SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB


 /X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1998

                                       OR

/ /   TRANSITION REPORT PURSUANT TO SECTION 13 0R 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from                to
                               --------------    ---------------
Commission file number: 33-23693

                                 Entropin, Inc.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

           Colorado                                        84-1090424
-------------------------------                     ----------------------------
(State or other jurisdiction of                     (IRS Employer Identification
 incorporation or organization)                      Number)

                   45926 Oasis Street, Indio, California 92201

              (Address of principal executive offices and Zip Code)

                                  (760) 775-8333
                         -------------------------------
                         (Registrant's telephone number)

                                       N/A
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares  outstanding  of the issuer's  common stock,  as of May 11,
1998 is 6,000,051 shares $.001 par value.




<PAGE>
                                 ENTROPIN, INC.

                                      INDEX


                                                                        Page No.
                                                                        --------
PART I.               FINANCIAL INFORMATION
-------               ---------------------

Item 1.   Financial statements:

          Balance Sheet - December 31, 1997 and
          March 31, 1998 (unaudited)                                         2

          Statement of Operations - For the Three Month
          Ended March 31, 1997 and 1998 and Cumulative
          Amounts from Inception (August 27, 1984) Through
          March 31, 1998 (unaudited)                                         3
   
          Statement of Stockholders' Equity - For the Three
          Months Ended March 31, 1998 (unaudited)                            4

          Statement of Cash Flows - For the Three Months
          Ended March 31, 1997 and 1998 and Cumulative Amounts
          from Inception (August 27, 1984) Through
          March 31, 1998 (unaudited)                                         5

          Notes to Unaudited Financial Statements                            6

Item 2.   Management's Discussion and Analysis or Results of Operation      12

PART II.              OTHER INFORMATION                                     13
--------              -----------------                                   










                                       1
<PAGE>
<TABLE>
<CAPTION>
                                 ENTROPIN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEET

                      December 31, 1997 and March 31, 1998
                                  (Unaudited)




                                     ASSETS
                                     ------

                                                      1997                  1998
                                                      ----                  ----
<S>                                               <C>                   <C>
Current assets:
   Cash                                           $       291           $   538,506
   Accounts receivable - stockholder                    5,000                 5,000
                                                  -----------           -----------
    Total current assets                                5,291               543,506

Deferred stock offering costs (Note 5)                 10,746

Patent costs, less accumulated amortization of
   $40,300 (1997) and $44,800 (1998)                  266,456               261,956
                                                  -----------           -----------

                                                  $   282,493           $   805,462
                                                  ===========           ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------

Current liabilities:
   Accounts payable                               $   329,813           $    31,567
   Advances - stockholders (Note 2)                    98,873                  --
                                                  -----------           -----------
    Total current liabilities                         428,686                31,567

Long-term debt:
   Stockholders (Note 4)                            1,710,487                     -
   Deferred royalty agreement (Note 7)                155,495               159,067
   Compensation agreement (Note 4)                  1,500,000                     -
                                                  -----------           -----------
    Total long-term debt                            3,365,982               159,067

Commitments (Notes 2 and7)

Series A redeemable preferred stock, $.001
  par value, 3,210,487 shares authorized,
  3,210,487 shares issued and outstanding
  (1998) (Note 4)                                           -             3,210,487

Stockholders' equity (deficit) (Note 5):
   Preferred stock, $.001 par value; 10,000,000
    shares authorized, Series A reported above              -                     -
   Common stock, $.001 par value; 50,000,000
    shares authorized, 5,220,000 (1997) and
    6,000,051 (1998) shares issued and
    outstanding                                         5,220                 6,000
   Additional paid-in capital                       1,043,780             2,061,210
   Deficit accumulated during the development
    stage                                          (4,561,175)
                                                  -----------           -----------
    Total stockholders' equity (deficit)           (3,512,175)           (2,595,659)
                                                  -----------           -----------

                                                  $   282,493           $   805,462
                                                  ===========           ===========
</TABLE>

                            See accompanying notes.

