****    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
 EXCHANGE
        ACT OF 1934
  FOR
        THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2005
 
 o
        TRANSITION REPORT
        PURSUANT TO SECTION 13 OR 15(D) OF THE
 SECURITIES
        EXCHANGE ACT OF 1934
  For
        the
        transition period from __________ to __________
 
 *COMMISSION
        FILE NO. 000-32947*
  Lev
                  Pharmaceuticals, Inc.(Name
                  of Small Business Issuer as
                  specified in Its Charter)Delaware
              
              88-0211496(State
                  or Other Jurisdiction ofIncorporation
                  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)(212)
                  682-3096(Issuer's
                  Telephone Number, Including Area
                  Code)
  Check
        whether the issuer (1) has filed all reports required to be filed by Section
        13
        or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
        (or for such shorter period that the registrant was required to file such
        reports), and (2) has been subject to such filing requirements for the past
        90
        days: Yes x No
o
 
 As
        of
        November 14, 2005, the issuer had 81,527,544 shares of common stock outstanding.
 
 Transitional
        Small Business Disclosure Format (Check one): o Yes x
        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 Amendment No. 1 to our Registration Statement on Form SB-2 filed in October
        2005 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 September 30, 2005 (Unaudited)
                      and
                      December 31, 2004
                  **3**Unaudited
                      Condensed Consolidated Statements of Operations for the Three
                      and Nine
                      MonthsEnded
                      September 30, 2005 and 2004and for the Period from July 21, 2003 (Inception) to September
                      30, 2005
                  **4**Unaudited
                      Condensed Consolidated Statements of Cash Flows for the Nine
                      MonthsEnded
                      September 30, 2005 and 2004and for the Period from July 21, 2003 (Inception) to September
                      30,
                      2005
                  **5**Notes
                      to Condensed Unaudited Consolidated Financial Statements
                  **6**Item
                      2.
                  Management’s
                      Discussion and Analysis or Plan of Operation
                  **11**Item
                      3.
                  Controls
                      and Procedures
                  **14**Part
                      II.
                  Other
                      Information
                  **14**Item
                      1.
                  Legal
                      Proceedings
                  **14**Item
                      2.
                  Unregistered
                      Sales of Equity Securities and Use of Proceeds
                  **14**Item
                      3.
                  Defaults
                      Upon Senior Securities
                  **14**Item
                      4.
                  Submission
                      of Matters to a Vote of Security Holders
                  **14**Item
                      5.
                  Other
                      Information
                  **14**Item
                      6.
                  Exhibits
                  **14**Signatures
                  **15**
  -2-
 **LEV
          PHARMACEUTICALS INC. AND SUBSIDIARY**
 **(a
          development stage enterprise)**
  **Condensed
          Consolidated Balance Sheets**
  September
                      30, 2005
                      (Unaudited)
                  
                  December
                      31,2004ASSETSCurrent
                      assets:Cash
                      and cash equivalents
                  
                  $
                  5,523,439
                  
                  $
                  5,544,507Investments
                  
                  
                  1,500,000Prepaid
                      expenses
                  
                  
                  110,713
                  
                  
                  263,587Other
                      assets
                  
                  
                  56,337
                  
                  
                  41,661Total
                      current assets
                  
                  
                  7,190,489
                  
                  
                  5,849,755Fixed
                      assets, net of accumulated depreciation
                  
                  
                  59,790
                  
                  
                  7,150Security
                      deposit
                  
                  
                  16,817
                  
                  
                  16,817$
                  7,267,096
                  
                  $
                  5,873,722LIABILITIESCurrent
                      liabilities:Accounts
                      payable
                  
                  $
                  138,639Accrued
                      expenses
                  
                  
                  197,526
                  
                  $
                  243,625Income
                      taxes payable
                  
                  
                  
                  
                  
                  82,916Deferred
                      lease liability
                  
                  
                  3,398Total
                      current liabilities
                  
                  
                  339,563
                  
                  
                  326,541Loan
                      payable
                  
                  
                  237,883Deferred
                      lease liability
                  
                  
                  
                  
                  
