Re:

SRKP 7, Inc.

Form SB-2

File No. 333-137208

Filed on September 8, 2006

1.

Given that there is no market for your securities, please disclose the price at which your selling shareholders will sell their securities. See Schedule A Item 16 of the Securities Act and Regulation S-B Item 501 (a)(9)(iv). We will not object if you also disclose that the selling shareholders will sell at prevailing market prices or privately negotiated prices after the shares are quoted on the OTC Bulletin Board. Please also modify your “Plan of Distribution” disclosure accordingly.

2.	Please avoid reliance on defined terms like those in parentheses and quotation marks. If the terms are clear from context, the definitions arc unnecessary. If they are not clear, please revise for clarity.

 

 

 

3.

The introductory paragraph to your summary states that the summary is not complete. A summary, by its very nature, does not and is not required to contain all of the detailed information that is in the prospectus. However, if you have elected to include a summary in your prospectus, it must be complete. Do you mean to say that, because this is a summary, it may not contain all of the information that is important to your investors? Delete the reference to an incomplete summary from your prospectus.

4.	With a view toward clarified disclosure, please tell us why you issued the placement agent two separate warrants with apparently the same terms.

5.	Please add a separate risk factor to highlight the going concern language in your auditor’s report. Disclose the reason for the language and its material effects, including its effect on your access to capital at market rates.

6.	Revise to quantify the amount of time that Dr. Kovach devotes to your business.

 

 

 

7.	In a separate risk factor, address the risks associated with the fact that these key personnel are involved in other business activities and may face a conflict in selecting between their other business interests and you, as discussed on page 40.

8.	Revise to clarify what steps you will need to achieve before you begin conducting preclinical studies and clinical trials in humans.

9.	In an appropriate section of your document, please disclose when the negotiations in the second sentence began. Also disclose the status of the negotiations and the principal hurdles that remain before an agreement can be reached.

10.	Revise to clarify whose obligation it will be to obtain the necessary consents. Also clarify why the consents might not be enforceable.

11.	Please clarify why there is a material risk of willful misconduct. Does your supplier have a history of such conduct?

 

 

 

12.	We note the disclosure in the first sentence that you “may” have weaknesses. Please disclose the reasons for the doubt.

13.

We note your belief that the compliance dates for you will first apply to your annual report for fiscal 2008. Your disclosure on page F-11, however, indicates that you will be required to comply with these requirements with your year ending December 31, 2007. Please revise as appropriate to reconcile.

14.	Please note that Section 27A of the Securities Act of 1933, and Section 21E of the Exchange Act of 1934, do not apply to issuers of penny stock. Please remove the references to these sections.

15.

We note in the last sentence of this section that you did not have any stock options or warrants issued or outstanding at December 31, 2005. This discussion should be expanded to include the stock options granted on June 30, 2006 as disclosed in Note 3 on page F-l3 of the interim financial statements and the impact of SFAS 123(R) on these issuances.

 

 

16.	Since Lixte has not generated revenue during the periods presented, discussion of your plan of operation should be provided. Please revise the filing to comply with Item 303(a) of Regulation S-B.

17.

Please discuss your disclosed need for $2.3 million. We note your reference to a wet lab on page 6. It is unclear why this wet lab is necessary in the short term given your current operations. Also, will you need additional property or employees to operate the lab? Are these costs included in the $2.3 million estimate?

18.	Please state the date of your incorporation. If you were organized in connection with affiliated companies, please describe those affiliations. Also, describe any change in control.

 

 

19.	Please disclose when the negotiations mentioned in the third sentence began. Also disclose:

·

the status of the negotiations;

·

the principal hurdles that remain before an agreement can be reached; and

·

the scope of your rights to the intellectual property if no agreement can be reached.

20.	With a view toward disclosure, please tell us how Dr. Kovach was involved in developing the intellectual property to the extent that he is co-owner.

21.	Please expand your disclosure that “permission has been obtained” to identify the entity who granted permission and the scope of such permission.

22.	We note your disclosure that you are negotiating an agreement to receive tissue and blood samples from the Institute of Pathology in Germany. Please revise to address how you currently obtain such samples.

23.	Expand your disclosure to clarify your obligations and potential liability, if any, under the regulatory requirements of the Office of Protection of Research Subjects in the United States.

24.	Please expand your disclosure to state at what stage your business activities will become subject to FDA regulation.

25.	Please clarify whether any competitors have developed or are investigating biomarkers for the same cancer that you are studying.

26.	Please clarify the nature of your facility. Is this a leased office devoted solely to your business in a commercial office building with multiple unrelated tenants?

