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

                                   FORM 10-KSB

                   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
                          COMMISSION FILE NO. 000-32947

                            Lev Pharmaceuticals, Inc.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

             Delaware                                       71-0390957
    -------------------------------                    -------------------
    (State or Other Jurisdiction of                     (I.R.S. Employer
    Incorporation or Organization)                     Identification No.)

  122 West 42nd Street, Suite 2606, New York, New York           10168
  ----------------------------------------------------         ---------
    (Address of Principal Executive Offices)                   (Zip Code)

                                 (212) 682-3096
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

    SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT: NONE

      SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:

                     Common Stock, $.01 Par Value Per Share

Check whether the issuer (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 [ ]

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained herein, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

      The issuer's revenues for the year ended December 31, 2004 were $0.

      The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant on March 15, 2005, based on the closing bid
price on such date was $ 49,267,213.

      As of March 15, 2005, the issuer had a total of 76,303,319 shares of
common stock outstanding.

      Transitional Small Business Disclosure Format (Check one): |_| Yes |X| No

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                                TABLE OF CONTENTS


                                                                            Page

                                     PART I

Item 1.     DESCRIPTION OF BUSINESS........................................   3
Item 2.     DESCRIPTION OF PROPERTY........................................  21
Item 3.     LEGAL PROCEEDINGS..............................................  21
Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............  21


                                    PART II

Item 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......  22
Item 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.....  23
Item 7.     FINANCIAL STATEMENTS...........................................  28
Item 8A.    CONTROLS AND PROCEDURES........................................  28

                                    PART III

Item 9.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............  28
Item 10.    EXECUTIVE COMPENSATION.........................................  31
Item 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT...................................................  35
Item 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................  36
Item 13.    EXHIBITS.......................................................  36
Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES.........................  37

SIGNATURES

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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

      We have made forward-looking statements in this document, all of which are
subject to substantial risks and uncertainties. You can identify these
statements by forward-looking words such as "may," "will," "expect," "intend,"
"anticipate," "believe," "estimate" and "continue" or similar words.
Forward-looking statements include information concerning possible or assumed
future business success or financial results. You should read statements that
contain these words carefully because they discuss our future expectations,
contain projections of our future results of operations or financial condition
or state other forward-looking information. We believe that it is important to
communicate our future expectations to our investors. However, there may be
events in the future that we are unable to accurately predict or control.
Accordingly, we do not undertake the obligation to update any forward-looking
statements for any reason, even if new information becomes available or other
events occur in the future. The factors listed in the section captioned "Risk
Factors," as well as any cautionary language in this document, provide examples
of risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of the events described in the "Risk Factors" section and elsewhere in this
document could have a material adverse effect on our business, operating results
and financial condition.

Introduction

      Lev Pharmaceuticals, Inc. ("Lev", "we", "our" or "us") is a
biopharmaceutical company that was formed in July 2003 to focus on developing
and commercializing therapeutic products for the treatment of inflammatory
diseases. Our product candidates are based on C1-esterase inhibitor ("C1-INH"),
a human plasma protein that mediates inflammation and is potentially applicable
as a treatment for a range of medical indications. We initiated a Phase III
clinical trial of our lead product candidate, C1-INH for the treatment of
hereditary angioedema ("HAE"), in March 2005. Lev is also developing C1-INH for
the treatment of acute myocardial infarction ("AMI"), or heart attack, and
selective other diseases and disorders in which inflammation is known or
believed to play an underlying role. We have certain rights to C1-INH technology
through agreements with Sanquin Blood Supply Foundation ("Sanquin"), an
Amsterdam-based not-for-profit organization that provides blood and plasma
products and related services, carries out research and provides education,
primarily in the Netherlands.

Recent Developments

      On November 5, 2004, Fun City Popcorn, Inc. ("FCP") a non-operating public
company, Lev Acquisition Corp, its wholly-owed subsidiary ("Lev Sub") and Lev
Development Corp, previously know as Lev Pharmaceuticals, Inc. ("Old Lev")
entered into an Agreement and Plan of Merger, as amended on December 8, 2004
(the "Agreement"). On December 29, 2004, the merger closed and pursuant to the
Agreement, Lev Sub merged into Old Lev and the combined entity became a
wholly-owned subsidiary of FCP ("Merger 1").

      As a result of Merger 1, FCP issued 5,029,795 shares of common stock and
4,789,433 shares of Series A convertible preferred stock (the "Series A
Preferred Stock") to holders of outstanding Old Lev common stock. On December
29, 2004, the Board of Directors and stockholders of FCP approved a merger of
FCP into a newly formed, wholly-owned subsidiary of FCP ("Merger 2"). On
February 17, 2005, Merger 2 closed and the issued and outstanding Series A
Preferred Stock of FCP was automatically converted into an aggregate of
66,767,994 shares of common stock, which along with the 4,505,530 shares of FCP
common stock outstanding prior to Merger 1 and the 5,029,794 shares of common
stock issued to the Old Lev stockholders in Merger 1 resulted in a total of
76,303,319 shares of common stock outstanding as of February 17, 2005. As part
of Merger 2, Old Lev changed its name to Lev Development Corp. and FCP changed
its name to Lev Pharmaceuticals, Inc. Merger 1 which, resulted in the
stockholders of Lev obtaining control of FCP, represents a recapitalization of
FCP, or a "reverse merger" rather than a business combination. In connection
therewith, Old Lev's historic capital accounts were retroactively adjusted to
reflect the equivalent number of shares issued by FCP while Old Lev's historical
accumulated deficit was carried forward. All share and per share information has
been retroactively restated in the accompanying consolidated financial
statements. The consolidated financial statements herein are the consolidated
financial statements of Old Lev.


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Product Programs

      Our lead program is the development of C1-INH for the treatment of HAE.
HAE is a rare genetic disorder characterized by episodic attacks of edema
(swelling) in the extremities, face, abdomen, and, most seriously the airway
passages. The disease is caused by a deficiency of C1-INH, and there are
believed to be 6,000 or more people with HAE in the United States.

      Sanquin Blood Supply Foundation ("Sanquin") has been producing and selling
successive generations of C1-INH, prepared from human plasma, in the Netherlands
for over 30 years for the treatment of HAE. Continuous product development
efforts at Sanquin have resulted in the current, highly purified product that
has been marketed in Europe since 1997. Despite its long record of use in
Europe, however, C1-INH, has never been introduced in the United States. Through
a supply and distribution agreement with Sanquin, we have the exclusive right to
market and sell C1-INH prepared by Sanquin, for the treatment of HAE in North
America and certain other geographic regions.

      We initiated a Phase III clinical trial of C1-INH for the treatment of HAE
in March 2005. In July 2004, we received orphan drug designation from the FDA
for C1-INH (human), which, upon product licensure, could provide us with a
seven-year exclusive right to market its C1-INH product as a treatment for HAE
in the United States.

      Our second development program is focused on the use of C1-INH in treating
acute myocardial infarction (AMI), commonly known as a heart attack. AMI results
from an obstruction of blood flow to the heart, and there are approximately
1,200,000 patients with AMI in the United States annually, resulting in an
estimated 500,000 directly attributable deaths. Current treatments for AMI, both
surgical and pharmaceutical, are directed at restoring blood flow to heart
tissue or preventing further obstruction. Despite a widespread appreciation for
the role of inflammation in AMI in both the scientific and medical communities,
no presently available treatments directly target the mechanisms of
inflammation. Based on preliminary animal and clinical data, we believe that
C1-INH may be useful as a treatment for AMI.

      The process of inflammation underlies a number of other serious diseases,
including gram-negative septicemia and inflammatory bowel disease, and is now
also understood to play a role in other disorders previously thought to be
unrelated to inflammation, including Alzheimer's disease and stroke. As a potent
mediator of inflammation, C1-INH has been examined as a potential treatment for
some of these diseases, in animal studies, and in a limited number of disorders,
in clinical studies as well. Based on these studies, and on the role C1-INH is
known to play in inhibiting key inflammatory pathways, we intend to develop
C1-INH for certain other diseases and disorders. We believe that the extensive
clinical experience with C1-INH in treating HAE in Europe will facilitate its
introduction into other clinical indications.

Strategy

      Our goal is to create a biopharmaceutical company that develops and
commercializes a portfolio of C1-INH products that offer improved efficacy and
safety characteristics over existing treatments. The key elements of our
strategy are to:

      o     complete the development of our lead product candidate, C1-INH for
            the treatment of HAE;
      o     advance our second product candidate, C1-INH for the treatment of
            AMI, into pre-clinical development in the United States; and
      o     selectively develop C1-INH for additional therapeutic indications.

Technology

      C1-INH is a human plasma protein that mediates inflammation and
coagulation. In Europe, C1-INH, produced by several manufacturers, has been used
to treat patients with HAE safely and effectively for more than 30 years, and is
widely accepted as the treatment of choice for HAE. It is this extensive record
of safety and efficacy that provides the basis for our lead program, the
development of C1-INH in the United States for the treatment of HAE.


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<PAGE>

      Beyond this impressive record of clinical experience, however, C1-INH is
also a well-characterized and well-understood molecule that is known to play a
key role regulating the complex biochemical interactions of blood-based systems
involved in inflammation and coagulation. C1-INH is known to be either a major
or minor inhibitor of at least seven proteins involved in these systems. More
specifically, C1-INH is known to inhibit three key biochemical pathways
underlying inflammation and/or coagulation - the complement system, the contact
pathway of intrinsic coagulation and the fibrinolytic system. Under normal
circumstances, these systems play important roles in defending the body from
infection, injury and disease and in repairing tissue damage. If improperly
controlled, however, these same systems can cause or contribute to disease and
tissue damage. Excessive activity in one or more of these systems is known or
believed to contribute to a number of diseases or disorders, including:
myocardial infarction, ischemic-reperfusion injury, inflammatory bowel disease,
gram-negative septicemia, Alzheimer's disease and stroke.

      Based on (i) the demonstrated role of these inflammatory pathways in
specific diseases, (ii) the known function of C1-INH in regulating these
pathways, and (iii) the extensive clinical experience in using C1-INH to treat
HAE, C1-INH has been extensively studied, both clinically and pre-clinically, as
a potential treatment for a number of diseases. We intend to leverage and extend
these studies to develop a portfolio of products based on C1-INH.

Hereditary Angioedema

Background

      HAE is a genetic disorder characterized by episodes of edema (swelling) in
the extremities, face, abdomen, and airway passages. The majority of patients
have stretches of severe abdominal pain, nausea, and vomiting that is caused by
swelling in the intestinal wall. Attacks that involve the face and throat must
be taken seriously and medical treatment should be sought without delay.
Swelling of the throat can close the air passage and cause death by suffocation.
The mortality rate from untreated airway obstruction has been reported to be
over 30% with death most frequently caused by asphyxiation due to airway
closure. The course of the disease is diverse and unpredictable, even within a
single patient over his lifetime. Swelling caused by HAE usually lasts for 24-72
hours, but the length of an attack can range from four hours to four days. On
average, patients experience approximately one attack per month, but the
frequency is highly variable. As many as 5% to 10% of patients are severely
affected, experiencing attacks one to three times per week. HAE affects between
1:10,000 and 1:50,000 individuals worldwide and there are believed to be 6,000
or more people with HAE in the United States.

      HAE is caused by a defective gene for C1-INH, and this defect is passed on
in families - a child has a 50% chance of inheriting this disease if one parent
is affected. The absence of family history, however, does not rule out HAE
diagnosis, and as many as 20% of HAE cases involve patients who appear to have
had a spontaneous mutation of the C1-INH gene at conception. The genetic defect
results in production of either inadequate or nonfunctioning C1-INH protein.

      C1-INH is known to inhibit three key biochemical pathways underlying
inflammation and/or coagulation - the complement system, the contact pathway of
intrinsic coagulation and the fibrinolytic system. Excessive activity of each of
these systems has been demonstrated in HAE, as evidenced by increased levels of
components of the complement system, kallikrein, coagulation Factors XIa and
XIIa, and plasmin. The biochemical imbalance that results from reduced levels of
functional C1-INH leads to the production of proteins and peptides that cause
fluids to be released from the capillaries into surrounding tissues thereby
causing edema.

      In the absence of C1-INH activity, activated C1 and plasmin generate
certain inflammatory mediators that are thought to be causal factors of the
angioedema observed in patients with HAE. C1-INH concentrate replaces the
missing or non-functional protein and inhibits the cataclysmic subunits of the
first component of the classic complement pathway (C1r and C1s), as well as
inhibition of the function of kallikrein, plasmin, and coagulation factors XIa
and XIIa.

      Because HAE is rare and has a wide variability in disease expression, it
is not uncommon for patients to remain undiagnosed or misdiagnosed for many
years. Many patients report that their frequent and severe abdominal pain was
inappropriately diagnosed as psychosomatic. Although rare, HAE is a disease with
potentially catastrophic consequences for those affected. Aside from the
potentially fatal acute respiratory compromise, unnecessary exploratory surgery
has been performed on patients experiencing gastrointestinal edema because
abdominal HAE attacks mimic conditions requiring surgery.

      Traditionally, HAE has been classified into two types (I and II). The most
common form of the disease, Type I, is characterized by low levels of C1-INH and
affects about 85% of patients, whereas Type II HAE affects 15% of patients and
is characterized by non-functional C1-INH. A third type of HAE has been
identified in which the abnormal C1-INH protein binds to albumin effectively
reducing the amount of functional C1-INH.


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Current Treatments of HAE

      Treatment of HAE can be categorized as: (i) preventive treatments for
patients severely affected by HAE; and (ii) mitigation treatments to remedy the
symptoms of infrequent episodic acute attacks. The only currently available
treatments in the United States for severe attacks are anabolic steroids, pain
control, and rehydration. Restriction of the inciting activity (e.g. repetitive
motion such as typing or hammering) is also advised. Current treatments for HAE
in the United States do not prevent all attacks and have adverse side effects.

      Long-term prevention therapy is recommended for patients who experience
more than one attack per month, or who believe the disease significantly
interferes with their quality of life. Most of these patients are currently
treated with anabolic steroids that reduce the frequency of attacks of edema.
The most commonly used steroids are alpha-alkylated androgens such as stanozolol
and danazol. Although these drugs are effective in reducing the number and
severity of the most serious attacks, they do not prevent all attacks. In
addition, use of such anabolic steroids can have numerous side effects ranging
from hepatotoxicity (liver toxicity), virilization (development of male sexual
characteristics in a female), weight gain, acne and hirsutism (unwanted hair
growth). Another preventive treatment is the use of freshly frozen plasma, which
contains C1-INH, but which also contains a wide variety of other factors that
may activate multiple inflammatory pathways and exacerbate an attack.

      There are currently no approved treatments for acute attacks available in
the United States. Rather, current therapies primarily focus upon treating the
symptoms of an acute attack. For swelling of the intestinal wall, which can
cause debilitating pain, narcotics such as morphine and antiemetics for nausea
are given, but these medications only address the symptoms and not the
underlying cause. For severe laryngeal swelling, which can be life threatening,
rescue therapy such as intubation or tracheotomy may be required. There are no
treatments available for swelling of the face or extremities.

C1-Esterase Inhibitor for the Treatment of HAE

      HAE can be effectively treated with intravenous administration of C1-INH
purified from human plasma. In Europe, C1-INH, produced by several
manufacturers, has been used to treat patients with HAE safely and effectively
for more than 30 years, and is widely accepted by HAE associations around the
world as the treatment of choice for acute attacks of HAE. It can be used to
treat acutely, when there is an attack, or prophylactically, to prevent attacks,
depending on the severity of the case. The treatment concept is similar to
hemophilia, in which a patient is treated regularly with the particular clotting
factor in which he is deficient. In spite of this long record of safety and
efficacy in Europe, C1-INH has never been introduced in the United States and it
is our objective to bring C1-INH to the United States for the treatment of
patients with HAE.

      Our first product candidate, C1-INH prepared from human plasma, is being
developed for both acute and prophylactic treatment of HAE. C1-INH is given by
intravenous administration. Published studies by others have shown C1-INH
treatment to resolve angioedema in 30 minutes to two hours, compared to 24-72
hours when untreated. A research study published in the New England Journal of
Medicine in 1996, provided evidence that this treatment was safe and effective
for both prevention of attacks and as an acute attack therapy - rapid resolution
of laryngeal, facial, abdominal, and extremity swelling was observed. A study
published in the Archives of Internal Medicine in 2001 concluded C1-INH to be
highly effective in treating the laryngeal edema of HAE with rapid resolution of
symptoms. We believe these studies, and others showing comparable efficacy, are
representative of the extensive European clinical experience using C1-INH as a
treatment for HAE for more than 30 years.

      We entered into a distribution and manufacturing services agreement with
Sanquin in January 2004. Sanquin currently manufactures and markets a highly
purified preparation of C1-INH in Europe and pursuant to the agreement, Sanquin
agreed to provide us with C1-INH for use in our clinical trials and for
commercial distribution upon regulatory licensure. Pursuant to the agreement, we
have distribution rights in all countries in North, Central and South America,
with the exception of the Dutch Overseas Territories, Argentina and Brazil.

      On September 20, 2004, we entered into a services agreement with
Compleware in connection with the design, management and implementation of our
Phase III clinical trial of C1-INH for the treatment of HAE. On March 1, 2005,
we terminated the agreement. On March 2, 2005, we entered into a new services
agreement with INC Research which governs INC Research's provision of services
in connection with the support of clinical investigation, management and/or
research of our Phase III clinical trial. It is estimated that we will pay INC
Research approximately $1,000,000 for its services over the next two years.


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Acute Myocardial Infarction

Background

      AMI, commonly known as a heart attack, is a sudden, life-threatening
cardiac disorder caused by an obstruction of blood flow to the heart. The major
symptom of AMI is chest discomfort, but associated symptoms include nausea,
vomiting, shortness of breath, and dizziness. AMIs vary in severity and
symptoms, and the intensity of the systems depends on the size of the area of
heart muscle affected by the infarction. Clinical diagnosis of AMI is typically
based on elevation of two cardiac enzymes, creatine phosphokinase and troponin,
markers considered highly reliable measures of cardiac injury.

      AMI results in the development of myocardial necrosis, or death of heart
cells or tissue, due to ischemia (lack of oxygen). The heart cells are not
supplied with sufficient oxygen to meet their metabolic requirements. The most
common cause of AMI is atherosclerosis or the accumulation of plaques in the
arterial wall. Plaques can rupture and form a thrombus, or clot, that partially
or totally blocks arterial blood flow. Patients with this condition suffer the
disruption of the normal pattern of contractions of the heart muscle leading to
atrial fibrillation (rapid uncontrolled beat) and/or heart failure. There are
approximately 1,200,000 patients with AMI in the United States annually,
resulting in an estimated 500,000 directly attributable deaths.

Current Treatments of AMI

      Current treatments of AMI are limited and are aimed at restoring blood
flow, improving tissue oxygenation and preventing further arterial obstruction.
The first line of treatment usually includes oxygen (to reduce the workload of
the heart), aspirin (to inhibit further clot formation), nitroglycerin (to
reduce the oxygen requirements of the heart) and morphine (for pain).
Fibrinolytic drugs, such as streptokinase, urokinase or alteplase, are
administered to dissolve clots, and heparin is given as an anticoagulant to
prevent further clot formation. Percutaneous transluminal coronary angioplasty,
or PTCA, is commonly performed to restore blood flow to the affected coronary
artery, a procedure that may involve the placement of a stent to prevent closure
of the vessel. In some cases, coronary arterial bypass graft surgery may be
required. Antiplatelet medications, such as aspirin and clopidogrel, have become
a cornerstone of therapy for AMI. These medications prevent the accumulation of
platelets, a trigger event in clot formation. Newer strategies include the use
of platelet glycoprotein IIb-IIIa receptor inhibitors, low molecular weight
heparin, and Factor Xa inhibitors.

