**U.S.
      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, 2006





 ̈  **TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT**





For
      the
      transition period from  to





Commission
      file number 000-29807


________________




**ENTROPIN,
      INC.**


**(Exact
      name of small business issuer as specified in its charter)**




________________




**DELAWARE**
            **68-0510827****(State
                or other jurisdiction of**
              **incorporation
                or organization)**
            **(IRS
                employer**
              **Identification
                No.)**





**13314
      Lost Key Place, Bradenton, FL. 34202**


**(Address
      of principal executive offices)**





**(941)
      388-9512**


**(Issuer’s
      telephone number)**





**Former
      Address**


**45926
      Oasis Street, Indio, CA 92201**





**Former
      Telephone Number**


**(760)
      775-8333**


________________


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  ̈





Indicate
      by check mark whether the Registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.):  Yes x No  ̈


As
      of
      November 3, 2006, 30,645,341  shares
      of
      the issuer’s Common Stock, $.0001 par value per share, were outstanding.





Transitional
      Small Business Disclosure Format Yes  ̈ No x









**INDEX**




**PART I.**
            **FINANCIAL
                INFORMATION**Item 1.
            Financial
                StatementsCondensed
                Balance Sheets - December 31, 2005 and September 30, 2006
                (unaudited)
            2Condensed
                Statements of Operations - For the Three Months Ended September 30,
                2005
                and 2006 (unaudited)
            3Condensed
                Statements of Operations - For the Nine Months Ended September 30,
                2005
                and 2006 and for the Period from August 27, 1984 (Inception) through
                September 30, 2006 (unaudited)
            4Condensed
                Statement of Changes in Stockholders’ Deficit - For the Nine Months Ended
                September 30, 2006 (unaudited)
            5Condensed
                Statements of Cash Flows - For the Nine Months Ended September 30,
                2005
                and 2006 and for the Period from August 27, 1984 (Inception) through
                September 30, 2006 (unaudited)
            6Notes
                to Condensed Financial Statements (unaudited)
            8Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            11Item
                3.
            Controls
                and Procedures
            15**PART II.**
            **OTHER
                INFORMATION**Item
                1.
            Legal
                Proceedings
            16Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            16Item
                3.
            Defaults
                upon Senior Securities
            16Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            16Item
                5.
            Other
                Information
            17Item
                6.
            Exhibits
            17Signatures
            18




1


**ENTROPIN,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONDENSED
      BALANCE SHEETS**


**December
      31, 2005 and September 30, 2006**




**December
                31, 2005**
            
            **September
                30, 2006****(unaudited)**Current
                assets:Cash
                and cash equivalents
            
            $
            112,841
            
            $
            42,724Prepaid
                expenses
            
            
            —
            
            
            —Total
                current assets
            
            $
            112,841
            
            $
            42,724Total
                assets
            
            $
            112,841
            
            $
            42,724**LIABILITIES
                AND STOCKHOLDERS’ DEFICIT**Current
                liabilities:Accounts
                payable
            
            $
            589,114
            
            $
            571,102Commitments
                & contingenciesStockholders’
                deficit:Series
                A’ redeemable preferred stock, $.0001 par value; 3,210,487 shares
                authorized, and 3,210,487 shares issued and outstanding, $1.00 per
                share
                redemption value
            
            
            3,210,487
            
            
            3,210,487Common
                stock, $.0001 par value; 200,000,000 shares authorized; 30,645,341
                shares
                issued and outstanding
            
            
            3,065
            
            
            3,065Additional
                paid-in capital
            
            
            34,819,422
            
            
            34,819,422Deficit
                accumulated during the development stage
            
            
            (38,509,247
            )
            
            (38,561,352
            )Total
                stockholders’ deficit
            
            
            (476,273
            )
            
            (528,378
            )Total
                liabilities and stockholders’ deficit
            
            $
            112,841
            
            $
            42,724




See
      accompanying notes to condensed financial
      statements.


2




**ENTROPIN,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONDENSED
      STATEMENTS OF OPERATIONS**


**For
      the Three Months Ended September 30, 2005 and 2006**


**(Unaudited)**




2005
              
              2006Costs
                  and expenses:General
                  and administrative
              
              
              34,302
              
              
              22,215Impairment
                  of patent costs
              
              $
              695,572
              
              $
              -Operating
                  loss
              
              
              (729,874
              )
              
              (22,215
              )Other
                  income:Interest
                  income
              
              
              -
              
              
              -Interest
                  expense
              
              
              -
              
              
              -Other
                  Expense
              
              
              -
              
              
              -Total
                  other income, net
              
              
              -
              
              
              -Net
                  loss
              
              
              (729,874
              )
              
              (22,215
              )Dividends
                  applicable to Series Bpreferred
                  stockholders
              
              
              -
              
              
              -Net
                  loss applicable to common stockholders
              
              $
              (729,874
              )
              $
              (22,215
              )Basic
                  and diluted net loss per common share
              
              $
              (.02
              )
              $
              (.00
              )Weighted
                  average common shares outstanding
              
              
              30,645,000
              
              
              30,645,000




See
      accompanying notes to condensed financial statements.