                                       2
<PAGE>

                                 ENTROPIN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                            STATEMENT OF OPERATIONS

               For the Three  Months  Ended  March 31, 1997 and 1998
     and for the Period from August 27, 1984 (inception) to March 31, 1998
                                   (Unaudited)




                                                                     Cumulative
                                                                    amounts from
                                            1997         1998        inception
                                            ----         ----       ------------

Interest income                          $       -    $   4,509      $    4,509

Costs and expenses:
   Research and development                 37,845        3,772       3,756,626
   General and administrative                6,598       97,452         608,707
   Depreciation and amortization             3,862        4,500          61,868
   Interest                                 36,579          479         240,177
                                         ---------    ---------      ----------
Net loss                                    84,884      106,203       4,667,378
                                         ---------    ---------      ----------
                                         $ (84,884)   $(101,694)     $4,662,869)
                                         =========    =========      ==========
Basic loss per common share              $    (.02)   $    (.02)     $     (.89)
                                         =========    ==========     ==========
Weighted average common shares
   outstanding (Note 6)                  5,220,000    5,870,000       5,232,000
                                         =========    ==========     ==========


                            See accompanying notes.

                                       3
<PAGE>
<TABLE>
<CAPTION>
                                 ENTROPIN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

                   For the Three Months Ended March 31, 1998
                                  (Unaudited)

                                                                                           Deficit
                                                                                         accumulated
                                                   Common Stock           Additional      during the
                                                --------------------       paid-in       development
                                                 Shares      Amount        capital          stage
                                                --------     -------      -----------    -----------
<S>                                             <C>          <C>      <C>                <C>    
Balance, December 31, 1997                      5,220,000    $ 5,220      $1,043,780     $(4,561,175)

   Sale of common stock for cash  ($2.75 per
     share (Note 5)                               300,000        300         797,810               -
   Issuance of common stock pursuant to
     recapitalization (Note 5)                    480,051        480         219,620               -
   Net loss for the three months ended 
     March 31, 1998                                     -          -               -        (101,694)
                                                ---------    -------      ----------     -----------
Balance, March 31, 1998                         6,000,051    $ 6,000      $2,061,210     $(4,662,869)
                                                =========    =======      ==========     =========== 
</TABLE>                 

                            See accompanying notes.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                                 ENTROPIN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                            STATEMENT OF CASH FLOWS

               For the Three  Months  Ended  March 31, 1997 and 1998
      and for the Period from August 27, 1984 (inception) to March 31, 1998
                                   (Unaudited)


                                                                          Cumulative
                                                                           amounts
                                                                            from
                                                  1997         1998       inception
                                                  ----         ----       ---------
<S>                                             <C>          <C>          <C> 
Cash flows from operating activities:
   Net loss                                     $(84,884)    $(101,694)   $(4,662,869)
   Adjustments to reconcile net loss
      to net cash used in operating
      activities:
      Depreciation and amortization                3,862         4,500         61,868
      IBC partner royalty agreement                4,763         3,572        159,067
      Services contributed in exchange
       for stock                                       -             -        694,000
      Services contributed in exchange
       for compensation agreements                23,333             -      2,231,678
      Increase in accounts receivable -
       shareholder                                     -             -         (5,000)
      Increase (decease) in accounts
       payable                                     3,761      (298,246)        31,567
      Increase in accrued interest                32,188             -        169,139
      Other                                            -             -            131
                                                --------     ---------    -----------

      Total adjustments                           67,907      (290,174)     3,342,450
                                                --------     ---------    -----------

      Net cash used in operations                (16,977)     (391,868)    (1,320,419)

Cash flows from investing activities:
   Purchase of equipment                               -             -        (17,207)
   Patent costs                                        -             -       (306,756)
                                                --------     ---------    -----------
      Net cash used in investing
        activities                                     -             -       (323,963)

Cash flows from financing activities:
   Proceeds from recapitalization                      -       220,100        220,100
   Deferred stock offering costs                       -        10,746              -
   Proceeds from sale of common stock                  -       798,110      1,153,110
   Outstanding checks in excess of
    bank balance                                   3,300             -              -
   Proceeds from stockholder loans                     -             -        809,678
   Proceeds from (payments on) stockholder
    advances                                      12,000       (98,873)             -
                                                --------     ---------    -----------
      Net cash provided by financing
        activities                                15,300       930,083      2,182,888
                                                --------     ---------    -----------
Net increase (decrease) in cash                   (1,677)      538,215        538,506

Cash at beginning of period                        1,677           291              -
                                                --------     ---------    -----------
Cash at end of period                           $      -     $ 538,506    $   538,506
                                                ========     =========    ===========
</TABLE>

                            See accompanying notes.

