****    **UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**





**(Mark
      One)**





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





**For
                the quarterly period ended March 31,
                2006**





**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.)**122
                East 42nd Street, Suite 2606**
              **New
                York, New York**
            **10168**(Address
                of principal executive offices)
            (Zip
                Code)




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





**N/A**


(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 T 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 T No





As
      of May
      8, 2006, the issuer had 81,702,544 shares of common stock outstanding.





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








**INTRODUCTORY
      NOTE**





This
      Report on Form 10-QSB for Lev Pharmaceuticals, Inc. (the "Company") may contain
      forward-looking statements. You can identify these statements by forward-looking
      words such as "may," "will," "expect," "intend," "anticipate," believe,"
      "estimate" and "continue" or similar words. Forward-looking statements include
      information concerning possible or assumed future business success or financial
      results. You should read statements that contain these words carefully because
      they discuss 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. Accordingly, we do not undertake any obligation
      to update any forward-looking statements for any reason, even if new information
      becomes available or other events occur in the future.





The
      forward-looking statements included herein are based on current expectations
      that involve a number of risks and uncertainties set forth under "Risk Factors"
      in our 10-KSB and our periodic reports filed with the SEC. Accordingly, to
      the
      extent that this Report contains forward-looking statements regarding the
      financial condition, operating results, business prospects or any other aspect
      of the Company, please be advised that the Company's actual financial condition,
      operating results and business performance may differ materially from that
      projected or estimated by the Company in forward-looking statements.








-1-


**Lev
      Pharmaceuticals, Inc.**




**Index
      to Form 10-QSB**






**Page**Part
                I.
            Financial
                InformationItem
                1.
            Condensed
                Consolidated Financial Statements
            **3**Condensed
                Consolidated Balance Sheets as of March 31 2006 (Unaudited) and December
                31, 2005
            **3**Unaudited
                Condensed Consolidated Statements of Operations for the Three MonthsEnded
                March 31,2006
                and March 31, 2005 and for the Period from July 21, 2003 (Inception)
                to
                March 31, 2006
            **4**Unaudited
                Condensed Consolidated Statements of Cash Flows for the Three MonthsEnded
                March 31,2006
                and March 31, 2005 and for the Period from July 21, 2003 (Inception)
                to
                March 31, 2006
            **5**Notes
                to Unaudited Condensed Consolidated Financial Statements
            **6**Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            **11**Item
                3.
            Controls
                and Procedures
            **17**Part
                II.
            Other
                Information
            **17**Item
                1.
            Legal
                Proceedings
            **17**Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            **17**Item
                3.
            Defaults
                Upon Senior Securities
            **17**Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            **17**Item
                5.
            Other
                Information
            **17**Item
                6.
            Exhibits
            **17**Signatures
            **18**






-2-


**LEV
        PHARMACEUTICALS INC. AND SUBSIDIARY**
 **(a
        development stage enterprise)**
  **Condensed
        Consolidated Balance Sheets**




March
                  31,
                2006(Unaudited)
            
            December
                31,
              2005ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            3,341,948
            
            $
            3,482,616Investments
                - held to maturity
            
            
            996,807
            
            
            2,487,390Prepaid
                expenses
            
            
            235,725
            
            
            276,829Other
                assets
            
            
            24,311
            
            
            60,081Total
                current assets
            
            
            4,598,791
            
            
            6,306,916Fixed
                assets, net of accumulated depreciation
            
            
            71,364
            
            
            69,922Security
                deposit
            
            
            16,817
            
            
            16,817$
            4,686,972
            
            $
            6,393,655LIABILITIESCurrent
                liabilities:Accounts
                payable
            
            $
            400,198
            
            $
            657,230Accrued
                expenses
            
            
            273,730
            
            
            352,036Deferred
                lease liability
            
            
            1,640
            
            
            2,519Total
                current liabilities
            
            
            675,568
            
            
            1,011,785Loan
                payable, net of debt discount
            
            
            708,262
            
            
            316,077Total
                liabilities
            
            
            1,383,830
            
            
            1,327,862Commitments
                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,
              81,527,544
                shares issued and outstanding at March 31, 2006
              and
                December 31, 2005, respectively
            
            
            815,275
            
            
            815,275Additional
                paid-in capital
            
            
            15,722,242
            
            
            15,671,368Deficit
                accumulated during the development stage
            
            
            (13,234,375
            )
            
            (11,420,850
            )Total
                stockholders' equity
            
            
            3,303,142
            
            
            5,065,793$
            4,686,972
            
            $
            6,393,655




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


-3-


**LEV
      PHARMACEUTICALS INC. AND SUBSIDIARY**


(a
      development stage enterprise)




