UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549

                               FORM 10-QSB

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
        For the quarterly period ended        March 31, 2000
                                      --------------------------

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
               For the transition period from _____________ to ____________

            Commission file number            33-23693
                                  -----------------------------

                             ENTROPIN, INC.
--------------------------------------------------------------------------
    (Exact name of small business issuer as specified in its charter)

          COLORADO                                  84-1090424
-------------------------------         ---------------------------------
(State or other jurisdiction of         (IRS Employer Identification No.)
incorporation or organization)

                   45926 Oasis Street, Indio, CA 92201
--------------------------------------------------------------------------
                (Address of principal executive offices)

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

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


Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
                                ---    ---

As of May 12, 2000, 9,596,680 shares of the issuer's Common Stock, $.001
par value per share were outstanding.

Transitional Small Business Disclosure Format    Yes       No X
                                                    ---      ---

<PAGE>
                             ENTROPIN, INC.



                                  INDEX
                                  -----

PART 1.                   FINANCIAL INFORMATION                  PAGE NO.
-------                   ---------------------                  --------

Item 1.  Financial Statements:

Balance Sheet - December 31, 1999 and March 31, 2000 (unaudited)       2

Statement of Operations - For the Three Months Ended March 31, 1999
and 2000 and Cumulative Amounts from Inception (August 27, 1984)
Through March 31, 2000 (unaudited)                                     4

Statement of Stockholders' Equity - For the Three Months Ended
March 31, 2000 (unaudited)                                             5

Statement of Cash Flows - For the Three Months Ended March 31, 1999
and 2000 and Cumulative Amounts from Inception (August 27, 1984)
Through March 31, 2000 (unaudited)                                     6

Notes to Unaudited Financial Statements                                8

Item 2.  Management's Discussion and Analysis of Financial Condition
and Results of Operations                                              13


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

Item 1.  Legal Proceedings                                             16

Item 2.  Changes in Securities                                         16

Item 6.  Exhibits and Reports on Form 8-K                              16

Signatures                                                             16



<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                      December 31, 1999 and March 31, 2000
                                  (Unaudited)

                                     ASSETS

                                                           1999          2000
                                                           ----          ----
Current assets:
   Cash and cash equivalents                            $2,260,526  $ 7,429,746
   Certificates of deposit                                       -    6,503,000
   Accounts receivable - related party                           -       73,526
   Accrued interest receivable                                   -       32,536
   Prepaid expenses                                              -       32,238
                                                        ----------  -----------

                                                         2,260,526   14,071,046

Property and equipment, at cost:
   Leasehold improvements                                   61,437       61,437
   Office furniture and equipment                           23,855       27,023
                                                        ----------  -----------

                                                            85,292       88,460

   Less accumulated depreciation                           (23,429)     (32,522)
                                                        ----------  -----------

     Net property and equipment                             61,863       55,938

Other assets:
   Deposits                                                 12,261       12,261
   Deferred stock offering costs (Note 4)                  169,425            -
   Patent costs, less accumulated amortization
     of $82,019 (1999) and $88,096 (2000)                  321,150      321,779
                                                        ----------  -----------
      Total other assets                                   502,836      334,040
                                                        ----------  -----------
                                                        $2,825,225  $14,461,024
                                                        ==========  ===========

                            See accompanying notes.
                                       2

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                      December 31, 1999 and March 31, 2000
                                  (Unaudited)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                           1999          2000
                                                           ----          ----

Current liabilities:
   Accounts payable                                    $   199,042  $   386,975
   Accounts payable - related parties                      123,763       31,497
                                                       -----------  -----------
     Total current liabilities                             322,805      418,472

Deferred royalty agreement (Note 6)                        184,071      187,643

Commitments and contingencies (Note 6)

Series A redeemable preferred stock, $.001 par value;
   3,210,487 shares authorized, issued and outstanding,
   $1 per share redemption value                         3,210,487    3,210,487

Series B redeemable convertible preferred stock, $.001
   par value; 400,000 shares authorized, 230,500 shares
   issued and outstanding, $5.00 per share redemption
   value (Note 3)                                        1,093,175    1,093,175