C1-INH for the Treatment of AMI

      Current treatments for AMI, both surgical and pharmaceutical, are directed
at restoring blood flow to heart tissue or preventing further obstruction. The
later stages of cardiac cell injury during AMI, however, result at least in part
from an inflammatory response. Activation of the complement system has been
demonstrated, inflammatory mediators have been identified, and certain
anti-inflammatory drugs have been shown to reduce infarct size in animal models.
Despite a widespread appreciation for the role of inflammation in AMI in both
the scientific and medical communities, no presently available treatments
directly target the mechanisms of inflammation. Based on preliminary animal and
clinical data, we believe that C1-INH may be useful as a treatment for AMI.

      Two of the major inflammatory pathways believed to be involved in AMI are
the complement system and the contact pathway of intrinsic coagulation. C1-INH
is an important inhibitor of both of these pathways and, therefore, may provide
a therapeutic benefit in the treatment of AMI. C1-INH has been studied
extensively in animal models of myocardial infarction in rat, pig, cat and dog
models. In these studies, C1-INH was shown both to restore blood flow and to
reduce cardiac damage. The use of C1-INH in treating AMI has also been studied
in a preliminary clinical trial published in the European Heart Journal in 2002.
In 13 patients, release of troponin T and creatine kinase MB, two accepted
biochemical markers of cardiac damage, were reduced by 36% and 57%,
respectively, compared to 18 controls. We entered into an exclusive worldwide
license with Sanquin for the use of C1-INH for the treatment of AMI.


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Other Inflammatory Diseases

      The process of inflammation underlies a number of serious diseases,
including rheumatoid arthritis and inflammatory bowel disease, and is now also
understood to play a role in other disorders previously thought to be unrelated
to inflammation, including Alzheimer's disease and stroke. C1-INH has been
examined as a potential treatment for some of these diseases, in animal studies,
and in a limited number of disorders, in clinical studies as well. C1-INH has
been studied in animal models of pancreatitis, lung transplantation, burn
injuries and traumatic shock. Preliminary clinical studies have been done in
coronary bypass surgery, gram-negative septicemia and bone marrow
transplantation. Based on these studies, and on the role C1-INH is known to play
in inhibiting key inflammatory pathways, we intend to develop C1-INH for certain
additional diseases and disorders. We believe that the extensive clinical
experience with C1-INH in treating HAE in Europe will facilitate its
introduction into other clinical indications.

Distribution, Manufacturing and Licensing Relationships

Distribution and Manufacturing Services Agreement with Sanquin

      We entered into a Distribution and Manufacturing Services Agreement with
Sanquin as of January 16, 2004 (the "Distribution Agreement"). Under this
agreement, Sanquin has granted us (i) the exclusive right to distribute, market,
offer for sale, sell, import and promote C1-INH derived from human plasma as
manufactured by Sanquin in all countries in North America and South America
(other than the Dutch Overseas Territories, Argentina and Brazil), and (ii) a
right of first refusal to distribute, market, offer for sale, sell, import and
promote C1-INH derived from human plasma as manufactured by Sanquin in certain
other geographic regions and under certain conditions.

      Under this agreement, we agreed to take primary responsibility for
conducting the Phase III clinical trials of C1-INH for the treatment of HAE, and
preparation and filing of all regulatory applications necessary to register the
product candidate. In exchange, Sanquin agreed to provide us with the technical
data and support necessary to assist us in preparing and filing all such
regulatory applications.

      Furthermore, Sanquin agreed to supply C1-INH for our Phase III clinical
trials. Upon receipt of FDA approval for our product candidate for the treatment
of HAE, upon commercial launch of this product and thereafter during the term of
the agreement, Sanquin will supply us with its commercial requirements for
C1-INH for the treatment of HAE in each country where we have received
regulatory approval. Our purchase of C1-INH from Sanquin is subject to minimum
annual purchase requirements.

      The initial term of this agreement shall expire on December 31, 2007,
subject to extension. We have the right to extend the term of this agreement for
up to six years in two successive three year periods upon written notice to
Sanquin no later than six months before this agreement or an extension of this
agreement terminates.

      As per the agreement, we have obtained FDA consent for our plan to collect
necessary data to support licensure in the United States and we have secured the
support of a clinical research organization to conduct our Phase III clinical
trials for our HAE product candidate. In addition, Sanquin has the right to
terminate this agreement in the event, among other things, that:

      o     we fail to complete the enrollment of our Phase III clinical trials
            for its HAE product candidate within a specified time frame
      o     we fail to submit a biologics license application, ("BLA"), in the
            United States within a specified time frame; or
      o     we fail to obtain marketing approval in the United States within a
            specified time frame.

Exclusive License Agreement with Sanquin

      We entered into a license agreement with Sanquin on January 27, 2004.
Under this agreement, we have an exclusive, worldwide, royalty-bearing license,
with the right to sublicense, to the use of C1-INH for the treatment of AMI. In
connection with the license agreement, we paid Sanquin certain fees and
reimbursed Sanquin for certain expenses. In addition, we have an obligation to
pay Sanquin royalties on sales of products incorporating the licensed
technology.


                                       8
<PAGE>

      We are required to create a comprehensive plan for the commercial
exploitation of the licensed technology, and to such end we have agreed to
commit at least $125,000 per annum during the first three years following the
execution of this agreement toward such research. In addition, we have agreed to
use commercially reasonable efforts to manufacture and market products
incorporating the licensed technology.

      The license agreement, unless it is terminated earlier, shall continue in
force until the expiration, invalidation or unenforceability of the last to
expire patent licensed pursuant to the agreement. Either party may terminate the
agreement in the event of an uncured breach by the other.

Intellectual Property

The following factors are important to our success:

      o     receiving patent protection for our product candidates;
      o     not infringing on the intellectual property rights of others;
      o     preventing others from infringing our intellectual property rights;
            and
      o     maintaining our patent rights and trade secrets.

      We actively seek, when appropriate, protection for our proposed products,
technologies and proprietary information through United States and foreign
patents. In addition, we rely upon trade secrets and contractual arrangements to
protect our proprietary information.

      As of March 15, 2005, we own or license one United States patent and one
foreign patent related to our technologies, compounds and their applications in
pharmaceutical development or their use as pharmaceuticals. We face the risk
that our issued patents may be challenged or circumvented or may otherwise not
provide protection for any commercially viable products that we develop. We also
note that United States patents and patent applications may be subject to
interference proceedings, and United States patents may be subject to
reexamination proceedings in the Unites States. Patent and Trademark Office (and
foreign patents may be subject to opposition or comparable proceedings in the
corresponding foreign patent office), which could result in either loss of the
patent or denial of the patent application or loss or reduction in the scope of
one or more of the claims of the patent or patent application. In addition, such
interference, reexamination and opposition proceedings may be costly.
Furthermore, an adverse decision in an interference proceeding can result in a
third party receiving the very patent rights sought by us, which in turn could
affect our ability to market a potential product to which that patent filing was
directed. In the event that we seek to enforce any of our owned or exclusively
licensed patents against an infringing party, it is likely that the party
defending the claim will seek to invalidate the patents we assert, which, if
successful, would result in the entire loss of our patent or the relevant
portion of our patent and not just with respect to that particular infringer.
Any litigation to enforce or defend our patent rights, even if we were to
prevail, could be costly and time-consuming and would divert the attention of
our management and key personnel from our business operations.

      In addition, our ability to assert our patents against a potential
infringer, depends on our ability to detect the infringement in the first
instance. Many countries, including certain European countries, have compulsory
licensing laws under which a patent owner may be compelled to grant licenses to
third parties in some circumstances (for example, when the patent owner has
failed to "work" the invention in that country, or the third party has patented
improvements). In addition, many countries limit the enforceability of patents
against government agencies or government contractors. In these countries, the
patent owner may have limited remedies, which could materially diminish the
value of the patent. Compulsory licensing of life saving drugs is also becoming
increasingly popular in developing countries either through direct legislation
or international initiatives. Such compulsory licenses could be extended to
include some of our product candidates, which could limit our potential revenue
opportunities. Moreover, the legal systems of certain countries, particularly
certain developing countries, do not favor the aggressive enforcement of patent
and other intellectual property protection.

      Our success will also depend in part upon our not infringing patents
issued to others. If our product candidates are found to infringe the patents of
others, our development, manufacture and sale of such potential products could
be severely restricted or prohibited.


                                       9
<PAGE>

      Patent litigation can involve complex factual and legal questions and its
outcome is uncertain. Any claim relating to infringement of patents that is
successfully asserted against us may require us to pay substantial damages. Even
if we were to prevail, any litigation could be costly and time-consuming and
would divert the attention of our management and key personnel from our business
operations. Furthermore, if a patent infringement suit were brought against us
or our future strategic partners or licensees, if any, we or they may be forced
to stop or delay developing, manufacturing or selling potential products that
are claimed to infringe a third party's intellectual property unless that party
grants us or our strategic partners or licensees rights to use its intellectual
property. In such cases, we may be required to obtain licenses to patents or
proprietary rights of others in order to continue to commercialize our products.
However, we may not be able to obtain any licenses required under any patents or
proprietary rights of third parties on acceptable terms, or at all. Even if we
or our strategic partners or licensees were able to obtain rights to the third
party's intellectual property, these rights may be non-exclusive, thereby giving
our competitors access to the same intellectual property. Ultimately, we may be
unable to commercialize some of our potential products or may have to cease some
of our business operations as a result of patent infringement claims, which
could severely harm our business.

      Much of our technology and many of our processes depend upon the
knowledge, experience and skills of our scientific and technical personnel. To
protect rights to our proprietary know-how and technology, we generally require
all employees, contractors, consultants, advisors, visiting scientists and
collaborators as well as potential collaborators to enter into confidentiality
agreements that prohibit the disclosure of confidential information. The
agreements with employees and consultants also require disclosure and assignment
to us of ideas, developments, discoveries and inventions. These agreements may
not effectively prevent disclosure of our confidential information or provide
meaningful protection for our confidential information.

Competition

      We compete in an industry characterized by intense competition and rapid
technological change. New developments occur and are expected to continue to
occur at a rapid pace. Discoveries or commercial developments by our competitors
may render some or all of our technologies, products or potential products
obsolete or non-competitive.

      Our principal focus is on the development of therapeutic products. We
conduct research and development programs to develop and test product candidates
and demonstrate to appropriate regulatory agencies that these products are safe
and effective for therapeutic use in particular indications. Our principal
competitors are companies that are already marketing products in those
indications or are developing new products for those indications. Most of these
organizations have greater financial resources and experience than we do.
Companies developing therapeutics for the treatment of HAE include Dyax Corp.,
Jerini AG and Pharming Group N.V. In addition, ZLB Behring currently markets a
plasma-derived C1-INH outside of the United States. Other competitors and
potential competitors include companies that market and develop anabolic
steroid-based drugs and anti-inflammatory compounds.

      For potential cardiovascular disease product applications, our potential
competitors include numerous pharmaceutical and biotechnology companies, most of
which have substantially greater financial resources and experience than we do.

Government Regulation

      Regulation by governmental authorities in the United States and other
countries is a significant factor in the development, manufacture and marketing
of pharmaceuticals, and in our ongoing research and development activities. All
of our products will require regulatory approval by governmental agencies prior
to commercialization. In particular, pharmaceutical drugs are subject to
rigorous preclinical testing and clinical trials and other pre-marketing
approval requirements by the FDA and regulatory authorities in other countries.
In the United States, various federal, and in some cases state statutes and
regulations, also govern or impact upon the manufacturing, safety, labeling,
storage, record-keeping and marketing of pharmaceutical products. The lengthy
process of seeking required approvals and the continuing need for compliance
with applicable statutes and regulations, require the expenditure of substantial
resources. Regulatory approval, when and if obtained for any of our product
candidates, may be limited in scope which may significantly limit the indicated
uses for which our product candidates may be marketed. Further, approved drugs
and manufacturers are subject to ongoing review and discovery of previously
unknown problems that may result in restrictions on their manufacture, sale or
use or in their withdrawal from the market.


                                       10
<PAGE>

Preclinical Studies

      Before testing any compounds with potential therapeutic value in human
subjects in the United States, stringent government requirements for preclinical
data must be satisfied. Preclinical testing includes both in vitro and in vivo
laboratory evaluation and characterization of the safety and efficacy of a drug
and its formulation. Preclinical testing results obtained from studies in
several animal species, as well as from in vitro studies, are submitted to the
FDA as part of an investigational new drug application, or IND, and are reviewed
by the FDA prior to the commencement of human clinical trials. These preclinical
data must provide an adequate basis for evaluating both the safety and the
scientific rationale for the initial trials in human volunteers.

Clinical Trials

      If a company wants to test a new drug in humans, an IND must be prepared
and filed with the FDA. The IND becomes effective if not rejected or put on
clinical hold by the FDA within 30 days. In addition, an Institutional Review
Board comprised in part of physicians at the hospital or clinic where the
proposed trials will be conducted, must review and approve the trial protocol
and monitor the trial on an ongoing basis. The FDA may, at any time during the
30-day period or at any time thereafter, impose a clinical hold on proposed or
ongoing clinical trials. If the FDA imposes a clinical hold, clinical trials
cannot commence or recommence without FDA authorization and then only under
terms authorized by the FDA. In some instances, the IND application process can
result in substantial delay and expense.

Clinical Trial Phases

      Clinical trials typically are conducted in three sequential phases, phases
I, II and III, with phase IV trials potentially conducted after marketing
approval. These phases may be compressed, may overlap or may be omitted in some
circumstances.

      o     Phase I clinical trials. After an IND becomes effective, Phase I
            human clinical trials can begin. These trials evaluate a drug's
            safety profile, and the range of safe dosages that can be
            administered to healthy volunteers and/or patients, including the
            maximum tolerated dose that can be given to a trial subject with the
            target disease or condition. Phase I trials also determine how a
            drug is absorbed, distributed, metabolized and excreted by the body,
            and duration of its action.

      o     Phase II clinical trials. Phase II clinical trials typical are
            designed to evaluate the potential effectiveness of the drug in
            patients and to further ascertain the safety of the drug at the
            dosage given in a larger patient population.

      o     Phase III clinical trials. In Phase III clinical trials, the drug is
            usually tested in a controlled, randomized trial comparing the
            investigational new drug to an approved form of therapy in an
            expanded and well-defined patient population and at multiple
            clinical sites. The goal of these trials is to obtain definitive
            statistical evidence of safety and effectiveness of the
            investigational new drug regime as compared to an approved standard
            therapy in defined patient populations with a given disease and
            stage of illness.

Biologics License Application

      After completion of clinical trials, if there is substantial evidence that
the drug is safe, pure and potent, a biologics license application, or BLA, is
prepared and submitted for the FDA to review. The BLA must contain all of the
essential information on the drug gathered to that date, including data from
preclinical and clinical trials, and the content and format of a BLA must
conform with all FDA regulations and guidelines. Accordingly, the preparation
and submission of a BLA is a major undertaking for a company. In addition, the
FDA reviews a BLA to determine whether the facility in which a product is
manufactured, processed, packed or held meets standards designed to assure the
product's continued safety, purity and potency.


                                       11
<PAGE>

      The FDA reviews all BLAs submitted before it accepts them for filing and
may request additional information from the sponsor rather than accepting a BLA
for filing. In such an event, the BLA must be submitted with the additional
information and, again, is subject to review before filing. Once the submission
is accepted for filing, the FDA begins an in-depth review of the BLA. By law,
the FDA has 180 days in which to review the BLA and respond to the applicant.
The review process is often significantly extended by the FDA through requests
for additional information and clarification. The FDA may refer the application
to an appropriate advisory committee, typically a panel of clinicians, for
review, evaluation and a recommendation as to whether the application should be
approved. The FDA is not bound by the recommendation, but gives great weight to
it. If the FDA evaluations of both the BLA and the manufacturing facilities are
favorable, the FDA may issue either an approval letter or an approvable letter,
which usually contains a number of conditions that must be satisfied in order to
secure final approval. If the FDA's evaluation of the BLA submission or
manufacturing facility is not favorable, the FDA may refuse to approve the BLA
or issue a not approvable letter.

Other Regulatory Requirements.

      Any products that we manufacture or distribute under FDA approvals are
subject to pervasive and continuing regulation by the FDA, including
record-keeping requirements and reporting of adverse experiences with the
products. Drug manufacturers and their subcontractors are required to register
with the FDA and, where appropriate, state agencies, and are subject to periodic
unannounced inspections by the FDA and state agencies for compliance with cGMP
regulations which impose procedural and documentation requirements upon us and
any third party manufacturers we utilize.

      The FDA closely regulates the marketing and promotion of drugs. A company
can make only those claims relating to safety and efficacy that are approved by
the FDA. Failure to comply with these requirements can result in adverse
publicity, warning letters, corrective advertising and potential civil and
criminal penalties. Physicians may prescribe legally available drugs for uses
that are not described in the product's labeling and that differ from those
tested by us and approved by the FDA. Such off-label uses are common across
medical specialties. Physicians may believe that such off-label uses are the
best treatment for many patients in varied circumstances. The FDA does not
regulate the behavior of physicians in their choice of treatments. The FDA does,
however, restrict manufacturer's communications on the subject of off-label use.

      The FDA's policies may change and additional government regulations may be
enacted which could prevent or delay regulatory approval of our product
candidates or approval of new indications for our existing products. We cannot
predict the likelihood, nature or extent of adverse governmental regulations
that might arise from future legislative or administrative action, either in the
United States or abroad.

 Approvals Outside of the United States.

      We will also be subject to a wide variety of foreign regulations governing
the development, manufacture and marketing of our products. Whether or not FDA
approval has been obtained, approval of a product by the comparable regulatory
authorities of foreign countries must still be obtained prior to manufacturing
or marketing the product in those countries. The approval process varies from
country to country and the time needed to secure approval may be longer or
shorter than that required for FDA approval. We cannot assure you that clinical
trials conducted in one country will be accepted by other countries or that
approval in one country will result in approval in any other country.

Employees

      As of March 15, 2005, we had six employees. We consider our relationship
with our employees to be satisfactory.

Available Information

      We operate one subsidiary, Lev Development Corp. Our principal offices are
at 122 West 42nd Street, Suite 2606, New York, NY 10168.

      We maintain a site on the world wide web at http://www.levpharma.com;
however, information found on our website is not incorporated by reference into
this report. We make available free of charge through our website our Securities
and Exchange Commission, or SEC, filings, including our annual report on Form
10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC.


                                       12
<PAGE>

                                  RISK FACTORS

      You should carefully consider the following risk factors and the other
information included herein as well as the information included in other reports
and filings made with the SEC before investing in our common stock. If any of
the following risks actually occurs, our business, financial condition or
results of operations could be harmed. The trading price of our common stock
could decline due to any of these risks, and you may lose part or all of your
investment.

Risks related to our business

We are at an early stage of development as a company and currently have no
source of revenue and may never become profitable.

      We are a development stage biopharmaceutical company with a limited
operating history. Currently, we have no products approved for commercial sale
and, to date, we have not generated any revenue. Our ability to generate revenue
depends on: first, obtaining FDA marketing approval for any of our products and,
second, successfully commercializing and bringing to market these products. In
particular, if we do not successfully develop and commercialize C1-INH for the
treatment of HAE, we will be unable to generate any revenue for many years, if
at all and, even if successful in obtaining FDA marketing approval for the
C1-INH for the treatment of HAE, it will be at least two years before we can
expect to begin to generate revenue. If we are unable to generate revenue, we
will not become profitable, and we may be unable to continue our operations.

We have incurred significant losses since inception and anticipate that we will
incur continued losses for the foreseeable future.

      As of December 31, 2004, we had an accumulated deficit of $5,112,494. We
have from inception incurred and will continue to incur significant and
increasing operating losses for the next several years as we commence and
continue Phase III clinical trials of C1-INH for the treatment of HAE, and
advance C1-INH for the treatment of AMI into clinical development. In addition,
if we receive regulatory approval of any of our product candidates, we expect to
incur significant sales and marketing expenses in the future. Because of the
numerous risks and uncertainties associated with developing and commercializing
these product candidates, we are unable to predict the extent of future losses
or when and if we will become profitable.

