**UNITED
                STATES**
              **SECURITIES
                AND EXCHANGE COMMISSION**
              **Washington,
                D.C. 20549**
              **FORM
                10-QSB**(Mark
                One)
              
              xQUARTERLY
                REPORT
                UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934For
                the quarterly period ended June 30, 2006oTRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                ACTCommission
                file number 000-51476**SRKP
                7, INC.**(Exact
                name of small business issueras
                specified in itscharter)**Delaware**
            
            **20-2903526**(State
                of organization)
            
            (IRS
                Employer Identification No.)**248 Route
                25A, No. 2**
              **East
                Setauket, New York 11733**
              (Address
                of principal executive
                offices)**(631)
                942-7959**
              (Issuer’
s
                telephone number)Indicate
                by check mark 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
                xNo
                oIndicate
                by check mark whether the registrant is a shell company (as defined
                in
                Rule 12b-2 of the Exchange Act).
              Yes
                oNo
                xNumber
                of shares outstanding of each of the issuer’s classes of common stock, as
                of July 31, 2006:
              **26,582,185
                shares of Common Stock.**Transitional
                Small Business Disclosure Format (Check one)
              Yes
                oNo
                x





**SRKP
      7, INC**




**INDEX**





**PART
                I - FINANCIAL INFORMATION**Item
                1. Condensed Financial Statements
            1Condensed
                Consolidated Balance Sheets -
            2December 31,
                2005 and June 30, 2006 (unaudited)
            2Condensed
                Consolidated Statements of Operations (unaudited) -
            3Three
                Months Ended June 30, 2006, Six Months Ended June 30, 2006, and
                August 9, 2005 (Inception) to June 30, 2006 (Cumulative)
            3Condensed
                Consolidated Statement of Stockholders’ Equity (Deficiency) (unaudited) -
            4August 9,
                2005 (Inception) to December 31, 2005, and January 1, 2006 to June
                30, 2006
            4Condensed
                Consolidated Statements of Cash Flows (unaudited) -
            5Six
                Months Ended June 30, 2006, and August 9, 2005 (Inception) to June
                30, 2006 (Cumulative)
            5Notes
                to Condensed Consolidated Financial Statements -
            6December 31,
                2005 and June 30, 2006
                (unaudited)Item
                2. Management’s Discussion and Analysis or Plan of
                Operation
            13Item
                3. Controls and Procedures
            18**PART
                II - OTHER INFORMATION**Item
                6
            
            Exhibits
            19Signatures
            
            
            20




-i-


**PART
      I**




**FINANCIAL
      INFORMATION**




**ITEM
      1.**  **Condensed
      Financial Statements**




**SRKP
      7, INC. AND SUBSIDIARY**


(a
      development stage company)




**CONDENSED
      CONSOLIDATED FINANCIAL STATEMENTS**




**December
      31, 2005 and June 30, 2006 (unaudited)**




Condensed
                Consolidated Balance Sheets -December 31,
                2005 and June 30, 2006 (unaudited)
            2Condensed
                Consolidated Statements of Operations (unaudited) -Three
                Months Ended June 30, 2006, Six Months Ended June 30, 2006, and
                August 9, 2005 (Inception) to June 30, 2006 (Cumulative)
            3Condensed
                Consolidated Statement of Stockholders’ Equity (Deficiency) (unaudited) -
            4August 9,
                2005 (Inception) to December 31, 2005, and January 1, 2006 to June
                30, 2006Condensed
                Consolidated Statements of Cash Flows (unaudited) -
            5Six
                Months Ended June 30, 2006, and August 9, 2005 (Inception) to June
                30, 2006 (Cumulative)Notes
                to Condensed Consolidated Financial Statements -
            6December 31,
                2005 and June 30, 2006 (unaudited)


1





**SRKP
      7, INC. AND SUBSIDIARY**


(a
      development stage company)




**CONDENSED
      CONSOLIDATED BALANCE SHEETS**




**December 31,
                2005**
            
            **June
                30,**
              **2006**(Unaudited)**ASSETS****Current
                assets:**Cash
                and cash equivalents
            
            $
            4,946
            
            $
            583,590Total
                current assets
            
            
            4,946
            
            
            583,590Office
                equipment**,**net of accumulated depreciation of $113 at December 31, 2005 and
                $342 at
                June 30, 2006
            
            
            1,026
            
            
            1,034Deferred
                research and development costs, net of amortization of $50,000 at
                June 30,
                2006
            
            
            —
            
            
            350,000Total
                assets
            
            $
            5,972
            
            $
            934,624**LIABILITIES
                AND STOCKHOLDERS’ EQUITY (DEFICIENCY)****Current
                liabilities:**Accounts
                payable and accrued expenses
            
            $
            14,650
            
            $
            30,608Research
                and development contract liability
            
            
            —
            
            
            397,000Due
                to stockholder
            
            
            5,946
            
            
            92,717Total
                liabilities
            
            
            20,596
            
            
            520,325Commitments
                and contingencies**Stockholders’
                equity (deficiency):**Preferred
                stock, $0.0001 par value;
              authorized
                - 10,000,000 shares; issued - none
            
            
            —
            
            
            —Common
                stock, $0.0001 par value;
              authorized
                - 100,000,000 shares; issued and outstanding - 19,021,786 shares
                at
                December 31, 2005 and 25,000,834 shares at June 30, 2006
            
            
            1,902
            
            
            2,500Additional
                paid-in capital
            
            
            (402
            )
            
            664,005Deficit
                accumulated during the development stage
            
            
            (16,124
            )
            
            (252,206
            )Total
                stockholders’ equity (deficiency)
            
            
            (14,624
            )
            
            414,299Total
                liabilities and stockholders’ equity (deficiency)
            
            $
            5,972
            
            $
            934,624





*See
      accompanying notes to condensed consolidated financial
      statements.*


2


**SRKP
      7, INC. AND SUBSIDIARY**


(a
      development stage company)




**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)**




**Three**
              **Months**
              **Ended**
              **June 30,**
              **2006**
            
            **Six**
              **Months**
              **Ended**
              **June 30,**
              **2006**
            
            **Period from**
              **August 9,**
              **2005**
              **(Inception)
                to**
              **June 30,**
              **2006**
              **(Cumulative)****Revenues**
            
            $
            —
            
            $
            —
            
            $
            —**Costs
                and expenses:**General
                and administrative (including stock-based compensation to director
                of
                $79,566)
            
            
            113,869
            
            
            135,853
            
            
            151,864Depreciation
            
            
            114
            
            
            229
            
            
            342Amortization
                of deferred research and development costs
            
            
            50,000
            
            
            50,000
            
            
            50,000Reverse
                merger costs
            
            
            45,000
            
            
            50,000
            
            
            50,000Total
                costs and expenses
            
            
            208,983
            
            
            236,082
            
            
            252,206**Net
                loss**
            
            $
            (208,983
            )
            $
            (236,082
            )
            $
            (252,206
            )**Net
                loss per common share - basic and diluted**
            
