 and
2002 totaled $230,022 and $123,181, respectively, and expenditures for patent
acquisition and development totaled $59,267 and $161,977, respectively.

Financing Activities

Net cash provided by financing activities decreased $8,834,421 from $11,078,699
in the first half of 2001 to $2,244,278 in the same period of 2002, due
primarily to net proceeds of $10,016,268 received during the first half of 2001
from issuance of common stock, of which $9,994,549 was received in the private
placement of common stock.

The Company received $1,000,000 on March 12, 2002 and $1,000,000 on April 24,
2002 from the Company's majority shareholder, Dr. Jacques Gonella, under a Term
Note agreement dated February 20, 2002. The Term Note agreement allowed for
total advances to the Company of $2,000,000. The note was interest bearing at
the three month Euribor Rate as of the date of each advance, plus 5%. The
principal and accrued interest of $36,550 was converted into 509,137 shares of
common stock on June 10, 2002 at $4.00 per share. In June 2002 the Company
borrowed an additional $300,000 from the Company's majority shareholder on a
short-term basis, with interest at the three month Euribor Rate as of the date
of the advance, plus 5%.

Liquidity

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's external auditor issued its report on the December 31, 2001 financial
statements, which expressed substantial doubt about the Company's ability to
continue as a going concern. The Company had negative working capital of
$2,016,280 at June 30, 2002, 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, 2002,
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 and the receipt of revenues from
sales of products.

The Company believes it has sufficient cash to continue operations through
September 2002 and will be required to raise additional working capital to
continue to exist. Management's intentions are to raise this additional capital
through alliances with strategic corporate partners, equity offerings, and/or
debt financing. The Company received $1,000,000 on March 12, 2002 and $1,000,000
on April 24, 2002 from the Company's majority shareholder, Dr. Jacques Gonella,
under a Term Note agreement dated February 20, 2002. The Term Note agreement
allowed for total advances to the Company of $2,000,000 and was interest bearing
at the three month Euribor Rate as of the date of each advance, plus 5%. The
principal of $2,000,000 and accrued interest of $36,550 was converted into
509,137 shares of common stock on June 10, 2002 at $4.00 per share. In June 2002
the Company borrowed an additional $300,000 from the Company's majority
shareholder on a short-term basis with interest at the three month Euribor Rate
as of the date of the advance, plus 5%.

                                       17
On July 12, 2002 the Company entered into a Securities Purchase Agreement (the
"Agreement") for the sale and purchase of up to $2,000,000 aggregate principal
amount of the Company's 10% Convertible Debentures. The debentures are
convertible into shares of the Company's common stock at a conversion price
which is the lower of $2.50 or 75% of the average of the three lowest intraday
prices of the Company's common stock during the 20 trading days prior to the
date of conversion, as reported on the Nasdaq SmallCap Market. Within 15 days of
the closing, the Company was obligated to file a registration statement with the
Securities and Exchange Commission to register the shares issuable upon
conversion of the debentures. Under the terms of the Agreement, the Company
received $700,000 upon closing of the transaction on July 12, 2002, an
additional $700,000 after the Company filed a registration statement on July 19,
2002 to register the shares issuable upon conversion of the debentures, and will
receive an additional $600,000 when such registration statement is declared
effective. Additionally, the Company intends to hold a special meeting of its
shareholders to approve the issuance of the shares issuable upon conversion of
the debentures. Upon conversion of the debentures, existing common shareholders
could experience substantial dilution of their investment. In addition, as the
per share conversion price of the debentures into common stock was substantially
lower than the market price of our common stock on the dates the debentures were
sold, we will be recording an accounting charge for the beneficial in-the-money
conversion feature of the debentures in the third quarter. This charge will be
material to our financial statements and could equal the principal amount of the
converted debentures.

There can be no assurance that the Company will ever become profitable or that
adequate funds will be available when needed or on acceptable terms. If for any
reason the Company is unable to obtain additional financing it may not be able
to continue as a going concern, which may result in material asset impairments,
other material adverse changes in the business, results of operations or
financial condition, or the loss by shareholders of all or a part of their
investment in the Company.

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.

