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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Washington,
      D.C. 20549</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">FORM&#160;8-K</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Current
      Report Pursuant to Section&#160;13 or 15(d) of</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
      Securities Exchange Act of 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report (Date of Earliest Event Reported): June 30, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 24pt; FONT-FAMILY: Times New Roman">SRKP
      7,
      INC.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      Name of Registrant as Specified in its Charter) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Delaware</font></div>
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      </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
      or
      Other Jurisdiction of Incorporation)</font><br></div>
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              </td>
              <td width="18%">&#160;</td>
              <td align="left" valign="top" width="41%" style="border-bottom: medium none;">
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              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="41%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                  <hr style="COLOR: black" align="center" noshade size="1" width="100%">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                  File Number)</font></div>
              </td>
              <td width="18%">&#160;</td>
              <td align="left" valign="top" width="41%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                  <hr style="COLOR: black" align="center" noshade size="1" width="100%">
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(I.R.S.
                  Employer Identification No.)</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div align="left">
        <table cellpadding="0" cellspacing="0" width="100%">

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              <td align="left" valign="top" width="41%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">248
                  Route 25A, No. 2, East Setauket, New York</font></div>
              </td>
              <td width="18%">&#160;</td>
              <td align="left" valign="top" width="41%" style="border-bottom: medium none;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11733</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="41%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                  <hr style="COLOR: black" align="center" noshade size="1" width="100%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
                  of Principal Executive Offices)</font></div>
              </td>
              <td width="18%">&#160;</td>
              <td align="left" valign="top" width="41%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                  <hr style="COLOR: black" align="center" noshade size="1" width="100%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Zip
                  Code)</font></div>
              </td>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">631-942-7959</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <div>
        <hr style="COLOR: black" align="center" noshade size="1" width="40%">
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant&#8217;s
      Telephone Number, Including Area Code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1900
      Avenue of the Stars, Los Angeles, CA 90067</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <div>
        <hr style="COLOR: black" align="center" noshade size="1" width="40%">
      </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
      Name or Former Address, if Changed Since Last Report)</font><br></div>
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item&#160;2.01
      Completion of Acquisition or Disposition of Assets</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
      30, 2006, pursuant to a Share Exchange Agreement dated as of June 8, 2006 (the
      &#8220;Share Exchange Agreement&#8221;) by and among SRKP 7, Inc. (the &#8220;Company&#8221;), John S.
      Kovach (&#8220;Seller&#8221;) and Lixte Biotechnology, Inc. (&#8220;Lixte&#8221;), the Company issued
      19,021,786 shares of its common stock in exchange for all of the issued and
      outstanding shares of Lixte (the &#8220;Exchange&#8221; or the &#8220;Reverse Merger&#8221;). Pursuant
      to the terms of the Share Exchange Agreement, there will be approximately
      27,527,341 shares of common stock issued and outstanding after giving effect
      to
      the Exchange and the maximum amount of the private placement as further
      described herein under Item 5.01.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the Exchange, Lixte became a wholly owned subsidiary of the Company.
      Item&#160;5.01 of this Current Report on Form&#160;8-K, is incorporated by
      reference into this Item&#160;2.01.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02 Unregistered Sales of Equity Securities</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      described in Item 2.01 of this Current Report on Form 8-K, on June 30, 2006,
      the
      Company issued 19,021,786 shares of its common stock to Seller in exchange
      for
      all of the issued and outstanding shares of Lixte. Concurrently with the closing
      of the Exchange, the Company sold an aggregate of 1,973,871 shares of its Common
      Stock to 26 accredited investors in a private placement (the &#8220;Private
&#8220;Placement&#8221;) at a per share price of $.333 resulting in aggregate gross proceeds
      to the Company of $657,299. The Company paid to WestPark Capital, Inc. as
      placement agent, a commission of 10% and a nonaccountable fee of 4% on the
      gross
      proceeds of the Private Placement and issued five year warrants to purchase
      common stock equal to (a) 10% of the number of shares sold in the Private
      Placement exercisable at $0.333 per share and (b) an additional 2% of the number
      of shares sold in the Private Placement also exercisable at $0.333 per share.
      The Company anticipates that there will be additional closings for the Private
      Placement up to a maximum of $1,500,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      securities were issued by the Company in the Exchange and the Private Placement
      in reliance upon an exemption from registration under Section 4(2) of the
      Securities Act of 1933, as amended and Regulation D promulgated
      thereunder.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item&#160;5.01.
      Changes in Control of Registrant</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Share Exchange</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
      30, 2006, the Company issued 19,021,786 shares of its common stock in exchange
      for all of the issued and outstanding shares of Lixte. As a result of the
      Exchange and Reverse Merger, Lixte became a wholly owned subsidiary of the
      Company. The Exchange occurred pursuant to the Share Exchange
      Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      prior to the Exchange and Reverse Merger, the Company had 4,005,556 outstanding
      shares of common stock and no outstanding shares of preferred stock. The
      Company&#8217;s Certificate of Incorporation provides for authorized capital of
      110,000,000 shares of which one hundred million (100,000,000) shares are $0.0001
      par value common stock and ten million (10,000,000) shares are $0.0001 par
      value
      preferred stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-1-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the Exchange, the Company issued to the Seller 19,021,786 shares. Therefore,
      the total issued and outstanding shares of the Company&#8217;s common stock equals
      25,001,213 shares after giving effect to the Exchange and the shares issued
      in
      the initial closing of the Private Placement. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the Exchange and the shares issued in the initial Private Placement,
      (i)&#160;the stockholders of the Company immediately prior to the Exchange own
      4,005,556 shares, or approximately 16.02% of the issued and outstanding shares
      of the Company&#8217;s common stock, and (ii)&#160;the Company is now controlled by
      the former stockholder of Lixte. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Share
      Exchange Agreement was determined through arms&#8217;-length negotiations between the
      Company, the Seller and Lixte. In connection with the Exchange, the Company
      paid
      WestPark Capital, Inc. a cash fee of $45,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Change
      of Executive Officers and Directors</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      following the completion of the Exchange, all of the existing members of the
      Company&#8217;s board of directors and all of its executive officers resigned and new
      appointees were elected to the Company&#8217;s board of directors as set forth
      below.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
      13, 2006, the Company filed with the Securities and Exchange Commission an
      Information Statement pursuant to Section&#160;14(f) of the Securities Exchange
      Act of 1934 and Rule&#160;14f-1 thereunder regarding the following change in the
      Company&#8217;s Board of Directors in accordance with the terms of the Share Exchange
      Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Information
      regarding the Company&#8217;s directors and executive officers is set forth below. If
      any director or executive officer listed below is unable to serve, the directors
      will appoint a successor. Each director serves until his successor is elected
      at
      the annual meeting of stockholders or until his earlier death, resignation
      or
      removal and each executive officer serves at the pleasure of the Board of
      Directors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      <table cellpadding="0" cellspacing="0" width="50%">

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            </td>
            <td align="left" valign="top" width="15%" style="border-bottom: medium none;">
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                </u></font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Position
                </u></font></div>
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                John S. Kovach</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">69</font></div>
            </td>
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                Director</font></div>
            </td>
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                Philip F. Palmedo</font></div>
            </td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">72</font></div>
            </td>
            <td align="left" valign="top" width="40%">
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            </td>
          </tr>

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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      intend
      to add at least one more independent director as soon as possible.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Dr.
      John&#160;S. Kovach, </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">age
      69,
      founded Lixte in August, 2005 and is its President and a member of the Board
      of
      Directors. He received a BA (cum laude) from Princeton University and an MD
      (AOA) from the College of Physicians &amp; Surgeons, Columbia University. Dr.
      Kovach trained in Internal Medicine and Hematology at Presbyterian Hospital,
      Columbia University and spent six years in the laboratory of Chemical Biology,
      National Institute of Arthritis and Metabolic diseases studying control of
      gene
      expression in bacterial systems.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Kovach was recruited to Stony Brook University in 2000 to found the Long Island
      Cancer Center (now named the Stony Brook University Cancer Center). He is
      presently Chair, Department of Preventive Medicine, Stony Brook University,
      Stony Brook, New York. From 1994 to 2000, Dr. Kovach was Executive Vice
      President for Medical and Scientific Affairs, City of Hope National Medical
      Center in Los Angeles, California. His responsibilities included oversight
      of
      all basic and clinical research initiatives at the City of Hope. During that
      time he was also Director of the Beckman Research Center at City of Hope and
      a
      member of the Arnold and Mabel Beckman Scientific Advisory Board in Newport
      Beach, California.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      1976
      to 1994, Dr. Kovach was a consultant in oncology and director of the Cancer
      Pharmacology Division at the Mayo Clinic in Rochester, Minnesota. During this
      time, he directed the early clinical trials program for evaluation of new
      anti-cancer drugs as principal investigator of contracts from the National
      Cancer Institute. From 1986 to 1994, he was also Chair of the Department of
      Oncology and Director of the NCI-designated Mayo Comprehensive Cancer Center.
      During that time, Dr. Kovach, working with a molecular geneticist, Steve Sommer
      MD, PhD, published extensively on patterns of acquired mutations in human cancer
      cells as markers of environmental mutagens and as potential indicators of breast
      cancer patient prognosis. Dr. Kovach has published over 100 articles on the
      pharmacology, toxicity, and effectiveness of anti-cancer treatments and on
      the
      molecular epidemiology of breast cancer. Dr. Kovach directs Lixte with the
      approval of the State University of New York at Stony Brook and the New York
      State Ethics Commission.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Chief
      Executive Officer</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Initially,
      leadership and management of the company will be provided by Dr. Kovach with
      the
      advice of the board of Directors and the Scientific Advisory Committee. The
      activities for the first year at least will be confined to achieving the goals
      of the CRADA through the collaborative arrangement of the company by which
      Dr.
      Kovach and Dr. Zhuang, aided by two full time technical personnel, will pursue
      development of lead compounds for the treatment of malignant brain tumors.
      During the initial year, Dr. Kovach will also oversee the collection of the
      clinical samples needed to validate the biomarker observations regarding GBMs
      and to be in a position to extend the discovery process to ovarian and stomach
      cancers. At this point, the company will consider seeking another CRADA to
      extend the scope of its research or establishing an independent laboratory.
      The
      timing of this expansion will depend on raising additional capital of
      approximately $2.0 million by sale of additional shares of stock. A chief
      executive officer would then be recruited to manage the business affairs of
      the
      company. It is anticipated that this may require less than full time effort
      for
      the second year with a need developing for a full time CEO and at least a part
      time financial officer in the third year of operation.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Board
      of Directors</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Philip&#160;F.
      Palmedo</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Philip F. Palmedo has had a diversified career as a physicist, entrepreneur,
      corporate manager and writer. Dr. Palmedo received his undergraduate degree
      from
      Williams College and M.S. and Ph.D. degrees from MIT. He carried out
      experimental nuclear reactor physics research at MIT, Oak Ridge National
      Laboratory, the French Atomic Energy Commission Laboratory at Saclay and
      Brookhaven National Laboratory (BNL). At BNL in 1972 he initiated and was the
      first head of the Energy Policy Analysis Group. In 1974 he served with the
      Energy Policy Office of the White House and in the following year initiated
      the
      BNL Developing Country Energy Program. </font></div>
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-3-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      1979
      Dr. Palmedo founded the International Resources Group, an international
      professional services firm in energy, environment and natural resources. He
      served as Chairman and CEO until 1988 and since that time remains as Chairman
      of
      the company. In 1985 the company was recognized by </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Inc.
      Magazine</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      as one
      of the 500 fastest growing private companies in the U.S. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      1988
      Dr. Palmedo joined in the formation of Kepler Financial Management, Ltd., a
      quantitative financial research and trading company. Dr. Palmedo held the
      position of President and Managing Director until the end of 1991 when
      Renaissance Technologies Corporation acquired the company. In 2005 he started
      a
      new hedge fund, Kepler Asset Management, and is a Managing Director of the
      firm.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Palmedo was the designer and, in 1992, became the first president of the Long
      Island Research Institute. LIRI was formed by Brookhaven National Laboratory,
      Cold Spring Harbor Laboratory, and Stony Brook University to facilitate the
      commercialization of technologies developed in their research and development
      programs. LIRI guided fledgling companies and started several new high tech
      entities. In order to provide &#8220;zero-stage&#8221; financing, LIRI created the Long
      Island Venture Fund, which evolved into the $250 million Topspin Fund.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Palmedo served on the boards of Asset Management Advisors and the Teton Trust
      Company and is currently a member of the Board of Directors of EHR Investments
      and the Gyrodyne Corporation of America. Dr. Palmedo also served on the Board
      of
      Trustees of Williams College and of the Stony Brook (University) Foundation
      and
      chaired the Foundation&#8217;s Investment Committee. He is the founding Chairman of
      the non-profit Cultural Preservation Fund. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Palmedo has served as a consultant and advisor to numerous corporations and
      national and international agencies in science, technology and environmental
      policy including the MacArthur Foundation, the U. S. National Academy of
      Sciences, International Atomic Energy Agency, UNIDO, Organization of American
      States, the Governments of Sweden, Denmark, Dominican Republic, Indonesia,
      Somalia, Sudan, Egypt and Peru. He is the author of many publications in nuclear
      reactor physics, energy and environment, and technology and economic
      development. Dr. Palmedo has two sons and lives in St. James, Long Island,
      N.Y.
      with his wife, Elisabeth. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Scientific
      Advisory Committee</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Arndt
      Hartmann, MD</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Hartmann is Professor of Pathology, Institute of Pathology, University of
      Regensburg, Germany. He was trained in Internal Medicine at the University
      of
      Jena, Germany, and in molecular genetics of cancer at Mayo Clinic, Rochester,
      MN. He was subsequently trained in pathology at the University of Regensburg
      and
      the University of Basel, Switzerland. His research is focused on methods
      development in molecular pathology. He has specific expertise in genetic
      alterations in cancers of the bladder, prostate, kidney and breast.
</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Ferdinand
      Hofstadter, MD</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Hofstadter is Professor and Director of the Institute of Pathology, University
      of Regensburg Medical School, Germany. He is Research Dean of the University
      of
      Regensburg-Medical Faculty, Chairman of the Managing Board of the Association
      of
      German Tumor Centers, Chairman of the German Society for Pathology, a member
      of
      the editorial boards of Virchow&#8217;s Archives and the Journal of Pathology, and a
      referee for Deutsche Forschungsgesellschaft, the Dr. Mildred Scheel-Stiftung,
      EU, and the European Research Framework Program.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Stefan
      Madajewicz, MD, PhD</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Madajewicz is Professor of Medicine. For the past 15 years, he has been Director
      of Cancer Clinical Trials and for the past 10 years, Chief, Neoplastic Diseases
      at SUNY-Stony Brook. Dr. Madajewicz is a Fellow, American College of Physicians
      and a member of the American Society of Clinical Oncology, American Association
      for Cancer Research, European Society of Medical Oncology an affiliate of the
      Eastern Cooperative Oncology Group, and member of the National Surgical Adjuvant
      Breast and Bowel Project. He is recognized as an outstanding cancer clinician
      and for the design of clinical trials, particularly the evaluation of new drugs
      in the treatment of cancers of the gastrointestinal tract and brain.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Iwao
      Ojima, BS, MS, PhD</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Professor
      Ojima is Distinguished Professor of Chemistry and Director, Institute of
      Chemical Biology and Drug Discovery, SUNY-Stony Brook. He is an internationally
      recognized expert in medicinal chemistry, including anticancer agents and enzyme
      inhibitors, development of efficient synthetic methods for organic synthesis
      by
      means of organometallic reagents, homogeneous catalysis and organometallic
      chemistry, peptide and peptide mimetics, beta-lactam chemistry, and
      organoflourine chemistry at the biomedical interface.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Ojima
      is a recipient of the Arthur C. Cope Scholar Award (1994) and the E. B.
      Hershberg Award (for important discovery of medicinally active substances)
      (2001) from the American Chemical Society; The Chemical Society of Japan Award
      (for distinguished achievements) (1999); Outstanding Inventor Award from the
      Research Foundation of the State University of New York (2002. He is a Fellow
      of
      the J.S. Guggenheim Memorial Foundation (1995-), the American Association for
      the Advancement of Science (1997-), and The New York Academy of Sciences
      (2000-).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
      Ojima
      is a member of the American Chemical Society, American Association for the
      Advancement of Science, American Association for Cancer Research, American
      Peptide Society, the Chemical Society of Japan, the Society of Synthetic Organic
      Chemistry, Japan, New York Academy of Sciences, and Signa Xi. He has served
      as a
      consultant for E. I. du Pont, Eli Lilly, Air Products &amp; Chemicals,
      Mitsubishi Chem. Inc., Nippon Steel Corp., Life Science Division, Rhone-Poulenc
      Rorer, ImmunoGen, Inc., Taiho Pharmaceutical Co., Milliken &amp; Co., Aventis
      Pharma, OSI Pharmaceuticals, Inc., Mitsubishi Chem. Corp.
      (current).</font></div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-5-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Family
      Relationships</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Security
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth the number of shares of common stock beneficially
      owned as by (i)&#160;those persons or groups known to beneficially own more than
      5% of the Company&#8217;s common stock prior to the closing of the Exchange,
      (ii)&#160;those persons or groups who beneficially own more than 5% of The
      Company&#8217;s common stock as of the closing of the Exchange, (iii)&#160;each
      current director and each person that became a director upon the closing of
      the
      Exchange, (iv)&#160;all current directors and executive officers as a group and
      (v)&#160;all directors and executive officers after the closing of the Exchange
      as a group. The information is determined in accordance with Rule&#160;13d-3
      promulgated under the Securities Exchange Act of 1934, as amended. Except as
      indicated below, the stockholders listed possess sole voting and investment
      power with respect to their shares. </font></div>
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      <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

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            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Before
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>of
                Exchange</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup><strong>
                (1)</strong></sup></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="5" valign="bottom" width="25%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>After
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                Exchange</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup><strong>(2)</strong></sup></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name
                and Address of Beneficial Owner</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Amount
                and Nature of Beneficial Ownership</strong></font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Percent
                of Class</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Amount
                and Nature of Beneficial Ownership</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: black thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Percent
                of Class</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pre-Exchange
                Officers, Directors and 5% stockholders</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Debbie
                Schwartzberg</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">800
                5</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                Avenue</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
                York, New York</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,155,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">28.8</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,154,845</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4.2</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Richard
                Rappaport</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1900
                Avenue of the Stars, Suite 310</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Los
                Angeles, California 90067</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,155,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">28.8</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,154,845</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4.2</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TMC
                Ulster Holdings, Inc.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1900
                Avenue of the Stars, Suite 310</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Los
                Angeles, California 90067</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,005,556</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">25.1</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,005,556</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">3.6</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tom
                Poletti</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1900
                Avenue of the Stars, Suite 310</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Los
                Angeles, California 90067</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">270,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6.7</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">269,973</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Anthony
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                Avenue of the Stars, Suite 310</font></div>
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            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">270,000</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6.7</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">269,973</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Glenn
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1900
                Avenue of the Stars, Suite 310</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Los
                Angeles, California 90067</font></div>
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            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">150,000</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">3.7</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">149,985</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Post-Exchange
                Officers, Directors and 5% stockholders</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
              </div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.John
                S. Kovach</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">248
                Route 25A, No. 2</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">East
                Setauket, New York 11733</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,021,786</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">69.1</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                Philip F. Palmedo</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">248
                Route 25A, No. 2</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">East
                Setauket, New York 11733</font></div>
            </td>
            <td width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">256,666</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><sup>(3)</sup></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
                Officers and directors as a group (two persons prior to and following
                the
                consummation of the Exchange)</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,425,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">35.5</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,278,452</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">70.0</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">
      <hr style="COLOR: black" align="left" noshade size="1" width="15%">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div>&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 36pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(1)</sup></font></div>
              </td>
              <td><font size="2">Based on 4,005,556 shares outstanding on June
                29,
                2006.</font></td>
            </tr>

        </table>
      </div>
      <div>&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based
                on 27,531,846 shares of the Company&#8217;s common stock outstanding projected
                to be outstanding following the closing of the Exchange and the completion
                of the maximum amount of the Private Placement ($1,500,000).
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(3)</sup></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consists
                of shares issuable pursuant to the exercise of immediately exercisable
                options to be granted to Dr. Palmedo as of the closing of the
                Exchange.</font></div>
            </td>
          </tr>

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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>BUSINESS
      OF THE COMPANY</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      prior to the completion of the Exchange, the Company did not conduct any
      business operations and had minimal assets and liabilities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Explanatory
      Note</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unless
      otherwise indicated or the context otherwise requires, all references below
      in
      this Report on Form 8-K to &#8220;we,&#8221; &#8220;us&#8221; and the &#8220;Company&#8221; are to SRKP 7, Inc., a
      Delaware corporation and its subsidiary, Lixte Biotechnology, Inc. References
      to
&#8220;Lixte&#8221; are to Lixte Biotechnology, Inc., a Delaware corporation. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cautionary
      Notice Regarding Forward Looking Statements </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company desires to take advantage of the &#8220;safe harbor&#8221; provisions of the Private
      Securities Litigation Reform Act of 1995. This Report on Form 8-K contains
      a
      number of forward-looking statements that reflect management&#8217;s current views and
      expectations with respect to its business, strategies, products future results
      and events and financial performance. All statements made in this Report other
      than statements of historical fact, including statements that address operating
      performance, events or developments that management expects or anticipates
      will
      or may occur in the future, including statements related to distributor
      channels, volume growth, revenues, profitability, new products, adequacy of
      funds from operations, statements expressing general optimism about future
      operating results and non-historical information, are forward looking
      statements. In particular, the words &#8220;believe,&#8221; &#8220;expect,&#8221; &#8220;intend,&#8221; &#8220;
anticipate,&#8221; &#8220;estimate,&#8221; &#8220;may,&#8221; &#8220;will,&#8221; variations of such words, and similar
      expressions identify forward-looking statements, but are not the exclusive
      means
      of identifying such statements and their absence does not mean that the
      statement is not forward-looking. These forward-looking statements are subject
      to certain risks and uncertainties, including those discussed below. Actual
      results, performance or achievements could differ materially from historical
      results as well as those expressed in, anticipated or implied by these
      forward-looking statements. Lixte does not undertake any obligation to revise
      these forward-looking statements to reflect any future events or circumstances.
      </font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-7-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Readers
      should not place undue reliance on these forward-looking statements, which
      are
      based on management&#8217;s current expectations and projections about future events,
      are not guarantees of future performance, are subject to risks, uncertainties
      and assumptions (including those described below) and apply only as of the
      date
      of this Report. Actual results, performance or achievements could differ
      materially from the results expressed in, or implied by, these forward-looking
      statements. Factors that could cause or contribute to such differences include,
      but are not limited to, those discussed below in &#8220;Risk Factors&#8221; as well as those
      discussed elsewhere in this Report, and the risks to be discussed in the next
      Annual Report on Form 10-KSB and in the press releases and other communications
      to stockholders issued by Lixte from time to time which attempt to advise
      interested parties of the risks and factors that may affect its business. Lixte
      undertakes no obligation to publicly update or revise any forward-looking
      statements, whether as a result of new information, future events or
      otherwise.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Glossary
      of Terms as Used in This Report</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Assay</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">An
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>assay</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is a
      method to determine the presence, absence, or the amount of a particular
      substance in a sample. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Assays</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      of body
      fluids such as blood and urine can be used to detect specific products
      (</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>biomarkers</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
      that
      indicate the presence of a specific type of cancer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Biomarker</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>biomarker</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is a
      component of a cell that is uniquely or strongly associated with a particular
      feature of that cell. The detection of the biomarker in body fluid by an
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>assay</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      indicates that a particular cell is very likely to be present in the body.
      In
      this memorandum, &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>biomarkers</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;
refer
      primarily to </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>proteins</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      that are
      uniquely produced by specific types of cancer cells or that are produced in
      excess by the cancer cells compared to non&#8212;cancer cells of the same tissue or
      organ.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cancer</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      disease
      characterized by loss or enhancement of one or more mechanisms that regulate
      the
      growth of cells of a specific tissue. Loss of these control mechanisms or gain
      of abnormal mechanisms in a single cell that put </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>cell
      growth</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      into
      overdrive allows that cell to grow, invade local tissue, and to spread to other
      regions of the body. This spreading of altered cells to distant sites is the
      process called </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>metastasis</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cell
      Growth</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Cell
      growth</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is the
      ability of an individual cell to reproduce by dividing into two cells. During
      normal development and subsequently during the life of the adult, this process
      is highly controlled. Loss of this control is the distinguishing feature of
      cancer cells. Although all cancer cells gain the capacity for uncontrolled
      growth, in most instances they retain many of the highly specialized features
      (and associated specific molecular components) that were characteristic of
      the
      normal tissue before loss of growth control. For example, breast cancer cells
      and brain cancer cells have lost control of growth and may be unrecognizable
      by
      their appearance under the microscope </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>but
      identifiable by the presence of biomarkers specific to breast or brain
      cells</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CRADA</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>CRADA</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      (Cooperative Research and Development Agreement) is a formal contractual
      mechanism by which a variety of federal government agencies may agree to work
      collaboratively with a non-governmental entity to study and advance a particular
      idea, observation, or process under a defined plan of work.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Gene</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>gene</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is a
      unit of information that specifies the structure of one or more </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>gene
      products</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Collectively, genes determine the precise composition of all molecules needed
      for maintenance of the functions of life: reproduction, development,
      organization, growth and metabolism. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Genes</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      are
      often referred to as units of heredity because they pass on the information
      necessary for all characteristics of an individual. For mammals like ourselves,
      one set of genes is received from each parent.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Gene
      Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      products of genes are the thousands of different chemical structures, called
      molecules, needed for development of all cells. Most gene products are proteins.