Stockholders' equity (deficit) (Note 4):
   Preferred stock, $.001 par value; 10,000,000 shares
     authorized, Series A and B reported above                   -            -
   Common stock, $.001 par value; 50,000,000 shares
     authorized, 7,382,280 (1999) and 9,382,895 (2000)
     shares issued and outstanding                           7,382        9,383
   Additional paid-in capital                           13,866,412   26,023,249
   Deficit accumulated during the development stage    (12,640,814) (13,919,012)
   Unearned stock compensation                          (3,218,293)  (2,562,373)
                                                       -----------  -----------
     Total stockholders' equity (deficit)               (1,985,313)   9,551,247
                                                       -----------  -----------
                                                       $ 2,825,225  $14,461,024
                                                       ===========  ===========
                            See accompanying notes.
                                       3

<PAGE>


                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS
                 For the Three Months Ended March 31, 1999 and 2000
       and for the Period from August 27, 1984 (inception) to March 31, 2000
                                    (Unaudited)

                                                                   Cumulative
                                                                  amounts from
                                            1999        2000       inception
                                            ----        ----      ------------
Costs and expenses:
   Research and development (Note 4)   $   318,112   $  498,023   $  7,095,433
   General and administrative (Note 4)     758,115      807,016      6,433,655
   Rent-related party                            -        2,400         20,714
   Depreciation and amortization             9,703       15,170        137,686
                                       -----------   ----------   ------------

    Operating loss                      (1,085,930)  (1,322,609)   (13,687,488)

Other income (expense):
   Interest income                           2,805       44,411        134,037
   Interest expense                              -            -       (242,811)
                                       -----------   ----------   ------------

    Total other income (expense)             2,805       44,411       (108,774)
                                       -----------   ----------   ------------

Net loss (Note 2)                       (1,083,125)  (1,278,198)   (13,796,262)

Accrued dividends applicable to
   Series B preferred stock (Note 3)       (30,688)     (28,813)      (204,373)
                                       -----------   ----------   ------------
Net loss applicable to common
   shareholders                        $(1,113,813) $(1,307,011)  $(14,000,635)
                                       ===========  ===========   ============

Basic net loss per common share
   (Note 5)                            $      (.19) $      (.17)  $      (2.59)
                                       ===========  ============  ============

Weighted average common shares
   outstanding (Note 5)                  6,000,000    7,646,000      5,404,000
                                       ===========  ===========   ============

                            See accompanying notes.
                                       4

<PAGE>
<TABLE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
        for the Period from August 27, 1984 (inception) to March 31, 2000
                                   (Unaudited)
<CAPTION>
                                                                                              Deficit
                                                                                            accumulated
                                                                Additional     Unearned     during the
                                              Common stock        paid-in       stock       development
                                            Shares    Amount      capital    compensation      stage
                                           ---------  ------    ----------   ------------   -----------
<S>                                        <C>        <C>      <C>           <C>           <C>

Balance, December 31, 1999                 7,382,280  $7,382   $13,866,412   $(3,218,293)  $(12,640,814)

   Amortization of unearned stock
     compensation (Note 4)                         -       -             -       655,920              -

   Repurchase of 101,681 stock warrants
     for cash (Note 4)                             -       -      (330,000)            -              -

   Issuance of common stock pursuant to
     public offering (Note 4)              2,000,000   2,000    12,484,138             -              -

   Shares of stock issued for services           615       1         2,699             -              -

  Net loss for the three months ended
     March 31, 2000                                -       -             -             -     (1,278,198)
                                           ---------   -----   -----------   -----------   ------------

Balance, March 31, 2000                    9,382,895  $9,383   $26,023,249   $(2,562,373)  $(13,919,012)
                                           =========  ======   ===========   ===========   ============
</TABLE>

                            See accompanying notes.
                                       5

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS
               For the Three Months Ended March 31, 1999 and 2000
      and for the Period from August 27, 1984 (inception) to March 31, 2000
                                   (Unaudited)

