**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**





**(Mark
      One)**





**x**
            
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                ACT
                OF 1934**





**For
                the quarterly period ended March 31,
                2007**




**or**





**o**
            
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                ACT
                OF 1934**




**For
                  the transition period from  ______________ to
                  ______________**





**Commission
      File Number: 000-32947**




**Lev
      Pharmaceuticals, Inc.**


(Exact
      name of small business issuer as specified in its charter)





**Delaware**
            **88-0211496**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)




**675
                Third Avenue, Suite 2200**
              **New
                York, New York**
            **10017**(Address
                of principal executive offices)
            (Zip
                Code)




**Issuer’s
      telephone number: (212) 682-3096**






(Former
      Name, Former Address and Former Fiscal Year, if Changes


Since
      Last Report)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to the filing requirements
      for
      the past 90 days. Yes x No o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


o Yes x No





As
      of May
      1, 2007, the issuer had 114,110,778 shares of common stock
      outstanding.





Transitional
      Small Business Disclosure Format (check one): o Yes x No




1


**Lev
      Pharmaceuticals, Inc.**




**Index
      to Form 10-QSB**




PagePart
                I.
            Financial
                InformationItem
                1.
            Condensed
                Consolidated Financial Statements
            
            3Condensed
                Consolidated Balance Sheets as of March 31, 2007 (Unaudited) and
                December
                31, 2006
            
            3Condensed
                Consolidated Statements of Operations (Unaudited) for the Three Months
                EndedMarch
                31, 2007 and March 31, 2006 and for the Period from July 21, 2003
                (Inception) to March 31, 2007
            
            4Condensed
                Consolidated Statements of Cash Flows (Unaudited) for the Three Months
                EndedMarch
                31, 2007 and March 31, 2006 and for the Period from July 21, 2003
                (Inception) to March 31, 2007
            
            5Notes
                to Unaudited Condensed Consolidated Financial Statements
            
            6Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            
            11Item
                3.
            Controls
                and Procedures
            
            17Part
                II.
            Other
                Information
            
            18Item
                1.
            Legal
                Proceedings
            
            18Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            18Item
                3.
            Defaults
                Upon Senior Securities
            
            18Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            18Item
                5.
            Other
                Information
            
            18Item
                6.
            Exhibits
            
            19Signatures
            
            20




2




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




**Condensed
                Consolidated Balance Sheets**
            
            March 31, 2007
            
            December
                31,
              2006(Unaudited)ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            3,081,759
            
            $
            7,887,635Investments
                - held to maturity
            
            
            9,999,845
            
            
            9,999,845Prepaid
                expenses
            
            
            363,537
            
            
            378,786Other
                assets
            
            
            125,517
            
            
            82,030Total
                current assets
            
            
            13,570,658
            
            
            18,348,296Fixed
                assets, net of accumulated depreciation
            
            
            176,948
            
            
            131,094Other
                assets
            
            
            93,335
            
            
            93,335Total
                assets
            
            $
            13,840,941
            
            $
            18,572,725LIABILITIESCurrent
                liabilities:Accounts
                payable
            
            $
            1,545,811
            
            $
            1,662,651Accrued
                expenses
            
            
            1,089,745
            
            
            1,494,548Total
                current liabilities
            
            
            2,635,556
            
            
            3,157,199Loan
                payable, net of debt discount
            
            
            2,523,611
            
            
            1,803,554Deferred
                lease liability
            
            
            15,714Total
                liabilities
            
            
            5,174,881
            
            
            4,960,753Commitments
                and contingenciesSTOCKHOLDERS'
                EQUITYPreferred
                stock - $0.01 par value, 20,000,000 authorized,no
                shares issued and outstandingCommon
                stock - $0.01 par value, 200,000,000 shares authorized,114,088,402
                and 114,010,237 shares issued and outstanding at March 31, 2007and
                December 31, 2006, respectively
            
            
            1,140,884
            
            
            1,140,102Additional
                paid-in capital
            
            
            36,191,588
            
            
            35,660,209Deficit
                accumulated during the development stage
            
            
            (28,666,412
            )
            
            (23,188,339
            )Total
                stockholders' equity
            
            
            8,666,060
            
            
            13,611,972Total
                liabilities and stockholders’ equity
            
            $
            13,840,941
            
            $
            18,572,725




The
      accompanying notes are an integral part of the unaudited condensed consolidated
      financial statements




3




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


(a
      development stage enterprise)




**Condensed
      Consolidated Statements of Operations (Unaudited)**





Three
                Months
              Ended
              March
                31,
            
            Period
                From
              July
                21, 2003
              (Inception)
                to
              March
                31,2007
            
            2006
            
            2007Costs
                and expenses:Research
                and development
            
            $
            3,223,397
            
            $
            1,096,187
            
            $
            13,893,623Merger
                costs
            
            
            
            
            
            
            
            
            283,732General
                and administrative
            
            
            2,421,693
            
            
            753,850
            
            
            14,742,774Loss
                before other income
            
            
            (5,645,090
            )
            
            (1,850,037
            )
            
            (28,920,129
            )Other
                income:Interest
                income
            
            
            197,791
            
            
            41,955
            
            
            712,450Interest
                expense
            
            
            (30,774
            )
            
            (5,443
            )
            
            (88,678
            )Net
                loss
            
            $
            (5,478,073
            )
            $
            (1,813,525
            )
            $
            (28,296,357
            )Net
                loss per share- basic and diluted
            
            $
            (0.05
            )
            $
            (0.02
            )Weighted
                average shares- basic and diluted
            
            
            114,046,749
            
            
            81,527,544




The
      accompanying notes are an integral part of the unaudited condensed consolidated
      financial statements




4




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


(a
      development stage enterprise)





**Condensed
      Consolidated Statements of Cash Flows (Unaudited)**




**Cash
                flows from operating activities:**
            
            Three
                      Months
                    Ended
                    March
                      31,2007
            
            Three
                      Months
                    Ended
                    March
                      31,2006
            
            July
                      21, 2003
                    (Inception)
                      to
                    March
                      31, 2007Net
                loss
            
            $
            (5,478,073
            )
            $
            (1,813,525
            )
            $
            (28,296,357
            )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Compensation
                  to consultants from issuance of warrants and common
                  stock
            
            
            
            
            
            11,458
            
            
            2,209,177Repricing
                of options and warrants
            
            
            
            
            
            
            
            
            1,455,269Option
                and warrants modification resulting from merger
            
            
            
            
            
            
            
            
            75,201Stock
                issued for services
            
            
            
            
            
            
            