3




**ENTROPIN,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONDENSED
      STATEMENTS OF OPERATIONS**


**For
      the Nine Months Ended September 30, 2005 and 2006**


**and
      for the Period from August 27, 1984 (Inception) Through September 30, 2006**


**(Unaudited)**




**2005**
            
            **2006**
            
            **Inception through
                September 30, 2006**Costs
                and expenses:Research
                and development
            
            $
            131,006
            
            $
            —
            
            $
            16,043,819General
                and administrative
            
            
            1,398,647
            
            
            52,105
            
            
            21,893,168Impairment
                of patent costs
            
            
            695,572
            
            
            —
            
            
            695,572Operating
                loss
            
            
            (2,225,224
            )
            
            (52,105
            )
            
            (38,632,559
            )Other
                income (expense):Interest
                income
            
            
            20,762
            
            
            —
            
            
            1,529,259Interest
                expense
            
            
            —
            
            
            —
            
            
            (242,811
            )Other
                Expense
            
            
            (931
            )
            
            —
            
            
            (127,241
            )Total
                other income (expense), net
            
            
            19,831
            
            
            —
            
            
            1,159,207Net
                loss
            
            
            (2,205,393
            )
            
            (52,105
            )
            
            (37,473,352
            )Dividends
                applicable to Series B preferred stockholders
            
            
            —
            
            
            —
            
            
            (1,103,184
            )Net
                loss applicable to common stockholders
            
            $
            (2,205,393
            )
            $
            (52,105
            )
            $
            (38,576,536
            )Basic
                and diluted net loss per common share
            
            $
            (0.07
            )
            $
            (0.00
            )
            $
            (4.20
            )Weighted
                average common shares outstanding
            
            
            30,645,000
            
            
            30,645,000
            
            
            9,187,000





See
      accompanying notes to condensed financial statements.




4




**ENTROPIN,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONDENSED
      STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT**


**For
      the Nine Months Ended September 30, 2006**


**(Unaudited)**




**Series
                  A Redeemble**
                **Preferred
                  Stock**
              
              
              **Common
                  Stock****Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **Additional**
                  **paid-in capital**
              
              
              **Deficit**
                      **accumulated**
                    **during**
                    **development
                      stage**
              
              
              **Total**
                  **stockholders’
                    equity**Balance,
                  January 1, 2006
              
              
              3,210,487
              
              $
              3,210,487
              
              
              30,645,341
              
              $
              3,065
              
              $
              34,819,422
              
              $
              (38,509,247
              )
              $
              (476,273
              )Net
                  loss for the period
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (52,105
              )
              
              (52,105
              )Balance,
                  September 30, 2006
              
              
              3,210,487
              
              $
              3,210,487
              
              
              30,645,341
              
              $
              3,065
              
              $
              34,819,422
              
              $
              (38,561,352
              )
              $
              (528,378
              )




See
      accompanying notes to condensed financial statements.




5





**ENTROPIN,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONDENSED
      STATEMENTS OF CASH FLOWS**


**For
      the Nine Months Ended September 30, 2005 and 2006**


**and
      for the Period from August 27, 1984 (Inception) Through September 30, 2006**


**(Unaudited)**




**2005**
              
              **2006**
              
              **Inception through
                  Sept. 30, 2006**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (2,205,393
              )
              $
              (52,105
              )
              $
              (37,473,352
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
                  and amortization
              
              
              30,624
              
              
              —
              
              
              352,584Impairment
                  of patent costs
              
              
              695,572
              
              
              —
              
              
              695,572Series
                  B preferred stock redemption conversion incentive
              
              
              —
              
              
              —
              
              
              126,309Loss
                  on disposal of assets
              
              
              —
              
              
              —
              
              
              1,837Services
                  received in exchange for stock, stock options and warrants
              
              
              —
              
              
              —
              
              
              10,642,845Services
                  received in exchange for compensation agreements
              
              
              —
              
              
              —
              
              
              2,231,678Increase
                  (decrease) in accounts payable
              
              
              (41,823
              )
              
              (18,012
              )
              
              778,799Other
              
              
              —
              
              
              —
              
              
              58,610Net
                  cash used in operating activities
              
              
              (1,521,020
              )
              
              (70,117
              )
              
              (22,585,118
              )Cash
                  flows from investing activities:Maturities
                  (purchase) of short-term investments, net
              
              
              1,273,000
              
              
              —
              
              
              —Patent
                  costs
              
              
              (50,188
              )
              
              —
              
              
              (976,433
              )Purchase
                  of property and equipment
              
              
              —
              
              
              —
              
              
              (130,515
              )Net
                  cash provided by (used in) investing activities
              
              
              1,288,812
              
              
              —
              
              
              (1,106,948
              )Cash
                  flows from financing activities:Proceeds
                  from issuance of common stock and warrants
              
              
              —
              
              
              —
              
              
              21,732,261Proceeds
                  from issuance of preferred stock
              
              
              —
              
              
              —
              
              
              1,142,750Proceeds
                  from stockholder loans
              
              
              —
              
              
              —
              
              
              809,679Proceeds
                  from shares issued pursuant to recapitalization
              
              
              —
              
              
              —
              
              
              220,100Proceeds
                  from stockholder advances
              
              
              —
              
              
              —
              
              
              98,873Repayments
                  of stockholder advances
              
              
              —
              
              
              —
              
              
              (98,873
              )Repurchase
                  of common stock
              
              
              —
              
              
              —
              
              
              (40,000
              )Payment
                  for cancellation of common stock warrant
              
              
              —
              
              
              —
              
              
              (330,000
              )Proceeds
                  from convertible notes payable
              
              
              —
              
              
              —
              
              
              200,000Net
                  cash provided by financing activities
              
              
              —
              
              
              —
              
              
              23,734,790Net
                  (decrease) increase in cash and cash equivalents
              
              
              (298,208
              )
              
              (70,117
              )
              
              42,724Cash
                  and cash equivalents at beginning of period
              
              
              444,611
              
              
              112,841
              
              
              —Cash
                  and cash equivalents at end of period
              
              $
              146,403
              
              $
              42,724
              
              $
              42,724




(Continued
        on following page)
 See
        accompanying notes to condensed financial statements


6




**ENTROPIN,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONDENSED
      STATEMENTS OF CASH FLOWS**


**For
      the Nine Months Ended September 30, 2005 and 2006**


**and
      for the Period from August 27, 1984 (Inception) Through September 30, 2006**


**(Unaudited)**





(Continued
      from preceding page)





Supplemental
      disclosure of cash flow information:


**2005**
              
              **2006**
              
              **Inception through
                  Sept. 30, 2006**Cash
                  paid for income taxes during period
              
              $
              —
              
              $
              —
              
              $
              —Cash
                  paid for interest during the period
              
              $
              —
              
              $
              —
              
              $
              242,811




Supplemental
      disclosure of non-cash investing and financing activities:





During
      the period from August 27, 1984 (inception) through September 30, 2006, the
      Company issued 3,210,487 shares of Series A preferred stock in exchange for
      an
      aggregate $1,710,487 of notes payable to stockholders plus accrued interest
      and
      a $1,500,000 compensation agreement.