**Unaudited
      Condensed Consolidated Statements of Operations**





PeriodThree
            
            Three
            
            FromMonths
            
            Months
            
            July
                21, 2003Ended
            
            Ended
            
            (Inception)
                toMarch
                31,
            
            March
                31,
            
            March
                31,2006
            
            2005
            
            2006Costs
                and expenses:Research
                and development
            
            $
            1,096,187
            
            $
            446,165
            
            $
            4,598,954Merger
                cost payments to certain Fun City Popcorn, Inc.
              shareholders
            
            
            
            
            
            
            
            
            283,732General
                and administrative
            
            
            753,850
            
            
            548,757
            
            
            8,239,487Loss
                before other income
            
            
            (1,850,037
            )
            
            (994,922
            )
            
            (13,122,173
            )Other
                income:Interest
                income
            
            
            41,955
            
            
            21,086
            
            
            274,762Interest
                expense
            
            
            (5,443
            )
            
            
            
            
            (16,909
            )Net
                loss
            
            $
            (1,813,525
            )
            $
            (973,836
            )
            $
            (12,864,320
            )Net
                loss per share - basic and diluted
            
            
            ($0.02
            )
            
            ($0.01
            )Weighted
                average shares - basic and diluted
            
            
            81,527,544
            
            
            76,303,919









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




-4-


**LEV
      PHARMACEUTICALS INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**




**Unaudited
      Condensed Consolidated Statements of Cash Flows**





Period
                FromThree
                Months
            
            Three
                Months
            
            July
                21, 2003Ended
            
            Ended
            
            (Inception)
                toMarch
                31,
            
            March
                31,
            
            March
                31,2006
            
            2005
            
            2006Cash
                flows from operating activities:Net
                loss
            
            $
            (1,813,525
            )
            $
            (973,836
            )
            $
            (12,864,320
            )Adjustments
                to reconcile net loss to net cash usedin
                operating activities:Compensation
                  to consultants from issuance ofwarrants
            
            
            11,458
            
            
            
            
            
            2,027,813Repricing
                of options and warrants
            
            
            
            
            
            
            
            
            1,455,269Option
                and warrants modification from merger
            
            
            
            
            
            
            
            
            75,201Depreciation
                expense
            
            
            4,179
            
            
            986
            
            
            14,939Stock-based
                compensation expense to employees
            
            
            36,350
            
            
            
            
            
            36,350Accretion of
                investment income
            
            
            (9,417
            )
            
            
            
            
            (9,417
            )Supplier
                purchase funding
            
            
            392,185
            
            
            
            
            
            708,262Changes
                in:Prepaid
                expenses and other assets
            
            
            79,940
            
            
            35,547
            
            
            (273,283
            )Accounts
                payable
            
            
            (257,032
            )
            
            152,276
            
            
            400,198Accrued
                expenses
            
            
            (78,306
            )
            
            (134,851
            )
            
            273,730Deferred
                lease liability
            
            
            (879
            )
            
            (374
            )
            
            1,640Income
                taxes payable
            
            
            
            
            
            319
            
            
            (64,463
            )Net
                cash used in operating activities
            
            
            (1,635,047
            )
            
            (919,933
            )
            
            (8,218,081
            )Cash
                flows from investing activities:Purchase
                of fixed assets
            
            
            (5,621
            )
            
            (19,152
            )
            
            (86,303
            )Proceeds
                from investments
            
            
            1,500,000
            
            
            
            
            
            1,500,000Purchase
                of investments
            
            
            
            
            
            
            
            
            (2,487,390
            )Net
                cash provided by (used in) investing
            
            
            1,494,379
            
            
            (19,152
            )
            
            (1,073,693
            )Cash flows
              from
              financing activities:Proceeds
                from stock subscription receivable
            
            
            
            
            
            
            
            
            130Proceeds
                from notes payable to stockholders
            
            
            
            
            
            
            
            
            18,000Repayment
                of notes payable to stockholders
            
            
            
            
            
            
            
            
            (18,000
            )Net
                proceeds from sale of common stock
            
            
            
            
            
            
            
            
            12,633,592Net
                cash provided by financing activities
            
            
            
            
            
            
            
            
            12,633,722Net
                (decrease) increase in cash and cash equivalents
            
            
            (140,668
            )
            
            (939,085
            )
            
            3,341,948Cash
                and cash equivalents - beginning of period
            
            
            3,482,616
            
            
            5,544,507Cash
                and cash equivalents - end of period
            
            $
            3,341,948
            
            $
            4,605,422
            
            $
            3,341,948




Supplemental
      non-cash flow from investing and financing activities:




During
        the three months ended March 31, 2006, our supplier (Sanquin) loaned the
        Company
        $505,947 for purchases of CI-INH, see note F. In connection with the loan,
        the
        Company recorded debt discount of $113,762.
 During
        the three months ended March 31, 2006, the Company issued warrants to
        consultants to purchase 50,000 shares of our stock at $1.10 per share that
        vest
        immediately and expire on February 18, 2009 that were valued at
        $14,524




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 that is engaged in developing and
      commercializing therapeutic products for the treatment of inflammatory diseases.
      On December 29, 2004, the merger closed and pursuant to the Agreement, FCP
      acquired 100% of the outstanding capital stock of Lev through its subsidiary
      Lev
      Acquisition Corp. ("LAC"). In connection with the merger, FCP changed its name
      to Lev Pharmaceuticals, Inc. and increased its authorized common stock to
      200,000,000 shares and its preferred stock to 20,000,000 shares. Under terms
      of
      the Agreement, the stockholders of Lev exchanged all of their issued and
      outstanding shares of common stock for 5,029,795 shares of FCP common stock,
      and
      4,789,433 Series A voting convertible preferred shares (the "Exchange"). Each
      Series A voting convertible preferred share is automatically convertible into
      13.940668 shares of FCP common stock (an aggregate 66,767,994 common shares).
      The 71,797,789 shares of common stock represent approximately 94.10% of the
      ownership interests in FCP. The
      outstanding shares of FCP were deemed issued for 4,505,530 shares of
      Lev. 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 paid $350,000 for the acquisition of FCP including $283,731
      to
      certain stockholders and assuming the outstanding tax liability of $66,269.
      In
      connection with the Exchange, 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%.





As
      a
      development stage enterprise, the Company's primary efforts are devoted to
      conducting research and development for inflammatory diseases and raising
      capital. The Company has limited capital resources and has experienced net
      losses and negative cash flows from operations since inception and expects
      these
      conditions to continue for the foreseeable future. As of March 31, 2006, the
      Company had approximately $ 4. 3 million in cash, cash equivalents and
      investments. Management believes that cash, cash equivalents and investments
      on
      hand as of March 31, 2006 are not sufficient to fund operations through March
      31, 2007 and we project that the funds should last partly through the first
      quarter of 2007. The Company will be required to raise additional funds to
      meet
      its short and long-term planned goals. There can be no assurance that such
      funds, if available at all, can be obtained on terms reasonable to the Company.





In
      addition to the normal risks associated with a new business venture, there
      can
      be no assurance that the Company's research and development will be successfully
      completed 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, development by the Company or its competitors
      of
      new technological innovations, dependence on key personnel, protection of
      proprietary technology, and compliance with 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. (formerly Lev
      Pharmaceuticals, Inc.) All significant intercompany transactions and balances
      have been eliminated in consolidation. The Company is devoting its efforts
      to
      research and development and there has not been any revenues 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, 2006 are not necessarily indicative
      of the results that may be expected for the year ended December 31, 2006. 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 period ended December
      31,
      2005.





**[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:**




Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting Standard
      No. 123R, “Share Based Payment” (“SFAS No. 123(R)”), which requires all
      stock-based payments, including grants of stock options, to be recognized in
      the
      income statement as compensation expense, based on their fair values on the
      grant date. Under the provisions of SFAS No.123R, the estimated fair value
      of
      options granted under the Company’s Employee 2004 Omnibus Incentive Compensation
      Plan (“Plan”) are recognized as compensation expense over the option-vesting
      period. The Company has adopted SFAS No. 123(R) using the
      modified-prospective-transition method, in which compensation expense is
      recognized beginning with the effective date of the adoption for all
      stock-based payments (i) granted after the effective date of adoption and
      (ii) granted prior to the effective date of adoption and that remain
      unvested on the date of adoption.




Prior
      to
      December 31, 2005, the Company applied APB Opinion No. 25, *Accounting for Stock Issued to Employees,* in
      accounting for its stock option plans. Under the provisions of APB 25, no
      compensation expense was recognized when stock options were granted with
      exercise prices equal to or greater than market value on the date of
      grant.




The
      following table illustrates the effect on net income and earnings per share
      if
      the fair value method had been applied to the prior period in comparison to
      the
      current period, where it was applied:




**Three Months Ended****March
                 31, 2006**
            
            **March
                31, 2005**Net
                loss applicable to common shareholders, as reported
            
            $
            (1,813,525
            )
            $
            (973,836
            )Add:
                Total stock-based employee compensation expense determined under
                fair
                value method (1)
            
            
            —
            
            
            (116,505
            )Proforma
                net loss
            
            $
            (1,813,525
            )
            $
            (1,090,341
            )Basic
                and diluted loss per shareAs
                reported
            
            $
            (0.02
            )
            $
            (0.01
            )Pro
                forma
            
            $
            (0.02
            )
            $
            (0.01
            )





(1)
      March
      31, 2006 net loss for the three months ended includes $36,350 of stock-based
      employee compensation expense.