                                                                     Cumulative
                                                                       amounts
                                                                        from
                                               1999        2000      inception
                                               ----        ----      ---------
Cash flows from operating activities:
   Net loss                               $(1,083,125 $(1,278,198) $(13,796,262)
   Adjustments to reconcile net loss to
    net cash used in operating activities:
     Depreciation and amortization              9,703      15,170       137,686
     IBC partner royalty agreement              3,572       3,572       187,643
     Services contributed in exchange for
       stock and stock options                747,765     655,920     6,116,894
     Services contributed in exchange for
       compensation agreements                      -           -     2,231,678
     Increase (decrease) in accounts
       payable - related party                (26,717)    (92,266)       31,497
     Advances to related party                      -     (73,526)      (73,526)
     Increase (decrease) in accounts
       payable                                 (3,592)    187,933       386,975
     Increase in accrued interest                   -     (32,536)      136,603
     Other                                          -     (32,238)      (30,445)
                                          ----------- -----------  ------------

     Total adjustments                        730,731     632,029     9,125,005
                                          ----------- -----------  ------------

     Net cash used in operations             (352,394)   (646,169)   (4,671,257)

Cash flows from investing activities:
   Purchase of property and equipment (net)    (1,500)     (3,168)     (105,667)
   Patent costs                               (12,566)     (6,706)     (409,875)
   Deposits                                         -           -       (12,261)
   Certificates of deposit                          -  (6,503,000)   (6,503,000)
                                          ----------- -----------  ------------

     Net cash used in investing activities    (14,066) (6,512,874)   (7,030,803)

Cash flows from financing activities:
   Proceeds from recapitalization                   -           -       220,100
   Proceeds from sale of common stock (net)         -  12,658,263    17,089,278
   Proceeds from sale of preferred stock
     (net)                                          -           -     1,142,750
   Repurchase of warrants                           -    (330,000)     (330,000)
   Proceeds from stockholder loans                  -           -       809,678
   Proceeds from stockholder advances               -           -        98,873
   Repayments of stockholder advances               -           -       (98,873)
   Proceeds from convertible notes payable    200,000           -       200,000
                                          ----------- -----------  ------------

     Net cash provided by financing
       activities                             200,000  12,328,263    19,131,806
                                           ----------- -----------  ------------

Net increase in cash                         (166,460)  5,169,220     7,429,746

Cash and cash equivalents at beginning of
   period                                     445,333   2,260,526             -
                                          ----------- -----------  ------------

Cash and cash equivalents at end of
   period                                 $   278,873 $ 7,429,746  $  7,429,746
                                          =========== ===========  ============

                         (Continued on following page)
                             See accompanying notes.
                                       6

<PAGE>


                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)
                              STATEMENT OF CASH FLOWS
               For the Three Months Ended March 31, 1999 and 2000
       and for the Period from August 27, 1984 (inception) to March 31, 2000
                                    (Unaudited)




                         (Continued from preceding page)

Supplemental disclosure of non-cash investing and financing activities:

   During the three months ended March 31, 2000,  the Company  issued 615 shares
   of common stock for services totaling $2,700.




                              See accompanying notes.
                                        7


<PAGE>


                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)
                      NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                   March 31, 2000



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, 1999 and 2000 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, 1999 as filed with the Securities and Exchange Commission.

1. Organization and selected accounting policies

   Organization:

   Entropin,  Inc.,  a  Colorado  corporation,  was  organized  as a  California
   corporation  in  August  1984,  to  be  a  pharmaceutical   research  company
   developing   Esterom(R)  solution,  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, seeking the U.S. Food and Drug Administration (FDA) approval for
   Esterom(R) solution, as well as fund raising.

   Concentrations of credit risk:

   Financial instruments which potentially subject the Company to concentrations
   of credit risk consist principally of cash, cash equivalents and certificates
   of  deposit.  The  Company  places  its  cash  with  high  quality  financial
   institutions.  At  times  during  the  periods,  the  balances  at  financial
   institutions may exceed FDIC limits.

   Stock-based compensation:

   The Company has adopted Statement of Financial Accounting Standards  No. 123,
   Accounting for Stock-Based Compensation. Compensation costs for stock options
   is  measured as  the excess, if any, of the fair value of the options at date
   of grant over the exercise price.

