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

                               FORM 10-QSB

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
        For the quarterly period ended        March 31, 1999     
                                       ----------------------------

[ ]  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)

        21550 Oxnard Street, Suite 810, Woodland Hills, CA 91367
--------------------------------------------------------------------------
                (Address of principal executive offices)

                             (818) 340-2323
--------------------------------------------------------------------------
                       (Issuer's telephone number)

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


Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

                             Yes X   No     
                                ---    ---

As of May 17, 1999, 6,611,072 shares of the issuer's Common Stock, $.001
par value per share were outstanding.

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

<PAGE>

                             ENTROPIN, INC.



                                  INDEX
                                  -----

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

Item 1.   Financial Statements:

Balance Sheet - December 31, 1998 and March 31, 1999 (unaudited)          2  

Statement of Operations - For the Three Months Ended March 31, 1998
and 1999 and Cumulative Amounts from Inception (August 27, 1984)
Through March 31, 1999 (unaudited)                                        4  

Statement of Stockholders' Equity - For the Three Months Ended
March 31, 1999 (unaudited)                                                5  

Statement of Cash Flows - For the Three Months Ended March 31, 1998
and 1999 and Cumulative Amounts from Inception (August 27, 1984)
Through March 31, 1999 (unaudited)                                        6  

Notes to Unaudited Financial Statements                                   7  

Item 2.   Management's Discussion and Analysis or Plan of Operations     20  

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

Item 1.   Legal Proceedings                                              23  

Item 2.   Changes in Securities                                          23  

Item 6.   Exhibits and Reports on Form 8-K                               28  

Signatures                                                               29  









<PAGE>

                                 ENTROPIN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEET

                      December 31, 1998 and March 31, 1999
                                  (Unaudited)

                                     ASSETS

                                                          1998         1999
                                                        -------       --------
Current assets:
   Cash and cash equivalents                            $ 445,333    $ 278,873
   Advances - related party                                     -       15,403
                                                        ---------    ---------
     Total current assets                                 445,333      294,276

Property and equipment, at cost:
   Leasehold improvements                                  72,187       72,187
   Office furniture and equipment                          15,518       17,018
                                                        ---------    ---------

                                                           87,705       89,205

   Less accumulated depreciation                           (5,006)      (9,359)
                                                        ---------    ---------

     Net property and equipment                            82,699       79,846

Other assets:
   Deposits                                                12,261       12,261
   Patent costs, less accumulated amortization of
     $59,600 (1998) and $64,950 (1999)                    295,316      302,532
                                                        ----------   ---------

      Total other assets                                  307,577      314,793
                                                        ----------   ---------
 
                                                        $ 835,609    $ 688,915
                                                        =========    =========

                             See accompanying notes.
                                       2
<PAGE>

                                 ENTROPIN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEET

                      December 31, 1998 and March 31, 1999
                                  (Unaudited)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                           1998         1999
                                                          -------     --------
Current liabilities:
   Accounts payable                                      $ 59,141     $ 55,549
   Notes payable (Note 2)                                       -      200,000
   Advances - related party                                11,314           -
                                                         --------     --------
     Total current liabilities                             70,455      255,549

Deferred royalty agreement (Note 7)                       169,783      173,355

Commitments and contingencies (Notes 2 and 7)

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

Series B redeemable convertible preferred stock, 
  $.001 par value, 400,000 shares authorized, 
  245,500 shares issued and outstanding (Note 4)        1,142,750    1,142,750

Stockholders' equity (deficit) (Note 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, 6,000,051 shares issued and out-
     standing                                               6,000        6,000
   Additional paid-in capital                           7,474,210    8,304,210
   Deficit accumulated during the development stage    (7,578,802)  (8,661,927)
   Unearned stock compensation (Note 7)                (3,659,274)  (3,741,509)
     Total stockholders' equity (deficit)              (3,757,866)  (4,093,226)
                                                       -----------  -----------

                                                       $  835,609   $  688,915
                                                       ==========   ==========


                             See accompanying notes.
                                       3
<PAGE>

                                 ENTROPIN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                             STATEMENT OF OPERATIONS

        For the Three  Months  Ended  March 31, 1998 and 1999 and for the
           Period from August 27, 1984 (inception) to March 31, 1999
                                  (Unaudited)

                                                                   Cumulative
                                                                  amounts from
                                             1998          1999     inception
                                             ----          ----     ---------

