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        SEPTEMBER 30, 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 November 6, 2000, 9,696,424 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


                                                                  Page No.

PART I.           FINANCIAL INFORMATION


Item 1.     Financial statements:


Balance  Sheet -  December  31,  1999 and  September  30,  2000
(unaudited)                                                            2

Statement of Operations - For the Three Months Ended  September
30, 1999 and 2000 (unaudited)                                          4

Statement of  Operations - For the Nine Months Ended  September
30, 1999 and 2000 and Cumulative Amounts from Inception (August
27, 1984) Through September 30, 2000 (unaudited)                       5

Statement  of  Stockholders'  Equity  (Deficit)  - for the Nine
Months Ended September 30, 2000 (unaudited)                            6

Statement of Cash Flows - For the Nine Months  Ended  September
30, 1999 and 2000 and Cumulative Amounts from Inception (August
27, 1984) Through September 30, 2000 (unaudited)                       7

Notes to Unaudited Financial Statements                                9

Item 2.  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations                                   15


PART II.                OTHER INFORMATION

   Item 1   Legal Proceedings                                         18

   Item 2   Changes in Securities and Use of Proceeds                 18

   Item 4   Submission of Matters to a Vote of Security Holders       19

   Item 6   Exhibits and Reports on Form 8-K                          19

            Signatures                                                19


<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                    December 31, 1999 and September 30, 2000
                                   (Unaudited)
                                     ASSETS

                                                           1999         2000
                                                           ----         ----
Current assets:
   Cash and cash equivalents                            $2,260,526  $ 4,748,714
   Certificates of deposit                                       -    7,980,569
   Accrued interest receivable                                   -      193,768
   Prepaid expenses                                              -        9,671
                                                        ----------  -----------

   Total current assets                                  2,260,526   12,932,722

Property and equipment, at cost:
   Leasehold improvements                                   61,437            -
   Office furniture and equipment                           23,855       10,911
                                                        ----------  -----------

                                                            85,292       10,911

   Less accumulated depreciation                           (23,429)      (2,403)
                                                        ----------  -----------

    Net property and equipment                              61,863        8,508

Other assets:
   Deposits                                                 12,261        3,000
   Deferred stock offering costs (Note 4)                  169,425            -
   Patent costs, less accumulated amortization of
    $82,019 (1999) and $100,330 (2000)                     321,150      325,086
                                                       -----------  -----------

      Total other assets                                   502,836      328,086
                                                       -----------  -----------

                                                        $2,825,225  $13,269,316
                                                        ==========  ===========


                            See accompanying notes.
                                       2

<PAGE>


                                ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                    December 31, 1999 and September 30, 2000
                                   (Unaudited)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                          1999         2000
                                                          ----         ----
Current liabilities:
   Accounts payable                                    $  199,042    $  143,564
   Accounts payable - related parties                     123,763             -
                                                       ----------    ----------
    Total current liabilities                             322,805       143,564

Deferred royalty agreement (Note 7)                       184,071       194,787

Commitments and contingencies (Note 7)

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 (1999) and 195,500
   shares (2000) issued and  outstanding, $5.00
   per share redemption value (Note 3)                  1,093,175       927,184

Stockholders' equity (deficit) (Notes 4 and 5):
   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 9,691,424 (2000)
    shares issued and outstanding                           7,382         9,692
   Additional paid-in capital                          13,866,412    27,365,423
   Deficit accumulated during the development stage   (12,640,814)  (17,401,043)
   Unearned stock compensation                         (3,218,293)   (1,180,778)
                                                      -----------   -----------
    Total stockholders' equity (deficit)               (1,985,313)    8,793,294
                                                      -----------   -----------

                                                      $ 2,825,225   $13,269,316
                                                      ===========   ===========

                             See accompanying notes.
                                       3

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS
             For the Three Months Ended September 30, 1999 and 2000
                                   (Unaudited)

                                                             1999        2000
                                                             ----        ----
Costs and expenses:
   Research and development (Note 5)                     $  392,464  $1,025,382
   General and administrative (Note 5)                      765,774     854,360
   Rent-related party                                         2,400       2,400
   Depreciation and amortization                             13,223       7,173
                                                         ----------  ----------