During
      the period from August 27, 1984 (inception) through September 30, 2006, the
      Company converted promissory notes payable with outstanding principal and
      interest balances totaling $201,660 into 100,831 shares of common stock.





During
      the period from August 27, 1984 (inception) through September 30, 2006, the
      Company issued 94,850 shares of common stock at $5.00 per share as payment
      of
      accrued dividends on Series B preferred stock.





During
      the period from August 27, 1984 (inception) through September 30, 2006, the
      Company issued 1,337,333 shares of common stock totaling $1,336,609, for
      conversion of shares of Series B preferred stock.





See
      accompanying notes to condensed financial statements.




7




**ENTROPIN,
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONDENSED FINANCIAL STATEMENTS**


**(Unaudited)**





The
      accompanying financial statements of Entropin, Inc. have been prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America (“GAAP”) for interim financial information and with the instructions to
      Form 10-QSB and Item 310(b) of Regulation S-B. Certain information and note
      disclosures normally included in financial statements prepared in accordance
      with GAAP have been condensed or omitted under such rules and regulations.
      Accordingly, they do not include all of the information and footnotes required
      by GAAP 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,
      2006 are not necessarily indicative of the results to be expected for the full
      year. For further information, refer to the financial statements and notes
      thereto included in our annual report on Form 10-KSB for the year ended December
      31, 2005 as filed with the Securities and Exchange Commission on April 11,
      2006.





1. Organization
      and summary of significant accounting policies





Organization
      and basis of presentation:





Entropin,
      Inc. (the “Company”), a Delaware corporation, was organized as a California
      corporation in August 1984. The Company has been a pharmaceutical research
      and
      development company focused on the development of its proprietary compound,
      ENT-103, as a pain therapy. Activities from inception include research and
      development, seeking the U.S. Food and Drug Administration (“FDA”) approval for
      its proprietary compounds, including its current drug candidate, ENT-103, as
      well as fund raising.





The
      Company is no longer seeking FDA approval for these products due to a lack
      of
      capital. The Company is currently seeking additional capital and evaluating
      the
      possibility of a merger with another company.





Going
      Concern:





As
      of
      September 30, 2006, the Company had total current assets of $42,724 and current
      liabilities of $571,102. The Company’s financial statements have been presented
      on a going concern basis, which contemplates the realization of assets and
      the
      satisfaction of liabilities in the normal course of business. The Company is
      in
      the development stage and has been primarily involved in research and
      development activities. This has resulted in significant operating losses and
      an
      accumulated deficit at September 30, 2006 of $38,561,352. Management anticipates
      additional operating losses for the foreseeable future. These factors, among
      others, indicate that the Company will be unable to continue as a going concern
      unless it can immediately obtain significant additional funds to support its
      operations. The financial statements do not include any adjustments related
      to
      the recoverability of recorded asset amounts that may be necessary should the
      Company be unable to continue as a going concern. In the absence of positive
      cash flows from operations which the Company expects will not be possible for
      several years, if at all, the Company is and will remain highly dependent on
      its
      ability to secure additional funding through the issuance of debt or equity
      instruments, corporate partnering or merger/acquisition arrangements. As the
      Company was unable to raise sufficient additional funds on a timely basis,
      it
      was forced to cease its operations prior to the end of the second quarter of
      2005.





It
      is
      management’s plan to put all of its effort into settling the outstanding
      litigation against the Company in the immediate future. Once the litigation
      is
      resolved, the Company intends to seek a merger or acquisition with another
      company. There can be no assurance that the litigation will be resolved or
      that
      a merger or acquisition will be consummated.





The
      Company does not have capital sufficient to meet the Company’s cash needs,
      including the cost of compliance with the continuing reporting requirements
      of
      the Securities Exchange Act of 1934. The Company will have to seek loans or
      equity placements to cover such cash needs. Lack of existing capital may be
      a
      sufficient impediment to prevent the Company from accomplishing the goal of
      successfully executing a new business strategy. The Company will need to raise
      additional funds to conduct its business activities in the next twelve
      months.





At
      this
      time the Company has no commitments to provide funds. Accordingly, there can
      be
      no assurances that any additional funds will be available to the Company to
      allow it to cover its expenses as they are incurred.





8





Because
      the Company has not yet completed product development, obtained regulatory
      approval, or verified the market acceptance and demand for any products it
      may
      develop, its activities have been accounted for as those of a “development stage
      enterprise” as set forth in Statement of Financial Accounting Standards No. 7,
“Accounting and Reporting by Development Stage Enterprises”.





Use
      of
      estimates:





The
      preparation of financial statements in conformity with GAAP requires management
      to make estimates and assumptions that affect the reported amounts of assets
      and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those estimates.





Income
      taxes:





The
      Company provides for income taxes utilizing the asset and liability approach
      under which deferred income taxes are recognized based upon currently enacted
      tax laws and rates applicable to the periods in which the taxes are expected
      to
      become payable. A valuation allowance is established for deferred income tax
      assets when their realization is not reasonably assured.





Property
      and equipment:





Office
      furniture and equipment is recorded at cost. Depreciation commences as items
      are
      placed in service and is computed using the straight-line method over their
      estimated useful lives of three years.





Leasehold
      improvements are recorded at cost and amortized using the straight-line method
      over the shorter of their estimated useful life or the related lease term.





Research
      and development costs:





Research
      and development costs are expensed as incurred.





Patents:





The
      Company believes that patents and other proprietary rights are important to
      its
      business. It is the Company’s policy to file patent applications to protect its
      technology, inventions and improvements to inventions that are considered
      important to the development of its business. Patent costs are capitalized
      and
      amortized on a straight-line basis over an estimated useful life of 16
      years.