We will need to raise substantial additional capital to fund our operations, and
our failure to obtain funding when needed may force us to delay, reduce or
eliminate our product candidates.

      Our operations have consumed substantial amounts of cash since inception.
We expect to continue to spend substantial amounts to;

      o     complete the clinical development of C1-INH for the treatment of
            HAE;
      o     continue the development of our other product candidates;
      o     finance our general, administrative and license acquisition costs;
      o     prepare regulatory approval applications and seek approvals for
            C1-1NH and our other product candidates;
      o     launch and commercialize our product candidates, if any such product
            candidates receive regulatory approval; and
      o     develop and implement sales, marketing and distribution
            capabilities.

      In 2004, our cash used in operations increased significantly over the
period from July 21, 2003 (inception) to December 31, 2003 and we expect that
our cash used in operations will increase significantly over the next several
years. We expect that our existing cash will be sufficient to fund our
operations for the next twelve months. We will be required to raise additional
capital to complete the development and commercialization of our current product
candidates. Our future funding requirements will depend on many factors,
including, but not limited not to:


                                       13
<PAGE>

      o     the rate of progress and cost of our clinical trials and other
            development activities;
      o     any future decisions we may make about the scope and prioritization
            of the programs we pursue;
      o     the costs and timing of filing, prosecuting, defending and enforcing
            any patent claims and other intellectual property rights;
      o     the costs of regulatory approval;
      o     the costs of establishing sales, marketing and distribution
            capabilities;
      o     the effect of competing technological and market developments;
      o     the terms and timing of any collaborative, licensing and other
            arrangements that we may establish and;
      o     general market conditions for offerings from biopharmaceuticals
            companies.

      To date, our sources of cash have been primarily limited to the sale of
equity securities. We cannot be certain that additional funding will be
available on acceptable terms, or at all. To the extent that we raise additional
funds by issuing equity securities, our stockholders may experience significant
dilution. Any debt financing, if available, may involve restrictive covenants
that impact our ability to conduct our business. If we are unable to raise
additional capital, when required, or on acceptable terms, we may have to
significantly delay, scale back or discontinue the development and /or the
commercialization of one or more of our product candidates. We also may required
to:

      o     seek collaborators for our product candidates at an earlier stage
            than otherwise would be desirable and on terms that are less
            favorable than might otherwise be available; and
      o     relinquish, license or otherwise dispose of rights to technologies,
            products candidates or products that we would otherwise seek to
            develop or commercialize ourselves on unfavorable terms.

If either of our agreements with Sanquin terminate, we may be unable to continue
our business.

      Our business is highly dependent on distribution and license rights that
we have received from Sanquin pursuant to a distribution agreement and a license
agreement.

      If we fail to fulfill certain obligations under the distribution
agreement, the distribution agreement may be terminated. In addition, Sanquin
has the right to terminate the agreement if Sanquin is unable to obtain
liability insurance for its United States obligations. In addition, either party
may terminate the agrement upon an uncured breach . If Sanquin terminates the
distribution agreement, we would have to retain another supplier of C1-INH. If
we are unable to locate another supplier of C1-INH comparable to Sanquin on
economically acceptable terms, or at all, we will not be able to commercialize
our product candidates and we may be forced to cease our operations.

      Under the license agreement, Sanquin granted us an exclusive license to
use certain patents and know-how related to the use of C1-INH technology for the
treatment of AMI. Under the terms of the license agreement, we are obligated to
make royalty and other payments to Sanquin. If we fail to fulfill those
obligations or other material obligations, the license agreement may be
terminated by Sanquin. If Sanquin terminates the license agreement, we will have
no further rights to utilize the intellectual property covered by the license
agreement, we would not be able to commercialize the applicable product
candidate and we may be forced to cease our operations, particularly if we do
not have rights to other product candidates.

Clinical trials involve a lengthy and expensive process with an uncertain
outcome, and results of earlier studies and trials may not be predictive of
future trial results.

      In order to receive regulatory approval for the commercialization of our
product candidates, we must conduct, at our own expense, extensive clinical
trials to demonstrate safety and efficacy of these product candidates. Clinical
testing is expensive, can take many years to complete and its outcome is
uncertain. Failure can occur at any time during the clinical trial process.

      The results of preclinical studies and early clinical trials of our
product candidates do not necessarily predict the results of later-stage
clinical trials. Product candidates in later stages of clinical trials may fail
to show the desired safety and efficacy traits despite having progressed through
initial clinical testing. The data collected from clinical trials of our product
candidates may not be sufficient to support the submission of a biologics
license application or to obtain regulatory approval in the United States or
elsewhere. Because of the uncertainties associated with drug development and
regulatory approval, we cannot determine if or when we will have an approved
product for commercialization or achieve sales or profits.


                                       14
<PAGE>

We are dependent on Sanquin as our sole source of supply for C1-1NH.

      Pursuant to our distribution agreement with Sanquin, Sanquin will supply
us with certain minimum and maximum amounts of C1-INH. In the event demand for
C-1NH is greater then the amount supplied by Sanquin, we would have to find
alternative suppliers of C1-1NH. If we are unable to locate another supplier of
C1-1NH comparable to Sanquin on economical terms, or at all, we may lose
business and our reputation in the marketplace could be adversely affected.

Delays in clinical testing could result in increased cost to us and delay our
ability to generate revenue.

      We may experience delays in clinical testing of our product candidates. We
do not know whether planned clinical trails will need to be redesigned or will
be completed on schedule, if at all. Clinical trials can be delayed for a
variety of reasons, including delays in obtaining regulatory approval to
commence a trial, in reaching agreement on acceptable clinical trial terms with
prospective sites, in obtaining institution review board approval to conduct a
trial at a prospective site, in recruiting patients to participate in a trial or
in obtaining sufficient supplies of clinical trial materials. Many factors
affect patient enrollments, including the size of the patient population, the
proximity of patients to clinical sites, the eligibility criteria for the trial,
competing clinical trials and new drugs approved for the conditions we are
investigating. Prescribing physicians will also have to decide to use our
product candidates over existing drugs that have established safety and efficacy
profiles. Any delays in completing our clinical trials will increase our cost,
slow down our product development and approval process and delay our ability to
generate revenue.

We may be required to suspend or discontinue clinical trials due to unexpected
side effects or other safety risks that could preclude approval of our product
candidates.

      Our clinical trials may be suspended at any time for a number of reasons.
For example, we may voluntarily suspend or terminate our clinical trials if at
any time we believe that they present an unacceptable risk to the clinical trial
patients. In addition, regulatory agencies may order the temporary or permanent
discontinuation of our clinical trials at any time if they believe that the
clinical trials are not being conducted in accordance with requirements or that
they present an unacceptable safety risk to the clinical trial patients.

      Administering any product candidates to humans may produce undesirable
side effects. These side effects could interrupt, delay or halt clinical trials
of our product candidates and could result in the FDA or other regulatory
authorities denying further developments or approval of our product candidates
for any of all targeted indications. Ultimately, some or all of our product
candidates may prove to be unsafe for human use. Moreover, we could be subject
to significantly liability if any volunteer or patient suffers, or appears to
suffer, adverse health effects as a result of participating in our clinical
trials.

If we are unable to satisfy regulatory requirements, we may not be able to
commercialize our product candidates.

      We need FDA approval prior to marketing our product candidates in the
United States. If we fail to obtain FDA approval to market our product
candidates, we will be unable to sell our products in the United States and we
will not generate any revenue.

      The FDA regulatory review and approval process, which includes evaluation
of preclinical studies and clinical trials of a product candidate as well as the
evaluation of our manufacturing process and our contract manufacturers'
facility, is lengthy, expensive and uncertain. To receive approval, we must,
among other things, demonstrate with substantial evidence from well-controlled
clinical trials that the product is both safe and effective for each indication
where approval is sought. Satisfaction of these requirements typically takes
several years and the time needed to satisfy them may vary substantially, based
on the type, complexity and novelty of the pharmaceutical product. We cannot
predict if or when we might submit for regulatory review any of our product
candidates currently under development. Any approvals we may obtain may not
cover all of the clinical indications for which we are seeking approval. Also,
an approval might contain significant limitations in the form of narrow
indications, warnings, precautions, or contra-indications with respect to
conditions of use.


                                       15
<PAGE>

      The FDA has substantial discretion in the approval process and may either
refuse to file our application for substantive review or may form the opinion
after review of our data that our application is insufficient to allow approval
of our product candidates. If the FDA does not file or approve our application,
it may require that we conduct additional clinical, preclinical or manufacturing
validation studies and submit that data before it will reconsider our
application. Depending on the extent of these or any other studies, approval of
any applications that we submit may be delayed by several years or may require
us to expand more resources then we have available. It is also possible that
additional studies, if performed and completed, may not be considered sufficient
by the FDA to make our application approvable. If any of these outcomes occur,
we may be forced to abandon our applications for approvals, which might cause us
to cease operations.

      We will also be subject to a wide variety of foreign regulations governing
the development, manufacture and marketing of our products. Whether or not FDA
approval has been obtained, approval of a product by the comparable regulatory
authorities of foreign countries must still be obtained prior to manufacturing
or marketing the product in those countries. The approval process varies from
country to country and the time needed to secure approval may be longer or
shorter that that required for FDA approval. We cannot assure you that clinical
trials conducted in one country will be accepted by other countries or that
approval in approval in one country will result in approval in any other
country.

The commercial success of our product candidates will depend upon the degree of
market acceptance of these products among physicians, patients, health care
payors and the medical community.

         Our product candidates have never been commercialized for any
indication. Even if approved for sale by the appropriate regulatory authorities,
physicians may not prescribe our product candidates, in which case we could not
generate revenue or become profitable. Market acceptance of C1-INH for the
treatment of HAE and our other product candidates by physicians, healthcare
payors and patients will depend on a number of factors, including:

      o     acceptance by physicians and patients of each such product as a safe
            and effective treatment;
      o     cost effectiveness;
      o     adequate reimbursement by third parties;
      o     potential advantages over alternative treatments;
      o     relative convenience and ease of administration; and
      o     prevalence and severity of side effects.

If our product candidates are unable to compete effectively with marketed
treatments, our commercial opportunity will be reduced or eliminated.

      We face competition from established pharmaceutical and biotechnology
companies, as well as from academic institutions, government agencies and
private and public research institutions. Many products are currently marketed
for the treatment of HAE and AMI, and a number of companies are developing new
treatments. Many of our competitors have significantly greater financial
resources and expertise in research and development, manufacturing, preclinical
testing, conducting clinical trials, obtaining regulatory approvals and
marketing approved products than we do. Smaller or early-stage companies may
also prove to be significant competitors, particularly through collaborative
arrangements with large, established companies. Our commercial opportunity will
be reduced or eliminated if our competitors develop and commercialize competing
products that are safer, more effective, have fewer side effects or are less
expensive than our product candidates. These third parties compete with us in
recruiting and retaining qualified scientific and management personnel,
establishing clinical trial sites and patient registration for clinical trials,
as well as in acquiring technologies and technology licenses complementary to
our programs or advantageous to our business.

      Because we will most often be competing against significantly larger
companies with established track records, we will have to demonstrate to
physicians that based on experience, clinical data, side-effect profiles and
other factors, our products are preferable to existing products. If we are
unable to compete effectively and differentiate our products from currently
marketed products, we may never generate meaningful revenue.

We currently have no sales and marketing organization. If we are unable to
establish a direct sales force in the United States to promote our products, the
commercial opportunity for our products may be diminished.

      We currently have no sales and marketing organization. If any of our
product candidates are approved by the FDA, we intend to market these products
directly to health care providers in the United States through our own sales
force. We will incur significant additional expenses and commit significant
additional management resources to establish this sales force. In the event we
are unable to develop our own sales force or collaborate with a third party to
sell our product candidates, we may not be able to commercialize our product
candidates which would negatively impact our ability to generate revenue.


                                       16
<PAGE>

If the FDA does not approve our contract manufacturers' facilities, we may be
unable to develop or commercialize our product candidates.

      We rely on Sanquin to manufacture our product candidates, and currently
have no plans to develop our own manufacturing facility. The facilities used by
Sanquin to manufacture our product candidates will require approval by the FDA.
There can be no assurance that Sanquin will be able to obtain or maintain
compliance with the FDA's compliance requirements. We may need to find
alternative manufacturing facilities, which would result in significant costs to
us as well as a delay of up to several years in obtaining approval for and
manufacturing of our product candidates.

We rely on third parties to conduct our clinical trials. If these third parties
do not successfully carry out their contractual duties or meet expected
deadlines, we may not be able to seek or obtain regulatory approval for or
commercialize our product candidates.

      We have agreements with third party clinical research organizations, or
CROs to provide monitors and to manage data for our clinical programs. We and
our CROs are required to comply with current Good Clinical Practices, or GCPs,
regulations and guidelines enforced by the FDA for all of our products in
clinical development. The FDA enforces GCPs through periodic inspections of
trial sponsors, principal investigators and trial sites. In the future, if we or
our CROs fail to comply with applicable GCPs, the clinical data generated in our
clinical trial may be deemed unreliable and the FDA may require us to perform
additional clinical trials before approving our marketing applications. We
cannot assure you that, upon inspection, the FDA will determine that any of our
clinical trials for products in clinical development comply with GCPs. In
addition, our clinical trials must be conducted with products produced under
cGMP regulations, and will require a large number of test subjects. Our failure
to comply with these regulations may require us to repeat clinical trials, which
would delay the regulatory approval process.

      If any of our relationships with these third-party CROs terminate, we may
not be able to enter into arrangements with alternative CROs. If CROs do not
successfully carry out their contractual duties or obligations or meet expected
deadlines, if they need to be replaced, or if the quality or accuracy of the
clinical data they obtain is compromised due to the failure to adhere to our
clinical protocols, regulatory requirements or for other reasons, our clinical
trials may be extended, delayed or terminated, and we may not be able to obtain
regulatory approval for or successfully commercialize our product candidates. As
a result, our financial results and the commercial prospects for our product
candidates would be harmed, our costs could increase, and our ability to
generate revenue could be delayed.

If product liability lawsuits are successfully brought against us, we may incur
substantial liabilities and may be required to limit commercialization of our
product candidates.

      We face an inherent risk of product liability lawsuits related to the
testing of our product candidates, and will face an even greater risk if we sell
our product candidates commercially. Currently, we are not aware of any
anticipated product liability claims with respect to our product candidates. In
the future, an individual may bring a liability claim against us if one of our
product candidates causes, or merely appears to have caused, an injury. If we
cannot successfully defend ourself against the product liability claim, we may
incur substantial liabilities. We have clinical trial liability insurance that
covers our clinical trials with an annual aggregate limit of $5,000,000. We
intend to expand our insurance coverage to include the sale of commercial
products if marketing approval is obtained for our product candidates. We
believe that we will be able to procure sufficient insurance coverage for our
proposed clinical development activities. However, as enrollment in our clinical
trials increases and we initiate additional clinical trials, such insurance
coverage may prove insufficient to cover any liability claims brought against
us. In addition, because of the increasing costs of insurance coverage, we may
not be able to maintain insurance coverage at a reasonable cost or obtain
insurance coverage that will be adequate to satisfy any liability that may
arise.

Even if we receive regulatory approval for our product candidates, we will be
subject to ongoing significant regulatory obligations and oversight.

      If we receive regulatory approval to sell our product candidates, the FDA
and foreign regulatory authorities may, nevertheless, impose significant
restrictions on the indicated uses or marketing of such products, or impose
ongoing requirements for post-approval studies. If we fail to comply with
applicable regulatory requirements, we may be subject to fines, suspension or
withdrawal of regulatory approvals, product recalls, seizure of products,
operating restrictions and criminal prosecution. Any of these events could harm
or prevent sales of the affected products or could substantially increase the
costs and expenses of commercializing and marketing these products.


                                       17
<PAGE>

If we fail to attract and keep senior management and key scientific personnel,
we may be unable to successfully develop our product candidates, conduct our
clinical trials and commercialize our product candidates.

      Our success depends in part on our continued ability to attract, retain
and motivate highly qualified management, clinical and scientific personnel and
on our ability to develop and maintain important relationships with leading
academic institutions, clinicians and scientists. We are highly dependent upon
our senior management and scientific staff, particularly Judson Cooper, our
Chairman and Executive Vice President, Joshua D. Schein, Ph.D., our Chief
Executive Officer and Yanina Wachtfogel, our Chief Scientific Officer. The loss
of services of Mr. Cooper, Dr. Schein, Ms. Wachtfogel or one or more other
members of senior management could delay or prevent the successful completion of
our planned clinical trials or the commercialization of our product candidates.

We will need to increase the size of our organization, and we may experience
difficulties in managing growth.

      We are a small company with six employees as of March 15, 2005. To
continue our clinical trials and commercialize our product candidates, we will
need to expand our employee base for managerial, operational, financial and
other resources. Future growth will impose significant added responsibilities on
members of management, including the need to identify, recruit, maintain and
integrate additional employees. Our future financial performance and our ability
to commercialize our product candidates and to compete effectively will depend,
in part, on our ability to manage any future growth effectively.

Reimbursement may not be available for our product candidates, including due to
legislative or regulatory reform of the healthcare system, which could diminish
our sales or affect our ability to sell our products profitably.

      As a result of legislative proposals and the trend towards managed health
care in the United States, third-party payers are increasingly attempting to
contain health care costs by limiting both coverage and the level of
reimbursement of new drugs. Market acceptance and sales of our product
candidates will depend on reimbursement policies and health care reform
measures. The levels at which government authorities and third-party payers,
such as private health insurers and health maintenance organizations, reimburse
patients for the price they pay for our products will affect whether we are able
to commercialize these products. We cannot be sure that reimbursement will be
available for any of these products. Also, we cannot be sure that reimbursement
amounts will not reduce the demand for, or the price of, our products. We have
not commenced efforts to have our product candidates reimbursed by government or
third party payers. If reimbursement is not available or is available only to
limited levels, we may not be able to commercialize our products.

Rapid technological change could make our product candidates obsolete.

      Biopharmaceutical technologies have undergone rapid and significant change
and we expect that they will continue to do so. Any compounds, products or
processes that we develop may become obsolete or uneconomical before we recover
any expenses incurred in connection with their development. Rapid technological
change could make our products obsolete or uneconomical.

Risks related to our intellectual property

It is difficult and costly to protect our proprietary rights, and we may not be
able to ensure their protection.

      Our commercial success will depend in part on obtaining and maintaining
patent protection and trade secret protection of our product candidates and the
methods used to manufacture them, as will as successful defending these patents
against third party challenges. We will only be able to protect our product
candidates from unauthorized making, using, selling, offering to sell or
importation by third parties to the extent that we have rights under valid and
enforceable patents or trade secrets that cover these activities.

      The patent position of pharmaceutical and biotechnology companies can be
highly uncertain and involve complex legal and factual questions for which
important legal principles remain unresolved. No consistent policy regarding the
breadth of claims allowed in biotechnology patents has emerged to date in the
United States. The biotechnology patent situation outside the United States is
even more uncertain. Changes in either the patent laws or interpretations of
patent laws in the United States and other countries may diminish the value of
our intellectual property. Accordingly, we cannot predict the breadth of claims
that may be allowed or enforced in our licensed patents or in third-party
patents.