            
            78,750Depreciation
                expense
            
            
            11,506
            
            
            4,179
            
            
            41,808Amortization
                of debt discount
            
            
            30,739
            
            
            5,435
            
            
            86,357Stock
                compensation to employees
            
            
            426,638
            
            
            36,350
            
            
            883,989Accretion
                of investment income
            
            
            
            
            
            (9,417
            )
            
            (12,610
            )Supplier
                purchase funding
            
            
            689,318
            
            
            386,750
            
            
            2,437,254Changes
                in:Prepaid
                expenses and other assets
            
            
            (28,238
            )
            
            79,940
            
            
            (581,885
            )Accounts
                payable
            
            
            (116,840
            )
            
            (257,032
            )
            
            1,545,811Accrued
                expenses
            
            
            (404,803
            )
            
            (78,306
            )
            
            1,089,745Deferred
                lease liability
            
            
            15,714
            
            
            (879
            )
            
            15,714Income
                taxes liability
            
            
            
            
            
            
            
            
            (64,463
            )Net
                cash used in operating activities
            
            
            (4,854,039
            )
            
            (1,635,047
            )
            
            (19,036,240
            )**Cash
                flows from investing activities:**Purchase
                of fixed assets
            
            
            (57,360
            )
            
            (5,621
            )
            
            (218,756
            )Proceeds
                from the sale of investments
            
            
            
            
            
            1,500,000
            
            
            2,500,000Purchase
                of investments
            
            
            
            
            
            
            
            
            (12,487,235
            )Net
                cash (used in) provided by investing activities
            
            
            (57,360
            )
            
            1,494,379
            
            
            (10,205,991
            )**Cash
                flows from financing activities:**Proceeds
                from stock subscription receivable
            
            
            
            
            
            
            
            
            130Proceeds
                from notes payable to stockholder
            
            
            
            
            
            
            
            
            18,000Repayment
                of notes payable to stockholder
            
            
            
            
            
            
            
            
            (18,000
            )Net
                proceeds from sale of common stock and warrants
            
            
            
            
            
            
            
            
            32,218,337Proceeds
                from exercise of warrants
            
            
            105,523
            
            
            
            
            
            105,523Net
                cash provided by financing activities
            
            
            105,523
            
            
            
            
            
            32,323,990**Net
                (decrease) increase in cash and cash equivalents**
            
            
            (4,805,876
            )
            
            (140,668
            )
            
            3,081,759Cash
                and cash equivalents - beginning of period
            
            
            7,887,635
            
            
            3,482,616**Cash
                and cash equivalents - end of period**
            
            $
            3,081,759
            
            $
            3,341,948
            
            $
            3,081,759





**Supplemental
      non-cash flow from financing activities:**




During
        the three months ended March 31, 2006, the Company issued warrants to a
        consultant to purchase 50,000 shares of our common stock at $1.10 per share
        that
        vest immediately and expire on January 19, 2009. The fair value of these
        warrants was $14,524 using the Black Scholes option pricing
        model.




The
      accompanying notes are an integral part of the unaudited condensed consolidated
      financial statements




5





**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**


**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 subsequently
      changed its name to Lev Pharmaceuticals, Inc. and increased its authorized
      common stock to 200,000,000 shares and its authorized 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 shares of Series A voting
      convertible preferred stock (the "Exchange"). Each Series A voting convertible
      preferred share was converted automatically into 13.940668 shares of FCP common
      stock (an aggregate of 66,767,994 common shares). The 71,797,789 shares of
      common stock represented approximately 94.10% of the ownership interests in
      FCP
      following the merger. In addition, 4,505,530 shares of common stock of FCP
      were
      deemed issued and outstanding in connection with the Exchange. In addition,
      all
      of the outstanding Lev options and warrants immediately prior to the merger
      were
      exchanged for 2,854,900 FCP options and 301,668 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 agreed
      to acquire FCP for $350,000. In December 2004, Lev paid certain FCP stockholders
      $283,732 which represents the acquisition price of $350,000 less the assumption
      of a tax liability of $66,268. 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 for the treatment of inflammatory diseases.
      As 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 the Company has needed to raise capital
      from the sales of its securities to sustain operations. As of March 31, 2007,
      the Company had approximately $13.1 million in cash, cash equivalents and
      short-term investments. Management believes that cash, cash equivalents and
      investments on hand as of March 31, 2007 are not sufficient to fund operations
      for the next twelve months. In October 2006, the Company raised net proceeds
      of
      $19,584,745 in a private placement. However, we
      expect
      that our cash used in operations will increase significantly over the next
      several years and we will be required to raise additional capital to complete
      the development and commercialization of our current product candidates. We
      will
      pursue equity financing alternatives or other financing in order to raise needed
      funds. There
      can be no assurance that such funds, if available at all, can be obtained on
      terms reasonable to the Company. If
      we are
      unsuccessful in raising additional capital and increasing revenues from
      operations, we will need to reduce costs and operations
      substantially.





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 or that any product will be approved or commercially viable. The
      Company is subject to risks common to companies in the biotechnology industry
      including, but not limited to, dependence on collaborative arrangements,
      development by the Company or its competitors of new technological innovations,
      dependence on key personnel, protection of proprietary technology, and
      compliance with the U.S. Food and Drug Administration (“FDA”) and other
      governmental regulations and approval requirements.




6




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**[1]
      Basis of Presentation:**




The
      consolidated financial statements include the accounts of Lev Pharmaceuticals,
      Inc. and its wholly-owned subsidiary Lev Development Corp. All significant
      intercompany transactions and balances have been eliminated in consolidation.
      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. The accompanying unaudited condensed consolidated financial
      statements have been prepared in accordance with accounting principles generally
      accepted in the United States of America for interim financial information.
      Accordingly, they do not include all of the information and footnotes required
      by accounting principles generally accepted in the United States of America
      for
      full year financial statements. In the opinion of management, all adjustments
      considered necessary for a fair presentation have been included and are of
      a
      normal, recurring nature. Operating results for the three months ended March
      31,
      2007 are not necessarily indicative of the results that may be expected for
      the
      year ended December 31, 2007. These consolidated financial statements should
      be
      read in conjunction with the consolidated financial statements and the notes
      thereto that are included in the Company's Annual Report on Form 10-KSB for
      the
      fiscal year ended December 31, 2006.





**[2]
      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.





**[3]
      Stock-based compensation:**




During
      the three months ended March 31, 2007, the Company recorded $426,638 of
      stock-based employee compensation expense.