            $
            (0.01
            )
            $
            (0.01
            )**Weighted
                average number of common shares outstanding - basic and diluted**
            
            
            19,087,490
            
            
            19,054,819





*See
      accompanying notes to condensed consolidated financial
      statements.*


3





**SRKP
      7, INC. AND SUBSIDIARY**


(a
      development stage company)




**CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
      (unaudited)**





**Common
                Stock**
            
            **Additional**
                **Paid-in**
            
            **Deficit**
                **Accumulated**
                **During
                  the**
                **Development**
            
            **Total
                  Stockholders’**
                **Equity****Shares**
            
            **Amount**
            
            **Capital**
            
            **Stage**
            
            **(Deficiency)****Balance,
                August 9, 2005 (inception)**
            
            
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Shares
                issued to founding stockholder
            
            
            19,021,786
            
            
            1,902
            
            
            (402
            )
            
            —
            
            
            1,500Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            (16,124
            )
            
            (16,124
            )**Balance,
                December 31, 2005**
            
            
            19,021,786
            
            
            1,902
            
            
            (402
            )
            
            (16,124
            )
            
            (14,624
            )Shares
                issued in connection with reverse merger transaction
            
            
            4,005,177
            
            
            401
            
            
            62,099
            
            
            —
            
            
            62,500Shares
                issued in private placement, net of offering costs of
                $134,360
            
            
            1,973,871
            
            
            197
            
            
            522,742
            
            
            —
            
            
            522,939Issuance
                of stock options to director
            
            
            —
            
            
            —
            
            
            79,566
            
            
            —
            
            
            79,566Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            (236,082
            )
            
            (236,082
            )**Balance,
                June 30, 2006**
            
            
            25,000,834
            
            $
            2,500
            
            $
            664,005
            
            $
            (252,206
            )
            $
            414,299




*See
      accompanying notes to condensed consolidated financial
      statements.*


4


**SRKP
      7, INC. AND SUBSIDIARY**


(a
      development stage company)




**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)**




**Six**
              **Months**
              **Ended**
              **June 30,**
              **2006**
            
            **Period from**
              **August 9,**
              **2005**
              **(Inception)
                to**
              **June
                30,**
              **2006**
              **(Cumulative)****Cash
                flows from operating activities**Net
                loss
            
            $
            (236,082
            )
            $
            (252,206
            )**Adjustments
                to reconcile net loss to net cash used in operating
                activities:**Depreciation
            
            
            229
            
            
            342Amortization
                of deferred research and development costs
            
            
            50,000
            
            
            50,000Stock-based
                compensation
            
            
            79,566
            
            
            79,566Changes
                in operating assets and liabilities:Increase
                (decrease) in -Accounts
                payable and accrued expenses
            
            
            15,958
            
            
            30,608Research
                and development contract liability
            
            
            (3,000
            )
            
            (3,000
            )**Net
                cash used in operating activities**
            
            
            (93,329
            )
            
            (94,690
            )**Cash
                flows from investing activities**Purchase
                of office equipment
            
            
            (237
            )
            
            (1,376
            )**Net
                cash used in investing activities**
            
            
            (237
            )
            
            (1,376
            )**Cash
                flows from financing activities**Proceeds
                from sale of common stock to founder
            
            
            —
            
            
            1,500Cash
                acquired in reverse merger transaction
            
            
            62,500
            
            
            62,500Gross
                proceeds from sale of common stock
            
            
            657,299
            
            
            657,299Payment
                of private placement offering costs
            
            
            (134,360
            )
            
            (134,360
            )Advances
                from stockholder
            
            
            86,771
            
            
            92,717**Net
                cash provided by financing activities**
            
            
            672,210
            
            
            679,656**Net
                increase in cash**
            
            
            578,644
            
            
            583,590**Cash**at
                beginning of period
            
            
            4,946
            
            
            —**Cash**at
                end of period
            
            $
            583,590
            
            $
            583,590**Supplemental
                disclosures of non-cash investing and financing
                activity:**Increase
                in deferred research and development costs and research and development
                contract liability
            
            $
            400,000
            
            $
            400,000**Supplemental
                disclosures of cash flow information:**Cash
                paid for -Interest
            
            $
            —
            
            $
            —Income
                taxes
            
            $
            —
            
            $
            —





*See
      accompanying notes to condensed consolidated financial
      statements.*


5


**SRKP
      7, INC. AND SUBSIDIARY**


(a
      development stage company)




**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)**





**December
      31, 2005 and June 30, 2006**





**1.
      Organization and Basis of** **Presentation**




On
      June
      30, 2006, Lixte Biotechnology, Inc., a privately-held Delaware corporation
      (“Lixte”), completed a reverse merger transaction with SRKP 7, Inc. (“SRKP”), a
      public “shell” company, whereby Lixte became a wholly-owned subsidiary of SRKP.
      For financial reporting purposes, Lixte was considered the accounting acquirer
      in the merger and the merger was accounted for as a reverse merger. Accordingly,
      the historical financial statements presented herein are those of Lixte and
      do
      not include the historical financial results of SRKP. The stockholders’ equity
      section of SRKP has been retroactively restated for all periods presented to
      reflect the accounting effect of the reverse merger transaction. All costs
      associated with the reverse merger transaction were expensed as incurred.
      Comparative financial statements for the interim periods ended June 30, 2005
      have not been presented as Lixte, the accounting acquirer in the reverse merger
      transaction, was not formed until August 9, 2005. Unless the context indicates
      otherwise, SRKP and Lixte are hereinafter referred to as the “Company”.
      Management intends to change the name of SRKP to Lixte Biotechnology Holdings,
      Inc.




The
      interim condensed consolidated financial statements are unaudited, but in the
      opinion of management of the Company, contain all adjustments, which include
      normal recurring adjustments, necessary to present fairly the financial position
      at June 30, 2006, and the results of operations and cash flows for the three
      months and six months ended June 30, 2006, and for the period from August 9,
      2005 (inception) to June 30, 2006 (cumulative). The consolidated balance sheet
      as of December 31, 2005 is derived from the Company’s audited financial
      statements. Operating results for the interim periods presented are not
      necessarily indicative of the results of operations to be expected for a full
      fiscal year.




The
      interim financial statements and related notes have been prepared pursuant
      to
      the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”)
      with respect to interim financial statements. Accordingly, certain information
      and footnote disclosures normally included in financial statements prepared
      in
      accordance with generally accepted accounting principles have been omitted
      pursuant to such rules and regulations, although management of the Company
      believes that the disclosures in these financial statements are adequate to
      make
      the information presented therein not misleading. These financial statements
      should be read in conjunction with the audited financial statements that were
      included in the Company’s Current Report on Form 8-K, as filed with the U.S.
      Securities and Exchange Commission on July 7, 2006.