      Most proteins are enzymes, molecules that can carry out work such as digesting
      and utilizing food for energy, signaling the cell to produce other gene products
      in response to changing conditions in the body, and controlling </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>cell
      growth</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      When
      proteins controlling </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>cell
      growth</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      are
      altered, as occurs in all cancers, they become prime candidates for </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>biomarkers</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      that
      reveal the presence of cancer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Glioblastoma
      Multiforme (GBM)</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>GBM</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is the
      most common and most aggressive type of primary human brain cancer. The name
      derives from the fact that the brain cell that loses growth control and becomes
      a brain cancer cell is a glial cell (glioblastoma); as the altered glial cells
      grow without restraint, they take on many different shapes (multiforme). Recent
      studies suggest, however, that GBMs may arise from primitive brain stem cells
      rather than from glial cells. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>GBM</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is the
      initial target of Lixte Biotechnology, Inc.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Metastasis</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Metastasis</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is the
      process by which cancers acquire the ability to spread to other parts of the
      body by entry and dissemination through the blood and/or lymph systems. The
      devastating aspect of metastasis is the ability of the cancer cells to grow
      in a
      new environment (new tissue) Examples are the metastasis of breast cancer cells
      to the brain and liver and prostate cancer cells to bone.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cure
      of
      cancers is much more difficult to achieve after </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>metastasis</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      has
      occurred. A major goal of our biomarker research is to develop </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>assays</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      for
      detection of cancers before they have invaded extensively or </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>metastasized</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      allowing complete removal by surgery.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mutation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>mutation</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is a
      change in one or more building blocks of a gene. Some changes can be tolerated
      without altering the integrity (function) of the product of the gene but other
      changes can result in cancer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      purposes of the cancer projects described in this memorandum, it is important
      to
      distinguish between inherited mutations (inborn mutations) and acquired
      (environmentally caused) mutations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Some
      inborn mutations predispose an individual to development of one or more kinds
      of
      cancer. Because these mutations are inherited, they are present in every cell
      in
      the body. Such mutations are responsible for the higher frequency of certain
      cancers in particular families and ethnic groups. Examples are the breast cancer
      predisposing genes known as BRCA&#160;I and BRCA&#160;II.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research
      on </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>biomarkers</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      however, is directed at finding the gene products (proteins) of acquired
      mutations. Acquired mutations that change a single cell to a cancer cell are
      present ONLY in that cell and cells arising from its uncontrolled </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>cell
      growth</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      If the
      products of the altered genes in these cancer cells are detectable in the body,
      they may reveal the presence of the cancer at a stage when it is curable by
      surgery.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Prognosis</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Prognosis</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      refers
      to the likely course of a disease at specific stage of development. For example,
      a breast or prostate cancer that is not confined to the tissue of origin, e.g.
      is also present in a lymph node when first detected, has a greater likelihood
      of
      recurrence, a worse prognosis, than if it were confined to the tissue of
      origin.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Thus,
      the
      presence of lymph node metastases is an indicator of poor
      prognosis.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      hoped that specific </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>biomarkers</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      for
      cancers will be found that have prognostic value. With assays for such markers,
      patients with poor prognoses could consider more aggressive treatments before
      obvious spread of disease and patients with good prognoses could be spared
      unnecessary treatment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Proteins</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Proteins</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      are
      molecules that have many functions important to the nature and behavior of
      the
      cell. Many proteins are enzymes that regulate and integrate a myriad of
      biochemical processes essential to life.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain
      enzymes are critical to an integrated system of cellular signaling that
      regulates cell behavior in response to a constantly changing environment and
      maintains the specialized nature of different types of cells. It is likely
      that
      some </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>biomarkers</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      of
      cancers have perverted signaling functions that perpetuate the abnormal behavior
      of the cancer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Thus,
      discovery of biomarkers of known function that are unique or overly abundant
      in
      specific types of cancers may provide clues as to the biochemical
      vulnerabilities of these cancers, weaknesses that can be attacked selectively
      by
      specific classes of drugs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Company</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      was
      created to capitalize on opportunities for the company to develop specific,
      and
      sensitive tests for the early detection of cancers to better estimate prognosis,
      to monitor treatment response, and to reveal targets for development of more
      effective treatments. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Research
      Objectives</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      first year of operation, Lixte will concentrate on exploiting the biomarker
      pathway associated with the growth of GBMs to identify drugs with potential
      selective activity against this type of tumor. In the first year, Lixte will
      also collect the clinical samples needed for the identification of biomarkers
      for ovarian and stomach cancer. Subsequently, Lixte will include cancers of
      the
      breast, prostate, colon, bladder, and kidney. For each of these diseases, a
      biomarker that would enable identification of the presence of cancer at a stage
      curable by surgery would save thousands of lives annually. Biomarkers specific
      to these diseases may also provide clues as to processes (biological pathways)
      that may be important to the growth of the cancer and therefore be vulnerable
      to
      drug treatments targeted to the biomarker pathway.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      will seek to identify new treatments for the most common and most aggressive
      type of primary brain cancer, glioblastoma multiforme (&#8220;GBM&#8221;) under a
      Cooperative Research and Development Agreement (&#8220;CRADA&#8221;) with the National
      Institute of Neurological Diseases and Stroke (&#8220;NINDS&#8221;) of the National
      Institutes of Health (&#8220;NIH&#8221;). A second goal of the CRADA is to determine whether
      expression of a component of the biomarker pathway correlates with prognosis
      in
      glioma patients. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      collaborating NIH laboratory is directed by Dr. Zhengping Zhuang, who is an
      internationally recognized molecular pathologist. He has four issued and two
      pending patents related to molecular pathology of human cancers. Dr. Zhuang
      and
      colleagues at NIH recently discovered a biomarker that Lixte believes can be
      used as a tool for identifying drugs that affect the growth of GBM cells. Under
      the CRADA, Lixte will support studies in Dr. Zhuang&#8217;s laboratory with $200,000
      annually for two years for two research assistants expected to be at the
      post-doctoral level and supplies. The selection of the research personnel will
      be made by Dr. Zhuang. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Intellectual
      Property</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      sponsored the development and submission of a provisional patent application
      filed February&#160;6, 2006 (the &#8220;Provisional Patent Application&#8221;) naming as
      co-inventors Dr. Zhuang, several other NIH investigators, and Dr. Kovach. When
      the final patent application is filed in early 2007, the named inventors will
      assign their rights in the inventions to their employers, meaning that any
      patent (or patents) arising out of the application will be jointly owned by
      the
      U.S. Government and Lixte. Lixte is currently in the negotiations with the
      NIH
      to obtain the exclusive commercial rights to the inventions covered by the
      Provisional Patent Application. Lixte expects to file further patent
      applications relating to the categories of products described below. Patent
      applications arising out of research pursuant to the CRADA are likely to be
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">jointly</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      owned by
      Lixte and the U.S. Government. In such cases of joint ownership, Lixte will
      likely seek to obtain the exclusive commercial rights to those
      inventions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Access
      to Clinical Materials</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      detect
      and to assess the clinical relevance of biomarkers, Lixte needs access to human
      tissue, blood and perhaps other body fluids of patients with and without the
      specific types of cancer under study. Lixte is negotiating an agreement with
      the
      Institute of Pathology at the University of Regensburg in Germany to receive
      a
      supply of high quality, accurately annotated tissue and blood samples.. This
      arrangement provides Lixte with appropriate clinical samples for which
      permission has been obtained to study any molecular feature of the tissue for
      commercial purposes. This is an absolute requirement for success of a for-profit
      company in this field. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      collection, selection, histological characterization, and processing of tissue
      samples and collection of blood samples will be managed by Arndt Hartmann,
      M.D.,
      a Professor in the Institute of Pathology at the University of Regensburg.
      Dr.
      Hartmann is an expert clinical and molecular pathologist and </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">is</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      keenly
      interested in the project. His research is focused on the molecular genetics
      of
      breast, bladder, prostate and kidney cancer. He was a research fellow for three
      years in Dr. Kovach&#8217;s laboratory at the Mayo Clinic in Rochester before
      completing his residency in pathology and joining the faculty at Regensburg
      University. Dr.&#160;Hartmann is a member of the Scientific Advisory Committee
      of Lixte.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte&#8217;s
      products will derive directly from its intellectual property consisting of
      its
      Provisional Patent Application </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      other
      patents it anticipates will arise from its research activities. Those patents
      are expected to cover biomarkers uniquely associated with specific types of
      cancer that may provide the bases for assays suitable for cancer detection
      and
      patents on methods to identify drugs that inhibit growth of specific tumor
      types
      and combinations of drugs as potential therapeutic agents for the treatment
      of
      specific cancers. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company believes that there are four main markets </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      potential products which may be developed by Lixte.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Improved
                Cancer Treatments. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Improved
                chemotherapy regimens for cancers not curable by surgery or
                radiation;</font></div>
            </td>
          </tr>

      </table>
    </div>
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      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Diagnostic
                Assays. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Improved
                assays of body fluids, primarily blood, for the diagnosis of cancers
                at
                stages when cure is possible through surgery and/or
                radiotherapy;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Estimation
                of Prognosis. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Improved
                methods for estimation of prognosis by molecular sub-classification
                of
                histologically indistinguishable tumor subtypes;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Assessment
                of Therapeutic Effectiveness. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Improved
                methods to assess therapeutic effectiveness by monitoring with biomarker
                assays persistence or reappearance of cancer during and after treatment
                and during drug development.</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      market is discussed below.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Improved
      Cancer Treatments</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      will seek to develop improved therapeutic regimens when biomarkers provide
      insight into pathways vulnerable to chemical and/or immunological attack. Some
      tumor biomarkers have specific (enzymatic) functions and are &#8220;drugable,&#8221; that
      is, their function can be altered pharmacologically. For example, the
      identification of the biomarker specific to regulation of GBMs has led to
      development of an assay for screening compounds for anti-GBM
      activity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2.
      Diagnostic Assays </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      intends to work under the CRADA with NINDS to assess the clinical potential
      of
      the new biomarker for GBM. Using the approach developed by Dr. Zhuang to
      identify markers for GBM and for other rare tumors, Lixte also intends to
      initiate searches for biomarkers in other common cancers for which there is
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">no</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      highly
      specific and sensitive blood test for early detection. The focus for the first
      two years, in addition to GBMs, will be ovarian and gastric cancer. For these
      diseases, a reliable blood test for their detection at an early surgically
      curable stage would save many lives. If Lixte resources increase as anticipated,
      research will likely be extended to the identification of biomarkers for stomach
      and ovarian cancer and subsequently to biomarkers for breast, prostate, colon,
      bladder, and kidney cancers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Estimation
      of Prognosis </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      is
      a wide spectrum of aggressiveness and responsiveness to drug treatments for
      many
      cancers that are clinically indistinguishable with present methods of
      classification. Judgment of the aggressiveness of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">most</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      cancers
      is currently based on their morphologic appearance under the microscope and,
      for
      some tumors, on a few molecular features such as hormone receptors associated
      with breast cancers. There are few biomarkers sufficiently reliable to predict
      the prognosis of a given cancer patient so that treatment intensity can be
      adjusted with confidence toward less or more toxic regimens. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-13-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>3.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Assessment
      of Therapeutic Effectiveness</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company believes that specific and sensitive biomarkers for any human cancer
      are
      in great demand by pharmaceutical companies and by the National Cancer Institute
      as aids to drug development and to the development of targeted drug treatment.
      In addition, the Company believes that biomarkers that reflect disease
      progression and regression during initial clinical evaluation of new therapeutic
      agents could greatly reduce the cost of new drug development. To assess the
      effectiveness of a specific treatment, it would be less expensive and more
      efficient to monitor the appearance and disappearance of a biomarker in the
      blood than to monitor the course of disease by radiological imaging.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Market</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company believes that a sensitive, specific, reasonably priced assay for the
      detection of any common human cancer at an early </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">stage</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      could
      save thousands of lives annually, reduce health care costs, and generate
      significant income. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Brain
      Cancer</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      most
      malignant type of brain cancer, GBM, although less common than stomach, breast
      and prostate cancers, is almost invariably fatal. Typically, survival after
      surgery and radiation is only 12 to 18 months. A biomarker reflecting disease
      progression and, most importantly, providing a method to develop more specific
      and effective treatments of GBM would be an important discovery. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Stomach
      Cancer</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company believes that stomach cancer (gastric cancer) is a target for biomarker
      identification because of its high prevalence in certain of the world&#8217;s
      population, particularly in Asia. Since gastric cancer is uncommon in the West,
      development of new diagnostics and treatments is not a priority for many
      pharmaceutical and diagnostic companies, providing a special opportunity for
      Lixte. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Current
      screening for gastric cancer entails passing a tube into the stomach
      (gastroscopy) and sampling of suspicious </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">areas</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      invasive nature and cost of gastroscopy with sedation limits systematic
      screening of large numbers of individuals at risk. The Company believes that
      a
      blood test for the early detection of stomach cancer could save many lives
      and
      significantly reduce health care costs in countries with a high prevalence
      of
      the disease.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Ovarian
      Cancer</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      ovarian cancer is much less common than breast cancer, cancer of the ovary
      is
      responsible for the death of almost half as many women who die from breast
      cancer. Less than 50% of women are cured of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ovarian</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      cancer
      because the disease is almost always in an advanced stage before it produces
      symptoms. Yet, if ovarian cancer is found early, the cure rate is 90% or better.
      A blood test for screening women at risk (all women who are 50 or older) is
      urgently needed. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Marketing
      Plan</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Once
      a
      biomarker has been identified, depending on the projected cost for evaluation,
      Lixte expects to either conduct the initial </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">assessment</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      using
      its resources or seek partners in industry for clinical development. If we
      have
      the resources, we prefer to generate evidence of clinical value on our own
      to
      maximize financial value of the product. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      we do
      not have the resources needed to develop the clinical potential of a given
      biomarker ourselves, we intend to try to find partners in large diagnostic
      and/or pharmaceutical companies. These companies are increasingly dependent
      upon
      new biomarkers discovered by academic groups and small biotechnology companies
      to maintain a pipeline of promising drugs and new diagnostic tools.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      confident that the molecular approaches that led to the discovery of the
      biomarker for GBMs (and the subject of the Provisional Patent Application)
      could
      lead to the discovery of equally promising new </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">biomarkers</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      for
      other cancers. If discovered and developed, the challenge will be to decide
      which products to license early and which to carry into clinical evaluation
      without a pharmaceutical company partner.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Research
      and Development </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      primary objective of Lixte is to develop sensitive and specific assays for
      identification of potential therapeutic targets and for the early detection
      for
      several common cancers. Most cancers produce abnormal proteins or </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">abnormal</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      amounts
      of normal proteins. How many of these potential biomarkers are present at
      detectable concentrations in the blood is not known.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      four steps in our </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">biomarker</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      detection and validation process: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Tissue
      Acquisition</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      acquisition of well-characterized cancer tissue and blood samples from cancer
      patients and control individuals is the most critical step to success. We
      believe that Lixte should have access to the clinical samples needed for its
      program from the Institute of Pathology at University of Regensburg in Germany.
      We expect that the samples we will obtain will be or have been collected under
      the regulatory requirements of the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">European</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Union
      and of the Office of Protection of Research Subjects in the United States.
      Those
      regulations require that each patient be fully informed about the process,
      the
      use of the samples, and any attendant risks. Though there is a negligible
      medical risk related to the collection of the samples for Lixte&#8217;s purposes, the
      consent form points out that the tissue is not needed for clinical purposes
      and
      that the research done will not affect the patient&#8217;s care in any way.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      consent specifies further that the samples will be used to develop diagnostic
      tests and/or treatments for cancer that may have commercial value and that
      the
      participants will not be entitled to any of the financial benefits from the
      product&#8217;s development. All samples are coded and the privacy of all </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">participants</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      is
      assured because personal identifiers are never shared with Lixte by the
      University of Regensburg. Obtaining consent is the responsibility of the
      collaborating institution, but all consent processes and forms will be jointly
      approved by the collaborating institution and by Lixte.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-15-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Tissue
      Processing</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      maximum efficiency in detecting biomarkers, cancer cells must be isolated from
      a
      complex matrix of normal cells and other structural elements of tissue in which
      the cancer has arisen under conditions that do not alter potential biomarkers.
      The procedures used minimize destruction and alteration of cell components.
      Once
      processed, preparations can be transported without compromising their integrity.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>3.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Detection
      and Identification of Biomarkers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      search for molecular elements with features unique to a specific cancer type
      is
      accomplished using highly reproducible physical techniques. These techniques
      are
      not proprietary but involve technologies used in sequences that are not obvious.
      The most prominent biomarkers for each tumor type are identified by mass
      spectrometric sequencing. We will select for patenting and clinical </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">evaluation</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      biomarkers present at high frequency in all cancers of the same type.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>4.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Development
      of Assays for Biomarkers in the Blood</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Whether
      to develop an assay for selected biomarkers is an important decision point.
      Assay development is an expensive component of the discovery process but also
      an
      essential step in establishing commercial </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">value</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      For
      each cancer type, we expect to screen sera of affected and unaffected persons
      for the five most promising biomarkers of known sequence for which patent
      protection seems achievable. Maximum value of the product for diagnostics is
      achieved by demonstrating the presence of specific biomarkers in the serum
      of
      patients harboring the cancer of interest and their absence in the sera of
      patients without the cancer. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Biomarkers
      not useful for diagnostic assays may still have significant value as markers
      of
      prognosis and/or as drug targets. For example, although it is not yet clear
      whether the new biomarker discovered by Dr. Zhuang will serve as a useful
      diagnostic assay for GBMs, that biomarker is nevertheless valuable because
      it
      was demonstrated to provide a tool for identification of new drug combinations
      active against GBMs in vitro. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Using
      stringent criteria for biomarker selection, analysis of small numbers of a
      given
      type of cancer is sufficient for detection of relevant biomarkers. If potential
      biomarkers for early diagnosis are </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">discovered</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      for
      several types of cancer, such as the one already identified for GBMs, we will
      prioritize their development in the following order: stomach, ovary, prostate,
      colon, bladder, and kidney. If a particularly compelling opportunity arises,
      we
      have the flexibility to quickly direct resources to maximize chances of
      developing a clinically useful product. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Employees</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of
      June 30, 2006, Lixte had no full-time employees. Dr. Kovach is Chair, Department
      of Preventive Medicine, SUNY, Stony Brook. He received approval from the School
      of Medicine, Stony Brook University and approval from the New York State Ethics
      Commission to operate and hold greater than 5% of outstanding shares of the
      Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-16-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
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      </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      investment commitments in the research efforts pursuant to the CRADA fund two
      technical assistants who will work under the supervision of Dr. Zhuang on the
      aims of the CRADA. Dr. Kovach will devote 0.2 person/years of his efforts per
      year to research planning and design and monitoring progress of the research
      under the CRADA. Dr. Kovach&#8217;s contributions will be made outside of his academic
      responsibilities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Contacts</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        business address is: </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
        Biotechnology, Inc.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">248
        Route
        25A #2</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">East
        Setauket, NY 11733</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Legal
      Proceedings</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      not a party to any legal proceedings.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MANAGEMENT&#8217;S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>AND
      RESULTS OF OPERATIONS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our financial statements and related notes, and
      the
      other financial information included in this Memorandum.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Forward-Looking
      Statements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      forward-looking comments contained in this discussion involve risks and
      uncertainties. Our actual results may differ materially from those discussed
      here due to factors such as, among others, limited operating history, difficulty
      in developing, exploiting and protecting proprietary technologies, intense
      competition and substantial regulation in the healthcare industry. Additional
      factors that could cause or contribute to such differences can be found in
      the
      following discussion, as well as in the section entitled &#8220;Risks
      Factors.&#8221;</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Recent
      Events</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Completion
      of Reverse Merger</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concurrently
      with the initial closing of the Private Placement, SRKP 7, Inc. acquired all
      of
      the capital stock of Lixte pursuant to a Share Exchange Agreement with the
      shareholder of Lixte. In connection with the Reverse Merger, the Company issued
      to the shareholder of Lixte 19,021,786 shares of the Company&#8217;s Common Stock. As
      a result, Lixte became a wholly owned subsidiary of SRKP 7, Inc. As Lixte will
      be treated as the &#8220;accounting acquirer&#8221; all of the financial information except
      certain share information refers to Lixte.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-17-</font></div>
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          <hr style="COLOR: black" noshade size="2">
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      </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accordingly,
        from an historical perspective, Lixte was deemed to have been the acquirer
        in
        the Reverse Merger and Lixte is deemed the survivor of the reorganization.
        Accordingly, the financial statements presented reflect the historical results
        of Lixte prior to the Reverse Merger and do not include the historical financial
        results of SRKP 7, Inc. The equity of SRKP 7, Inc. survives the reorganization.
        All costs associated with the Reverse Merger were expensed as incurred.
        Information with respect to shares is based on a forward split of 1.111 to
        1.</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      was
      created to capitalize on opportunities for the company to develop low cost,
      specific, and sensitive tests for the early detection of cancers to better
      estimate prognosis, to monitor treatment response, and to reveal targets for
      development of more effective treatments. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      is
      concentrating on discovering biomarkers for common cancers for which better
      diagnostic and therapeutic measures are needed. For each of these diseases
      a
      biomarker that would enable identification of the presence of cancer at a stage
      curable by surgery would save thousands of lives annually. In addition,
      biomarkers specific to these diseases may also provide clues as to processes
      (biological pathways) that characterize specific cancer types and that may
      be
      vulnerable to drug treatment targeted to the activity of the
      biomarker.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte&#8217;s
      initial focus is on developing new treatments for the most common and most
      aggressive type of primary brain cancer, glioblastoma multiforme (&#8220;GBM&#8221;). Lixte
      entered into a Cooperative Research and Development Agreement (&#8220;CRADA&#8221;) with the
      National Institute of Neurological Diseases and Stroke (&#8220;NINDS&#8221;) of the National
      Institutes of Health (&#8220;NIH&#8221;) to identify and evaluate drugs that target a
      specific biochemical pathway for GBM cell differentiation. The CRADA also covers
      research to determine whether expression of a component of this pathway
      correlates with prognosis in glioma patients. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      lead
      scientist at NINDS collaborating with Lixte under the CRADA is Dr. Zhengping
      Zhuang. Dr. Zhuang is internationally recognized for his research in molecular
      pathology. Dr. Zhuang has four issued and two pending patents related to
      molecular pathology of human cancers. He has recently discovered a biomarker
      of
      relevance to the growth of GBMs that Lixte believes can be used as a tool for
      identifying drugs that affect the growth of GBM cells. Under the CRADA, Lixte
      will support two persons at NIH to work under the direction of Dr. Zhuang.
      The
      goal is to identify drugs that inhibit GBM cell growth and to determine if
      the
      identified biomarker may be useful for estimation of prognosis. Lixte&#8217;s annual
      contribution to the collaborative research done by Lixte and NIH is $200,000
      annually for two years for two research assistants expected to be at the
      post-doctoral level and supplies. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      sponsored the development and submission of a provisional patent application
      filed February&#160;6, 2006 (the &#8220;Provisional Patent Application&#8221;) naming as
      co-inventors Dr. Zhuang, several other NIH investigators, and Dr. Kovach. When
      the final patent application is filed in early 2007, the named inventors will
      assign their rights in the inventions to their employers, meaning that any
      patent (or patents) arising out of the application will be jointly owned by
      the
      U.S. Government and Lixte. Lixte is currently in the negotiations with the
      NIH
      to obtain the exclusive commercial rights to the inventions covered by the
      Provisional Patent Application. As its research progresses, Lixte expects to
      file further patent applications relating to the categories of products
      described below. Patent applications arising out of research pursuant to the
      CRADA are likely to be jointly owned by Lixte and the U.S. Government. In such
      cases of joint ownership, Lixte will likely seek to obtain the exclusive
      commercial rights to those inventions.</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte&#8217;s
      products will derive directly from its intellectual property consisting of
      its
      Provisional Patent Application and other patents it anticipates it will arise
      out of its research activities. Those patents are expected to cover biomarkers
      uniquely associated with specific types of cancer, patents on methods to
      identify drugs that inhibit growth of specific tumor types and combinations
      of
      drugs and potential therapeutic agents for the treatment of specific cancers.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company faces several potential challenges in its drive for commercial success,
      including raising sufficient capital to fund its business plan, achieving
      commercially applicable results of its research program, continued access to
      tissue and blood samples from cancer patients, competition from established,
      well funded companies with competitive technologies, and future competition
      from
      companies that are developing competitive technologies, some of whom are larger
      companies with greater capital resources than the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Liquidity
      and Capital Resources</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
      Lixte is currently engaged in research at a very early stage, significant time
      may be </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">required</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      to
      develop any product or intellectual property capable of generating revenues.
      As
      such, Lixte&#8217;s business is unlikely to generate any revenue in the next several
      years and may never do so. Even if Lixte is able to generate revenues in the
      future through licensing its technologies or through product sales, there is
      no
      assurance that such revenues will exceed its expenses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      the
      maximum Private Placement ($1,500,000) is achieved, we believe the net proceeds
      of the Private Placement will be sufficient to fund planned operations for
      the
      next twelve months. These funds will not be sufficient to fully develop and
      commercialize any products that may arise from our research. We will also need
      to raise additional funds in order to satisfy our future liquidity requirements.
      Most immediately, in addition to the net proceeds from the Private Placement,
      we
      expect to require up to $2&#160;million (plus the difference, if any, between
      $1,290,000, the net proceeds from the maximum Private Placement and the net
      amount actually received from the Private Placement). However, as of June 30,
      2006, the Company has only raised $657,299 in gross proceeds. Additionally,
      the
      amount and timing of future cash requirements will depend on market acceptance
      of our products, if any, and the resources we devote to developing and
      supporting our products. We will need to fund these cash requirements from
      either one or a combination of additional financings, mergers or acquisitions,
      or via the sale or license of certain of our assets. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Current
      market conditions present uncertainty as </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
      our
      ability to secure additional funds, as well as our </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ability</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      to reach
      profitability. There can be no assurances</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that
      we
      will be able to secure additional financing, or obtain favorable terms on such
      financing if it is available,</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      or as to
      our ability to achieve positive cash flow from operations. Continued negative
      cash flows and lack of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">liquidity
      create significant uncertainty about our ability to fully implement our
      operating plan and we may have</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      to
      reduce the scope of our planned operations. If cash and cash equivalents are
      insufficient to satisfy our liquidity requirements, we would be required to
      scale back or discontinue our product development program, or obtain funds
      if
      available through strategic alliances that may require us to relinquish rights
      to certain of our technologies or discontinue our operations.</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Off-Balance
      Sheet Arrangements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of
      March&#160;31, 2006, we had no off-balance sheet arrangements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXECUTIVE
      COMPENSATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      current fiscal year, Dr.&#160;Kovach does not anticipate receiving any
      compensation from the Company in view of the Company&#8217;s early stage status. He
      will be reimbursed for any out-of-pocket expenses. Any future compensation
      arrangements will be subject to the approval of the board of
      directors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Option
      Grants in 2005</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Aggregated
      Option Exercises in 2005 and Option Values at December&#160;31,
      2005</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Option
      Plans</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Members
      of the Board of Directors</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      outside member of the Board will receive options to purchase 200,000 shares
      of
      common stock at the initial private placement price of $0.333/ share with one
      third of the options (66,666 shares) vesting immediately upon joining the board
      and one third vesting annually for two years on the anniversary of that date.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Board
      member, Phillip Palmedo also will receive additional options to purchase 190,000
      shares of common stock at $0.333 per share for services rendered in developing
      the business plan for Lixte.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Members
      of the Scientific Advisory Committee</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      member of the Scientific Advisory Committee (SAC) other than Drs. Hartmann
      and
      Hofstadter will receive options to purchase 50,000 shares of common stock at
      the
      initial private placement price of $0.333/share with one half of the options
      (25,000 shares) vesting on the first anniversary of joining the SAC and one
      half
      vesting on the second anniversary. </font></div>
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      </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Indemnification
      of Directors and Executive Officers and Limitation of
      Liability</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      Section&#160;145 of the General Corporation Law of the State of Delaware, we can
      indemnify our directors and officers against liabilities they may incur in
      such
      capacities, including liabilities under the Securities Act of 1933, as amended
      (the &#8220;Securities Act&#8221;). The Company&#8217;s Certificate of Incorporation and Bylaws
      provide for indemnification. The provisions in our certificate of incorporation,
      bylaws and the Delaware statute do not eliminate the duty of care, and in
      appropriate circumstances equitable remedies such as injunctive or other forms
      of nonmonetary relief will remain available under Delaware law. In addition,
      each director will continue to be subject to liability for breach of the
      director&#8217;s duty of loyalty to us or our stockholders, for acts or omissions not
      in good faith or involving intentional misconduct or knowing violations of
      the
      law, for actions leading to improper personal benefit to the director, and
      for
      payment of dividends or approval of stock repurchases or redemptions that are
      unlawful under Delaware law. The provisions also do not affect a director&#8217;s
      responsibilities under any other law, such as the federal securities laws or
      state or federal environmental laws.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      been advised that in the opinion of the Securities and Exchange Commission,
      insofar as indemnification for liabilities arising under the Securities Act
      may
      be permitted to our directors, officers and controlling persons pursuant to
      the
      foregoing provisions, or otherwise, such indemnification is against public
      policy as expressed in the Securities Act and is therefore unenforceable. In
      the
      event a claim for indemnification against such liabilities (other than our
      payment of expenses incurred or paid by our director, officer or controlling
      person in the successful defense of any action, suit or proceeding) is asserted
      by such director, officer or controlling person in connection with the
      securities being registered, we will, unless in the opinion of our counsel
      the
      matter has been settled by controlling precedent, submit to a court of
      appropriate jurisdiction the question of whether such indemnification by us
      is
      against public policy as expressed in the Securities Act and will be governed
      by
      the final adjudication of such issue.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      may
      enter into indemnification agreements with each of our present or future
      directors and officers that are, in some cases, broader than the specific
      indemnification provisions permitted by Delaware law, and that may provide
      additional procedural protection. The indemnification agreements may require
      us,
      among other things, to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">indemnify
                officers and directors against certain liabilities that may arise
                because
                of their status as officers or
                directors;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">advance
                expenses, as incurred, to officers and directors in connection with
                a
                legal proceeding, subject to limited exceptions;
                or</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtain
                directors&#8217; and officers&#8217; insurance.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      present, there is no pending litigation or proceeding involving our
      director/officer or involving any of our employees in which indemnification
      is
      sought, nor are we aware of any threatened litigation that may result in claims
      for indemnification.</font></div>
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        </div>
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      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISK
      FACTORS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      investment in our common stock involves a high degree of risk. The following
      risk factors relating to Lixte should carefully considered.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISKS
      RELATED TO BUSINESS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      are engaged in early stage research and as such may not be successful in our
      efforts to develop a portfolio of commercially viable
      products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      key
      element of our strategy is to discover, develop and commercialize a portfolio
      of
      new drugs and diagnostic tests. We are seeking to do so through our internal
      research programs. A significant portion of the research that we are conducting
      involves new and unproven technologies. Research programs to identify new
      disease targets and product candidates require substantial technical, financial
      and human resources whether or not any candidates or technologies are ultimately
      identified. Our research programs may initially show promise in identifying
      potential product candidates, yet fail to yield product candidates for clinical
      development for any of the following reasons:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                research methodology used may not be successful in identifying potential
                product candidates;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">product
                candidates for diagnostic tests may on further study be shown to
                not
                obtain an acceptable level of accuracy;
                or</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">product
                candidates for drugs may on further study be shown to have harmful
                side
                effects or other characteristics that indicate they are unlikely
                to be
                effective drugs.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      we have identified one potential product candidate in the area of brain tumors,
      the work needed to demonstrate its commercial viability is at a very early
      stage. The follow-up research needed to demonstrate the viability of the product
      is costly and time-consuming and may reveal that the product does not function
      as expected or that it is otherwise not commercially viable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      we are
      unable to discover suitable potential product candidates, develop additional
      delivery technologies through internal research programs or in-license suitable
      products or delivery technologies on acceptable business terms, our business
      prospects will suffer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      the
      Company has no operating history or revenue and only minimal assets, there
      is a
      risk that we will be unable to continue as a going concern. The Company has
      had
      no recent operating history nor any revenues or earnings from operations since
      inception. We have no significant assets. We will, in all likelihood, sustain
      operating expenses without corresponding revenues, at least until products
      are
      viable and marketable. This may result in our incurring a net operating loss
      that will increase continuously. We cannot assure you that our products will
      be
      marketable. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Lixte
      does not expect to obtain any revenues for several years and there is no
      assurance that it will ever generate revenue or be profitable. If we do not
      generate revenues and achieve profitability, we will be forced to cease or
      substantially curtail our operations and you may lose your entire investment.
      </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
      Lixte is currently engaged in research at a very early stage, significant time
      may be </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">required</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      to
      develop any product or intellectual property capable of generating revenues.