                  4,857Accrued
                      interest payable
                  
                  
                  2,947Total
                      liabilities
                  
                  
                  580,393
                  
                  
                  331,398Commitments
                      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
                      and 76,303,319 shares issued and outstanding at September 30,2005
                      and December 31, 2004, respectively
                  
                  
                  815,275
                  
                  
                  763,033Additional
                      paid-in capital
                  
                  
                  14,232,589
                  
                  
                  9,891,915Subscription
                      receivable
                  
                  
                  
                  
                  
                  (130
                  )Deficit
                      accumulated during the development stage
                  
                  
                  (8,361,161
                  )
                  
                  (5,112,494
                  )Total
                      stockholders' equity
                  
                  
                  6,686,703
                  
                  
                  5,542,324$
                  7,267,096
                  
                  $
                  5,873,722
  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**
 
 Three
                    Months Ended
                
                Nine
                    Months Ended
                
                Period
                    From July 21, 2003 (Inception) toSeptember
                    30,
                
                September
                    30,
                
                September
                      30,2005
                
                2004
                
                2005
                
                2004
                
                2005Costs
                    and expenses:Research
                    and development
                
                $
                554,730
                
                $
                188,916
                
                $
                1,580,519
                
                $
                886,400
                
                $
                2,714,452Payment
                      to certain Fun CityPopcorn, Inc.shareholders
                      representing merger costs
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                283,732General
                      and administrative and licenseacquisition
                      costs
                
                
                688,982
                
                
                404,827
                
                
                1,791,297
                
                
                2,797,574
                
                
                5,166,929Loss
                    from operations
                
                
                (1,243,712
                )
                
                (593,743
                )
                
                (3,371,816
                )
                
                (3,683,974
                )
                
                (8,165,113
                )Other
                    income:Interest
                    income
                
                
                60,800
                
                
                14,167
                
                
                126,276
                
                
                31,446
                
                
                177,134Interest
                    expense
                
                
                (3,127
                )
                
                
                
                
                (3,127
                )
                
                
                
                
                (3,127
                )Net
                    loss
                
                $
                (1,186,039
                )
                $
                (579,576
                )
                $
                (3,248,667
                )
                $
                (3,652,528
                )
                $
                (7,991,106
                )Net
                    loss per share - basic and diluted
                
                $
                (0.01
                )
                $
                (0.00
                )
                $
                (0.04
                )
                $
                (0.05
                )Weighted
                    average shares - basic and diluted
                
                
                81,385,154
                
                
                71,797,789
                
                
                79,001,223
                
                
                69,996,601
   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
                    FromJuly
                    21, 2003Nine
                    Months Ended
                
                (Inception)
                    toSeptember
                    30,
                
                September
                    30,2005
                
                2004
                
                2005Cash
                    flows from operating activities:Net
                    loss
                
                $
                (3,248,667
                )
                $
                (3,652,528
                )
                $
                (7,991,106
                )Adjustments
                      to reconcile net loss to net cash usedin operating
                      activities:Compensation
                      to consultants from issuance of warrants
                
                
                
                
                
                2,005,530
                
                
                2,005,530Compensation
                    expense from re-pricing ofwarrants
                
                
                27,819
                
                
                
                
                
                27,819Option
                    and warrants modification resultingfrom
                    merger
                
                
                
                
                
                
                
                
                75,201Supplier
                    purchase funding
                
                
                237,883
                
                
                
                
                
                237,883Depreciation
                    expense
                
                
                7,044
                
                
                
                
                
                7,330Changes
                    in:Prepaid
                    expenses and other assets and liabilities
                
                
                141,145
                
                
                (71,734
                )
                
                (180,920
                )Accounts
                    payable
                
                
                138,639
                
                
                
                
                
                138,639Accrued
                    expenses
                
                
                (46,099
                )
                
                99,230
                
                
                197,526Deferred
                    lease liability
                
                
                (1,459
                )
                
                5,233
                
                
                3,398Income
                    taxes payable
                
                
                (82,916
                )
                
                
                
                
                (64,463
                )Net
                    cash used in operating activities
                
                
                (2,826,611
                )
                
                (1,614,269
                )
                
                (5,543,163
                )Cash
                    flows from investing activities:Purchase
                    of fixed assets
                