                                        8


<PAGE>


                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)
                      NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                   March 31, 2000



2. Income taxes

   At March 31,  2000,  the  Company has net  operating  loss  carryforwards  of
   approximately $4,177,000 and future tax deductions of $7,602,000 which may be
   used to offset future taxable income.  The future tax deductions  result from
   utilizing the cash basis for income tax reporting purposes and unearned stock
   compensation.  The difference  between the tax loss  carryforwards and future
   tax  deductions  and the  cumulative  losses from  inception  result from the
   losses  previously  incurred  by the  Company  as an S  corporation.  The net
   operating loss  carryforwards  expire in 2018,  2019 and 2020.  Approximately
   $250,000 of the net operating loss  carryforward  is limited as to the amount
   which may be used in any one year.  At March 31,  2000,  total  deferred  tax
   assets and valuation allowance are as follows:

                                                1999         2000
                                                ----         ----
     Deferred tax assets resulting from:
       Net operating loss carryforwards    $   596,000  $ 1,462,000
       Accrual to cash adjustments             874,000      875,000
       Unearned stock compensation             787,000    1,786,000
                                           -----------  -----------

       Total                                 2,257,000    4,123,000

    Less valuation allowance                (2,257,000)  (4,123,000)
                                           -----------  -----------

                                           $         -  $         -
                                           ===========  ===========

   A 100%  valuation  allowance  has been  established  against the deferred tax
   assets,  as utilization of the loss  carryforwards  and  realization of other
   deferred tax assets cannot be reasonably assured.

3. Redeemable preferred stock

   At the  Company's  election,  the annual  dividends on the Series B preferred
   stock were paid in shares of the  Company's  common stock valued at $5.00 per
   share at July 15, 1999.  Dividends are added to net loss in  determining  net
   loss per common share.

4. Stockholders' equity

   Completion of public offering:

   On March 20, 2000, the Company  completed a secondary  public  offering.  The
   Company received net proceeds of  approximately  $12,500,000 (net of offering
   expenses of  approximately  $2,000,000)  from the sale of 2,000,000 shares of
   common stock and 2,000,000  redeemable  common stock purchase  warrants.  The
   warrants  are  exercisable  at $10.50 per share at any time  until  March 14,
   2005.  After March 14,  2001,  under  certain  conditions,  the  warrants are
   redeemable  at $.25 per warrant  (see Note 7). The Company also issued to the
   underwriter warrants to purchase up to 200,000 shares at an exercise price of
   $8.75 per share and to  purchase up to 200,000  warrants to purchase  200,000
   shares at $.30 per warrant.


                                        9


<PAGE>


                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)
                      NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                   March 31, 2000



4. Stockholders' equity (continued)

   Other common stock transactions:

   On March 9, 2000, the Company  entered into an agreement with an organization
   to cancel a 101,681 share stock warrant agreement issued in September 1999 in
   connection with private placements of common stock. The Company paid $330,000
   cash as consideration for cancellation of the warrant agreement.

   Stock options and warrants:

   The following is a summary of stock option activity:
                                                             Options exercisable
                              Option     Wtd.avg.   Number   Wtd. avg.  Number
                             price per   exercise     of     exercise    of
                               share      price     shares   price      shares
                             ---------   --------   ------   --------   ------
   Balance December 31,
     1999                 $1.50 to $5.00  $3.42   2,616,001   $3.44   1,692,670
   Granted                     $0.00      $0.00           -       -           -
   Exercised                   $0.00      $0.00           -       -           -
                               -----      -----   ---------   -----   ---------
   Balance March 31,
     2000                 $1.50 to $5.00  $3.42   2,616,001   $3.44   1,692,670
                                                  =========   =====   =========


   The  following  is  additional  information  with  respect  to those  options
   outstanding at March 31, 2000:

                                Wtd.avg.remaining      Number
            Option price        contractural life        of        Options
             per share              in years           shares   exercisable
             ---------          -----------------     -------   -----------
              $1.50                   3.1             450,000       75,000
              $2.80                   2.8             180,001      180,001
              $3.00                   6.0             625,000      540,001
              $4.00                   4.0             901,000      897,668
              $5.00                   4.6             460,000            -
                                                    ---------    ---------

                                                    2,616,001    1,692,670
                                                    =========    =========

   The following is a summary of stock warrant activity:

                                     Warrant price      Number
                                       per share       of shares
                                     -------------     ---------