Costs and expenses:
   Research and development                $ 3,772     $ 318,112   $ 5,171,685
   General and administrative               95,372       758,115     3,172,945
   Rent - related party                      2,080             -        12,314
   Depreciation and amortization             4,500         9,703        91,377
                                          --------     ---------   -----------

     Operating loss                       (105,724)   (1,085,930)   (8,448,321)
                                          ---------   -----------   -----------

Other income (expense):
   Interest income                           4,509         2,805        27,543
   Interest expense                           (479)            -      (241,149)
                                          --------    ----------    ----------

     Total other income (expense)            4,030         2,805      (213,606)
                                          --------    ----------    ---------- 

Net loss (Note 3)                         (101,694)   (1,083,125)   (8,661,927)

Accrued dividends applicable to Series
   B preferred stock (Note 4)                    -       (30,688)      (86,948)
                                        ----------   -----------    ---------- 

Net loss applicable to common
   shareholders                         $ (101,694)  $(1,113,813)  $(8,748,875)
                                        ==========   ===========   ===========  

Basic net loss per common share             $ (.02)       $ (.19)      $ (1.66)
                                           =======       =======      ========

Weighted average common shares
   outstanding (Note 6)                  5,870,000     6,000,000     5,284,000
                                         =========     =========     =========



                             See accompanying notes.
                                       4
<PAGE>

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

             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

                    For the Three Months Ended March 31, 1999
                                  (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, 1998                            6,000,051     $ 6,000  $ 7,474,210 $(3,659,274) $(7,578,802)

   Unearned stock compensation pursuant to issuance
     of common stock options (Note 5)                         -           -      830,000    (830,000)           -

   Amortization of unearned stock compensation 
     (Note 5)                                                 -           -            -     747,765            -

   Net loss for the three months ended March 31, 1999         -           -            -           -   (1,083,125)
                                                      ---------     -------  -----------  ----------   ----------

Balance, March 31, 1999                               6,000,051     $ 6,000  $ 8,304,210 $(3,741,509) $(8,661,927)
                                                      =========     =======  =========== ==========   ===========  
                               
</TABLE>

                             See accompanying notes.
                                       5
<PAGE>

                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                             STATEMENT OF CASH FLOWS

          For the Three  Months  Ended  March 31, 1998 and 1999 and for the
              Period from August 27, 1984 (inception) to March 31, 1999
                                  (Unaudited)
                                                                    Cumulative
                                                                     amounts
                                                                       from
                                             1998         1999      inception
                                             ----         ----      ---------
Cash flows from operating activities:
   Net loss                                $ (101,694) $(1,083,125)$(8,661,927)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
      Depreciation and amortization             4,500        9,703      91,377
      IBC partner royalty agreement             3,572        3,572     173,355
      Services contributed in exchange
        for stock or stock options                  -      747,765   3,195,491
      Services contributed in exchange for
        compensation agreements                     -            -   2,231,678
      Increase in advances - related party          -      (26,717)    (15,403)
      Increase (decrease) in accounts 
       payable                               (298,246)      (3,592)     55,549
      Increase in accrued interest                  -            -     169,139
      Other                                         -            -         131
                                           ----------   ----------  ----------

      Total adjustments                      (290,174)     730,731   5,901,317
                                           ----------   ----------  ----------

      Net cash used in operations            (391,868)    (352,394) (2,760,610)

Cash flows from investing activities:
   Purchase of property and equipment               -       (1,500)   (106,412)
   Patent costs                                     -      (12,566)   (367,482)
   Deposits                                         -            -     (12,261)
                                            ---------    ---------  ---------- 

      Net cash used in investing activities         -      (14,066)   (486,155)

Cash flows from financing activities:
   Proceeds from recapitalization             220,100            -     220,100
   Deferred stock offering costs               10,746            -           -
   Proceeds from sale of common stock         798,110            -   1,153,110
   Proceeds from sale of preferred stock            -            -   1,142,750
   Proceeds from stockholder loans                  -            -     809,678
   Repayments of stockholder advances         (98,873)           -           -
   Proceeds from notes payable                      -      200,000     200,000
                                           ----------    ---------  ----------

      Net cash provided by financing 
       activities                             930,083      200,000   3,525,638
                                           ----------    ---------  ----------

Net increase (decrease) in cash               538,215     (166,460)    278,873

Cash and cash equivalents at beginning of 
  period                                          291      445,333           -
                                            ---------    ---------   ---------