                
                (59,684
                )
                
                (3,553
                )
                
                (67,120
                )Purchase
                    of investments
                
                
                (1,500,000
                )
                
                
                
                
                (1,500,000
                )Net
                    cash used in investing activities
                
                
                (1,559,684
                )
                
                (3,553
                )
                
                (1,567,120
                )Cash
                    flows from financing activities:Proceeds
                    from stock subscription receivable
                
                
                130
                
                
                
                
                
                130Proceeds
                    from notes payable to stockholder
                
                
                
                
                
                
                
                
                18,000Repayment
                    of notes payable to stockholder
                
                
                
                
                
                (18,000
                )
                
                (18,000
                )Net
                    proceeds from sale of common stock
                
                
                4,365,097
                
                
                7,968,495
                
                
                12,633,592Net
                    cash provided by financing activities
                
                
                4,365,227
                
                
                7,950,495
                
                
                12,633,722Net
                    (decrease) increase in cash and cash equivalents
                
                
                (21,068
                )
                
                6,332,673
                
                
                5,523,439Cash
                    and cash equivalents - beginning of period
                
                
                5,544,507
                
                
                300,409Cash
                    and cash equivalents - end of period
                
                $
                5,523,439
                
                $
                6,633,082
                
                $
                5,523,439
  Supplemental
        non cash flow from financing activities:
  During
        the nine months ended September 30, 2005, the Company purchased C1-INH from
        its
        supplier and was loaned $237,883 until
        regulatory approval see (Note F).
  Issuance
        of 179,451 shares of common stock in connection with the cashless exercise
        of a
        warrant to purchase 190,327
        shares in September 2005.
  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.
 
 On
        November 5, 2004, FCP entered into an agreement and plan of merger (the
        "Agreement") with Lev Development Corp., formerly known as Lev Pharmaceuticals,
        Inc. ("Lev"), which was incorporated on July 21, 2003 in the State of Delaware.
        Lev is a development stage company which is engaged in developing and
        commercializing therapeutic products for the treatment of inflammatory diseases.
        On December 29, 2004, the merger closed and pursuant to the Agreement, FCP
        acquired 100% of the outstanding capital stock of Lev through its subsidiary
        Lev
        Acquisition Corp ("LAC"). In connection with the merger, FCP changed its
        name to
        Lev Pharmaceuticals, Inc. and increased its authorized common stock to
        200,000,000 shares and its preferred stock to 20,000,000 shares. Under the
        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 was converted automatically 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 following the merger. 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
        $283,731 which represents the acquisition price of $350,000 less the assumption
        of a tax liability of $66,269. In connection with the Exchange, the exercise
        price of the outstanding warrants and options remained the same. The Company
        recorded a charge of approximately $75,000 for the change in value of the
        Company's outstanding options and warrants as of December 29, 2004 as a result
        of the increase in the number of common shares into which these equity
        instruments are exercisable based on the exchange ratio used in the merger,
        since the aggregate intrinsic value of the warrants and options after the
        Exchange is greater than before. The Black-Scholes option-pricing model was
        used
        to calculate the value of certain options and warrants and the related charge
        based upon the following weighted average assumptions to determine fair value;
        risk-free interest rate of 3.58%; expected life of 5 years; dividend yield
        of 0%
        and expected volatility of 70%.
 
 As
        a
        development stage enterprise, the Company's primary efforts are devoted to
        conducting research and development, forming collaborations and raising capital.
        The Company has limited capital resources and has experienced net losses
        and
        negative cash flows from operations since inception and expects these conditions
        to continue for the foreseeable future. As of September 30, 2005, the Company
        had approximately $7,000,000 in cash, cash equivalents and investments.
        Management believes that cash, cash equivalents and investments on hand as
        of
        September 30, 2005 will be sufficient to fund operations through September
        30,
        2006. In May 2005, the Company raised net proceeds of $4,365,097 in a private
        placement, see Note G. However, the Company will be required to raise additional
        funds to meet long-term planned goals. There can be no assurance that such
        funds, if 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, 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 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 and nine months ended September 30, 2005 are not
        necessarily indicative of the results that may be expected for the year ended
        December 31, 2005. 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, 2004.
 