Amortization
      expense related to amortizable patents was $28,718 and $0 for the nine months
      ended September 30, 2005 and 2006, respectively, and approximately $281,000
      from
      inception through September 30, 2006. The Company decided to write off the
      balance of the patents totaling $695,572 as of September 30, 2005, due to a
      lack
      of capital to fund the approval process for the patents.





Impairment
      of long-lived assets:





The
      Company evaluates its long-lived assets for impairment whenever events or
      changes in circumstances indicate that the carrying amount of such assets or
      intangibles may not be recoverable. Recoverability of assets to be held and
      used
      is measured by a comparison of the carrying amount of an asset to future
      undiscounted net cash flows expected to be generated by the asset. If such
      assets are considered to be impaired, the impairment to be recognized is
      measured by the amount by which the carrying amount of the assets exceeds the
      fair value of the assets. Assets to be disposed of are reported at the lower
      of
      the carrying amount or fair value less costs to sell.





9





Concentrations
      of credit risk:





The
      Company invests its excess cash principally in certificates of deposit. The
      Company has established guidelines relative to diversification and maturities
      that maintain safety and liquidity. These guidelines are periodically reviewed
      and modified to take advantage of trends in yields and interest rates. The
      Company has not experienced any losses on its cash equivalents or short-term
      investments.





Stock-based
      compensation:





The
      Company follows the fair value method of accounting for employee stock-based
      compensation provided for in Statement of Financial Accounting Standards No.
      123, “Accounting for Stock-Based Compensation”. Compensation cost for stock
      option grants is measured as the fair value of the options using the
      Black-Scholes option pricing model. Amounts recorded for options granted to
      non-employees are determined in accordance with Statement of Financial
      Accounting Standards No. 123 and EITF 96-18 based on the fair value of the
      consideration or the fair value of the equity instruments issued, whichever
      is
      more reliably measured.





Fair
      value of financial instruments:





The
      carrying amounts of cash, cash equivalents, short-term investments and accounts
      payable are considered to be representative of their respective fair values
      because of their short-term nature.




Loss
      per
      share:





Net
      loss
      per common share is computed using the weighted average number of common shares
      outstanding. Basic and diluted net loss per common share amounts are equivalent
      for the periods presented as the inclusion of common stock equivalents in the
      number of shares used for the diluted computation would be anti-dilutive.
      Dividends on preferred stock, consisting of 10% cumulative dividends and deemed
      dividends related to the beneficial conversion feature and mandatory redemption
      accretion of Series B preferred stock, are added to net loss for the purpose
      of
      determining net loss and net loss per share amounts applicable to common
      stockholders.





Segment
      reporting:





The
      Company currently operates in a single segment. In addition, financial results
      are prepared and reviewed by management as a single operating segment. The
      Company continually evaluates its operating activities and the method utilized
      by management to evaluate such activities and will report on a segment basis
      when appropriate to do so.





2. Commitments
      and contingencies





The
      Company, along with two of its former officers and/or directors, is currently
      a
      defendant in a class action securities fraud lawsuit that is pending in the
      United States District Court for the Central District of California. The
      plaintiffs in this lawsuit are a class of shareholders who purchased Entropin
      securities in the Company’s March 15, 2000 public offering. In the lawsuit,
      Entropin is accused of violating Sections 10(b) and 20(a) of the Securities
      Exchange Act of 1934 by making false and misleading statements in the Company’s
      March 15, 2000 registration statement regarding the scientific and regulatory
      development of its developmental drug, Esterom. Specifically, the Company and
      the individual defendants are accused of making false and misleading statements
      regarding: (1) the results of its Phase II clinical study of Esterom; (2) the
      Phase III clinical study of Esterom; and (3) Entropin’s intention to file a new
      drug application for Esterom in early 2001. The Company is vigorously defending
      itself against these allegations, which it believes are without merit. A trial
      date has been set for January 9, 2007. However, there can be no assurance that
      the Company will succeed in defending or settling this action. Additionally,
      there can be no assurance that the action will not have a material adverse
      effect on the Company's business.





The
      Company, along with two of its former officers and directors, is also a
      defendant in a class action securities fraud lawsuit that is pending in
      California Superior Court. The allegations and parties in this lawsuit are
      largely identical to those in the federal litigation described above. In June
      2004, this lawsuit was dismissed by the California Superior Court as having
      been
      filed after the statutes of limitations had expired. However, the California
      Court of Appeals has reversed the California Superior Court’s order of dismissal
      and has taken actions to remand the matter back to the California Superior
      Court
      for further deliberations. The Company will vigorously defend itself against
      these allegations, which it believes are without merit. There can be no
      assurance that the Company will succeed in defending or settling this action.
      Additionally, there can be no assurance that the action will not have a material
      adverse effect on the Company's business. As of the date of this report, the
      Company is not a party to any other material legal proceedings.




10




**Item 2.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**





*The
      following discussion and analysis should be read in conjunction with the
      unaudited financial statements and notes thereto included in Part I - Item
      1 of
      this report, and the audited financial statements and notes thereto contained
      in
      our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005.*





The
      following Management’s Discussion and Analysis of Financial Condition and
      Results of Operations and other portions of this Form 10-QSB contain
      forward-looking statements within the meaning of Section 21E of the Securities
      Exchange Act of 1934, as amended, and are subject to the Safe Harbor provisions
      created by that statute. In some cases, you can identify the forward-looking
      statements by terminology such as
      may,”“will,”“should,”“could,”“expects,”“plans,”“anticipates,”“believes,” “estimates,”“predicts,”“potential”
      or “continue” or the negative of these terms or other comparable terminology.
      Our business and results of operations are subject to various risks and
      uncertainties as disclosed under the caption “Factors That May Affect Our Future
      Results and the Trading Price of Our Common Stock” in this Form 10-QSB. These
      risks and uncertainties include our need and ability to raise significant
      additional capital; our history of significant operating losses; our ability
      to
      successfully complete formulation, development and preclinical studies for
      our
      sole drug candidate, ENT-103; the time, cost and uncertainty of obtaining
      regulatory approvals; and our ability to successfully commercialize products.
      The actual results that we achieve may differ materially from any
      forward-looking statements due to these risks and uncertainties and we undertake
      no obligation to update any such forward-looking statements.