For
      purposes of the disclosure in the foregoing table and for purposes of
      determining estimated fair value under SFAS No.123(R), the Company has computed
      the estimated fair values of all share-based compensation using the
      Black-Scholes option-pricing model and has applied the assumptions set forth
      in
      the following table. The Company calculated expected volatility based upon
      historical volatility of the Company’s common stock. The aggregate fair value of
      options granted in the three months ended March 31, 2007 was approximately
      $6,372,000 or $1.45 per share. The following table illustrates the assumptions
      used in the Company’s Black-Scholes option pricing model to determine the stock
      option expense for the three months ended March 31, 2007. No options were
      granted in the three months ended March 31, 2006.





**Risk
                Free Interest Rate**
            
            **Dividend**
              **Yield**
            
            **Volatility
                Factor**
            
            **Estimated
                Life (Years)**For
                the three months ended
              March
                31, 2007
            
            4.48%
                - 4.80%
            
            0%
            
            125.3%-130.6%
            
            5.2





A
      summary
      of option activity under the Plan as of March 31, 2007 and changes during the
      three month period then ended is presented below.




Number
                of Options
            
            Weighted
                Average Exercise Price
            
            Weighted
                Average Remaining Contractual
              Life
                (Years)
            
            Aggregate
                Intrinsic ValueOutstanding,
                December 31, 2006
            
            
            5,594,900
            
            $
            0.50Granted
            
            
            4,380,000
            
            
            1.62Outstanding,
                March 31, 2007
            
            
            9,974,900
            
            $
            0.99
            
            
            7.95
            
            $
            6,781,513Vested
                and expected to vest, March 31, 2007
            
            
            9,974,900
            
            $
            0.99
            
            
            7.95
            
            $
            6,781,513Exercisable
                shares as of March 31, 2007
            
            
            3,834,900
            
            $
            0.41
            
            
            7.92
            
            $
            4,818,913




7




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**[3]
      Stock-based compensation (continued):**





As
      of
      March 31, 2007, there was $6,852,807 of total unrecognized compensation expense
      related to unvested share-based compensation arrangements granted under the
      Plan. This expense is expected to be recognized over a weighted-average period
      of 36 months.





**[4]
      Net loss per share:**





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. There were potentially dilutive common shares of 25,125,872 and
      7,044,672 as of March 31, 2007 and March 31, 2006, respectively related to
      stock
      options and warrants, which were excluded from the diluted loss per share
      calculation since their effect would have been anti-dilutive.




**[5]
      Investments:**





Investments
      with original maturities of 91 days to one year are considered short term
      investments and are carried at amortized cost. Investments consist of $4,999,845
      in an Adjustable Rate Preferred Security and a Certificate of Deposit for
      $5,000,000.





**[6]
      Fixed assets:**




Fixed
      assets are stated at cost less accumulated depreciation. Depreciation is
      calculated using the straight-line method over the asset's estimated useful
      life, which is five years.





**[7]
      New Accounting Pronouncements:**





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities Including an Amendment of FASB
      Statement No. 115” (SFAS 159), which permits entities to measure many
      financial instruments and certain other items at fair value.  The objective
      is to improve financial reporting by providing entities with the opportunity
      to
      mitigate volatility in reported earnings caused by measuring related assets
      and
      liabilities differently without having to apply complex hedge accounting
      provisions.  SFAS 159 is effective for fiscal years beginning
      November 15, 2007.  We are currently evaluating the impact that SFAS
      159 will have on our consolidated financial position, results of operations,
      and
      cash flows as of its adoption in 2008





On
      September 15, 2006 the Financial Accounting Standards Board (“FASB”) issued
      Statement No. 157, *Fair
      Value Measurements.* The Statement provides guidance for using fair value to measure assets and
      liabilities.  This Statement references fair value as the price that would
      be received to sell an asset or paid to transfer a liability in an orderly
      transaction between market participants in the market in which the reporting
      entity transacts. The Statement applies whenever other standards require (or
      permit) assets or liabilities to be measured at fair value.  The Statement
      does not expand the use of fair value in any new circumstances.  It is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years.  The
      adoption of SFAS No. 157 is not expected to have a material impact on the
      Company’s financial statements.





**NOTE
      C - FIXED ASSETS**




Fixed
      assets, at cost, consist of the following:





March
                31,
              2007
            
            December
                31,
              2006(Unaudited)Lab
                Equipment
            
            $
            11,645
            
            $
            11,645Office
                Equipment
            
            
            207,110
            
            
            149,750Total
            
            
            218,755
            
            
            161,395Accumulated
                Depreciation
            
            
            (41,807
            )
            
            (30,301
            )$
            176,948
            
            $
            131,094




The
      Company recorded depreciation expense of $11,506 and $4,179 for the three months
      ended March 31, 2007 and March 31, 2006, respectively.




8




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOTE
      D - ACCRUED EXPENSES**





Accrued
      expenses consisted of the following:




March
                31,
              2007
            
            December
                31,
              2006(Unaudited)Research
                and development - sponsored research
            
            $
            234,000
            
            $
            234,000Research
                and development - other
            
            
            525,000
            
            
            653,540Research
                and development - payroll
            
            
            16,275
            
            
            28,756General
                and administrative - professional fees
            
            
            158,696
            
            
            60,000General
                and administrative - payroll
            
            
            141,069
            
            
            487,380General
                and administrative - other
            
            
            14,705
            
            
            30,872$
            1,089,745
            
            $
            1,494,548




**NOTE
      E - LOAN PAYABLE**





The
      Company purchases its C1-INH product from the Sanquin Blood Supply Foundation
      (“Sanquin”). Under the agreement with Sanquin, Sanquin provides a loan to the
      Company for the value of C1-INH purchased. The loans are subject to a purchase
      money security interest. Upon regulatory approval, Sanquin will forgive each
      loan and release all security interests. If regulatory approval is not obtained,
      then each loan is payable on the earlier of January 16, 2014 or the termination
      of the agreement. The principal loan balance outstanding as of March 31, 2007
      was $2,523,611 net of debt discount of $1,336,930. This debt discount relates
      to
      interest imputed on the original loan balance as it is non-interest bearing
      and
      was recorded as a reduction to product costs that were included as research
      and
      development expense. The loans are payable in Euros and any currency differences
      are recorded in our Unaudited Condensed Consolidated Statement of Operations.
      The Company has recorded interest expense using the effective interest rate
      method. Interest rates range from 4.31% to 7.64%. For the three months ended
      March 31, 2007 and March 31, 2006, interest expense was $30,739 and $5,435
      respectively. The amount included in research and development expense for
      product cost for the three months ended March 31, 2007 and March 31, 2006 was
      $689,318 and $386,750, respectively.