 [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:
 
 The
        Company accounts for stock-based compensation to employees in accordance
        with
        APB Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No.
        25")
        and related interpretations. Under APB No. 25, generally, no compensation
        expense is recognized in the financial statements in connection with the
        awarding of stock option grants to employees provided that, as of the grant
        date, all terms associated with the award are fixed and the fair value of
        the
        Company's stock is equal to or less than the amount an employee must pay
        to
        acquire the stock. The Company will recognize compensation expense in situations
        where the terms of an option grant are not fixed or where the fair value
        of the
        Company's common stock on the grant date is greater than the amount an employee
        must pay to acquire the stock. No stock options were granted under the plan
        until November 1, 2004. Had the Company accounted for its employee stock
        options
        under the fair value method of SFAS No. 123, “Accounting for Stock Based
        Accounting Compensation” (“SFAS No.123”), the Company's net loss per share would
        have changed as follows :
 
 -7-
  **LEV
        PHARMACEUTICALS INC. AND SUBSIDIARY**
 **(a
        development stage enterprise)**
 
 **NOTES
        TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
  Three
                      Months EndedSeptember
                      30,
                
                Nine
                      Months Ended September 30,2005
                
                2004
                
                2005
                
                2004Net
                    loss
                
                $
                (1,186,039
                )
                $
                (579,576
                )
                $
                (3,248,667
                )
                $
                (3,652,528
                )Total
                    stock based employee compensationexpense
                    determined under fair value basedmethod
                    for all awards
                
                
                (148,812
                )
                
                
                
                
                (431,594
                )Pro
                    forma net loss
                
                $
                (1,334,851
                )
                $
                (579,576
                )
                $
                (3,680,261
                )
                $
                (3,652,528
                )Net
                    loss per common share (basic and diluted):
                  As
                    reported
                
                $
                (0.01
                )
                $
                (0.00
                )
                $
                (0.04
                )
                $
                (0.05
                )Pro
                    forma
                
                $
                (0.02
                )
                $
                (0.00
                )
                $
                (0.05
                )
                $
                (0.05
                )
  **** The
        weighted average fair value at the date of grant for options granted during
        the
        three and nine months ended September 30, 2005 was
        estimated using the Black-Scholes option pricing model with the following
        weighted-average assumptions:
  Years
                5Interest
                    rate
                3.58
                    - 4.11%Volatility
                70%Dividend
                    yield
                0%
  The
        fair
        value of warrants issued to non-employees for services are included in the
        financial statements and expensed when services are performed. The estimated
        allocated fair value of warrants issued in connection with financing activities
        is expensed over the term of the debt instruments. Warrants issued in connection
        with services or financings were valued at the grant date using the
        Black-Scholes option-pricing model.
  -8-
  **LEV
          PHARMACEUTICALS INC. AND SUBSIDIARY**
 **(a
          development stage enterprise)**
  **NOTES
          TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
  [4]
          Future impact of recently issued accounting standards:
  In
          December 2004, the Financial Accounting Standards Board ("FASB") issued
          Statement of Financial Accounting Standards No. 123R ("SFAS No. 123R"),
          Share-Based Payment". SFAS No. 123R revises SFAS No. 123, and supersedes
          APB No.
          25, "Accounting for Stock Issued to Employees," and its related implementation
          guidance. The provisions of SFAS No. 123R require the Company to expense,
          in the
          statement of operations, the fair value of awards of equity instruments
          exchanged for employee services, based on the grant-date fair value of
          those
          awards. The grant-date fair value of equity instruments will be estimated
          using
          an appropriate option-pricing model and will be recognized over the vesting
          period of the awards. SFAS No. 123R will be effective, for calendar year
          reporting public companies, commencing in the first quarter of the fiscal
          year
          ending December 31, 2006. The Company is in the process of analyzing the
          effects
          of adopting SFAS No. 123R and expects it to have a material effect on its
          financial statements, but cannot estimate the effect at this time.
  [5]
          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 6,944,672, 301,668, 6,944,672 and
          301,668
          for the three months ended September 30, 2005 and 2004 and nine months
          ended
          September 30, 2005 and 2004, respectively, related to stock options and
          warrants, were excluded from the diluted loss per share calculation because
          their effect would have been anti-dilutive.
  [6 ]
          Investments:
  S ecurities
          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.
  [7 ]
          Fixed
          assets:
  Fixed
          assets are stated at cost less accumulated depreciation. We compute depreciation
          of fixed assets using the straight-line method over the assets' estimated
          useful
          life, which is five years.
  Note
          C -
          Investments
  Investments
          as of September 30, 2005 consist of two Certificate of Deposits valued
          at
          $1,500,000, which approximates fair value, and are due in less than one
          year.
  Note
          D -
          Fixed Assets
  Fixed
          assets, at cost, consist of the following:
 September
                        30, 2005
                        (Unaudited)
                    