                                       18
<PAGE>

      The degree of future protection for our proprietary rights is uncertain
because legal means afford only limited protection and may not adequately
protect our rights or permit us to gain or keep our competitive advantage. For
example;

      o     others may be able to make compounds that are competitive with our
            product candidates but that are not covered by the claims of our
            licensed patents, or for which we are not licensed under our license
            agreements;
      o     we or our licensor might not have been the first to make the
            invention covered by our pending patent applications or the pending
            patent applications and issued patents of our licensors;
      o     we or our licensor might not have been the first to file patent
            application for these inventions;
      o     others may independently develop similar or alternative technologies
            or duplicate any of our technologies;
      o     it is possible that our pending patent applications or one or more
            of the pending patent applications of our licensor will not result
            in issued patents;
      o     the issued patents of our licensor may not provide us with any
            competitive advantage, or may be held invalid or unenforceable as a
            result of legal challenges by third parties;
      o     we may not develop additional proprietary technologies that are
            patentable; or
      o     the patents of others may have an adverse effect on our business

      We also may rely on trade secrets to protect our technology, especially
where we do not believe patent protection is appropriate or obtainable. However,
trade secrets are difficult to protect. While we use reasonable efforts to
protect our trade secrets, our employees, consultants, contractors, outside
scientific collaborators and other advisors may unintentionally or willfully
disclose our information to competitors. Enforcing a claim that a third party
illegally obtained and is using our trade secrets is expensive and time
consuming and the outcome is unpredictable. In additions, courts outside the
United States are sometimes less willing to protect trade secrets. Moreover, our
competitors may independently develop equivalent knowledge, methods, and
know-how.

We may incur substantial costs as a result of litigation or other proceedings
relating to patent and other intellectual property rights and we may be unable
to protect our rights, or use, our technology.

      If we choose to go to court to stop someone else from using the inventions
claimed in our licensed patents, that individual or company has the right to ask
the court to rule that these patents are invalid and/or should not be enforced
against that third party. These lawsuits are expense and would consume time and
other resources even if we were successful in stopping the infringement of these
patents. In addition, there is a risk that the court will decide that these
patents are not valid and that we do not have the right to stop the other party
from using the inventions. There is also the risk that even if the validity of
these patents is upheld, the court will refuse to stop the other party on the
ground that such other party's activities do not infringe our rights to these
patents.

      Furthermore, a third party may claim that we are using inventions covered
by the third party's patent rights and may go to court to stop us from engaging
in our normal operations and activities, including making or selling our product
candidates. These lawsuits are costly and could affect our results of operations
and divert the attention of managerial and technical personnel. There is a risk
that a court would decide that we are infringing the third party's patents and
would order us to stop the activities covered by the patents. In addition, there
is a risk that a court will order us to pay the other party damages for having
violated the other party's patents. The biotechnology industry has produced a
proliferation of patents, and it is not always clear to industry participants,
including us, which patents cover various types of products or methods of use.
The coverage of patents is subject to interpretation by the courts, and the
interpretation is not always uniform. If we are sued for patent infringement, we
would need to demonstrate that our products or methods of use either does not
infringe the patent claims of the relevant patent and/or that the patent claims
are invalid, and we may not be able to do this. Proving invalidity, in
particular, is difficult since it requires a showing of clear and convincing
evidence to overcome the presumption of validity enjoyed by issued patents.


                                       19
<PAGE>

      Because some patent applications in the United States of America may be
maintained in secrecy until the patents are issued, because patent applications
in the United Sates of America and many foreign jurisdictions are typically not
published until eighteen months after filing and because publications in the
scientific literature often lag behind actual discoveries, we cannot be certain
that others have not filed patent applications for technology covered by our
licensors' issued patents or our pending applications or our licensors' pending
applications or that we or our licensors were the first to invent the
technology. Our competitors may have filed, and may in the future, patent
applications covering technology similar to ours. Any such patent application
may have priority cover by our licensors' patent applications and could further
require us to obtain to rights to issued patents covering such technologies. If
another party has filed a United States patent application on inventions similar
to ours, we may have to participate in an interference proceeding declared by
the United States Patent and Trademark Office to determine priority of
inventions in the United States. The cost of these proceedings could be
substantial, and it is possible that such efforts would be unsuccessful,
resulting in a loss of our United States patent position with respect to such
inventions.

      Some of our competitors may be able to sustain the costs of complex patent
litigation more effectively than we can because they have substantially greater
resources. In addition, any uncertainties resulting from the initiation and
continuation of any litigation could have a material adverse effect on our
ability to raise the funds necessary to continue our operations.

Risks related to our common stock and its market value

Market volatility may affect our stock and the value of your investment.

      The market prices for securities of biopharmaceutical companies in general
have been highly volatile and may continue to be highly volatile in the future.
The following factors in addition to other risk factors described in this
section, may have a significant impact on the market price of our common stock.

      o     announcements of technological innovations or new products by us or
            our competitors;
      o     announcements of FDA approval or non-approval of our product
            candidate or delays in the FDA review process;
      o     actions taken by regulatory agencies with respect to our product
            candidates, clinical trials, manufacturing process or sales and
            marketing activities;
      o     regulatory developments in the United States of America and foreign
            countries;
      o     the success of our development efforts to acquire or in-license
            additional products or product candidates;
      o     any intellectual property infringement action, or any other
            litigation, involving us;
      o     announcements concerning our competitors, or the biotechnology or
            biopharmaceutical industries in general;
      o     actual or anticipated fluctuations in our operating results;
      o     changes in financial estimates or recommendations by securities
            analysts;
      o     sales of large blocks of our common stock;
      o     sale of our common stock by our executive officers, directors and
            significant stockholders; and
      o     the loss of any of our key scientific or management personnel.

      The occurrence of one or more of these factors may cause our stock price
to decline, and you may not be able to resell your shares at or above the price
you paid for your shares. In addition, the stock market in general, and the
markets for biotechnology and biopharmaceutical stocks in particular, have
experienced extreme volatility that has often been unrelated to the operating
performance of particular companies. These broad market conditions may adversely
affect the trading price of our common stock.

We are at risk of securities class action litigation.

      In the past, securities class action litigation has often been brought
against a company following a decline in the market price of its securities.
This risk is especially relevant for us because biotechnology and
biopharmaceutical stocks have experienced significant stock price volatility in
recent years. If we faced such litigation, it could result in substantial costs
and a diversion of management's attention and resources, which could harm our
business.

The ownership interests of our officers, directors and largest stockholders
could conflict with the interests of our other stockholders.

      As of March 15, 2005, our officers, directors and holders of 5% or more of
our outstanding common stock beneficially own approximately 46.2% of our common
stock. As a result, these stockholders, acting together, will be able to
significantly influence all matters requiring approval by our stockholders,
including the election of directors and the approval of mergers or other
business combination transactions. The interests of this group of stockholders
may not always coincide with our interests or the interests of other
stockholders.


                                       20
<PAGE>

Our common stock may be deemed penny stock with a limited trading market.

      Our common stock is currently listed for trading on the OTC Bulletin Board
which is generally considered to be a less efficient market than markets such as
NASDAQ or other national exchanges, and which may cause difficulty in obtaining
future financing. Further, our securities are subject to the "penny stock rules"
adopted pursuant to Section 15 (g) of the Securities Exchange Act of the 1934,
as amended, or Exchange Act. The penny stock rules apply to Non-NASDAQ companies
whose common stock trades at less than $5.00 per share or which have a tangible
net worth less then $5,000,000 ($2,000,000 if the company has been operating for
three or more years). Such rules require, among other things, that brokers who
trade "penny stock" to persons other then "established customers" complete
certain documentation, make suitable inquiries of investors and provide
investors with certain information concerning trading in the security, including
a risk, disclosure document and quote information under certain circumstances.
Many brokers have decided not to trade "penny stock" because of the requirements
of the penny stock rules and, as a result, the number of broker-dealers willing
to act as market makers in such securities is limited. In the event that we
remain subject to the "penny stock rules" for any significant period, there may
develop an adverse impact on the market, if any, for our securities. Because our
securities are subject to the "penny stock rules", investors will find it more
difficult to dispose of our securities. Further, for companies whose securities
are traded on the OTC Bulletin Board, it is more difficult: (1) to obtain
accurate quotations, (ii) obtain coverage for significant new events because
major wire services, such as the Dow Jones New Service, generally do not publish
press releases about such companies, and (iii) to obtain need capital.

A sale of a substantial number of shares of our common stock may cause the price
of our common stock to decline.

      If our stockholders sell substantial amounts of our common stock in the
public market, including shares issued upon the exercise of outstanding options
or warrants, the market price of our common stock could fall. These sales also
may make it more difficult for us to sell equity or equity-related securities in
the future at a time and price that we deem reasonable or appropriate.
Stockholders who have been issued shares in Merger 1 will be able to sell their
shares pursuant to Rule 144 under the Securities Act of 1933, beginning one year
after the stockholders acquired their shares.

ITEM 2. DESCRIPTION OF PROPERTY

      Our principal executive office is located at: 122 East 42nd Street, Suite
2606, New York, New York, and consists of approximately 1,000 square feet of
space. Our sublease will expire on August 31, 2006. The annual payment amounts
due under the sublease are approximately $68,000 for 2005 and $46,000 for 2006.
We believe that our office space will be adequate for our needs for at least the
next few years, and we expect that additional facilities will be available
in other jurisdictions to the extent that we require new or additional space.

ITEM 3. LEGAL PROCEEDINGS

      We are not currently a party to, nor are any of our property currently the
subject of, any pending legal proceeding. None of our directors, officers, or
affiliates is involved in a proceeding adverse to our business or has a material
interest adverse to our business.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.

      There was no matter submitted to our security holders during the fourth
quarter of the fiscal year ended December 31, 2004.


                                       21
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

      Our common stock has traded on the OTC Bulletin Board under the symbol
"LEVP.OB" since February 18, 2005. From April 10, 2002 to February 17, 2005 our
common stock had been quoted on the OTC Bulletin Board under our prior name "Fun
City Popcorn, Inc." under the symbol "FNCY."

      As of March 24, 2005, there were 630 holders of record. This does not
reflect those shares held beneficially or those shares held in "street" name.

      The table below sets forth the high and low closing prices per share of
the common stock for each full quarterly period in the last two fiscal years and
the year to date as reported on the OTC Bulletin Board. With respect to OTC
Bulletin Board quotes, these prices reflect inter-dealer prices, without retail
mark-up, markdown or commissions and may not represent actual transactions.

      On March 15, 2005, the last sale price for the common stock on the OTC
Bulletin Board was $1.20.

---------------------------------------------------
Quarter Ended               High          Low
----------------------- ------------- -------------

December 31, 2004           $1.05         $0.22
----------------------- ------------- -------------
September 30, 2004          $0.22         $0.15
----------------------- ------------- -------------
June 30, 2004               $0.45         $0.15
----------------------- ------------- -------------
March 31, 2004              $0.15         $0.04
----------------------- ------------- -------------
December 31, 2003           $0.04         $0.03
----------------------- ------------- -------------
September 30, 2003          $0.03         $0.03
----------------------- ------------- -------------
June 30, 2003               $0.03         $0.03
----------------------- ------------- -------------
March 31, 2003              $0.03         $0.03
----------------------- ------------- -------------

Dividend Policy

      It is our present policy not to pay cash dividends and to retain future
earnings to support our growth. We do not anticipate paying any cash dividends
in the foreseeable future.

Recent Issuances of Unregistered Securities.

      On November 5, 2004, FCP, Lev Sub and Old Lev entered into the Agreement.
On December 29, 2004, Merger 1 closed and pursuant to the Agreement, Lev Sub
merged into Old Lev and the combined entity became a wholly-owned subsidiary of
FCP.

      As a result of Merger 1, FCP issued 5,029,794 shares of common stock and
4,789,433 shares of Series A Preferred Stock to holders of outstanding Old Lev
common stock. On December 29, 2004, the Board of Directors and stockholders of
FCP approved Merger 2 by which FCP merged into a newly formed, wholly-owned
subsidiary of FCP. On February 17, 2005, Merger 2 closed and the issued and
outstanding Series A Preferred Stock of FCP was automatically converted into an
aggregate of 66,767,995 shares of common stock, which along with the 4,505,530
shares of FCP common stock outstanding prior to Merger 1 and the 5,029,794
shares of common stock issued to the Old Lev stockholders in Merger 1 resulted
in a total of 76,303,319 shares of common stock outstanding as of February 17,
2005


                                       22
<PAGE>

      On October 2, 2004, Gary J. McAdam, Gary A. Agron and Mathis Family
Partners, Ltd., each a former principal stockholder, agreed to provide FCP a
line of credit up to an aggregate $100,000. Any borrowings were to bear interest
at balance at 6% per annum, any outstanding amounts were due on demand and the
obligation of the lenders to loan any funds terminated upon the Merger. There
were no borrowings under the line of credit. In consideration of providing the
line of credit, FCP issued to each of Gary J. McAdam, Gary A. Agron and Mathis
Family Partners, Ltd. 871,317 shares of FCP's common stock or an aggregate of
2,613,951 shares.

      Between February and March 2004, we received proceeds in a private
placement of approximately $7,968,000, net of issuance costs of approximately
$51,000, from the sale of 3,425,879 shares of common stock at $0.26 per share
and from the sale of 23,913,848 shares of common stock at $0.30 per share. In
connection with the offer and sale of securities, we relied on the exemption
from registration provided by Section 4(2) of the Securities Act of 1933, as
amended and Rule 506 promulgated thereunder.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

      The following discussion should be read in conjunction with our financial
statements and other financial information appearing elsewhere in this Annual
Report. In addition to historical information, the following discussion and
other parts of this Annual Report contain forward-looking information that
involves risks and uncertainties.

Overview

      We are a development stage biopharmaceutical company that was formed in
July 2003 to focus on developing and commercializing therapeutic products for
the treatment of inflammatory diseases. Our product candidates are based on
C1-INH, a human plasma protein that mediates inflammation and is potentially
applicable as a treatment for a range of medical indications. We initiated a
Phase III clinical trial of our lead product candidate, C1-INH for the treatment
of HAE in March 2005. We are also developing C1-INH for the treatment of AMI and
selective other diseases and disorders in which inflammation is known or
believed to play an underlying role. We have certain rights to C1-INH technology
through agreements with Sanquin, an Amsterdam-based not-for-profit organization
that provides blood and plasma products and related services, carries out
research and provides education, primarily in the Netherlands.

      From July 21, 2003 (inception) through December 31, 2004 we have not
generated any revenue from operations. We expect to incur additional losses to
perform further research and development activities. We do not currently have
any commercial biopharmaceutical products, and do not expect to have such for a
number of years, if at all

Recent Developments

      On November 5, 2004, FCP, Lev Sub and Old Lev entered into the Agreement.
On December 29, 2004, Merger 1 closed and pursuant to the Agreement, Lev Sub
merged into Old Lev and the combined entity became a wholly-owned subsidiary of
FCP.

      As a result of Merger 1, FCP issued 5,029,794 shares of common stock and
4,789,433 shares of Series A Preferred Stock to holders of outstanding Old Lev
common stock. On December 29, 2004, the Board of Directors and stockholders of
FCP approved Merger 2 by which FCP merged into a newly formed, wholly-owned
subsidiary of FCP. On February 17, 2005, Merger 2 closed and the issued and
outstanding Series A Preferred Stock of FCP was automatically converted into an
aggregate of 66,767,995 shares of common stock, which along with the 4,505,530
shares of FCP common stock outstanding prior to Merger 1 and the 5,029,794
shares of common stock issued to the Old Lev stockholders in Merger 1 resulted
in a total of 76,303,319 shares of common stock outstanding as of February 17,
2005. As part of Merger 2, Old Lev changed its name to Lev Development Corp. and
FCP changed its name to Lev Pharmaceuticals, Inc. Merger 1 which, resulted in
the stockholders of Lev obtaining control of FCP, represents a recapitalization
of FCP, or a "reverse merger" rather than a business combination. In connection
therewith, Old Lev's historic capital accounts were retroactively adjusted to
reflect the equivalent number of shares issued by FCP while Old Lev's historical
accumulated deficit was carried forward.


                                       23
<PAGE>

Plan of Operations

      Our plan of operations for the next twelve months is to focus primarily on
our Phase III clinical trial of our lead product candidate, C1-INH for the
treatment of HAE. In addition, we are currently developing C1-INH for the
treatment of AMI.

Hereditary Angioedema

      We entered into a distribution and manufacturing services agreement with
Sanquin, a not-for-profit organization in the Netherlands that provides blood
supplies and promotes transfusion medicine in January 2004. Sanquin currently
manufactures and markets a highly purified preparation of C1-INH in Europe and
pursuant to the agreement, Sanquin agreed to provide us with C1-INH for use in
our clinical trials and for commercial distribution upon regulatory licensure.
Pursuant to the agreement, we have distribution rights in all countries in
North, Central and South America, with the exception of the Dutch Overseas
Territories, Argentina and Brazil.

      Under this agreement, we agreed to take primary responsibility for
conducting the Phase III clinical trials of C1-INH for the treatment of HAE, and
preparation and filing of all regulatory applications necessary to register the
product candidate. In exchange, Sanquin agreed to provide us with the technical
data and support necessary to assist us in preparing and filing all such
regulatory applications.

      Furthermore, Sanquin agreed to supply C1-INH for our Phase III clinical
trials. Upon receipt of FDA approval for our product candidate for the treatment
of HAE, upon commercial launch of this product and thereafter during the term of
the agreement, Sanquin will supply us with its commercial requirements for
C1-INH for the treatment of HAE in each country where we have received
regulatory approval. Our purchase of C1-INH from Sanquin is subject to minimum
annual purchase requirements.

      We initiated a Phase III clinical trial of C1-INH for the treatment of HAE
in March 2005. In July 2004, we received orphan drug designation from the FDA
for C1-INH (human), which, upon product licensure, could provide us with a
seven-year exclusive right to market its C1-INH product as a treatment for HAE
in the United States.

Acute Myocardial Infarction

      We entered into a license agreement with Sanquin on January 27, 2004.
Under this agreement, we have an exclusive, worldwide, royalty-bearing license,
with the right to sublicense, to the use of C1-INH for the treatment of AMI. In
connection with the license agreement, we paid Sanquin certain fees and
reimbursed Sanquin for certain expenses. In addition, we have an obligation to
pay Sanquin royalties on sales of products incorporating the licensed
technology.

      Our second development program is focused on the use of C1-INH in treating
acute myocardial infarction (AMI), commonly known as a heart attack. Current
treatments for AMI, both surgical and pharmaceutical, are directed at restoring
blood flow to heart tissue or preventing further obstruction. Despite a
widespread appreciation for the role of inflammation in AMI in both the
scientific and medical communities, no presently available treatments directly
target the mechanisms of inflammation. Based on preliminary animal and clinical
data, we believe that C1-INH may be useful as a treatment for AMI.

Off-balance Sheet Arrangements

We had no off-balance sheet arrangements as of December 31, 2004.

Critical Accounting Policies

      Financial Reporting Release No. 60 requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Our accounting policies are described in Note B of the
notes to our financial statements included in this Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2004. The methods, estimates and
judgments we use in applying our most critical accounting policies have a
significant impact on the results we report in our financial statements. We
evaluate our estimates and judgments on an ongoing basis. We base our estimates
on historical experience and on assumptions that we believe to be reasonable
under the circumstances. Our experience and assumptions form the basis for our
judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may vary from what we
anticipate, and different assumptions or estimates about the future could
materially change our reported results. We believe the following accounting
policies are the most critical to us, in that they are important to the
portrayal of our financial statements and they require our most difficult,
subjective or complex judgments in the preparation of our financial statements.


                                       24
<PAGE>

Research and development costs:

      We expense all research and development costs as incurred for which there
is no alternative future use. Such expenses include licensing fees and costs
associated with planning and conducting clinical trials.

Income taxes:

      We account for income taxes in accordance with the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
No. 109"). SFAS No. 109 requires that we recognize deferred tax liabilities and
assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred
tax liabilities and assets are determined on the basis of the difference between
the tax basis of assets and liabilities and their respective financial reporting
amounts ("temporary differences") at enacted tax rates in effect for the years
in which the temporary differences are expected to reverse. We record an
estimated valuation allowance on our deferred income tax assets if it is not
more than likely that these deferred income tax assets will be realized.

Equity-based compensation:

      We account for stock-based compensation to employees in accordance with
APB Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25")
and related interpretations. Under APB No. 25, generally, no compensation
expense is recognized in the financial statements in connection with the
awarding of stock option grants to employees provided that, as of the grant
date, all terms associated with the award are fixed and the fair value of our
stock is equal to or less than the amount an employee must pay to acquire the
stock. We will recognize compensation expense in situations where the terms of
an option grant are not fixed or where the fair value of our common stock on the
grant date is greater than the amount an employee must pay to acquire the stock.