We
      were
      incorporated in California in 1984 as Entropin, Inc., old (“Entropin”), and in
      1998 completed a merger with and into Vanden Capital Group, Inc. (“Vanden”),
      pursuant to which all of the issued and outstanding common shares of old
      Entropin were converted into a majority of Vanden’s common stock. Vanden
      subsequently 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, became a Colorado corporation. In June 2002, we changed our
      state of incorporation from Colorado to Delaware.





From
      our
      inception in August 1984, we have devoted our resources primarily to funding
      our
      research and development efforts and conducting clinical trials with our
      products. We have been unprofitable since inception and have had no revenue
      from
      the sale of products, and do not expect revenue for the foreseeable future
      until
      we have received u.s. Food and Drug Administration (“FDA”) approval for one of
      the proprietary compounds we were attempting to develop. As of September 30,
      2006, our accumulated deficit was approximately  $38.6
      million.





As
      of
      September 30, 2006, we had total current assets of approximately $43,000. Our
      available funds are not sufficient to allow us to pursue any further development
      of our proprietary drug candidate, ENT-103, including the preclinical work
      necessary to prepare and file an Investigational New Drug application with
      the
      FDA or to commence human clinical trials for ENT-103. As we were unable to
      immediately obtain significant additional funds to support our operations,
      we
      were forced to cease our operations prior to the end of the second quarter
      of
      2005.





We
      do not
      have capital sufficient to meet our cash needs, including the cost of compliance
      with the continuing reporting requirements of the Securities Exchange Act of
      1934. We will have to seek loans or funds through equity placements to cover
      such cash needs. Lack of existing capital may be sufficient impediment to
      prevent us from conducting our business activities in the next twelve
      months.





At
      this
      time, we have no commitments to provide funds. Accordingly, there can be no
      assurances that any funds will be available to us to allow us to cover our
      expenses as they are incurred.





11




**Going
      Concern:**





Our
      independent auditors have added an explanatory paragraph in connection with
      the
      December 31, 2005 financial statements, which states that our Company is in
      the
      development stage and has incurred an accumulated deficit at December 31, 2005
      of approximately $38.5 million. These conditions give rise to substantial doubt
      about our Company’s ability to continue as a going concern. The Company is
      dependant on its ability to secure additional funding through the issuance
      of
      debt or equity instruments, corporate partnering or merger/acquisition
      arrangements. The Company ceased its business operations in the second quarter
      of 2005.





It
      is
      management’s plan to put all of its effort into settling the outstanding
      litigation against the Company in the immediate future. Once the litigation
      is
      resolved, the Company intends to seek a merger or acquisition with another
      strategic company. There can be no assurance that the litigation will be
      resolved or that a merger or acquisition will be consummated.





**Plan
      of Operation**





Our
      available funds are not sufficient to allow us to pursue any further development
      of our proprietary drug candidate, ENT-103, including the preclinical work
      necessary to prepare and file an Investigational New Drug application with
      the
      FDA or to commence human clinical trials for ENT-103. We are actively seeking
      additional funding through potential merger/acquisition transactions coupled
      with private sales of our equity or debt securities. We also intend to seek
      additional funding from corporate partnerships or licensing arrangements. Any
      such transactions may require us to relinquish rights to some of our
      technologies or products, and will be dilutive to our existing stockholders.
      We
      cannot guarantee that we will be able to complete any such transaction or secure
      additional funds on a timely basis, or at all, and we cannot assure that such
      transaction will be on reasonable terms. As we were unable to obtain the
      significant additional funds to support our operations, we had to cease our
      operations prior to the end of the second quarter of 2005.





We
      do not
      have capital sufficient to meet our cash needs, including the cost of compliance
      with the continuing reporting requirements of the Securities Exchange Act of
      1934. We will have to seek loans or funds from equity placements to cover such
      cash needs. Lack of existing capital may be a sufficient impediment to prevent
      us from accomplishing the goal of successfully executing a new business
      strategy. We will need to raise additional funds to conduct our business
      activities in the next twelve months.





At
      this
      time, we have no commitments to provide funds. Accordingly, there can be no
      assurances that any additional funds will be available to us to allow us to
      cover our expenses as they are incurred.





**Results
      of Operations**





**Three
      months ended September 30, 2006, compared to three months ended September 30,
      2005.**




The
      net
      loss for the three months ended September 30, 2006 was approximately $22,000,
      as
      compared to approximately $730,000 for the same period in 2005, a decrease
      of
      approximately $708,000 or 97%. Approximately $696,000 of this decrease was
      due
      to the impairment of patent costs.





Total
      research and development expenses were $0 for the three months ended September
      30, 2006 and 2005, due to the cessation of operations in May, 2005.





Total
      general and administrative expenses were approximately $22,000 for the three
      months ended September 30, 2006, as compared to approximately $34,000 for the
      same period in 2005, a decrease of $12,000 or 35% due to the cessation of
      operations in May, 2005.





There
      was
      no interest income during the three months ended September 30, 2006 and
      2005.





12




**Nine
      months ended September 30, 2006, compared to nine months ended September 30,
      2005.**





The
      net
      loss for the first nine months of 2006 was approximately $52,000, as compared
      to
      approximately $2.2 million for the same period in 2005, a decrease of
      approximately $2,148,000 or $97.6%. Approximately $696,000 of the total decrease
      was due to the impairment of patent costs and the balance was due to the
      cessation of operations in May, 2005.





Total
      research and development expenses was $0 during the first nine months of 2006,
      as compared to approximately $131,000 for the first nine months of 2005, a
      decrease of $131,000 or 100%. The decrease in research and development expenses
      was due to the cessation of Company’s operations since May, 2005.