**NOTE
      F - INCOME TAXES**





We
      adopted the provisions of Financial Standards Accounting Board Interpretation
      No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation
      of FASB Statement No. 109 (“SFAS 109”) on January 1, 2007. As a result of the
      implementation of FIN 48, we did not recognize any adjustment in the liability
      for unrecognized income tax benefits.





The
      tax
      years 2003-2006 remain open to examination by the major taxing jurisdictions
      to
      which we are subject.





**NOTE
      G - EMPLOYMENT AGREEMENTS**





On
      January 23, 2007, the Company entered into amended and restated employment
      agreements with each of its Chief Executive Officer, Mr. Joshua D. Schein,
      and
      its Executive Vice President and Chairman, Mr. Judson Cooper. Both employment
      agreements are effective as of January 17, 2007. The employment agreements
      are
      identical in all material respects and are summarized as follows. As used in
      the
      following summary, the term “Executive(s)” shall refer to Messrs. Schein and
      Cooper. The employment agreements are for an initial term of four years and
      at
      the end of the initial term renew automatically for additional one year terms
      unless sooner terminated or not renewed. Under the employment agreements, the
      Executives are entitled to a base salary of $425,000 beginning as of January
      1,
      2007. The base salary increases at the end of each year of service (commencing
      at the end of 2007) by the greater of (i) 4% or (ii) a percentage equal to
      the
      increase, if any, in the United States Department of Labor Consumer Price Index
      (or comparable index, if available) for the New York metropolitan area over
      the
      previous 12 months. In addition, the Executives are entitled to a bonus as
      defined in the employment agreements. On January 17, 2007, the Board of
      Directors granted each of the Executives options to purchase 1,600,000 shares
      of
      the Company common stock, which options expire ten years from the date of grant
      and which are exercisable at an exercise price of $1.60, which was equal to
      the
      closing price of its common stock on the date of grant. The options vest in
      equal annual installments of 25% of the total option amount until vested in
      full, subject to the terms and conditions of the Company’s 2004 Omnibus
      Incentive Compensation Plan. In the event of the termination of employment
      by
      the Company without “cause” or by an Executive for “good reason,” there is a
      lump sum settlement payable as defined in the employment agreements. There
      is a
      provision for change of control.




9




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOTE
      G - EMPLOYMENT AGREEMENTS (CONTINUED)**





On
      March
      16, 2007, the Company entered into an employment relationship with Mr. Dov
      S.
      Elefant for Mr. Elefant to serve as its Corporate Controller. Pursuant to the
      terms of an offer letter executed by the Company and Mr. Elefant, Mr. Elefant
      will serve as Corporate Controller on an at-will basis and earn an annual salary
      at the rate of $195,000. Mr. Elefant will be eligible for an annual bonus of
      $20,000 in the discretion of the compensation committee of the Board. In the
      event Mr. Elefant’s employment is terminated by the Company without cause within
      three years of his start date, the Company will pay him a severance payment
      of
      six months of his then-current base salary. In addition, pursuant to the
      Company’s 2004 Omnibus Incentive Compensation Plan and subject to the terms and
      conditions therein, on March 19, 2007, the Company granted Mr. Elefant options
      to purchase 200,000 shares of the common stock, which options are exercisable
      for a period of seven years at a per share price of $1.75 and which options
      vest
      over a three year period, with 1/3 of the option award vesting on the one-year
      anniversary of the date of grant and the balance vesting in equal monthly
      installments of 1/24 of the remaining option award over the following 24
      months.





**NOTE
      H - SUBSEQUENT EVENT**





On
      April
      12, 2007, the Company entered into a Plasma Purchase Agreement with a
      third-party supplier for the purchase of U.S. source plasma (the “Purchase
      Agreement”). The plasma will be utilized for the production of product by
      Sanquin Blood Supply Foundation under the Company’s Distribution and
      Manufacturing Services Agreement with Sanquin and to supply our patients with
      product under the open-label clinical trial. The term of the Purchase Agreement
      expires December 31, 2011, unless sooner terminated in accordance with its
      terms. Under the Purchase Agreement, the supplier agreed to sell the Company
      specified annual quantities of plasma in accordance with applicable good
      manufacturing practices. The Company committed to purchase $7,360,000 worth
      of
      product during the 2007 calendar year and $8,320,000 worth of product during
      2008. The parties agreed to negotiate the purchase commitments for future
      periods. Either party may terminate the Purchase Agreement upon written notice
      if the other party is in material breach of any provision thereof, subject
      to
      applicable thirty (30) day cure periods. Either party may also terminate the
      Purchase Agreement upon ninety (90) days’ prior written notice upon the
      occurrence of certain standard events involving the bankruptcy or insolvency
      of
      the other party and the Purchase Agreement shall automatically terminate upon
      the occurrence of additional certain events specified therein. For
      the
      year ended December 31, 2007, Sanquin has agreed to purchase a maximum of
      $3,200,000 of plasma from the Company.




10




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




The
      following discussion should be read in conjunction with our condensed
      consolidated financial statements and notes to those statements. In addition
      to
      historical information, the following discussion and other parts of this
      quarterly report contain forward-looking information that involves risks and
      uncertainties.





**Forward
      Looking Statements**





This
      Report on Form 10-QSB for Lev Pharmaceuticals, Inc. may contain forward-looking
      statements. We are including the following cautionary statement in this
      Quarterly Report on Form 10-QSB to make applicable the safe harbor provisions
      of
      the Private Securities Litigation Reform Act of 1995 for any forward-looking
      statements made by us or on our behalf. Forward looking statements include
      statements concerning plans, objectives, goals, strategies, future events or
      performance and underlying assumptions and other statements which are other
      than
      statements of historical facts. You can identify these statements by
      forward-looking words such as “may,” “will,” “expect,” “intend,” “anticipate,”
“believe,” “estimate” and “continue” or similar words. You should read
      statements that contain these words carefully because they discuss future
      expectations and plans, which contain projections of future results of
      operations or financial condition or state other forward-looking information.
      We
      believe that it is important to communicate future expectations to investors.
      However, there may be events in the future that we are not able to accurately
      predict or control. Any forward-looking statement contained in this document
      speaks only as of the date on which the statement is made. We undertake no
      obligation to update any forward-looking statement or statements to reflect
      events or circumstances that occur after the date on which the statement is
      made
      or to reflect the occurrence of unanticipated events.