      The fair value of warrants granted to non-employees for financing or
services are included in the financial statements and expensed over the life of
the debt or the services performed, respectively. Warrants issued in connection
with services or financings were valued at the grant date using the
Black-Scholes option-pricing model.

Results of Operations

Year Ended December 31, 2004 as compared to the period from July 21, 2003
(inception) to December 31, 2003

      We had no revenues during the year ended December 31, 2004 and the period
from July 21, 2003 (inception) to December 31, 2003 because we do not have any
commercial biopharmaceutical products.

      Research and development expenses for the year ended December 31, 2004
were $1,126,933 as compared to $7,000 for the period from July 21, 2003
(inception) to December 31, 2003. The increase of $1,119,933 represents
contractual expenses relating to our license and service agreements in addition
to our consultants and salary expenses. Included in research and development
expense for the year ended December 31, 2004 was compensation expense of
$19,968, that was recorded at fair value and was for a warrant issued to a
consultant who assisted us with development programs and clinical trial design.
Our research and development activities increased upon the signing of the
distribution and manufacturing services agreement with Sanquin in January 2004.

      Payments to certain FCP shareholders representing merger costs of $283,738
was recorded for the year ended December 31, 2004 in connection with the
acquisition of such company.

      General, administrative and license acquisition costs were $3,262,461 for
the year ended December 31, 2004 as compared to $113,171 for the period from
July 21, 2003 (inception) to December 31, 2003. The increase of $3,149,290 was
due to increased salaries, professional and general administrative costs.
Operations increased upon the signing of the distribution and manufacturing
services agreement with Sanquin in January 2004. In 2004, there were non-cash
compensation expenses of $2,060,763 consisting of (i) $1,985,562 based upon the
issuance of warrants to two consultants in connection with the development of
our strategic business plan, obtaining our license and consulting on our
corporate structure and (ii) $75,201 which was the incremental increase in value
of certain warrants and options based upon a modification in the terms of the
agreements resulting from the merger with FCP. Compensation expense was
calculated based upon the Black-Scholes pricing model.


                                       25
<PAGE>

      Interest income was $50,912 for the year ended December 31, 2004 and was
earned from our excess cash investments in a money market fund.

      Due to the factors mentioned above, the net loss for the year was
$4,622,214 or $0.07 per common share, basic and diluted, based upon weighted
average shares outstanding of 62,384,476 shares as compared to a loss for the
period from July 21, 2003 (inception) to December 31, 2003 of $120,225 or $0.00
per common share, basic and diluted, based upon weighted average shares
outstanding of 37,164,757.

Liquidity and Capital Resources

      At December 31, 2004, we had cash and cash equivalents of $5,544,507 and
working capital was $5,523,214. For the year ended December 31, 2004, net cash
used in operations was $2,698,961 which primarily consisted of our loss of
$4,622,214 offset by non-cash compensation expenses of $2,080,731. The cash from
investing was $7,950,495 resulted from net proceeds of the sale of common stock
of $7,968,495 and repayment of notes payable to stockholder of $18,000.

      Between February and March 2004, we received proceeds in a private
placement of approximately $7,968,000, net of issuance costs of approximately
$51,000, from the sale of 3,425,879 shares of common stock at $0.26 per share
and from the sale of 23,913,848 shares of common stock at $0.30 per share. In
December 2003, we received proceeds in a private placement of $300,000 through
the sale of 1,141,960 shares of common stock at $0.27 per share.

      To date, we have relied primarily upon selling equity securities from
private placements to generate cash to implement our plan of operations. We
believe that our cash and cash equivalents will be sufficient to meet our cash
requirements for the next twelve months. Our capital resources are focused on
the clinical development and regulatory approval of C1-INH for the treatment of
HAE. We will need additional funding to complete these activities. We cannot be
certain that additional funding will be available on acceptable terms, or at
all.

Contractual Obligations and Commitments

      The following is a summary of our significant contractual cash obligations
for the periods indicated that existed as of December 31, 2004, and is based on
information appearing in the Notes to Consolidated Financial Statements.

                                   Less than       1 - 2    3 - 5     More than
                        Total       1 year         years    years      5 years
                        -----       ------         -----    -----      -------

Operating Leases      $114,475    $ 68,110      $46,365         $0           0
CRO contract           100,000     100,000            0          0           0
                      --------    --------      -------         --          --
Total obligations     $214,475    $168,110      $46,635         $0          $0
                      ========    ========      =======         ==          ==

      Our major contractual obligations relate to our facilities lease, clinical
trial costs, purchase commitments and obligations to pay royalties. We expect to
devote substantial resources to continue our research and development efforts
and to expand our product pipeline and support our product candidates as they
move forward in the clinical development process. Our funding requirements will
depend on numerous factors, including:

      o     the scope and results of our clinical trials;
      o     advancement of other product candidates into development;
      o     potential acquisition or in-licensing of other product candidates,
            commercial products or technologies;
      o     the timing of, and the costs involved in, obtaining regulatory
            approvals;
      o     the cost of manufacturing activities for product candidates;
      o     the costs involved in preparing, filing, prosecuting, maintaining
            and enforcing patent claims and other patent-related costs,
            including litigation costs and the results of such litigation; and
      o     our ability to establish and maintain additional collaborative
            arrangements.


                                       26
<PAGE>

      We expect product development costs to increase in the future as more of
our product candidates enter clinical trials. In addition, we may be obligated
to make milestone payments on certain of our product candidates as they progress
through the clinical trial process.

      The duration and cost of clinical trials may vary significantly over the
life of a particular project as a result of, among other things, the following
factors:

      o     the length of time required to recruit qualified patients for
            clinical trials;
      o     the duration of patient dosing and follow-up in light of trial
            results;
      o     the number of clinical sites required for trials; and
      o     the number of patients that ultimately participate.

      On January 16, 2004, we entered into the Distribution Agreement with
Sanquin under which Sanquin will manufacture and supply agreed-upon quantities
of C1-INH to us for an agreed-upon minimum price, which is subject to change. In
connection with quantities supplied for the clinical trial prior to regulatory
approval, Sanquin will provide a loan to us in the amount of the C1-INH
purchased, which will be subject to a purchase money security interest. Upon
regulatory approval, Sanquin will forgive the loan and release any and all
security interests. The C1-INH will initially be used to conduct Phase III
clinical trials. Sanquin also granted to us the exclusive right to distribute,
market and sell C1-INH in the United States and certain other countries, as
specified upon regulatory approval to do so in each respective country.

      The Distribution Agreement terminates on December 31, 2007, unless
extended by us for up to two three-year periods or by mutual agreement of the
parties prior to its expiration. Commencing with the commercial launch of C1-INH
and thereafter, we must purchase from Sanquin a minimum of approximately
$7,200,000 of C1-INH per calendar year.

      On September 20, 2004, we entered into a services agreement with
Compleware in connection with the design, management and implementation of our
Phase III clinical trial of C1-INH for the treatment of HAE. On March 1, 2005,
we terminated the agreement. Subsequent to December 31, 2004, we paid Compleware
$100,000. On March 2, 2005, we entered into a new services agreement with INC
Research which governs INC Research's provision of services in connection with
the support of clinical investigation, management and/or research of our Phase
III clinical trial. It is estimated that we will pay INC Research approximately
$1,000,000 for its services over the next two years.

Recent Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 123R ("SFAS No. 123R"),
"Share-Based Payment". SFAS No. 123R revises SFAS No. 123, "Accounting for
Stock-Based Compensation" and supersedes APB No. 25, "Accounting for Stock
issued to Employees," and its related implementation guidance. The provisions of
SFAS No. 123R require us to expense, in the statement of operations, the fair
value of awards of equity instruments exchanged for employee services, based on
the grant-date fair value of those awards. The grant-date fair value of equity
instruments will be estimated using an appropriate option-pricing model and will
be recognized over the vesting period of the awards. SFAS No. 123R will be
effective, for public companies, for interim or annual reporting periods that
begin after June 15, 2005. We are in the process of analyzing adopting SFAS No.
123R but expects it to have a material impact on its financial statements.

      In January 2003, the FASB issued FIN 46, "Consolidation of Variable
Interest Entities." In December 2003, the FASB issued FIN 46 Revised ("FIN
46R"), which claries certain complexities of FIN 46. The primary objectives of
FIN 46 are to provide guidance on the identification of entities for which
control is achieved through means other than through voting rights (variable
interest entities or "VIEs") and how to determine when and which business
enterprise should consolidate the VIE (the "primary beneficiary"). This
interpretation applies to an entity in which either (1) the equity investors (if
any) do not have a controlling financial interest or (2) the equity investment
at risk is insufficient to finance that entity's activities without receiving
additional subordinated financial support from other parties. In addition, FIN
46 requires that both the primary beneficiary and all other enterprises with a
significant variable interest in a VIE make additional disclosures. A company
with a variable interest in a VIE must disclose certain information. We do not
believe we have VIE arrangements.


                                       27
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

      The full text of our audited consolidated financial statements for the
year ended December 31, 2004 and for the period July 21, 2003 (inception) to
December 31, 2003 begins on page F-1 of this Annual Report on Form 10-KSB.

ITEM 8A. CONTROLS AND PROCEDURES

      As of the end of the period covered by this report, we conducted an
evaluation, under the supervision and with the participation of our chief
executive officer of our disclosure controls and procedures (as defined in Rule
13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation,
our chief executive officer concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
SEC's rules and forms. There has been no significant change in our internal
controls over financial reporting that could significantly affect internal
controls subsequent to September 30, 2004.

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Our executive officers and directors as of March 15, 2005 are:

------------------------- ------------ ---------------------------------
          Name              Age                   Position
------------------------- ------------ ---------------------------------
Joshua D. Schein             44        Chief Executive Officer and
                                       Director
------------------------- ------------ ---------------------------------
Judson Cooper                46        Chairman of the Board,
                                       Executive Vice President and
                                       Secretary
------------------------- ------------ ---------------------------------
Douglas J. Beck              44        Controller
------------------------- ------------ ---------------------------------
Yanina Tova Wachtfogel       46        Chief Scientific Officer
------------------------- ------------ ---------------------------------
Scott Eagle                  45        Director
------------------------- ------------ ---------------------------------
Eric I. Richman              43        Director
------------------------- ------------ ---------------------------------
Thomas Lanier                45        Director
------------------------- ------------ ---------------------------------

Joshua D. Schein, Ph.D. has been our Chief Executive Officer and a Director
since December 29, 2004 and Chief Executive Officer and a Director of LDC since
the commencement of LDC's operations in July 2003. Dr. Schein is also a founder
of SIGA Technologies, Inc., a publicly traded biotechnology company, and served
as its Chief Executive Officer from August 1998 to April 2001. Dr. Schein also
served as SIGA's acting Chief Executive Officer from April 1998 to August 1998,
as Secretary and a Director from December 1995 to April 2001, and as Chief
Financial Officer from December 1995 until April 1998. Dr. Schein is also a
founder of DepoMed, Inc., a publicly traded drug delivery company and served as
a director of the company from December 1995 to June 1998. From January 1996 to
August 1998, Dr. Schein was an executive officer and a director of Virologix
Corporation, a private biotechnology company that he co-founded and subsequently
was acquired by Access Pharmaceuticals, a publicly traded biotechnology company.
From June 1996 to September 1998, Dr. Schein was an executive officer and a
director of Callisto Pharmaceuticals, Inc., a publicly traded biotechnology
company that he co-founded. Dr. Schein is also a founder of Hemoxymed, Inc., a
publicly traded biotechnology company. Since 1997, Dr. Schein has been a
principal of Prism Ventures LLC, a privately held limited liability company
focused on the biotechnology industry. From 1994 to 1995, Dr. Schein served as a
Vice President of Investment Banking at Josephthal, Lyon and Ross, Incorporated,
an investment banking firm. Dr. Schein received a Ph.D. in neuroscience from the
Albert Einstein College of Medicine, an MBA from the Columbia Graduate School of
Business, and a B.A. in biochemistry from Brandeis University.


                                       28
<PAGE>

Judson Cooper has been our Chairman, Executive Vice President and Secretary
since December 29, 2004 and Chairman of LDC since the commencement of operations
of LDC in July 2003 and Executive Vice President since November 1, 2004. Mr.
Cooper is also a founder of SIGA Technologies, Inc., a publicly traded
biotechnology company, and served as its Chairman from August 1998 to April
2001. Mr. Cooper also served as SIGA's acting Chairman from April 1998 to August
1998, as a Director from December 1995 to April 2001, and as Executive Vice
President from November 1996 to April 2001, and as its founding President from
December 1995 to November 1996. Mr. Cooper is also a founder of DepoMed, Inc., a
publicly traded drug delivery company and served as a director of the company
from December 1995 to June 1998. From January 1996 to August 1998, Mr. Cooper
was an executive officer and a director of Virologix Corporation, a private
biotechnology company that he co-founded and subsequently was acquired by Access
Pharmaceuticals, a publicly traded biotechnology company. From June 1996 to
September 1998, Mr. Cooper was an executive officer and a director of Callisto
Pharmaceuticals, Inc., a publicly traded biotechnology company that he
co-founded. Mr. Cooper is also a founder of Hemoxymed, Inc., a publicly traded
biotechnology company. Since 1997, Mr. Cooper has been a principal of Prism
Ventures LLC, a privately held limited liability company focused on the
biotechnology industry. From September 1993 to December 1995, Mr. Cooper was a
private investor. Mr. Cooper is a graduate of the Kellogg School of Management.

Douglas J. Beck is a CPA and has been our Controller since February 22, 2005.
From September 2004 to October 2004, Mr. Beck served as a consultant to Pfizer,
Inc. From December 2002 to September 2004, Mr. Beck served in various capacities
with Diversified Security Solutions, Inc., from Director of Finance to Chief
Financial Officer. From November 2000 to December 2002, Mr. Beck was a financial
consultant to various companies. From March 2000 to October 2000, Mr. Beck
served as Director of Financial Reporting for Urbanfetch.com, Inc. and from
December 1998 to March 2000, Mr. Beck was an audit manager with Andersen LLP.
Mr. Beck holds a B.S. from the Fairleigh Dickinson University.

Yanina Tova Wachtfogel has been our Chief Scientific Officer since December 29,
2004 and the Chief Scientific Officer of LDC since February 2004. From July 2003
to February 2004, Ms. Wachtfogel served as President and Chief Operating Officer
of LDC. Ms. Wachtfogel has extensive industry experience in the development of
therapeutics for treatment in the fields of inflammation, immunology, and
cardiovascular disease. Prior to joining Lev, Ms. Wachtfogel served as Chief
Operating Officer and Vice President, Scientific Affairs for Callisto
Pharmaceuticals, Inc., a publicly traded biotechnology company, from 2001 to
2003. Previously, Ms. Wachtfogel served as a Senior Manager, Scientific Affairs
at Bristol-Myers Squibb Oncology/Immunology and a Medical Education Specialist,
US Human Health at Merck & Co., Inc. Prior to joining industry, Ms. Wachtfogel
spent 15 years as an academic research scientist in the Sol Sherry Thrombosis
Research Center at the Temple University School of Medicine doing basic and
clinical research focused on inflammatory mediators and the contact pathway of
intrinsic coagulation. During her academic career, Ms. Wachtfogel was a visiting
research scientist at many international academic centers and published numerous
articles in peer-reviewed journals.

Scott Eagle has served as a Director of our company since December 29, 2004.
Since November 1998, Mr. Eagle has been Vice President of Marketing at Claria
Corporation, a leading behavioral online marketing firm where he manages the
marketing team and oversees business development and partnership activities.
Prior to joining Claria, Mr. Eagle was the Vice President of Marketing at
Concentric Network Corporation from 1996 to 1998. Before Concentric, from 1993
to 1996, Mr. Eagle served as Vice President of Marketing at MFS Communications
where he launched regional marketing campaigns for the start-up MFS Intelenet
subsidiary. Mr. Eagle began his career at Procter & Gamble in marketing and new
product development for the consumer package goods, managing brands such as
Formula 44 and Chloraseptic. Mr. Eagle holds a B.S. from the University of
Pennsylvania, Wharton School.


                                       29
<PAGE>

Eric I. Richman has served as a Director of our company since December 29, 2004.
Since October 2003, Mr. Richman has been Vice President, Business Development
and Strategic Planning at PharmAthene, Inc., a private biotechnology company.
From 2000 to 2003, he was Vice President, Corporate Development at MaxCyte, Inc.
Prior to that, from 1998 to 2000, he was Director, Internal Commercialization
with MedImmune, Inc. From 1993 to 1998, Mr. Richman was MedImmune's Senior
Director of Transplantation Products. Mr. Richman was part of the founding team
at MedImmune holding various other administrative, financial and strategic
planning positions since joining MedImmune in 1998. Mr. Richman was a key member
on the launch teams for MedImmune's biotechnology products, both domestically
and internationally. Mr. Richman received a B.S. degree in Biomedical Science in
1984 from the Sophie Davis School of Biomedical Education and an MBA in 1987
from the American Graduate School in International Management.


Thomas Lanier has served as a Director of our company since December 29, 2004.
Mr. Lanier has served as Financial Attache in the Office of International
Affairs, US Treasury, and Moscow since 2003. From 1996 to 2003, Mr. Lanier was
an International Advisor for the U.S. Department of the Treasury during which
time he co-wrote the U.S. Treasury's guide to external debt issuance for
emerging market borrowers. From 1988 until 1996 Mr. Lanier worked for Chemical
Bank as a U.S. Government Bond Trader (1988-1993), Emerging Markets Salesperson
(1993-1994) and Emerging Markets Debt Trader (1994-1996). In 1981 Mr. Lanier
graduated from the United States Military Academy at West Point with a Bachelor
of Science Degree and prior to leaving the Army in 1986, also graduated from the
U.S. Army Airborne School and the U.S. Army Flight School as well as planning,
organizing and controlling logistical operations on an international project for
the Army Chief of Staff. In 1998, Mr. Lanier received a Masters of Business
Administration with an emphasis in finance and marketing from the Fuqua School
of Business, Duke University.

Compensation of Directors

      Upon their appointment to the Board of Directors, each of our independent
directors received a grant of 225,000 stock options to purchase common stock
which vest over a period of three years from the date of grant.

Committees of the Board of Directors

Audit Committee

      The Audit Committee currently consists of Mr. Thomas Lanier. Our Board of
Directors has determined that Mr. Lanier is "independent" as that term is
defined under applicable SEC rules. We currently do not have an audit committee
financial expert serving on our Audit Committee. We expect to shortly appoint a
director who qualifies as an "audit committee financial expert" as defined in
Item 401(e) of Regulation S-B promulgated by the SEC. The Board of Directors has
adopted a written charter setting forth the authority and responsibilities of
the Audit Committee. A copy of this charter is available on our web site
www.levpharma.com

      The Audit Committee's responsibilities include: (i) reviewing the
independence, qualifications, services, fees, and performance of the independent
auditors, (ii) appointing, replacing and discharging the independent auditors,
(iii) pre-approving the professional services provided by the independent
auditors, (iv) reviewing the scope of the annual audit and reports and
recommendations submitted by the independent auditors, and (v) reviewing our
financial reporting and accounting policies, including any significant changes,
with management and the independent auditors. The Audit Committee also prepares
the Audit Committee report that is required pursuant to the rules of the SEC.

Compensation Committee

      We have a Compensation Committee currently consisting of Mr. Eric Richman
and Mr. Scott Eagle. The Board of Directors has determined that all of the
members of the Compensation Committee are "independent." The Board of Directors
has adopted a written charter setting forth the authority and responsibilities
of the Compensation Committee. A copy of this charter is available on our web
site www.levpharma.com.

      The Compensation Committee has responsibility for assisting the Board of
Directors in, among other things, evaluating and making recommendations
regarding the compensation of the executive officers and directors of the
Company; assuring that the executive officers are compensated effectively in a
manner consistent with the stated compensation strategy of the company;
producing an annual report on executive compensation in accordance with the
rules and regulations promulgated by the SEC; and periodically evaluating the
terms and administration of the Company's incentive plans and benefit programs.