-7-


**LEV
      PHARMACEUTICALS INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





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





For
      the
      three months ended March 31, 2006, the Company included $36,350 of stock-based
      compensation in its Statement of Operations included in general and
      administrative expenses. Had the Company continued to account for share-based
      compensation under APB Opinion No. 25, basic and diluted loss per common share
      for the three ended March 31, 2006 would have been ($0.02) compared to ($0.02).
      No stock option expense was included in the Company’s Statement of Operations
      for the three months ended March 31, 2005.




Under
      the
      modified prospective method of transition under SFAS No. 123(R), the Company
      is
      not required to restate its prior period financial statements to reflect
      expensing of stock-based compensation under SFAS No. 123(R). Therefore, the
      results for the period ended March 31, 2006 are not directly comparable to
      the
      same period in the prior year.




Prior
      to
      the adoption of SFAS No. 123R, the Company presented cash flows resulting from
      the tax benefits of deductions resulting from the exercise of stock options
      as
      operating cash flows in the Statement of Cash Flows. SFAS No. 123R requires
      cash
      flows resulting from the tax benefits resulting from tax deductions in excess
      of
      the compensation cost recognized for those options (excess tax benefits) to
      be
      classified as financing cash flows. The Company did not realize any tax benefits
      from stock options during the three months ended March 31, 2006.




For
      purposes of the disclosure in the foregoing table and for purposes of
      determining estimated fair value under SFAS No.123R, 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
      comparable companies in the industry. The following table illustrates the
      assumptions used in the Company’s Black-Scholes calculations to determine the
      stock option expense for the three months ended March 31,
      2005.




**Risk
                Free Interest Rate**
            
            **Dividend**
              **Yield**
            
            **Volatility
                Factor**
            
            **Estimated
                Life (Years)**
            
            **Weighted
                Average**
              **Option
                Life (Months)**Three
                Months ended March 31, 2005
            
            3.58%
                - 4.11%
            
            0%
            
            70.0%
            
            5
            
            108




The
      Black-Scholes option-pricing model requires the input of highly subjective
      assumptions. Because the Company’s employee stock options have characteristics
      significantly different from those of traded options, and because changes in
      the
      subjective input assumptions can materially affect the fair value estimate,
      in
      management’s opinion, the existing models may not provide a reliable single
      measure of the fair value of its employee stock options. In addition, management
      will continue to assess the assumptions and methodologies used to calculate
      estimated fair value of share-based compensation. Circumstances may change
      and
      additional data may become available over time, which can result in changes
      to
      these assumptions and methodologies, which could materially impact the Company’s
      fair value determination.




A
      summary
      of option activity under the Plan as of March 31, 2006 and changes during the
      three month period then ended is presented below.




**Summary
      Details for** **Plan:**




**Number
                of**
              **Options**
            
            **Weighted
                Average**
              **Exercise
                Price**
            
            **Weighted
                Average**
              **Remaining
                Contractual**
              **Life
                (Years)**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding
                December 31, 2005
            
            3,629,900
            
            $
            0.42Granted
            
            —
            
            0.00Exercised
            
            —
            
            0.00Forfeited
            
            —
            
            0.00Outstanding
                March 31, 2006
            
            3,629,900
            
            $
            0.42
            
            8.73
            
            $
            1,084,862Exercisable
                shares as of March 31, 2006
            
            3,129,900











-8-


**LEV
      PHARMACEUTICALS INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





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





There
      were no options granted, canceled or exercised during the three month period
      ended March 31, 2006, therefore, the there was no intrinsic value of options
      exercised or any weighted average fair value of options exercised or granted
      during the three month period ended March 31, 2006.




A
      summary
      of the status of the Company’s unvested shares as of March 31, 2006, and changes
      during the three month period then ended is presented below.




**Unvested
      shares issued under the Plan:**




**Number of**
              **Options**
            
            **Weighted
                Average**
              **Exercise Price**
            
            **Weighted
                Average**
              **Remaining
                Contractual**
              **Life
                (Years)**
            
            **Aggregate**
              **Intrinsic**
              **Value**Unvested
                balance, December 31, 2005
            
            550,000
            
            $
            0.87Granted
            
            —
            
            0.00Vested
            
            (50,000
            )
            1.20Forfeited
            
            —
            
            00.0Unvested
                balance, March 31, 2006
            
            500,000
            
            $
            0.84
            
            8.80
            
            $
            0





As
      of
      March 31, 2006, there was $223,173 of total unrecognized compensation expense
      related to unvested share-based compensation arrangements granted under the
      Plans. This expense is expected to be recognized over a weighted-average period
      of 21 months.