                    December
                        31, 2004Lab
                        equipment
                    
                    $
                    11,645
                    
                    $
                    —Office
                        equipment
                    
                    
                    55,475
                    
                    
                    7,436Total
                    
                    
                    67,120
                    
                    
                    7436Accumulated
                        depreciation
                    
                    
                    (7,330
                    )
                    
                    (286
                    )$
                    59,790
                    
                    $
                    7,150
  The
          Company recorded depreciation expense of $3,226 and $0 for the three months
          ended September 30, 2005 and 2004 and $7,044 and $0 for the nine months
          ended
          September 30, 2005 and 2004, respectively.
  -9-
 **LEV
            PHARMACEUTICALS INC. AND SUBSIDIARY**
 **(a
            development stage enterprise)**
  **NOTES
            TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
  NOTE
            E -
            ACCRUED EXPENSES
  Accrued
            expenses consisted of the following **:**
 September
                          30, 2005
                          (Unaudited)
                      
                      December
                          31, 2004Research
                          and development
                      
                      $
                      164,010
                      
                      $
                      —Professional
                          fees
                      
                      
                      20,103
                      
                      
                      129,795Rent
                      
                      
                      **—**
                      
                      
                      33,437Payroll
                      
                      
                      **—**
                      
                      
                      22,081Other
                      
                      
                      13,413
                      
                      
                      58,312$
                      197,526
                      
                      $
                      243,625
 Note
            F -
            Loan Payable
  In
            connection with product supplied during our clinical trial prior to and
            through
            regulatory approval, Sanquin Blood Supply Foundation (“Sanquin”) provides us a
            loan for C1-INH purchased. The loan is subject to a purchase money security
            interest. **** Upon
            regulatory approval, Sanquin will forgive the loan and release any and
            all
            security interests. If
            regulatory approval is not obtained, then the loan must be repaid. The
            repayment
            terms and interest have not yet been finalized. The Company has accrued
            interest
            based on the imputed interest method .
            The
            principal loan balance outstanding as of September 30, 2005 is $237,883.
            The
            Sanquin loan is payable in Euros. Sanquin is an Amsterdam based not-for-
            profit
            organization that provides blood and plasma products, related services,
            and
            carries out research and education in the Netherlands.
  Note
            G -
            Private Placement
  In
            May
            2005, the Company 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. The Company sold 100.9 units for gross proceeds of
            $5,044,774. The Company's net proceeds were $4,365,097 after payment
            of fees and
            expenses, including registration costs. The Company 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. The Company 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 .
  Note
            H -
            Options and Warrants
  Following
            the merger between Lev and a subsidiary of FCP, in May 2005, the Company's
            Board
            of Directors determined that the basis for the exchange of options and
            warrants
            to purchase common stock of Lev outstanding prior to the merger for options
            and
            warrants to purchase common stock of the Company 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. 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. Also, the exercise price of outstanding warrants
            to purchase
            111,341 shares was reduced from $0.85 to $0.30 per share. At the date
            of this
            repricing, the Company recognized a charge to operations of $27,819 for
            the
            incremental value of these warrants based upon the Black Scholes option
            pricing
            model.
  The
            Board further determined, subject to obtaining stockholder approval
            at the
            Company's next annual meeting to be held on December 12, 2005, to reduce
            the
            exercise price, from $0.85 to $0.30, of outstanding options to purchase
            1,427,450 shares of common stock held by each of the Chief Executive
            Officer and
            the Chairman, respectively (an aggregate of 2,854,900 shares). If this
            option
            repricing is approved by the Company's stockholders, the Company will
            record a
            charge to operations at the repricing date and the Company's statement
            of
            operations will be charged or credited at the end of each reporting period
            with
            respect to these employee options to reflect subsequent changes in the
            value of
            these options based on changes in the Company's stock price. These charges
            will
            cease upon the earlier of the exercise of the options or the adoption
            of SFAS
            123R. If the stockholders had approved this change as of September 30,
            2005, the
            Company would have recorded a charge of approximately $2,284,000 to the
            Consolidated Statement of Operations for the nine months ended September
            30,
            2005.
  -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.
 