Cash and cash equivalents at end of period  $ 538,506    $ 278,873   $ 278,873
                                            ==========   ==========  =========


                             See accompanying notes.
                                       6
<PAGE>

                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




The  accompanying  financial  statements  of the Company  have been  prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions  to Form 10-QSB.  Certain notes and other
information have been condensed or omitted from the interim financial statements
presented  in  this  report.  Accordingly,  they  do  not  include  all  of  the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements.  In the opinion of management,  the financial
statements reflect all adjustments considered necessary for a fair presentation.
The  results of  operations  for the three  months  ended March 31, 1999 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, 1998 as filed with the Securities and Exchange Commission.

1. Organization and summary of significant accounting policies

   Organization:

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

   On January 15, 1998, the Company  consummated an agreement and plan of merger
   with Vanden Capital Group, Inc. (Vanden), in which Vanden acquired all of the
   issued and outstanding common shares of the Company (see Note 5). The Company
   was merged into Vanden,  and Vanden  changed its name to  Entropin,  Inc. For
   accounting purposes the acquisition has been treated as a recapitalization of
   the  Company,  based upon  historical  cost, a reverse  acquisition  with the
   Company as the acquirer.

   Basis of presentation and management's plans:

   The Company's  financial  statements  have been  presented on a going concern
   basis which  contemplates  the realization of assets and the  satisfaction of
   liabilities  in  the  normal  course  of  business.  The  Company  is in  the
   development stage and has been primarily involved in research and development
   activities.  This has  resulted  in  significant  losses  and an  accumulated
   deficit at March 31, 1999 of $8,661,927. The Company's continued existence is
   dependent  on its  ability  to obtain the  additional  funding  necessary  to
   complete the FDA approval process for Esterom(R) and market the product.



                                       7
<PAGE>
                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




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

   As  described  in Note 5, the  Company has  successfully  completed a private
   placement and a  recapitalization  of the Company which  provided  additional
   liquidity  for the Company for current  operations.  The Company  also sold a
   private  offering of 245,500 shares of Series B convertible  preferred  stock
   for net  proceeds  of  $1,142,750  (Note 4),  $200,000 of  convertible  notes
   payable,  and 500,000 shares of common stock for gross proceeds of $1,000,000
   (Note 9). However,  the Company estimates it will require  additional funding
   of up to $10,000,000  over the next three years to successfully  complete the
   FDA approval process.  The financial statements do not include any adjustment
   relating to the  recoverability  and classification of recorded asset amounts
   or the amount and  classification  of liabilities or other  adjustments  that
   might be  necessary  should  the  Company  be unable to  continue  as a going
   concern in its present form.

   Use of estimates:

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

   Income Taxes:

   The Company provides for income taxes utilizing the liability  approach under
   which  deferred  income  taxes are  provided  based upon enacted tax laws and
   rates applicable to the periods in which the taxes become payable.

   Property and equipment:

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

   Leasehold  improvements are recorded at cost and amortized over the five-year
   term of the lease.

   Patents:

   Patents are stated at cost less accumulated  amortization which is calculated
   on a  straight-line  basis over the useful lives of the assets,  estimated by
   management to average 16 years.  Research and development costs and any costs
   associated  with  internally  developed  patents (with the exception of legal
   costs) are expensed in the year incurred.




                                       8
<PAGE>


                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




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

   Esterom(R) is protected by a U.S.  Composition  Patent  granted  December 27,
   1994 which includes  safeguarding  the discovery of three new molecules.  The
   Company's patents include the following:  Patent #5,559,123 granted September
   24, 1996 with the Company as  Assignee;  Patent  #5,525,613  granted June 11,
   1996 with the Company as Assignee; and Patent #5,376,667 granted December 27,
   1994 with the Company as Assignee. In addition, Dr. Lowell M. Somers obtained
   the following  initial patents which he subsequently  assigned to the Company
   in September 1992;  #4,512,996  granted April 1985; patent #4,469,700 granted
   September 1984; and Patent  #4,556,663  granted  December 1985.  Although the
   Company has obtained approval of Patent  Application  #5,556,663,  the Patent
   has not yet been issued.

   Impairment of long-lived assets:

   The Company  evaluates  the  potential  impairment  of  long-lived  assets in
   accordance  with  Statement  of  Financial   Accounting  Standards  No.  121,
   "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
   to be  Disposed  of".  The  Company  annually  reviews the amount of recorded
   long-lived assets for impairment.  If the sum of the expected cash flows from
   these assets is less than the carrying amount,  the Company will recognize an
   impairment loss in such period.