The
      Company has selected December 31 as its fiscal year-end.




**2.
      Business Operations and Summary of Significant Accounting
      Policies**




***Nature
      of Operations***




Lixte
      was
      incorporated in Delaware on August 9, 2005 to capitalize on opportunities to
      develop low cost, specific and sensitive tests for the early detection of
      cancers to better estimate prognosis, to monitor treatment response, and to
      reveal targets for development of more effective treatments.




The
      Company’s initial focus is on developing new treatments for the most common and
      most aggressive type of primary brain cancer, glioblastoma multiforme (“GBM”).
      Lixte entered into a Cooperative Research and Development Agreement (“CRADA”)
      with the National Institute of Neurological Diseases and Stroke (“NINDS”) of the
      National Institutes of Health (“NIH”) to identify and evaluate drugs that target
      a specific biochemical pathway for GBM cell differentiation. The CRADA also
      covers research to determine whether expression of a component of this pathway
      correlates with prognosis in glioma patients.


6


The
      Company expects that its products will derive directly from its intellectual
      property, which will consist of patents that it anticipates will arise out
      of
      its research activities. These patents are expected to cover biomarkers uniquely
      associated with the specific types of cancer, patents on methods to identify
      drugs that inhibit growth of specific tumor types, and combinations of drugs
      and
      potential drugs and potential therapeutic agents for the treatment of specific
      cancers.




At
      June
      30, 2006, the Company was considered a “development stage company” as defined in
      Statement of Financial Accounting Standards No. 7, “Accounting and Reporting by
      Development Stage Enterprises”, as it had not yet commenced any
      revenue-generating operations, did not have any cash flows from operations,
      and
      was dependent on debt and equity funding to finance its operations.




***Going
      Concern***




At
      June 30, 2006, the Company had not yet commenced any revenue-generating
      operations. All activity through June 30, 2006 related to the Company’s
      formation, capital raising efforts and initial research and development
      activities. As such, the Company has yet to generate any cash flows from
      operations, and is essentially dependent on debt and equity funding from both
      related and unrelated parties to finance its operations. Prior to June 30 2006,
      cash requirements were funded by advances from Lixte’s founder. On June 30,
      2006, the Company completed an initial closing of its private placement (see
      Note 3), selling 1,973,871 shares of common stock at a price of $0.333 per
      share
      and receiving net proceeds of $522,939. On July 27, 2006, the Company completed
      a second closing of its private placement, selling 1,581,351 shares of common
      stock at a price of $0.333 per share and receiving net proceeds of $452,867.




Because
      the Company is currently engaged in research at a very early stage, it will
      likely take a significant amount of time to develop any product or intellectual
      property capable of generating revenues. As such, the Company’s business is
      unlikely to generate any revenue in the next several years and may never do
      so.
      Even if the Company is able to generate revenues in the future through licensing
      its technologies or through product sales, there can be no assurance that such
      revenues will exceed its expenses.




Based
      on
      the proceeds received from the private placement (see Note 3), the Company
      may
      not have sufficient resources to completely fund its planned operations for
      the
      next twelve months. The Company does not have sufficient resources to fully
      develop and commercialize any products that may arise from its research.
      Accordingly, the Company will need to raise additional funds in order to satisfy
      its future working capital requirements. In the short-term, in addition to
      the
      net proceeds from the private placement, the Company estimates that it will
      approximately require additional funding of approximately $2,300,000.
      Additionally, the amount and timing of future cash requirements will depend
      on
      market acceptance of the Company’s products, if any, and the resources that the
      Company devotes to developing and supporting its products. The Company will
      need
      to fund these cash requirements from either one or a combination of additional
      financings, mergers or acquisitions, or via the sale or license of certain
      of
      its assets.




Current
      market conditions present uncertainty as to the Company’s ability to secure
      additional funds, as well as its ability to reach profitability. There can
      be no
      assurances that the Company will be able to secure additional financing, or
      obtain favorable terms on such financing if it is available, or as to its
      ability to achieve positive cash flow from operations. Continued negative cash
      flows and lack of liquidity create significant uncertainty about the Company’s
      ability to fully implement its operating plan and the Company may have to reduce
      the scope of its planned operations. If cash and cash equivalents are
      insufficient to satisfy the Company’s liquidity requirements, the Company would
      be required to scale back or discontinue its product development program, or
      obtain funds if available through strategic alliances that may require the
      Company to relinquish rights to certain of its technologies or discontinue
      its
      operations.


7




***Principles
      of Consolidation***




The
      accompanying consolidated financial statements include the financial statements
      of SRKP and its wholly-owned subsidiary, Lixte. All intercompany balances and
      transactions have been eliminated in consolidation.




***Cash
      and Cash Equivalents and Concentrations***




The
      Company considers all highly liquid investments with an original maturity of
      three months or less when purchased to be cash equivalents. At times, such
      cash
      and cash equivalents may exceed federally insured limits. The Company has not
      experienced a loss in such accounts to date. The Company maintains its accounts
      with financial institutions with high credit ratings.




***Income
      Taxes***




The
      Company accounts for income taxes under Statement of Financial Accounting
      Standards No. 109, “Accounting for Income Taxes”, which requires the
      recognition of deferred tax assets and liabilities for the expected impact
      of
      differences between the financial statements and the tax basis of assets and
      liabilities.




For
      federal income tax purposes, substantially all expenses must be deferred until
      the Company commences business operations and then they may be written off
      over
      a 60-month period. These expenses will not be deducted for tax purposes and
      will
      represent a deferred tax asset. The Company will provide a valuation allowance
      for the full amount of the deferred tax asset since there is no assurance of
      future taxable income. Tax deductible losses can be carried forward for 20
      years
      until utilized.




***Stock-
      Based Compensation***




In
      December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
      No.
      123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"), a revision to
      SFAS
      No. 123, "Accounting for Stock-Based Compensation". SFAS No. 123R superseded
      APB
      No. 25 and amended SFAS No. 95, "Statement of Cash Flows". Effective January
      1,
      2006, SFAS No. 123R requires that the Company measure the cost of employee
      services received in exchange for equity awards based on the grant date fair
      value of the awards, with the cost to be recognized as compensation expense
      in
      the Company’s financial statements over the vesting period of the
      awards.




The
      Company adopted SFAS No. 123R effective January 1, 2006, and is using the
      modified prospective method in which compensation cost is recognized beginning
      with the effective date (a) based on the requirements of SFAS No. 123R for
      all
      share-based payments granted after the effective date and (b) based on the
      requirements of SFAS No. 123R for all awards granted to employees prior to
      the
      effective date of SFAS No. 123R that remain unvested on the effective date.