      As
      such, Lixte&#8217;s business is unlikely to generate any revenue in the next several
      years and may never do so. Even if Lixte is able to generate revenues in the
      future through licensing its technologies or through product sales, there is
      no
      assurance that such revenues will exceed its expenses. Should Lixte fail to
      achieve profitability, you may lose your entire investment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      will need to raise additional funds in the future and these funds may not be
      available on acceptable terms or at all.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      the
      maximum Private Placement is achieved, we believe the net proceeds of this
      Offering will be sufficient to fund planned operations for the next twelve
      months. These funds will not be sufficient to fully develop and commercialize
      any products that may arise from our research. We will also need to raise
      additional funds in order to satisfy our future liquidity requirements. Most
      immediately in addition to the $1.5 million from the maximum amount of the
      Private Placement, we expect to require up to $2&#160;million (plus any
      shortfall between $1,290,000, the net proceeds from the maximum amount of the
      Private Placement and the net amount actually received from the Private
      Placement) in the near term to enable us to obtain a wet lab to further advance
      our research projects. Additionally, the amount and timing of future cash
      requirements will depend on market acceptance of our products, if any, and
      the
      resources we devote to developing and supporting our products. We will need
      to
      fund these cash requirements from either one or a combination of additional
      financings, mergers or acquisitions, or via the sale or license of certain
      of
      our assets. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Current
      market conditions present uncertainty as </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
      our
      ability to secure additional funds, as well as our </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ability</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      to reach
      profitability. There can be no assurances</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that
      we
      will be able to secure additional financing, or obtain favorable terms on such
      financing if it is available,</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      or as to
      our ability to achieve positive cash flow from operations. Continued negative
      cash flows and lack of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">liquidity
      create significant uncertainty about our ability to fully implement our
      operating plan and we may have</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      to
      reduce the scope of our planned operations. If cash and cash equivalents are
      insufficient to satisfy our liquidity requirements, we would be required to
      scale back or discontinue our product development program, or obtain funds
      if
      available through strategic alliances that may require us to relinquish rights
      to certain of our technologies or discontinue our operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we are unable to secure licenses to technologies or materials vital to our
      business, or if the rights to technologies that we have licensed terminate,
      our
      commercialization efforts could be delayed or fail.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      February 2006, a provisional patent application was filed covering certain
      methods and classes of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">molecules</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      that we
      expect to be the foundation of our product development and commercialization
      efforts with respect to human brain tumors that are subject to the CRADA. Any
      patents resulting from that application are likely to be jointly owned by Lixte
      and the U.S. Government. We are currently in negotiations with the government
      to
      obtain exclusive commercialization rights with respect to those patents and
      expect to execute an agreement shortly. However, should we be unable to reach
      such an agreement, or should we be unable to reach such an agreement in the
      future pertaining to other technologies owned by the government or third
      parties, this could harm our businesses. Additionally, if those licenses
      terminate and we are unable to renew them, or must renew them only on
      unfavorable terms, such events could require us to cease providing products
      or
      services using such licensed technology and, therefore, would likely result
      in
      loss of revenue for our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
      our business depends on obtaining well-characterized blood, tissue and other
      samples from patients to enable us to locate biomarkers. To that end, we intend
      to collaborate with researchers at the Institute of Pathology at the University
      of Regensburg in Germany, who will collect samples of brain, stomach, breast,
      prostate, colon, ovarian, bladder, and kidney cancers and transmit them to
      us.
      We have not yet executed an agreement committing the researchers to provide
      us
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">with</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      these
      materials, however, though we expect to execute such an agreement shortly.
      Should negotiations on such an agreement break down, however, or should future
      circumstances cause our arrangement with those researchers to terminate, we
      will
      be forced to find other sources for those materials, and this may not be
      possible or may entail a significantly greater expense.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we were to materially breach our present collaboration agreement or any future
      license or collaboration agreements, we could lose our ability to commercialize
      the related technologies, and our business could be materially and adversely
      affected.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      party to a research collaboration agreement and intend to enter into
      intellectual property </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">licenses</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and
      agreements, all of which will be integral to our business. These licenses and
      agreements impose various research, development, commercialization,
      sublicensing, royalty, indemnification, insurance and other obligations on
      us.
      If we or our collaborators fail to perform under these agreements or otherwise
      breach obligations imposed by them, we could lose intellectual property rights
      that are important to our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may not be successful in establishing additional strategic collaborations,
      which
      could adversely affect our ability to develop and commercialize
      products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      future, we may seek opportunities to establish new collaborations, joint
      ventures and strategic collaborations for the development and commercialization
      of products we discover. We face significant competition in seeking appropriate
      collaborators and the negotiation process is time-</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">consuming</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and
      complex. We may not be successful in our efforts to establish additional
      strategic collaborations or other alternative arrangements. Even if we are
      successful in our efforts to establish a collaboration or agreement, the terms
      that we establish may not be favorable to us. Finally, such strategic alliances
      or other arrangements may not result in successful products and associated
      revenue.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      life sciences industry is highly competitive and subject to rapid technological
      change.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      life
      sciences industry is highly competitive and subject to rapid and profound
      technological change. Our present and potential competitors include major
      pharmaceutical companies, as well as specialized biotechnology and life sciences
      firms in the United States and in other countries. Most of these companies
      have
      considerably greater financial, technical and marketing resources than we do.
      Additional mergers and acquisitions in the pharmaceutical and biotechnology
      industries may result in even more resources being concentrated in our
      competitors. Our existing or prospective competitors may develop processes
      or
      products that are more effective than ours or be more effective at implementing
      their technologies to develop commercial products faster. Our competitors may
      succeed in obtaining patent protection and/or receiving regulatory approval
      for
      commercializing products before us. Developments by our competitors may render
      our product candidates obsolete or non-competitive.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      experience competition from universities and other research institutions, and
      we
      are likely to compete with others in acquiring technology from those sources.
      There can be no assurance </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      others
      will not develop technologies with significant advantages over those that we
      are
      seeking to develop. Any such development could harm our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may be unable to compete successfully with our
      competitors.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      face
      competition from other companies seeking to identify and commercialize cancer
      biomarkers. We also compete with universities and other research institutions
      engaged in research in these areas. Many of our competitors have greater
      technical and financial resources than we do. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      ability to compete successfully is based on numerous factors,
      including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                cost-effectiveness of any product we ultimately commercialize relative
                to
                competing products;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                ease of use and ready availability of any product we bring to
                market;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                accuracy of a diagnostic test designed by us in detecting cancers,
                including overcoming the propensity for &#8220;false positive&#8221; results;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                relative speed with which we are able to bring any product resulting
                from
                our research to market in our target
                markets.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      we are
      unable to distinguish our products from competing products, or if competing
      products </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">reach</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      the
      market first, we may be unable to compete successfully with current or future
      competitors. This would cause our revenues to decline and affect our ability
      to
      achieve profitability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      depend on certain key scientific personnel for our success who do not work
      full
      time for the Company. The loss of any such personnel could adversely affect
      our
      business, financial condition and results of
      operations.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success depends on the continued availability and contributions of our President
      and founder, Dr. John S. Kovach, as well as the continued availability and
      contributions of Dr. Zhengping Zhuang and other collaborators at the NIH. In
      particular, Dr. Kovach is 69 years old, and, because of his arrangement with
      the
      State University of New York, does not devote his full time to the Company.
      The
      loss of services of any of these persons could delay or reduce our product
      development and commercialization efforts. Furthermore, recruiting and retaining
      qualified scientific personnel to perform future research and </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">development</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      work
      will be critical to our success. The loss of members of our scientific
      personnel, or our inability to attract or retain other qualified personnel
      or
      advisors, could significant weaken our management, harm our ability to compete
      effectively and harm our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-25-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      expect to rely heavily on third parties for the conduct of clinical trials
      of
      our product candidates. If these clinical trials are not successful, or if
      we or
      our collaborators are not able to obtain the necessary regulatory approvals,
      we
      will not be able to commercialize our product
      candidates.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      order
      to obtain regulatory approval for the commercial sale of our product candidates,
      we and our collaborators will be required to complete extensive preclinical
      studies as well as clinical trials in humans to demonstrate to the FDA and
      foreign regulatory authorities that our product candidates are safe and
      effective. Dr. Kovach is experienced in the design and conduct of early clinical
      cancer trials, having been the lead investigator for a National Cancer Institute
      Phase I contract for ten years at the Mayo Clinic, Rochester, MN. Lixte,
      however, has no experience in conducting clinical trials and expects to rely
      heavily on collaborative partners and contract research organizations for their
      performance and management of clinical trials of our product
      candidates.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Clinical
      development, including preclinical testing, is a long, expensive and uncertain
      process. Accordingly, preclinical testing and clinical trials, if any, of our
      product candidates under </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">development</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      may not
      be successful. We and our collaborators could experience delays in preclinical
      or clinical trials of any of our product candidates, obtain unfavorable results
      in a development program, or fail to obtain regulatory approval for the
      commercialization of a product. Preclinical studies or clinical trials may
      produce negative, inconsistent or inconclusive results, and we or our
      collaborators may decide, or regulators may require us, to conduct additional
      preclinical studies or clinical trials. The results from early clinical trials
      may not be statistically significant or predictive of results that will be
      obtained from expanded, advanced clinical trials.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
      the timing and completion of clinical trials, if any, of our product candidates
      depend on, among other factors, the number of patients we will be required
      to
      enroll in the clinical trials and the rate at which those patients are enrolled.
      Any increase in the required number of patients, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">decrease</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      in
      recruitment rates or difficulties retaining study participants may result in
      increased costs, program delays or both.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Also,
      our
      products under development may not be effective in treating any of our targeted
      disorders or may </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">prove</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      to have
      undesirable or unintended side effects, toxicities or other characteristics
      that
      may prevent or limit their commercial use. Institutional review boards or
      regulators, including the FDA, may hold, suspend or terminate our clinical
      research or the clinical trials of our product candidates for various reasons,
      including non-compliance with regulatory requirements or if, in their opinion,
      the participating subjects are being exposed to unacceptable health risks.
      Additionally, the failure of third parties conducting or overseeing the
      operation of the clinical trials to perform their contractual or regulatory
      obligations in a timely fashion could delay the clinical trials. Failure of
      clinical trials can occur at any stage of testing. Any of these events would
      adversely affect our ability to market a product candidate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-26-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      development process necessary to obtain regulatory approval is lengthy, complex
      and expensive. If we and our collaborative partners do not obtain necessary
      regulatory approvals, then our business will be unsuccessful and the market
      price of our common stock will substantially decline.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      the
      extent that we, or our collaborative partners, are able to successfully advance
      a product candidate </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">through</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      the
      clinic, we, or such partner, will be required to obtain regulatory approval
      prior to marketing and selling such product.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      process of obtaining FDA and other required regulatory approvals is expensive.
      The time required for FDA </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      other
      approvals is uncertain and typically takes a number of years, depending on
      the
      complexity and novelty of the product.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      regulatory approval to market a product may be subject to limitations on the
      indicated uses for which we, or our collaborative partners, may market the
      product. These limitations may restrict the size of the market for the product
      and affect reimbursement by third-party payors. In </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">addition</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      regulatory agencies may not grant approvals on a timely basis or may revoke
      or
      significantly modify previously granted approvals.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We,
      or
      our collaborative partners, also are subject to numerous foreign regulatory
      requirements governing the manufacturing and marketing of our potential future
      products outside of the United </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">States</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      approval procedure varies among countries, additional testing may be required
      in
      some jurisdictions, and the time required to obtain foreign approvals often
      differs from that required to obtain FDA approvals. Moreover, approval by the
      FDA does not ensure approval by regulatory authorities in other countries,
      and
      vice versa.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of these factors, we or our collaborators may not successfully begin
      or
      complete clinical trials in </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      time
      periods estimated, if at all. Moreover, if we or our collaborators incur costs
      and delays in development programs or fail to successfully develop and
      commercialize products based upon our technologies, we may not become profitable
      and our stock price could decline.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Even
      if our products are approved by regulatory authorities, if we fail to comply
      with ongoing regulatory requirements, or if we experience unanticipated problems
      with our products, these products could be subject to restrictions or withdrawal
      from the market.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      product for which we obtain marketing approval, along with the manufacturing
      processes, post-approval clinical data and promotional activities for such
      product, will be subject to continual review and periodic inspections by the
      FDA
      and other regulatory bodies. Even if regulatory </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">approval</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      of a
      product is granted, the approval may be subject to limitations on the indicated
      uses for which the product may be marketed or contain requirements for costly
      post-marketing testing and surveillance to monitor the safety or efficacy of
      the
      product. Later discovery of previously unknown problems with our products,
      including unanticipated adverse events or adverse events of unanticipated
      severity or frequency, manufacturer or manufacturing processes, or failure
      to
      comply with regulatory requirements, may result in restrictions on such products
      or manufacturing processes, withdrawal of the products from the market,
      voluntary or mandatory recall, fines, suspension of regulatory approvals,
      product seizures, injunctions or the imposition of civil or criminal
      penalties.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-27-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We,
      and our collaborators, are subject to governmental regulations other than those
      imposed by the FDA. We, and any of our collaborators, may not be able to comply
      with these regulations, which could subject us, or such collaborators, to
      penalties and otherwise result in the limitation of our or such collaborators&#8217;
operations.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition to regulations imposed by the FDA, we and our collaborators are subject
      to regulation under various federal and state statutes and regulations such
      as
      the Occupational Safety and Health Act, the Environmental Protection Act, the
      Toxic Substances Control Act, the Research Conservation and Recovery Act, as
      well as regulations administered by the Nuclear Regulatory Commission, national
      restrictions on technology transfer, and import, export and customs regulations.
      From time to time, other federal agencies and congressional committees have
      indicated an interest in implementing further regulation of biotechnology
      applications. We are not able to predict whether any such regulations will
      be
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">adopted</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      or
      whether, if adopted, such regulations will apply to our business, or whether
      we
      or our collaborators would be able to comply with any applicable
      regulations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Failure
      to obtain regulatory approval in foreign jurisdictions will prevent us from
      marketing our products abroad.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      intend
      to market our products in international markets. In order to market our products
      in the European Union and many other foreign jurisdictions, we must obtain
      separate regulatory approvals. The approval procedure varies among countries
      and
      can involve additional testing, and the time required to obtain approval may
      differ from that required to obtain FDA approval. The foreign regulatory
      approval process may include all of the risks associated with obtaining FDA
      approval. We may not obtain foreign regulatory approvals on a timely basis,
      if
      at all. Approval by the FDA does not ensure approval by regulatory authorities
      in other countries, and approval by one foreign regulatory authority does not
      ensure approval by regulatory authorities in other foreign countries or by
      the
      FDA. We may not be able to file for regulatory approvals and may not receive
      necessary approvals to commercialize our products in any market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      are subject to uncertainty relating to health care reform measures and
      reimbursement policies which, if not favorable to our product candidates, could
      hinder or prevent our product candidates&#8217; commercial
      success.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      continuing efforts of the government, insurance companies, managed care
      organizations and other payors of health care costs to contain or reduce costs
      of health care may adversely affect:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                ability to generate revenues and achieve
                profitability;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                future revenues and profitability of our potential customers, suppliers
                and collaborators; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                availability of capital.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-28-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      certain foreign markets, the pricing of prescription pharmaceuticals is subject
      to government control. In the United States, given recent federal and state
      government initiatives directed at </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">lowering</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      the
      total cost of health care, the U.S. Congress and state legislatures will likely
      continue to focus on health care reform, the cost of prescription
      pharmaceuticals and on the reform of the Medicare and Medicaid systems. For
      example, legislation was enacted on December&#160;8, 2003, which provides a new
      Medicare prescription drug benefit beginning in 2006 and mandates other reforms.
      While we cannot predict the full effects of the implementation of this new
      legislation or whether any legislative or regulatory proposals affecting our
      business will be adopted, the implementation of this legislation or announcement
      or adoption of these proposals could have a material and adverse effect on
      our
      business, financial condition and results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      ability to commercialize our product candidates successfully will depend in
      part
      on the extent to which governmental authorities, private health insurers and
      other organizations establish appropriate </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">reimbursement</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      levels
      for the cost of our products and related treatments. Third-party payors are
      increasingly challenging the prices charged for medical products and services.
      Also, the trend toward managed health care in the United States, which could
      significantly influence the purchase of health care services and products,
      as
      well as legislative proposals to reform health care or reduce government
      insurance programs, may result in lower prices for our product candidates or
      exclusion of our product candidates from reimbursement programs. The cost
      containment measures that health care payors and providers are instituting
      and
      the effect of any health care reform could materially and adversely affect
      our
      results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      physicians and patients do not accept the products that we may develop, our
      ability to generate product revenue in the future will be adversely
      affected.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      product </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">candidates</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      that we
      may develop may not gain market acceptance among physicians, healthcare payors,
      patients and the medical community which will adversely affect our ability
      to
      generate revenue. Market acceptance of and demand for any product that we may
      develop will depend on many factors, including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                ability to provide acceptable evidence of safety and
                efficacy;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">convenience
                and ease of administration;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">prevalence
                and severity of adverse side
                effects;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">availability
                of alternative treatments or diagnostic
                tests;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">cost
                effectiveness;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">effectiveness
                of our marketing strategy and the pricing of any product that we
                may
                develop;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">publicity
                concerning our products or competitive products;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-29-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                ability to obtain third-party coverage or
                reimbursement.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      face the risk of product liability claims and may not be able to obtain
      insurance.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      business exposes us to the risk of product liability claims that is inherent
      in
      the testing, manufacturing, and marketing of drugs and related devices. Although
      we will obtain product liability and clinical trial liability insurance when
      appropriate, this insurance is subject to deductibles and coverage limitations.
      We may not be able to obtain or maintain adequate protection against potential
      liabilities. In addition, if any of our product candidates are approved for
      marketing, we may seek additional insurance coverage. If we are unable to obtain
      insurance at acceptable cost or on acceptable terms with adequate coverage
      or
      otherwise protect against potential product liability claims, we will be exposed
      to significant liabilities, which may harm our business. These liabilities
      could
      prevent or interfere with our product commercialization efforts. Defending
      a
      suit, regardless of merit, could be costly, could divert management attention
      and might result in adverse publicity or reduced acceptance of our products
      in
      the market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      cannot be certain we will be able to obtain patent protection to protect our
      product candidates and technology.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      cannot
      be certain that any patent or patents will be issued based on the pending
      provisional patent application we recently filed. If a third party has also
      filed a patent application relating to an invention claimed by us or our
      licensors, we may be required to participate in an interference proceeding
      declared by the U.S. Patent and Trademark Office to determine priority of
      invention, which could result in substantial uncertainties and cost for us,
      even
      if the eventual outcome is favorable to us. The degree of future protection
      for
      our proprietary rights is uncertain. For example:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
                or our licensors might not have been the first to make the inventions
                covered by our pending or future patent
                applications;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
                or our licensors might not have been the first to file patent applications
                for these inventions;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">others
                may independently develop similar or alternative technologies or
                duplicate
                any of our technologies;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">it
                is possible that our patent applications will not result in an issued
                patent or patents, or that the scope of protection granted by any
                patents
                arising from our patent applications will be significantly narrower
                than
                expected;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any
                patents under which we hold ultimate rights may not provide us with
                a
                basis for commercially-viable products, may not provide us with any
                competitive advantages or may be challenged by third parties as not
                infringed, invalid, or unenforceable under United States or foreign
                laws;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any
                patent issued to us in the future or under which we hold rights may
                not be
                valid or enforceable; or</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-30-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
                may develop additional proprietary technologies that are not patentable
                and which may not be adequately protected through trade secrets;
                for
                example if a competitor independently develops duplicative, similar,
                or
                alternative technologies.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we are not able to protect and control our unpatented trade secrets, know-how
      and other technological innovation, we may suffer competitive
      harm.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      rely on proprietary trade secrets and unpatented know-how to protect our
      research and development activities, particularly when we do not believe that
      patent protection is appropriate or available. However, trade secrets are
      difficult to protect. We will attempt to protect our trade secrets and
      unpatented know-how by requiring our employees, consultants and advisors to
      execute a confidentiality and non-use agreement. We cannot guarantee that these
      agreements will provide meaningful protection, that these agreements will not
      be
      breached, that we will have an adequate remedy for any such breach, or that
      our
      trade secrets will not otherwise become known or independently developed by
      a
      third party. Our trade secrets, and those of our present or future collaborators
      that we utilize by agreement, may become known or may be independently
      discovered by others, which could adversely affect the competitive position
      of
      our product candidates.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may incur substantial costs enforcing our patents, defending against third-party
      patents, invalidating third-party patents or licensing third-party intellectual
      property, as a result of litigation or other proceedings relating to patent
      and
      other intellectual property rights.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      may
      not have rights under some patents or patent applications that may cover
      technologies that we use in our research, drug targets that we select, or
      product candidates that we seek to develop and commercialize. Third parties
      may
      own or control these patents and patent applications in the United States and
      abroad. These third parties could bring claims against us or our collaborators
      that would cause us to incur substantial expenses and, if successful against
      us,
      could cause us to pay substantial damages. Further, if a patent infringement
      suit were brought against us or our collaborators, we or they could be forced
      to
      stop or delay research, development, manufacturing or sales of the product
      or
      product candidate that is the subject of the suit. We or our collaborators
      therefore may choose to seek, or be required to seek, a license from the
      third-party and would most likely be required to pay license fees or royalties
      or both. These licenses may not be available on acceptable terms, or at all.
      Even if we or our collaborators were able to obtain a license, the rights may
      be
      nonexclusive, which would give our competitors access to the same intellectual
      property. Ultimately, we could be prevented from commercializing a product,
      or
      forced to cease some aspect of our business operations, as a result of patent
      infringement claims, which could harm our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      has
      been substantial litigation and other proceedings regarding patent and other
      intellectual property rights in the pharmaceutical and biotechnology industries.
      Although we are not currently a party to any patent litigation or any other
      adversarial proceeding, including any interference </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">proceeding</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      declared
      before the United States Patent and Trademark Office, regarding intellectual
      property rights with respect to our products and technology, we may become
      so in
      the future. We are not currently aware of any actual or potential third party
      infringement claim involving our products. The cost to us of any patent
      litigation or other proceeding, even if resolved in our favor, could be
      substantial. The outcome of patent litigation is subject to uncertainties that
      cannot be adequately quantified in advance, including the demeanor and
      credibility of witnesses and the identity of the adverse party, especially
      in
      biotechnology related patent cases that may turn on the testimony of experts
      as
      to technical facts upon which experts may reasonably disagree. Some of our
      competitors may be able to sustain the costs of such litigation or proceedings
      more effectively than we can because of their substantially greater financial
      resources. If a patent or other proceeding is resolved against us, we may be
      enjoined from researching, developing, manufacturing or commercializing our
      products without a license from the other party and we may be held liable for
      significant damages. We may not be able to obtain any required license on
      commercially acceptable terms or at all.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-31-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Uncertainties
      resulting from the initiation and continuation of patent litigation or other
      proceedings could harm our ability to compete in the marketplace. Patent
      litigation and other proceedings may also absorb significant management
      time.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      our products were derived from tissue or other samples from a patient without
      the patient&#8217;s consent, we could be forced to pay royalties or cease selling our
      products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">An
      essential component of our business is our ability to obtain well-characterized
      tissue and other samples from patients. To that end, we are negotiating an
      agreement with the Institute of Pathology at the University of Regensburg in
      Germany to collect samples of stomach, breast, prostate, and ovarian cancers
      for
      biomarker discovery programs focused on these cancers. Although we believe
      that
      all necessary consents will be obtained from any patient who donates samples
      for
      our research purposes, there is a risk that, without our knowledge and through
      inadvertence, neglect, or willful misconduct, proper consents will not be
      obtained from all patients. There is also a risk that the consents of some
      or
      all of the patients will not be enforceable. If a patient does not give a proper
      consent and we develop a product using a sample obtained from him or her, we
      could be forced to pay royalties or to cease selling that product.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we are unable to protect our intellectual property rights, our competitors
      may
      develop and market products with similar features that may reduce demand for
      our
      potential products.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following factors are important to our success:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">receiving
                patent protection for our product
                candidates;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">preventing
                others from infringing our intellectual property rights;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">maintaining
                our patent rights and trade
                secrets.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      be able to protect our intellectual property rights in patents and trade secrets
      from unauthorized use by </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">third</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      parties
      only to the extent that such intellectual property rights are covered by valid
      and enforceable patents or are effectively maintained as trade
      secrets.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-32-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      date,
      we have sought to protect our proprietary position by filing a U.S. provisional
      patent application related to </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">inventions</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      that
      form the basis of our research arrangements with the NIH and potential pipeline
      of future products. We anticipate that we will apply for further patents based
      on our ongoing research. Because issues of patentability involve complex legal
      and factual questions, the issuance, scope and enforceability of patents cannot
      be predicted with certainty. Patents, if issued, may be challenged, invalidated
      or circumvented. U.S. patents and patent applications may also be subject to
      interference proceedings, and U.S. patents may be subject to reexamination
      proceedings in the U.S. Patent and Trademark Office and foreign patents may
      be
      subject to opposition or comparable proceedings in corresponding foreign patent
      offices, which proceedings could result in either loss of the patent or denial
      of the patent application or loss or reduction in the scope of one or more
      of
      the claims of the patent or patent application. In addition, such interference,
      reexamination and opposition proceedings may be costly. Thus, any patents that
      we own or license from others may not provide any protection against
      competitors. Furthermore, an adverse decision in an interference proceeding
      can
      result in a third-party receiving the patent rights sought by us, which in
      turn
      could affect our ability to market a potential product to which that patent
      filing was directed. Our pending patent applications, those that we may file
      in
      the future, or those that we may license from third parties may not result
      in
      patents being issued. If issued, they may not provide us with proprietary
      protection or competitive advantages against competitors with similar
      technology. Furthermore, others may independently develop similar technologies
      or duplicate any technology that we have developed. Many countries, including
      certain countries in Europe, have compulsory licensing laws under which a patent
      owner may be compelled to grant licenses to third parties. For example,
      compulsory licenses may be required in cases where the patent owner has failed
      to &#8220;work&#8221; the invention in that country, or the third-party has patented
      improvements. In addition, many countries limit the enforceability of patents
      against government agencies or government contractors. In these countries,
      the
      patent owner may have limited remedies, which could materially diminish the
      value of the patent. Moreover, the legal systems of certain countries,
      particularly certain developing countries, do not favor the aggressive
      enforcement of patent and other intellectual property protection which makes
      it
      difficult to stop infringement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, our ability to enforce our patent rights depends on our ability to
      detect infringement. It is difficult to detect infringers who do not advertise
      the compounds that are used in their products. Any litigation to enforce or
      defend our patent rights, even if we prevail, could be costly and
      time-</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">consuming</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and
      would divert the attention of management and key personnel from business
      operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      also rely on trade secrets, know-how and technology, which are not protected
      by
      patents, to maintain our competitive position. We will seek to protect this
      information by entering into confidentiality agreements with parties that have
      access to it, such as strategic partners, collaborators, employees and
      consultants. Any of these parties may breach these agreements and disclose
      our
      confidential information or our competitors might learn of the information
      in
      some other way. If any trade secret, know-how or other technology not protected
      by a patent were disclosed to, or independently developed by, a competitor,
      our
      business, financial condition and results of operations could be materially
      adversely affected.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      our third-party manufacturers&#8217; facilities do not follow current good
      manufacturing practices, our product development and commercialization efforts
      may be harmed.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      a limited number of manufacturers that operate under the FDA&#8217;s and European
      Union&#8217;s good manufacturing practices regulations and are capable of
      manufacturing products. Third-party manufacturers </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">may</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      encounter difficulties in achieving quality control and quality assurance and
      may experience shortages of qualified personnel. A failure of third-party
      manufacturers to follow current good manufacturing practices or other regulatory
      requirements and to document their adherence to such practices may lead to
      significant delays in the availability of products for commercial use or
      clinical study, the termination of, or hold on, a clinical study, or may delay
      or prevent filing or approval of marketing applications for our products. In
      addition we could be subject to sanctions being imposed on us, including fines,
      injunctions and civil penalties. Changing manufacturers may require additional
      clinical trials and the revalidation of the manufacturing process and procedures
      in accordance with FDA mandated current good manufacturing practices and will
      require FDA approval. This revalidation may be costly and time consuming. If
      we
      are unable to arrange for third-party manufacturing of our products, or to
      do so
      on commercially reasonable terms, we may not be able to complete development
      or
      marketing of our products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we fail to obtain an adequate level of reimbursement for our products by
      third-party payors, there may be no commercially viable markets for our products
      or the markets may be much smaller than expected.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      availability and levels of reimbursement by governmental and other third-party
      payors affect the market for our p</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">roducts.
      The efficacy, safety and cost-effectiveness of our products as well as the
      efficacy, safety</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and
      cost-effectiveness of any competing products will determine the availability
      and
      level of reimbursement. These third-party payors continually attempt to contain
      or reduce the costs of healthcare by challenging the prices charged for
      healthcare products and services. In certain countries, particularly the
      countries of the European Union, the pricing of prescription pharmaceuticals
      is
      subject to governmental control. In these countries, pricing negotiations with
      governmental </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">authorities</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      can take
      six to twelve months or longer after the receipt of regulatory marketing
      approval for a product. To obtain reimbursement or pricing approval in some
      countries, we may be required to conduct clinical trials that compare the
      cost-effectiveness of our products to other available therapies. If
      reimbursement for our products is unavailable or limited in scope or amount
      or
      if pricing is set at unsatisfactory levels, our revenues would be
      reduced.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Another
      development that </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">may</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      affect
      the pricing of drugs is regulatory action regarding drug reimportation into
      the
      United States. The Medicare Prescription Drug, Improvement and Modernization
      Act
      of 2003, which became law in December 2003, requires the Secretary of the U.S.