 **Overview**
 
 We
        are a
        development stage b iopharmaceutical
        company that was formed in July 2003 to focus on developing and commercializing
        therapeutic products for the treatment of inflammatory diseases. Lev
        Pharmaceuticals, Inc. Our product candidates are based on C1-esterase inhibitor
        ("C1-INH"), a human plasma protein that mediates inflammation and is potentially
        applicable as a treatment for a range of medical indications. We initiated
        a
        Phase III clinical trial of our lead product candidate, C1-INH for the treatment
        of hereditary angioedema ("HAE"), in March 2005. We are also developing C1-INH
        for the treatment of acute myocardial infarction ("AMI"), or heart attack,
        and
        selective other diseases and disorders in which inflammation is known or
        believed to play an underlying role. We have certain rights to C1-INH technology
        through agreements with Sanquin Blood Supply Foundation, 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 September 30, 2005, we have not generated any
        revenue from operations. We expect to incur additional losses to perform
        further
        research and development activities. We do not currently have any commercial
        biopharmaceutical products, and do not expect to have such for a number of
        years, if at all.
 
 **Recent
        Developments**
 
 On
        November 5, 2004, FCP 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. 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%.
  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.
 
 Following
        the merger between Lev and a subsidiary of FCP, in May 2005, our Board of
        Directors determined that the basis for the exchange of options and warrants
        to
        purchase common stock of Lev outstanding prior to the merger 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. 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. Also, the exercise price of 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 $27,819 for the incremental value
        of
        these warrants based upon the Black Scholes option pricing model.
 
 -11-
  The
        Board further determined, subject to obtaining stockholder approval
        at our
        next annual meeting to be held on December 12, 2005, to reduce the exercise
        price, from $0.85 to $0.30, of outstanding options to purchase 1,427,450
        shares
        of common stock held by each of the Chief Executive Officer and the Chairman,
        respectively (an aggregate of 2,854,900 shares). If this option repricing
        is
        approved by our stockholders we will record a charge to operations at the
        repricing date and our statement of operations will be charged or credited
        at
        the end of each reporting period with respect to these employee options to
        reflect subsequent changes in the value of these options based on changes
        in our
        stock price. These charges will cease upon the earlier of the exercise of
        the
        options or the adoption of SFAS 123R. If the stockholders had approved this
        change as of September 30, 2005, we would have recorded a charge of
        approximately $2,284,000 to the Consolidated Statement of Operations for
        the
        nine months ended September 30, 2005.
 
 **Plan
        of Operation**
 
 Our
        plan
        of operation for the next twelve months is to focus primarily on our Phase
        III
        clinical trial of our lead product candidate, C1-INH for the treatment of
        HAE.
        In addition, we are currently developing C1-INH for the treatment of AMI.
 
 *Hereditary
        Angioedema*
 
 We
        entered into a distribution and manufacturing services agreement with Sanquin
        in
        January 2004. Sanquin currently manufactures and markets a highly purified
        preparation of C1-INH in Europe and pursuant to the agreement, Sanquin agreed
        to
        provide us with C1-INH for use in our clinical trials and for commercial
        distribution upon regulatory licensure. Pursuant to the agreement, we have
        distribution rights in all countries in North, Central and South America,
        with
        the exception of the Dutch Overseas Territories, Argentina and Brazil.
 