Accordingly,
      the Company recognizes compensation cost for equity-based compensation for
      all
      new or modified grants issued after December 31, 2005. The Company did not
      have
      any modified grants during the three months and six months ended June 30, 2006.




In
      addition, commencing January 1, 2006, the Company is required to recognize
      the
      unvested portion of the grant date fair value of awards issued prior to the
      adoption of SFAS No. 123R based on the fair values previously calculated for
      disclosure purposes over the remaining vesting period of the outstanding stock
      options and warrants. The Company did not have any unvested outstanding stock
      options and warrants at December 31, 2005.




Pro
      forma
      information regarding net income (loss) per share is required by SFAS No. 123
      as
      if the Company had accounted for its employee stock options and warrants under
      the fair value method of such statement. However, during the three months and
      six months ended June 30, 2005, Lixte had not been formed. Accordingly, no
      pro
      forma financial disclosure has been presented for the three months and six
      months ended June 30, 2005.


8


Information
      with respect to stock options and warrants issued during 2006 is presented
      at
      Note 3. A summary of stock option and warrant activity for the six months ended
      June 30, 2006 is shown below.




Number
                ofShares
            
            Weighted
                Average Exercise
              Price
            
            Weighted
                Average Remaining Contractual
              Life
                (Years)Options
                and warrants outstanding at December31,
                2005
            
            
            —
            
            $
            —
            
            
            —Granted
            
            
            726,864
            
            
            0.333
            
            
            5.0Exercised
            
            
            —
            
            
            —
            
            
            —Cancelled
            
            
            —
            
            
            —
            
            
            —Options
                and warrants outstanding at June 30, 2006
            
            
            726,864
            
            $
            0.333
            
            
            5.0Options
                and warrants exercisable at June 30, 2006
            
            
            493,530
            
            $
            0.333
            
            
            5.0





***Recent
      Accounting Pronouncements and Developments***




In
      May 2005, the FASB issued Statement of Financial Accounting Standards
      No. 154, “Accounting Changes and Error Corrections” (“SFAS No. 154”).
      SFAS No. 154 is a replacement of APB Opinion No. 20, “Accounting
      Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial
      Statements - (an Amendment of APB Opinion No. 28)” and provides guidance on
      the accounting for and reporting of accounting changes and error corrections.
      SFAS No. 154 establishes retrospective application as the required method
      for reporting a change in accounting principle, and provides guidance for
      determining whether retrospective application of a change in accounting
      principle is impracticable and for reporting a change when retrospective
      application is impracticable. Retrospective application is the application
      of a
      different accounting principle to a prior accounting period as if that principle
      had always been used or as the adjustment of previously issued financial
      statements to reflect a change in the reporting entity. SFAS No. 154 also
      addresses the reporting of the correction of an error by restating previously
      issued financial statements. The Company adopted SFAS No. 154 effective
      January 1, 2006.




On
      September 22, 2005, the SEC issued rules to delay by one-year the required
      reporting by management on internal controls over financial reporting for
      non-accelerated filers. The new SEC rule extends the compliance date for such
      registrants to fiscal years ending on or after July 15, 2007. Accordingly,
      the
      Company qualifies for the deferral until its year ending December 31, 2007
      to
      comply with the internal control reporting requirements. On August 9, 2006,
      the
      SEC issued two releases that when adopted are designed to grant smaller public
      companies further relief from compliance with Section 404 of the Sarbanes-Oxley
      Act of 2002.




***Loss
      per Common Share***




Loss
      per
      common share is computed by dividing net loss by the weighted average number
      of
      shares of common stock outstanding during the respective periods. Basic and
      diluted loss per common share are the same for all periods presented because
      all
      warrants and stock options outstanding are anti-dilutive. The 19,021,786 shares
      of common stock issued to the founder of Lixte in conjunction with the closing
      of the reverse merger transaction on June 30, 2006 have been presented as
      outstanding for all periods presented.


9




***Research
      and Development***




Research
      and development costs are expensed as incurred.




Research
      and development contracts with third parties are recorded as a liability, with
      the related amount of such contracts recorded as deferred research and
      development costs on the Company’s balance sheet. Such deferred research and
      development costs are amortized over the life of the contractual commitment
      on
      the straight-line basis, unless the achievement of milestones, the completion
      of
      contracted work, or other information indicates that a different amortization
      schedule is more appropriate.




***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 at the date of the financial statements and the reported amounts
      of
      expenses during the reporting period. Actual results could differ from those
      estimates.




***Equipment***




Equipment
      is recorded at cost. Depreciation expense is provided on a straight-line basis
      using estimated useful lives of 3 years. Maintenance and repairs are charged
      to
      expense as incurred. When assets are retired or otherwise disposed of, the
      property accounts are relieved of costs and accumulated depreciation and any
      resulting gain or loss is credited or charged to operations.




**3.
      Share Exchange Agreement and Private Placement**




***Share
      Exchange Agreement***




On
      June
      30, 2006, pursuant to a Share Exchange Agreement dated as of June 8, 2006 (the
      “Share Exchange Agreement”) by and among SRKP, John S. Kovach (“Seller”) and
      Lixte, SRKP issued 19,021,786 shares of its common stock in exchange for all
      of
      the issued and outstanding shares of Lixte (the “Exchange”). Previously, on
      October 3, 2005, Lixte had issued 1,500 shares of its no par value common stock
      to its founder for $1,500, which constituted all of the issued and outstanding
      shares of Lixte prior to the Exchange. As a result of the Exchange, Lixte became
      a wholly-owned subsidiary of SRKP.




Pursuant
      to the Exchange, SRKP issued to the Seller 19,021,786 shares of its common
      stock. SRKP had a total of 25,000,834 shares of common stock issued and
      outstanding after giving effect to the Exchange and the 1,973,871 shares of
      common stock issued in the initial closing of the private placement.




As
      a
      result of the Exchange and the shares of common stock issued in the initial
      closing of the private placement, on June 30, 2006, the stockholders of the
      Company immediately prior to the Exchange owned 4,005,177 shares of common
      stock, equivalent to approximately 16% of the issued and outstanding shares
      of
      the Company’s common stock, and the Company is now controlled by the former
      stockholder of Lixte.




The
      Share
      Exchange Agreement was determined through arms-length negotiations between
      SRKP,
      the Seller and Lixte. In connection with the Exchange, the Company paid WestPark
      Capital, Inc. a cash fee of $50,000.