      Department of Health and Human Services to promulgate regulations allowing
      drug
      reimportation from Canada into the United States under certain circumstances.
      These provisions will become effective only if the Secretary certifies that
      such
      imports will pose no additional risk to the public&#8217;s health and safety and
      result in significant cost savings to consumers. To date, the Secretary has
      made
      no such finding, but he could do so in the future. Proponents of drug
      reimportation may also attempt to pass legislation that would remove the
      requirement for the Secretary&#8217;s certification or allow reimportation under
      circumstances beyond those anticipated under current law. If legislation is
      enacted, or regulations issued, allowing the reimportation of drugs, it could
      decrease the reimbursement we would receive for any products that we may
      commercialize, negatively affecting our anticipated revenues and prospects
      for
      profitability.</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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      <div id="HDR">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISKS
      RELATED TO CAPITAL STRUCTURE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>There
      is no assurance of an established public trading market, which would adversely
      affect the ability of our investors to sell their securities in the public
      market.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      our common stock is registered under the Exchange Act, our common stock is
      not
      and has never been publicly traded. As such, a regular trading market for the
      securities does not yet exist and may not </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">exist</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      or be
      sustained in the future. The Company intends to seek a listing on the OTC
      Bulletin Board. No assurance can be given that such listing will be obtained
      or
      the timing of the listing. Even if such listing is obtained, the NASD has
      enacted recent changes that limit quotations on the OTC Bulletin Board to
      securities of issuers that are current in their reports filed with the
      Securities and Exchange Commission. The effect on the OTC Bulletin Board of
      these rule changes and other proposed changes cannot be determined at this
      time.
      The OTC Bulletin Board is an inter-dealer, over-the-counter market that provides
      significantly less liquidity than the NASD&#8217;s automated quotation system (the
&#8220;NASDAQ Stock Market&#8221;). Quotes for stocks included on the OTC Bulletin Board are
      not listed in the financial sections of newspapers as are those for the NASDAQ
      Stock Market. Therefore, prices for securities traded solely on the OTC Bulletin
      Board may be difficult to obtain and holders of common stock may be unable
      to
      resell their securities at or near their original offering price or at any
      price. Market prices for our common stock will be influenced by a number of
      factors, including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                issuance of new equity securities pursuant to a future offering or
                acquisition;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">changes
                in interest rates;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">competitive
                developments, including announcements by competitors of new products
                or
                services or significant contracts, acquisitions, strategic partnerships,
                joint ventures or capital
                commitments;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">variations
                in quarterly operating results;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">changes
                in financial estimates by securities
                analysts;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                depth and liquidity of the market for our common
                stock;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">investor
                perceptions of our company and the medical device industry generally;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">general
                economic and other national
                conditions.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Shares
      eligible for future sale may adversely affect the market price of our common
      stock, as the future sale of a substantial amount of outstanding stock in the
      public marketplace could reduce the price of our common
      stock.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      former stockholder of Lixte who received shares of our stock in the Reverse
      Merger will be eligible to sell all or some of his shares of common stock by
      means of ordinary brokerage transactions in the open market pursuant to
      Rule&#160;144 promulgated under the Securities Act (&#8220;Rule&#160;144&#8221;), commencing
      one year after the Reverse Merger, subject to certain limitations. In general,
      pursuant to Rule&#160;144, a stockholder (or stockholders whose shares are
      aggregated) who has satisfied a one-year holding period may, under certain
      circumstances, sell within any three-month period a number of securities which
      does not exceed the greater of 1% of the then outstanding shares of common
      stock
      or the average weekly trading volume of the class during the four calendar
      weeks
      prior to such sale if the shares are listed on a national exchange or on NASDAQ.
      Rule&#160;144 also permits, under certain circumstances, the sale of securities,
      without any limitations, by a non-affiliate that has satisfied a two-year
      holding period. Additionally, we have agreed to file a registration statement
      covering the resale of shares issued in this offering and the shares owned
      by
      the shareholders of SRKP&#160;7, Inc. immediately prior to the Reverse Merger.
      Any substantial sale of common stock pursuant to any resale registration
      statement or Rule&#160;144 may have an adverse effect on the market price of our
      common stock by creating an excessive supply.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-35-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      common stock is considered a &#8220;penny stock&#8221; and may be difficult to
      sell.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      common stock is considered to be a &#8220;penny stock&#8221; since it meets one or more of
      the definitions in Rules&#160;15g-2 through 15g-6 promulgated under
      Section&#160;15(g) of the Exchange Act. These include but are not limited to the
      following: (i)&#160;the stock trades at a price less than $5.00 per share;
      (ii)&#160;it is NOT traded on a &#8220;recognized&#8221; national exchange; (iii)&#160;it is
      NOT quoted on the NASDAQ Stock Market, or even if so, has a price less than
      $5.00 per share; or (iv)&#160;it is issued by a company with net tangible assets
      less than $2.0&#160;million, if in business more than a continuous three years,
      or with average revenues of less than $6.0&#160;million for the past three
      years. The principal result or effect of being designated a &#8220;penny stock&#8221; is
      that securities broker-dealers cannot recommend the stock but must trade in
      it
      on an unsolicited basis.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
      Section&#160;15(g) of the Exchange Act and Rule&#160;15g-2 promulgated
      thereunder by the SEC require broker-dealers dealing in penny stocks to provide
      potential investors with a document disclosing the risks of penny stocks and
      to
      obtain a manually signed and dated written receipt of the document before
      effecting any transaction in a penny stock for the investor&#8217;s
      account.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Potential
      investors in our common stock are urged to obtain and read such disclosure
      carefully before purchasing any shares that are deemed to be &#8220;penny stock.&#8221;
Moreover, Rule&#160;15g-9 requires broker-dealers in penny stocks to approve the
      account of any investor for transactions in such stocks before selling any
      penny
      stock to that investor. This procedure requires the broker-dealer to
      (i)&#160;obtain from the investor information concerning his or her financial
      situation, investment experience and investment objectives; (ii)&#160;reasonably
      determine, based on that information, that transactions in penny stocks are
      suitable for the investor and that the investor has sufficient knowledge and
      experience as to be reasonably capable of evaluating the risks of penny stock
      transactions; (iii)&#160;provide the investor with a written statement setting
      forth the basis on which the broker-dealer made the determination in (ii) above;
      and (iv)&#160;receive a signed and dated copy of such statement from the
      investor, confirming that it accurately reflects the investor&#8217;s financial
      situation, investment experience and investment objectives. Compliance with
      these requirements may make it more difficult for holders of our common stock
      to
      resell their shares to third parties or to otherwise dispose of them in the
      market or otherwise.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-36-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      principal stockholder has significant influence over our
      company.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the Reverse Merger, John Kovach, our principal stockholder, will
      beneficially own approximately 69.10% of our outstanding voting stock after
      giving effect to this offering (assuming the maximum amount of the Private
      Placement is achieved). As a result, John Kovach possesses significant
      influence, giving him the ability, among other things, to elect all of the
      members of the Board of Directors and to approve significant corporate
      transactions. Such stock ownership and control may also have the effect of
      delaying or preventing a future change in control, impeding a merger,
      consolidation, takeover or other business combination or discourage a potential
      acquirer from making a tender offer or otherwise attempting to obtain control
      of
      us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we fail to maintain effective internal controls over financial reporting, the
      price of our common stock may be adversely affected.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      internal control over financial reporting may have weaknesses and conditions
      that need to be addressed, the disclosure of which may have an adverse impact
      on
      the price of our common stock. We are required to establish and maintain
      appropriate internal controls over financial reporting. Failure to establish
      those controls, or any failure of those controls once established, could
      adversely impact our public disclosures regarding our business, financial
      condition or results of operations. In addition, management&#8217;s assessment of
      internal controls over financial reporting may identify weaknesses and
      conditions that need to be addressed in our internal controls over financial
      reporting or other matters that may raise concerns for investors. Any actual
      or
      perceived weaknesses and conditions that need to be addressed in our internal
      control over financial reporting, disclosure of management&#8217;s assessment of our
      internal controls over financial reporting or disclosure of our public
      accounting firm&#8217;s attestation to or report on management&#8217;s assessment of our
      internal controls over financial reporting may have an adverse impact on the
      price of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Standards
      for compliance with Section&#160;404 of the Sarbanes-Oxley Act of 2002 are
      uncertain, and if we fail to comply in a timely manner, our business could
      be
      harmed and our stock price could decline.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rules
      adopted by the SEC pursuant to Section&#160;404 of the Sarbanes-Oxley Act of
      2002 require annual assessment of our internal control over financial reporting,
      and attestation of our assessment by our independent registered public
      accountants. On September&#160;22, 2005, the SEC extended the compliance dates
      for non-accelerated filers, as defined by the SEC, by one year. Accordingly,
      we
      believe that this requirement will first apply to our annual report for fiscal
      2008. The standards that must be met for management to assess the internal
      control over financial reporting as effective are new and complex, and require
      significant documentation, testing and possible remediation to meet the detailed
      standards. We may encounter problems or delays in completing activities
      necessary to make an assessment of our internal control over financial
      reporting. In addition, the attestation process by our independent registered
      public accountants is new and we may encounter problems or delays in completing
      the implementation of any requested improvements and receiving an attestation
      of
      our assessment by our independent registered public accountants. If we cannot
      assess our internal control over financial reporting as effective, or our
      independent registered public accountants are unable to provide an unqualified
      attestation report on such assessment, investor confidence and share value
      may
      be negatively impacted.</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      do not foresee paying cash dividends in the foreseeable
      future.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      not paid cash dividends on our stock and do not plan to pay cash dividends
      on
      our common stock in the foreseeable future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may receive less than the maximum amount in the Private Placement.
</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
        of the
        June 30, 2006 the Initial Private Placement grossed $657,299 in proceeds.
        To the
        extent that less than the maximum amount of the Private Placement is raised,
        the
        Company may not have sufficient funds to implement its business
        plan.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
      OF SECURITIES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      authorized to issue 100,000,000 shares of Common Stock, par value $.0001 par
      value per share 10,000,000 shares of preferred stock, par value $.0001 per
      share, of which no shares are currently issued and outstanding. The preferred
      stock may be issued in one or more series and our Board of Directors, without
      further approval from its stockholders, is authorized to fix the dividend rights
      and terms, conversion rights, voting rights, redemption rights, liquidation
      preferences and other rights and restrictions relating to any series. Issuances
      of preferred stock, while providing flexibility in connection with possible
      financings, acquisitions and other corporate purposes, could, among other
      things, adversely affect the voting power of the holders of our common
      stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Market
      Price of Our Common Stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of the
      date of this Report, there is no trading of our capital stock on any publicly
      traded market. Even if such stock becomes publicly tradable, the price of our
      common stock will likely fluctuate in the future. The stock market in general
      has experienced extreme stock price fluctuations in the past few years. In
      some
      cases, these fluctuations have been unrelated to the operating performance
      of
      the affected companies. Many companies have experienced dramatic volatility
      in
      the market prices of their common stock. We believe that a number of factors,
      both within and outside our control, could cause the price of our common stock
      to fluctuate, perhaps substantially. Factors such as the following could have
      a
      significant adverse impact on the market price of its common stock:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                ability to obtain additional financing and, if available, the terms
                and
                conditions of the financing;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                financial position and results of
                operations;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concern
                as to, or other evidence of, the safety or efficacy of any future
                proposed
                products and services or our competitors&#8217; products and
                services;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Announcements
                of technological innovations or new products or services by us or
                our
                competitors;</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">U.S.
                and foreign governmental regulatory
                actions;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                development of litigation against
                us;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Period-to-period
                fluctuations in our operating
                results;</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Changes
                in estimates of our performance by any securities
                analysts;</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Possible
                regulatory requirements on our
                business;</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                issuance of new equity securities pursuant to a future
                offering;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Changes
                in interest rates;</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Competitive
                developments, including announcements by competitors of new products
                or
                services or significant contracts, acquisitions, strategic partnerships,
                joint ventures or capital
                commitments;</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Variations
                in quarterly operating results;</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Change
                in financial estimates by securities
                analysts;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                depth and liquidity of the market for our common
                stock;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Investor
                perceptions of us; and</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
                economic and other national
                conditions.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Delaware
      Anti-Takeover Law and Charter and Bylaw Provisions</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      subject to Section&#160;203 of the Delaware General Corporation Law. This
      provision generally prohibits a Delaware corporation from engaging in any
      business combination with any interested stockholder for a period of three
      years
      following the date the stockholder became an interested stockholder,
      unless:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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                consummation of the transaction that resulted in the stockholder
                becoming
                an interested stockholder, the interested stockholder owned at least
                85%
                of the voting stock of the corporation outstanding at the time the
                transaction commenced, excluding for purposes of determining the
                number of
                shares outstanding those shares owned by persons who are directors
                and
                also officers and by employee stock plans in which employee participants
                do not have the right to determine confidentially whether shares
                held
                subject to the plan will be tendered in a tender or exchange offer;
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                or subsequent to such date, the business combination is approved
                by the
                Board of Directors and authorized at an annual meeting or special
                meeting
                of stockholders and not by written consent, by the affirmative vote
                of at
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                the
                interested stockholder.</font></div>
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                merger or consolidation involving the corporation and the interested
                stockholder;</font></div>
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                sale, transfer, pledge or other disposition of 10% or more of the
                assets
                of the corporation involving the interested
                stockholder;</font></div>
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                to certain exceptions, any transaction that results in the issuance
                or
                transfer by the corporation of any stock of the corporation to the
                interested stockholder;</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
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                transaction involving the corporation that has the effect of increasing
                the proportionate share of the stock of any class or series of the
                corporation beneficially owned by the interested stockholder;
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                receipt by the interested stockholder of the benefit of any loans,
                advances, guarantees, pledges or other financial benefits provided
                by or
                through the corporation.</font></div>
            </td>
          </tr>

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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      general, Section&#160;203 defines an &#8220;interested stockholder&#8221; as any entity or
      person beneficially owning 15% or more of the outstanding voting stock of a
      corporation, or an affiliate or associate of the corporation and was the owner
      of 15% or more of the outstanding voting stock of a corporation at any time
      within three years prior to the time of determination of interested stockholder
      status; and any entity or person affiliated with or controlling or controlled
      by
      such entity or person.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      certificate of incorporation and bylaws contain provisions that could have
      the
      effect of discouraging potential acquisition proposals or making a tender offer
      or delaying or preventing a change in control of us, including changes a
      stockholder might consider favorable. These provisions include authorization
      for
      the issuance of up to 10,000,000 shares of preferred stock with designations,
      rights and preferences determined from time to time by our Board of Directors.
      Accordingly, our Board of Directors is empowered, without stockholder approval,
      to issue preferred stock with dividend, liquidation, conversion, voting, or
      other rights which could adversely affect the voting power or other rights
      of
      the holders of the common stock. In the event of issuance, the preferred stock
      could be utilized, under certain circumstances, as a method of discouraging,
      delaying or preventing a change in control of the Company.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Such
      provisions may have the effect of discouraging a third-party from acquiring
      us,
      even if doing so would be beneficial to our stockholders. These provisions
      are
      intended to enhance the likelihood of continuity and stability in the
      composition of our board of directors and in the policies formulated by them,
      and to discourage some types of transactions that may involve an actual or
      threatened change in control of our company. These provisions are designed
      to
      reduce our vulnerability to an unsolicited acquisition proposal and to
      discourage some tactics that may be used in proxy fights. We believe that the
      benefits of increased protection of our potential ability to negotiate with
      the
      proponent of an unfriendly or unsolicited proposal to acquire or restructure
      our
      company outweigh the disadvantages of discouraging such proposals because,
      among
      other things, negotiation of such proposals could result in an improvement
      of
      their terms. However, these provisions could have the effect of discouraging
      others from making tender offers for our shares that could result from actual
      or
      rumored takeover attempts. These provisions also may have the effect of
      preventing changes in our management.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-40-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item&#160;5.02.
      Departure of Directors or Principal Officers; Election of Directors; Appointment
      of Principal Officers.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      following the completion of the Exchange, all of the existing members of the
      Company&#8217;s board of directors and all of its executive officers resigned and new
      appointees comprised the Company&#8217;s board of directors as set forth in Item 5.01
      of this Current Report on Form&#160;8-K, which is incorporated by reference into
      this Item&#160;5.02.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item&#160;8.01
      Other Events </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the Exchange, the Company has moved its principal executive offices
      to
      248 Route 25A, No. 2, East Setauket, New York 11733.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item&#160;9.01
      Financial Statements and Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Financial
      Statements of Businesses Acquired.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      financial statements of Lixte required by Rule 3-05(b) of Regulation S-X are
      herewith filed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibits.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 72pt;">&#160;</td>
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.1</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Share
                Exchange Agreement dated as of June 8, 2006 among the Company, John
                S.
                Kovach and Lixte Biotechnology,
                Inc.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-41-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td colspan="2">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SRKP
                7, INC.</font></div>
            </td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Date:&#160;July
              7,
              2006</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/&#160;John
              S.
              Kovach</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="FONT-FAMILY: " size="1">&#160;</font></td>
            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John
                S. Kovach, Chairman of the Board and Chief Executive Officer (principal
                executive officer)</font></div>
            </td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-42-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      INDEX</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="12%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><u><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibit&#160;No</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></u></div>
            </td>
            <td width="5%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="top" width="83%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Description</u></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="83%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Share
                Exchange Agreement dated as of June 8, 2006 among the Company, John
                S.
                Kovach, Lixte Biotechnology, Inc.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-43-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td colspan="2" valign="top" width="82%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -0.9pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INDEX
                TO FINANCIAL STATEMENTS</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="67%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="15%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 5.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Page</u></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="67%">&#160;</td>
            <td align="left" valign="bottom" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="67%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Report
                of Independent Registered Public Accounting Firm</font></div>
            </td>
            <td align="right" valign="bottom" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-2</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="67%">&#160;</td>
            <td align="right" valign="bottom" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="67%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Financial
                Statements:</font></div>
            </td>
            <td align="right" valign="bottom" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="67%">&#160;</td>
            <td align="right" valign="bottom" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="67%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 27pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance
                Sheets</font></div>
            </td>
            <td align="right" valign="bottom" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-3</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="67%">&#160;</td>
            <td align="right" valign="bottom" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="67%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 27pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Statements
                of Operations</font></div>
            </td>
            <td align="right" valign="bottom" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-4</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="67%">&#160;</td>
            <td align="right" valign="bottom" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="67%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 27pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Statements
                of Changes in Stockholder&#8217;s Equity (Deficit)</font></div>
            </td>
            <td align="right" valign="bottom" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-5</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="67%">&#160;</td>
            <td align="right" valign="bottom" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="67%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 27pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Statements
                of Cash Flows</font></div>
            </td>
            <td align="right" valign="bottom" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-6</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="67%">&#160;</td>
            <td align="right" valign="bottom" width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="67%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Notes
                to Financial Statements</font></div>
            </td>
            <td align="right" valign="bottom" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-7</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-44-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>AJ.
      ROBBINS, PC</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CERTIFIED
      PUBLIC ACCOUNTANTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>216
      SIXTEENTH STREET</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SUITE
      600</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DENVER,
      COLORADO 80206</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      the
      Board of Directors</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      Biotechnology, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">East
      Setauket, NY</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      audited the accompanying balance sheet of Lixte Biotechnology, Inc. (a
      development stage company) as of December 31, 2005, and the related statements
      of operations, changes in stockholder&#8217;s equity (deficit), and cash flows for the
      period from August 9, 2005 (inception) to December 31, 2005. These financial
      statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining on
      a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Lixte Biotechnology, Inc. as of
      December 31, 2005, and the results of its operations and its cash flows for
      the
      period from August 9, 2005 (inception) to December 31, 2005, in conformity
      with
      accounting principles generally accepted in the United States of America.
</font></div>
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      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1 to the financial
      statements, the Company is in the development stage and has not commenced
      operations. Its ability to continue as a going concern is dependent upon its
      ability to develop additional sources of capital, locate and complete a merger
      with another company and ultimately achieve profitable operations. These
      conditions raise substantial doubt about its ability to continue as a going
      concern. The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>AJ.
      ROBBINS, PC</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CERTIFIED
      PUBLIC ACCOUNTANTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Denver,
      Colorado</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>February
      27, 2006</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div><br>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIXTE
          BIOTECHNOLOGY, INC.</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
          Development Stage Company)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>BALANCE
          SHEETS</u></strong></font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>ASSETS</u></strong></font><br></div>
    <div>
      <div>
        <div>
          <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

              <tr>
                <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>March
                    31,</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>December
                    31,</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2006</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2005</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Unaudited)</strong></font></div>
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                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
                    ASSETS:</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash</font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
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                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4,946</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EQUIPMENT</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
                    net</font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,149</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,026</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white solid;">&#160;</td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">11,552</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5,972</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%">&#160;</td>
                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" colspan="8" valign="bottom" width="100%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>LIABILITIES
                    AND STOCKHOLDER&#8217;S EQUITY (DEFICIT)</u></strong></font></div>
                </td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIABILITIES:</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accounts
                    Payable</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,850</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">14,650</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
                    to Stockholder</font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">76,426</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5,946</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt"></font><font id="TAB1" style="MARGIN-LEFT: 18pt"></font><font id="TAB1" style="MARGIN-LEFT: 9pt"></font><font id="TAB1" style="MARGIN-LEFT: 9pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
                    Current Liabilities</font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">78,276</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">20,596</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>COMMITMENTS
                    AND CONTINGENCIES</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>STOCKHOLDER&#8217;S
                    EQUITY (DEFICIT):</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
                    stock, no par value, 1,500 shares authorized; 1,500 shares issued
                    and
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                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
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                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Deficit)
                    accumulated during development stage</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(68,224</font></div>
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                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(16,124</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt"></font><font id="TAB1" style="MARGIN-LEFT: 18pt"></font><font id="TAB1" style="MARGIN-LEFT: 9pt"></font><font id="TAB1" style="MARGIN-LEFT: 9pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
                    Stockholder&#8217;s Equity (Deficit)</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(66,724</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(14,624</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="71%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc solid;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">11,552</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5,972</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
              </tr>

          </table>
        </div>
      </div>
    </div>
    <div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SEE
        ACCOMPANYING NOTES TO FINANCIAL STATEMENTS</strong></font></div>
    </div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIXTE
        BIOTECHNOLOGY, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
        Development Stage Company)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>STATEMENTS
        OF OPERATIONS</u></strong></font></div>
    </div>
    <div>&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td valign="bottom" width="57%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>For
                  the Three</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Months
                  Ended</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>March
                  31, </strong></font>2006</div>
              </div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>For
                  the Period</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>From
                  August 9,</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2005
                  to</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>December
                  31, </strong></font>2005</div>
              </div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cumulative
                  </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>from
                  </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>August
                  9, </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2005
                  </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Inception)
                  </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>To</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>March
                  31 </strong></font>2006</div>
              </div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Unaudited)</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Unaudited)</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>REVENUE</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="57%" style="border-bottom: white;">&#160;</td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">&#160;</td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="57%" style="border-bottom: white solid;">
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            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">52,100</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">16,124</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">68,224</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
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          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">&#160;</td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="57%" style="border-bottom: white;">&#160;</td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NET
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            </td>
            <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(52,100</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(16,124</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(68,224</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="57%" style="border-bottom: white;">&#160;</td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">&#160;</td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="57%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NET
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            </td>
            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(34.73</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(10.75</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">&#160;</td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="57%" style="border-bottom: white;">&#160;</td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SEE
        ACCOMPANYING NOTES TO FINANCIAL STATEMENTS</strong></font></div><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIXTE
        BIOTECHNOLOGY, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
        Development Stage Company)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>STATEMENTS
        OF CHANGES IN STOCKHOLDER&#8217;S EQUITY</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
        THE PEROD FROM AUGUST 9, 2005 (INCEPTION) </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>TO
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>FOR
        THE THREE MONTHS ENDED MARCH 31, 2006
        (Unaudited)</u></strong></font></div>
    </div>
    <div>&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td align="left" valign="bottom" width="43%">&#160;</td>
            <td width="2%">&#160;</td>
            <td align="left" colspan="5" valign="bottom" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Common
                Stock</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="11%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;"><br>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Shares</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;"><br>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Amount</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(Deficit)
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Accumulated
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>During
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Development
                </strong></font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Stage</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><strong>Total
</strong>Stockholder&#8217;s
                    Equity
                    (Deficit)</div>
                </div>
              </div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Balances,
                August 9, 2005</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white;">&#160;</td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Sale
                of common stock on October 3, 2005 at $1.00 per share</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 9pt"></font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Net
                (loss)</font></div>
            </td>
            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(16,124</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(16,124</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Balances,
                December 31,2005</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(16,124</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(14,624</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Net
                (loss) for the period</font></div>
            </td>
            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(52,100</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(52,100</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Balances,
                March 31, 2006 (Unaudited)</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(68,224</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(66,724</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SEE
        ACCOMPANYING NOTES TO FINANCIAL STATEMENTS</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    </div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIXTE
        BIOTECHNOLOGY, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
        Development Stage Company)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>STATEMENTS
        OF CASH FLOWS</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
        <div>
          <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cumulative</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>from</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>August
                    9,</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2005</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>For
                    the Three</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>For
                    the Period</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Inception)</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Months
                    Ended</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>From
                    August 9,</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>To</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>March
                    31,</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2005
                    To</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>March
                    31,</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2006</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>December
                    31, 2005</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2006</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Unaudited)</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Unaudited)</strong></font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="57%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CASH
                    FLOWS FROM (TO) OPERATING ACTIVITIES:</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
                    (loss)</font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(52,100</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(16,124</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
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                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Adjustments
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                    activities: </font></div>
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                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white;">
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                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">115</font></div>
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                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">113</font></div>
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                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">228</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Changes
                    in :</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accounts
                    payable</font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(12,800</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">14,650</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,850</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
                    Cash (Used in) Operating Activities</font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(64,785</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(1,361</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(66,146</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CASH
                    FLOWS FROM (TO) INVESTING ACTIVITIES:</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Purchase
                    of equipment</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(238</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(1,139</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(1,377</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
                    Cash (Used in) Investing Activities</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(238</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(1,139</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(1,377</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CASH
                    FLOWS FROM (TO) FINANCING ACTIVITIES:</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
                    stock issued for cash</font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,500</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Advances
                    from stockholder</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">70,480</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5,946</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">76,426</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
                    Cash Provided by Financing Activities</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">70,480</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7,446</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">77,926</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NET
                    CHANGE IN CASH</font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5,457</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4,946</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,403</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CASH
                    BEGINNING</font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4,946</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">---</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="57%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="57%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CASH
                    ENDING</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,403</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4,946</font></div>
                </td>
                <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,403</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
              </tr>

          </table>
        </div>
        <div>&#160;</div>
        <div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SEE
            ACCOMPANYING NOTES TO FINANCIAL STATEMENTS</strong></font></div>
        </div>
        <div>&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-6</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right">
            </div>
          </div>
        </div>
      </div>
    </div>
    <div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIXTE
        BIOTECHNOLOGY, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
        Development Stage Company)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>STATEMENTS
        OF CASH FLOWS</u></strong></font></div>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>History</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lixte
      Biotechnology, Inc. (&#8220;the Company&#8221;), a development stage company, was organized
      under the laws of the State of Delaware on August 9, 2005. The Company is in
      the
      development stage as defined in Financial Accounting Standards Board Statement
      No. 7. The fiscal year end is December 31.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      April
      2006, the Company changed its name to Lixte Biotechnology, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Going
      Concern and Plan of Operation</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s financial statements have been presented on the basis that it is a
      going concern, which contemplates the realization of assets and satisfaction
      of
      liabilities in the normal course of business. The Company is in the development
      stage and has not earned any revenues from operations to date, which raises
      substantial doubt about its ability to continue as a going concern.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s ability to continue as a going concern is dependent upon its ability
      to develop additional sources of capital, and ultimately achieve profitable
      operations. The accompanying financial statements do not include any adjustments
      that might result from the outcome of these uncertainties.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company is currently devoting its efforts to research and development related
      to
      specific cancer biomarkers for early detection, estimation of prognosis,
      monitoring response to treatment, and development of targeted therapeutic
      agents. The Company is seeking to exploit this opportunity through execution
      of
      its business plan and the development of related patents.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Income
      Taxes</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company uses the liability method of accounting for income taxes pursuant to
      Statement of Financial Accounting Standards No. 109. Under this method, deferred
      income taxes are recorded to reflect the tax consequences in future years of
      temporary differences between the tax basis of the assets and liabilities and
      their financial amounts at year end.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      federal income tax purposes, substantially all expenses must be deferred until
      the Company commences business and then they may be written off over 60-month
      period. These expenses will not be deducted for tax purposes and will represent
      a deferred tax asset. The Company will provide a valuation allowance in the
      full
      amount of the deferred tax asset since there is not assurance of future taxable
      income. Tax deductible losses can be earned forward for 20 years until
      utilized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Cash
      and Cash Equivalents</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash
      and
      cash equivalents consist primarily of cash in banks and highly liquid
      investments with original maturities of 90 days or less.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIXTE
        BIOTECHNOLOGY, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
        Development Stage Company)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>STATEMENTS
        OF CASH FLOWS</u></strong></font></div>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Equipment</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Equipment
      is recorded at cost. Depreciation expense is provided on a straight-line basis
      using estimated useful lives of 3 years. Depreciation expense was $115 and
      $113
      for the periods ended March 31, 2006 and December 31, 2005, respectively.