The
      forward-looking statements included herein are based on current expectations
      that involve a number of risks and uncertainties which could cause actual
      results or outcomes to differ materially from those expressed in good faith
      forward-looking statements. Certain of these risks are set forth under “Risk
      Factors” in our Annual Report on Form 10-KSB and our periodic reports filed with
      the SEC. These risks include, without limitation: the carrying-out of our
      research and development program for our product candidates, including
      demonstrating their safety and efficacy at each stage of testing; the timely
      obtaining of regulatory approvals; the commercialization of our product
      candidates, at reasonable costs; the ability to compete against products
      intended for similar use by recognized and well capitalized pharmaceutical
      companies; our ability to raise capital when needed, and without adverse and
      highly dilutive consequences to stockholders; and our ability to retain
      management and obtain additional employees as required. Our expectations,
      beliefs and projections are expressed in good faith and are believed by us
      to
      have a reasonable basis, including without limitation, management’s examination
      of historical operating trends, data contained in our records and other data
      available from third parties, but there can be no assurance that management’s
      expectations, beliefs or projections will result or be achieved or accomplished.
      Accordingly, to the extent that this Report contains forward-looking statements
      regarding the financial condition, operating results, business prospects or
      any
      other aspect of our company, please be advised that our actual financial
      condition, operating results and business performance may differ materially
      from
      that projected or estimated by us in forward-looking statements.




**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 acute treatment of
      hereditary angioedema (“HAE”), in March 2005. In November 2005, we initiated a
      Phase III clinical trial of C1-INH for the prophylactic treatment of HAE. In
      October 2005, we received fast track designation status by the FDA for the
      treatment of HAE.





On
      January 17, 2007, we announced that we have completed patient treatment in
      the
      acute portion of a pivotal Phase III clinical trial for our lead product
      candidate, C1-INH for the treatment of HAE and on March 14, 2007, we announced
      positive results from our Phase III clinical trial of C1-INH for the acute
      treatment of HAE. In the acute trial, the protocol-defined primary endpoint
      was
      reached, showing a clinically and statistically significant reduction in the
      time to sustained relief of acute HAE symptoms. The primary endpoint was met
      using the protocol-defined intent to treat analysis, with a median time to
      sustained symptom relief of 2.0 hours for patients receiving C1-INH compared
      to
      greater than 4.0 hours, the maximum evaluation period, for patients receiving
      placebo. In addition, 21 laryngeal attacks were treated in the study on an
      open
      label basis. All of the laryngeal attacks were successfully treated with C1-INH.
      Based on the positive results of this trial, we intend to submit a biologics
      license application, or BLA, to the FDA during the second quarter of 2007.
      The
      second phase of the trial, examining the effectiveness of C1-INH in preventing
      inflammatory attacks in more severely affected HAE patients, is ongoing and
      is
      expected to conclude in the second half of 2007. If approved, we intend to
      commercialize C1-INH ourselves through a specialty sales force in the United
      States. We are also developing C1-INH for the treatment of 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.




11




From
      July
      21, 2003 (inception) through March 31, 2007, 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 a commercially available
      product by the end of our 2007 fiscal year. Commercialization of our product
      candidates is subject to FDA approval.





As
      a
      company that expects to have neither product revenues nor profits over the
      next
      year, management of cash flow is extremely important. The most significant
      use
      of our cash is for research and development activities, which include clinical
      trials and regulatory clearance. During the three months ended March 31, 2007,
      our research and development expenses were $3,223,397.





**2006
      Financing**





On
      October 16, 2006 and October 20, 2006, we closed on the sale of an aggregate
      of 32,307,693 shares of our common stock and warrants to purchase up to an
      aggregate of 9,692,308 shares of common stock for aggregate proceeds of $21
      million to certain institutions and accredited investors. The warrants are
      exercisable at any time until five years from the initial closing date at a
      price of $0.84 per share. We have been using the net proceeds of the private
      placement of approximately $19.6 million for continued funding of our clinical
      trials, additional research and development efforts, and general working capital
      purposes. These securities were sold under Section 4(2) of the Securities Act
      of
      1933, as amended, and Rule 506 of Regulation D, promulgated thereunder, on
      a
      private placement basis, to institutional and accredited investors. We paid
      approximately $1.4 million in total commissions and expenses to broker-dealers
      engaged to assist us in the financing and also issued warrants to purchase
      up to
      1,897,057 shares of common stock as additional compensation to the
      broker-dealers, which warrants were issued on substantially similar terms as
      the
      investor warrants




**Merger
      Transaction**





On
      November 5, 2004, Fun City Popcorn (“FCP”), its wholly-owned subsidiary, Lev
      Acquisition Corp. (“Lev Sub”) and Lev Development Corp., previously known as Lev
      Pharmaceuticals, Inc. (“Old Lev” or “LDC”), entered into the 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 (the “Public
      Company Merger”). As a result of the Public Company Merger, FCP issued 5,029,795
      shares of common stock and 4,789,433 shares of Series A convertible 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 incorporated
      in Delaware (the “Recapitalization Merger”). This merger was undertaken to
      increase the authorized number of shares of common stock to permit the
      conversion of the Series A preferred stock, to reincorporate FCP in the State
      of
      Delaware and to change the name of the company. On February 17, 2005, the
      Recapitalization Merger 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 the Public Company Merger and the 5,029,795 shares of
      common stock issued to the Old Lev stockholders in the Public Company Merger,
      resulted in a total of 76,303,319 shares of common stock outstanding as of
      February 17, 2005. As part of the Recapitalization Merger, Old Lev changed
      its
      name to Lev Development Corp., FCP changed its name to Lev Pharmaceuticals,
      Inc.
      and we increased our authorized common stock to 200,000,000 shares and our
      preferred stock to 20,000,000 shares. As a result of these mergers, the
      stockholders of Old Lev acquired approximately 94% of our outstanding common
      stock.




12




The
      Public Company Merger, which resulted in the stockholders of Old 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
      historical 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. The Consolidated Statement of Operations reflects
      the activities of Old Lev from the commencement of its operations on July 21,
      2003. In connection with the Agreement, Old Lev paid $350,000 for the
      acquisition of FCP including $283,732 to certain stockholders and assuming
      the
      outstanding tax liability of $66,268. In connection with these mergers, the
      exercise price of the outstanding warrants and options remained the same. We
      recorded a charge of approximately $75,000 for the change in value of our
      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%.





*New
      Employment Agreements/Arrangements*





During
      the quarter ended March 31, 2007, we entered into amended and restated
      employment agreements with our Chairman, Judson Cooper and our Chief Executive
      Officer, Joshua Schein. In March 2007 we hired Dov Elefant as our Corporate
      Controller pursuant to the terms of an offer letter. The material terms and
      conditions of these employments arrangements are summarized in Note G to our
      Unaudited Condensed Consolidated Financial Statements.