The
      following chart shows the effect of stock option expense on the Statement of
      Operations:




**Three
                Months Ended****March
                31, 2006**
            
            **March
                31, 2005**Loss
                from operations before stock option expense
            
            $
            (1,777,175
            )
            $
            (973,836
            )Stock
                option expense
            
            
            (36,350
            )
            
            —Loss
                from operations
            
            $
            (1,813,525
            )
            $
            (973,836
            )Net
                loss before stock option expense
            
            
            (1,777,175
            )
            
            (973,836
            )Stock
                option expense
            
            
            (36,350
            )
            
            —Net
                loss
            
            $
            (1,813,525
            )
            $
            (973,836
            )Basic
                and diluted loss per share before stock option expense
            
            $
            (.02
            )
            $
            (0.01
            )Stock
                option expense per share
            
            
            (.00
            )
            
            0.00Basic
                and diluted loss per share
            
            $
            (0.02
            )
            $
            (0.01
            )





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





Basic
      net
      loss per common share is computed by dividing the net loss by the weighted
      average number of shares of common stock outstanding during the period.
      Potentially dilutive common shares of 7,044,672 and 3,831,568 for the three
      months ended March 31, 2006 and March 31, 2005 respectively, related to stock
      options and warrants were excluded from the diluted loss per share calculation
      because their effect would have been anti-dilutive.




-9-


**LEV
      PHARMACEUTICALS INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





**[5]
      Investments:**




Securities
      that the Company has the positive intent and ability to hold to maturity are
      classified as held-to-maturity and are carried at amortized cost on the balance
      sheet s.




**[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





**NOTE
      C - INVESTMENTS**





Investments
      with original maturities of 91 days to one year are considered short- term
      investments and are carried at cost. Investments
      as of March 31, 2006 consist of two United States Treasury Notes, which
      approximates fair value, and are due in less than one year.




**NOTE
      D - FIXED ASSETS**




Fixed
      assets, at cost, consist of the following:


March
                    31,
                  2006
              
              December
                  31,
                  2005(Unaudited)Lab
                  equipment
              
              $
              11,645
              
              $
              11,645Office
                  equipment
              
              
              74,658
              
              
              69,037Total
              
              
              86,303
              
              
              80,682Accumulated
                  depreciation
              
              
              (14,939
              )
              
              (10,760
              )$
              71,364
              
              $
              69,922




The
      Company recorded depreciation expense of $4,179 and $986 for the three months
      ended March 31, 2006 and March 31, 2005 respectively.





**NOTE
      E - ACCRUED EXPENSE**





Accrued
      expenses consisted of the following **:**




March
                31,
              2006
            
            December
                31,
              2005(Unaudited)Research
                and development - sponsored research
            
            $
            140,800
            
            $
            125,000Research
                and development - other
            
            
            80,000
            
            
            70,526Research
                and development - clinical research organization
            
            
            —
            
            
            28,936Research
                and development - payroll
            
            
            —
            
            
            16,655Professional
                fees
            
            
            45,800
            
            
            64,311Payroll
                - general and administrative
            
            
            —
            
            
            20,466Other
            
            
            7,130
            
            
            26,142$
            273,730
            
            $
            352,036


**NOTE
        F - LOAN PAYABLE** ****
 
 The
        Company purchases its C1-INH product from the Sanquin Blood Supply Foundation
        (“Sanquin”). Under our agreement with Sanquin, Sanquin provides a loan to the
        Company for the value of C1-INH purchased. The loan is 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 must be
        payable on the earlier of January 16, 2014 or the termination of the agreement.
        The principal loan balance outstanding
        as of March 31, 2006 was $1,090,064, net of discount of $381,802. This 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 included in research
        and development. The loans are payable in Euros and any currency differences
        are
        recorded in our Consolidated Statement of Operations. The Company has recorded
        interestexpense
        using the effective interest rate method. Interest rates range from 4.31%
        to
        7.08%. For the three months ended March 31, 2006 and March 31, 2005
        respectively, interest expense recorded was $5,443 and $0. The amount included
        in research and development expense for the three months March 31, 2006 and
        March 31, 2005 was $375,359 and $0.





-10-


**LEV
      PHARMACEUTICALS INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**




**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      G- SUBSEQUENT EVENT**





On
      May 4,
      2006, the Company entered into a one-year consulting agreement for
      services to be provided by an investor relations firm. The Company
      issued 175,000 shares of stock and an additional 175,000 shares are issuable
      in
      six months if the agreement is not cancelled. The monthly fee is $10,000.