      Maintenance and repairs are charged to expense as incurred. When assets are
      retired or otherwise disposed of, the property accounts are relieved of costs
      and accumulated depreciation and any resulting gain or loss is credited or
      charged to operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Concentrations
      of Credit Risk</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company maintains all cash in deposit accounts, which at times may exceed
      federally insured limits. The Company has not experienced a loss in such
      accounts.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Earnings
      Per Common Share</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Earnings
      per common share is computed based upon the weighted average number of common
      shares outstanding during the period. Diluted earnings per share consists of
      weighted average number of common shares outstanding plus the dilutive effects
      of options and warrants calculated using the treasury stock method. In loss
      periods, dilutive common equivalent shares are excluded as the effect would
      be
      anti-dilutive.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Use
      of Estimates in the Preparation of Financial
      Statements</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of asset and liabilities, the disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenue and expenses during the reporting periods.
      Actual results could differ from those estimates and assumptions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Recently
      Issued Accounting Pronouncements</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has adopted all recently issued accounting pronouncements. The adoption
      of the accounting pronouncements is not anticipated to have a material effect
      on
      the operations of the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
      2 - EQUIPMENT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Equipment
      consists of the following at:</font></div>
    <div align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="75%">

          <tr>
            <td align="left" valign="bottom" width="53%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="21%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>March
                31, 2006</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="21%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>December
                31, 2005</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="53%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Office
                equipment</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,158</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">920</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="53%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Software</font></div>
            </td>
            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">219</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">219</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="53%" style="border-bottom: #ccffcc;">&#160;</td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="53%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,377</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,139</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="53%" style="border-bottom: #ccffcc;">&#160;</td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="53%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Less
                accumulated depreciation</font></div>
            </td>
            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(228</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: black thin solid;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
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            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="53%" style="border-bottom: white solid;">&#160;</td>
            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,149</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
            </td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: black double;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,026</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
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      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIXTE
        BIOTECHNOLOGY, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
        Development Stage Company)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>STATEMENTS
        OF CASH FLOWS</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
      3 - STOCKHOLDER&#8217;S EQUITY </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      October 2005, the Company issued 1,500 shares of its common stock to one
      investor for $1,500.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
      4 - RELATED PARTY TRANSACTIONS </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;Most
      office services are provided without charge by the president. Such costs are
      immaterial to the financial statements and accordingly, have not been reflected
      therein. The officer and director of the Company is involved in other business
      activities and may, in the future, become involved in other business
      opportunities that become available, such person may face a conflict in
      selecting between the Company and his other business interests. The Company
      has
      not formulated a policy for the resolution of such conflicts.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
      5 - DUE TO STOCKHOLDER </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      inception, a stockholder advanced the Company $76,426 to pay for operating
      expenses. These funds have been advanced interest free.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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{"company-data": {"conformed-name": "SRKP 7 INC", "cik": "0001335105", "assigned-sic": "6770", "irs-number": "000000000"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-51476", "film-number": "06951936"}, "business-address": {"street1": "210 SOUTH FEDERAL HIGHWAY", "street2": "SUITE 205", "city": "DEERFIELD BEACH", "state": "FL", "zip": "33441", "phone": "310 203 2902"}, "mail-address": {"street1": "210 SOUTH FEDERAL HIGHWAY", "street2": "SUITE 205", "city": "DEERFIELD BEACH", "state": "FL", "zip": "33441"}}
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
FORM 8-K
Current
      Report Pursuant to Section 13 or 15(d) of
the
      Securities Exchange Act of 1934
Date
      of
      Report (Date of Earliest Event Reported): June 30, 2006
SRKP
      7,
      INC.
(Exact
      Name of Registrant as Specified in its Charter)
Delaware
(State
      or
      Other Jurisdiction of Incorporation)
000-51476
20-2903526
(Commission
                  File Number)
(I.R.S.
                  Employer Identification No.)
248
                  Route 25A, No. 2, East Setauket, New York
11733
(Address
                  of Principal Executive Offices)
(Zip
                  Code)
631-942-7959
(Registrant's
      Telephone Number, Including Area Code)
1900
      Avenue of the Stars, Los Angeles, CA 90067
(Former
      Name or Former Address, if Changed Since Last Report)
Item 2.01
      Completion of Acquisition or Disposition of Assets
On
      June
      30, 2006, pursuant to a Share Exchange Agreement dated as of June 8, 2006 (the
      "Share Exchange Agreement") by and among SRKP 7, Inc. (the "Company"), John S.
      Kovach ("Seller") and Lixte Biotechnology, Inc. ("Lixte"), the Company issued
      19,021,786 shares of its common stock in exchange for all of the issued and
      outstanding shares of Lixte (the "Exchange" or the "Reverse Merger"). Pursuant
      to the terms of the Share Exchange Agreement, there will be approximately
      27,527,341 shares of common stock issued and outstanding after giving effect
      to
      the Exchange and the maximum amount of the private placement as further
      described herein under Item 5.01.
As
      a
      result of the Exchange, Lixte became a wholly owned subsidiary of the Company.
      Item 5.01 of this Current Report on Form 8-K, is incorporated by
      reference into this Item 2.01.
Item
      3.02 Unregistered Sales of Equity Securities
As
      described in Item 2.01 of this Current Report on Form 8-K, on June 30, 2006,
      the
      Company issued 19,021,786 shares of its common stock to Seller in exchange
      for
      all of the issued and outstanding shares of Lixte. Concurrently with the closing
      of the Exchange, the Company sold an aggregate of 1,973,871 shares of its Common
      Stock to 26 accredited investors in a private placement (the "Private
"Placement") at a per share price of $.333 resulting in aggregate gross proceeds
      to the Company of $657,299. The Company paid to WestPark Capital, Inc. as
      placement agent, a commission of 10% and a nonaccountable fee of 4% on the
      gross
      proceeds of the Private Placement and issued five year warrants to purchase
      common stock equal to (a) 10% of the number of shares sold in the Private
      Placement exercisable at $0.333 per share and (b) an additional 2% of the number
      of shares sold in the Private Placement also exercisable at $0.333 per share.
      The Company anticipates that there will be additional closings for the Private
      Placement up to a maximum of $1,500,000.
The
      securities were issued by the Company in the Exchange and the Private Placement
      in reliance upon an exemption from registration under Section 4(2) of the
      Securities Act of 1933, as amended and Regulation D promulgated
      thereunder.
Item 5.01.
      Changes in Control of Registrant
The
      Share Exchange
On
      June
      30, 2006, the Company issued 19,021,786 shares of its common stock in exchange
      for all of the issued and outstanding shares of Lixte. As a result of the
      Exchange and Reverse Merger, Lixte became a wholly owned subsidiary of the
      Company. The Exchange occurred pursuant to the Share Exchange
      Agreement.
Immediately
      prior to the Exchange and Reverse Merger, the Company had 4,005,556 outstanding
      shares of common stock and no outstanding shares of preferred stock. The
      Company's Certificate of Incorporation provides for authorized capital of
      110,000,000 shares of which one hundred million (100,000,000) shares are $0.0001
      par value common stock and ten million (10,000,000) shares are $0.0001 par
      value
      preferred stock.
-1-
Pursuant
      to the Exchange, the Company issued to the Seller 19,021,786 shares. Therefore,
      the total issued and outstanding shares of the Company's common stock equals
      25,001,213 shares after giving effect to the Exchange and the shares issued
      in
      the initial closing of the Private Placement.
As
      a
      result of the Exchange and the shares issued in the initial Private Placement,
      (i) the stockholders of the Company immediately prior to the Exchange own
      4,005,556 shares, or approximately 16.02% of the issued and outstanding shares
      of the Company's common stock, and (ii) the Company is now controlled by
      the former stockholder of Lixte.
The
      Share
      Exchange Agreement was determined through arms'-length negotiations between the
      Company, the Seller and Lixte. In connection with the Exchange, the Company
      paid
      WestPark Capital, Inc. a cash fee of $45,000.
Change
      of Executive Officers and Directors
Immediately
      following the completion of the Exchange, all of the existing members of the
      Company's board of directors and all of its executive officers resigned and new
      appointees were elected to the Company's board of directors as set forth
      below.
On
      June
      13, 2006, the Company filed with the Securities and Exchange Commission an
      Information Statement pursuant to Section 14(f) of the Securities Exchange
      Act of 1934 and Rule 14f-1 thereunder regarding the following change in the
      Company's Board of Directors in accordance with the terms of the Share Exchange
      Agreement.
Information
      regarding the Company's directors and executive officers is set forth below. If
      any director or executive officer listed below is unable to serve, the directors
      will appoint a successor. Each director serves until his successor is elected
      at
      the annual meeting of stockholders or until his earlier death, resignation
      or
      removal and each executive officer serves at the pleasure of the Board of
      Directors.
Name
Age
Position
Dr.
                John S. Kovach
69
President,
                Director
Dr.
                Philip F. Palmedo
72
Director
We
      intend
      to add at least one more independent director as soon as possible.
Dr.
      John S. Kovach,
age
      69,
      founded Lixte in August, 2005 and is its President and a member of the Board
      of
      Directors. He received a BA (cum laude) from Princeton University and an MD
      (AOA) from the College of Physicians & Surgeons, Columbia University. Dr.
      Kovach trained in Internal Medicine and Hematology at Presbyterian Hospital,
      Columbia University and spent six years in the laboratory of Chemical Biology,
      National Institute of Arthritis and Metabolic diseases studying control of
      gene
      expression in bacterial systems.
Dr.
      Kovach was recruited to Stony Brook University in 2000 to found the Long Island
      Cancer Center (now named the Stony Brook University Cancer Center). He is
      presently Chair, Department of Preventive Medicine, Stony Brook University,
      Stony Brook, New York. From 1994 to 2000, Dr. Kovach was Executive Vice
      President for Medical and Scientific Affairs, City of Hope National Medical
      Center in Los Angeles, California. His responsibilities included oversight
      of
      all basic and clinical research initiatives at the City of Hope. During that
      time he was also Director of the Beckman Research Center at City of Hope and
      a
      member of the Arnold and Mabel Beckman Scientific Advisory Board in Newport
      Beach, California.
-2-
From
      1976
      to 1994, Dr. Kovach was a consultant in oncology and director of the Cancer
      Pharmacology Division at the Mayo Clinic in Rochester, Minnesota. During this
      time, he directed the early clinical trials program for evaluation of new
      anti-cancer drugs as principal investigator of contracts from the National
      Cancer Institute. From 1986 to 1994, he was also Chair of the Department of
      Oncology and Director of the NCI-designated Mayo Comprehensive Cancer Center.
      During that time, Dr. Kovach, working with a molecular geneticist, Steve Sommer
      MD, PhD, published extensively on patterns of acquired mutations in human cancer
      cells as markers of environmental mutagens and as potential indicators of breast
      cancer patient prognosis. Dr. Kovach has published over 100 articles on the
      pharmacology, toxicity, and effectiveness of anti-cancer treatments and on
      the
      molecular epidemiology of breast cancer. Dr. Kovach directs Lixte with the
      approval of the State University of New York at Stony Brook and the New York
      State Ethics Commission.
Chief
      Executive Officer
Initially,
      leadership and management of the company will be provided by Dr. Kovach with
      the
      advice of the board of Directors and the Scientific Advisory Committee. The
      activities for the first year at least will be confined to achieving the goals
      of the CRADA through the collaborative arrangement of the company by which
      Dr.
      Kovach and Dr. Zhuang, aided by two full time technical personnel, will pursue
      development of lead compounds for the treatment of malignant brain tumors.
      During the initial year, Dr. Kovach will also oversee the collection of the
      clinical samples needed to validate the biomarker observations regarding GBMs
      and to be in a position to extend the discovery process to ovarian and stomach
      cancers. At this point, the company will consider seeking another CRADA to
      extend the scope of its research or establishing an independent laboratory.
      The
      timing of this expansion will depend on raising additional capital of
      approximately $2.0 million by sale of additional shares of stock. A chief
      executive officer would then be recruited to manage the business affairs of
      the
      company. It is anticipated that this may require less than full time effort
      for
      the second year with a need developing for a full time CEO and at least a part
      time financial officer in the third year of operation.
Board
      of Directors
Philip F.
      Palmedo
Dr.
      Philip F. Palmedo has had a diversified career as a physicist, entrepreneur,
      corporate manager and writer. Dr. Palmedo received his undergraduate degree
      from
      Williams College and M.S. and Ph.D. degrees from MIT. He carried out
      experimental nuclear reactor physics research at MIT, Oak Ridge National
      Laboratory, the French Atomic Energy Commission Laboratory at Saclay and
      Brookhaven National Laboratory (BNL). At BNL in 1972 he initiated and was the
      first head of the Energy Policy Analysis Group. In 1974 he served with the
      Energy Policy Office of the White House and in the following year initiated
      the
      BNL Developing Country Energy Program.
-3-
In
      1979
      Dr. Palmedo founded the International Resources Group, an international
      professional services firm in energy, environment and natural resources. He
      served as Chairman and CEO until 1988 and since that time remains as Chairman
      of
      the company. In 1985 the company was recognized by
Inc.
      Magazine
as one
      of the 500 fastest growing private companies in the U.S.
In
      1988
      Dr. Palmedo joined in the formation of Kepler Financial Management, Ltd., a
      quantitative financial research and trading company. Dr. Palmedo held the
      position of President and Managing Director until the end of 1991 when
      Renaissance Technologies Corporation acquired the company. In 2005 he started
      a
      new hedge fund, Kepler Asset Management, and is a Managing Director of the
      firm.
Dr.
      Palmedo was the designer and, in 1992, became the first president of the Long
      Island Research Institute. LIRI was formed by Brookhaven National Laboratory,
      Cold Spring Harbor Laboratory, and Stony Brook University to facilitate the
      commercialization of technologies developed in their research and development
      programs. LIRI guided fledgling companies and started several new high tech
      entities. In order to provide "zero-stage" financing, LIRI created the Long
      Island Venture Fund, which evolved into the $250 million Topspin Fund.
Dr.
      Palmedo served on the boards of Asset Management Advisors and the Teton Trust
      Company and is currently a member of the Board of Directors of EHR Investments
      and the Gyrodyne Corporation of America. Dr. Palmedo also served on the Board
      of
      Trustees of Williams College and of the Stony Brook (University) Foundation
      and
      chaired the Foundation's Investment Committee. He is the founding Chairman of
      the non-profit Cultural Preservation Fund.
Dr.
      Palmedo has served as a consultant and advisor to numerous corporations and
      national and international agencies in science, technology and environmental
      policy including the MacArthur Foundation, the U. S. National Academy of
      Sciences, International Atomic Energy Agency, UNIDO, Organization of American
      States, the Governments of Sweden, Denmark, Dominican Republic, Indonesia,
      Somalia, Sudan, Egypt and Peru. He is the author of many publications in nuclear
      reactor physics, energy and environment, and technology and economic
      development. Dr. Palmedo has two sons and lives in St. James, Long Island,
      N.Y.
      with his wife, Elisabeth.
Scientific
      Advisory Committee
Arndt
      Hartmann, MD
Dr.
      Hartmann is Professor of Pathology, Institute of Pathology, University of
      Regensburg, Germany. He was trained in Internal Medicine at the University
      of
      Jena, Germany, and in molecular genetics of cancer at Mayo Clinic, Rochester,
      MN. He was subsequently trained in pathology at the University of Regensburg
      and
      the University of Basel, Switzerland. His research is focused on methods
      development in molecular pathology. He has specific expertise in genetic
      alterations in cancers of the bladder, prostate, kidney and breast.
-4-
Ferdinand
      Hofstadter, MD
Dr.
      Hofstadter is Professor and Director of the Institute of Pathology, University
      of Regensburg Medical School, Germany. He is Research Dean of the University
      of
      Regensburg-Medical Faculty, Chairman of the Managing Board of the Association
      of
      German Tumor Centers, Chairman of the German Society for Pathology, a member
      of
      the editorial boards of Virchow's Archives and the Journal of Pathology, and a
      referee for Deutsche Forschungsgesellschaft, the Dr. Mildred Scheel-Stiftung,
      EU, and the European Research Framework Program.
Stefan
      Madajewicz, MD, PhD
Dr.
      Madajewicz is Professor of Medicine. For the past 15 years, he has been Director
      of Cancer Clinical Trials and for the past 10 years, Chief, Neoplastic Diseases
      at SUNY-Stony Brook. Dr. Madajewicz is a Fellow, American College of Physicians
      and a member of the American Society of Clinical Oncology, American Association
      for Cancer Research, European Society of Medical Oncology an affiliate of the
      Eastern Cooperative Oncology Group, and member of the National Surgical Adjuvant
      Breast and Bowel Project. He is recognized as an outstanding cancer clinician
      and for the design of clinical trials, particularly the evaluation of new drugs
      in the treatment of cancers of the gastrointestinal tract and brain.
Iwao
      Ojima, BS, MS, PhD
Professor
      Ojima is Distinguished Professor of Chemistry and Director, Institute of
      Chemical Biology and Drug Discovery, SUNY-Stony Brook. He is an internationally
      recognized expert in medicinal chemistry, including anticancer agents and enzyme
      inhibitors, development of efficient synthetic methods for organic synthesis
      by
      means of organometallic reagents, homogeneous catalysis and organometallic
      chemistry, peptide and peptide mimetics, beta-lactam chemistry, and
      organoflourine chemistry at the biomedical interface.
Dr.
      Ojima
      is a recipient of the Arthur C. Cope Scholar Award (1994) and the E. B.
      Hershberg Award (for important discovery of medicinally active substances)
      (2001) from the American Chemical Society; The Chemical Society of Japan Award
      (for distinguished achievements) (1999); Outstanding Inventor Award from the
      Research Foundation of the State University of New York (2002. He is a Fellow
      of
      the J.S. Guggenheim Memorial Foundation (1995-), the American Association for
      the Advancement of Science (1997-), and The New York Academy of Sciences
      (2000-).
Dr.
      Ojima
      is a member of the American Chemical Society, American Association for the
      Advancement of Science, American Association for Cancer Research, American
      Peptide Society, the Chemical Society of Japan, the Society of Synthetic Organic
      Chemistry, Japan, New York Academy of Sciences, and Signa Xi. He has served
      as a
      consultant for E. I. du Pont, Eli Lilly, Air Products & Chemicals,
      Mitsubishi Chem. Inc., Nippon Steel Corp., Life Science Division, Rhone-Poulenc
      Rorer, ImmunoGen, Inc., Taiho Pharmaceutical Co., Milliken & Co., Aventis
      Pharma, OSI Pharmaceuticals, Inc., Mitsubishi Chem. Corp.
      (current).
-5-
Family
      Relationships
None.
Security
      Ownership of Certain Beneficial Owners and Management
The
      following table sets forth the number of shares of common stock beneficially
      owned as by (i) those persons or groups known to beneficially own more than
      5% of the Company's common stock prior to the closing of the Exchange,
      (ii) those persons or groups who beneficially own more than 5% of The
      Company's common stock as of the closing of the Exchange, (iii) each
      current director and each person that became a director upon the closing of
      the
      Exchange, (iv) all current directors and executive officers as a group and
      (v) all directors and executive officers after the closing of the Exchange
      as a group. The information is determined in accordance with Rule 13d-3
      promulgated under the Securities Exchange Act of 1934, as amended. Except as
      indicated below, the stockholders listed possess sole voting and investment
      power with respect to their shares.
Before
                Closing
of
                Exchange
(1)
After
                Closing
of
                Exchange
(2)
Name
                and Address of Beneficial Owner
Amount
                and Nature of Beneficial Ownership
Percent
                of Class
Amount
                and Nature of Beneficial Ownership
Percent
                of Class
Pre-Exchange
                Officers, Directors and 5% stockholders
Debbie
                Schwartzberg
800
                5
th
Avenue
New
                York, New York
1,155,000
28.8
%
1,154,845
4.2
%
Richard
                Rappaport
1900
                Avenue of the Stars, Suite 310
Los
                Angeles, California 90067
1,155,000
28.8
%
1,154,845
4.2
%
TMC
                Ulster Holdings, Inc.
1900
                Avenue of the Stars, Suite 310
Los
                Angeles, California 90067
1,005,556
25.1
%
1,005,556
3.6
%
Tom
                Poletti
1900
                Avenue of the Stars, Suite 310
Los
                Angeles, California 90067
270,000
6.7
%
269,973
*
Anthony
                C. Pintsopoulos
1900
                Avenue of the Stars, Suite 310
Los
                Angeles, California 90067
270,000
6.7
%
269,973
*
Glenn
                Krinsky
1900
                Avenue of the Stars, Suite 310
Los
                Angeles, California 90067
150,000
3.7
%
149,985
*
Post-Exchange
                Officers, Directors and 5% stockholders
Dr.John
                S. Kovach
248
                Route 25A, No. 2
East
                Setauket, New York 11733
19,021,786
69.1
%
Dr.
                Philip F. Palmedo
248
                Route 25A, No. 2
East
                Setauket, New York 11733
256,666
(3)
*
All
                Officers and directors as a group (two persons prior to and following
                the
                consummation of the Exchange)
1,425,000
35.5
%
19,278,452
70.0
%
(1)
Based on 4,005,556 shares outstanding on June
                29,
                2006.
(2)
Based
                on 27,531,846 shares of the Company's common stock outstanding projected
                to be outstanding following the closing of the Exchange and the completion
                of the maximum amount of the Private Placement ($1,500,000).
(3)
Consists
                of shares issuable pursuant to the exercise of immediately exercisable
                options to be granted to Dr. Palmedo as of the closing of the
                Exchange.
-6-
BUSINESS
      OF THE COMPANY
Immediately
      prior to the completion of the Exchange, the Company did not conduct any
      business operations and had minimal assets and liabilities.
Explanatory
      Note
Unless
      otherwise indicated or the context otherwise requires, all references below
      in
      this Report on Form 8-K to "we," "us" and the "Company" are to SRKP 7, Inc., a
      Delaware corporation and its subsidiary, Lixte Biotechnology, Inc. References
      to
"Lixte" are to Lixte Biotechnology, Inc., a Delaware corporation.
Cautionary
      Notice Regarding Forward Looking Statements
The
      Company desires to take advantage of the "safe harbor" provisions of the Private
      Securities Litigation Reform Act of 1995. This Report on Form 8-K contains
      a
      number of forward-looking statements that reflect management's current views and
      expectations with respect to its business, strategies, products future results
      and events and financial performance. All statements made in this Report other
      than statements of historical fact, including statements that address operating
      performance, events or developments that management expects or anticipates
      will
      or may occur in the future, including statements related to distributor
      channels, volume growth, revenues, profitability, new products, adequacy of
      funds from operations, statements expressing general optimism about future
      operating results and non-historical information, are forward looking
      statements. In particular, the words "believe," "expect," "intend," "
anticipate," "estimate," "may," "will," variations of such words, and similar
      expressions identify forward-looking statements, but are not the exclusive
      means
      of identifying such statements and their absence does not mean that the
      statement is not forward-looking. These forward-looking statements are subject
      to certain risks and uncertainties, including those discussed below. Actual
      results, performance or achievements could differ materially from historical
      results as well as those expressed in, anticipated or implied by these
      forward-looking statements. Lixte does not undertake any obligation to revise
      these forward-looking statements to reflect any future events or circumstances.
-7-
Readers
      should not place undue reliance on these forward-looking statements, which
      are
      based on management's current expectations and projections about future events,
      are not guarantees of future performance, are subject to risks, uncertainties
      and assumptions (including those described below) and apply only as of the
      date
      of this Report. Actual results, performance or achievements could differ
      materially from the results expressed in, or implied by, these forward-looking
      statements. Factors that could cause or contribute to such differences include,
      but are not limited to, those discussed below in "Risk Factors" as well as those
      discussed elsewhere in this Report, and the risks to be discussed in the next
      Annual Report on Form 10-KSB and in the press releases and other communications
      to stockholders issued by Lixte from time to time which attempt to advise
      interested parties of the risks and factors that may affect its business. Lixte
      undertakes no obligation to publicly update or revise any forward-looking
      statements, whether as a result of new information, future events or
      otherwise.
Glossary
      of Terms as Used in This Report
Assay
An
assay
is a
      method to determine the presence, absence, or the amount of a particular
      substance in a sample.
Assays
of body
      fluids such as blood and urine can be used to detect specific products
      (
biomarkers
)
      that
      indicate the presence of a specific type of cancer.
Biomarker
A
biomarker
is a
      component of a cell that is uniquely or strongly associated with a particular
      feature of that cell. The detection of the biomarker in body fluid by an
assay
indicates that a particular cell is very likely to be present in the body.
      In
      this memorandum, "
biomarkers
"
refer
      primarily to
proteins
that are
      uniquely produced by specific types of cancer cells or that are produced in
      excess by the cancer cells compared to non—cancer cells of the same tissue or
      organ.
Cancer
A
      disease
      characterized by loss or enhancement of one or more mechanisms that regulate
      the
      growth of cells of a specific tissue. Loss of these control mechanisms or gain
      of abnormal mechanisms in a single cell that put
cell
      growth
into
      overdrive allows that cell to grow, invade local tissue, and to spread to other
      regions of the body. This spreading of altered cells to distant sites is the
      process called
metastasis
.
-8-
Cell
      Growth
Cell
      growth
is the
      ability of an individual cell to reproduce by dividing into two cells. During
      normal development and subsequently during the life of the adult, this process
      is highly controlled. Loss of this control is the distinguishing feature of
      cancer cells. Although all cancer cells gain the capacity for uncontrolled
      growth, in most instances they retain many of the highly specialized features
      (and associated specific molecular components) that were characteristic of
      the
      normal tissue before loss of growth control. For example, breast cancer cells
      and brain cancer cells have lost control of growth and may be unrecognizable
      by
      their appearance under the microscope
but
      identifiable by the presence of biomarkers specific to breast or brain
      cells
.
CRADA
A
CRADA
(Cooperative Research and Development Agreement) is a formal contractual
      mechanism by which a variety of federal government agencies may agree to work
      collaboratively with a non-governmental entity to study and advance a particular
      idea, observation, or process under a defined plan of work.
Gene
A
gene
is a
      unit of information that specifies the structure of one or more
gene
      products
.
      Collectively, genes determine the precise composition of all molecules needed
      for maintenance of the functions of life: reproduction, development,
      organization, growth and metabolism.
Genes
are
      often referred to as units of heredity because they pass on the information
      necessary for all characteristics of an individual. For mammals like ourselves,
      one set of genes is received from each parent.
Gene
      Products
The
      products of genes are the thousands of different chemical structures, called
      molecules, needed for development of all cells. Most gene products are proteins.
      Most proteins are enzymes, molecules that can carry out work such as digesting
      and utilizing food for energy, signaling the cell to produce other gene products
      in response to changing conditions in the body, and controlling
cell
      growth
.
      When
      proteins controlling
cell
      growth
are
      altered, as occurs in all cancers, they become prime candidates for
biomarkers
that
      reveal the presence of cancer.
Glioblastoma
      Multiforme (GBM)
GBM
is the
      most common and most aggressive type of primary human brain cancer. The name
      derives from the fact that the brain cell that loses growth control and becomes
      a brain cancer cell is a glial cell (glioblastoma); as the altered glial cells
      grow without restraint, they take on many different shapes (multiforme). Recent
      studies suggest, however, that GBMs may arise from primitive brain stem cells
      rather than from glial cells.
GBM
is the
      initial target of Lixte Biotechnology, Inc.
-9-
Metastasis
Metastasis
is the
      process by which cancers acquire the ability to spread to other parts of the
      body by entry and dissemination through the blood and/or lymph systems. The
      devastating aspect of metastasis is the ability of the cancer cells to grow
      in a
      new environment (new tissue) Examples are the metastasis of breast cancer cells
      to the brain and liver and prostate cancer cells to bone.
Cure
      of
      cancers is much more difficult to achieve after
metastasis
has
      occurred. A major goal of our biomarker research is to develop
assays
for
      detection of cancers before they have invaded extensively or
metastasized
,
      allowing complete removal by surgery.
Mutation
A
mutation
is a
      change in one or more building blocks of a gene. Some changes can be tolerated
      without altering the integrity (function) of the product of the gene but other
      changes can result in cancer.
For
      the
      purposes of the cancer projects described in this memorandum, it is important
      to
      distinguish between inherited mutations (inborn mutations) and acquired
      (environmentally caused) mutations.
Some
      inborn mutations predispose an individual to development of one or more kinds
      of
      cancer. Because these mutations are inherited, they are present in every cell
      in
      the body. Such mutations are responsible for the higher frequency of certain
      cancers in particular families and ethnic groups. Examples are the breast cancer
      predisposing genes known as BRCA I and BRCA II.
Research
      on
biomarkers
,
      however, is directed at finding the gene products (proteins) of acquired
      mutations. Acquired mutations that change a single cell to a cancer cell are
      present ONLY in that cell and cells arising from its uncontrolled
cell
      growth
.
      If the
      products of the altered genes in these cancer cells are detectable in the body,
      they may reveal the presence of the cancer at a stage when it is curable by
      surgery.