27.	Please clarify how each cited regulation affects your business. Also clarify whether you are in compliance.

28.

We note the statement on page 37 that your director, Dr. Philip Palmedo, has served as a consultant to the government of Sudan. Please advise us of the nature and extent of the consultancy. Tell us whether Dr. Palmedo has served as a consultant to the government of Sudan during the period he has served as your director, and whether he continues to serve as a consultant to the government of Sudan. Please also describe your past, current and anticipated contacts with Sudan, if any, whether through subsidiaries, affiliates or other direct or indirect arrangements. We may have further comment.

29.	Please clarify when Dr. Palmedo joined the board.

 

 

 

30.	Please describe the role of the committee. For example, how often does the committee meet? On what matters have they deliberated and advised you? When did each member join the committee?

31.

If the committee members serve a management role, please provide full disclosure regarding their background. See, for example, Regulation S-B Item 401(b). If the committee does not serve in a management role, please tell us why you have identified the committee in the management section of your prospectus.

32.	Please provide disclosure for each person who served as your CEO or acted in a similar capacity during the last completed fiscal year. See Regulation S-B Item 402 (a)(2)(i). Also, include a row for each such person in your table disclosing beneficial ownership of your stock.

33.	Please revise to disclose when your directors and members of the Scientific Advisory Committee will receive the options.

34.	We note your disclosure that most office services are provided by the president. Revise to disclose the name of the individual who serves in this capacity.

35.

Tell us why you have not provided disclosure under Item 404(a) of Regulation SB for the commission and fee paid to WestPark Capital, Inc. for its services as placement agent in connection with your recent private placements. We note that at the time of the transaction, it appears your president, Mr. Rappaport, was also CEO of WestPark Capital.

36.	Please tell us why you have not described in this section the stockholder advances mentioned on pages 27 and F-2.

37.	Please provide the disclosure required by Item 404(d) of Regulation S-B.

38.	Please disclose when you split your securities as mentioned at the bottom of page 2. Also, tell us when shareholders approved the split.

 

 

 

39.	Please quantify the amounts required by Regulation S-B Item 201 (a)(2).

40.	Please revise the selling stockholder table to identify the individuals who beneficially own the shares held by the entities named in the table.

41.	Please tell us whether any of the selling shareholders are broker-dealers or affiliates of broker-dealers.

42.	Please disclose when each selling shareholder acquired the offered shares and the consideration paid for those shares.

43.	Please update your financial statements, as necessary, to comply with Item 310(g) of Regulation S-B.

44.	Please tell us your basis for incorporating by reference the information from your Form 8-K as disclosed on page F-7.

 

 

45.

There is no distinction made herein of which liability items are current or non-current. Based on the disclosure in MD&A about the amount of working capital at June 30, 2006, it appears that the research and development contract liability represents a current liability at that date. Please revise your balance sheet to classify liabilities as either current or long-term.

46.

We note that the 4,005,177 shares issued in connection with the reverse merger transaction represent those held by the Company’s stockholders immediately prior to the share exchange and the value assigned to these shares ($62,500) was based on the cash acquired in the transaction. According to Form 10-QSB for the quarter ended March 31, 2006, the Company only had $3,000 in cash and negative working capital of approximately $10,000. Please provide us with a summary calculation of how the amount of cash acquired on June 30, 2006 was determined and tell us from what source it was derived. Also, tell us why you believe your accounting entry for the reverse merger was appropriate and compliant with GAAP. Finally, revise the filing as necessary based on our comment.

 

 

 

 

SRKP 7, Inc. had approximately $3,000 of cash on March 31, 2006 (see Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2006, filed on May 15, 2006). On May 17, 2006, SRKP 7, Inc. sold 905,000 shares of its common stock to TMC Ulster Holdings, Inc. in a private placement for $100,000 in cash (see Current Report on Form 8-K filed on June 8, 2006). During the three months ended June 30, 2006, prior to the reverse merger transaction with Lixte Biotechnology, Inc. effective June 30, 2006, SRKP 7, Inc. disbursed approximately $40,500 as payment of all corporate obligations, resulting in a cash balance of approximately $62,500 in SRKP 7, Inc. immediately prior to the reverse merger transaction. A schedule showing the account balances as of March 31, 2006 rolled forward to the account balances as of June 30, 2006 is attached hereto as Exhibit _.

47.	Please disclose the terms of any registration rights agreements. We note that there was no financial penalty associated with these registration rights. Please tell us the accounting implications of the rights. Your response should address how EITF 05-04 impacts your conclusions.