   Balance December 31, 1999         $3.00 to $5.00      1,005,181
   Granted                           $8.75 to $10.50     2,200,000
   Repurchased                           $4.00            (101,681)
   Exercised                             $0.00                   -
                                         -----           ---------

   Balance March 31, 2000            $3.00 to $10.50     3,103,500
                                                         =========



                                        10


<PAGE>


                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)
                      NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                   March 31, 2000



4. Stockholders' equity (continued)

   Unearned stock compensation:

   At March 31,  2000,  the Company had  outstanding  an  aggregate of 5,519,501
   options and warrants of which  1,070,000  were at purchase  prices lower than
   fair value of the stock at date of grant, including the 450,000 stock options
   granted to Western Center for Clinical Studies, Inc. (see Note 6). The excess
   of the fair value of the options and warrants, using the Black-Scholes option
   pricing  model,  over the  exercise  price has been  recorded  as  additional
   paid-in  capital and unearned stock  compensation.  Unearned  compensation is
   being amortized to research and  development  and general and  administrative
   expense over the term of the related agreements, as follows:

                                     Three Months Ended        Cumulative
                                           March 31,          amounts from
                                         1999         2000     inception
                                         ----         ----    ------------

   Research and development            $177,306     $177,306   $1,388,530
   General and administrative           570,459      478,614    3,713,597
                                       --------     --------   ----------

                                       $747,765     $655,920   $5,102,127
                                       ========     ========   ==========


5. Basic and diluted net 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  excludes
   dilution from common stock equivalents,  as exercise of the outstanding stock
   options and warrants would have an anti-dilutive  effect.  The 10% cumulative
   dividends on Series B preferred stock have been accrued and added to net loss
   for the purpose of determining net loss and net loss per share  applicable to
   common shareholders.

6. Commitments and contingencies

   Compensation agreements:

   In 1993,  the Company  entered  into a 30 year  compensation  agreement  with
   I.B.C.  limited  partners  owning 64.28% of the I.B.C.  Limited  Partnership.
   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  expenses
   incurred 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, 2000, no liabilities have been accrued with respect
   to this agreement.


                                        11


<PAGE>


                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)
                      NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                   March 31, 2000



6. Commitments and contingencies (continued)

   In a separate  agreement with certain  former I.B.C.  limited  partners,  the
   Company has agreed to pay the partners 35.72% of a decreasing  earned payment
   (3% to 1% of the Company's annual sales) until October 10, 2004. From October
   10, 2004 until  October 10, 2014,  the Company has agreed to pay the partners
   17.86% of the earned payment.  In accordance with the agreement,  the Company
   has agreed to pay these former limited partners a one-time payment of $40,000
   and a minimum  earned  payment of $3,572 per  calendar  quarter  beginning on
   December 1, 1989. These amounts become payable when the Company is reimbursed
   for expenses incurred for the development of the medicine,  or from the first
   income received by 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  partners.  As of March 31, 2000,  the total  liability  accrued with
   respect to this  agreement  was  $187,643.  The Company will receive a credit
   against the earned payments of 50% of monies which are expended in connection
   with preparing,  filing, obtaining, and maintaining patents involved with the
   sold rights.

   Management agreements:

   During April 1998, the Company  entered into an agreement with Western Center
   for Clinical Studies, Inc. (WCCS), to provide assistance in taking Esterom(R)
   solution through the clinical trials and New Drug  Application(NDA)  approval
   process. The agreement was subsequently amended on July 21, 1999. The Company
   is required to pay management  fees of $880,400  through  January 5, 2001 and
   $76,400  per  quarter  commencing  January  2001  and  continuing  until  NDA
   submission.  The Company also has granted  stock  options to WCCS to purchase
   450,000 shares of Entropin common stock at $1.50 per share.  The options will
   expire  five  years  from  the  date  they  become  exercisable.  The  shares
   underlying the options are also provided with certain registration rights.

   In August  1999,  the Company  entered  into an  agreement  with  Therapeutic
   Management,  Inc. to provide clinical trial  management  services and monitor
   all aspects of Esterom(R)'s Phase III clinical studies. In November 1999, the
   Company  entered  into  an  agreement  with  WCCS  to  assume  the  Company's
   obligations under the Therapeutic Management agreement.  The Company will pay
   WCCS approximately $350,000 based upon completion of certain project goals.