Prognosis
Prognosis
refers
      to the likely course of a disease at specific stage of development. For example,
      a breast or prostate cancer that is not confined to the tissue of origin, e.g.
      is also present in a lymph node when first detected, has a greater likelihood
      of
      recurrence, a worse prognosis, than if it were confined to the tissue of
      origin.
Thus,
      the
      presence of lymph node metastases is an indicator of poor
      prognosis.
It
      is
      hoped that specific
biomarkers
for
      cancers will be found that have prognostic value. With assays for such markers,
      patients with poor prognoses could consider more aggressive treatments before
      obvious spread of disease and patients with good prognoses could be spared
      unnecessary treatment.
-10-
Proteins
Proteins
are
      molecules that have many functions important to the nature and behavior of
      the
      cell. Many proteins are enzymes that regulate and integrate a myriad of
      biochemical processes essential to life.
Certain
      enzymes are critical to an integrated system of cellular signaling that
      regulates cell behavior in response to a constantly changing environment and
      maintains the specialized nature of different types of cells. It is likely
      that
      some
biomarkers
of
      cancers have perverted signaling functions that perpetuate the abnormal behavior
      of the cancer.
Thus,
      discovery of biomarkers of known function that are unique or overly abundant
      in
      specific types of cancers may provide clues as to the biochemical
      vulnerabilities of these cancers, weaknesses that can be attacked selectively
      by
      specific classes of drugs.
The
      Company
Lixte
      was
      created to capitalize on opportunities for the company to develop specific,
      and
      sensitive tests for the early detection of cancers to better estimate prognosis,
      to monitor treatment response, and to reveal targets for development of more
      effective treatments.
Research
      Objectives
In
      the
      first year of operation, Lixte will concentrate on exploiting the biomarker
      pathway associated with the growth of GBMs to identify drugs with potential
      selective activity against this type of tumor. In the first year, Lixte will
      also collect the clinical samples needed for the identification of biomarkers
      for ovarian and stomach cancer. Subsequently, Lixte will include cancers of
      the
      breast, prostate, colon, bladder, and kidney. For each of these diseases, a
      biomarker that would enable identification of the presence of cancer at a stage
      curable by surgery would save thousands of lives annually. Biomarkers specific
      to these diseases may also provide clues as to processes (biological pathways)
      that may be important to the growth of the cancer and therefore be vulnerable
      to
      drug treatments targeted to the biomarker pathway.
Lixte
      will seek to identify new treatments for the most common and most aggressive
      type of primary brain cancer, glioblastoma multiforme ("GBM") under a
      Cooperative Research and Development Agreement ("CRADA") with the National
      Institute of Neurological Diseases and Stroke ("NINDS") of the National
      Institutes of Health ("NIH"). A second goal of the CRADA is to determine whether
      expression of a component of the biomarker pathway correlates with prognosis
      in
      glioma patients.
The
      collaborating NIH laboratory is directed by Dr. Zhengping Zhuang, who is an
      internationally recognized molecular pathologist. He has four issued and two
      pending patents related to molecular pathology of human cancers. Dr. Zhuang
      and
      colleagues at NIH recently discovered a biomarker that Lixte believes can be
      used as a tool for identifying drugs that affect the growth of GBM cells. Under
      the CRADA, Lixte will support studies in Dr. Zhuang's laboratory with $200,000
      annually for two years for two research assistants expected to be at the
      post-doctoral level and supplies. The selection of the research personnel will
      be made by Dr. Zhuang.
-11-
Intellectual
      Property
Lixte
      sponsored the development and submission of a provisional patent application
      filed February 6, 2006 (the "Provisional Patent Application") naming as
      co-inventors Dr. Zhuang, several other NIH investigators, and Dr. Kovach. When
      the final patent application is filed in early 2007, the named inventors will
      assign their rights in the inventions to their employers, meaning that any
      patent (or patents) arising out of the application will be jointly owned by
      the
      U.S. Government and Lixte. Lixte is currently in the negotiations with the
      NIH
      to obtain the exclusive commercial rights to the inventions covered by the
      Provisional Patent Application. Lixte expects to file further patent
      applications relating to the categories of products described below. Patent
      applications arising out of research pursuant to the CRADA are likely to be
jointly
owned by
      Lixte and the U.S. Government. In such cases of joint ownership, Lixte will
      likely seek to obtain the exclusive commercial rights to those
      inventions.
Access
      to Clinical Materials
To
      detect
      and to assess the clinical relevance of biomarkers, Lixte needs access to human
      tissue, blood and perhaps other body fluids of patients with and without the
      specific types of cancer under study. Lixte is negotiating an agreement with
      the
      Institute of Pathology at the University of Regensburg in Germany to receive
      a
      supply of high quality, accurately annotated tissue and blood samples.. This
      arrangement provides Lixte with appropriate clinical samples for which
      permission has been obtained to study any molecular feature of the tissue for
      commercial purposes. This is an absolute requirement for success of a for-profit
      company in this field.
The
      collection, selection, histological characterization, and processing of tissue
      samples and collection of blood samples will be managed by Arndt Hartmann,
      M.D.,
      a Professor in the Institute of Pathology at the University of Regensburg.
      Dr.
      Hartmann is an expert clinical and molecular pathologist and
is
keenly
      interested in the project. His research is focused on the molecular genetics
      of
      breast, bladder, prostate and kidney cancer. He was a research fellow for three
      years in Dr. Kovach's laboratory at the Mayo Clinic in Rochester before
      completing his residency in pathology and joining the faculty at Regensburg
      University. Dr. Hartmann is a member of the Scientific Advisory Committee
      of Lixte.
Products
Lixte's
      products will derive directly from its intellectual property consisting of
      its
      Provisional Patent Application
and
other
      patents it anticipates will arise from its research activities. Those patents
      are expected to cover biomarkers uniquely associated with specific types of
      cancer that may provide the bases for assays suitable for cancer detection
      and
      patents on methods to identify drugs that inhibit growth of specific tumor
      types
      and combinations of drugs as potential therapeutic agents for the treatment
      of
      specific cancers.
The
      Company believes that there are four main markets
for
potential products which may be developed by Lixte.
1.
Improved
                Cancer Treatments.
Improved
                chemotherapy regimens for cancers not curable by surgery or
                radiation;
-12-
2.
Diagnostic
                Assays.
Improved
                assays of body fluids, primarily blood, for the diagnosis of cancers
                at
                stages when cure is possible through surgery and/or
                radiotherapy;
3.
Estimation
                of Prognosis.
Improved
                methods for estimation of prognosis by molecular sub-classification
                of
                histologically indistinguishable tumor subtypes;
                and
4.
Assessment
                of Therapeutic Effectiveness.
Improved
                methods to assess therapeutic effectiveness by monitoring with biomarker
                assays persistence or reappearance of cancer during and after treatment
                and during drug development.
Each
      market is discussed below.
1.
Improved
      Cancer Treatments
Lixte
      will seek to develop improved therapeutic regimens when biomarkers provide
      insight into pathways vulnerable to chemical and/or immunological attack. Some
      tumor biomarkers have specific (enzymatic) functions and are "drugable," that
      is, their function can be altered pharmacologically. For example, the
      identification of the biomarker specific to regulation of GBMs has led to
      development of an assay for screening compounds for anti-GBM
      activity.
2.
      Diagnostic Assays
Lixte
      intends to work under the CRADA with NINDS to assess the clinical potential
      of
      the new biomarker for GBM. Using the approach developed by Dr. Zhuang to
      identify markers for GBM and for other rare tumors, Lixte also intends to
      initiate searches for biomarkers in other common cancers for which there is
no
highly
      specific and sensitive blood test for early detection. The focus for the first
      two years, in addition to GBMs, will be ovarian and gastric cancer. For these
      diseases, a reliable blood test for their detection at an early surgically
      curable stage would save many lives. If Lixte resources increase as anticipated,
      research will likely be extended to the identification of biomarkers for stomach
      and ovarian cancer and subsequently to biomarkers for breast, prostate, colon,
      bladder, and kidney cancers.
2.
Estimation
      of Prognosis
There
      is
      a wide spectrum of aggressiveness and responsiveness to drug treatments for
      many
      cancers that are clinically indistinguishable with present methods of
      classification. Judgment of the aggressiveness of
most
cancers
      is currently based on their morphologic appearance under the microscope and,
      for
      some tumors, on a few molecular features such as hormone receptors associated
      with breast cancers. There are few biomarkers sufficiently reliable to predict
      the prognosis of a given cancer patient so that treatment intensity can be
      adjusted with confidence toward less or more toxic regimens.
-13-
3.
Assessment
      of Therapeutic Effectiveness
The
      Company believes that specific and sensitive biomarkers for any human cancer
      are
      in great demand by pharmaceutical companies and by the National Cancer Institute
      as aids to drug development and to the development of targeted drug treatment.
      In addition, the Company believes that biomarkers that reflect disease
      progression and regression during initial clinical evaluation of new therapeutic
      agents could greatly reduce the cost of new drug development. To assess the
      effectiveness of a specific treatment, it would be less expensive and more
      efficient to monitor the appearance and disappearance of a biomarker in the
      blood than to monitor the course of disease by radiological imaging.
The
      Market
The
      Company believes that a sensitive, specific, reasonably priced assay for the
      detection of any common human cancer at an early
stage
could
      save thousands of lives annually, reduce health care costs, and generate
      significant income.
Brain
      Cancer
The
      most
      malignant type of brain cancer, GBM, although less common than stomach, breast
      and prostate cancers, is almost invariably fatal. Typically, survival after
      surgery and radiation is only 12 to 18 months. A biomarker reflecting disease
      progression and, most importantly, providing a method to develop more specific
      and effective treatments of GBM would be an important discovery.
Stomach
      Cancer
The
      Company believes that stomach cancer (gastric cancer) is a target for biomarker
      identification because of its high prevalence in certain of the world's
      population, particularly in Asia. Since gastric cancer is uncommon in the West,
      development of new diagnostics and treatments is not a priority for many
      pharmaceutical and diagnostic companies, providing a special opportunity for
      Lixte.
Current
      screening for gastric cancer entails passing a tube into the stomach
      (gastroscopy) and sampling of suspicious
areas
.
      The
      invasive nature and cost of gastroscopy with sedation limits systematic
      screening of large numbers of individuals at risk. The Company believes that
      a
      blood test for the early detection of stomach cancer could save many lives
      and
      significantly reduce health care costs in countries with a high prevalence
      of
      the disease.
Ovarian
      Cancer
Although
      ovarian cancer is much less common than breast cancer, cancer of the ovary
      is
      responsible for the death of almost half as many women who die from breast
      cancer. Less than 50% of women are cured of
ovarian
cancer
      because the disease is almost always in an advanced stage before it produces
      symptoms. Yet, if ovarian cancer is found early, the cure rate is 90% or better.
      A blood test for screening women at risk (all women who are 50 or older) is
      urgently needed.
-14-
Marketing
      Plan
Once
      a
      biomarker has been identified, depending on the projected cost for evaluation,
      Lixte expects to either conduct the initial
assessment
using
      its resources or seek partners in industry for clinical development. If we
      have
      the resources, we prefer to generate evidence of clinical value on our own
      to
      maximize financial value of the product.
If
      we do
      not have the resources needed to develop the clinical potential of a given
      biomarker ourselves, we intend to try to find partners in large diagnostic
      and/or pharmaceutical companies. These companies are increasingly dependent
      upon
      new biomarkers discovered by academic groups and small biotechnology companies
      to maintain a pipeline of promising drugs and new diagnostic tools.
We
      are
      confident that the molecular approaches that led to the discovery of the
      biomarker for GBMs (and the subject of the Provisional Patent Application)
      could
      lead to the discovery of equally promising new
biomarkers
for
      other cancers. If discovered and developed, the challenge will be to decide
      which products to license early and which to carry into clinical evaluation
      without a pharmaceutical company partner.
Research
      and Development
The
      primary objective of Lixte is to develop sensitive and specific assays for
      identification of potential therapeutic targets and for the early detection
      for
      several common cancers. Most cancers produce abnormal proteins or
abnormal
amounts
      of normal proteins. How many of these potential biomarkers are present at
      detectable concentrations in the blood is not known.
There
      are
      four steps in our
biomarker
detection and validation process:
1.
Tissue
      Acquisition
The
      acquisition of well-characterized cancer tissue and blood samples from cancer
      patients and control individuals is the most critical step to success. We
      believe that Lixte should have access to the clinical samples needed for its
      program from the Institute of Pathology at University of Regensburg in Germany.
      We expect that the samples we will obtain will be or have been collected under
      the regulatory requirements of the
European
Union
      and of the Office of Protection of Research Subjects in the United States.
      Those
      regulations require that each patient be fully informed about the process,
      the
      use of the samples, and any attendant risks. Though there is a negligible
      medical risk related to the collection of the samples for Lixte's purposes, the
      consent form points out that the tissue is not needed for clinical purposes
      and
      that the research done will not affect the patient's care in any way.
The
      consent specifies further that the samples will be used to develop diagnostic
      tests and/or treatments for cancer that may have commercial value and that
      the
      participants will not be entitled to any of the financial benefits from the
      product's development. All samples are coded and the privacy of all
participants
is
      assured because personal identifiers are never shared with Lixte by the
      University of Regensburg. Obtaining consent is the responsibility of the
      collaborating institution, but all consent processes and forms will be jointly
      approved by the collaborating institution and by Lixte.
-15-
2.
Tissue
      Processing
For
      maximum efficiency in detecting biomarkers, cancer cells must be isolated from
      a
      complex matrix of normal cells and other structural elements of tissue in which
      the cancer has arisen under conditions that do not alter potential biomarkers.
      The procedures used minimize destruction and alteration of cell components.
      Once
      processed, preparations can be transported without compromising their integrity.
3.
Detection
      and Identification of Biomarkers
The
      search for molecular elements with features unique to a specific cancer type
      is
      accomplished using highly reproducible physical techniques. These techniques
      are
      not proprietary but involve technologies used in sequences that are not obvious.
      The most prominent biomarkers for each tumor type are identified by mass
      spectrometric sequencing. We will select for patenting and clinical
evaluation
biomarkers present at high frequency in all cancers of the same type.
4.
Development
      of Assays for Biomarkers in the Blood
Whether
      to develop an assay for selected biomarkers is an important decision point.
      Assay development is an expensive component of the discovery process but also
      an
      essential step in establishing commercial
value
.
      For
      each cancer type, we expect to screen sera of affected and unaffected persons
      for the five most promising biomarkers of known sequence for which patent
      protection seems achievable. Maximum value of the product for diagnostics is
      achieved by demonstrating the presence of specific biomarkers in the serum
      of
      patients harboring the cancer of interest and their absence in the sera of
      patients without the cancer.
Biomarkers
      not useful for diagnostic assays may still have significant value as markers
      of
      prognosis and/or as drug targets. For example, although it is not yet clear
      whether the new biomarker discovered by Dr. Zhuang will serve as a useful
      diagnostic assay for GBMs, that biomarker is nevertheless valuable because
      it
      was demonstrated to provide a tool for identification of new drug combinations
      active against GBMs in vitro.
Using
      stringent criteria for biomarker selection, analysis of small numbers of a
      given
      type of cancer is sufficient for detection of relevant biomarkers. If potential
      biomarkers for early diagnosis are
discovered
for
      several types of cancer, such as the one already identified for GBMs, we will
      prioritize their development in the following order: stomach, ovary, prostate,
      colon, bladder, and kidney. If a particularly compelling opportunity arises,
      we
      have the flexibility to quickly direct resources to maximize chances of
      developing a clinically useful product.
Employees
As
      of
      June 30, 2006, Lixte had no full-time employees. Dr. Kovach is Chair, Department
      of Preventive Medicine, SUNY, Stony Brook. He received approval from the School
      of Medicine, Stony Brook University and approval from the New York State Ethics
      Commission to operate and hold greater than 5% of outstanding shares of the
      Company.
-16-
Our
      investment commitments in the research efforts pursuant to the CRADA fund two
      technical assistants who will work under the supervision of Dr. Zhuang on the
      aims of the CRADA. Dr. Kovach will devote 0.2 person/years of his efforts per
      year to research planning and design and monitoring progress of the research
      under the CRADA. Dr. Kovach's contributions will be made outside of his academic
      responsibilities.
Contacts
The
        business address is:
Lixte
        Biotechnology, Inc.
248
        Route
        25A #2
East
        Setauket, NY 11733
Legal
      Proceedings
We
      are
      not a party to any legal proceedings.
MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
      RESULTS OF OPERATIONS
The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our financial statements and related notes, and
      the
      other financial information included in this Memorandum.
Forward-Looking
      Statements
The
      forward-looking comments contained in this discussion involve risks and
      uncertainties. Our actual results may differ materially from those discussed
      here due to factors such as, among others, limited operating history, difficulty
      in developing, exploiting and protecting proprietary technologies, intense
      competition and substantial regulation in the healthcare industry. Additional
      factors that could cause or contribute to such differences can be found in
      the
      following discussion, as well as in the section entitled "Risks
      Factors."
Recent
      Events
Completion
      of Reverse Merger
Concurrently
      with the initial closing of the Private Placement, SRKP 7, Inc. acquired all
      of
      the capital stock of Lixte pursuant to a Share Exchange Agreement with the
      shareholder of Lixte. In connection with the Reverse Merger, the Company issued
      to the shareholder of Lixte 19,021,786 shares of the Company's Common Stock. As
      a result, Lixte became a wholly owned subsidiary of SRKP 7, Inc. As Lixte will
      be treated as the "accounting acquirer" all of the financial information except
      certain share information refers to Lixte.
-17-
Accordingly,
        from an historical perspective, Lixte was deemed to have been the acquirer
        in
        the Reverse Merger and Lixte is deemed the survivor of the reorganization.
        Accordingly, the financial statements presented reflect the historical results
        of Lixte prior to the Reverse Merger and do not include the historical financial
        results of SRKP 7, Inc. The equity of SRKP 7, Inc. survives the reorganization.
        All costs associated with the Reverse Merger were expensed as incurred.
        Information with respect to shares is based on a forward split of 1.111 to
        1.
Overview
Lixte
      was
      created to capitalize on opportunities for the company to develop low cost,
      specific, and sensitive tests for the early detection of cancers to better
      estimate prognosis, to monitor treatment response, and to reveal targets for
      development of more effective treatments.
Lixte
      is
      concentrating on discovering biomarkers for common cancers for which better
      diagnostic and therapeutic measures are needed. For each of these diseases
      a
      biomarker that would enable identification of the presence of cancer at a stage
      curable by surgery would save thousands of lives annually. In addition,
      biomarkers specific to these diseases may also provide clues as to processes
      (biological pathways) that characterize specific cancer types and that may
      be
      vulnerable to drug treatment targeted to the activity of the
      biomarker.
Lixte's
      initial focus is on developing new treatments for the most common and most
      aggressive type of primary brain cancer, glioblastoma multiforme ("GBM"). Lixte
      entered into a Cooperative Research and Development Agreement ("CRADA") with the
      National Institute of Neurological Diseases and Stroke ("NINDS") of the National
      Institutes of Health ("NIH") to identify and evaluate drugs that target a
      specific biochemical pathway for GBM cell differentiation. The CRADA also covers
      research to determine whether expression of a component of this pathway
      correlates with prognosis in glioma patients.
The
      lead
      scientist at NINDS collaborating with Lixte under the CRADA is Dr. Zhengping
      Zhuang. Dr. Zhuang is internationally recognized for his research in molecular
      pathology. Dr. Zhuang has four issued and two pending patents related to
      molecular pathology of human cancers. He has recently discovered a biomarker
      of
      relevance to the growth of GBMs that Lixte believes can be used as a tool for
      identifying drugs that affect the growth of GBM cells. Under the CRADA, Lixte
      will support two persons at NIH to work under the direction of Dr. Zhuang.
      The
      goal is to identify drugs that inhibit GBM cell growth and to determine if
      the
      identified biomarker may be useful for estimation of prognosis. Lixte's annual
      contribution to the collaborative research done by Lixte and NIH is $200,000
      annually for two years for two research assistants expected to be at the
      post-doctoral level and supplies.
Lixte
      sponsored the development and submission of a provisional patent application
      filed February 6, 2006 (the "Provisional Patent Application") naming as
      co-inventors Dr. Zhuang, several other NIH investigators, and Dr. Kovach. When
      the final patent application is filed in early 2007, the named inventors will
      assign their rights in the inventions to their employers, meaning that any
      patent (or patents) arising out of the application will be jointly owned by
      the
      U.S. Government and Lixte. Lixte is currently in the negotiations with the
      NIH
      to obtain the exclusive commercial rights to the inventions covered by the
      Provisional Patent Application. As its research progresses, Lixte expects to
      file further patent applications relating to the categories of products
      described below. Patent applications arising out of research pursuant to the
      CRADA are likely to be jointly owned by Lixte and the U.S. Government. In such
      cases of joint ownership, Lixte will likely seek to obtain the exclusive
      commercial rights to those inventions.
-18-
Lixte's
      products will derive directly from its intellectual property consisting of
      its
      Provisional Patent Application and other patents it anticipates it will arise
      out of its research activities. Those patents are expected to cover biomarkers
      uniquely associated with specific types of cancer, patents on methods to
      identify drugs that inhibit growth of specific tumor types and combinations
      of
      drugs and potential therapeutic agents for the treatment of specific cancers.
The
      Company faces several potential challenges in its drive for commercial success,
      including raising sufficient capital to fund its business plan, achieving
      commercially applicable results of its research program, continued access to
      tissue and blood samples from cancer patients, competition from established,
      well funded companies with competitive technologies, and future competition
      from
      companies that are developing competitive technologies, some of whom are larger
      companies with greater capital resources than the Company.
Liquidity
      and Capital Resources
Because
      Lixte is currently engaged in research at a very early stage, significant time
      may be
required
to
      develop any product or intellectual property capable of generating revenues.
      As
      such, Lixte's business is unlikely to generate any revenue in the next several
      years and may never do so. Even if Lixte is able to generate revenues in the
      future through licensing its technologies or through product sales, there is
      no
      assurance that such revenues will exceed its expenses.
If
      the
      maximum Private Placement ($1,500,000) is achieved, we believe the net proceeds
      of the Private Placement will be sufficient to fund planned operations for
      the
      next twelve months. These funds will not be sufficient to fully develop and
      commercialize any products that may arise from our research. We will also need
      to raise additional funds in order to satisfy our future liquidity requirements.
      Most immediately, in addition to the net proceeds from the Private Placement,
      we
      expect to require up to $2 million (plus the difference, if any, between
      $1,290,000, the net proceeds from the maximum Private Placement and the net
      amount actually received from the Private Placement). However, as of June 30,
      2006, the Company has only raised $657,299 in gross proceeds. Additionally,
      the
      amount and timing of future cash requirements will depend on market acceptance
      of our products, if any, and the resources we devote to developing and
      supporting our products. We will need to fund these cash requirements from
      either one or a combination of additional financings, mergers or acquisitions,
      or via the sale or license of certain of our assets.
Current
      market conditions present uncertainty as
to
      our
      ability to secure additional funds, as well as our
ability
to reach
      profitability. There can be no assurances
that
      we
      will be able to secure additional financing, or obtain favorable terms on such
      financing if it is available,
or as to
      our ability to achieve positive cash flow from operations. Continued negative
      cash flows and lack of
liquidity
      create significant uncertainty about our ability to fully implement our
      operating plan and we may have
to
      reduce the scope of our planned operations. If cash and cash equivalents are
      insufficient to satisfy our liquidity requirements, we would be required to
      scale back or discontinue our product development program, or obtain funds
      if
      available through strategic alliances that may require us to relinquish rights
      to certain of our technologies or discontinue our operations.
-19-
Off-Balance
      Sheet Arrangements
As
      of
      March 31, 2006, we had no off-balance sheet arrangements.
EXECUTIVE
      COMPENSATION
For
      the
      current fiscal year, Dr. Kovach does not anticipate receiving any
      compensation from the Company in view of the Company's early stage status. He
      will be reimbursed for any out-of-pocket expenses. Any future compensation
      arrangements will be subject to the approval of the board of
      directors.
Option
      Grants in 2005
None.
Aggregated
      Option Exercises in 2005 and Option Values at December 31,
      2005
None.
Option
      Plans
Members
      of the Board of Directors
Each
      outside member of the Board will receive options to purchase 200,000 shares
      of
      common stock at the initial private placement price of $0.333/ share with one
      third of the options (66,666 shares) vesting immediately upon joining the board
      and one third vesting annually for two years on the anniversary of that date.
Board
      member, Phillip Palmedo also will receive additional options to purchase 190,000
      shares of common stock at $0.333 per share for services rendered in developing
      the business plan for Lixte.
Members
      of the Scientific Advisory Committee
Each
      member of the Scientific Advisory Committee (SAC) other than Drs. Hartmann
      and
      Hofstadter will receive options to purchase 50,000 shares of common stock at
      the
      initial private placement price of $0.333/share with one half of the options
      (25,000 shares) vesting on the first anniversary of joining the SAC and one
      half
      vesting on the second anniversary.
-20-
Indemnification
      of Directors and Executive Officers and Limitation of
      Liability
Under
      Section 145 of the General Corporation Law of the State of Delaware, we can
      indemnify our directors and officers against liabilities they may incur in
      such
      capacities, including liabilities under the Securities Act of 1933, as amended
      (the "Securities Act"). The Company's Certificate of Incorporation and Bylaws
      provide for indemnification. The provisions in our certificate of incorporation,
      bylaws and the Delaware statute do not eliminate the duty of care, and in
      appropriate circumstances equitable remedies such as injunctive or other forms
      of nonmonetary relief will remain available under Delaware law. In addition,
      each director will continue to be subject to liability for breach of the
      director's duty of loyalty to us or our stockholders, for acts or omissions not
      in good faith or involving intentional misconduct or knowing violations of
      the
      law, for actions leading to improper personal benefit to the director, and
      for
      payment of dividends or approval of stock repurchases or redemptions that are
      unlawful under Delaware law. The provisions also do not affect a director's
      responsibilities under any other law, such as the federal securities laws or
      state or federal environmental laws.
We
      have
      been advised that in the opinion of the Securities and Exchange Commission,
      insofar as indemnification for liabilities arising under the Securities Act
      may
      be permitted to our directors, officers and controlling persons pursuant to
      the
      foregoing provisions, or otherwise, such indemnification is against public
      policy as expressed in the Securities Act and is therefore unenforceable. In
      the
      event a claim for indemnification against such liabilities (other than our
      payment of expenses incurred or paid by our director, officer or controlling
      person in the successful defense of any action, suit or proceeding) is asserted
      by such director, officer or controlling person in connection with the
      securities being registered, we will, unless in the opinion of our counsel
      the
      matter has been settled by controlling precedent, submit to a court of
      appropriate jurisdiction the question of whether such indemnification by us
      is
      against public policy as expressed in the Securities Act and will be governed
      by
      the final adjudication of such issue.
We
      may
      enter into indemnification agreements with each of our present or future
      directors and officers that are, in some cases, broader than the specific
      indemnification provisions permitted by Delaware law, and that may provide
      additional procedural protection. The indemnification agreements may require
      us,
      among other things, to:
·
indemnify
                officers and directors against certain liabilities that may arise
                because
                of their status as officers or
                directors;
·
advance
                expenses, as incurred, to officers and directors in connection with
                a
                legal proceeding, subject to limited exceptions;
                or
·
obtain
                directors' and officers' insurance.
At
      present, there is no pending litigation or proceeding involving our
      director/officer or involving any of our employees in which indemnification
      is
      sought, nor are we aware of any threatened litigation that may result in claims
      for indemnification.
-21-
RISK
      FACTORS
Any
      investment in our common stock involves a high degree of risk. The following
      risk factors relating to Lixte should carefully considered.
RISKS
      RELATED TO BUSINESS
We
      are engaged in early stage research and as such may not be successful in our
      efforts to develop a portfolio of commercially viable
      products.
A
      key
      element of our strategy is to discover, develop and commercialize a portfolio
      of
      new drugs and diagnostic tests. We are seeking to do so through our internal
      research programs. A significant portion of the research that we are conducting
      involves new and unproven technologies. Research programs to identify new
      disease targets and product candidates require substantial technical, financial
      and human resources whether or not any candidates or technologies are ultimately
      identified. Our research programs may initially show promise in identifying
      potential product candidates, yet fail to yield product candidates for clinical
      development for any of the following reasons:
·
the
                research methodology used may not be successful in identifying potential
                product candidates;
·
product
                candidates for diagnostic tests may on further study be shown to
                not
                obtain an acceptable level of accuracy;
                or
·
product
                candidates for drugs may on further study be shown to have harmful
                side
                effects or other characteristics that indicate they are unlikely
                to be
                effective drugs.
Although
      we have identified one potential product candidate in the area of brain tumors,
      the work needed to demonstrate its commercial viability is at a very early
      stage. The follow-up research needed to demonstrate the viability of the product
      is costly and time-consuming and may reveal that the product does not function
      as expected or that it is otherwise not commercially viable.
If
      we are
      unable to discover suitable potential product candidates, develop additional
      delivery technologies through internal research programs or in-license suitable
      products or delivery technologies on acceptable business terms, our business
      prospects will suffer.
As
      the
      Company has no operating history or revenue and only minimal assets, there
      is a
      risk that we will be unable to continue as a going concern. The Company has
      had
      no recent operating history nor any revenues or earnings from operations since
      inception. We have no significant assets. We will, in all likelihood, sustain
      operating expenses without corresponding revenues, at least until products
      are
      viable and marketable. This may result in our incurring a net operating loss
      that will increase continuously. We cannot assure you that our products will
      be
      marketable.