 Under
        this agreement, we agreed to take primary responsibility for conducting the
        Phase III clinical trials of C1-INH for the treatment of **** HAE,
        and
        preparation and filing of all regulatory applications necessary to register
        the
        product candidate. In exchange, Sanquin agreed to provide us with the technical
        data and support necessary to assist us in preparing and filing all such
        regulatory applications.
 
 Furthermore,
        Sanquin agreed to supply C1-INH for our Phase III clinical trials. Upon receipt
        of FDA approval for our product candidate for the treatment of HAE, upon
        commercial launch of this product and thereafter during the term of the
        agreement, Sanquin will supply us with 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.
 
 We
        initiated a Phase III clinical trial of C1-INH for the treatment of HAE in
        March
        2005. In July 2004, we received orphan drug designation from the FDA for
        C1-INH
        (human), which, upon product licensure, could provide us with a seven-year
        exclusive right to market its C1-INH product as a treatment for HAE in the
        United States.
 
 *Acute
        Myocardial Infarction*
 
 Our
        second development program is focused on the use of C1-INH in treating AMI,
        commonly known as a heart attack. Current treatments for AMI, both surgical
        and
        pharmaceutical, are directed at restoring blood flow to heart tissue or
        preventing further obstruction. Despite a widespread appreciation for the
        role
        of inflammation in AMI in both the scientific and medical communities, no
        presently available treatments directly target the mechanisms of inflammation.
        Based on preliminary animal and clinical data, we believe **** that
        C1-INH may be useful as a treatment for AMI.
 
 We
        entered into a license agreement with Sanquin on January 27, 2004. Under
        this
        agreement, we have an exclusive, worldwide, royalty-bearing license, with
        the
        right to sublicense, to the use of C1-INH for the treatment of AMI. In
        connection with the license agreement, we paid Sanquin certain fees and
        reimbursed Sanquin for certain expenses. In addition, we have an obligation
        to
        pay Sanquin royalties on sales of products incorporating the licensed
        technology.
 
 **Results
        of Operations**
 
 **Three
        Months Ended September 30, 2005 as compared to the Three Months Ended September
        30, 2004**
 
 We
        had no
        revenues during the three months ended September 30, 2005 and 2004 because
        we do
        not have any commercial biopharmaceutical products.
 
 Research
        and development expenses for the three months ended September 30, 2005 were
        $554,730 as compared to $188,916 for the three months ended September 30,
        2004.
        The increase of $365,814 primarily represents expenses relating to the Phase
        III
        clinical trials that commenced in March 2005.
 
 General
        and administrative and license acquisition costs were $688,982 for the three
        months ended September 30, 2005 as compared to $404,827 for the three months
        ended September 30, 2004. The increase of $284,155 is primarily due to increases
        in payroll and benefits, travel and related expenses and general operating
        costs
        associated with being a public company.
 
 Interest
        income was $60,800 for the three months ended September 30, 2005 as compared
        to
        interest income of $14,167 for the three months ended September 30, 2004.
        The
        increase of $46,633 is attributed to higher interest rates for the three
        months
        ended September 30, 2005 as compared to September 30, 2004.
 
 -12-
  Due
        to
        the factors mentioned above, the net loss for the three months ended September
        30, 2005 was $1,186,039 or loss of $ 0.01 per common share, basic and diluted
        as
        compared to a loss of $579,576 for the three months ended September 30, 2004
        or
        a loss of $0.00 per common share, basic and diluted.
 
 **Nine
        Months Ended September 30, 2005 as compared to the Nine Months Ended September
        30, 2004**
 
 We
        had no
        revenues during the nine months ended September 30, 2005 and 2004 because
        we do
        not have any commercial biopharmaceutical products.
 
 Research
        and development expenses for the nine months ended September 30, 2005 were
        $1,580,519 as compared to $886,400 for the nine months ended September 30,
        2004.
        The increase of $694,119 primarily represents expenses relating to the Phase
        III
        clinical trials that commenced in March 2005.
 