**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.





**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 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. We are also developing
      C1-INH for the treatment of acute myocardial infarction (“AMI”) and selective
      other diseases and disorders in which inflammation is known or believed to
      play
      an underlying role. **** We
      have
      certain rights to C1-INH technology through agreements with Sanquin (“Sanquin”),
      an Amsterdam-based not-for-profit organization that provides blood and plasma
      products and related services, carries out research and provides education,
      primarily in the Netherlands.




From
      July
      21, 2003 (inception) through March 31, 2006, we have not generated any revenue
      from operations. We expect to incur additional losses to perform further
      research and development activities. We do not currently have any commercial
      biopharmaceutical products, and do not expect to have such for a number of
      years, if at all.





As
      we do not
      expect to generate product revenues or profits over the next several years,
      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, 2006, our
      research and development expenses were $1,096,187.





**Merger
      Transaction**





On
      November 5, 2004, Fun City Popcorn (“FCP”), its wholly-owned subsidiary, Lev
      Acquisition Corp. (“Lev Sub”) and Lev Development Corp., previously know 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.





-11-




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.





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
      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 $283,731 to certain
      stockholders and assuming the outstanding tax liability of $66,269. 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%.




**Financing
      Activities**





In
      May
      2005, we completed a private placement of units at a price of $50,000 per unit,
      with each unit consisting of 50,000 shares of common stock and a five-year
      warrant to purchase 25,000 shares of common stock at an exercise price of $1.35
      per share. We sold 100.9 units for gross proceeds of $5,044,774. Our net
      proceeds were $4,365,097 after payment of fees and expenses, including
      registration costs. We paid $454,030 to the placement agent and issued warrants
      to the placement agent to purchase 681,044 shares of common stock. These
      warrants are immediately exercisable at $1.35 per share and expire in May 2010.
      We issued an aggregate of 5,044,774 shares of common stock and warrants to
      purchase 2,522,387 shares of common stock to investors in the private placement,
      not including the warrants issued to the placement agent.





**Repricing
      of Options and Warrants**





Following
      the Public Company and Reincorporation Mergers, in May 2005, our Board of
      Directors determined that the basis for the exchange of options and warrants
      to
      purchase common stock of Old Lev outstanding prior to the mergers for options
      and warrants to purchase our common stock should be changed. Though the number
      of shares issuable upon exercise of these options and warrants was increased,
      the parties to the merger did not proportionately reduce the exercise price
      of
      these options and warrants to account for the increase in the number of shares
      outstanding after the merger. The
      reduced exercise price of these warrants and options was calculated by
      multiplying the number of shares issuable upon exercise of these warrants and
      options prior to the mergers times the relevant exercise price, and then
      dividing that dollar amount by the new number of shares issuable upon exercise
      of these warrants and options after the mergers.





Prior
      to
      the Public Company Merger, warrants to purchase 66,667 and 39,000 shares of
      common stock were outstanding with exercise prices of $0.10 and $0.85 per share,
      respectively. Subsequently, pursuant to the exchange ratio in the Agreement,
      warrants to purchase 190,327 and 111,341 shares of common stock were outstanding
      with exercise prices of $0.10 and $0.85 per share, respectively. The Board
      believed this was unfair to the holders of the warrants and made a determination
      to treat the warrant holders on the same basis as the holders of common stock
      of
      Old Lev. Accordingly, in May 2005, the exercise price of outstanding warrants
      to
      purchase 190,327 shares was reduced from $0.10 to $0.04 per share, and the
      exercise price of other outstanding warrants to purchase 111,341 shares was
      reduced from $0.85 to $0.30 per share. At the date of this repricing, we
      recognized a charge to operations of approximately $28,000 for the incremental
      value of these warrants based upon the Black Scholes option pricing
      model.