Lixte
      does not expect to obtain any revenues for several years and there is no
      assurance that it will ever generate revenue or be profitable. If we do not
      generate revenues and achieve profitability, we will be forced to cease or
      substantially curtail our operations and you may lose your entire investment.
Because
      Lixte is currently engaged in research at a very early stage, significant time
      may be
required
to
      develop any product or intellectual property capable of generating revenues.
      As
      such, Lixte's business is unlikely to generate any revenue in the next several
      years and may never do so. Even if Lixte is able to generate revenues in the
      future through licensing its technologies or through product sales, there is
      no
      assurance that such revenues will exceed its expenses. Should Lixte fail to
      achieve profitability, you may lose your entire investment.
-22-
We
      will need to raise additional funds in the future and these funds may not be
      available on acceptable terms or at all.
If
      the
      maximum Private Placement is achieved, we believe the net proceeds of this
      Offering will be sufficient to fund planned operations for the next twelve
      months. These funds will not be sufficient to fully develop and commercialize
      any products that may arise from our research. We will also need to raise
      additional funds in order to satisfy our future liquidity requirements. Most
      immediately in addition to the $1.5 million from the maximum amount of the
      Private Placement, we expect to require up to $2 million (plus any
      shortfall between $1,290,000, the net proceeds from the maximum amount of the
      Private Placement and the net amount actually received from the Private
      Placement) in the near term to enable us to obtain a wet lab to further advance
      our research projects. Additionally, the amount and timing of future cash
      requirements will depend on market acceptance of our products, if any, and
      the
      resources we devote to developing and supporting our products. We will need
      to
      fund these cash requirements from either one or a combination of additional
      financings, mergers or acquisitions, or via the sale or license of certain
      of
      our assets.
Current
      market conditions present uncertainty as
to
      our
      ability to secure additional funds, as well as our
ability
to reach
      profitability. There can be no assurances
that
      we
      will be able to secure additional financing, or obtain favorable terms on such
      financing if it is available,
or as to
      our ability to achieve positive cash flow from operations. Continued negative
      cash flows and lack of
liquidity
      create significant uncertainty about our ability to fully implement our
      operating plan and we may have
to
      reduce the scope of our planned operations. If cash and cash equivalents are
      insufficient to satisfy our liquidity requirements, we would be required to
      scale back or discontinue our product development program, or obtain funds
      if
      available through strategic alliances that may require us to relinquish rights
      to certain of our technologies or discontinue our operations.
If
      we are unable to secure licenses to technologies or materials vital to our
      business, or if the rights to technologies that we have licensed terminate,
      our
      commercialization efforts could be delayed or fail.
In
      February 2006, a provisional patent application was filed covering certain
      methods and classes of
molecules
that we
      expect to be the foundation of our product development and commercialization
      efforts with respect to human brain tumors that are subject to the CRADA. Any
      patents resulting from that application are likely to be jointly owned by Lixte
      and the U.S. Government. We are currently in negotiations with the government
      to
      obtain exclusive commercialization rights with respect to those patents and
      expect to execute an agreement shortly. However, should we be unable to reach
      such an agreement, or should we be unable to reach such an agreement in the
      future pertaining to other technologies owned by the government or third
      parties, this could harm our businesses. Additionally, if those licenses
      terminate and we are unable to renew them, or must renew them only on
      unfavorable terms, such events could require us to cease providing products
      or
      services using such licensed technology and, therefore, would likely result
      in
      loss of revenue for our business.
-23-
Additionally,
      our business depends on obtaining well-characterized blood, tissue and other
      samples from patients to enable us to locate biomarkers. To that end, we intend
      to collaborate with researchers at the Institute of Pathology at the University
      of Regensburg in Germany, who will collect samples of brain, stomach, breast,
      prostate, colon, ovarian, bladder, and kidney cancers and transmit them to
      us.
      We have not yet executed an agreement committing the researchers to provide
      us
with
these
      materials, however, though we expect to execute such an agreement shortly.
      Should negotiations on such an agreement break down, however, or should future
      circumstances cause our arrangement with those researchers to terminate, we
      will
      be forced to find other sources for those materials, and this may not be
      possible or may entail a significantly greater expense.
If
      we were to materially breach our present collaboration agreement or any future
      license or collaboration agreements, we could lose our ability to commercialize
      the related technologies, and our business could be materially and adversely
      affected.
We
      are
      party to a research collaboration agreement and intend to enter into
      intellectual property
licenses
and
      agreements, all of which will be integral to our business. These licenses and
      agreements impose various research, development, commercialization,
      sublicensing, royalty, indemnification, insurance and other obligations on
      us.
      If we or our collaborators fail to perform under these agreements or otherwise
      breach obligations imposed by them, we could lose intellectual property rights
      that are important to our business.
We
      may not be successful in establishing additional strategic collaborations,
      which
      could adversely affect our ability to develop and commercialize
      products.
In
      the
      future, we may seek opportunities to establish new collaborations, joint
      ventures and strategic collaborations for the development and commercialization
      of products we discover. We face significant competition in seeking appropriate
      collaborators and the negotiation process is time-
consuming
and
      complex. We may not be successful in our efforts to establish additional
      strategic collaborations or other alternative arrangements. Even if we are
      successful in our efforts to establish a collaboration or agreement, the terms
      that we establish may not be favorable to us. Finally, such strategic alliances
      or other arrangements may not result in successful products and associated
      revenue.
The
      life sciences industry is highly competitive and subject to rapid technological
      change.
The
      life
      sciences industry is highly competitive and subject to rapid and profound
      technological change. Our present and potential competitors include major
      pharmaceutical companies, as well as specialized biotechnology and life sciences
      firms in the United States and in other countries. Most of these companies
      have
      considerably greater financial, technical and marketing resources than we do.
      Additional mergers and acquisitions in the pharmaceutical and biotechnology
      industries may result in even more resources being concentrated in our
      competitors. Our existing or prospective competitors may develop processes
      or
      products that are more effective than ours or be more effective at implementing
      their technologies to develop commercial products faster. Our competitors may
      succeed in obtaining patent protection and/or receiving regulatory approval
      for
      commercializing products before us. Developments by our competitors may render
      our product candidates obsolete or non-competitive.
-24-
We
      also
      experience competition from universities and other research institutions, and
      we
      are likely to compete with others in acquiring technology from those sources.
      There can be no assurance
that
others
      will not develop technologies with significant advantages over those that we
      are
      seeking to develop. Any such development could harm our business.
We
      may be unable to compete successfully with our
      competitors.
We
      face
      competition from other companies seeking to identify and commercialize cancer
      biomarkers. We also compete with universities and other research institutions
      engaged in research in these areas. Many of our competitors have greater
      technical and financial resources than we do.
Our
      ability to compete successfully is based on numerous factors,
      including:
·
the
                cost-effectiveness of any product we ultimately commercialize relative
                to
                competing products;
·
the
                ease of use and ready availability of any product we bring to
                market;
·
the
                accuracy of a diagnostic test designed by us in detecting cancers,
                including overcoming the propensity for "false positive" results;
                and
·
the
                relative speed with which we are able to bring any product resulting
                from
                our research to market in our target
                markets.
If
      we are
      unable to distinguish our products from competing products, or if competing
      products
reach
the
      market first, we may be unable to compete successfully with current or future
      competitors. This would cause our revenues to decline and affect our ability
      to
      achieve profitability.
We
      depend on certain key scientific personnel for our success who do not work
      full
      time for the Company. The loss of any such personnel could adversely affect
      our
      business, financial condition and results of
      operations.
Our
      success depends on the continued availability and contributions of our President
      and founder, Dr. John S. Kovach, as well as the continued availability and
      contributions of Dr. Zhengping Zhuang and other collaborators at the NIH. In
      particular, Dr. Kovach is 69 years old, and, because of his arrangement with
      the
      State University of New York, does not devote his full time to the Company.
      The
      loss of services of any of these persons could delay or reduce our product
      development and commercialization efforts. Furthermore, recruiting and retaining
      qualified scientific personnel to perform future research and
development
work
      will be critical to our success. The loss of members of our scientific
      personnel, or our inability to attract or retain other qualified personnel
      or
      advisors, could significant weaken our management, harm our ability to compete
      effectively and harm our business.
-25-
We
      expect to rely heavily on third parties for the conduct of clinical trials
      of
      our product candidates. If these clinical trials are not successful, or if
      we or
      our collaborators are not able to obtain the necessary regulatory approvals,
      we
      will not be able to commercialize our product
      candidates.
In
      order
      to obtain regulatory approval for the commercial sale of our product candidates,
      we and our collaborators will be required to complete extensive preclinical
      studies as well as clinical trials in humans to demonstrate to the FDA and
      foreign regulatory authorities that our product candidates are safe and
      effective. Dr. Kovach is experienced in the design and conduct of early clinical
      cancer trials, having been the lead investigator for a National Cancer Institute
      Phase I contract for ten years at the Mayo Clinic, Rochester, MN. Lixte,
      however, has no experience in conducting clinical trials and expects to rely
      heavily on collaborative partners and contract research organizations for their
      performance and management of clinical trials of our product
      candidates.
Clinical
      development, including preclinical testing, is a long, expensive and uncertain
      process. Accordingly, preclinical testing and clinical trials, if any, of our
      product candidates under
development
may not
      be successful. We and our collaborators could experience delays in preclinical
      or clinical trials of any of our product candidates, obtain unfavorable results
      in a development program, or fail to obtain regulatory approval for the
      commercialization of a product. Preclinical studies or clinical trials may
      produce negative, inconsistent or inconclusive results, and we or our
      collaborators may decide, or regulators may require us, to conduct additional
      preclinical studies or clinical trials. The results from early clinical trials
      may not be statistically significant or predictive of results that will be
      obtained from expanded, advanced clinical trials.
Furthermore,
      the timing and completion of clinical trials, if any, of our product candidates
      depend on, among other factors, the number of patients we will be required
      to
      enroll in the clinical trials and the rate at which those patients are enrolled.
      Any increase in the required number of patients,
decrease
in
      recruitment rates or difficulties retaining study participants may result in
      increased costs, program delays or both.
Also,
      our
      products under development may not be effective in treating any of our targeted
      disorders or may
prove
to have
      undesirable or unintended side effects, toxicities or other characteristics
      that
      may prevent or limit their commercial use. Institutional review boards or
      regulators, including the FDA, may hold, suspend or terminate our clinical
      research or the clinical trials of our product candidates for various reasons,
      including non-compliance with regulatory requirements or if, in their opinion,
      the participating subjects are being exposed to unacceptable health risks.
      Additionally, the failure of third parties conducting or overseeing the
      operation of the clinical trials to perform their contractual or regulatory
      obligations in a timely fashion could delay the clinical trials. Failure of
      clinical trials can occur at any stage of testing. Any of these events would
      adversely affect our ability to market a product candidate.
-26-
The
      development process necessary to obtain regulatory approval is lengthy, complex
      and expensive. If we and our collaborative partners do not obtain necessary
      regulatory approvals, then our business will be unsuccessful and the market
      price of our common stock will substantially decline.
To
      the
      extent that we, or our collaborative partners, are able to successfully advance
      a product candidate
through
the
      clinic, we, or such partner, will be required to obtain regulatory approval
      prior to marketing and selling such product.
The
      process of obtaining FDA and other required regulatory approvals is expensive.
      The time required for FDA
and
other
      approvals is uncertain and typically takes a number of years, depending on
      the
      complexity and novelty of the product.
Any
      regulatory approval to market a product may be subject to limitations on the
      indicated uses for which we, or our collaborative partners, may market the
      product. These limitations may restrict the size of the market for the product
      and affect reimbursement by third-party payors. In
addition
,
      regulatory agencies may not grant approvals on a timely basis or may revoke
      or
      significantly modify previously granted approvals.
We,
      or
      our collaborative partners, also are subject to numerous foreign regulatory
      requirements governing the manufacturing and marketing of our potential future
      products outside of the United
States
.
      The
      approval procedure varies among countries, additional testing may be required
      in
      some jurisdictions, and the time required to obtain foreign approvals often
      differs from that required to obtain FDA approvals. Moreover, approval by the
      FDA does not ensure approval by regulatory authorities in other countries,
      and
      vice versa.
As
      a
      result of these factors, we or our collaborators may not successfully begin
      or
      complete clinical trials in
the
time
      periods estimated, if at all. Moreover, if we or our collaborators incur costs
      and delays in development programs or fail to successfully develop and
      commercialize products based upon our technologies, we may not become profitable
      and our stock price could decline.
Even
      if our products are approved by regulatory authorities, if we fail to comply
      with ongoing regulatory requirements, or if we experience unanticipated problems
      with our products, these products could be subject to restrictions or withdrawal
      from the market.
Any
      product for which we obtain marketing approval, along with the manufacturing
      processes, post-approval clinical data and promotional activities for such
      product, will be subject to continual review and periodic inspections by the
      FDA
      and other regulatory bodies. Even if regulatory
approval
of a
      product is granted, the approval may be subject to limitations on the indicated
      uses for which the product may be marketed or contain requirements for costly
      post-marketing testing and surveillance to monitor the safety or efficacy of
      the
      product. Later discovery of previously unknown problems with our products,
      including unanticipated adverse events or adverse events of unanticipated
      severity or frequency, manufacturer or manufacturing processes, or failure
      to
      comply with regulatory requirements, may result in restrictions on such products
      or manufacturing processes, withdrawal of the products from the market,
      voluntary or mandatory recall, fines, suspension of regulatory approvals,
      product seizures, injunctions or the imposition of civil or criminal
      penalties.
-27-
We,
      and our collaborators, are subject to governmental regulations other than those
      imposed by the FDA. We, and any of our collaborators, may not be able to comply
      with these regulations, which could subject us, or such collaborators, to
      penalties and otherwise result in the limitation of our or such collaborators'
operations.
In
      addition to regulations imposed by the FDA, we and our collaborators are subject
      to regulation under various federal and state statutes and regulations such
      as
      the Occupational Safety and Health Act, the Environmental Protection Act, the
      Toxic Substances Control Act, the Research Conservation and Recovery Act, as
      well as regulations administered by the Nuclear Regulatory Commission, national
      restrictions on technology transfer, and import, export and customs regulations.
      From time to time, other federal agencies and congressional committees have
      indicated an interest in implementing further regulation of biotechnology
      applications. We are not able to predict whether any such regulations will
      be
adopted
or
      whether, if adopted, such regulations will apply to our business, or whether
      we
      or our collaborators would be able to comply with any applicable
      regulations.
Failure
      to obtain regulatory approval in foreign jurisdictions will prevent us from
      marketing our products abroad.
We
      intend
      to market our products in international markets. In order to market our products
      in the European Union and many other foreign jurisdictions, we must obtain
      separate regulatory approvals. The approval procedure varies among countries
      and
      can involve additional testing, and the time required to obtain approval may
      differ from that required to obtain FDA approval. The foreign regulatory
      approval process may include all of the risks associated with obtaining FDA
      approval. We may not obtain foreign regulatory approvals on a timely basis,
      if
      at all. Approval by the FDA does not ensure approval by regulatory authorities
      in other countries, and approval by one foreign regulatory authority does not
      ensure approval by regulatory authorities in other foreign countries or by
      the
      FDA. We may not be able to file for regulatory approvals and may not receive
      necessary approvals to commercialize our products in any market.
We
      are subject to uncertainty relating to health care reform measures and
      reimbursement policies which, if not favorable to our product candidates, could
      hinder or prevent our product candidates' commercial
      success.
The
      continuing efforts of the government, insurance companies, managed care
      organizations and other payors of health care costs to contain or reduce costs
      of health care may adversely affect:
·
our
                ability to generate revenues and achieve
                profitability;
·
the
                future revenues and profitability of our potential customers, suppliers
                and collaborators; and
·
the
                availability of capital.
-28-
In
      certain foreign markets, the pricing of prescription pharmaceuticals is subject
      to government control. In the United States, given recent federal and state
      government initiatives directed at
lowering
the
      total cost of health care, the U.S. Congress and state legislatures will likely
      continue to focus on health care reform, the cost of prescription
      pharmaceuticals and on the reform of the Medicare and Medicaid systems. For
      example, legislation was enacted on December 8, 2003, which provides a new
      Medicare prescription drug benefit beginning in 2006 and mandates other reforms.
      While we cannot predict the full effects of the implementation of this new
      legislation or whether any legislative or regulatory proposals affecting our
      business will be adopted, the implementation of this legislation or announcement
      or adoption of these proposals could have a material and adverse effect on
      our
      business, financial condition and results of operations.
Our
      ability to commercialize our product candidates successfully will depend in
      part
      on the extent to which governmental authorities, private health insurers and
      other organizations establish appropriate
reimbursement
levels
      for the cost of our products and related treatments. Third-party payors are
      increasingly challenging the prices charged for medical products and services.
      Also, the trend toward managed health care in the United States, which could
      significantly influence the purchase of health care services and products,
      as
      well as legislative proposals to reform health care or reduce government
      insurance programs, may result in lower prices for our product candidates or
      exclusion of our product candidates from reimbursement programs. The cost
      containment measures that health care payors and providers are instituting
      and
      the effect of any health care reform could materially and adversely affect
      our
      results of operations.
If
      physicians and patients do not accept the products that we may develop, our
      ability to generate product revenue in the future will be adversely
      affected.
The
      product
candidates
that we
      may develop may not gain market acceptance among physicians, healthcare payors,
      patients and the medical community which will adversely affect our ability
      to
      generate revenue. Market acceptance of and demand for any product that we may
      develop will depend on many factors, including:
·
our
                ability to provide acceptable evidence of safety and
                efficacy;
·
convenience
                and ease of administration;
·
prevalence
                and severity of adverse side
                effects;
·
availability
                of alternative treatments or diagnostic
                tests;
·
cost
                effectiveness;
·
effectiveness
                of our marketing strategy and the pricing of any product that we
                may
                develop;
·
publicity
                concerning our products or competitive products;
                and
-29-
·
our
                ability to obtain third-party coverage or
                reimbursement.
We
      face the risk of product liability claims and may not be able to obtain
      insurance.
Our
      business exposes us to the risk of product liability claims that is inherent
      in
      the testing, manufacturing, and marketing of drugs and related devices. Although
      we will obtain product liability and clinical trial liability insurance when
      appropriate, this insurance is subject to deductibles and coverage limitations.
      We may not be able to obtain or maintain adequate protection against potential
      liabilities. In addition, if any of our product candidates are approved for
      marketing, we may seek additional insurance coverage. If we are unable to obtain
      insurance at acceptable cost or on acceptable terms with adequate coverage
      or
      otherwise protect against potential product liability claims, we will be exposed
      to significant liabilities, which may harm our business. These liabilities
      could
      prevent or interfere with our product commercialization efforts. Defending
      a
      suit, regardless of merit, could be costly, could divert management attention
      and might result in adverse publicity or reduced acceptance of our products
      in
      the market.
We
      cannot be certain we will be able to obtain patent protection to protect our
      product candidates and technology.
We
      cannot
      be certain that any patent or patents will be issued based on the pending
      provisional patent application we recently filed. If a third party has also
      filed a patent application relating to an invention claimed by us or our
      licensors, we may be required to participate in an interference proceeding
      declared by the U.S. Patent and Trademark Office to determine priority of
      invention, which could result in substantial uncertainties and cost for us,
      even
      if the eventual outcome is favorable to us. The degree of future protection
      for
      our proprietary rights is uncertain. For example:
·
we
                or our licensors might not have been the first to make the inventions
                covered by our pending or future patent
                applications;
·
we
                or our licensors might not have been the first to file patent applications
                for these inventions;
·
others
                may independently develop similar or alternative technologies or
                duplicate
                any of our technologies;
·
it
                is possible that our patent applications will not result in an issued
                patent or patents, or that the scope of protection granted by any
                patents
                arising from our patent applications will be significantly narrower
                than
                expected;
·
any
                patents under which we hold ultimate rights may not provide us with
                a
                basis for commercially-viable products, may not provide us with any
                competitive advantages or may be challenged by third parties as not
                infringed, invalid, or unenforceable under United States or foreign
                laws;
·
any
                patent issued to us in the future or under which we hold rights may
                not be
                valid or enforceable; or
-30-
·
we
                may develop additional proprietary technologies that are not patentable
                and which may not be adequately protected through trade secrets;
                for
                example if a competitor independently develops duplicative, similar,
                or
                alternative technologies.
If
      we are not able to protect and control our unpatented trade secrets, know-how
      and other technological innovation, we may suffer competitive
      harm.
We
      also
      rely on proprietary trade secrets and unpatented know-how to protect our
      research and development activities, particularly when we do not believe that
      patent protection is appropriate or available. However, trade secrets are
      difficult to protect. We will attempt to protect our trade secrets and
      unpatented know-how by requiring our employees, consultants and advisors to
      execute a confidentiality and non-use agreement. We cannot guarantee that these
      agreements will provide meaningful protection, that these agreements will not
      be
      breached, that we will have an adequate remedy for any such breach, or that
      our
      trade secrets will not otherwise become known or independently developed by
      a
      third party. Our trade secrets, and those of our present or future collaborators
      that we utilize by agreement, may become known or may be independently
      discovered by others, which could adversely affect the competitive position
      of
      our product candidates.
We
      may incur substantial costs enforcing our patents, defending against third-party
      patents, invalidating third-party patents or licensing third-party intellectual
      property, as a result of litigation or other proceedings relating to patent
      and
      other intellectual property rights.
We
      may
      not have rights under some patents or patent applications that may cover
      technologies that we use in our research, drug targets that we select, or
      product candidates that we seek to develop and commercialize. Third parties
      may
      own or control these patents and patent applications in the United States and
      abroad. These third parties could bring claims against us or our collaborators
      that would cause us to incur substantial expenses and, if successful against
      us,
      could cause us to pay substantial damages. Further, if a patent infringement
      suit were brought against us or our collaborators, we or they could be forced
      to
      stop or delay research, development, manufacturing or sales of the product
      or
      product candidate that is the subject of the suit. We or our collaborators
      therefore may choose to seek, or be required to seek, a license from the
      third-party and would most likely be required to pay license fees or royalties
      or both. These licenses may not be available on acceptable terms, or at all.
      Even if we or our collaborators were able to obtain a license, the rights may
      be
      nonexclusive, which would give our competitors access to the same intellectual
      property. Ultimately, we could be prevented from commercializing a product,
      or
      forced to cease some aspect of our business operations, as a result of patent
      infringement claims, which could harm our business.
There
      has
      been substantial litigation and other proceedings regarding patent and other
      intellectual property rights in the pharmaceutical and biotechnology industries.
      Although we are not currently a party to any patent litigation or any other
      adversarial proceeding, including any interference
proceeding
declared
      before the United States Patent and Trademark Office, regarding intellectual
      property rights with respect to our products and technology, we may become
      so in
      the future. We are not currently aware of any actual or potential third party
      infringement claim involving our products. The cost to us of any patent
      litigation or other proceeding, even if resolved in our favor, could be
      substantial. The outcome of patent litigation is subject to uncertainties that
      cannot be adequately quantified in advance, including the demeanor and
      credibility of witnesses and the identity of the adverse party, especially
      in
      biotechnology related patent cases that may turn on the testimony of experts
      as
      to technical facts upon which experts may reasonably disagree. Some of our
      competitors may be able to sustain the costs of such litigation or proceedings
      more effectively than we can because of their substantially greater financial
      resources. If a patent or other proceeding is resolved against us, we may be
      enjoined from researching, developing, manufacturing or commercializing our
      products without a license from the other party and we may be held liable for
      significant damages. We may not be able to obtain any required license on
      commercially acceptable terms or at all.
-31-
Uncertainties
      resulting from the initiation and continuation of patent litigation or other
      proceedings could harm our ability to compete in the marketplace. Patent
      litigation and other proceedings may also absorb significant management
      time.
If
      our products were derived from tissue or other samples from a patient without
      the patient's consent, we could be forced to pay royalties or cease selling our
      products.
An
      essential component of our business is our ability to obtain well-characterized
      tissue and other samples from patients. To that end, we are negotiating an
      agreement with the Institute of Pathology at the University of Regensburg in
      Germany to collect samples of stomach, breast, prostate, and ovarian cancers
      for
      biomarker discovery programs focused on these cancers. Although we believe
      that
      all necessary consents will be obtained from any patient who donates samples
      for
      our research purposes, there is a risk that, without our knowledge and through
      inadvertence, neglect, or willful misconduct, proper consents will not be
      obtained from all patients. There is also a risk that the consents of some
      or
      all of the patients will not be enforceable. If a patient does not give a proper
      consent and we develop a product using a sample obtained from him or her, we
      could be forced to pay royalties or to cease selling that product.
If
      we are unable to protect our intellectual property rights, our competitors
      may
      develop and market products with similar features that may reduce demand for
      our
      potential products.
The
      following factors are important to our success:
·
receiving
                patent protection for our product
                candidates;
·
preventing
                others from infringing our intellectual property rights;
                and
·
maintaining
                our patent rights and trade
                secrets.
We
      will
      be able to protect our intellectual property rights in patents and trade secrets
      from unauthorized use by
third
parties
      only to the extent that such intellectual property rights are covered by valid
      and enforceable patents or are effectively maintained as trade
      secrets.
-32-
To
      date,
      we have sought to protect our proprietary position by filing a U.S. provisional
      patent application related to
inventions
that
      form the basis of our research arrangements with the NIH and potential pipeline
      of future products. We anticipate that we will apply for further patents based
      on our ongoing research. Because issues of patentability involve complex legal
      and factual questions, the issuance, scope and enforceability of patents cannot
      be predicted with certainty. Patents, if issued, may be challenged, invalidated
      or circumvented. U.S. patents and patent applications may also be subject to
      interference proceedings, and U.S. patents may be subject to reexamination
      proceedings in the U.S. Patent and Trademark Office and foreign patents may
      be
      subject to opposition or comparable proceedings in corresponding foreign patent
      offices, which proceedings could result in either loss of the patent or denial
      of the patent application or loss or reduction in the scope of one or more
      of
      the claims of the patent or patent application. In addition, such interference,
      reexamination and opposition proceedings may be costly. Thus, any patents that
      we own or license from others may not provide any protection against
      competitors. Furthermore, an adverse decision in an interference proceeding
      can
      result in a third-party receiving the patent rights sought by us, which in
      turn
      could affect our ability to market a potential product to which that patent
      filing was directed. Our pending patent applications, those that we may file
      in
      the future, or those that we may license from third parties may not result
      in
      patents being issued. If issued, they may not provide us with proprietary
      protection or competitive advantages against competitors with similar
      technology. Furthermore, others may independently develop similar technologies
      or duplicate any technology that we have developed. Many countries, including
      certain countries in Europe, have compulsory licensing laws under which a patent
      owner may be compelled to grant licenses to third parties. For example,
      compulsory licenses may be required in cases where the patent owner has failed
      to "work" the invention in that country, or the third-party has patented
      improvements. In addition, many countries limit the enforceability of patents
      against government agencies or government contractors. In these countries,
      the
      patent owner may have limited remedies, which could materially diminish the
      value of the patent. Moreover, the legal systems of certain countries,
      particularly certain developing countries, do not favor the aggressive
      enforcement of patent and other intellectual property protection which makes
      it
      difficult to stop infringement.
In
      addition, our ability to enforce our patent rights depends on our ability to
      detect infringement. It is difficult to detect infringers who do not advertise
      the compounds that are used in their products. Any litigation to enforce or
      defend our patent rights, even if we prevail, could be costly and
      time-
consuming
and
      would divert the attention of management and key personnel from business
      operations.
We
      will
      also rely on trade secrets, know-how and technology, which are not protected
      by
      patents, to maintain our competitive position. We will seek to protect this
      information by entering into confidentiality agreements with parties that have
      access to it, such as strategic partners, collaborators, employees and
      consultants. Any of these parties may breach these agreements and disclose
      our
      confidential information or our competitors might learn of the information
      in
      some other way. If any trade secret, know-how or other technology not protected
      by a patent were disclosed to, or independently developed by, a competitor,
      our
      business, financial condition and results of operations could be materially
      adversely affected.
If
      our third-party manufacturers' facilities do not follow current good
      manufacturing practices, our product development and commercialization efforts
      may be harmed.
There
      are
      a limited number of manufacturers that operate under the FDA's and European
      Union's good manufacturing practices regulations and are capable of
      manufacturing products. Third-party manufacturers
may
encounter difficulties in achieving quality control and quality assurance and
      may experience shortages of qualified personnel. A failure of third-party
      manufacturers to follow current good manufacturing practices or other regulatory
      requirements and to document their adherence to such practices may lead to
      significant delays in the availability of products for commercial use or
      clinical study, the termination of, or hold on, a clinical study, or may delay
      or prevent filing or approval of marketing applications for our products. In
      addition we could be subject to sanctions being imposed on us, including fines,
      injunctions and civil penalties. Changing manufacturers may require additional
      clinical trials and the revalidation of the manufacturing process and procedures
      in accordance with FDA mandated current good manufacturing practices and will
      require FDA approval. This revalidation may be costly and time consuming. If
      we
      are unable to arrange for third-party manufacturing of our products, or to
      do so
      on commercially reasonable terms, we may not be able to complete development
      or
      marketing of our products.
-33-
If
      we fail to obtain an adequate level of reimbursement for our products by
      third-party payors, there may be no commercially viable markets for our products
      or the markets may be much smaller than expected.