                                       5
<PAGE>
                                 ENTROPIN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                 March 31, 1998


The  accompanying  financial  statements  of the Company  have been  prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions  to Form 10-QSB.  Certain notes and other
information have been condensed or omitted from the interim financial statements
presented  in  this  report.  Accordingly,  they  do  not  include  all  of  the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements.  In the opinion of management,  the financial
statements reflect all adjustments considered necessary for a fair presentation.
The  results of  operations  for the three  months  ended March 31, 1998 are not
necessarily  indicative  of the  results to be expected  for the full year.  For
further  information,  refer to the financial  statements and footnotes  thereto
included  in the  Company's  Annual  Report on Form  10-KSB  for the year  ended
December 31, 1997 as filed with the Securities and Exchange Commission.

1.   Organization and summary of significant accounting policies
     -----------------------------------------------------------

     Organization:

     Entropin,  Inc.  was  incorporated  in  California  in  August  1984,  as a
     pharmaceutical research company developing Esterom(R),  a topically applied
     compound for the  treatment  of impaired  range of motion  associated  with
     acute  lower  back  sprain  and acute  painful  shoulder.  The  Company  is
     considered  to be a development  stage  enterprise as more fully defined in
     Statement No. 7 of the Financial  Accounting  Standards  Board.  Activities
     from inception  include  research and development  activities,  seeking the
     U.S. Food and Drug Administration (FDA) approval for Esterom(R), as well as
     fund raising.

     Basis of presentation and managements' plans:

     The Company's  financial  statements have been presented on a going concern
     basis which  contemplates the realization of assets and the satisfaction of
     liabilities  in the  normal  course  of  business.  The  Company  is in the
     development  stage  and  has  been  primarily   involved  in  research  and
     development  activities.  This has  resulted  in  significant  losses and a
     stockholders'  deficit  at March  31,  1998 of  $4,662,869.  The  Company's
     continued  existence is  dependent on its ability to obtain the  additional
     funding  necessary to complete the FDA approval  process for Esterom(R) and
     market the product.

     As  described in Note 5, the Company has  successfully  completed a private
     placement  and  a  recapitalization  of  the  Company  which  will  provide
     additional  liquidity for the Company for current operations.  However, the
     Company  estimates it will require  additional  funding of up to $8,000,000
     over the  next  three  years  to  successfully  complete  the FDA  approval
     process. The financial statements do not include any adjustment relating to
     the  recoverability  and  classification  of recorded  asset amounts or the
     amount and classification of liabilities or other adjustments that might be
     necessary  should the Company be unable to  continue as a going  concern in
     its present form.




                                       6
<PAGE>

                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                 March 31, 1998


1.   Organization and summary of significant accounting policies (continued)
     ----------------------------------------------------------------------

     Use of estimates:

     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 assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Deferred stock offering costs:

     Deferred  stock  offering  costs  represent  costs incurred to December 31,
     1997, in connection with the private  placement of common stock, more fully
     discussed in Note 5. Costs  incurred as of December 31, 1997 and additional
     costs incurred  subsequent to that date,  were charged against the proceeds
     of the offering.

     Patents:

     Patents  are  stated  at  cost  less  accumulated   amortization  which  is
     calculated  on a  straight-line  basis over the useful lives of the assets,
     estimated by management to average 17 years. Research and development costs
     and any  costs  associated  with  internally  developed  patents  (with the
     exception  of  legal  costs)  are  expensed  in  the  year  incurred.   The
     recoverability  of carrying values of intangible  assets are evaluated on a
     recurring basis.

     Cash equivalents:

     For the purposes of the statement of cash flows, the Company  considers all
     highly liquid debt instruments purchased with a maturity of three months or
     less to be cash equivalents.

     Concentrations of credit risk:

     Financial   instruments   which   potentially   subject   the   Company  to
     concentrations  of credit risk  consist  principally  of cash.  The Company
     places its cash with high quality  financial  institutions.  At times,  the
     balance at any one financial institution may exceed FDIC limits.

2.   Related party transactions
     --------------------------

     Lease agreement:

     In February 1998, the Company entered into an office lease arrangement with
     a  shareholder.  The lease has a two-year term expiring on February 1, 2000
     and a monthly rent of $1,040.


                                        7


<PAGE>
                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                 March 31, 1998


2.   Related party transactions (continued)
     --------------------------------------

     Advances - stockholders:

     At December  31, 1997,  an  aggregate  of $98,873 had been  advanced to the
     Company by two shareholders.  The advances were repaid in January 1998 from
     proceeds associated with the recapitalization of the Company (see Note 5).