***Private
      Placement***




On
      June
      30, 2006, concurrently with the closing of the Exchange, the Company sold an
      aggregate of 1,973,871 shares of its common stock to 26 accredited investors
      in
      an initial closing of its private placement at a per share price of $0.333,
      resulting in aggregate gross proceeds to the Company of $657,299. The Company
      paid to WestPark Capital, Inc., as placement agent, a commission of 10% and
      a
      non-accountable fee of 4% of the gross proceeds of the private placement and
      issued five-year warrants to purchase common stock equal to (a) 10% of the
      number of shares sold in the private placement exercisable at $0.333 per share
      and (b) an additional 2% of the number of shares sold in the private placement
      also exercisable at $0.333 per share. A total of 236,864 warrants were issued.
      Net cash proceeds to the Company, after the deduction of all private placement
      offering costs and expenses, were $522,939.


10


On
      July
      27, 2006, the Company sold an aggregate of 1,581,351 shares of its common stock
      to 31 accredited investors in a second closing of the private placement at
      a per
      share price of $0.333 resulting in aggregate gross proceeds to the Company
      of
      $526,590. The Company paid to WestPark Capital, Inc., as placement agent, a
      commission of 10% and a non-accountable fee of 4% of the gross proceeds of
      the
      private placement and issued five-year warrants to purchase common stock equal
      to (a) 10% of the number of shares sold in the private placement exercisable
      at
      $0.333 per share and (b) an additional 2% of the number of shares sold in the
      private placement also exercisable at $0.333 per share. A total of 189,762
      warrants were issued. Net cash proceeds to the Company were $452,867.




In
      conjunction with the private placement of common stock, the Company issued
      a
      total of 426,626 five-year warrants to WestPark Capital, Inc. exercisable at
      the
      per share price of the common stock sold in the private placement ($0.333 per
      share). The warrants issued to WestPark Capital, Inc. do not contain any price
      anti-dilution provisions. However, such warrants contain demand registration
      rights (but no financial penalty associated therewith) and cashless exercise
      provisions. The fair value of the warrants, as calculated pursuant to the
      Black-Scholes option-pricing model, was determined to be $132,254 ($0.31 per
      share). Based on the foregoing, the warrants have been accounted for as
      equity.




The
      fair
      value of the aforementioned warrants was calculated using the following
      Black-Scholes input variables: stock price on date of grant - $0.333; exercise
      price - $0.333; expected life - 5 years; expected volatility - 150%; expected
      dividend yield - 0%; risk-free interest rate - 5%.




***Stock
      Options***




On
      June
      30, 2006, effective with the closing of the Exchange, the Company granted to
      Dr.
      Philip Palmedo, an outside director of the Company, stock options to purchase
      an
      aggregate of 200,000 shares of common stock, exercisable for a period of five
      years at $0.333 per share, with one-third of the options (66,666 shares) vesting
      immediately upon joining the Board and one-third vesting annually on each of
      June 30, 2007 and 2008. The fair value of these options, as calculated pursuant
      to the Black-Scholes option-pricing model, was determined to be $62,000 ($0.31
      per share), of which $20,666 was charged to operations during the three months
      and six months ended June 30, 2006, and the remaining $41,334 will be charged
      to
      operations ratably from July 1, 2006 through June 30, 2008.




On
      June
      30, 2006, effective with the closing of the Exchange, the Company also granted
      to Dr. Palmedo additional stock options to purchase 190,000 shares of common
      stock exercisable for a period of five years at $0.333 per share for services
      rendered in developing the business plan for Lixte, all of which were fully
      vested upon issuance. The fair value of these options, as calculated pursuant
      to
      the Black-Scholes option-pricing model, was determined to be $58,900 ($0.31
      per
      share), and was charged to operations during the three months and six months
      ended June 30, 2006.




On
      June
      30, 2006, effective with the closing of the Exchange, the Company granted to
      certain members of its Scientific Advisory Committee stock options to purchase
      an aggregate of 100,000 shares of common stock exercisable for a period of
      five
      years at $0.333 per share, with one-half of the options vesting annually on
      each
      of June 30, 2007 and June 30, 2008. The fair value of these options, as
      calculated pursuant to the Black-Scholes option-pricing model, was initially
      determined to be $31,000 ($0.31 per share). The fair value of such options
      will
      be charged to operations ratably from July 1, 2006 through June 30, 2008. In
      accordance with EITF 96-18, options granted to committee members are valued
      each
      reporting period to determine the amount to be recorded as an expense in the
      respective period. As the options vest, they will be valued one final time
      on
      each vesting date and an adjustment will be recorded for the difference between
      the value already recorded and the then current value on the date of vesting.


11


The
      fair
      value of the aforementioned stock options was calculated using the following
      Black-Scholes input variables: stock price on date of grant - $0.333; exercise
      price - $0.333; expected life - 5 years; expected volatility - 150%; expected
      dividend yield - 0%; risk-free interest rate - 5%.




**4.
      Related Party Transactions**




Since
      inception, Lixte’s founding stockholder has periodically made
      non-interest-bearing advances to the Company to meet operating expenses. At
      December 31, 2005 and June 30, 2006, such advances totaled $5,946 and $92,717,
      respectively.




Through
      June 30, 2006, the Company’s office facilities have been provided without charge
      by the Company’s President. Such costs were not material to the financial
      statements and accordingly, have not been reflected therein.




Through
      June 30, 2006, the Company’s President did not receive any compensation from the
      Company in view of the Company’s early stage status and limited activities. Any
      future compensation arrangements will be subject to the approval of the Board
      of
      Directors.




The
      President of the Company is involved in other business activities and may,
      in
      the future, become involved in other business opportunities that become
      available. Accordingly, such person may face a conflict in selecting between
      the
      Company and his other business interests. The Company has not formulated a
      policy for the resolution of such potential conflicts.




**5.
      Common Stock and Preferred Stock**




The
      Company’s Certificate of Incorporation provides for authorized capital of
      110,000,000 shares, of which 100,000,000 shares are $0.0001 par value common
      stock and 10,000,000 shares are $0.0001 par value preferred stock




The
      Company is authorized to issue 10,000,000 shares of $0.0001 par value preferred
      stock with such designations, voting and other rights and preferences, as may
      be
      determined from time to time by the Board of Directors.




**6.** **Commitments and Contingencies**




Effective
      March 22, 2006, Lixte entered into a Cooperative Research and Development
      Agreement (the “CRADA”) with the U.S. Department of Health and Human Services,
      as represented by National Institute of Neurological Disorders and Stroke
      (“NINDS”) of the National Institutes of Health. The CRADA is for a term of two
      years from the effective date and may be unilaterally terminated by either
      party
      by providing written notice within sixty days. Pursuant to the CRADA, Lixte
      agreed to provide total payments of $400,000 over the term of the CRADA. The
      CRADA provides for the collaboration between the parties in the identification
      and evaluation of agents that target the Nuclear Receptor CoRepressor (N-CoR)
      pathway for glioma cell differentiation. The CRADA also provided that NINDS
      and
      Lixte will conduct research to determine if expression of N-CoR correlates
      with
      prognosis in glioma patients.