Total
      general and administrative expenses were approximately $52,000 for the first
      nine months of 2006, as compared to approximately $1,399,000 for the first
      nine
      months of 2005, a decrease of $1,347,000 or 96%.





Interest
      income during the first nine months of 2006 was $0, as compared to approximately
      $21,000 during the first nine months of 2005, a decrease of approximately
      $21,000 or 100%.




**Liquidity
      and Capital Resources**




As
      of
      September 30, 2006, we had total current assets of approximately $43,000,
      current liabilities of approximately $571,000, and a negative working capital
      of
      approximately $528,000. Our financial statements have been presented on a going
      concern basis. We have an immediate need to raise additional funds to continue
      our operations. There can be no assurance that such additional capital will
      be
      available on a timely basis or on terms acceptable to us, if at all. As we
      were
      unable to obtain the significant additional funds to support our operations,
      we
      had to cease our operations prior to the end of the second quarter of 2005.





We
      are in
      the development stage and have been primarily involved in research and
      development activities. This has resulted in significant operating losses and
      an
      accumulated deficit at September 30, 2006 of approximately $38.6 million. Our
      management anticipates additional operating losses for the foreseeable future.
      These factors, among others, indicate that we will be unable to continue as
      a
      going concern unless it can immediately obtain significant additional funds
      to
      support its operations. 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, 2006, we have received net cash proceeds from financing activities
      aggregating approximately $23.7 million. As of September 30, 2006, we had a
      negative working capital of approximately $528,000.





Our
      liquidity and capital needs relate primarily to working capital, research and
      development of ENT-103, and other general corporate requirements. We have not
      received any cash from operations since inception.





Net
      cash
      used in operating activities was approximately $70,000 during the first nine
      months of 2006, compared with approximately $1.6 million during the first nine
      months of 2005. No research was done during the first nine months of 2006.
      However, during the same period in 2005, the cash used in operations was
      primarily related to conducting preclinical research studies and maintaining
      our
      administrative infrastructure.





**Critical
      Accounting Policies**





We
      routinely granted stock options to compensate officers, directors and employees
      for their services. This practice allowed us to conserve our cash resources
      for
      our drug development program. We had adopted the fair value accounting
      provisions of Statement of Financial Accounting Standards No. 123, “Accounting
      for Stock-Based Compensation”. Under these provisions, stock based compensation
      was measured based on the fair value of the options granted using the
      Black-Scholes option-pricing model. Amounts recorded for options granted to
      non-employees were determined in accordance with Statement of Financial
      Accounting Standards No. 123 and EITF 96-18 based on the fair value of the
      consideration or the fair value of the equity instruments issued, whichever
      was
      more reliably measured.





**Factors
      That May Affect Our Future Results and the Trading Price of Our Common Stock**





*An
      investment in shares of our common stock involves a high degree of risk. You
      should consider carefully the following information about these risks, together
      with other information contained in this report and our other filings with
      the
      Securities and Exchange Commission before you decide to buy our stock. If any
      of
      the following risks actually occur, our business, financial condition and
      prospects would likely suffer. Additional risks and uncertainties not presently
      known to us or that we currently deem immaterial may also impair our operations.*




13




**We
      are subject to a going concern opinion and have ceased our business
      operations.**





Our
      independent auditors have added an explanatory paragraph in connection with
      the
      December 31, 2005 financial statements, which states that our Company is in
      the
      development stage and has incurred an accumulated deficit at December 31, 2005
      of $38,509,247. At September 30, 2006, the Company had an accumulated deficit
      of
      approximately $38.6 million. These conditions give rise to substantial doubt
      about our Company’s ability to continue as a going concern. The Company is
      dependant on its ability to secure additional funding through the issuance
      of
      debt or equity instruments, corporate partnering or merger/acquisition
      arrangements. The Company ceased its business operations in the second quarter
      of 2005.





It
      is
      management’s plan to put all of its effort into settling the outstanding
      litigation against the Company in the immediate future. Once the litigation
      is
      resolved, the Company intends to seek a merger or acquisition with another
      strategic company. There can be no assurance that the litigation will be
      resolved or that a merger or acquisition will be consummated.





**We
      need to raise additional funds immediately in order to resume our operations.**





As
      of
      September 30, 2006, we had total current assets of approximately $43,000 and
      current liabilities of approximately $571,000. We ceased our operations in
      the
      second quarter of 2005. Our financial statements have been presented on a going
      concern basis. Our available funds are not sufficient to allow us to begin
      any
      further development of our proprietary drug candidate, ENT-103, including the
      preclinical work necessary to prepare and file an Investigational New Drug
      application with the FDA or to commence human clinical trials for ENT-103.
      We
      are actively seeking additional funding through potential merger/acquisition
      transactions coupled with private sales of our equity or debt securities. Any
      such transactions may require us to relinquish rights to some of our
      technologies or products, and will be dilutive to our existing stockholders.
      We
      cannot guarantee that we will be able to complete any such transaction or secure
      additional funds on a timely basis, or at all, and we cannot assure that such
      transaction will be on reasonable terms.





We
      do not
      have capital sufficient to meet our cash needs, including the cost of compliance
      with the continuing reporting requirements of the Securities Exchange Act of
      1934. We will have to seek loans or funds from equity placements to cover such
      cash needs. Lack of existing capital may be sufficient impediment to prevent
      us
      from accomplishing the goal of successfully executing a new business strategy.
      We will need to raise additional funds to conduct its business activities in
      the
      next twelve months.





At
      this
      time, we have no commitments to provide funds. Accordingly, there can be no
      assurances that any funds will be available to us to allow us to cover our
      expenses as they are incurred.




**We
      have a history of losses and we may never resume operations.**





To
      date
      we have experienced significant operating losses in funding the research,
      development and testing of our previous drug candidate, Esterom solution, and
      our subsequent and current drug candidates, ENT-102 and ENT-103. From our
      inception through September 30, 2006, we have incurred cumulative net losses
      applicable to common stockholders of $38.6 million. We ceased operations in
      the
      second quarter of 2005.