**Plan
      of Operation**





Our
      plan
      of operation for the next twelve months is to focus primarily on our Phase
      III
      clinical trials of our lead product candidate, C1-INH for the acute and
      prophylactic treatment of HAE, to complete the analysis of the data from the
      Phase III trial for acute treatment of HAE and submit a BLA requesting the
      FDA’s
      approval for commercialization. In addition, we intend to initiate a research
      program in 2007 for the development of a genetically engineered or recombinant
      version of C1-INH as part of a broader program examining the potential of C1-INH
      in treating cardiovascular disease, including acute myocardial infarction
      (“AMI”).





*Satisfaction
      of Cash Resources*





To
      date,
      we have relied solely upon selling equity securities in private placements
      to
      generate cash to implement our plan of operations. Based
      on
      our current levels of research and development and our business plan, we
      believe that our existing cash, cash equivalents and investments of $13,081,604
      as of March 31, 2007 will not be sufficient to meet our cash requirements for
      the next twelve months .
      As we
      expect that our cash used in operations will increase significantly over the
      next several years, we will be required to raise additional capital to complete
      the development and commercialization of our current product candidates. We
      will
      pursue equity financing alternatives or other financing in order to raise needed
      funds. To raise additional funds, we intend to either undertake private
      placements of our securities, either as a self-offering or with the assistance
      of registered broker-dealers, or negotiate a private sale of our securities
      to
      one or more institutional investors. However, we currently have no firm
      agreements with any third-parties for any financing arrangements and no
      assurances can be given that we will be successful in raising additional capital
      from any proposed financings. Further, we cannot assure you that any additional
      financing will be available or, even if it is available that it will be on
      terms
      acceptable to us. If we raise additional funds by selling shares of common
      stock
      or convertible securities, the ownership of our existing shareholders will
      be
      diluted. Further, if additional funds are raised though the issuance of equity
      or debt securities, such additional securities may have powers, designations,
      preferences or rights senior to our currently outstanding securities. Any
      inability to obtain required financing on sufficiently favorable terms could
      have a material adverse effect on our business, results of operations and
      financial condition. If we are unsuccessful in raising additional capital and
      increasing revenues from operations, we will need to reduce costs and operations
      substantially.   Further, if expenditures required to achieve our plans are
      greater than projected or if revenues are less than, or are generated more
      slowly than, projected, we will need to raise a greater amount of funds than
      currently expected. As of March 31, 2007, we have cash commitments through
      December 31, 2007 of approximately $9,472,000 to primarily fund our clinical
      research programs, leases, executive
      employment contracts and plasma supply contract. A significant expense for
      the
      Phase III clinical trials is the C1-INH product that we purchase from Sanquin.
      However, this does not affect our cash position because Sanquin has granted
      continuing loans to us in the amount of the aggregate purchase price of the
      C1-INH product. The loan balance as of March 31, 2007 was $2,523,611, net of
      debt discount. Each loan will be forgiven if regulatory approval is obtained.
      If
      regulatory approval is not received, then each loan is payable on the earlier
      of
      January 16, 2014 or the termination of the Sanquin distribution agreement.
      We
      expect to increase our expenditures for our Phase III clinical trials and
      regulatory matters, including preparation and filing of a BLA, by the second
      quarter of 2007 .
      As
      described in greater detail in note H to our Unaudited Condensed Consolidated
      Financial Statements, in April 2007 we entered into a plasma supply agreement
      with a third-party supplier pursuant to which we will purchase $7,360,000 worth
      of product during the 2007 calendar year and $8,320,000 worth of product during
      2008. We also expect that our general and administrative expenses will increase
      this year as we hire additional marketing staff and have expenditures relating
      to the commercialization of CI-1NH.




13




*Research/Product
      Programs*





Hereditary
      Angioedema





In
      January 2004, we entered into a distribution and manufacturing services
      agreement with Sanquin relating to the treatment of HAE. 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 Israel and all
      countries in North, Central and South America, with the exception of the Dutch
      Overseas Territories, Argentina and Brazil.





Under
      the
      distribution agreement, it is our responsibility to conduct the Phase III
      clinical trials of C1-INH for the treatment of HAE and to prepare and file
      all
      regulatory applications necessary to register the product candidate. 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 our 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 upon receipt of FDA approval.





As
      described in greater detail above under the caption “Overview”, on March 14,
      2007, we announced positive results from our Phase III clinical trial of C1-INH
      for the acute treatment of HAE. Based on the positive results of this study,
      we
      intend to submit a BLA to the FDA during the second quarter of
      2007.





Acute
      Myocardial Infarction





We
      entered into a separate license agreement with Sanquin on January 27, 2004
      relating to the treatment of AMI. 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.





This
      second development program is focused on the use of C1-INH in treating AMI.
      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. Based on
      the
      rights obtained from Sanquin, we intend to initiate a research program for
      the
      development of a genetically engineered or recombinant version of C1-INH as
      part
      of a broader program examining the potential of C1-INH in treating
      cardiovascular disease, including AMI during the second half of fiscal
      2007.




The
      following analysis of our financial condition and results of operations should
      be read in conjunction with our condensed consolidated financial statements
      and
      notes contained elsewhere in this Form 10-QSB.





**Results
      of Operations**





*Three
      Months Ended March 31, 2007 as compared to the Three Months Ended March 31,
      2006*  ******





We
      had no
      revenues during the three months ended March 31, 2007 and March 31, 2006 because
      we do not have any commercial biopharmaceutical products.




14




Research
      and development expenses for the three months ended March 31, 2007 and 2006
      were
      $3,223,397 and $1,096,187, respectively. The increase of $2,127,210 was
      primarily due to expenses relating to the progress of the Phase III clinical
      trials, purchases of plasma product that were purchased for the open-label
      clinical trial, laboratory services and consulting expense.





General
      and administrative expenses for the three months ended March 31, 2007 and 2006
      were $2,421,693 and $753,850, respectively. The increase of $1,667,843 was
      primarily due to increases in payroll and related benefits, share-based
      compensation for employee options, marketing, legal expense and
      travel.





Interest
      income for the three months ended March 31, 2007 and 2006 was $197,791 and
      $41,955, respectively. The increase of $155,836 was attributed to having more
      cash to invest.





Due
      to
      the factors mentioned above, the net loss for the three months ended March
      31,
      2007 was $5,478,073 or a loss of $ 0.05 per common share, basic and diluted
      as
      compared to a loss of $1,813,525 for the three months ended March 31, 2006
      or a
      loss of $0.02 per common share, basic and diluted.