Pursuant
      to the CRADA, Lixte agreed to provide funds under the CRADA in the amount of
      $200,000 per year to fund two technical assistants for the technical,
      statistical and administrative support for the research activities, as well
      as
      to pay for supplies and travel expenses. The first installment was due within
      180 days of the effective date. Through June 30, 2006, Lixte had paid a total
      of
      $3,000. The remainder of the first installment of $197,000 was paid on July
      6,
      2006. The second installment is due within thirty days of the first anniversary
      of the effective date.


12




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**




**Forward-Looking
      Statements**




This
      Quarterly Report contains certain forward-looking statements within the meaning
      of Section 27A of the Securities Act of 1933, and Section 21E of the Securities
      Exchange Act of 1934. For example, statements regarding the Company’s financial
      position, business strategy and other plans and objectives for future
      operations, and assumptions and predictions about future product demand, supply,
      manufacturing, costs, marketing and pricing factors are all forward-looking
      statements. These statements are generally accompanied by words such as
“intend,” anticipate,” “believe,” “estimate,” “potential(ly),” “continue,”
“forecast,” “predict,” “plan,” “may,” “will,” “could,” “would,” “should,”
“expect” or the negative of such terms or other comparable terminology. The
      Company believe that the assumptions and expectations reflected in such
      forward-looking statements are reasonable, based on information available to
      us
      on the date hereof, but the Company cannot assure you that these assumptions
      and
      expectations will prove to have been correct or that the Company will take
      any
      action that the Company may presently be planning. However, these
      forward-looking statements are inherently subject to known and unknown risks
      and
      uncertainties. Actual results or experience may differ materially from those
      expected or anticipated in the forward-looking statements. Factors that could
      cause or contribute to such differences include, but are not limited to,
      regulatory policies, available cash, research results, competition from other
      similar businesses, and market and general economic factors. This discussion
      should be read in conjunction with the condensed consolidated financial
      statements and notes thereto included in Item 1 of this Quarterly Report on
      Form 10-QSB.




**Recent
      Events:**




On
      June
      30, 2006, Lixte Biotechnology, Inc., a privately-held Delaware corporation
      (“Lixte”), completed a reverse merger transaction with SRKP 7, Inc. (“SRKP”), a
      public “shell” company, whereby Lixte became a wholly-owned subsidiary of SRKP.
      For financial reporting purposes, Lixte was considered the accounting acquirer
      in the merger and the merger was accounted for as a reverse merger. Accordingly,
      the historical financial statements presented herein are those of Lixte and
      do
      not include the historical financial results of SRKP. All costs associated
      with
      the reverse merger transaction were expensed as incurred. Unless the context
      indicates otherwise, SRKP and Lixte are hereinafter referred to as the
“Company”. Management intends to change the name of SRKP to Lixte Biotechnology
      Holdings, Inc.




**Overview:**




Lixte
      was
      incorporated in Delaware on August 9, 2005 to capitalize on opportunities to
      develop low cost, specific and sensitive tests for the early detection of
      cancers to better estimate prognosis, to monitor treatment response, and to
      reveal targets for development of more effective treatments.




The
      Company is concentrating on discovering biomarkers for common cancers for which
      better diagnostic and therapeutic measures are needed. For each of these
      diseases, a biomarker that would enable identification of the presence of cancer
      at a stage curable by surgery could possibly save thousands of lives annually.
      In addition, biomarkers specific to these diseases may also provide clues as
      to
      processes (biological pathways) that characterize specific cancer types and
      that
      may be vulnerable to drug treatment targeted to the activity of the
      biomarker.




The
      Company’s initial focus is on developing new treatments for the most common and
      most aggressive type of primary brain cancer, glioblastoma multiforme (“GBM”).
      Lixte entered into a Cooperative Research and Development Agreement (“CRADA”)
      with the National Institute of Neurological Diseases and Stroke (“NINDS”) of the
      National Institutes of Health (“NIH”) to identify and evaluate drugs that target
      a specific biochemical pathway for GBM cell differentiation. The CRADA also
      covers research to determine whether expression of a component of this pathway
      correlates with prognosis in glioma patients.


13


The
      lead
      scientist at NINDS collaborating with Lixte under the CRADA is Dr. Zhengping
      Zhuang. Dr. Zhuang is internationally recognized for his research in molecular
      pathology. Dr. Zhuang has four issued and two pending patents related to
      molecular pathology of human cancers. Dr. Zhuang recently discovered a biomarker
      of relevance to the growth of GBMs that Lixte believes can be used as a tool
      for
      identifying drugs that affect the growth of GBM cells. Under the CRADA, Lixte
      will support two persons at NIH to work under the direction of Dr. Zhuang.
      The
      goal is to identify drugs that inhibit GBM cell growth and to determine if
      the
      identified biomarker may be useful for estimation of prognosis. Lixte’s
      contribution to the collaborative research done by Lixte and NIH is $200,000
      annually for two years to fund two research assistants expected to be at the
      post-doctoral level, as well as supplies and travel expenses.




Lixte
      sponsored the development and submission of a provisional patent application
      filed February 6, 2006 (the “Provisional Patent Application”) naming as
      co-inventors Dr. Zhuang, several other NIH investigators, and Dr. John S.
      Kovach. When the final patent application is filed in early 2007, the named
      inventors will assign their rights in the inventions to their employers, meaning
      that any patent (or patents) arising out of the application will be jointly
      owned by the U.S. Government and Lixte. Lixte is currently in negotiations
      with
      the NIH to obtain the exclusive commercial rights to the inventions covered
      by
      the Provisional Patent Application. As its research progresses, Lixte expects
      to
      file further patent applications relating to the categories of products
      described below. Patent applications arising out of research pursuant to the
      CRADA are likely to be jointly owned by Lixte and the U.S. Government. In such
      cases of joint ownership, Lixte will likely seek to obtain the exclusive
      commercial rights to those inventions




The
      Company expects that its products will derive directly from its intellectual
      property, which will consist of the Provisional Patent Application and other
      patents that it anticipates will arise out of its research activities. These
      patents are expected to cover biomarkers uniquely associated with the specific
      types of cancer, patents on methods to identify drugs that inhibit growth of
      specific tumor types, and combinations of drugs and potential drugs and
      potential therapeutic agents for the treatment of specific cancers.




The
      Company faces several potential challenges in its efforts to achieve commercial
      success, including raising sufficient capital to fund its business plan,
      achieving commercially applicable results of its research program, continued
      access to tissue and blood samples from cancer patients, competition from more
      established, well-funded companies with competitive technologies, and future
      competition from companies that are developing competitive technologies, some
      of
      whom are larger companies with greater capital resources than the
      Company.




There
      is
      substantial uncertainty as to the Company’s ability to fund its operations and
      continue as a going concern (see “Liquidity and Capital Resources - Going
      Concern” below).