   Cash equivalents:

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

   Concentrations of credit risk:

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

   Comprehensive Income:

   In June 1997, the Financial  Accounting  Standards Board issued  Statement of
   Financial Accounting Standards No. 130, "Reporting Comprehensive Income." FAS
   130  establishes  standards for the  reporting  and display of  comprehensive
   income  and  its  components  in a full  set  of  general  purpose  financial
   statements  and is effective for fiscal years  beginning  after  December 15,
   1997. To date, the Company has not had any transactions  that are required to
   be reported in Comprehensive Income.



                                       9
<PAGE>

                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




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

   Segment Information:

   In June 1997, the FASB issued Statement of Financial Accounting Standards No.
   131, " Disclosures  about Segments of an Enterprise and Related  Information"
   (FAS 131). This statement  establishes standards for the way companies report
   information about operating segments in annual financial statements.  It also
   establishes  standards for related  disclosures  about products and services,
   geographic  areas and major customers based on the provisions of FAS 131. The
   Company has determined that it does not have separately  reportable operating
   segments.

   Recent Accounting Pronouncements:

   In June 1998,  FASB issued  Statement of Financial  Accounting  Standards No.
   133,  "Accounting  for Derivative  Instruments and Hedging  Activities"  (FAS
   133).  The  Company is  required  to adopt SFAS 133 in its fiscal year ending
   December 31, 2000. FAS 133  establishes  methods of accounting for derivative
   financial  instruments and hedging activities related to those instruments as
   well as other hedging  activities.  To date, the Company has not entered into
   any derivative financial instruments or hedging activities.

2. Notes payable

   On March 24, 1999, the Company  received cash proceeds  aggregating  $200,000
   pursuant to eight convertible note payable  agreements with various unrelated
   individuals and entities. Each note is unsecured,  bears interest at 10%, and
   is due the  earlier of 90 days from the date of issue or upon the  receipt by
   the Company of certain proceeds from a private offering of its securities. In
   the event of default,  each note and the unpaid interest will be converted by
   the Company into one share of restricted common stock for each two dollars of
   principal and interest  outstanding  (see Note 9). Each note  agreement  also
   provides a warrant  granting  the holder the right to purchase  three and one
   half  restricted  shares of the  Company's  common  stock for each  dollar of
   principal  received by the Company,  for an aggregate of 700,000  shares (see
   Note 5).

3. Income taxes

   The  consummation  of the stock  exchange  with  Vanden and the  issuance  of
   preferred  stock in January  1998 (see Note 5),  resulted  in a change in the
   Company's  tax status from an S  corporation  to a taxable  corporation.  The
   effect of the change is to provide for income tax based upon reported results
   of  operations,  and to  provide  deferred  tax  assets  and  liabilities  on
   temporary differences between reported earnings and taxable income.



                                       10
<PAGE>

                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




3. Income taxes (continued)

   At March 31,  1999,  the  Company has net  operating  loss  carryforwards  of
   approximately $1,704,000 and future tax deductions of $2,496,000 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 S  corporation.  The net  operating  loss
   carryforwards  expire in 2018 and  2019.  Approximately  $250,000  of the net
   operating loss  carryforward is limited as to the amount which may be used in
   any one year.  At March 31, 1999,  total  deferred  tax assets and  valuation
   allowance are as follows:

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

    Total                                2,257,000
    
    Less valuation allowance            (2,257,000)
                                        ----------
                                        $        -
                                        ==========

   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.

4. Redeemable preferred stock

   In  December  1997,  the Board of  Directors  approved  an  amendment  to the
   Articles of Incorporation to authorize  10,000,000  shares of $.001 par value
   preferred  stock. On January 15, 1998, the Company issued 3,210,487 shares of
   its Series A redeemable,  non-voting,  non-cumulative  8% preferred  stock in
   exchange for an aggregate  $1,710,487  of notes payable to  shareholders  and
   accrued  interest,  and a $1,500,000  compensation  agreement.  The annual 8%
   dividend is based upon a $1.00 per share  value,  and is only  payable out of
   earnings.