    Operating loss                                       (1,173,861) (1,889,315)

Other income (expense):
   Interest income                                           22,868     218,258
   Interest expense                                               -           -
                                                          ---------  ----------

    Total other income (expense)                             22,868     218,258
                                                          ---------  ----------

Net loss (Note 2)                                        (1,150,993) (1,671,057)

Accrued dividends applicable to Series B
   preferred stock (Note 3)                                 (28,813)    (24,437)
                                                         ----------  ----------

Net loss applicable to common shareholders              $(1,179,806)$(1,695,494)
                                                        =========== ===========

Basic net loss per common share (Note 6)                     $ (.17)     $ (.18)
                                                        =========== ===========

Weighted average common shares
   outstanding (Note 6)                                   7,126,000   9,625,000
                                                        =========== ===========

                             See accompanying notes.
                                       4

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS
             For the Nine Months Ended September 30, 1999 and 2000
  and for the Period from August 27, 1984 (inception)through September 30, 2000
                                   (Unaudited)

                                                                    Cumulative
                                                                   amounts from
                                             1999         2000       inception
                                             ----         ----     ------------
Costs and expenses:
   Research and development (Note 5)      $1,086,795   $2,515,657   $ 9,113,067
   General and administrative (Note 5)     2,479,425    2,577,249     8,203,888
   Rent-related party                          3,600        7,200        25,514
   Depreciation and amortization              33,016       34,740       157,256
                                          ----------    ---------   -----------

    Operating loss                        (3,602,836)  (5,134,846)  (17,499,725)

Other income (expense):
   Interest income                            36,199      487,368       576,994
   Interest expense                           (1,662)           -      (242,811)
                                          ----------   ----------   -----------

    Total other income (expense)              34,537      487,368       334,183
                                          ----------   ----------   -----------

Net loss (Note 2)                         (3,568,299)  (4,647,478)  (17,165,542)

Accrued dividends applicable to Series B
   preferred stock (Note 3)                  (90,189)     (80,812)     (256,372)
                                            --------     --------     ---------
Net loss applicable to common
   shareholders                          $(3,658,488) $(4,728,290) $(17,421,914)
                                         ===========  ===========  ============

Basic net loss per common share (Note 6)      $ (.55)      $ (.53)      $ (3.15)
                                         ===========  ===========  ============

Weighted average common shares
   outstanding (Note 6)                    6,617,000    8,941,000     5,535,000
                                         ===========  ===========  ============


                             See accompanying notes.
                                       5

<PAGE>
<TABLE>



                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
         For the Period from January 1, 2000 through September 30, 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 5)                      -       -            -   1,803,925              -

   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   12,492,888           -              -

   Shares of stock issued for services    18,608      19      106,427           -              -

   Overallotment of common stock pur-
    suant to public offering (Note 4)    180,000     180    1,184,656           -              -

   Common stock issued in conversion
    of Preferred B shares                 35,000      35      165,956           -              -

   Issuance of stock options to directors      -       -      120,000    (120,000)             -

   Shares issued for Series B preferred
    stock dividend (Note 3)               22,550      23      112,727           -       (112,750)

   Cashless exercise of 105,000 options
    and warrants                          52,986      53          (53)          -              -

   Cancellation of 433,333 options to WCCS     -       -     (353,590)    353,590              -

   Net loss for the nine months ended
    September 30, 2000                         -       -            -           -     (4,647,478)
                                       ---------  ------  -----------  ----------   ------------

Balance, September 30, 2000            9,691,424  $9,692  $27,365,423  $(1,180,778) $(17,401,042)
                                       =========  ======  ===========  ===========  ============
</TABLE>

                             See accompanying notes.
                                       6

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT  OF CASH FLOWS
             For the Nine Months Ended September 30, 1999 and 2000
 and for the Period from August 27, 1984 (inception) through September 30, 2000
                                   (Unaudited)