**The
      securities lawsuits filed against the Company and two of its directors are
      diverting the Company’s resources and attention, and if the Company is required
      to continue to defend against these lawsuits, its business and financial
      condition will continue to be harmed.**





The
      Company, along with two of its former officers and directors, is currently
      a
      defendant in a class action securities fraud lawsuit that is pending in the
      United States District Court for the Central District of California. The
      plaintiffs in this lawsuit are a class of shareholders who purchased Entropin
      securities in the Company’s March 15, 2000 public offering. In the lawsuit,
      Entropin is accused of violating Sections 10(b) and 20(a) of the Securities
      Exchange Act of 1934 by making false and misleading statements in the Company’s
      March 15, 2000 registration statement regarding the scientific and regulatory
      development of its developmental drug Esterom. Specifically, the Company and
      the
      individual defendants are accused of making false and misleading statements
      regarding: (1) the results of its Phase II clinical study of Esterom; (2) the
      Phase III clinical study of Esterom; and (3) Entropin’s intention to file a new
      drug application for Esterom in early 2001. A trial date has been set for
      January 9, 2007. However, there can be no assurance that the Company will
      succeed in defending or settling this action. Additionally, there can be no
      assurance that the action will not have a material adverse effect on the
      Company's business.




14




The
      Company, along with two of its former officers and directors, is also a
      defendant in a class action securities fraud lawsuit that is pending in
      California Superior Court. The allegations and parties in this lawsuit are
      largely identical to those in the federal litigation described above. In June
      2004, this lawsuit was dismissed by the California Superior Court as having
      been
      filed after the statutes of limitations had expired. However, the California
      Court of Appeals has reversed the California Superior Court’s order of dismissal
      and has taken actions to remand the matter back to the California Superior
      Court
      for further deliberations. There can be no assurance that the Company will
      succeed in defending or settling this action. Additionally, there can be no
      assurance that the action will not have a material adverse effect on the
      Company's business.





**The
      existing trading market for our securities is limited, which affects the price
      and liquidity of our securities.**





On
      June
      26, 2003, our common stock was delisted from the Nasdaq SmallCap Market and
      now
      trades on the OTC Bulletin Board. Securities trading on the OTC Bulletin Board
      typically suffer from lower liquidity, which may lead to depressed trading
      prices, greater price volatility and difficultly in buying or selling shares,
      particularly in large quantities. Currently, there is a limited trading market
      for our common stock and we cannot predict when, if ever, a fully developed
      public market for the common stock will occur. If a developed public trading
      market for the common stock does develop at a future time, there are no
      assurances that it will be sustained for any period of time. Any sales of shares
      by stockholders in substantial amounts in the public market could adversely
      affect the prevailing market price and could impair our future ability to raise
      capital through the sale of equity securities.





In
      addition, the SEC has adopted regulations which generally define “penny stock”
to be any listed, trading equity security that has a market price less than
      $5.00 per share or an exercise price of less than $5.00 per share. These
      requirements may restrict the ability of broker-dealers to sell our common
      stock
      and may affect the ability of purchasers in this offering to sell our securities
      in the secondary market.





**We
      may sell additional shares of capital stock in the future, which could dilute
      your investment.**





Our
      stockholders approved the proposal to increase the number authorized shares
      of
      common stock at a special meeting held on November 19, 2004. The approval of
      this proposal by the Company’s stockholders provides the Board of Directors with
      a significant number of additional shares of common stock to issue in fund
      raising activities and for other corporate purposes. Our Certificate of
      Incorporation also provides for the issuance of up to 200 million shares of
      common stock and 10,000,000 shares of preferred stock. The issuance of these
      additional shares of common stock and/or preferred stock will have a dilutive
      effect on the equity and voting power of the existing holders of our common
      stock. It may also adversely affect the market price of our common stock. As
      of
      November 3, 2006, there were 30,645,341 shares of common stock issued and
      outstanding and 3,210,487 shares of Series A’ preferred stock issued and
      outstanding.





**The
      price of common stock has fluctuated greatly over the past several years and
      we
      expect this volatility to continue.**





The
      market prices and trading volumes for the securities of development stage
      companies in general, and for our securities in particular, have historically
      been highly volatile and have experienced significant price and volume
      fluctuations. These fluctuations may or may not be related to our operating
      performance, and the announcement of developments regarding our products,
      regulatory approval status, competition, government regulation or other matters
      that are material to our business or prospects may cause significant swings
      in
      our stock prices.








**Item 3.**  **CONTROLS
      AND PROCEDURES**





**(A)**  **Evaluation
      of Disclosure Controls and Procedures**





As
      of the
      end of the period covered by this report, the Company carried out an evaluation,
      under the supervision and with the participation of the Company’s Principal
      Executive Officer/Principal Financial Officer of the effectiveness of the design
      and operation of the Company’s disclosure controls and procedures. The Company’s
      disclosure controls and procedures are designed to provide a reasonable level
      of
      assurance of achieving the Company’s disclosure control objectives. The
      Company’s Principal Executive Officer/Principal Financial Officer has concluded
      that the Company’s disclosure controls and procedures are, in fact, effective at
      this reasonable assurance level as of the period covered. In addition, the
      Company reviewed its internal controls, and there have been no significant
      changes in its internal controls or in other factors that could significantly
      affect those controls subsequent to the date of their last evaluation or from
      the end of the reporting period to the date of this Form 10-QSB.




15




**(B)**  **Changes
      in Internal Controls OverFinancial Reporting**





In
      connection with the evaluation of the Company’s internal controls during the
      Company’s quarter ended September 30, 2006, the Company’s Principal Executive
      Officer/Principal Financial Officer has determined that there are no changes
      to
      the Company’s internal controls over financial reporting that has materially
      affected, or is reasonably likely to materially effect, the Company’s internal
      controls over financial reporting.