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued SFAS 141,
"Business Combinations," and SFAS 142, "Goodwill and Other Intangible Assets."
SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. SFAS 142 changes the
accounting for goodwill from an amortization method to an impairment-only
approach. Thus, amortization of goodwill, including goodwill recorded in past
business combinations, ceased upon adoption of that Statement. The Company
adopted SFAS 142 in the first quarter of fiscal 2002 and accordingly evaluated
its existing intangible assets and goodwill that were acquired in a prior
purchase business combination, and determined that $1,935,588 representing the
unamortized portion of the amount allocated to other intangible assets on the
date of adoption, should be reclassified as goodwill. These amounts were
previously classified as workforce, ISO certification and clinical studies. Upon
adoption of SFAS 142, the Company reassessed the useful lives and residual
values of all intangible assets acquired in purchase business combinations, and
determined that there were no amortization period adjustments necessary.

The Company adopted SFAS 141 during 2001 and adopted SFAS 142 effective January
1, 2002. As of the date of adoption of SFAS 142, after reclassification of other
intangible assets as goodwill, the Company had approximately $3,095,355 of
unamortized goodwill subject to the transition provisions of SFAS 141 and 142.
The Company engaged a third-party valuation firm to complete an evaluation of

                                       18
goodwill in accordance with the provisions of SFAS 142 and concluded that no
impairment exists. Adoption of SFAS 142 is expected to decrease amortization
expenses in 2002 by approximately $410,000 as a result of ceasing amortization
of goodwill and other intangible assets reclassified as goodwill.

For the three and six month periods ended June 30, 2001 and 2002, the goodwill
amortization, adjusted net loss and basic and diluted loss per share are as
follows:
Three Months Ended                    Six Months Ended
                                                         June 30,                             June 30,
                                             ----------------------------------   ----------------------------------
                                                  2001              2002               2001              2002
                                             ----------------  ----------------   ----------------  ----------------
Net loss as reported                         $  (1,728,723)    $  (1,966,884)     $  (9,696,795)    $  (4,113,524)
Addback goodwill amortization                      102,396                 -            170,660                 -
                                             ----------------  ----------------   ----------------  ----------------
Adjusted net loss                            $  (1,626,327)    $  (1,966,884)     $  (9,526,135)    $  (4,113,524)
                                             ================  ================   ================  ================

Basic and diluted loss per share:
    Net loss as reported                     $       (0.20)    $       (0.21)     $       (1.22)    $       (0.45)
    Goodwill amortization                             0.01                 -               0.02                 -
                                             ----------------  ----------------   ----------------  ----------------
 Adjusted net loss                           $       (0.19)    $       (0.21)     $       (1.20)    $       (0.45)
                                             ================  ================   ================  ================
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred and nullifies EITF 94-3. The Company plans to adopt SFAS No. 146 in
January 2003. Management believes that the adoption of this statement will not
have a material effect on the Company's future results 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. For the three and six-months ended June 30, 2002, the
Company recorded an increase to cumulative comprehensive loss of $51,815 and
$53,441, respectively, and $32,350 and $340,755, respectively, for the same
prior-year periods related to foreign currency translation adjustments. 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 three and six-months ended June 30, 2001 and 2002 was
not material. 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.

The Company's exposure to interest rate risk is not believed to be material. The
Company does not use derivative financial instruments to manage interest rate
risk. All existing debt agreements of the Company bear interest at fixed rates,
and are therefore not subject to exposure from fluctuating interest rates.

                                       19
PART II - OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

(c)      On June 10, 2002 Dr. Jacques Gonella, majority shareholder and chairman
         of the Company, converted his $2,000,000 loan to the Company and
         related accrued interest of $36,550 into 509,137 shares of unregistered
         common stock at a price of $4.00 per share. The Company used the
         proceeds of the loan for working capital. The stock issued to Dr.
         Gonella was exempt from registration under Rule 506 of the Securities
         Act of 1933. Dr. Gonella is an accredited investor and was the only
         recipient of shares in this offering.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         Exhibit No.                         Description
         -----------          --------------------------------------------------
              99.1            Section 906 CEO and CFO Certification

(b)      Reports on Form 8-K

         Form 8-K was filed on June 25, 2002, which describes the conversion of
         a $2,000,000 Term Note with the Company's majority shareholder, Dr.
         Jacques Gonella, into 509,137 shares of common stock.

                                       20
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.

August 14, 2002                 /s/ Roger G. Harrison, Ph.D.
                               -------------------------------------------------
                               Roger G. Harrison, Ph.D.
                               Chief Executive Officer and President

August 14, 2002                 /s/ Lawrence M. Christian
                               -------------------------------------------------
                               Lawrence M. Christian
                               Chief Financial Officer, Vice President - Finance
                               and Secretary

                                       21