                                                                   Cumulative
                                                                     amounts
                                                                      from
                                                1999       2000    inception
                                                ----       ----    ----------
Cash flows from operating activities:
   Net loss                              $(3,568,299) $(4,647,478) $(17,165,542)
   Adjustments to reconcile net loss to
    net cash used in operating activities:
     Depreciation and amortization            33,016       34,740       157,256
     Write-off of assets in connection
      with contract termination                    -       59,614        59,614
     IBC partner royalty agreement            10,716       10,716       194,787
     Services contributed in exchange for
      stock and stock options              2,282,303    1,910,371     7,371,345
     Services contributed in exchange for
      compensation agreements                      -            -     2,231,678
     Increase (decrease) in accounts
      payable - related party                      -     (123,763)            -
     Advances to related party                 9,857            -             -
     Increase (decrease) in accounts
      payable                                163,087      (55,478)      143,564
     Increase in accrued interest                  -     (193,768)      (24,629)
     Other                                     1,661       (9,671)       (7,878)
                                           ---------   ----------   -----------

     Total adjustments                     2,500,640    1,632,761    10,125,737
                                          ----------   ----------   -----------

     Net cash used in operations          (1,067,659)  (3,014,717)   (7,039,805)

Cash flows from investing activities:
   Purchase of property and equipment
    (net)                                     (8,337)     (10,171)     (112,670)
   Patent costs                              (36,435)     (22,248)     (425,417)
   Deposits                                        -       (3,256)      (15,517)
   Certificates of deposit                         -   (7,980,569)   (7,980,569)

                                           ---------   ----------   -----------
     Net cash used in investing activities   (44,772)  (8,016,244)   (8,534,173)

Cash flows from financing activities:
   Proceeds from recapitalization                  -            -       220,100
   Deferred stock offering costs             (42,175)     169,425       169,425
   Proceeds from sale of common stock
   (net)                                   3,367,330   13,679,724    18,110,739
   Proceeds from exercise of stock options    80,000            -             -
   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                           3,605,155   13,519,149    20,322,692
                                          ----------   ----------   -----------
Net increase in cash                       2,492,724    2,488,188     4,748,714

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

Cash and cash equivalents at end
  of period                               $2,938,057   $4,748,714    $4,748,714
                                          ==========   ==========    ==========

                          (Continued on following page)
                             See accompanying notes.
                                        7

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS
              For the Nine Months Ended  September 30, 1999 and 2000 and for the
    Period from August 27, 1984 (inception) to September 30, 2000
                                   (Unaudited)


                         (Continued from preceding page)

Supplemental disclosure of non-cash investing and financing activities:

   During the nine months ended  September 30, 2000,  the Company  issued 18,608
   shares of common stock for services totaling $106,446.

   During the nine months  ended  September  30,  2000,  the Company also issued
   35,000  shares  of  common  stock in a  conversion  from  preferred  B shares
   totaling $165,991.

   In July 2000,  the Company  issued  22,550  shares of common  stock valued at
   $5.00 per share as payment of accrued dividends on Series B preferred stock.


                                       8

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                               September 30, 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 nine months ended  September 30, 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.

                                       9

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                               September 30, 2000

2. Income taxes

   At September 30, 2000,  the Company has net operating loss  carryforwards  of
   approximately $5,238,000 and future tax deductions of $8,650,000 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 December  31, 1999 and  September  30,
   2000, total deferred tax assets and valuation allowance are as follows:

                                               1999        2000
                                               ----        ----
     Deferred tax assets resulting from:
      Net operating loss carryforwards      $ 596,000   $2,151,000
      Accrual to cash adjustments             874,000      876,000
      Unearned stock compensation             787,000    2,211,000
                                            ---------    ---------

          Total                             2,257,000    5,238,000

     Less valuation allowance              (2,257,000)  (5,238,000)
                                           ----------  -----------

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

   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, 2000.  Dividends are added to net loss in  determining  net
   loss per common share.

                                       10

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                               September 30, 2000

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.  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.  On May 1, 2000,  the  Company  received  net  proceeds of
   $1,184,836 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.