3.   Income taxes
     ------------

     The  consummation  of the stock  exchange  with Vanden and the  issuance of
     preferred  stock in January 1998 (see Note 5),  resulted in a change in the
     Company's tax status from an S corporation  to a taxable  corporation.  The
     effect of the  change is to provide  for  income  tax based  upon  reported
     results of operations,  and to provide  deferred tax assets and liabilities
     on temporary  differences  between  reported  earnings and taxable  income.
     Since the Company has had losses since inception,  no change in the results
     of operations  would have occurred,  assuming the change in status occurred
     at the beginning of the periods presented.

4.   Redeemable preferred stock
     --------------------------

     On January 15, 1998,  the Company issued  3,210,487  shares of its Series A
     redeemable non-voting, non-cumulative 8% preferred stock in exchange for an
     aggregate $1,710,487 of notes payable to shareholders and accrued interest,
     and the $1,500,000 compensation agreement.

5.   Stockholders' equity
     --------------------
 
     Recapitalization:

     On December 9, 1997,  the Company  entered  into an  agreement  and plan of
     merger with Vanden  Capital  Group,  Inc.  (Vanden) to exchange  all of the
     issued and  outstanding  common  shares of the  Company,  in  exchange  for
     5,220,000 shares of Vanden's $.001 par value common stock.

     Pursuant to the  agreement,  Vanden  agreed to have cash of $220,000 and no
     unpaid  liabilities at the effective date of the transaction.  The exchange
     was   consummated   on  January   15,   1998.   In   connection   with  the
     recapitalization,  the Company issued 180,001 shares of its $.001 par value
     common stock for cash of $100 and options to purchase an additional 180,001
     shares of common  stock for $2.80 per share,  as required  by a  management
     advisory  services  contract.  The options are  exercisable for a five-year
     period.


                                        8


<PAGE>
                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                 March 31, 1998


5.   Stockholders' equity (continued)
     --------------------------------

     Following the exchange, the Company's shareholders own approximately 95% of
     the outstanding  common stock of Vanden. The acquisition has been accounted
     for as a  recapitalization  of the  Company  based  upon  historical  cost.
     Accordingly,  the number authorized and issued common shares,  par value of
     common  stock and  additional  paid-in  capital  have been  restated on the
     balance sheet and the statement of stockholders' equity to give retroactive
     effect to the recapitalization.

     Private placement:

     On January 15, 1998, the Company  completed a private  placement of 300,000
     shares of its $.001 par value common stock for gross  proceeds of $825,000,
     $2.75 per share.

6.   Loss per share
     --------------

     Basic net loss per share is based on the weighted  average number of shares
     outstanding during the periods. Shares issued for nominal consideration are
     considered outstanding since inception. Diluted loss per share has not been
     presented  as  exercise  of the  outstanding  stock  options  would have an
     anti-dilutive effect.

7.   Commitments
     -----------

     Compensation agreements:

     In 1993,  the Company  entered into a 30 year  compensation  agreement with
     I.B.C.  limited  partners  owning  64.28% of the limited  partnership.  The
     I.B.C.  Limited  Partnership  participated  in  the  early  development  of
     Estrom(R)  (the  medicine) and owned the patent rights to three patents and
     all  intellectual  property rights.  Under the terms of the Agreement,  the
     Company  acquired  all of the patent and  intellectual  property  rights in
     exchange  for  certain  compensation  to the  limited  partners,  which  is
     dependent upon the Company's receipt of a marketing partners  technological
     access  fee  and  royalty   payments.   The  partnership  was  subsequently
     dissolved.  Compensation  under the  agreement  includes a bonus payment of
     $96,420 to be paid at the time the Company is  reimbursed by a drug company
     for past expenses paid for  development of the medicine,  as well as 64.28%
     of a decreasing  payment  rate (3% to 1%) on  cumulative  annual  royalties
     received by the Company.  As of March 31, 1998 , no  liabilities  have been
     accrued with respect to this agreement.