Code of Ethics

      We have adopted a Code of Ethics and Business Conduct for Officers,
Directors and Employees that applies to all of our officers, directors and
employees. The Code of Ethics is filed herewith as Exhibit 14.1.


                                       30
<PAGE>

Compliance with Section 16(a) of the Exchange Act

      Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and persons who beneficially own more than ten
percent of our common stock to file with the SEC initial reports of ownership
and reports of change in ownership of common stock and other equity securities
of our company. Officers, directors and greater than ten percent stockholders
are required by SEC regulations to furnish us with copies of all Section 16(a)
forms they file. To our knowledge, none of our directors. executive officers or
persons who beneficially own ten percent or more of our common stock have failed
to file, on a timely basis, the identified reports required by Section 16(a) of
the Exchange Act during the most recent fiscal year, except that Gary McAdam,
Mathis Family Partners Ltd., and Gary Agron, each former principal stockholders
of the company and James Eller, the company's former chief executive officer and
director, were late in filing a Form 4 for an issuance of shares of common stock
in October 2004.

ITEM 10. EXECUTIVE COMPENSATION

                           Summary Compensation Table

      The following table sets forth information concerning the total
compensation that we have paid or that has accrued on behalf of our chief
executive officer and other executive officers (the "Named Executive Officers")
with annual compensation exceeding $100,000 during the fiscal year ended
December 31, 2004.

<TABLE>
<CAPTION>
                                                       Annual Compensation      Long Term Compensation
                                                       -------------------      ----------------------
Name and Principal                              Year      Salary                 Securities Underlying
Position                                                  ($)                         Options (#)

<S>                                            <C>          <C>                    <C>
Joshua D. Schein                               2004         $252,423               1,427,450
Chief Executive Officer

Judson Cooper                                  2004         $264,423               1,427,450
Chairman and Executive Vice President

Yanina Wachtfogel                              2004         $312,500                      --
Chief Scientific Officer
</TABLE>

Option Grants in Fiscal Year 2004

      The following table sets forth certain information concerning grants of
stock options to the Named Executive Officers during the fiscal year ended
December 31, 2004.

<TABLE>
<CAPTION>
                                            Number of Shares     Percent of Total
                                              Underlying         Options Granted to      Exercise Price     Expiration
Name                                        Options Granted      Employees in 2004         Per Share           Date
----                                        ---------------      -----------------         ---------           ----
<S>                                            <C>                          <C>             <C>              <C>
Joshua D. Schein                               1,427,450                    50%              $0.85           11/1/2014
Chief Executive Officer

Judson Cooper                                  1,427,450                    50%              $0.85           11/1/2014
Chairman and Executive Vice President
</TABLE>


                                       31
<PAGE>

Aggregated Option Exercises in 2004 and Year End Option Values

      The following table provides certain information with respect to the Named
Executive Officers concerning the exercise of stock options during the fiscal
year ended December 31, 2004 and the value of unexercised stock options held as
of such date.

<TABLE>
<CAPTION>
                                      Number of Shares Underlying        Value of Unexercised In the Money
                                      Options at December 31, 2004       Options at December 31, 2004 (1)
                                      -----------------------------      ---------------------------------
Name                                  Exercisable    Unexercisable       Exercisable         Unexercisable
                                      -----------    -------------       -----------         -------------

<S>                                <C>                    <C>              <C>                          <C>
Joshua D. Schein                   1,427,450              0                $228,392                     --
Chief Executive Officer

Judson Cooper                      1,427,450              0                $228,392                     --
Chairman and Executive Vice President
</TABLE>

During the fiscal year ended December 31, 2004, no options were exercised.

(1) Amounts calculated by subtracting the exercise price of the options from the
market value of the underlying common stock using the closing sale price on the
OTC Bulletin Board of $1.01 per share on December 31, 2004.

Employment Agreements

      We entered into employment agreements with each of Joshua Schein and
Judson Cooper, effective as of November 1, 2004. Pursuant to the respective
employment agreements, each of Mr. Schein and Mr. Cooper receives a base salary
of $312,500 with an annual 5% increase, options to purchase up to 1,427,450
shares of our common stock with an exercise price of $0.85 per share and
customary benefits and reimbursements. In the event Messrs. Schein or Cooper are
terminated in connection with a change in control of our company, each will
receive his salary for the remainder of the term of the employment agreement and
all other amounts due pursuant to the employment agreement plus a tax gross-up
payment.

2004 Omnibus Incentive Compensation Plan

      We rely on incentive compensation in the form of stock options to retain
and motivate directors, executive officers, employees and consultants. Incentive
compensation in the form of stock options is designed to provide long-term
incentives to directors, executive officers employees and consultants, to
encourage them to remain with us and to enable them to develop and maintain an
ownership position in our common stock.

      Share Reserve. A total of 10,000,000 shares of our common stock have been
reserved for issuance under the 2004 Omnibus Incentive Compensation Plan (the
"2004 Plan"). As of December 31, 2004, options for 3,529,900 shares were
outstanding under the 2004 Plan.

      Eligibility and Terms of Awards. The 2004 Plan permits the grant of
cash-based awards, options, stock appreciation rights, restricted stock units,
performance shares, performance units, covered employee annual incentive awards,
restricted stock awards and other stock-based awards to our employees and
directors. Options will be either incentive stock options or ISOs, as defined
under the Internal Revenue Code of 1986, as amended, or the Code, which may be
granted solely to employees (including officers); or nonstatutory stock options,
or NSOs, that do not qualify as incentive stock options within the meaning of
Section 422 of the Code and which may be granted to employees (including
officers) and directors.

      Administration. Our Board of Directors administers the 2004 Plan unless it
delegates administration of the plan to a committee. In either case, the plan
administrator determines the recipients and terms and conditions applicable to
each award made under the 2004 Plan, including the exercise or purchase price,
the vesting schedule and the ability to exercise an award prior to vesting and
the provisions related to the impact of a termination of employment or service
on outstanding awards. The plan administrator may also amend the terms of the
2004 Plan and outstanding equity awards, except that no amendment may adversely
affect an award without the recipient's written consent. The plan administrator
may not amend an option to lower its exercise price or exchange an option for an
option with a lower exercise price, another equity award, cash, or any other
consideration or may take any other action that is treated as a repricing under
United States generally accepted accounting principles without the prior
approval of our stockholders. Amendments to the 2004 Plan are subject to
stockholder approval to the extent required by law, rule or regulation.


                                       32
<PAGE>

      Stock Options. Stock options are granted pursuant to stock option
agreements. The plan administrator determines the exercise price for a stock
option subject, in the case of ISOs, to the requirements of Section 422 of the
Code. Options granted under the 2004 Plan vest at the rate specified in the
option agreement.

      The plan administrator determines the term of stock options granted under
the 2004 Plan. Generally, the term of stock options granted under the 2004 Plan
may not exceed ten years. The plan administrator determines the extent to which
the optionee shall have the right to exercise the stock option following
termination of the optionee's employment or provision of services to the
company. In no event may an option be exercised after the maximum term provided
for in the stock option agreement.

      Acceptable consideration for the purchase of common stock issued under the
2004 Plan will be determined by the plan administrator and may include cash,
common stock previously owned by the optionee, consideration received in a
"cashless" exercise program implemented by us and other legal consideration
approved by the plan administrator.

      Generally, an optionee may not transfer a stock option other than by will
or the laws of descent and distribution unless the stock option agreement
provides otherwise. However, an optionee may designate a beneficiary who may
exercise the option following the optionee's death.

      Restricted Stock Awards. Restricted stock awards are purchased through a
restricted stock purchase agreement. The purchase price for restricted stock
awards must be at least the par value of the stock. The purchase price for a
restricted stock award may be payable in cash, the recipient's past services
performed for Lev, or any other form of legal consideration acceptable to the
plan administrator.

      Stock Appreciation Rights. A stock appreciation right is granted pursuant
to a stock appreciation right agreement. The plan administrator determines the
strike price and term for a stock appreciation right granted under the 2004
Plan. A stock appreciation right granted under the 2004 Plan vests at the rate
specified in the stock appreciation right agreement. If an awardee's service
relationship with us, or any of our affiliates, ceases, then the awardee, or his
or her beneficiary, may exercise any vested stock appreciation right after the
date such service relationship ends for the period of time provided in the stock
appreciation right agreement. Different post-termination exercise periods may be
provided in the stock appreciation right agreement for specific types of
terminations such as death, disability or retirement. Our payment to a
participant in settlement of a stock appreciation right may be made by the
delivery of shares of our common stock, cash, or any combination of the two.

      Effect of a Change in Control. Our standard form of stock option agreement
provides that following specified change in control transactions, the equity
awards granted under the 2004 Plan will be fully vested and exercisable if the
optionee ceases to perform services for the surviving or acquiring company
within 12 months after the close of the change in control transaction and the
optionee is terminated by the surviving or acquiring company for any reason
except cause.


                                       33
<PAGE>

Equity Compensation Plan Information

      The following table shows information with respect to each equity
compensation plan under which our common stock is authorized for issuance as of
the fiscal year ended December 31, 2004.

<TABLE>
<CAPTION>
--------------------------------- ------------------------------ ------------------------------- ------------------------------
                                   Number of securities to be      Weighted-average exercise         Number of securities
                                     issued upon exercise of     price of outstanding options,      remaining available for
                                      outstanding options,            warrants and rights        future issuance under equity
                                       warrants and rights                                            compensation plans
                                                                                                     (excluding securities
                                                                                                   reflected in column (a))
--------------------------------- ------------------------------ ------------------------------- ------------------------------

                                               (a)                            (b)                               (c)
--------------------------------- ------------------------------ ------------------------------- ------------------------------
<S>                                         <C>                              <C>                           <C>
   Equity compensation plans                3,529,900                        $0.84                         6,470,100
  approved by security holders
--------------------------------- ------------------------------ ------------------------------- ------------------------------

--------------------------------- ------------------------------ ------------------------------- ------------------------------
 Equity compensation plans not
  approved by security holders                301,668                        $0.38                            -0-
--------------------------------- ------------------------------ ------------------------------- ------------------------------

--------------------------------- ------------------------------ ------------------------------- ------------------------------
             Total                          3,831,568                        $0.80                         6,470,100
--------------------------------- ------------------------------ ------------------------------- ------------------------------
</TABLE>


                                       34
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table indicates beneficial ownership of our common stock as of
March 15, 2005 by:

      o     By each person or entity known by us to beneficially own more than
            5% of the outstanding shares of our common stock;

      o     By each of our executive officers and directors; and

      o     By all of our executive officers and directors as a group.

      Unless other indicated, the address of each beneficial owner listed below
is c/o Lev Pharmaceuticals, Inc., 122 E. 42nd Street, Suite 2606, New York, NY
10168.

      Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Percentage of beneficial ownership is based on
76,303,319 shares of our common stock issued and outstanding as of March 15,
2005.

<TABLE>
<CAPTION>
Name of Beneficial Owner                                      Number of Shares    Percentage of Shares Beneficially Owned
------------------------                                      ----------------    ---------------------------------------
<S>                                                               <C>                             <C>
Named executive officers and directors:

Judson Cooper (1)                                                 29,329,102                      38.4%

Joshua D. Schein (2)                                              29,894,372                      39.2%

Douglas J. Beck                                                            0                       --

Yanina T. Wachtfogel                                               3,425,879                       4.5%

Scott Eagle                                                                0                        --

Eric I. Richman                                                            0                        --

Thomas Lanier                                                         71,372                         *

All Directors and Executive Officers as a Group (7 persons)       35,247,308                      46.2%

Prism Ventures, LLC  (3)                                          27,473,417                      36.0%

Emigrant Capital Corporation                                      10,076,116                      13.2%

Richard Stone                                                      6,297,571                       8.3%

Newton Partners LLC (4)                                            5,293,763                       6.9%

Windsor Ventures LLC (4)                                           5,017,066                       6.6%

Sapphire Ventures LLC (4)                                          4,011,362                       5.3%
</TABLE>

*     less than 1%

(1)   Consists of (i) 1,427,450 shares of common stock issuable upon exercise of
      stock options, (ii) 27,473,417 shares of common stock owned by various
      limited liability companies, each of which Prism Ventures, LLC, a limited
      liability company in which Mr. Cooper owns a 50% interest in, owns and
      (iii) 428,235 shares of common stock owned by certain family members of
      Mr. Cooper.


                                       35
<PAGE>

(2)   Includes (i) 1,427,450 shares of common stock issuable upon exercise of
      stock options and (ii) 27,473,417 shares of common stock owned by various
      limited liability companies, each of which Prism Ventures LLC, a limited
      liability company in which Mr. Schein owns a 50% interest in, owns.

(3)   Includes 20,621,658 shares of common stock owned by various limited
      liability companies, each of which Prism Ventures LLC owns. Each of Judson
      Cooper and Joshua D. Schein own a 50% interest in Prism Ventures LLC.

(4)   Prism Ventures LLC owns a 100% limited liability interest of such company.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      At the time of our inception on July 21, 2003, Prism Ventures LLC, which
is owned 50% by Judson Cooper, our Chairman and Executive Vice President and 50%
by Joshua Schein, our CEO, purchased 30,132,168 shares of our common stock for
nominal value.

      On August 6, 2004, Timothy E. Evon, Thomas T. Evon and William H. Hamen
("Sellers") sold an aggregate of 1,441,027 shares of FCP common stock to Earnest
Mathis, Gary McAdam and Gary A. Agron, each former principal stockholders of the
company ("Purchasers"). Messrs. Mathis, McAdam and Agron acquired 480,342
shares, 480,342 shares and 480,343 shares, respectively. The purchase price for
the shares was $300,000 plus the assumption by the Purchasers of approximately
$66,800 of our liabilities. The Purchasers also agreed to pay the Sellers a
portion of any profits earned by the Purchasers upon any resale of the shares.
The purchase price was satisfied by the delivery to Sellers from Purchasers of a
non-interest bearing $300,000 promissory note due no later than February 6, 2006
and the assumption by the Purchasers of the aforesaid liabilities of our company
in the approximate amount of $66,800.

      On October 2, 2004, Gary J. McAdam, Gary A. Agron and Mathis Family
Partners, Ltd., each a former principal stockholder, agreed to provide FCP a
line of credit up to an aggregate $100,000. Any borrowings were to bear interest
at balance at 6% per annum, any outstanding amounts were due on demand and the
obligation of the lenders to loan any funds terminated upon the Merger. There
were no borrowings under the line of credit. In consideration of the line of
credit, FCP issued to each of Gary J. McAdam, Gary A. Agron and Mathis Family
Partners, Ltd. 871,317 shares of FCP's common stock or an aggregate of
2,613,951.


ITEM 13. EXHIBITS

Exhibit
Number   Description
------   -----------

2.1      Agreement and Plan of Merger by and among Fun City Popcorn, Inc., Lev
         Acquisition Corp., and Lev Pharmaceuticals, Inc., dated November 5,
         2004 (incorporated by reference to Exhibit 2.1 to Form 8-K filed
         November 10, 2004).

2.2      Amendment No. 1 to Agreement and Plan of Merger by and among Fun City
         Popcorn, Inc., Lev Acquisition Corp. and Lev Pharmaceuticals, Inc.,
         dated as of December 8, 2004 (incorporated by reference to the Form
         10-K/SB filed on December 29, 2004).

3.1      Certificate of Incorporation (incorporated by reference herein to the
         Information Statement on Schedule 14C dated January 26, 2005).

3.2      Bylaws (incorporated by reference herein to the Information Statement
         on Schedule 14C dated January 26, 2005).

4.1      2004 Omnibus Incentive Compensation Plan (incorporated by reference
         herein to Exhibit 4.1 to Form 8-K filed on January 4, 2005)


                                       36
<PAGE>

10.1     Employment Agreement dated as of November 1, 2004 between Lev
         Pharmaceuticals, Inc. and Judson Cooper (incorporated by reference
         herein to Exhibit 10.1 to Form 8-K filed on January 4, 2005)*

10.2     Employment Agreement dated as of November 1, 2004 between Lev
         Pharmaceuticals, Inc. and Joshua D. Schein (incorporated by reference
         herein to Exhibit 10.2 to Form 8-K filed on January 4, 2005)*

10.3     Distribution and Manufacturing Services Agreement between Lev
         Pharmaceuticals, Inc. and Sanquin Blood Supply Foundation dated as of
         January 16, 2004 **

10.4     Exclusive License Agreement between Lev Pharmaceuticals, Inc. and
         Sanquin Blood Supply Foundation dated as of January 27, 2004 **

14.1     Code of Ethics

21.1     Subisidiary of the Registrant.

31.1     Certification by Chief Executive Officer pursuant to Sarbanes Oxley
         Section 302.

31.2     Certification by Chief Financial Officer pursuant to Sarbanes Oxley
         Section 302.

32.1     Certification by Chief Executive Officer pursuant to 18 U.S. C. Section
         1350

32.2     Certification by Chief Financial Officer pursuant to 18 U.S. C. Section
         1350

*Management contract or compensatory plan or arrangement required to be filed as
an Exhibit to this form pursuant to Item 601 of Regulation S-K.

** Confidential treatment has been requested with respect to deleted portions of
this agreement.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

      The aggregate fees billed and unbilled for professional services rendered
by our principal accountants for the audits of our financial statements included
in Form 8-K/A and for the financial statements included in our annual report on
Form 10-KSB were approximately $25,000 for the period from July 21, 2003
(inception) to December 31, 2003 and approximately $80,000 for the year ended
December 31, 2004 which includes an audit for the nine month period ended
September 30, 2004. The aggregate fees billed by our principal accountants, for
professional services rendered for the audits of FCP's annual financial
statements for the years ended September 30, 2004 and 2003, and for the reviews
of the financial statements included in FCP's quarterly reports on Form 10-QSB
during those fiscal years were $19,525 and $34,870, respectively.

Audit-Related Fees

      For the period from July 21, 2003 (inception) to December 31, 2003 and for
the year ended December 31, 2004 there were no audit-related fees billed by our
principal accountants. The aggregate fees billed by our principal accountants
for FCP Audit Related matters were $5,046 for the fiscal year ended September
30, 2004 and $0 for the fiscal year ended September 30, 2003.


                                       37
<PAGE>

Tax and Other Fees

      We were not billed by our principal accountants for tax compliance matters
or other services for the fiscal years ended December 31, 2004 and for the
period from July 21, 2003 (inception to) December 31, 2003. The aggregate fees
billed by our principal accountants for FCP tax compliance matters were $454 for
the fiscal year ended September 30, 2004 and $1,085 for the fiscal year ended
September 30, 2003

Audit Committee Pre-Approval Policies and Procedures

      The Audit Committee's policy is to pre-approve all audit, audit-related
and permissible non-audit services provided by the independent auditors in order
to assure that the provision of such services does not impair the auditor's
independence. These services may include audit services, audit-related services,
tax services and other services.


                                       38
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date: March 31, 2005                        LEV PHARMAEUTICALS, INC.