The
      availability and levels of reimbursement by governmental and other third-party
      payors affect the market for our p
roducts.
      The efficacy, safety and cost-effectiveness of our products as well as the
      efficacy, safety
and
      cost-effectiveness of any competing products will determine the availability
      and
      level of reimbursement. These third-party payors continually attempt to contain
      or reduce the costs of healthcare by challenging the prices charged for
      healthcare products and services. In certain countries, particularly the
      countries of the European Union, the pricing of prescription pharmaceuticals
      is
      subject to governmental control. In these countries, pricing negotiations with
      governmental
authorities
can take
      six to twelve months or longer after the receipt of regulatory marketing
      approval for a product. To obtain reimbursement or pricing approval in some
      countries, we may be required to conduct clinical trials that compare the
      cost-effectiveness of our products to other available therapies. If
      reimbursement for our products is unavailable or limited in scope or amount
      or
      if pricing is set at unsatisfactory levels, our revenues would be
      reduced.
Another
      development that
may
affect
      the pricing of drugs is regulatory action regarding drug reimportation into
      the
      United States. The Medicare Prescription Drug, Improvement and Modernization
      Act
      of 2003, which became law in December 2003, requires the Secretary of the U.S.
      Department of Health and Human Services to promulgate regulations allowing
      drug
      reimportation from Canada into the United States under certain circumstances.
      These provisions will become effective only if the Secretary certifies that
      such
      imports will pose no additional risk to the public's health and safety and
      result in significant cost savings to consumers. To date, the Secretary has
      made
      no such finding, but he could do so in the future. Proponents of drug
      reimportation may also attempt to pass legislation that would remove the
      requirement for the Secretary's certification or allow reimportation under
      circumstances beyond those anticipated under current law. If legislation is
      enacted, or regulations issued, allowing the reimportation of drugs, it could
      decrease the reimbursement we would receive for any products that we may
      commercialize, negatively affecting our anticipated revenues and prospects
      for
      profitability.
-34-
RISKS
      RELATED TO CAPITAL STRUCTURE
There
      is no assurance of an established public trading market, which would adversely
      affect the ability of our investors to sell their securities in the public
      market.
Although
      our common stock is registered under the Exchange Act, our common stock is
      not
      and has never been publicly traded. As such, a regular trading market for the
      securities does not yet exist and may not
exist
or be
      sustained in the future. The Company intends to seek a listing on the OTC
      Bulletin Board. No assurance can be given that such listing will be obtained
      or
      the timing of the listing. Even if such listing is obtained, the NASD has
      enacted recent changes that limit quotations on the OTC Bulletin Board to
      securities of issuers that are current in their reports filed with the
      Securities and Exchange Commission. The effect on the OTC Bulletin Board of
      these rule changes and other proposed changes cannot be determined at this
      time.
      The OTC Bulletin Board is an inter-dealer, over-the-counter market that provides
      significantly less liquidity than the NASD's automated quotation system (the
"NASDAQ Stock Market"). Quotes for stocks included on the OTC Bulletin Board are
      not listed in the financial sections of newspapers as are those for the NASDAQ
      Stock Market. Therefore, prices for securities traded solely on the OTC Bulletin
      Board may be difficult to obtain and holders of common stock may be unable
      to
      resell their securities at or near their original offering price or at any
      price. Market prices for our common stock will be influenced by a number of
      factors, including:
·
the
                issuance of new equity securities pursuant to a future offering or
                acquisition;
·
changes
                in interest rates;
·
competitive
                developments, including announcements by competitors of new products
                or
                services or significant contracts, acquisitions, strategic partnerships,
                joint ventures or capital
                commitments;
·
variations
                in quarterly operating results;
·
changes
                in financial estimates by securities
                analysts;
·
the
                depth and liquidity of the market for our common
                stock;
·
investor
                perceptions of our company and the medical device industry generally;
                and
·
general
                economic and other national
                conditions.
Shares
      eligible for future sale may adversely affect the market price of our common
      stock, as the future sale of a substantial amount of outstanding stock in the
      public marketplace could reduce the price of our common
      stock.
The
      former stockholder of Lixte who received shares of our stock in the Reverse
      Merger will be eligible to sell all or some of his shares of common stock by
      means of ordinary brokerage transactions in the open market pursuant to
      Rule 144 promulgated under the Securities Act ("Rule 144"), commencing
      one year after the Reverse Merger, subject to certain limitations. In general,
      pursuant to Rule 144, a stockholder (or stockholders whose shares are
      aggregated) who has satisfied a one-year holding period may, under certain
      circumstances, sell within any three-month period a number of securities which
      does not exceed the greater of 1% of the then outstanding shares of common
      stock
      or the average weekly trading volume of the class during the four calendar
      weeks
      prior to such sale if the shares are listed on a national exchange or on NASDAQ.
      Rule 144 also permits, under certain circumstances, the sale of securities,
      without any limitations, by a non-affiliate that has satisfied a two-year
      holding period. Additionally, we have agreed to file a registration statement
      covering the resale of shares issued in this offering and the shares owned
      by
      the shareholders of SRKP 7, Inc. immediately prior to the Reverse Merger.
      Any substantial sale of common stock pursuant to any resale registration
      statement or Rule 144 may have an adverse effect on the market price of our
      common stock by creating an excessive supply.
-35-
Our
      common stock is considered a "penny stock" and may be difficult to
      sell.
Our
      common stock is considered to be a "penny stock" since it meets one or more of
      the definitions in Rules 15g-2 through 15g-6 promulgated under
      Section 15(g) of the Exchange Act. These include but are not limited to the
      following: (i) the stock trades at a price less than $5.00 per share;
      (ii) it is NOT traded on a "recognized" national exchange; (iii) it is
      NOT quoted on the NASDAQ Stock Market, or even if so, has a price less than
      $5.00 per share; or (iv) it is issued by a company with net tangible assets
      less than $2.0 million, if in business more than a continuous three years,
      or with average revenues of less than $6.0 million for the past three
      years. The principal result or effect of being designated a "penny stock" is
      that securities broker-dealers cannot recommend the stock but must trade in
      it
      on an unsolicited basis.
Additionally,
      Section 15(g) of the Exchange Act and Rule 15g-2 promulgated
      thereunder by the SEC require broker-dealers dealing in penny stocks to provide
      potential investors with a document disclosing the risks of penny stocks and
      to
      obtain a manually signed and dated written receipt of the document before
      effecting any transaction in a penny stock for the investor's
      account.
Potential
      investors in our common stock are urged to obtain and read such disclosure
      carefully before purchasing any shares that are deemed to be "penny stock."
Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the
      account of any investor for transactions in such stocks before selling any
      penny
      stock to that investor. This procedure requires the broker-dealer to
      (i) obtain from the investor information concerning his or her financial
      situation, investment experience and investment objectives; (ii) reasonably
      determine, based on that information, that transactions in penny stocks are
      suitable for the investor and that the investor has sufficient knowledge and
      experience as to be reasonably capable of evaluating the risks of penny stock
      transactions; (iii) provide the investor with a written statement setting
      forth the basis on which the broker-dealer made the determination in (ii) above;
      and (iv) receive a signed and dated copy of such statement from the
      investor, confirming that it accurately reflects the investor's financial
      situation, investment experience and investment objectives. Compliance with
      these requirements may make it more difficult for holders of our common stock
      to
      resell their shares to third parties or to otherwise dispose of them in the
      market or otherwise.
-36-
Our
      principal stockholder has significant influence over our
      company.
As
      a
      result of the Reverse Merger, John Kovach, our principal stockholder, will
      beneficially own approximately 69.10% of our outstanding voting stock after
      giving effect to this offering (assuming the maximum amount of the Private
      Placement is achieved). As a result, John Kovach possesses significant
      influence, giving him the ability, among other things, to elect all of the
      members of the Board of Directors and to approve significant corporate
      transactions. Such stock ownership and control may also have the effect of
      delaying or preventing a future change in control, impeding a merger,
      consolidation, takeover or other business combination or discourage a potential
      acquirer from making a tender offer or otherwise attempting to obtain control
      of
      us.
If
      we fail to maintain effective internal controls over financial reporting, the
      price of our common stock may be adversely affected.
Our
      internal control over financial reporting may have weaknesses and conditions
      that need to be addressed, the disclosure of which may have an adverse impact
      on
      the price of our common stock. We are required to establish and maintain
      appropriate internal controls over financial reporting. Failure to establish
      those controls, or any failure of those controls once established, could
      adversely impact our public disclosures regarding our business, financial
      condition or results of operations. In addition, management's assessment of
      internal controls over financial reporting may identify weaknesses and
      conditions that need to be addressed in our internal controls over financial
      reporting or other matters that may raise concerns for investors. Any actual
      or
      perceived weaknesses and conditions that need to be addressed in our internal
      control over financial reporting, disclosure of management's assessment of our
      internal controls over financial reporting or disclosure of our public
      accounting firm's attestation to or report on management's assessment of our
      internal controls over financial reporting may have an adverse impact on the
      price of our common stock.
Standards
      for compliance with Section 404 of the Sarbanes-Oxley Act of 2002 are
      uncertain, and if we fail to comply in a timely manner, our business could
      be
      harmed and our stock price could decline.
Rules
      adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of
      2002 require annual assessment of our internal control over financial reporting,
      and attestation of our assessment by our independent registered public
      accountants. On September 22, 2005, the SEC extended the compliance dates
      for non-accelerated filers, as defined by the SEC, by one year. Accordingly,
      we
      believe that this requirement will first apply to our annual report for fiscal
      2008. The standards that must be met for management to assess the internal
      control over financial reporting as effective are new and complex, and require
      significant documentation, testing and possible remediation to meet the detailed
      standards. We may encounter problems or delays in completing activities
      necessary to make an assessment of our internal control over financial
      reporting. In addition, the attestation process by our independent registered
      public accountants is new and we may encounter problems or delays in completing
      the implementation of any requested improvements and receiving an attestation
      of
      our assessment by our independent registered public accountants. If we cannot
      assess our internal control over financial reporting as effective, or our
      independent registered public accountants are unable to provide an unqualified
      attestation report on such assessment, investor confidence and share value
      may
      be negatively impacted.
-37-
We
      do not foresee paying cash dividends in the foreseeable
      future.
We
      have
      not paid cash dividends on our stock and do not plan to pay cash dividends
      on
      our common stock in the foreseeable future.
We
      may receive less than the maximum amount in the Private Placement.
As
        of the
        June 30, 2006 the Initial Private Placement grossed $657,299 in proceeds.
        To the
        extent that less than the maximum amount of the Private Placement is raised,
        the
        Company may not have sufficient funds to implement its business
        plan.
DESCRIPTION
      OF SECURITIES
We
      are
      authorized to issue 100,000,000 shares of Common Stock, par value $.0001 par
      value per share 10,000,000 shares of preferred stock, par value $.0001 per
      share, of which no shares are currently issued and outstanding. The preferred
      stock may be issued in one or more series and our Board of Directors, without
      further approval from its stockholders, is authorized to fix the dividend rights
      and terms, conversion rights, voting rights, redemption rights, liquidation
      preferences and other rights and restrictions relating to any series. Issuances
      of preferred stock, while providing flexibility in connection with possible
      financings, acquisitions and other corporate purposes, could, among other
      things, adversely affect the voting power of the holders of our common
      stock.
Market
      Price of Our Common Stock
As
      of the
      date of this Report, there is no trading of our capital stock on any publicly
      traded market. Even if such stock becomes publicly tradable, the price of our
      common stock will likely fluctuate in the future. The stock market in general
      has experienced extreme stock price fluctuations in the past few years. In
      some
      cases, these fluctuations have been unrelated to the operating performance
      of
      the affected companies. Many companies have experienced dramatic volatility
      in
      the market prices of their common stock. We believe that a number of factors,
      both within and outside our control, could cause the price of our common stock
      to fluctuate, perhaps substantially. Factors such as the following could have
      a
      significant adverse impact on the market price of its common stock:
·
Our
                ability to obtain additional financing and, if available, the terms
                and
                conditions of the financing;
·
Our
                financial position and results of
                operations;
·
Concern
                as to, or other evidence of, the safety or efficacy of any future
                proposed
                products and services or our competitors' products and
                services;
·
Announcements
                of technological innovations or new products or services by us or
                our
                competitors;
-38-
·
U.S.
                and foreign governmental regulatory
                actions;
·
The
                development of litigation against
                us;
·
Period-to-period
                fluctuations in our operating
                results;
·
Changes
                in estimates of our performance by any securities
                analysts;
·
Possible
                regulatory requirements on our
                business;
·
The
                issuance of new equity securities pursuant to a future
                offering;
·
Changes
                in interest rates;
·
Competitive
                developments, including announcements by competitors of new products
                or
                services or significant contracts, acquisitions, strategic partnerships,
                joint ventures or capital
                commitments;
·
Variations
                in quarterly operating results;
·
Change
                in financial estimates by securities
                analysts;
·
The
                depth and liquidity of the market for our common
                stock;
·
Investor
                perceptions of us; and
·
General
                economic and other national
                conditions.
Delaware
      Anti-Takeover Law and Charter and Bylaw Provisions
We
      are
      subject to Section 203 of the Delaware General Corporation Law. This
      provision generally prohibits a Delaware corporation from engaging in any
      business combination with any interested stockholder for a period of three
      years
      following the date the stockholder became an interested stockholder,
      unless:
·
prior
                to such date, the Board of Directors approved either the business
                combination or the transaction that resulted in the stockholder becoming
                an interested stockholder;
·
upon
                consummation of the transaction that resulted in the stockholder
                becoming
                an interested stockholder, the interested stockholder owned at least
                85%
                of the voting stock of the corporation outstanding at the time the
                transaction commenced, excluding for purposes of determining the
                number of
                shares outstanding those shares owned by persons who are directors
                and
                also officers and by employee stock plans in which employee participants
                do not have the right to determine confidentially whether shares
                held
                subject to the plan will be tendered in a tender or exchange offer;
                or
-39-
·
on
                or subsequent to such date, the business combination is approved
                by the
                Board of Directors and authorized at an annual meeting or special
                meeting
                of stockholders and not by written consent, by the affirmative vote
                of at
                least 66 2/3% of the outstanding voting stock that is not owned by
                the
                interested stockholder.
Section 203
      defines a business combination to include:
·
any
                merger or consolidation involving the corporation and the interested
                stockholder;
·
any
                sale, transfer, pledge or other disposition of 10% or more of the
                assets
                of the corporation involving the interested
                stockholder;
·
subject
                to certain exceptions, any transaction that results in the issuance
                or
                transfer by the corporation of any stock of the corporation to the
                interested stockholder;
·
any
                transaction involving the corporation that has the effect of increasing
                the proportionate share of the stock of any class or series of the
                corporation beneficially owned by the interested stockholder;
                or
·
the
                receipt by the interested stockholder of the benefit of any loans,
                advances, guarantees, pledges or other financial benefits provided
                by or
                through the corporation.
In
      general, Section 203 defines an "interested stockholder" as any entity or
      person beneficially owning 15% or more of the outstanding voting stock of a
      corporation, or an affiliate or associate of the corporation and was the owner
      of 15% or more of the outstanding voting stock of a corporation at any time
      within three years prior to the time of determination of interested stockholder
      status; and any entity or person affiliated with or controlling or controlled
      by
      such entity or person.
Our
      certificate of incorporation and bylaws contain provisions that could have
      the
      effect of discouraging potential acquisition proposals or making a tender offer
      or delaying or preventing a change in control of us, including changes a
      stockholder might consider favorable. These provisions include authorization
      for
      the issuance of up to 10,000,000 shares of preferred stock with designations,
      rights and preferences determined from time to time by our Board of Directors.
      Accordingly, our Board of Directors is empowered, without stockholder approval,
      to issue preferred stock with dividend, liquidation, conversion, voting, or
      other rights which could adversely affect the voting power or other rights
      of
      the holders of the common stock. In the event of issuance, the preferred stock
      could be utilized, under certain circumstances, as a method of discouraging,
      delaying or preventing a change in control of the Company.
Such
      provisions may have the effect of discouraging a third-party from acquiring
      us,
      even if doing so would be beneficial to our stockholders. These provisions
      are
      intended to enhance the likelihood of continuity and stability in the
      composition of our board of directors and in the policies formulated by them,
      and to discourage some types of transactions that may involve an actual or
      threatened change in control of our company. These provisions are designed
      to
      reduce our vulnerability to an unsolicited acquisition proposal and to
      discourage some tactics that may be used in proxy fights. We believe that the
      benefits of increased protection of our potential ability to negotiate with
      the
      proponent of an unfriendly or unsolicited proposal to acquire or restructure
      our
      company outweigh the disadvantages of discouraging such proposals because,
      among
      other things, negotiation of such proposals could result in an improvement
      of
      their terms. However, these provisions could have the effect of discouraging
      others from making tender offers for our shares that could result from actual
      or
      rumored takeover attempts. These provisions also may have the effect of
      preventing changes in our management.
-40-
Item 5.02.
      Departure of Directors or Principal Officers; Election of Directors; Appointment
      of Principal Officers.
Immediately
      following the completion of the Exchange, all of the existing members of the
      Company's board of directors and all of its executive officers resigned and new
      appointees comprised the Company's board of directors as set forth in Item 5.01
      of this Current Report on Form 8-K, which is incorporated by reference into
      this Item 5.02.
Item 8.01
      Other Events
As
      a
      result of the Exchange, the Company has moved its principal executive offices
      to
      248 Route 25A, No. 2, East Setauket, New York 11733.
Item 9.01
      Financial Statements and Exhibits.
(a)
Financial
      Statements of Businesses Acquired.
The
      financial statements of Lixte required by Rule 3-05(b) of Regulation S-X are
      herewith filed.
(b)
Exhibits.
2.1
Share
                Exchange Agreement dated as of June 8, 2006 among the Company, John
                S.
                Kovach and Lixte Biotechnology,
                Inc.
-41-
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
SRKP
                7, INC.
Date: July
              7,
              2006
By:
/s/ John
              S.
              Kovach
John
                S. Kovach, Chairman of the Board and Chief Executive Officer (principal
                executive officer)
-42-
EXHIBIT
      INDEX
Exhibit No
.
Description
2.1
Share
                Exchange Agreement dated as of June 8, 2006 among the Company, John
                S.
                Kovach, Lixte Biotechnology, Inc.
-43-
INDEX
                TO FINANCIAL STATEMENTS
Page
Report
                of Independent Registered Public Accounting Firm
F-2
Financial
                Statements:
Balance
                Sheets
F-3
Statements
                of Operations
F-4
Statements
                of Changes in Stockholder's Equity (Deficit)
F-5
Statements
                of Cash Flows
F-6
Notes
                to Financial Statements
F-7
-44-
AJ.
      ROBBINS, PC
CERTIFIED
      PUBLIC ACCOUNTANTS
216
      SIXTEENTH STREET
SUITE
      600
DENVER,
      COLORADO 80206
REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
      the
      Board of Directors
Lixte
      Biotechnology, Inc.
East
      Setauket, NY
We
      have
      audited the accompanying balance sheet of Lixte Biotechnology, Inc. (a
      development stage company) as of December 31, 2005, and the related statements
      of operations, changes in stockholder's equity (deficit), and cash flows for the
      period from August 9, 2005 (inception) to December 31, 2005. These financial
      statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit.
We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining on
      a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.
In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Lixte Biotechnology, Inc. as of
      December 31, 2005, and the results of its operations and its cash flows for
      the
      period from August 9, 2005 (inception) to December 31, 2005, in conformity
      with
      accounting principles generally accepted in the United States of America.
The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1 to the financial
      statements, the Company is in the development stage and has not commenced
      operations. Its ability to continue as a going concern is dependent upon its
      ability to develop additional sources of capital, locate and complete a merger
      with another company and ultimately achieve profitable operations. These
      conditions raise substantial doubt about its ability to continue as a going
      concern. The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.
AJ.
      ROBBINS, PC
CERTIFIED
      PUBLIC ACCOUNTANTS
Denver,
      Colorado
February
      27, 2006
F-2
LIXTE
          BIOTECHNOLOGY, INC.
(A
          Development Stage Company)
BALANCE
          SHEETS
ASSETS
March
                    31,
December
                    31,
2006
2005
(Unaudited)
CURRENT
                    ASSETS:
Cash
$
10,403
$
4,946
EQUIPMENT
,
                    net
1,149
1,026
$
11,552
$
5,972
LIABILITIES
                    AND STOCKHOLDER'S EQUITY (DEFICIT)
LIABILITIES:
Accounts
                    Payable
$
1,850
$
14,650
Due
                    to Stockholder
76,426
5,946
Total
                    Current Liabilities
78,276
20,596
COMMITMENTS
                    AND CONTINGENCIES
STOCKHOLDER'S
                    EQUITY (DEFICIT):
Common
                    stock, no par value, 1,500 shares authorized; 1,500 shares issued
                    and
                    outstanding
1,500
1,500
(Deficit)
                    accumulated during development stage
(68,224
)
(16,124
)
Total
                    Stockholder's Equity (Deficit)
(66,724
)
(14,624
)
$
11,552
$
5,972
SEE
        ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3
LIXTE
        BIOTECHNOLOGY, INC.
(A
        Development Stage Company)
STATEMENTS
        OF OPERATIONS
For
                  the Three
Months
                  Ended
March
                  31,
2006
For
                  the Period
From
                  August 9,
2005
                  to
December
                  31,
2005
Cumulative
from
August
                  9,
2005
(Inception)
To
March
                  31
2006
(Unaudited)
(Unaudited)
REVENUE
$
---
$
---
$
---
EXPENSES
52,100
16,124
68,224
NET
                (LOSS)
$
(52,100
)
$
(16,124
)
$
(68,224
)
NET
                (LOSS) PER COMMON SHARE -
BASIC
$
(34.73
)
$
(10.75
)
WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
1,500
1,500
SEE
        ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4
LIXTE
        BIOTECHNOLOGY, INC.
(A
        Development Stage Company)
STATEMENTS
        OF CHANGES IN STOCKHOLDER'S EQUITY
FOR
        THE PEROD FROM AUGUST 9, 2005 (INCEPTION)
TO
        DECEMBER 31, 2005 AND
FOR
        THE THREE MONTHS ENDED MARCH 31, 2006
        (Unaudited)
Common
                Stock
Shares
Amount
(Deficit)
Accumulated
During
Development
Stage
Total
Stockholder's
                    Equity
                    (Deficit)
Balances,
                August 9, 2005
---
$
---
$
---
$
---
Sale
                of common stock on October 3, 2005 at $1.00 per share
1,500
1,500
-
1,500
Net
                (loss)
---
---
(16,124
)
(16,124
)
Balances,
                December 31,2005
1,500
1,500
(16,124
)
(14,624
)
Net
                (loss) for the period
---
---
(52,100
)
(52,100
)
Balances,
                March 31, 2006 (Unaudited)
1,500
$
1,500
$
(68,224
)
$
(66,724
)
SEE
        ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-5
LIXTE
        BIOTECHNOLOGY, INC.
(A
        Development Stage Company)
STATEMENTS
        OF CASH FLOWS
Cumulative
from
August
                    9,
2005
For
                    the Three
For
                    the Period
(Inception)
Months
                    Ended
From
                    August 9,
To
March
                    31,
2005
                    To
March
                    31,
2006
December
                    31, 2005
2006
(Unaudited)
(Unaudited)
CASH
                    FLOWS FROM (TO) OPERATING ACTIVITIES:
Net
                    (loss)
$
(52,100
)
$
(16,124
)
$
(68,224
)
Adjustments
                    to reconcile net (loss) to net cash (used in)
operating
                    activities:
Depreciation
115
113
228
Changes
                    in :
Accounts
                    payable
(12,800
)
14,650
1,850
Net
                    Cash (Used in) Operating Activities
(64,785
)
(1,361
)
(66,146
)
CASH
                    FLOWS FROM (TO) INVESTING ACTIVITIES:
Purchase
                    of equipment
(238
)
(1,139
)
(1,377
)
Net
                    Cash (Used in) Investing Activities
(238
)
(1,139
)
(1,377
)
CASH
                    FLOWS FROM (TO) FINANCING ACTIVITIES:
Common
                    stock issued for cash
---
1,500
1,500
Advances
                    from stockholder
70,480
5,946
76,426
Net
                    Cash Provided by Financing Activities
70,480
7,446
77,926
NET
                    CHANGE IN CASH
5,457
4,946
10,403
CASH
                    BEGINNING
4,946
---
---
CASH
                    ENDING
$
10,403
$
4,946
$
10,403
SEE
            ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-6
LIXTE
        BIOTECHNOLOGY, INC.
(A
        Development Stage Company)
STATEMENTS
        OF CASH FLOWS
NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
History
Lixte
      Biotechnology, Inc. ("the Company"), a development stage company, was organized
      under the laws of the State of Delaware on August 9, 2005. The Company is in
      the
      development stage as defined in Financial Accounting Standards Board Statement
      No. 7. The fiscal year end is December 31.
In
      April
      2006, the Company changed its name to Lixte Biotechnology, Inc.
Going
      Concern and Plan of Operation
The
      Company's financial statements have been presented on the basis that it is a
      going concern, which contemplates the realization of assets and satisfaction
      of
      liabilities in the normal course of business. The Company is in the development
      stage and has not earned any revenues from operations to date, which raises
      substantial doubt about its ability to continue as a going concern.
The
      Company's ability to continue as a going concern is dependent upon its ability
      to develop additional sources of capital, and ultimately achieve profitable
      operations. The accompanying financial statements do not include any adjustments
      that might result from the outcome of these uncertainties.
The
      Company is currently devoting its efforts to research and development related
      to
      specific cancer biomarkers for early detection, estimation of prognosis,
      monitoring response to treatment, and development of targeted therapeutic
      agents. The Company is seeking to exploit this opportunity through execution
      of
      its business plan and the development of related patents.
Income
      Taxes
The
      Company uses the liability method of accounting for income taxes pursuant to
      Statement of Financial Accounting Standards No. 109. Under this method, deferred
      income taxes are recorded to reflect the tax consequences in future years of
      temporary differences between the tax basis of the assets and liabilities and
      their financial amounts at year end.
For
      federal income tax purposes, substantially all expenses must be deferred until
      the Company commences business and then they may be written off over 60-month
      period. These expenses will not be deducted for tax purposes and will represent
      a deferred tax asset. The Company will provide a valuation allowance in the
      full
      amount of the deferred tax asset since there is not assurance of future taxable
      income. Tax deductible losses can be earned forward for 20 years until
      utilized.
Cash
      and Cash Equivalents
Cash
      and
      cash equivalents consist primarily of cash in banks and highly liquid
      investments with original maturities of 90 days or less.
F-7
LIXTE
        BIOTECHNOLOGY, INC.
(A
        Development Stage Company)
STATEMENTS
        OF CASH FLOWS
NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Equipment
Equipment
      is recorded at cost. Depreciation expense is provided on a straight-line basis
      using estimated useful lives of 3 years. Depreciation expense was $115 and
      $113
      for the periods ended March 31, 2006 and December 31, 2005, respectively.
      Maintenance and repairs are charged to expense as incurred. When assets are
      retired or otherwise disposed of, the property accounts are relieved of costs
      and accumulated depreciation and any resulting gain or loss is credited or
      charged to operations.
Concentrations
      of Credit Risk
The
      Company maintains all cash in deposit accounts, which at times may exceed
      federally insured limits. The Company has not experienced a loss in such
      accounts.
Earnings
      Per Common Share
Earnings
      per common share is computed based upon the weighted average number of common
      shares outstanding during the period. Diluted earnings per share consists of
      weighted average number of common shares outstanding plus the dilutive effects
      of options and warrants calculated using the treasury stock method. In loss
      periods, dilutive common equivalent shares are excluded as the effect would
      be
      anti-dilutive.
Use
      of Estimates in the Preparation of Financial
      Statements
The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of asset and liabilities, the disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenue and expenses during the reporting periods.
      Actual results could differ from those estimates and assumptions.
Recently
      Issued Accounting Pronouncements
The
      Company has adopted all recently issued accounting pronouncements. The adoption
      of the accounting pronouncements is not anticipated to have a material effect
      on
      the operations of the Company.
.
NOTE
      2 - EQUIPMENT
Equipment
      consists of the following at:
March
                31, 2006
December
                31, 2005
Office
                equipment
$
1,158
$
920
Software
219
219
Total
1,377
1,139
Less
                accumulated depreciation
(228
)
(113
)
$
1,149
$
1,026
F-8
LIXTE
        BIOTECHNOLOGY, INC.
(A
        Development Stage Company)
STATEMENTS
        OF CASH FLOWS
NOTE
      3 - STOCKHOLDER'S EQUITY
During
      October 2005, the Company issued 1,500 shares of its common stock to one
      investor for $1,500.
NOTE
      4 - RELATED PARTY TRANSACTIONS
Most
      office services are provided without charge by the president. Such costs are
      immaterial to the financial statements and accordingly, have not been reflected
      therein. The officer and director of the Company is involved in other business
      activities and may, in the future, become involved in other business
      opportunities that become available, such person may face a conflict in
      selecting between the Company and his other business interests. The Company
      has
      not formulated a policy for the resolution of such conflicts.
NOTE
      5 - DUE TO STOCKHOLDER
Since
      inception, a stockholder advanced the Company $76,426 to pay for operating
      expenses. These funds have been advanced interest free.
F-9