**Liquidity
      and Capital Resources**





As
      of
      March 31, 2007, we had cash, cash equivalents and investments of $13,081,604
      and
      working capital of $10,935,102. Net operating cash used in operations was
      $4,854,039 for the three months ended March 31, 2007 and was primarily due
      to
      our loss of $5,478,073. The operating loss was partially offset by non cash
      expenses of $1,158,201 related to stock-based compensation related to the
      issuance of employee stock options, purchases of C1-INH product and amortization
      of debt discount. Pursuant to the Sanquin loan agreement, purchases made during
      our Phase III clinical trials are added to our loan and we are not required
      to
      make any principal payments. The loan balance, net of debt discount as of March
      31, 2007 was $2,523,611 and will be forgiven when regulatory approval from
      the
      FDA is received. If we do not receive regulatory approval, then the loan is
      repayable on the earlier of January 16, 2014, or the termination of the
      Agreement. The loan does not bear interest and we impute interest using the
      effective interest rate method. Net cash used in investing activities was
      $57,360 for the three months ended March 31, 2007 resulting from the purchase
      of
      fixed assets. Cash provided by financing activities for the three months ended
      March 31, 2007 was $105,523 resulting from proceeds from the exercise of
      warrants.





Our
      distribution agreement with Sanquin 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 receipt of FDA regulatory
      approval of C1-INH and thereafter, we must purchase from Sanquin a minimum
      amount of C1-INH valued in Euros equal to be approximately $10,000,000 (as
      of
      March 31, 2007) per calendar year.




In
      connection with the license agreement with Sanquin for the treatment of AMI
      we
      are required to create a comprehensive research plan for the commercial
      exploitation of the licensed technology. We continue to work with Sanquin on
      the
      design of the research plan. We agreed to commit a minimum of $125,000 per
      annum
      during the first three years following the execution of the license agreement
      toward research on the licensed technology conducted by Sanquin and by other
      parties. To date, we have funded approximately $141,000 to third parties engaged
      in this research. We also have an obligation to pay Sanquin royalties on sales
      of products incorporating the technology.





On
      March
      2, 2005, we entered into a CRO services agreement with INC Research which
      governs INC Research’s provision of services in connection with the support of
      clinical investigation and management and/or research of our Phase III clinical
      trial. We entered into a separate services agreement with INC Research in
      September 2006 which governs INC Research’s provision of additional services in
      connection with our Phase III clinical trials and activities related to the
      commercialization of our product candidates. The services provided by INC
      Research pursuant to both contractual arrangements are on a work-order basis
      and
      we are invoiced on a time and materials basis. We have the right to terminate
      both agreements, and any pending work-order, with prior notice and without
      cause. As of March 31, 2007, we have estimated that we will pay INC Research
      at
      least $1,085,000 for its services under both agreements in 2007. However,
      du e
      to the
      variability associated with the conduct of clinical trials, we are unable to
      estimate with certainty the future costs we will incur under our CRO agreement.
      We anticipate that these costs will increase significantly above our current
      estimates in future periods as a result of our initiation or expansion of the
      clinical trials.





In
      October 2006, we received net proceeds of $19,584,745 in a private placement,
      net of issuance costs of $1,415,255 from the sale of 32,307,693 shares of common
      stock at $0.61 per share and five year warrants to purchase 9,692,308 shares
      of
      common from stock at an exercise price of $0.84 per share. The Company issued
      1,698,538 and 198,519 warrants to purchase common stock to registered
      broker-dealers that assisted us in the financings (the “Agent Warrants”). The
      Agent Warrants are exercisable at $0.84 per share and $1.18 per share and expire
      five years from the date of issue. We paid $1,279,593 to the placement agent
      and
      to the registered broker dealer.




15


Our
      capital resources are focused on the clinical development and regulatory
      approval of C1-INH for the treatment of HAE .
      To
      date, we have relied solely upon selling equity securities in private placements
      to generate cash to implement our plan of operations. Based
      on
      our current levels of research and development and our business plan, we
      believe that our existing cash, cash equivalents and investments of $13,081,604
      as of March 31, 2007 will not be sufficient to meet our cash requirements for
      the next twelve months .
      As we
      expect that our cash used in operations will increase significantly over the
      next several years, we will be required to raise additional capital to complete
      the development and commercialization of our current product candidates. We
      will
      pursue equity financing alternatives or other financing in order to raise needed
      funds. If we are unsuccessful in raising additional capital and increasing
      revenues from operations, we will need to reduce costs and operations
      substantially.  Our capital resources are focused on the clinical
      development and regulatory approval of C1-INH for the treatment of HAE. As
      we
      expect that our cash used in operations will increase significantly over the
      next several years, we expect to need to raise additional capital to complete
      the development and commercialization of our current product candidates. As
      discussed above under the caption “Plan of Operation - Satisfaction of Cash
      Resources”, we will need to pursue equity financing alternatives or other
      financing in order to raise needed funds. We currently have no firm agreements
      with any third-parties for any financing arrangements and no assurances can
      be
      given that we will be successful in raising additional capital from any proposed
      financings. Further, we cannot assure you that any additional financing will
      be
      available or, even if it is available that it will be on terms acceptable to
      us.
      If we raise additional funds by selling shares of common stock or convertible
      securities, the ownership of our existing shareholders will be diluted and
      the
      securities that we may issue in a financing may include powers, designations,
      preferences or rights senior to our currently outstanding securities. Any
      inability to obtain required financing on sufficiently favorable terms could
      have a material adverse effect on our business, results of operations and
      financial condition. If we are unsuccessful in raising additional capital and
      increasing revenues from operations, we will need to reduce costs and operations
      substantially.




As
      a
      development stage enterprise, our primary efforts, to date, have been devoted
      to
      conducting research and development, raising capital, forming collaborations
      and
      recruiting staff. We have limited capital resources and have an accumulated
      deficit of $28,666,412 since inception and have had negative cash flows from
      operations since inception. These losses have resulted principally from costs
      incurred in research and development activities, including acquisition of
      technology rights and general and administrative expenses. We expect to incur
      additional operating losses until such time as we generate sufficient revenue
      to
      offset expenses, and we may never achieve profitable operations.





We
      expect
      our cash requirements for operating activities will increase due to the
      following future activities:





·
            Conduct
                commercialization activities in support of our product candidates,
                including development of market plans and regional sales and marketing
                capabilities;





·
            Conduct
                clinical programs, including clinical trials to support regulatory
                submissions of our product
                candidates;




·
            Maintain,
                protect and expand our intellectual
                property;




·
            Develop
                expanded internal infrastructure;
                and




·
            Hire
                additional personnel.