   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.            Wtd.avg.
                            price per   exercise   Number   exercise Number of
                              share      price   of shares   price    shares
                            ---------   -------- ---------  -------- ---------
   Balance December 31,
    1999                 $1.50 to $5.00  $3.42   2,616,001  $3.45   1,772,673
   Granted               $1.50 to $6.00  $2.82     205,000  $2.48     185,004
   Exercised                  $4.00      $4.00     (95,000) $4.00     (95,000)
   Cancelled                  $1.50      $1.50    (433,333) $1.50     (75,000)
                              -----      -----   ---------  -----   ---------

   Balance September 30,
    2000                  $1.50 to $5.00 $3.71   2,292,668  $3.41   1,787,677
                                                 =========          =========

                                       11

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                               September 30, 2000

4. Stockholders' equity (continued)

   The  following  is  additional  information  with  respect  to those  options
   outstanding at September 30, 2000:

                              Wtd.avg.remaining          Number      Options
    Option price per share contractual life in years   of shares  exercisable
    ---------------------- --------------------------   ---------  -----------
             $1.50                   2.63                91,667       75,000
             $2.50                   4.75                90,000       90,000
             $2.80                   2.29               180,001      180,001
             $3.00                   5.53               625,000      590,005
             $4.00                   3.74               806,000      806,000
             $5.00                   3.58               460,000       26,667
             $6.00                   4.50                40,000       20,004
                                                      ---------    ---------

                                                      2,292,668    1,787,677
                                                      =========    =========

   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     2,500,000
   Repurchased                           $4.00            (101,681)
   Exercised                             $4.00             (10,000)
                                         -----           ---------

   Balance September 30, 2000        $3.00 to $10.50     3,393,500
                                                         =========

5. Unearned stock compensation

   At September 30, 2000, the Company had  outstanding an aggregate of 5,686,168
   options and warrants of which 801,667 were at purchase prices lower than fair
   value of the stock at date of grant,  including  the  181,667  stock  options
   granted to Western Center for Clinical Studies, Inc. (see Note 7). 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:


                                       12

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                               September 30, 2000

5. Unearned stock compensation (continued)

                      Three Months Ended     Nine Months Ended     Cumulative
                        September 30,          September 30,      amounts from
                       1999       2000       1999        2000      inception
                       ----       ----       ----        ----      ---------

Research and
   development       $178,725  $  5,142  $  531,918   $ 359,754    $1,570,978
General and
   administrative     531,051   537,743   1,735,442    1,509,971    4,744,954
                     --------  --------  ----------   ----------   ----------

                     $709,776  $542,885  $2,267,360   $1,869,725   $6,315,932
                     ========  ========  ==========   ==========   ==========

6. 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.

7. 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% of the Company's  annual  sales) on cumulative  annual
   royalties  received by the Company.  As of June 30, 2000, no liabilities have
   been accrued with respect to this agreement.

   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 September 30, 2000, the total liability accrued with
   respect to this  agreement  was  $194,787.  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.

                                       13

<PAGE>


                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                               September 30, 2000

7. Commitments and contingencies (continued)

   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. WCCS subsequently
   assigned  options to purchase  16,667 shares of common stock to its employees
   and consultants.

   In July 2000, upon completion of enrollment in the Phase IIIA clinical trial,
   the Company terminated its agreements with WCCS. The terms of the termination
   agreement include a final payment of $71,600 and the issuance of an option to
   purchase 75,000 shares of Entropin,  Inc. common stock at $1.50 per share and
   an option to purchase  90,000 shares of Entropin,  Inc. common stock at $2.50
   per share. A previously  issued option to purchase 433,333 shares of Entropin
   common  stock at $1.50 per share was  cancelled  as part of this  termination
   agreement.  The Company has also agreed to leave WCCS leasehold improvements,
   office furniture and equipment and a deposit with a net book value of $59,614
   at June 30, 2000.

   In May 2000, the Company  entered into an agreement with a contract  research
   organization to conduct statistical analysis of the data collected during the
   course of the Phase  IIIA  clinical  trial  and to  prepare a written  report
   summarizing  the results of the trial.  The cost to perform this  statistical
   analysis and medical writing will approximate $269,000.