***Critical
      Accounting Policies and Estimates:***




The
      Company prepared its consolidated financial statements in accordance with
      accounting principles generally accepted in the United States of America. The
      preparation of these financial statements requires the use of estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      the
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amount of revenues and expenses during the reporting
      period. Management periodically evaluates the estimates and judgments made.
      Management bases its estimates and judgments on historical experience and on
      various factors that are believed to be reasonable under the circumstances.
      Actual results may differ from these estimates as a result of different
      assumptions or conditions.




The
      following critical accounting policies affect the more significant judgments
      and
      estimates used in the preparation of the Company’s consolidated financial
      statements.


14




***Research
      and Development:***




Research
      and development costs are expensed as incurred. Research and development
      contracts with third parties are recorded as a liability, with the related
      amount of such contracts recorded as deferred research and development costs
      on
      the Company’s balance sheet. Such deferred research and development costs are
      amortized over the life of the contractual commitment on the straight-line
      basis, unless the achievement of milestones, the completion of contracted work,
      or other information indicates that a different amortization schedule is more
      appropriate.




***Stock-Based
      Compensation:***




In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 123(R), "Share-Based Payment" (“SFAS
      123(R)”). SFAS 123(R) requires all share-based payments, including grants of
      employee stock options to employees, to be recognized in the financial
      statements based on their grant date fair values. The Company adopted SFAS
      123(R) effective January 1, 2006. Lixte did not have any stock options or
      warrants issued or outstanding at December 31, 2005.




***Income
      Taxes:***




The
      Company accounts for income taxes under Statement of Financial Accounting
      Standards No. 109, “Accounting for Income Taxes”, which requires the recognition
      of deferred tax assets and liabilities for the expected impact of differences
      between the financial statements and the tax basis of assets and
      liabilities.




For
      federal income tax purposes, substantially all expenses must be deferred until
      the Company commences business operations and then they may be written off
      over
      a 60-month period. These expenses will not be deducted for tax purposes and
      will
      represent a deferred tax asset. The Company will provide a valuation allowance
      for the full amount of the deferred tax asset since there is no assurance of
      future taxable income. Tax deductible losses can be carried forward for 20
      years
      until utilized.




***Results
      of Operations - Three Months and Six Months Ended June 30,
      2006:***




Comparative
      financial statements for the interim periods ended June 30, 2005 have not been
      presented as Lixte, the accounting acquirer in the reverse merger transaction,
      was not formed until August 9, 2005.




The
      Company is a development stage company and has not yet commenced revenue
      generating operations.




General
      and Administrative. For the three months and six month ended June 30, 2006,
      general and administrative expenses were $113,869 and $135,853, respectively,
      which included $79,566 for the vested portion of the grant date fair value
      of
      stock options issued to a director on June 30, 2006. Significant components
      of
      general and administrative expenses to date consist of board compensation and
      legal and accounting fees.




Depreciation.
      For the three months and six months ended June 30, 2006, depreciation expense
      was $114 and $229, respectively.




Amortization
      of Deferred Research and Development Costs. Effective March 22, 2006, Lixte
      entered into a Cooperative Research and Development Agreement (the “CRADA”) with
      the U.S. Department of Health and Human Services, as represented by National
      Institute of Neurological Disorders and Stroke (“NINDS”) of the National
      Institutes of Health. The CRADA is for a term of two years from the effective
      date and may be unilaterally terminated by either party by providing written
      notice within sixty days. Pursuant to the CRADA, Lixte agreed to provide total
      payments of $400,000 over the term of the CRADA.


15


The
      CRADA
      was recorded as a liability, with the related amount of such contract recorded
      as deferred research and development costs on the Company’s balance sheet. Such
      deferred research and development costs are amortized over the life of the
      contractual commitment on the straight-line basis, unless the achievement of
      milestones, the completion of contracted work, or other information indicates
      that a different amortization schedule is more appropriate. Accordingly, for
      the
      three months and six months ended June 30, 2006, amortization of deferred
      research and development costs was $50,000.




Reverse
      Merger Costs. On June 30, 2006, pursuant to a Share Exchange Agreement dated
      as
      of June 8, 2006 by and among SRKP, John S. Kovach and Lixte, SRKP issued
      19,021,786 shares of its common stock in exchange for all of the issued and
      outstanding shares of Lixte, and Lixte became a wholly-owned subsidiary of
      SRKP.
      In connection with this transaction, the Company paid WestPark Capital, Inc.
      a
      cash fee of $50,000, which was charged to operations during the three months
      and
      six months ended June 30, 2006.




Net
      Loss.
      For the three months and six months ended June 30, 2006, the Company incurred
      a
      net loss of $208,983 and $236,082, respectively.




**Liquidity
      and Capital Resources - June 30, 2006:**




***Going
      Concern:***




At
      June
      30, 2006, the Company had not yet commenced any revenue-generating operations
      and was therefore considered a “development stage company”. All activity through
      June 30, 2006 related to the Company’s formation, capital raising efforts and
      initial research and development activities. As such, the Company has yet to
      generate any cash flows from operations, and is essentially dependent on debt
      and equity funding from both related and unrelated parties to finance its
      operations. Prior to June 30 2006, cash requirements were funded by advances
      from Lixte’s founder. On June 30, 2006, the Company completed an initial closing
      of its private placement, selling 1,973,871 shares of common stock at a price
      of
      $0.333 per share and receiving net proceeds of $522,939. On July 27, 2006,
      the
      Company completed a second closing of its private placement, selling 1,581,351
      shares of common stock at a price of $0.333 per share and receiving net proceeds
      of $452,867.




Because
      the Company is currently engaged in research at a very early stage, it will
      likely take a significant amount of time to develop any product or intellectual
      property capable of generating revenues. As such, the Company’s business is
      unlikely to generate any revenue in the next several years and may never do
      so.
      Even if the Company is able to generate revenues in the future through licensing
      its technologies or through product sales, there can be no assurance that such
      revenues will exceed its expenses.




Based
      on
      the proceeds received from the private placement, the Company may not have
      sufficient resources to completely fund its planned operations for the next
      twelve months. The Company does not have sufficient resources to fully develop
      and commercialize any products that may arise from its research. Accordingly,
      the Company will need to raise additional funds in order to satisfy its future
      working capital requirements. In the short-term, in addition to the net proceeds
      from the private placement, the Company estimates that it will approximately
      require additional funding of approximately $2,300,000. Additionally, the amount
      and timing of future cash requirements will depend on market acceptance of
      the
      Company’s products, if any, and the resources that the Company devotes to
      developing and supporting its products. The Company will need to fund these
      cash
      requirements from either one or a combination of additional financings, mergers
      or acquisitions, or via the sale or license of certain of its assets.