**COMMITMENTS
      AND CONTINGENCIES**




In
      our
      Annual Report on Form 10-KSB for the year ended December 31, 2006 under the
      heading “Contractual Obligations,” we outlined our commitments and
      contingencies. For the three months ended March 31, 2007, there have been no
      material changes in our commitments and contingencies except for the employment
      agreements that we entered into during such period. See Note G to our Unaudited
      Condensed Consolidated Financial Statements for additional information regarding
      these agreements and to supply our patients with product under the open-label
      clinical trial. In addition, on April 12, 2007, we entered into a Plasma
      Purchase Agreement with a third-party supplier for the purchase of U.S. Source
      Plasma. The plasma will be utilized for the production of product by Sanquin
      Blood Supply Foundation under our Distribution and Manufacturing Services
      Agreement with Sanquin. The Purchase Agreement expires December 31, 2011, unless
      sooner terminated in accordance with its terms. Under the Purchase Agreement,
      the supplier agreed to sell us specified annual quantities of plasma in
      accordance with applicable good manufacturing practices. We committed to
      purchase $7,360,000 worth of product during the 2007 calendar year and
      $8,320,000 worth of product during 2008. The parties agreed to negotiate the
      purchase commitments for future periods.




16




**OFF
      -BALANCE SHEET ARRANGEMENTS**





We
      had no
      off-balance sheet arrangements as of March 31, 2007 with the exception of the
      leases of our office space and copiers.




**CRITICAL
      ACCOUNTING POLICIES**




There
      have been no material changes to our critical accounting policies and estimates
      from the information provided in Item 6, “Management’s Discussion and Analysis
      or Plan of Operation”, included in our 10-KSB for the fiscal year ended December
      31, 2006, except as follows:





FIN
      48 -
      We account for uncertain tax positions in accordance with FASB Interpretation
      No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation
      of FASB Statement No. 109 (“SFAS 109”). The application of income tax law is
      inherently complex. Laws and regulations in this area are voluminous and are
      often ambiguous. As such, we are required to make many subjective assumptions
      and judgments regarding our income tax exposures. Interpretations of and
      guidance surrounding income tax laws and regulations change over time. As such,
      changes in our subjective assumptions and judgments can materially affect
      amounts recognized in the consolidated balance sheets and statements of
      operations. See note F to the unaudited condensed consolidated financial
      statements.




**ITEM
      3. CONTROLS AND PROCEDURES**





*Evaluation
      of Disclosure Controls and Procedures*





Our
      Chief
      Executive Officer and Chief Financial Officer, after evaluating the
      effectiveness of our disclosure controls and procedures (as defined in Rule
      13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period
      covered by this report, have concluded that, based on the evaluation of these
      controls and procedures, our disclosure controls and procedures were effective
      at the reasonable assurance level 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.





*Changes
      in Internal Controls*




As
      previously reported, on March 16, 2007 we appointed Dov S. Elefant as our
      Corporate Controller to augment our internal accounting department and improve
      our internal control over financial reporting. Management believes that the
      integration of our Corporate Controller has been successful. Other than as
      described above, there was no change in our system of internal control over
      financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange
      Act of 1934) during our fiscal quarter ended March 31, 2007 that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.





We
      do not
      expect that internal controls over financial reporting will prevent all errors
      or all instances of fraud. A control system, no matter how well designed and
      operated, can provide only reasonable, not absolute, assurance that the control
      system’s objectives will be met. Further, the design of a control system must
      reflect the fact that there are resource constraints, and the benefits of
      controls must be considered relative to their costs. Because of the inherent
      limitations in all control systems, no evaluation of controls can provide
      absolute assurance that all control issues and instances of fraud, if any,
      within its company have been detected. These inherent limitations include the
      realities that judgments in decision-making can be faulty, and that breakdowns
      can occur because of simple error or mistake. Controls can also be circumvented
      by the individual acts of some persons, by collusion of two or more people,
      or
      by management override of the controls. The design of any system of controls
      is
      based in part upon certain assumptions about the likelihood of future events,
      and any design may not succeed in achieving its stated goals under all potential
      future conditions. Over time, controls may become inadequate because of changes
      in conditions or deterioration in the degree of compliance with policies or
      procedures. Because of the inherent limitation of a cost-effective control
      system, misstatements due to error or fraud may occur and not be detected.




17




**PART
      II - OTHER INFORMATION**




**ITEM
      1. LEGAL PROCEEDINGS**





We
      are
      not currently a party to, nor are any of our property currently the subject
      of,
      any pending legal proceeding.




**ITEM
      2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





During
      the quarter ended March 31, 2007, we did not issue any securities that were
      not
      registered under the Securities Act of 1933, as amended (the “Securities Act”)
      except as disclosed in previous SEC filings and as set forth herein.


****


**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





Not
      applicable.




**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





Not
      applicable.





**ITEM
      5. OTHER INFORMATION**





None.




18





**ITEM
      6. EXHIBITS**




The
      following exhibits are filed herewith or incorporated by reference.





**Incorporated
                by Reference****Exhibit****Number**
            
            **Exhibit
                Description**
            
            **Form**
            
            **Dated**
            
            **Exhibit**
            
            **Filed****Herewith**10.1
            
            Employment
                Agreement between the Registrant and Judson Cooper
            
            10-KSB
            
            3/30/07
            
            10.1510.2
            
            Employment
                Agreement between theRegistrant
                and Joshua D. Schein
            
            10-KSB
            
            3/30/07
            
            10.1610.3
            
            Offer
                Letter between theRegistrant
                and Dov Elefant
            
            10-KSB
            
            3/30/07
            
            10.1710.4*
            
            Plasma
                Supply Agreement
            
            
            
            
            
            
            
            X31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002
            
            
            
            
            
            
            
            X31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002
            
            
            
            
            
            
            
            X32.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
            
            
            
            
            
            
            
            X32.2
            
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
            
            
            
            
            
            
            
            X





*
      Confidential treatment has been requested with respect to portions of this
      document pursuant to Rule 24b-2 of the Securities Exchange Act. The redacted
      portions of this document were filed separately with the Securities and Exchange
      Commission.




19





**SIGNATURES**





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




**Lev
                Pharmaceuticals, Inc.**May
                15, 2007
            By:
            /s/ Joshua
              D.
              ScheinJoshua
                D. Schein, Ph.D.
              Chief
                  Executive Officer




May
                15, 2007
            By:
            /s/ Douglas
              J. BeckDouglas
                J. Beck
              Chief
                  Financial Officer




20