   In July  2000,  the  Company  executed  a letter  of intent  with a  contract
   research  organization  to  manage  the  remaining  clinical  and  regulatory
   processes of preparing,  submitting,  filing and finalizing approval of a New
   Drug Application for Esterom(R).  this  organization will replace WCCS during
   our Phase III clinical trials.

                                       14





<PAGE>
                  MANAGEMENT'S 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 September 30, 2000, our accumulated deficit was
approximately $17.4 million.

PLAN OF OPERATION

In March 2000, we raised $12.5 million through a successful secondary
offering.  In May 2000, we raised an additional $1.2 million through the
sale of the underwriter's overallotment.  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

During the nine months ended September 30, 2000, Entropin incurred a net
loss of $4,647,478 compared to $3,568,299 for the nine months ended
September 30, 1999.  Research and development ("R&D") expenses were
$2,515,657 for the nine months ended September 30, 2000, compared to
$1,086,795 for the nine months ended September 30, 1999.  The $1,428,862
increase in research and development expenses resulted primarily from
expenditures associated with our Phase IIIA clinical trial.  This expense
was partially offset by an increase in interest income from $36,199 for
the nine months ended September 30,1999 to $487,368 for the nine months
ended September 30, 2000.  The increase in interest income resulted from
larger cash and cash equivalent balances during 2000 reflecting the proceeds

                                   15
<PAGE>
from our successful secondary offering in late March.  R&D and G&A for
the nine months ended September 30, 2000, included expenses of $359,754
and $1,509,971, respectively, related to the amortization of non-cash
compensation associated with stock options issued for services rendered.

During the three months ended September 30, 2000, Entropin incurred a net
loss of $1,691,057 compared to $1,150,993 for the three months ended
September 30, 1999.  The increase resulted primarily from an increase of
$632,918 in research and development expenses related to the funding of
our Phase IIIA clinical trial.  This expense was partially offset by a
$195,390 increase in interest income.

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 September 30, 2000, we have
received net cash proceeds from these financing activities aggregating
approximately $20.3 million.  As of September 30, 2000, our working capital
was $12,789,158. On March 20, 2000, we completed a secondary public offering
generating net proceeds of approximately $12.5 million from the sale of
2,000,000 shares of common stock and warrants. On May 1, 2000, we received
approximately $1.2 million 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 $3,014,717 during the first
nine months of 2000 compared with $1,067,659 during the first nine months
of 1999. The cash used in operations was primarily related to funding our
Phase IIIA clinical trial, expansion of research and development
activities, and establishing an administrative infrastructure.

As of September 30, 2000, our principal source of liquidity was approximately
$12.7 million in cash, cash equivalents and certificates of deposits.

In May 2000, we entered into an agreement with a contract research
organization to conduct statistical analysis of the data collected during
the course of our Phase IIIA clinical trial and to prepare a written
report summarizing the results of the trial.  The cost to perform this
statistical analysis and medical writing will approximate $269,000,
including a change order issued in October 2000, covering additional
analysis not specified in the original contract.

                                   16
<PAGE>
In July 2000, upon completion of enrollment in our Phase IIIA clinical
trial, Entropin terminated its agreements with Western Center for
Clinical Studies (WCCS).  The termination agreement included a final
payment of $71,600 and the issuance of an option to purchase 75,000
shares of Entropin, Inc. common stock at $1.50 per share and an option to
purchase 90,000 shares of Entropin common stock at $2.50 per share.  A
previously issued option to purchase 433,333 shares of Entropin common
stock at $1.50 per share was cancelled as part of the termination
agreement.  The Company has also agreed to leave WCCS with assets, which
had a net book value of $59,614 at June 30, 2000.  These assets comprise
leasehold improvements, office furniture and equipment, and a security deposit.

In July 2000, we executed a letter of intent with a contract research
organization to manage the remaining clinical and regulatory processes of
preparing, submitting, filing and finalizing approval of a New Drug
Application for Esterom(R).