-12-




In
      addition, prior to the Public Company Merger, stock options to purchase 500,000
      shares of common stock at an exercise price of $0.85 per share were held by
      each
      of Joshua D. Schein, Ph.D., our Chief Executive Officer, and by Judson Cooper,
      our Chairman. Subsequently, pursuant to the exchange ratio in the Agreement,
      each person’s options were converted into options to purchase 1,427,450 shares
      of common stock with an exercise price of $0.85 per share (an aggregate of
      2,854,900 shares). In May 2005, in addition to repricing the warrants, the
      Board
      further determined, subject to obtaining stockholder approval at our next annual
      meeting, to reduce the exercise price of these options from $0.85 to $0.30
      per
      share. The Board made the determination to seek stockholder approval because
      it
      believed that stockholder approval was necessary to reduce the exercise price
      of
      such options under the terms of our 2004 Omnibus Incentive Compensation Plan.
      In
      addition, the Board believed that the repricing of these options should be
      subject to stockholder approval because the reduction in exercise price of
      the
      stock options directly benefits our Chief Executive Officer and Chairman.
      However, it should be noted that our Chief Executive Officer and Chairman are
      also principal stockholders who voted on this proposal. The stockholders
      approved this repricing at the annual meeting held on December 12, 2005.
      Presently, Messrs. Schein and Cooper each own options to purchase 1,427,450
      shares of common stock at an exercise price of $0.30 per share as opposed to
      the
      prior exercise price of $0.85 per share. If they exercise all of these options,
      Messrs. Schein and Cooper would realize a cash savings of, and the proceeds
      we
      would receive would be reduced by, $785,098 for each of them. A charge of
      $1,427,450 was recorded to our Consolidated Statement of Operations based upon
      our stock price when our stockholders approved the repricing at the
      stockholders' meeting and subsequent changes to our stock price through December
      31, 2005. These charges ceased upon the adoption of SFAS No. 123R on January
      1,
      2006.





**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. In addition, we intend to initiate a research
      program in 2006 for the development of a genetically engineered or recombinant
      version of C1-INH to be used in the treatment of AMI.





*Satisfaction
      of Cash Resources*





We
      believe that our cash, cash equivalents and investment of $4,338,755 as of
      March
      31, 2006, will not be sufficient to meet our cash requirements for the next
      twelve months. We have cash commitments through December 31, 2006 of
      approximately $1,510,000 as disclosed in our 10-KSB to primarily fund our
      clinical research organization and executive employment contracts. 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 a continuing loan to us in the amount of the aggregate purchase
      price of the C1-INH product. 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 the Phase
      III
      clinical trials over the next twelve months. We also expect that our general
      and
      administrative expenses and will increase for the next year as we hire
      additional marketing staff.





To
      date,
      we have relied solely upon selling equity securities in private placements
      to
      generate cash to implement our plan of operations. We will need additional
      funding to complete the development and commercialization of our product
      candidates. 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. We currently have no firm agreements with
      any third-parties for 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 generating 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.




-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.





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





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 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. We intend
      to
      initiate a research program in 2006 for the development of a genetically
      engineered or recombinant version of C1-INH to be used in the treatment of
      AMI.
      In 2007, we may initiate studies for C1-INH in treating AMI, if we obtain
      additional funding and if we are able to acquire additional C1-INH product
      from
      Sanquin. There can be no assurance that we will raise any additional funds
      or
      that we will acquire the resources needed to conduct further research and trials
      for the treatment of AMI.





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.





-14-




**Results
      of Operations**





*Three
      Months Ended March 31, 2006 as compared to the Three Months Ended March 31,
      2005* ******





We
      had no
      revenues during the three months ended March 31, 2006 and March 31, 2005 because
      we do not have any commercial biopharmaceutical products.





Research
      and development expenses for the three months ended March 31, 2006 were
      $1,096,187 as compared to $446,165 for the three months ended March 31, 2005.
      The increase of $650,022 primarily represents expenses relating to the Phase
      III
      clinical trials. In March 2005, we initiated a Phase III clinical trial for
      the
      acute treatment of HAE. In November 2005, we initiated a Phase III clinical
      trial of C1-INH for the prophylactic treatment of HAE.





General
      and administrative costs were $753,850 for the three months ended March 31,
      2006
      as compared to $548,757 for the three months ended March 31, 2005. The increase
      of $205,093 is primarily due to increases in payroll and related benefits,
      investor relations, branding, and share-based compensation for employee
      options.





Interest
      income was $41,955 for the three months ended March 31, 2006 as compared to
      $21,086 for the three months ended March 31, 2005. The increase of $20,869
      is
      attributed to obtaining higher interest rates on cash invested for the three
      months March 31, 2006.





Due
      to
      the factors mentioned above, the net loss for the three months ended March
      31,
      2006 was $1,813,525 or a loss of $ 0.02 per common share, basic and diluted
      as
      compared to a loss of $973,836 for the three months ended March 31, 2005 or
      a
      loss of $0.01 per common share, basic and diluted.





**Liquidity
      and Capital Resources**





As
      of
      March 31, 2006, we had cash, cash equivalents and investments of $4,338,755
      and
      working capital was $3,923,223. Net operating cash used in operations was
      $1,635,047 for the three months ended March 31, 2006 and was primarily due
      to
      our loss of $1,813,525. Pursuant to the Sanquin loan agreement, purchases made
      during our Phase III clinical trials are added to our loans and we are not
      required to make any principal payments. As of March 31, 2006, our
      commitment to Sanquin is approximately $4,100,000 during the trial period.
      We
      received a price increase of C1-INH effective March 1, 2006. The loans will be
      forgiven when regulatory approval from the FDA is received. If we do not receive
      regulatory approval, then the loans are repayable on the earlier of January
      16,
      2014, or the termination of the Agreement. The loans do not bear interest and
      we
      impute interest using the effective interest rate method. Cash provided by
      investing activities for the year ended March 31, 2006 was $1,494,379 primarily
      resulting from proceeds from investments.