                                        9


<PAGE>
                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                 March 31, 1998


7.   Commitments (continued)
     -----------------------

     In a separate agreement with a former I.B.C.  limited partner,  the Company
     has agreed to pay the partner 35.72% of a decreasing  earned payment (3% to
     1% on cumulative annual sales of products by the Company) until October 10,
     2004.  From October 10, 2004 until  October 10, 2014,  the Company will pay
     the partner 17.86% of the earned payment. In accordance with the agreement,
     the  Company  has agreed to pay the former  limited  partner  the amount of
     $40,000  and a minimum  earned  payment  of  $3,572  per  calendar  quarter
     beginning  on December  31,  1989.  Such  minimum  earned  payment is to be
     evidenced  by a  promissory  note issued each  quarter and payable when the
     Company is either  reimbursed for expenses paid for the  development of the
     medicine or from the first income  received from the Company from net sales
     of the  medicine.  The  quarterly  payments  are to be applied  against the
     earned  payment to be received by the limited  partner.  As of December 31,
     1997, and March 31, 1998, the total liability  accrued with respect to this
     agreement totaled $155,495 and $159,067, respectively.

     Development and Supply Agreement:

     On January 1, 1997, the Company entered into 10 year Development and Supply
     Agreements  with  Mallinckrodt,  Inc.  to  develop  all of  the  chemistry,
     manufacturing  and controls to comply with the drug master file of the Food
     and Drug  Administration  as well as supply  the bulk  active  product  for
     marketing.  In  exchange  for these  services,  Mallinckrodt  will  receive
     exclusive rights as a supplier of the bulk active product to the Company in
     North  America.  For the first year ended  December 31, 1997,  the contract
     price of the ingredient will be fixed based on the number of liters ordered
     by the Company. Subsequent to December 31, 1997, the cost per liter will be
     adjusted based on changes in the price of the components in the bulk active
     product.

     In  addition,   pursuant  to  the   agreement,   the  Company  has  granted
     Mallinckrodt a right of first refusal to supply the Company's  requirements
     of the bulk active product in all other parts of the world outside of North
     America.

     License Agreement:

     In January 1998,  the Company  entered into an agreement with a director of
     the Company, whereby the Company granted the director a non-exclusive right
     to make,  import  and use the  Company's  product,  Esterom(R),  under  the
     Company's   licensed   patents  and  to  use  the  Company's   confidential
     information   to  develop  new  products   that  contain  the  same  active
     ingredients as Esterom(R),  but are formulated  differently.  All rights to
     the improved products will remain the exclusive property of the Company and
     the  director  will  receive a two percent  royalty on the net sales of all
     improved products, and a negotiated royalty on new products. The expiration
     date of this agreement is January 1, 2003.


                                       10


<PAGE>

                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                 March 31, 1998


7.   Commitments (continued)
     -----------------------

     Management agreement:

     During April 1998,  the Company  entered into an agreement with the Western
     Center for Clinical Studies, Inc. (WCCS), a company experienced in managing
     pharmaceutical  development,   including  providing  assistance  in  taking
     pharmaceutical  products to the FDA and through the clinical trials and New
     Drug  Application  stages of  development.  The  Company is required to pay
     management  fees of $880,400  over the 33 month term of the  agreement,  as
     well as grant stock options to WCCS within  thirty days after  execution of
     the agreement to purchase  450,000  shares of Entropin  common  stock.  The
     options  will have a term of five years from the grant date and an exercise
     price of $1.50. The options will be exercisable in varying amounts on dates
     ranging from August 1998 to December 2000.

8.   Subsequent event
     ----------------

     On May 5,  1998,  the  Company  amended  an  existing  management  advisory
     services  agreement with an  organization  to extend the agreement  through
     October 28, 2000 and to provide a monthly fee of $5,000 to the organization
     through April 1, 1999. As additional  compensation,  the  organization  was
     granted an option to purchase up to 100,000  shares of the Company's  $.001
     par value common stock at a purchase  price of $4.00 per share.  The rights
     granted under the stock option are exercisable if written notice of a right
     to exercise  the option is given by the Company to the  organization  on or
     before 180 days from May 5, 1998.
               





                                       11
<PAGE>

Item 2. Management's discussion and analysis or plan of operations
        ----------------------------------------------------------

     Results of Operations:

     Entropin,  Inc. is a development stage  pharmaceutical  company and has not
     generated  revenues  from  operations  for the period  from August 27, 1984
     (inception) through March 31, 1998. Entropin has devoted  substantially all
     it's resource to  acquisition of patents,  research and  development of the
     medicine, and expenses related to the startup of its business.