In conjunction with the private placement of the Company’s common stock, the Company issued five-year warrants to WestPark Capital, Inc. for placement agent services, exercisable at the per share price of the common stock sold in the private placement. The warrants are exercisable into a fixed number of shares with only standard anti-dilution rights. However, the warrants contain cashless exercise provisions and demand registration rights. Although the warrant holders have demand registration rights, the failure to register the shares after the Company’s best commercial efforts will not result in any cash or other economic damages to the Company. Accordingly, the Company does not believe that the demand registration rights result in the warrants becoming a derivative liability. In reaching its conclusion, the Company considered the impacts of paragraphs 11a and 12c of FAS 133 and the discussions included in EITF No. 00-19 (principally paragraph 4).

Paragraph 1 of EITF No. 05-04 refers to a “… registration rights agreement that includes a liquidated damages clause.” Paragraph 4 of EITF No. 05-04 summarizes this issue as follows: “The issue is how a liquidated damages clause payable in cash affects the accounting for a freestanding financial instrument subject to the provisions of Issue [EITF No.] 00-19.” Since the Company has no liquidated damages clause in its registration rights commitments with WestPark Capital, Inc., the Company does not believe that EITF No. 05-04 has any impact on its conclusions. The Company believes that the appropriate accounting for any such damages should be recorded as incurred and should not itself be considered as a derivative.

48.	Please disclose the terms and conditions of the non-interest bearing advances made by Lixte’s founding stockholder.

 

 

49.

We note that on March 22, 2006 you entered into a contract (CRADA) with the U.S. Department of Health and Human Services whereupon you agreed to provide funds totaling $400,000 over a two-year term. We further note that this was recorded as a liability with the related amount of such contract recorded as “deferred research and development costs” (i.e., an asset). Please tell us why you believe you have correctly accounted for this agreement. Also, tell us how the latter satisfies the definition of an asset as described in paragraph 25 of CON6 and why you believe it was appropriate to record it as a fixed asset. Reference your response to the guidance in CON6 or other applicable authoritative accounting literature. Also, please include a copy of the agreement as an exhibit to the filing.

 

50.	Please provide the disclosure required by Regulation S-B Item 701 for all securities sold during the past three years without registration under the Securities Act.

51.	Please disclose the facts relied upon to make the cited exemption from registration available.

52.	Please include the undertakings required by item 512(a)(4) and 512(g) of Regulation S-B. Refer to Rule 424(b)(3) and Rule 430C(d).

53.	Please tell us why you have not filed the Cooperative Research and Development Agreement as an exhibit.

 

 

54.	Please provide an updated consent from your independent accountant in any amendment.

55.	Please indicate below the second paragraph required on the Signatures page who is signing the document in the capacity of principal financial officer and controller or principal accounting officer. See “Instructions for signatures” at the end of Form SB-2.

		Sincerely,
		/s/ David L. Ficksman
		David L. Ficksman
		of
		Troy & Gould

 

Exhibit A
SRKP 7, Inc. - Rollforward of Balances from 03/31/06 to 06/30/06
																				Deficit
																				Accumulated
											Due			Common			Additional			During
								Accounts			To			Stock			Paid-in			Development			Total
					Cash			Payable			Stockholders			($0.001 par)			Capital			Stage			DR(CR)
Balances per 03/31/06 Form 10-QSB					$	3,035		$	(400	)	$	(12,500	)	$	(270	)	$	(24,730	)	$	34,865		$	-
Activity:
04/01/06 to 05/11/06			Professional fees paid		$	(1,400	)	$	400											$	1,000		$	-
			Other expenses paid		$	(427	)													$	427		$	-
5/17/2006			Proceeds from sale of common stock		$	100,000								$	(91	)	$	(99,910	)				$	-
(see Form 8-K of SRKP 7, Inc. dated May 17, 2006)																							$	-
																							$	-
05/30/06 to 06/26/06			Professional fees paid		$	(4,687	)													$	4,687		$	-
			Other expenses paid		$	(713	)													$	713		$	-
6/30/2006			Shareholder advances repaid		$	(12,500	)				$	12,500											$	-
			Professional fees paid		$	(19,859	)													$	19,859		$	-
Balances before reverse merger transfer to Lixte					$	63,449		$	-		$	-		$	(361	)	$	(124,640	)	$	61,551		$	-
6/30/2006			Transfer to Lixte		$	(62,500	)
Balance after reverse merger transfer to Lixte					$	949
(subsequently disbursed in payment of filing fees & bank charges)