 General
        and administrative and license acquisition costs were $1,791,297 for the
        nine
        months ended September 30, 2005 as compared to $2,797,574 for the nine months
        ended September 30, 2004. The decrease of $1,006,277 was partially due to
        the
        recording of a non-cash compensation expense of $2,005,530 for the nine months
        ended September 30, 2004 for the issuance of warrants to three consultants
        in
        connection with the development of our strategic business plan, obtaining
        our
        license and consulting on our corporate structure which was offset by increases
        in salaries and travel related expenses during the nine months ended September
        30, 2005. Compensation expense was recorded at fair value based upon the
        Black-Scholes option pricing model. For the nine months ended September 30,
        2005, excluding the non-cash compensation charge, our costs increased by
        $999,253 primarily due to increases in payroll and benefits, travel and related
        expenses and general operating costs associated with being a public
        company.
 
 Interest
        income was $126,276 for the nine months ended September 30, 2005 as compared
        to
        interest income of $31,446 for the nine months ended September 30, 2004.
        The
        increase of $94,830 is attributed to higher interest rates for the nine months
        ended September 30, 2005 as compared to September 30, 2004.
 
 Due
        to
        the factors mentioned above, the net loss for the nine months ended September
        30, 2005 was $3,248,667 or a loss of $0.04 per common share, basic and diluted,
        as compared to a loss of $3,652,528 for the nine months ended September 30,
        2004
        or a loss of $0.05 per common share, basic and diluted.
  **Liquidity
        and Capital Resources**
 
 As
        of
        September 30, 2005, we had cash, cash equivalents and investments of $7,023,439
        and working capital was $6,850,926. Net cash used in operations was $2,826,611
        for the nine months ended September 30, 2005 and was primarily due to our
        loss
        of $3,257,293. Cash used in investing activities for the nine months ended
        September 30, 2005 was $1,559,684 resulting from the purchase of investments
        and
        fixed assets. Cash from financing activities was $4,365,227 and resulted
        primarily from the sale of common stock and warrants from a private placement
        in
        May 2005.
 
 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.
 
 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.
  To
        date,
        we have relied primarily upon selling equity securities from private placements
        to generate cash to implement our plan of operations. We believe that our
        cash
        and cash equivalents will be sufficient to meet our cash requirements for
        the
        next twelve months. Our capital resources are focused on the clinical
        development and regulatory approval of C1-INH for the treatment of HAE. We
        will
        need additional funding to complete these activities. We cannot be certain
        that
        additional funding will be available on acceptable terms, or at all.
 
 **COMMITMENTS
        AND CONTINGENCIES**
  In
        our
        Annual Report on Form 10-KSB for the year ended December 31, 2004
        under the
        heading “Contractual Obligations,” we outlined our commitments and
        contingencies. For the quarter ended September 30, 2005, there have been
        no
        material changes in our commitments and contingencies.
 
 **OFF
        -BALANCE SHEET ARRANGEMENTS**
 
 We
        had no
        off-balance sheet arrangements as of September 30, 2005 with the exception
        of
        operating leases.
  -13-
  **CRITICAL
        ACCOUNTING ESTIMATES**
  In
        our
        Annual Report on Form 10-KSB for the year ended December 31, 2004,
        our most
        critical accounting policies and estimates upon which our financial status
        depends upon were identified as those relating to income taxes, equity 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 September 30, 2005. We did not make any changes in those
        policies during the three months ended September 30, 2005 **.**
  **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 has been no significant
        change in our internal controls over financial reporting that could
        significantly affect internal controls subsequent to June 30, 2005.
 
 **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**
 
 **** Not
        applicable. ****
 
 **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**
 Number
                ****
                Description31.1
                
                Certification
                    by Chief Executive Officer pursuant to Sarbanes Oxley Section
                    302.31.2
                
                Certification
                    by Chief Financial Officer pursuant to Sarbanes Oxley Section
                    302.32.1
                
                Certification
                    by Chief Executive Officer pursuant to 18 U.S. C. Section
                    135032.2
                
                Certification
                    by Chief Financial Officer pursuant to 18 U.S. C. Section
                    1350
 
 -14-
  **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.**(Registrant)Date: November
                14, 2005
              By:
              /s/ Joshua
                D. Schein, Ph.D.Joshua
                  D. Schein, Ph.D.
                Chief
                  Executive Officer
 Date: November 14, 2005
              By:
              /s/ Douglas
                J. BeckDouglas
                  J. Beck
                Chief
                  Financial Officer
 
 -15-