     During the three months ended March 31, 1998,  Entropin  incurred a loss of
     $101,694, as compared to a loss of $84,884 for the three months ended March
     31, 1997.  The increase  resulted  primarily from an increase of $90,854 in
     general  and  administrative  expenses,  relating  to  recapitalization  of
     Entropin  and  negotiation  of an  agreement  with The  Western  Center for
     Clinical  Studies,  Inc.  (WCCS).  Interest  expense  decreased  in 1998 by
     $36,100 as a result of conversion of notes payable to redeemable  preferred
     stock in January 15, 1998. Research and development costs also decreased by
     $34,073 due to the Company  concentrating it's efforts on negotiations with
     WCCS and the recapitalization during the first quarter of 1998.

     Entropin  has  been  unprofitable  since  inception  and  expects  to incur
     substantial  additional operating losses for at least the next few years as
     it  increases  expenditures  on  research  and  development  and  begins to
     allocate   significant  and  increasing   resources  to  clinical  testing,
     marketing  and  other   activities.   On  January  15,  1998,  the  Company
     successfully  completed a private placement and a  recapitalization  of the
     Company  that  provided  additional  liquidity  for the Company for current
     operations. The Company estimates, however, that it will require additional
     funding  of up to  $8,000,000  over the next  three  years to  successfully
     complete the FDA  approval  process.  In  addition,  the Company has had no
     experience in marketing the medicine. As a result, Entropin's activities to
     date are not as broad in depth or scope as the activities it must undertake
     in  the  future,  and  Entropin's   historical   operations  and  financial
     information are not indicative of Entropin's  future  operating  results or
     financial  condition or its ability to operate  profitably  as a commercial
     enterprise when and if it succeeds in bringing any product to market.

     Capital Resources and Liquidity:

     In  the  years  since  inception,  Entropin  has  financed  its  operations
     primarily  through the sale of shares of Entropin  common stock,  and loans
     and advances from shareholders.  On January 15, 1998, the Company completed
     a  private  placement  of 30 units  (10,000  shares  of its $.001 par value
     common stock per unit) at $27,500 unit, or $2.75 per share,  which resulted
     in gross proceeds of $825,000.  Concurrent with the private placement,  the
     Company  completed  an  agreement  and plan of merger with  Vanden  Capital
     Group, Inc. to exchange all of the issued and outstanding  common shares of
     the Company for 5,220,000  shares of Vanden's $.001 par value common stock.
     Pursuant to the agreement Vanden provided cash of $220,000.

     On January  15,  1998,  the  Company  issued  3,210,487  shares of Series A
     redeemable non-voting,  noncumulative 8% preferred stock in exchange for an
     aggregate  $3,210,487 of notes payable to shareholders and accrued interest
     and various other liabilities of the Company.

     The Company  recently entered into an agreement with the Western Center for
     Clinical  Studies,  Inc. a California  corporation  experienced in managing
     pharmaceutical  development,   including  providing  assistance  in  taking
     pharmaceutical products to the FDA and through clinical trials and New Drug
     Application  stages of  development.  The agreement has a 33-month term, at
     the  end of  which  the  Company's  primary  product  may be  approved  for
     marketing.  The Company is required to pay management fees of approximately
     $880,400 over the term of the agreement as well as provide stock options to
     purchase  450,000 shares of Entropin common stock over a 33 month period at
     an exercise price of $1.50 per share.



                                       12
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     The  Company  is not a party  to any  legal  proceedings  which  management
believes to be material, and there are no such proceedings which are known to be
contemplated.

ITEM 2.  CHANGES IN SECURITIES.

     (a) On January 15, 1998,  the security  holders of the Company voted on and
approved an amendment to the  Company's  Articles of  Incorporation  to effect a
1-for-300  reverse  stock  split  whereby  each  300  currently  authorized  and
outstanding  shares of the  Company's  $.0001 par value  Common  Stock (the "Old
Common  Stock") were  exchanged and converted  into one share of $.001 par value
Common Stock (the "New Common Stock").  The amendments to the Company's Articles
of Incorporation were approved by a majority of the outstanding shares of Common
Stock at a meeting of all of the  Company's  shareholders  held on  January  15,
1998,  pursuant to applicable  provisions of the Colorado  Business  Corporation
Act.