On July 15, 2000, Entropin issued 22,550 shares of common stock as
payment of the annual dividends accrued on our Series B preferred stock
in accordance with the terms of our July 1998 private placement of
245,500 shares of Series B preferred stock at $5.00 per share.  The
Series B preferred stock is designated as redeemable 10% cumulative non-
voting convertible preferred stock with $.001 par value.  Dividends
accrue at the rate of $.50 per share per annum and are to be paid
annually in arrears commencing July 15, 1998.  At Entropin's election,
annual dividends may be paid in cash and/or in shares of Entropin's
common stock valued at $5.00 per share.

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.  The estimated period for which 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 may
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.



                                   17
<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 AND USE OF PROCEEDS.

RECENT SALES OF UNREGISTERED SECURITIES

In July 2000, the Registrant issued an aggregate of 22,550 shares of its
common stock to the holders of the Registrant's Series B Preferred Stock
as a dividend, valued at $5.00 per share.  The issuance of the dividend
shares was exempt from registration in that there was no sale of the
shares by the Registrant.  Each holder of the Registrant's Series B
Preferred Stock represented that he received the shares for investment
and not with a view to distribution.  All certificates were endorsed with
a legend restricting the sale or transfer of the securities except in
accordance with federal securities laws.  Stop transfer instructions have
been placed against the transfer of these certificates by the
Registrant's Transfer Agent.

For securities issued prior to this reporting period, such information
about the sales of unregistered securities is incorporated by reference
to Item 26 of the Registrant's Post-Effective Amendment No.1 to Form SB-2
Registration Statement filed on March 22, 2000 under registration No. 333-11308.

USE OF PROCEEDS

Pursuant to a Registration Statement, Registration No. 333-11308, which
became effective on March 14, 2000, the Registrant sold for an aggregate
market price of $14,500,000 on March 20, 2000, 2,000,000 shares of common
stock at $7.00 per share, and 2,000,000 warrants to purchase 2,000,000
shares of common stock at $0.25 per warrant.  All offering expenses,
including underwriting discounts and commissions, finders' fees, and
other underwriting expenses, are estimated to be $2,000,000 which was
paid to the underwriters.  After deduction of offering expenses,
Registrant obtained net proceeds of approximately $12.5 million.  On May 1,
2000, the Managing Underwriter exercised its overallotment option, for
an aggregate price of $1,335,000, to purchase an additional 180,000
shares of common stock at $7.00 per share, and an additional 300,000
warrants to purchase 300,000 shares of common stock at $0.25 per warrant.
After deduction of overallotment expenses of approximately $135,000, the
Registrant obtained net proceeds of approximately $1.2 million.

Since the Secondary Offering the net proceeds have been used as follows:
$672,764 for General and Administrative and Working Capital; $1,968,415
for Phase III clinical trials and the research and development required
thereby; $2,588,672 is currently maintained in a money market account for
additional working capital and Phase III clinical trials; and $10,140,611
is currently held in temporary investments pursuant to Prospectus dated
March 14, 2000.  None of the proceeds have been applied to the New Drug
Application and are not scheduled for such use until completion of the
Phase III clinical trials.   As part of the General and Administrative
Expenses, the Registrant's directors have been compensated directly in an
aggregate amount of $25,000; the Registrant's officers have directly
received $107,180; and Thomas Anderson, who owns more than 10% of the
Registrant's securities, indirectly received $4,800 in the form of

                                   18
<PAGE>
rent for the Registrant's office space which was paid to the Law Offices
of Thomas Anderson.  All other payments made to other persons or entities
were direct payments.


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

There have been no matters submitted to a vote of security holders during
the period of July 1, 2000 to September 30, 2000 through the solicitation
of proxies or otherwise.


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

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

          EXHIBIT 27     FINANCIAL DATA SCHEDULE

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

During the last quarter covered by this Report, the Registrant filed a
Current Report on Form 8-K dated October 9, 2000 regarding the results of
the Phase IIIA clinical trials required by the U.S. Food and Drug
Administration as reported in that certain press release dated October 2, 2000.


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:   November 14, 2000          By: /s/ HIGGINS D. BAILEY
                                      --------------------------------
                                        Higgins D. Bailey
                                        Chairman of the Board

Date:   November 14, 2000          By: /s/ PATRICIA G. KRISS
                                      --------------------------------
                                        Patricia G. Kriss
                                        Chief Financial Officer



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