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 $9,100,000 (as of
      March 31, 2006) 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, management and/or research of our Phase III clinical
      trial. It is estimated that we will pay INC Research approximately $700,000
      for
      its services in 2006 and 2007.





In
      May
      2005, we completed a private placement of units at a price of $50,000 per unit,
      with each unit consisting of 50,000 shares of common stock and a five-year
      warrant to purchase 25,000 shares of common stock at an exercise price of $1.35
      per share. We sold 100.9 units for gross proceeds of $5,044,774. Our net
      proceeds were $4,365,097 after payment of fees and expenses, including
      registration costs. We paid $454,030 to the placement agent and issued warrants
      to the placement agent to purchase 681,044 shares of common stock. These
      warrants are immediately exercisable at $1.35 per share and expire in May 2010.
      We issued an aggregate of 5,044,774 shares of common stock and warrants to
      purchase 2,522,387 shares of common stock to investors in the private placement,
      not including the warrants issued to the placement agent.





-15-




In
      February and March 2004, we received proceeds in a private placement of
      $7,968,495, net of issuance costs of $51,465, from the sale of 3,425,879 shares
      of common stock at $0.26 per share and from the sale of 23,913,848 shares of
      common stock at $0.30 per share. In December 2003, we received proceeds in
      a
      private placement of $300,000 through the sale of 1,141,960 shares of common
      stock at $0.26 per share.




We
      have
      cash commitments for the 2006 fiscal year of approximately $1,510,000 primarily
      to fund our clinical research organization and executives’ employment
      contracts.





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





**COMMITMENTS
      AND CONTINGENCIES**




In
      our
      Annual Report on Form 10-KSB for the year ended December 31, 2005 under the
      heading “Contractual Obligations,” we outlined our commitments and
      contingencies. For the quarter ended March 31, 2006, there have been no material
      changes in our commitments and contingencies.





**OFF
      -BALANCE SHEET ARRANGEMENTS**





We
      had no
      off-balance sheet arrangements as of March 31, 2006 with the exception of our
      office lease. As of December 31, 2005, our remaining obligation under this
      lease
      was $46,365.




**CRITICAL
      ACCOUNTING ESTIMATES**




In
      our
      Annual Report on Form 10-KSB for the year ended December 31, 2005, our most
      critical accounting policies and estimates upon which our financial status
      depends upon were identified as those relating to income taxes, stock based
      compensation and research and development cost . We reviewed our policies and
      determined that those policies remain our most critical accounting policies
      for
      the quarter ended March 31, 2006. On January 1, 2006 we adopted stock-based
      compensation (S FAS
      No.
      123(R)). See Note
      B (3) to our Condensed Consolidated Financial Statements for a discussion of
      the
      impact on our company of adopting SFAS No. 123(R).




**ITEM
      3. CONTROLS AND PROCEDURES**





**** As
      of the
      end of the period covered by this report, we conducted an evaluation, under
      the
      supervision and with the participation of our chief executive officer and chief
      financial officer of our disclosure controls and procedures (as defined in
      Rule
      13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation,
      our chief executive officer and principal accounting officer concluded that
      our
      disclosure controls and procedures are effective to ensure that information
      required to be disclosed by us in the reports that we file or submit under
      the
      Exchange Act is recorded, processed, summarized and reported, within the time
      periods specified in the SEC’s rules and forms. There have been no changes in
      our internal control over financial reporting during the quarter ended March
      31,
      2006 that have materially affected, or are reasonably likely to materially
      affect, our internal controls over financial reporting.




-16-


**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**





On
      February 19, 2006, we issued warrants to purchase 50,000 shares of common stock
      at $1.10 per share that vest immediately and expire in three years, to
      consultants to perform public and investor relations services. These securities
      were issued in reliance on Section 4(2) of the Securities Act of
      1933. ****





**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**





Not
      applicable.





**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**31.1
            
            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








-17-





**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 11,
                2006
            By:
            /s/ Joshua
              D.
              Schein, Ph.D.Joshua D. Schein, Ph.D.
              Chief
                Executive OfficerMay
                11, 2006
            By:
            /s/
              Douglas J. BeckDouglas
                J. Beck
              Chief
                Financial Officer








-18-