     (c) On Janauary 15, 1998, in order to consummate  the Agreement and Plan of
Merger with  Entopin,  Inc.,  a California  corporation  ("Old  Entropin"),  the
Registrant  issued  5,700,001  shares of its Common  Stock,  $.001 par value per
share, and 3,210,487 shares of the Company's  non-voting,  redeemable  Preferred
Stock,  $.001  par  value per  share,  in  exchange  for all of the  issued  and
outstanding  shares of Common  Stock and  Preferred  Stock of Old  Entropin on a
one-for-one  basis.  These  transactions  were effected under the exemption from
registration provided under Section 4(2) of the Act and Rule 506 of Regulation D
promulagated  thereunder,  for transactions not involving a public offering. All
of the foregoing shares were issued with the appropriate restrictive legend.

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

     A Special  Meeting of the  Company's  shareholders  was held on January 15,
1997.  The  following  matters were  submitted to and approved by the  Company's
shareholders:

         1. A proposal to approve the acquisition  (the "Entropin  Acquisition")
by the Company of all of the outstanding shares of Entropin,  Inc., a California
corporation  ("Entropin"),  for shares of the Company's  New Common  Stock,  and
shares of the Company's Preferred Stock, $.001 par value per share,  pursuant to
which:  (1) the  shareholders  of Entropin  acquired  control of the Company (by
ownership of approximately  95% of the outstanding  voting shares of the Company
following  completion of the Entropin  Acquisition);  and (2) the Company become
engaged in the  pharmaceutical  research business and commercially  developing a
patented  medicinal  preparation  known as  Esterom(R),  which  was the  current
business of Entropin.


                                       13

<PAGE>

                % of                     % of                      % of
               shares                   shares                    shares
   For       outstanding    Against   outstanding    Abstain    outstanding
   ---       -----------    -------   -----------    -------    -----------

57,068,400      63.4%       167,000   Less than 1%    45,000    Less than 1%

         2. A proposal to approve an amendment  to Article III of the  Company's
Articles of Incorporation to effect a 1-for-300 reverse stock split whereby each
300 currently  authorized  and  outstanding  shares of the Company's  $.0001 par
value  Common Stock were  exchanged  and  converted  into one share of $.001 par
value Common Stock.


                % of                     % of                     % of
               shares                   shares                    shares
   For       outstanding    Against   outstanding    Abstain    outstanding
   ---       -----------    -------   -----------    -------    -----------

56,277,700      62.5%       757,000   Less than 1%   245,700    Less than 1%

         3. A proposal to approve an amendment  to Article III of the  Company's
Articles  of  Incorporation  to fix the number of  authorized  shares of capital
stock of the Company at a total of 60,000,000 shares,  50,000,000 of which shall
be  designated  as Common Stock and  10,000,000  of which shall be designated as
Preferred Stock.

                % of                     % of                     % of
               shares                   shares                    shares
   For       outstanding    Against   outstanding    Abstain    outstanding
   ---       -----------    -------   -----------    -------    ----------

56,192,70       62.4%       267,000   Less than 1%   820,700    Less than 1%

         4. A proposal  to approve an  Amendment  to Article I of the  Company's
Articles of Incorporation to change the Company's name to Entropin, Inc.

                % of                     % of                     % of
               shares                   shares                    shares
   For       outstanding    Against   outstanding    Abstain    outstanding
   ---       -----------    -------   -----------    -------    -----------

56,968,400      63.3%       167,000   Less than 1%   145,000    Less than 1%


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          Exhibit 27 - Financial Data Schedule


                                       14
<PAGE>

     (b)  Reports on Form 8-K

          (1)  Form 8-K,  dated  January 15,  1998,  as amended,  reporting  the
               consummation  of  the  acquisition  of  all  of  the  issued  and
               outstanding  shares of Entropin,  Inc. by the Company pursuant to
               Item 2 thereof.

          (2)  Form 8-K, dated January 22, 1998,  reporting  developments in the
               Company's business under Item 5 thereof.

          (3)  Form 8-K, dated February 25, 1998, reporting  developments in the
               Company's business under Item 5 thereof.

          (4)  Form 8-K, dated March 25, 1998, reporting Changes in Registrant's
               Certifying  Accountants under Item 4, and reporting change of the
               Company' fiscal year under Item 8.







                                       15
<PAGE>

                                   SIGNATURES

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

                                          ENTROPIN, INC.


Date: May 14, 1998                        By: /s/ Higgins D. Bailey
                                             -----------------------------------
                                              Higgins D. Bailey
                                              Chairman of the Board of Directors


Date: May 14, 1998                        By: /s/ Wellington A. Ewen
                                             -----------------------------------
                                              Wellington A. Ewen
                                              Chief Financial Officer




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