7. Subsequent event

   On May 1, 2000,  the Company  received  net proceeds of  $1,188,150  from the
   overallotment  sale of 180,000  shares of common stock and 300,000  warrants.
   The warrants  carry the same terms as those sold in the public  offering (see
   Note 4).




                                        12


<PAGE>


                       MANAGEMENTS DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


   Overview

   We  were  incorporated  in  California  in  1984  as  Entropin,   Inc.  ("old
   Entropin"),  and in 1998,  completed  an  agreement  and plan of merger  with
   Vanden  Capital  Group,  Inc. to exchange  all of the issued and  outstanding
   common shares of old Entropin for 5,220,000  shares of Vanden's common stock.
   We were merged into Vanden, and Vanden changed its name to Entropin, Inc. For
   accounting purposes, the acquisition was treated as a recapitalization of old
   Entropin based upon historical  cost,  with old Entropin as the acquirer.  In
   conjunction with the merger, Entropin, Inc. became a Colorado corporation.

   From our  inception in August 1984,  we have devoted  resources  primarily to
   funding our research and development efforts. We have been unprofitable since
   inception  and  have  had no  revenue  from  the  sale of  products  or other
   resources,  and do not  expect  revenue  for the  next  two  years,  or until
   Esterom(R) solution has received FDA approval. We expect to continue to incur
   losses for the  foreseeable  future  through the  completion of our Phase III
   clinical trials and the New Drug Application  process.  As of March 31, 2000,
   our accumulated deficit was approximately $14 million.

   Plan of Operation

   We raised  sufficient  funds in 1999 to complete the first part of a two part
   Phase III clinical trial program associated with the FDA approval process for
   the  treatment of acute painful  shoulder.  The trials began in November 1999
   and the first part is scheduled for completion in mid-2000.  In March 2000 we
   raised additional funds through a successful secondary offering. We intend to
   use a substantial portion of these funds to finance part two of our Phase III
   clinical trials, our New Drug Application process related to the treatment of
   acute painful shoulder, and to provide funds for research and development and
   working  capital.  In the  future,  we plan to seek FDA  approval  to  market
   Esterom(R)  solution for the treatment of impaired range of motion associated
   with lower back pain and identify and develop other medical  applications for
   Esterom(R)  solution,  such as  applications  for  arthritis  and other joint
   disorders.  We intend to  minimize  our fixed costs by  outsourcing  clinical
   studies, regulatory activities, manufacturing and sales and marketing.

   Results of Operations

   Three  months  ended March 31, 2000  compared to the three months ended March
   31, 1999.  Our research and  development  expenses were $498,023 for 2000, as
   compared to  $318,112 in 1999.  The  increase  in  research  and  development
   resulted  primarily from initiation of Phase III clinical trials. Our general
   and administrative  expenses were comparable for the two three month periods,
   $807,016 in 2000,  as compared to $758,115 in 1999.  Our interest  income was
   $44,411 in 2000,  as  compared to $2,805 in 1999.  This  increase in interest
   income  resulted from greater cash and cash  equivalent  balances during 2000
   reflecting  the proceeds from private  placements  and our  secondary  public
   offering.


                                       13
<PAGE>

   Liquidity and Capital Resources

   We have financed our operations  since  inception  primarily  through the net
   proceeds  generated  from the sale of our common  and  preferred  stock,  and
   through loans and advances from stockholders that were subsequently converted
   into equity  securities.  From  inception  through  March 31,  2000,  we have
   received  net cash  proceeds  from  these  financing  activities  aggregating
   approximately  $19  million.  As of March 31, 2000,  our working  capital was
   $13,652,574.  On March 20,  2000,  we completed a secondary  public  offering
   generating  net  proceeds  of  approximately  $12,500,000  from  the  sale of
   2,000,000  shares of common stock and  warrants.  On May 1, 2000, we received
   approximately  $1,200,000  from the  overallotment  sale of 180,000 shares of
   common stock and 300,000 warrants.