**PART
      II.**





**OTHER
      INFORMATION**





**Item
      1.**  **Legal
      Proceedings**





The
      Company, along with two of its former officers and directors, is currently
      a
      defendant in a class action securities fraud lawsuit that is pending in the
      United States District Court for the Central District of California. The
      plaintiffs in this lawsuit are a class of shareholders who purchased Entropin
      securities in the Company’s March 15, 2000 public offering. In the lawsuit,
      Entropin is accused of violating Sections 10(b) and 20(a) of the Securities
      Exchange Act of 1934 by making false and misleading statements in the Company’s
      March 15, 2000 registration statement regarding the scientific and regulatory
      development of its developmental drug Esterom. Specifically, the Company and
      the
      individual defendants are accused of making false and misleading statements
      regarding: (1) the results of its Phase II clinical study of Esterom; (2) the
      Phase III clinical study of Esterom; and (3) Entropin’s intention to file a new
      drug application for Esterom in early 2001. The Company is vigorously defending
      itself against these allegations, which it believes are without merit. A trial
      date has been set for January 9, 2007. However, there can be no assurance that
      the Company will succeed in defending or settling this action. Additionally,
      there can be no assurance that the action will not have a material adverse
      effect on the Company's business.





The
      Company, along with two of its former officers and directors, is also a
      defendant in a class action securities fraud lawsuit that is pending in
      California Superior Court. The allegations and parties in this lawsuit are
      largely identical to those in the federal litigation described above. In June
      2004, this lawsuit was dismissed by the California Superior Court as having
      been
      filed after the statutes of limitations had expired. However, the California
      Court of Appeals has reversed the California Superior Court’s order of dismissal
      and has taken actions to remand the matter back to the California Superior
      Court
      for further deliberations. In this event, the Company will vigorously defend
      itself against these allegations, which it believes are without merit. There
      can
      be no assurance that the Company will succeed in defending or settling this
      action. Additionally, there can be no assurance that the action will not have
      a
      material adverse effect on the Company's business. As of the date of this
      report, the Company is not a party to any other material legal
      proceedings.








**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**





None.





**Item
      3.**  **Defaults
      Upon Senior Securities**





None.





**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders**





None




16




**Item
      5.**  **Other
      Information**





None.




**Item
      6.**  **Exhibits**





**Exhibits**





**Exhibit
                Number**
            
            **Description**2.1
            
            Agreement
                of Plan of Merger, dated May 2, 2002, by and between Entropin, Inc.,
                a
                Delaware Corporation and Entropin, Inc., a Colorado corporation
                (1)3.1
            
            Certificate
                of Incorporation of Entropin, Inc., a Delaware corporation
                (2)3.2
            
            Bylaws
                of Entropin, Inc., a Delaware corporation (2)3.3
            
            Certificate
                of Designations of Series A’ Preferred Stock of Entropin, Inc.
                (3)3.4
            
            Certificate
                of Amendment to Certificate of Incorporation (4)4.1
            
            Form
                of Common Stock Purchase Warrant (5)4.2
            
            Warrant
                for Common Stock issued to Navidec Financial Services, Inc.
                (6)10.1
            
            Agreement
                and Plan of Merger, dated December 9, 1997 between Vanden Capital
                Group,
                Inc. and Entropin, Inc. (7)10.2
            
            Lease
                Agreement, dated February 1, 1998, between the Registrant and Thomas
                T.
                Anderson (8)10.3
            
            1998
                Compensatory Stock Plan (9)10.4
            
            Employment
                Agreement, dated December 1, 1999, between Entropin, Inc. and Thomas
                Tachovsky. (10)10.5
            
            Amended
                and Restated Investment Banking Agreement, dated December 11, 2003,
                between Entropin, Inc. and InvestLinc Securities, LLC.
                (10)10.6
            
            Form
                of Indemnification Agreement for the officers and directors
                (11)31.1
            
            Certification
                of Chief Executive Officer31.2
            
            Certification
                of Chief Financial Officer32.1
            
            Certification
                of President and Chief Executive Officer under Section 906 of the
                Sarbanes-Oxley Act of 2002.32.2
            
            Certification
                of Chief Financial Officer under Section 906 of the Sarbanes-Oxley
                Act of
                2002.


___________


(1) Incorporated
      by reference to the like numbered exhibit filed with the Registrant’s quarterly
      report on Form 10-QSB on August 14, 2002.




17




(2) Incorporated
      by reference from the like numbered exhibits as filed with the Registrant’s
      Current Report on Form 8-K on June 26, 2002.




(3) Incorporated
      by reference from the like numbered exhibit as filed with the Registrant’s
      annual report on Form 10-KSB/A on April 30, 2003.




(4) Incorporated
      by reference from Exhibit A filed with the Registrant’s Proxy Statement on
      October 1, 2004.




(5) Incorporated
      by reference to the exhibit filed with the Registrant’s Registration Statement
      on Form SB-2/A, No. 333-11308, on March 15, 2000.




(6) Incorporated
      by reference from the exhibit as filed with the Registrant’s annual report on
      Form 10-KSB on March 30, 2004.




(7) Incorporated
      by reference from the exhibit filed with the Registrant’s Current Report on Form
      8-K, as amended, on January 15, 1998.




(8) Incorporated
      by reference from the exhibit filed with the Registrant’s Annual Report on Form
      10-KSB, on April 15, 1998, as amended.




(9) Incorporated
      by reference from exhibit filed with the Registrant’s Registration Statement on
      Form S-8 on December 30, 1998.




(10) Incorporated
      by reference to the exhibit filed with the Registrant’s Registration Statement
      on Form SB-2/A, No. 333-110159, on December 17, 2003.





(11)
      Incorporated by reference from Exhibit 10.1 as filed with the Registrant’s
      Current Report on Form 8-K filed on September 17, 2004.




**SIGNATURES**





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




ENTROPIN,
                INC., a Delaware corporationDate:
                November 7, 2006
            By:
                /s/ David L.
                NorrisDavid
                L.NorrisPresident,
                Chief Executive Officer
              Chief
                Financial Officer




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