                                            BY: /s/ Joshua D. Schein
                                                --------------------
                                                Joshua D. Schein
                                                Chief Executive Officer

      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

     NAME                      TITLE                             DATE
     ----                      -----                             ----

/s/ Joshua D. Schein       Chief Executive Officer and        March 31, 2005
-----------------------    Director
Joshua D. Schein           (Principal Executive Officer)

/s/ Judson Cooper          Chairman of the Board, Executive   March 31, 2005
-----------------------    Vice President
Judson Cooper

/s/ Douglas J. Beck        Controller                         March 31, 2005
-----------------------    (Principal Accounting Officer)
Douglas J. Beck

/s/ Scott Eagle            Director                           March 31, 2005
-----------------------
Scott Eagle

/s/ Eric I. Richman        Director                           March 31, 2005
-----------------------
Eric I. Richman

/s/ Thomas Lanier          Director                           March 31, 2005
-----------------------
Thomas Lanier


                                       39

<PAGE>

                    LEV PHARMACEUTICALS, INC. AND SUBSIDIARY
                        (a development stage enterprise)
                        (formerly Fun City Popcorn, Inc.)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          YEAR ENDED DECEMBER 31, 2004,
                    THE PERIOD FROM JULY 21, 2003 (INCEPTION)
                            TO DECEMBER 31, 2003 AND
                           THE CUMULATIVE PERIOD FROM
                          JULY 21, 2003 (INCEPTION) TO
                                DECEMBER 31, 2004


<PAGE>

LEV PHARMACEUTICALS, INC.
(a development stage enterprise)

Contents

                                                                           Page

Consolidated Financial Statements

   Report of independent registered public accounting firm                  F-2

   Balance sheet as of December 31, 2004                                    F-3

   Statements of operations for the cumulative period from July 21, 2003
      (inception) to December 31, 2004, the year ended December 31, 2004
      and the period from July 21, 2003                                     F-4
      (inception) to December 31, 2003

   Statements of changes in stockholders' equity for the year ended
      December 31, 2004 and the period from July 21, 2003 (inception)
      to December 31, 2003                                                  F-5

   Statements of cash flows for the cumulative period from July 21, 2003
      (inception) to December 31, 2004, the year ended December 31, 2004
      and the period from July 21, 2003 (inception) to December 31, 2003    F-6

   Notes to financial statements                                            F-7


                                                                             F-1
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Lev Pharmaceuticals, Inc. and Subsidiary


We have audited the accompanying consolidated balance sheet of Lev
Pharmaceuticals, Inc. and subsidiary (the "Company") (a development stage
enterprise) as of December 31, 2004, and the related consolidated statements of
operations, stockholders' equity and cash flows for the period from July 21,
2003 (inception) to December 31, 2004, the year ended December 31, 2004 and the
period from July 21, 2003 (inception) to December 31, 2003. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements enumerated above present fairly, in all
material respects, the consolidated financial position of Lev Pharmaceuticals
Inc. as of December 31, 2004, and the consolidated results of their operations
and their consolidated cash flows for the period from July 21, 2003 (inception)
to December 31, 2004, the year ended December 31, 2004 and the period from July
21, 2003 (inception) to December 31, 2003, in conformity with U.S. generally
accepted accounting principles.





Eisner LLP

New York, New York
March 28, 2005


                                                                             F-2
<PAGE>

LEV PHARMACEUTICALS, INC. AND SUBSIDIARY
(a development stage enterprise)

Consolidated Balance Sheet
December 31, 2004

ASSETS
Current assets:
   Cash and cash equivalents                                        $ 5,544,507
   Prepaid expenses                                                     263,587
   Other assets                                                          41,661
                                                                    -----------

        Total current assets                                          5,849,755

Fixed assets, net of accumulated depreciation of $286                     7,150
Security deposit                                                         16,817
                                                                    -----------

                                                                    $ 5,873,722
                                                                    ===========

LIABILITIES
Current liabilities:
   Accrued expenses                                                 $   243,625
   Income taxes payable                                                  82,916
                                                                    -----------

        Total current liabilities                                       326,541

   Deferred lease liability                                               4,857
                                                                    -----------

        Total liabilities                                               331,398
                                                                    -----------

Commitments and contingencies

STOCKHOLDERS' EQUITY
Preferred stock - $0.01 par value, 20,000,000 authorized,
   no shares issued and outstanding
Common stock - $0.01 par value, 200,000,000 shares authorized,
   76,303,319 shares issued  and issuable at December 31, 2004          763,033
Additional paid-in capital                                            9,891,915
Subscription receivable                                                    (130)
Deficit accumulated during the development stage                     (5,112,494)
                                                                    -----------

      Total stockholders' equity                                      5,542,324
                                                                    -----------

                                                                    $ 5,873,722
                                                                    ===========


See notes to consolidated financial statements                               F-3


<PAGE>

LEV PHARMACEUTICALS, INC. AND SUBSIDIARY
(a development stage enterprise)

Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                 Period From                    Period From
                                                July 21, 2003      Year        July 21, 2003
                                               (Inception) to      Ended       (Inception) to
                                                December 31,    December 31,     December 31,
                                                    2004           2004             2003
                                               ------------    ------------    ------------
<S>                                            <C>             <C>             <C>
Costs and expenses:
   Research and development                    $  1,133,933    $  1,126,933    $      7,000
   Payment to certain Fun City Popcorn, Inc.
      shareholders representing merger costs        283,732         283,732
   General and administrative and license
      acquisition costs                           3,375,632       3,262,461         113,171
                                               ------------    ------------    ------------

      Loss from operations                       (4,793,297)     (4,673,126)       (120,171)

Other income (expense):
   Interest income (expense)                         50,858          50,912             (54)
                                               ------------    ------------    ------------

Net loss                                       $ (4,742,439)   $ (4,622,214)   $   (120,225)
                                               ============    ============    ============

Net loss per share - basic and diluted                         ($      0.07)   ($      0.00)
                                                               ============    ============

Weighted average shares - basic and diluted                      62,384,476      37,164,757
                                                               ============    ============
</TABLE>


See notes to consolidated financial statements                              F-4


<PAGE>

LEV PHARMACEUTICALS, INC. AND SUBSIDIARY
(a development stage enterprise)

Consolidated Statements of Changes in Stockholders' Equity (Notes A and E)
Year Ended December 31, 2004 and the Period From July 21, 2003 (Inception) to
December 31, 2004

<TABLE>
<CAPTION>
                                                                                                           Deficit
                                                                                                         Accumulated
                                                                                Additional                During the
                                       Preferred Stock      Common Stock          Paid-in  Subscription  Development
                                       Shares   Amount    Shares     Amount       Capital   Receivable      Stage         Total
                                       ------   ------    ------     ------       -------   ----------   ------------     -----

<S>                                                      <C>          <C>        <C>          <C>      <C>            <C>
Issuance of founders' shares ($0.01
   per share) issued July 21, 2003                       37,018,531   $370,185                $ (130)    $(370,055)       $     0
Sale of shares in December 2003 at
  $0.26 per share                                         1,141,960     11,420     $288,580                                300,000
Net loss for the period from July 21,
  2003 (inception) to December 31, 2003                                                                   (120,225)       (120,225)
                                                         ----------  ---------    ---------   ------     ---------    ------------

Balance - December 31, 2003                              38,160,491    381,605      288,580     (130)     (490,280)        179,775
Sale of common stock in February
  2004 at $0.26 per share                                 3,425,879     34,259      865,741                                900,000
Sale of common stock in February
  and March 2004 at $0.30 per share,
  net of issuance costs of $51,465                       23,913,848    239,138    6,829,357                              7,068,495
Issuance of warrants to purchase
  7,327,576 shares of common stock
  to consultants at fair value, in
  March 2004                                                                      1,985,562                              1,985,562
Issuance of warrants to purchase
  111,341 shares of common stock
  to consultant at fair value, in
  August 2004                                                                        19,968                                 19,968
Cashless exercise of warrants
  in August 2004                                          6,297,571     62,976      (62,976)                                     0
Shares deemed issued in connection
  with Fun City Popcorn, Inc.
  merger on December 29, 2004                             4,505,530     45,055     (109,518)                               (64,463)
Issuance of Series A preferred stock
  and automatic conversion into
  common shares in connection with
  the merger of Fun City Popcorn,
  Inc. on December 29, 2004 (Note A)
Modification of options and warrants
  in connection with merger treated
  as compensation expense                                                            75,201                                 75,201
Net loss for the year ended
  December 31, 2004                                                                                     (4,622,214)     (4,622,214)
                                                         ----------   --------   ----------   ------   -----------    ------------

Balance - December 31, 2004                              76,303,319   $763,033   $9,891,915   $ (130)  $(5,112,494)   $  5,542,324
                                                         ==========   ========   ==========   ======   ===========    ============
</TABLE>


See notes to consolidated financial statements                              F-5


<PAGE>

LEV PHARMACEUTICALS, INC. AND SUBSIDIARY
(a development stage enterprise)

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                           Cumulative
                                                          Period From                    Period From
                                                         July 21, 2003      Year        July 21, 2003
                                                         (Inception) to    Ended       (Inception) to
                                                          December 31,   December 31,   December 31,
                                                              2004          2004           2003
                                                         -----------    -----------    ---------------
<S>                                                      <C>            <C>            <C>
Cash flows from operating activities:
   Net loss                                              $(4,742,439)   $(4,622,214)   $  (120,225)
   Adjustments to reconcile net loss to net cash used
      in operating activities:
        Compensation to consultants from issuance of
           warrants                                        2,005,530      2,005,530
        Option and warrants modification resulting
           from merger                                        75,201         75,201
        Depreciation expense                                     286            286
        Changes in:
           Prepaid expenses and other assets                (322,065)      (322,065)
           Deferred lease liability                            4,857          4,857
           Income tax liability                               18,453         18,453
           Accrued expenses                                  243,625        140,991        102,634
                                                         -----------    -----------    -----------

             Net cash used in operating activities        (2,716,552)    (2,698,961)       (17,591)
                                                         -----------    -----------    -----------

Cash flows from investing activities:
   Purchase of fixed assets                                   (7,436)        (7,436)
                                                         -----------    -----------

Cash flows from financing activities:
   Proceeds from notes payable to stockholder                 18,000                        18,000
   Repayment of notes payable to stockholder                 (18,000)       (18,000)
   Net proceeds from sale of common stock                  8,268,495      7,968,495        300,000
                                                         -----------    -----------    -----------

             Net cash provided by financing activities     8,268,495      7,950,495        318,000
                                                         -----------    -----------    -----------

Net increase in cash and cash equivalents                  5,544,507      5,244,098        300,409
Cash and cash equivalents - beginning of period                             300,409
                                                         -----------    -----------    -----------

Cash and cash equivalents - end of period                $ 5,544,507    $ 5,544,507    $   300,409
                                                         ===========    ===========    ===========

Supplemental non-cash investing and financing
   activities:
      Issuance of 6,297,571 shares of common stock in
        connection with the cashless exercise of a
        warrant to purchase 7,137,249 shares of common
        stock in August 2004 (Note F)
</TABLE>


See notes to consolidated financial statements                               F-6


<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE A - ORGANIZATION AND BUSINESS

Fun City Popcorn, Inc., (the "Company" or "FCP"), a non-operating public
company, was incorporated on September 18, 1985 in the State of Nevada.

On November 5, 2004, FCP entered into an agreement and plan of merger (the
"Agreement") with Lev Development Corp., formerly known as Lev Pharmaceuticals,
Inc. ("Lev"), which was incorporated on July 21, 2003 in the State of Delaware.
Lev is a development stage company which is engaged in developing and
commercializing therapeutic products for the treatment of inflammatory diseases.
On December 29, 2004, the merger closed and pursuant to the Agreement, FCP
acquired 100% of the outstanding capital stock of Lev through its subsidiary Lev
Acquisition Corp ("LAC"). In connection with the merger, FCP changed its name to
Lev Pharmaceuticals, Inc. and increased its authorized common stock to
200,000,000 shares and its preferred stock to 20,000,000 shares. Under terms of
the Agreement, the stockholders of Lev exchanged all of their issued and
outstanding shares of common stock for 5,029,795 shares of FCP common stock, and
4,789,433 Series A voting convertible preferred shares (the "Exchange"). Each
Series A voting convertible preferred share is automatically convertible into
13.940668 shares of FCP common stock (an aggregate 66,767,994 common shares).
The 71,797,789 shares of common stock represent approximately 94.10% of the
ownership interests in FCP. In addition, all of the outstanding Lev options and
warrants immediately prior to the merger were exchanged for 2,854,900 FCP
options and 301,669 FCP warrants. The Exchange which, resulted in the
stockholders of Lev having control of FCP, represents a recapitalization of FCP,
or a "reverse merger" rather than a business combination. In connection
therewith, FCP's historic capital accounts were retroactively adjusted to
reflect the equivalent number of shares issued by FCP in the Exchange while
Lev's historical accumulated deficit was carried forward. The statement of
operations reflects the activities of Lev from the commencement of its
operations on July 21, 2003. In connection with the Agreement, Lev would pay an
aggregate of $350,000 to certain FCP stockholders. In December 2004, Lev paid
certain FCP stockholders $283,731 which represents the $350,000 less a balance
of $66,269 for FCP's tax liability. In connection with the Exchange, the
exercise price of the outstanding warrants and options remained the same. The
Company recorded a charge of approximately $75,000 for the change in value of
the Company's outstanding options and warrants as of December 29, 2004 as a
result of the increase in the number of common shares into which these equity
instruments are exercisable based on the exchange ratio used in the merger,
since the aggregate intrinsic value of the warrants and options after the
Exchange is greater than before. The Black-Scholes option-pricing model was used
to calculate the value of certain options and warrants and the related charge
based upon the following weighted average assumptions to determine fair value;
risk-free interest rate of 3.58%; expected life of 5 years; dividend yield of 0%
and expected volatility of 70%.

As a development stage enterprise, the Company's primary efforts are devoted to
conducting research and development, forming collaborations and raising capital.
The Company has limited capital resources and has experienced net losses and
negative cash flows from operations since inception and expects these conditions
to continue for the foreseeable future. At December 31, 2004, the Company had
approximately $5.5 million in cash and cash equivalents. Management believes
that cash and cash equivalents on hand at December 31, 2004 will be sufficient
to fund operations through December 31, 2005. However, the Company will be
required to raise additional funds to meet long-term planned goals. There can be
no assurance that such funds, if at all available, can be obtained on terms
reasonable to the Company.

In addition to the normal risks associated with a new business venture, there
can be no assurance that the Company's research and development will be
successfully completed, that any product will be approved or commercially
viable. As the Company operates in an environment of rapidly changing
technology, it is dependent upon the services of its employees, collaborators
and consultants.


                                                                             F-7
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1]   Basis of Presentation

      The consolidated financial statements include the accounts of Lev
      Pharmaceuticals, Inc. (formerly Fun City Popcorn, Inc.) and its
      wholly-owned subsidiary Lev Development Corp (formerly Lev
      Pharmaceuticals, Inc.) All significant intercompany transactions and
      balances have been eliminated in consolidation. As the Company is devoting
      its efforts to research and the development, there has been no revenue
      generated from sales, license fees or royalties, the Company's financial
      statements are presented as statements of a development stage enterprise

[2]   Cash and cash equivalents:

      The Company considers all highly liquid investments which have maturities
      of three months or less, when acquired, to be cash equivalents. The
      carrying amount reported in the balance sheet for cash and cash
      equivalents approximates its fair value. At December 31, 2004, the Company
      had deposited approximately $5.5 million in two commercial banks.

[3]   Patents:

      As a result of research and development efforts conducted by the Company,
      it has applied or is applying for a number of patents to protect
      proprietary inventions. All costs associated with patents are expensed as
      incurred.

[4]   Research and development costs:

      The Company expenses all research and development costs as incurred for
      which there is no alternative future use. Such expenses include licensing
      fees and costs associated with planning and conducting clinical trials.

[5]   Concentration of credit risk:

      Financial instruments which potentially subject the Company to
      concentrations of credit risk consist of cash and cash equivalents.

[6]   Property and equipment:

      Property and equipment is stated at cost less accumulated depreciation. We
      compute depreciation of property and equipment using the straight-line
      method over the asset's estimated useful life, which is five years.

[7]   Income taxes:

      The Company accounts for income taxes in accordance with the provisions of
      Statement of Financial Accounting Standards No. 109, "Accounting for
      Income Taxes" ("SFAS No. 109"). SFAS No. 109 requires that the Company
      recognize deferred tax liabilities and assets for the expected future tax
      consequences of events that have been included in the financial statements
      or tax returns. Under this method, deferred tax liabilities and assets are
      determined on the basis of the difference between the tax basis of assets
      and liabilities and their respective financial reporting amounts
      ("temporary differences") at enacted tax rates in effect for the years in
      which the temporary differences are expected to reverse. The Company
      records an estimated valuation allowance on its deferred income tax assets
      if it is not more than likely that these deferred income tax assets will
      be realized.


                                                                             F-8
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

[8]   Use of estimates:

      The preparation of financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the reporting period. Actual
      results could differ from those estimates. Equity instruments are valued
      using assumptions which may vary significantly between periods.

[9]   Equity issuance costs:

      Costs incurred for the issuance of the Company's common stock may be
      temporarily recorded as deferred offering costs. Upon issuance of the
      securities, those costs are reclassified as a reduction of the offering
      proceeds. In the event that an offering is not completed within a
      reasonable time, those costs would be expensed in the period the offering
      is determined to be unsuccessful.

[10]  Stock-based compensation:

      The Company accounts for stock-based compensation to employees in
      accordance with APB Opinion No. 25, "Accounting for Stock Issued to
      Employees" ("APB No. 25") and related interpretations. Under APB No. 25,
      generally, no compensation expense is recognized in the financial
      statements in connection with the awarding of stock option grants to
      employees provided that, as of the grant date, all terms associated with
      the award are fixed and the fair value of the Company's stock is equal to
      or less than the amount an employee must pay to acquire the stock. The
      Company will recognize compensation expense in situations where the terms
      of an option grant are not fixed or where the fair value of the Company's
      common stock on the grant date is greater than the amount an employee must
      pay to acquire the stock.

      The Company has a stock-based incentive plan, which is described in Note
      H. For the period from July 21, 2003 (inception) to December 31, 2003 no
      stock options were granted. During the year ended December 31, 2004, stock
      options were granted under the plan:

          Net loss                                                $ (4,622,214)
          Total stock based employee compensation expense
            determined under fair value based method
            for all awards                                          (1,470,279)
                                                                  ------------

          Pro forma net loss                                      $ (6,092,493)
                                                                  ============

          Net loss per common share (basic and diluted):
             As reported                                          $      (0.07)
                                                                  ============

             Pro forma                                            $      (0.10)
                                                                  ============

      The weighted average fair value at the date of grant for options granted
      during the year ended December 31, 2004 was $0.50 and was estimated using
      the Black-Scholes option pricing model with the following weighted-average
      assumptions:

          Expected life in years                                             5
          Interest rate                                            3.36 - 3.58
          Volatility                                                        70%
          Dividend yield                                                     0%


                                                                             F-9
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

[10]  Stock-based compensation: (continued)

      The fair value of warrants issued to non-employees for services are
      included in the financial statements and expensed when services are
      performed. The estimated allocated fair value of warrants issued in
      connection with financing activities is expensed over the term of debt
      instruments. Warrants issued in connection with services or financings
      were valued at the grant date using the Black-Scholes option-pricing
      model.

[11]  Future impact of recently issued accounting standards:

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards No. 123R ("SFAS No. 123R"),
      "Share-Based Payment". SFAS No. 123R revises SFAS No. 123, "Accounting for
      Stock-Based Compensation" and supersedes APB No. 25, "Accounting for Stock
      issued to Employees," and its related implementation guidance. The
      provisions of SFAS No. 123R require the Company to expense, in the
      statement of operations, the fair value of awards of equity instruments
      exchanged for employee services, based on the grant-date fair value of
      those awards. The grant-date fair value of equity instruments will be
      estimated using an appropriate option-pricing model and will be recognized
      over the vesting period of the awards. SFAS No. 123R will be effective,
      for public companies, for interim or annual reporting periods that begin
      after June 15, 2005. The Company is in the process of analyzing adopting
      SFAS No. 123R but expects it to have a material impact on its financial
      statements.

      In January 2003, the FASB issued FIN 46, "Consolidation of Variable
      Interest Entities." In December 2003, the FASB issued FIN 46 Revised ("FIN
      46R"), which claries certain complexities of FIN 46. The primary
      objectives of FIN 46 are to provide guidance on the identification of
      entities for which control is achieved through means other than through
      voting rights (variable interest entities or "VIEs") and how to determine
      when and which business enterprise should consolidate the VIE (the
      "primary beneficiary"). This interpretation applies to an entity in which
      either (1) the equity investors (if any) do not have a controlling
      financial interest or (2) the equity investment at risk is insufficient to
      finance that entity's activities without receiving additional subordinated
      financial support from other parties. In addition, FIN 46 requires that
      both the primary beneficiary and all other enterprises with a significant
      variable interest in a VIE make additional disclosures. A company with a
      variable interest in a VIE must disclose certain information. The Company
      does not believe it has VIE arrangements.