Current
      market conditions present uncertainty as to the Company’s ability to secure
      additional funds, as well as its ability to reach profitability. There can
      be no
      assurances that the Company will be able to secure additional financing, or
      obtain favorable terms on such financing if it is available, or as to its
      ability to achieve positive cash flow from operations. Continued negative cash
      flows and lack of liquidity create significant uncertainty about the Company’s
      ability to fully implement its operating plan and the Company may have to reduce
      the scope of its planned operations. If cash and cash equivalents are
      insufficient to satisfy the Company’s liquidity requirements, the Company would
      be required to scale back or discontinue its product development program, or
      obtain funds if available through strategic alliances that may require the
      Company to relinquish rights to certain of its technologies or discontinue
      its
      operations.


16


Operating
      Activities. For the six months ended June 30, 2006, operating activities
      utilized cash of $93,329.




The
      Company had working capital of $63,265 at June 30, 2006, as compared to a
      working capital deficiency of $15,650 at December 31, 2005, primarily as a
      result of the initial closing of the private placement on June 30, 2006, which
      generated net proceeds of $522,939. On July 27, 2006, the Company completed
      a
      second closing of its private placement, which generated net proceeds of
      $452,867.




Investing
      Activities. For the six months ended June 30, 2006, investing activities
      utilized net cash of $237 for the purchase of office equipment.




Financing
      Activities. For the six months ended June 30, 2006, financing activities
      provided net cash of $672,210, consisting of the gross proceeds from the sale
      of
      common stock of $657,299, the cash acquired in the reverse merger transaction
      of
      $62,500, and advances from stockholder of $86,771, reduced by the payment of
      private placement offering costs of $134,360.




***Principal
      Commitments:***




At
      June
      30, 2006, the Company did not have any material commitments for capital
      expenditures. The Company’s principal commitment at June 30, 2006 consisted of
      the remaining balance of $397,000 on its research and development contract
      liability as summarized below, of which $197,000 was paid in July 2006 and
      the
      remaining $200,000 is due and payable in April 2007.




Effective
      March 22, 2006, Lixte entered into a Cooperative Research and Development
      Agreement (the “CRADA”) with the U.S. Department of Health and Human Services,
      as represented by National Institute of Neurological Disorders and Stroke
      (“NINDS”) of the National Institutes of Health. The CRADA is for a term of two
      years from the effective date and may be unilaterally terminated by either
      party
      by providing written notice within sixty days. Pursuant to the CRADA, Lixte
      agreed to provide total payments of $400,000 over the term of the CRADA.




***Off-Balance
      Sheet Arrangements:***




At
      June
      30, 2006, the Company did not have any transactions, obligations or
      relationships that could be considered off-balance sheet
      arrangements.




***Recent
      Accounting Pronouncements and Developments:***




In
      May
      2005, the FASB issued Statement of Financial Accounting Standards No. 154,
      “Accounting Changes and Error Corrections” (“SFAS No. 154”). SFAS No. 154 is a
      replacement of APB Opinion No. 20, “Accounting Changes” and SFAS No. 3,
“Reporting Accounting Changes in Interim Financial Statements - (an Amendment
      of
      APB Opinion No. 28)” and provides guidance on the accounting for and reporting
      of accounting changes and error corrections. SFAS No. 154 establishes
      retrospective application as the required method for reporting a change in
      accounting principle, and provides guidance for determining whether
      retrospective application of a change in accounting principle is impracticable
      and for reporting a change when retrospective application is impracticable.
      Retrospective application is the application of a different accounting principle
      to a prior accounting period as if that principle had always been used or as
      the
      adjustment of previously issued financial statements to reflect a change in
      the
      reporting entity. SFAS No. 154 also addresses the reporting of the correction
      of
      an error by restating previously issued financial statements. The Company
      adopted SFAS No. 154 effective January 1, 2006.


17


On
      September 22, 2005, the SEC issued rules to delay by one-year the required
      reporting by management on internal controls over financial reporting for
      non-accelerated filers. The new SEC rule extends the compliance date for such
      registrants to fiscal years ending on or after July 15, 2007. Accordingly,
      the
      Company qualifies for the deferral until its year ending December 31, 2007
      to
      comply with the internal control reporting requirements. On August 9, 2006,
      the
      SEC issued two releases that when adopted are designed to grant smaller public
      companies further relief from compliance with Section 404 of the Sarbanes-Oxley
      Act of 2002.




Item
      3  Controls
      and Procedures




(a) Evaluation
      of Disclosure Controls and Procedures




Disclosure
      Controls and procedures are designed to ensure that information required to
      be
      disclosed in the reports filed or submitted under the Exchange Act is recorded,
      processed, summarized and reported, within the time periods specified in the
      SEC’s rules and forms. Disclosure controls and procedures include, without
      limitation, controls and procedures designed to ensure that information required
      to be disclosed in the reports filed under the Exchange Act is accumulated
      and
      communicated to management.




As
      of
      June 30, 2006, our chief executive officer and chief financial officer (who
      is
      the same individual) evaluated the effectiveness of the design and operation
      of
      the Company’s disclosure controls and procedures. Based upon and as of the date
      of that evaluation, the Chief Executive Officer and Chief Financial Officer
      concluded that the Company’s disclosure controls and procedures are effective to
      ensure that the information required to be disclosed in the reports the Company
      files and submits under the exchange act is recorded, processed, summarized,
      and
      reported as and when required.




(b)  Changes
      in Internal Controls




There
      were no changes in the Company’s internal controls or in other factors that
      could have significantly affected those controls during the quarter ended June
      30, 2006.


18


**PART
      II**




**OTHER
      INFORMATION**




Item
      6.  (a)
      Exhibits




Exhibit
      No.




2.1
            Share
                Exchange Agreement dated as of June 8, 2006 among the Company, John
                S.
                Kovach and Lixte Biotechnology, Inc.13.1
            Certificate
                of Incorporation, as filed with the Delaware Secretary of State on
                May 24,
                200523.2
            Bylaws231
            Certification
                Pursuant to Section 302 of the Sarbanes-Oxley Act of
                200232
            Certification
                Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002







1
            Filed
                as an Exhibit to the Company’s Current Report on Form 8-K as filed with
                the Securities and Exchange Commission on July 7, 2006, and incorporated
                herein by reference.


2
            Filed
                as an Exhibit to the Company’s Registration Statement on Form 10-SB, as
                filed with the Securities and Exchange Commission on August 3, 2005
                and
                incorporated herein by
                reference.


19





**SIGNATURES**




In
      accordance with the requirements of the Securities and Exchange Act of 1934,
      the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned thereunto duly authorized.


**SRKP
                7, INC.**Date:
                August 16, 2006
            By:
            /s/ John
              S.
              KovachJohn
              S. KovachChief
                Executive Officer and Chief Financial Officer
              (principal
                financial and accounting officer)




20