   Our liquidity and capital needs relate primarily to working capital, research
   and  development  of  Esterom(R)   solution,   and  other  general  corporate
   requirements.  We have not received any cash from operations since inception.
   Based on our  current  plans,  we believe  the  proceeds  from our  secondary
   offering and overallotment  will provide sufficient capital resources to fund
   our  operations  through the NDA  approval  process.  Expectations  about our
   long-term  liquidity may prove inaccurate if approval for Esterom(R) solution
   is  delayed  or not  obtained.  We will not  generate  revenue  from sales of
   Esterom(R)  solution  unless  Esterom(R)  solution is approved by the FDA for
   marketing.

   Net cash used in operating activities was approximately  $646,169 in 2000 and
   $352,000  in 1999.  The cash used in  operations  was  primarily  related  to
   funding  expansion  of  research  and  development  activities,  as  well  as
   establishing  an  administrative  infrastructure.  For the three months ended
   March 31, 2000, cash used in operating activities  principally represents the
   net loss for the period of  $1,278,198  adjusted  for  non-cash  stock option
   compensation and an increase in accounts payable.

   In March 2000, we entered into an agreement  with Neidiger,  Tucker,  Bruner,
   Inc. to cancel a 101,681  share stock  warrant  agreement,  for which we paid
   $330,000 cash as consideration.

   As of March 31, 2000,  our principal  source of liquidity  was  approximately
   $13,900,000 in cash, cash equivalents and certificates of deposit,  excluding
   the proceeds of our overallotment sale.

   In April  1998,  we  entered  into an  agreement  with  WCCS to  assist us in
   obtaining  FDA  approval  for  Esterom(R)  solution.  We are  required to pay
   management fees of approximately $880,400 through January 5, 2001 and $76,400
   per  quarter   beginning  January  2001  and  continuing  until  a  New  Drug
   Application is filed with the FDA.

   In August 1999,  we entered into an agreement  with  Therapeutic  Management,
   Inc. to provide clinical trial management services and monitor all aspects of
   Esterom's  part one of the Phase III clinical  studies.  In November 1999, we
   entered  into an  agreement  with WCCS to assume  our  obligations  under our
   agreement  with  Therapeutic  Management,  Inc. to perform tasks  required to
   comply with FDA  regulations  applicable  to the  conduct,  coordination  and
   management  of the first  Phase III trial.  Among  other  things,  WCCS is to
   select investigators, train clinical site personnel, maintain the master file
   of all  pre-study  and study  documents,  and prepare the Study  Report to be
   submitted  to the FDA. We will pay Western an  additional  $350,000  based on
   completion of certain project goals.

   Our operating expenses will increase as we proceed with part two of our Phase
   III  clinical  trials  through the New Drug  Application  and the related FDA
   approval process. We also expect that our general and administrative expenses
   will  increase  significantly  with  the  addition  of  our  full-time  chief
   executive

                                       14
<PAGE>
   officer  and  president.  The  estimated  period  for  which  the  we  expect
   available  sources of cash to be  sufficient  to meet our funding  needs is a
   forward-looking statement that involves risks and uncertainties. In the event
   that our capital  requirements  are greater than  estimated,  we made need to
   raise additional capital to fund our research and development activities. Our
   future  liquidity and capital  funding  requirements  will depend on numerous
   factors,  including the timing of regulatory actions for Esterom(R) solution,
   the cost and timing of sales,  marketing and  manufacturing  activities,  the
   extent to which Esterom(R)  solution gains market acceptance,  and the impact
   of  competitors'  products.  There can be no assurance  that such  additional
   capital will be available on terms  acceptable  to us, if at all. If adequate
   funds are not available, we may be forced to significantly curtail operations
   or to obtain funds through  entering into  collaborative  agreements or other
   arrangements  that may be on unfavorable  terms. Our failure to raise capital
   on  favorable  terms  could  have a  material  adverse  effect  on  business,
   financial condition or results of operations.

                                       15
<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.

     None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits
          --------

          Exhibit 27     Financial Data Schedule

     (b)  Reports on Form 8-K
          -------------------

          None.


                               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 15, 2000        By: /s/ Higgins D. Bailey
                                 ---------------------------------------
                                   Higgins D. Bailey
                                   Chairman of the Board


Date:     May 15, 2000        By: /s/ Wellington Ewen
                                 ---------------------------------------
                                   Wellington Ewen
                                   Chief Financial Officer

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