[12]  Net loss per share:

      The Company prepares its per share data in accordance with Statement of
      Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No.
      128"). Basic net loss per share is computed on the basis of net loss for
      the period divided by the weighted average number of shares of common
      stock outstanding during the period. Since the Company has incurred net
      losses since inception, diluted net loss per share does not include the
      number of shares issuable upon exercise of outstanding options and
      warrants since inclusion would be anti-dilutive. Additional disclosures
      have been included in Note E.



                                                                            F-10
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE C - FIXED ASSETS

Fixed assets at December 31, 2004 consist of the following:

      Office equipment                                            $ 7,436
      Accumulated depreciation                                       (286)
                                                                  -------

                                                                  $ 7,150
                                                                  =======

Depreciation expense for the year ended December 31, 2004 was $286.


NOTE D - ACCRUED EXPENSES

Accrued expenses at December 31, 2004 consist of the following:

      Accrued professional fees                                     $ 129,795
      Accrued rent                                                     33,437
      Accrued payroll                                                  22,081
      Other accrued expenses                                           58,312
                                                                    ---------

                                                                    $ 243,625
                                                                    =========


NOTE E - LOSS PER SHARE

Basic net loss per common share is computed by dividing the net loss by the
weighted average number of shares of common stock outstanding during each year.
Potentially common shares, of 3,831,568 at December 31, 2004, related to stock
options and warrants, were excluded from the diluted loss per share calculation
because their effect would have been anti-dilutive.


NOTE F - STOCKHOLDERS' EQUITY

[1]   Common stock:

      Lev issued 12,966,667 shares of common stock at $0.00001 par value to its
      founders (the "Founders' Shares") effective July 22, 2003 and recorded
      subscriptions receivable of $130. These shares were exchanged for
      37,018,531 shares of the Company's common stock in connection with the
      merger. The Company increased its accumulated deficit by $370,055 in
      connection with the par value differential of the shares relating to FCP.

      In December 2003, Lev received proceeds of $300,000 through the sale of
      1,141,960 shares of common stock to a single investor at $0.26 per share.

      Between February and March 2004, Lev received proceeds of approximately
      $7,968,000, net of issuance costs of approximately $51,000, from the sale
      of 3,425,879 shares of common stock at $0.26 per share and of 23,913,848
      shares of common stock at $0.30 per share.


                                                                            F-11
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE F - STOCKHOLDERS' EQUITY  (CONTINUED)

[2]   Warrants:

      In March 2004, the Company granted fully vested warrants to two
      consultants, who had assisted the Company with developing its strategic
      business plan, obtaining its license for the Product as herein after
      defined and consulting on its corporate structure. The warrants are for
      the purchase of 7,327,576 shares of common stock (2,566,667 shares of
      common stock prior to the Exchange) of common stock at an exercise price
      of $0.10 per share, expiring in March 2014. The aggregate fair value of
      the warrants, using the Black-Scholes option-pricing model, totaled
      approximately $1,986,000. The weighted-average assumptions used to
      determine the fair values of the warrants are as follows: risk-free
      interest rate of 2.64%; expected warrant life of 5 years; dividend yield
      of 0% and expected volatility of 70%. On August 23, 2004, one of the
      consultants exercised warrants covering 7,137,249 (2,500,000 shares of
      common stock prior to the Exchange) shares of common stock in a net share
      settlement. The warrant exercise price of $250,000 was satisfied by
      reducing the number of shares exercised with a total value of $250,000 (at
      $0.85 per share). The Company issued 6,297,571 shares of common stock.

      In August 2004, the Company granted warrants to a consultant, who had
      assisted the Company with its development programs and clinical trial
      design to purchase a total of 111,341 shares (39,000 shares of common
      stock prior to the merger) of common stock at an exercise price of $0.85
      per share, expiring in August 2014. The aggregate fair value of the
      warrants on their respective issuance dates, using the Black-Scholes
      option-pricing model, totaled approximately $20,000. The weighted-average
      assumptions used to determine the fair values of the warrants are as
      follows: risk-free interest rate of 3.38%; expected warrant life of 5
      years; dividend yield of 0% and expected volatility of 70%.

      On February 9, 2004, the Company entered into an engagement agreement (the
      "Engagement Agreement") with a placement agent (the "Placement Agent"),
      under which the Placement Agent was engaged to raise funds and assist the
      Company in an initial public offering. The Engagement Agreement also
      provided for the sale of a contingent warrant for $100,000, to the
      Placement Agent to purchase up to 35,686,243 shares (12,500,000 shares of
      common stock prior to the merger) of common stock. The Placement Agent
      raised approximately $550,000 for the Company in February 2004. On June 9,
      2004, the Company entered into an amended and restated engagement
      agreement (the "Amended Engagement Agreement") which replaced the
      Engagement Agreement, under which the Placement Agent was engaged to raise
      funds through a private placement of the Company's common stock at $0.85
      per share with gross proceeds of up to $10,000,000 closing on or before
      July 30, 2004. In connection with the Amended Engagement Agreement, the
      warrant to purchase 35,686,243 (12,500,000 share of common stock prior to
      the merger) shares of common stock was cancelled and terminated, and the
      Placement Agent would receive a defined number of warrants, exercisable at
      $0.85 per share to purchase up to a maximum of 7,137,249 shares of the
      Company's common stock based on the amount of funds raised from investors
      introduced by the Placement Agent. In addition, the Placement Agent would
      receive a defined amount of cash compensation. The Company was responsible
      for all expenses in connection with the Private Placement. No funds were
      raised under the Amended Engagement Agreement, which expired on September
      1, 2004.



                                                                            F-12
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE F - STOCKHOLDERS' EQUITY  (CONTINUED)

[2]   Warrants:  (continued)

      Warrant activity is summarized as follows:

                                                                       Weighted-
                                                                        Average
                                                                        Exercise
                                                        Shares           Price
                                                        ------           -----

           Outstanding at December 31, 2003:
              Granted                                   43,125,160      $0.72
              Exercised                                 (7,137,249)      0.10
              Cancelled                                (35,686,243)      0.85
                                                      ------------

              Warrants outstanding and exercisable
                 at December 31, 2004                      301,668      $0.38
                                                      ============


      The following table summarizes information about warrants outstanding at
      December 31, 2004:

                                                          Weighted
                                                           Average
                                          Number          Remaining
                                       Outstanding       Contractual
                        Exercise           and              Life
                          Price        Exercisable       (In Years)
                          -----        -----------       ----------

                         $ 0.10          190,327             9.2
                         $ 0.85          111,341             9.7
                                         -------

                                         301,668
                                         =======

NOTE G - COMMITMENTS AND CONTINGENCIES

[1]   Sanquin Blood Foundation:

      The Company has entered into a series of agreements (the "Sanquin
      Agreements") with Sanquin Blood Foundation ("Sanquin"), a not-for-profit
      research organization in the Netherlands, including an option agreement, a
      distribution and manufacturing services agreement and a license agreement.
      The Sanquin Agreements are intended to allow the Company to conduct
      clinical trials of the C1 esterase inhibitor (the "Product") manufactured
      and supplied by Sanquin, and to sell the Product following regulatory
      approval.

      (a) Option agreement:

      On September 23, 2003, the Company and Sanquin entered into an option
      agreement (the "Option Agreement") under which Sanquin granted to the
      Company an option for an exclusive, world-wide license to certain Sanquin
      technology and underlying patents. The Company paid Sanquin a
      non-refundable fee of $25,000 in exchange for the rights to this option.
      On January 27, 2004, the Company exercised its option under the Option
      Agreement (see License Agreement).


                                                                            F-13
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE G - COMMITMENTS AND CONTINGENCIES  (CONTINUED)

[1]   Sanquin Blood Foundation:

      (b) Distribution and manufacturing services agreement:

      On January 16, 2004, the Company and Sanquin entered into a distribution
      and manufacturing services agreement (the "Distribution Agreement") under
      which Sanquin will manufacture and supply agreed-upon quantities of the
      product to the Company, as soon as Sanquin obtains an export license
      during 2005, for an agreed-upon minimum price, which is subject to change,
      as defined. In connection with quantities supplied for the clinical trial
      prior to regulatory approval, Sanquin will provide a loan to the Company
      in the amount of the product purchased, which will be subject to a
      purchase money security interest. Upon regulatory approval, Sanquin will
      forgive the loan and release any and all security interests. Title to the
      product will transfer to the Company upon delivery. The product will
      initially be used to conduct Phase III clinical trials. Sanquin also
      granted to the Company the exclusive right to distribute, market and sell
      the product in the U.S. and certain other countries, as specified upon
      regulatory approval to do so in each respective country.

      The Distribution Agreement terminates on December 31, 2007, unless
      extended by the Company for up to two three-year periods or by mutual
      agreement of the parties prior to its expiration. Either party may
      terminate the Distribution Agreement if the Company does not obtain FDA
      approval for the clinical development plan or does not secure a clinical
      research organization to conduct the Phase III clinical trial before
      December 31, 2004. As of December 31, 2004, such condition has been
      satisfied. In addition, either party may terminate the Distribution
      Agreement upon breach, as defined, by the other party that is not cured
      within 30 days of written notice. The Distribution Agreement will be
      terminated by both parties, without obligation by either party, if an
      export license is not obtained by Sanquin during 2005. Commencing with the
      commercial launch of the product and thereafter, the Company must purchase
      from Sanquin a minimum of approximately $7,200,000 of the product per
      calendar year.

      (c) License agreement:

      On January 27, 2004, the Company signed an exclusive world-wide license
      agreement (the "License Agreement") with Sanquin, thus exercising its
      option under the Option Agreement. The Company has the right to grant
      sub-licenses under the License Agreement. The License Agreement gives the
      Company the right to perform research for, make, use and sell the licensed
      technology and licensed products, as defined.

      In consideration for the granting of the license, the Company agreed to
      pay Sanquin, within 60 days of execution of the License Agreement,
      $82,000, the agreed-upon amount of expenses incurred by Sanquin for the
      preparation, filing and maintenance of the underlying patents through the
      date of execution of the License Agreement. In addition, the Company shall
      make the following payments to Sanquin during the course of the License
      Agreement: (i) royalties on net sales, as defined, of therapeutic products
      or diagnostic products, as defined; (ii) a non-refundable, non-creditable
      one-time license access fee of $175,000 within 60 days of execution of the
      License Agreement; (iii) minimum annual royalties beginning in the first
      year of commercialization, as defined; and (iv) 10% of the consideration
      received from patent infringement settlements. In addition, the Company
      will create a sponsored research plan to be carried out by Sanquin and
      will provide minimum funding of $125,000 per year for three years from the
      date of execution of the License Agreement. In February 2004, the Company
      paid $257,000 in connection with execution of the License Agreement and
      such amounts were recorded in the statement of operations for the year
      ended December 31, 2004 as research and development expense.



                                                                            F-14
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE G - COMMITMENTS AND CONTINGENCIES  (CONTINUED)

[1]   Sanquin Blood Foundation:

      (c) License agreement: (continued)

      The License Agreement will terminate upon the expiration of the last to
      expire patent underlying the related technology. In the event of
      expiration of the License Agreement, the Company will have a royalty-free,
      fully paid-up, non-exclusive license to the technology. Either party may
      terminate the License Agreement upon breach by the other party that is not
      cured within 30 days of written notice. The Company will have the right to
      terminate the License Agreement within 90 days' written notice to Sanquin
      for any reason, at which time the Company will be responsible to pay
      certain defined outstanding obligations. Sanquin may terminate the License
      Agreement if the Company does not perform, as defined, under the License
      Agreement and such failure to perform is not cured within 60 days' written
      notice to the Company.

[2]   Service agreements:

      (a)   On September 20, 2004, the Company entered into an agreement for the
            design, management and implementation of clinical development
            programs and paid $225,000. The agreement was terminated by the
            Company on March 1, 2005.

      (b)   On March 2, 2005, the Company entered into an agreement for the
            design, management and implementation of clinical development
            programs. Upon execution of the agreement, the Company made a
            payment of approximately $57,000 as a deposit against monthly
            invoices. The estimated fees for the services to be provided are
            approximately $1,000,000.

[3]   Operating lease:

      On July 1, 2004, the Company entered into an agreement to sublease office
      space through August 31, 2006 (the "Office Sublease") and paid a security
      deposit of $16,817. The Office Sublease contains provisions for escalation
      of rental payments, a rental holiday during the first month of the
      sublease, a proportionate share of utilities and real estate taxes. In
      addition, the Company is required to make additional payments for
      utilities and real estate taxes. Prior to July 1, 2004, the Company
      utilized space provided by a founder/officer without remuneration. During
      the year ended December 31, 2004, rent expense was $32,255 before sublease
      income. In addition, the Company sublet a portion of its office space to
      third parties on a month-to-month basis. Rental income from these
      subleases amounted to $11,212 for the year ended December 31, 2004. As of
      December 31, 2004, the Company recorded a deferred lease liability of
      $4,858, which represents the excess of rent expense recognized on a
      straight-line basis over the term of the office sublease over rental
      payments.

      Future minimum rental payments under the Office Sublease are as follows:

                        Year Ending           Operating
                        December 31,             Lease
                        ------------             -----

                          2005                  68,000
                          2006                  46,000
                                              --------

                                              $114,000
                                              ========


                                                                            F-15
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE G - COMMITMENTS AND CONTINGENCIES  (CONTINUED)

[4]   Employment agreements:

      On November 1, 2004, the Company entered into employment agreements (the
      "Employment Agreements"), expiring on October 31, 2008 (the "Initial
      Term"), with the Chief Executive Officer and the Chairman and Executive
      Vice President of the Company (the "Employees"), who are also significant
      stockholders of the Company. Under the terms of the Employment Agreements,
      the Employees are each to receive annual base compensation of $312,500,
      which will increase every year by the greater of 5% or the percentage
      increase of the Labor Consumer Price Index, and fully vested options to
      purchase 1,427,450 shares of the Company's common stock exercisable at
      $0.85 per share, which will expire on November 1, 2014. Under the
      provisions of the Employment Agreements, the Employees will receive a cash
      payment equal to their salary for the remainder of the term of the
      Employment Agreements in any occurrence of a change of control in the
      Company, as defined. The Employment Agreements will be automatically
      renewed for additional one-year periods (the "Renewal Terms") unless
      either party notifies the other in writing of its intentions not to renew
      within 90 days prior to the expiration of the Initial Term or Renewal
      Terms (the Initial Term together with the Renewal Terms will be known as
      the "Term"). Upon termination, as defined, the Employees will continue to
      receive compensation through the end of the current Term, unless such Term
      is reduced, as defined.


NOTE H - STOCK OPTIONS

On March 18, 2004 (the "Effective Date"), the Company's Board and stockholders
adopted the 2004 Omnibus Incentive Compensation Plan (the "Plan"). The Plan has
been adopted as a means of attracting, motivating, and retaining the best
available personnel for positions of substantial responsibility within the
Company, and in order to provide additional incentive to directors, employees,
and other eligible individuals (the "Awardees"). Under the Plan, the maximum
number of options to acquire shares of the Company's common stock that are
available for issuance to Awardees shall be 3,500,000. For the period from July
21, 2003 (inception) to December 31, 2003, no options were granted under the
Plan or outside the Plan.

Awards include options, restricted shares, stock appreciation rights,
performance shares and cash-based awards (the "Awards"). The Plan contains
certain anti-dilution provisions in the event of a stock split, stock dividend
or other capital adjustment, as defined. The Plan provides for a Committee of
the Board (the "Committee") to grant Awards to Awardees and to determine the
exercise price, vesting term, expiration date and all other terms and conditions
of the Awards, including acceleration of the vesting of an Award at any time.
All options granted under the Plan are intended to be non-qualified ("NQO")
unless specified by the Committee to be incentive stock options ("ISO"), as
defined by the Internal Revenue Code. NQOs may be granted to employees,
consultants or other individuals at an exercise price, equal to, below or above
the fair value of the common stock on the date of grant. ISOs may only be
granted to employees of the Company and may not be granted at exercise prices
below fair value of the common stock on the date of grant (110% of fair value
for employees who own 10% or more the Company). Under the Plan, following the
termination of an Awardee's employment or active involvement with the Company,
the Committee shall determine the extent to which the Awardee has the right to
exercise outstanding options. The Plan will terminate at the earliest of (i) its
termination by the Committee or (ii) March 18, 2014. Awards granted before
termination of the Plan will continue under the Plan until exercised, cancelled
or expired.


                                                                            F-16
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE H - STOCK OPTIONS  (CONTINUED)

On December 29, 2004, the Company increased the number of shares available for
issuance under the Plan from 3,500,000 to 10,000,000. In addition, the Company
issued to three directors a total of 675,000 stock options to purchase common
stock under the Plan at an exercise price of $0.80 per share which vest equally
over three years. As of December 31, 2004, there are 6,470,100 options available
to grant under the Plan.

Activity related to the Stock Option Plan is summarized as follows:

                                                               Weighted
                                                                Average
                                                               Exercise
                                                 Outstanding    Price
                                                 -----------    -----
      Outstanding at December 31, 2003:
         Options granted                         3,529,900      $0.84
                                                 ---------

      Options at December 31, 2004               3,529,900      $0.84
                                                 =========

The following table summarizes information about stock options outstanding as of
December 31, 2004:

                                               Weighted
                                                Average
                                               Remaining
                                              Contractual
             Exercise          Number            Life             Number
               Price        Outstanding       (In Years)       Exercisable
               -----        -----------       ----------       -----------

             $  0.80             675,000         10.0
             $  0.85           2,854,900          9.8           2,854,900
                               ---------                        ---------

                               3,529,900                        2,854.900
                               =========                        =========


NOTE I - INCOME TAXES

There is no provision (benefit) for federal or state income taxes for the year
ended December 31, 2004 and the period from July 21, 2003 (inception) to
December 31, 2003 since the Company has incurred operating losses and has
established a valuation allowance equal to the total deferred tax asset.

The tax effect of temporary differences and net operating losses are as follows:

                                                       December 31,
                                                    2004           2003
                                                    ----           ----

Deferred tax assets and valuation allowance:
   Net operating loss carryforwards            $   714,000
   Capitalized start-up cost                       463,000    $    44,000
   Capitalized research and development cost       434,000          3,000
   Issuance of warrants to consultants              57,000
                                               -----------    -----------

   Total deferred tax assets                     1,668,000         47,000
   Valuation allowance                          (1,668,000)       (47,000)
                                               -----------    -----------

      Net deferred tax asset                   $         0    $         0
                                               ===========    ===========


                                                                            F-17
<PAGE>

LEV PHARMACEUTICALS INC. AND SUBSIDIARY
(a development stage enterprise)

Notes to Consolidated Financial Statements
December 31, 2004

NOTE I - INCOME TAXES  (CONTINUED)

At December 31, 2004, the Company has available, for tax purposes, unused net
operating loss carryforwards of approximately $1,832,000 which will expire in
2024. The change to the valuation allowance from December 31, 2003 to December
31, 2004 was $1,622,000. Pursuant to Sections 382 and 383 of the Internal
Revenue Code, annual use of the Company's net operating loss and credit
carryforwards may be limited in the event that a cumulative change in ownership
of more than 50% has occurred within a three-year period.

A reconciliation of the effect of applying the federal statutory rate and the
effective income tax rate used to calculate the Company's income tax provision
is as follows:

                                                                December 31,
                                                              2004         2003
                                                              ----         ----

Statutory federal income tax rate                               34 %        34 %
State income tax rate, net of federal taxes                      5           5
Permanent differences                                         (2.9)          -
Valuation allowance                                          (36.1)        (39)
                                                             -----        ----

Income tax provision                                             0 %         0 %
                                                             =====        ====


                                                                            F-18