   The Series A preferred  stock is subject to mandatory  redemption.  The funds
   available for redemption  will be equal to more than 20% but less than 50% of
   annual earnings,  as determined  annually by the Board of Directors,  but not
   exceeding cash flow from  operations and will  automatically  cancel in seven
   years if not fully redeemed.  The Company may voluntarily  redeem outstanding
   shares of preferred stock at $1 per share.



                                       11
<PAGE>

                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




4. Redeemable preferred stock (continued)

   In July 1998, the Company  completed a private placement of 245,500 shares of
   Series B  preferred  stock at $5.00 per  share,  for total  net  proceeds  of
   $1,142,750.  The Series B preferred  stock is designated  as  redeemable  10%
   cumulative  non-voting  convertible preferred stock with $.001 par value. The
   dividends  will  accrue  at the rate of $.50 per  share per annum and will be
   paid annually in arrears commencing July 15, 1998. At the Company's election,
   annual dividends may be paid in cash and/or in shares of the Company's common
   stock  valued  at  $5.00  per  share.  Dividends  are  added  to net  loss in
   determining net loss per common share.  None of the Series B preferred shares
   have been converted as of March 31, 1999.

5. Stockholders' equity

   Recapitalization:

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

   Pursuant to the  agreement,  Vanden  agreed to have cash of  $220,000  and no
   unpaid liabilities at the effective date of the transaction. The exchange was
   consummated on January 15, 1998. In connection with the recapitalization, the
   Company  issued  options to  purchase  180,001  shares of its $.001 par value
   common stock for cash of $100 and options to purchase an  additional  180,001
   shares of common  stock for $2.80 per  share,  as  required  by a  management
   advisory  services  contract  as  compensation  for  arranging  a  merger  or
   acquisition  acceptable to the Company. The difference between the fair value
   of the  stock,  estimated  by the  Company  to be $2.75  per  share,  and the
   purchase price for the initial  180,001 shares was treated as additional cost
   of the merger and  charged to capital,  consistent  with  accounting  for the
   reverse acquisition as a recapitalization. The net effect of this transaction
   was to record an increase and related decrease to additional  paid-in capital
   of $495,000.  The remaining options to acquire 180,001 shares are exercisable
   for a five-year period.

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


                                       12
<PAGE>
                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




5. Stockholders' equity (continued)

   Private placement:

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

   Stock options:

   On August 4, 1998, the Company  granted to each director  options to purchase
   up to 60,000  shares of the  Company's  common stock  (300,000  shares in the
   aggregate),  exercisable at $3.00 per share.  The options vest at the rate of
   20,000 shares per year commencing February 1999 through February 2001. Should
   any of the directors cease to serve on the board of directors, all non-vested
   options shall be forfeited.

   On September 11, 1998, the board of directors  approved a  compensation  plan
   for three  officers  and  directors,  to serve on a  management  team,  which
   included stock options  aggregating  295,000 shares,  at an exercise price of
   $4.00 per share.  Other terms and  conditions  of the options are the same as
   the director options described above.

   In October 1998, the Company  provided a 100,000 share stock option agreement
   to an organization,  with whom the Company entered into a one year consulting
   agreement.  The consultant  will provide  investor  relations and development
   services,  and will receive compensation of $5,000 per month. The options are
   exercisable  at $4.00 per share and vest 50,000  shares as of the date of the
   agreement,  25,000  shares on March 31,  1999 and  25,000  shares on June 30,
   1999.

   On December 15, 1998,  the board of directors  approved a resolution  whereby
   the  Company  granted to a company  and an  individual  two stock  options to
   purchase up to 17,500 shares of the Company's  common stock (35,000 shares in
   the aggregate) in exchange for services the Company received during 1998. The
   options  are  exercisable  at $4.00 per share and are fully  vested as of the
   date of the resolution.

   On March 11,  1999,  the  Company  provided  a  175,000  share  stock  option
   agreement  to an  organization  with  whom  the  Company  entered  a one year
   consulting  agreement.  The organization  will provide  investment  community
   relations  services,  and will receive  compensation of $3,000 per month. The
   option is  exercisable  at $3.00  per  share.  The  option  provides  certain
   registration  rights to the holder, and is exercisable the earlier of January
   1, 2000 or when the shares  become  registered.  The exercise  period is five
   years from the date the shares  become freely  tradeable.  To the extent that
   the shares  underlying  the  options are not  registered  within two years of
   grant date,  the holders have the right to exercise the options on a cashless
   basis for a period of five years.



                                       13
<PAGE>

                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




5. Stockholders' equity (continued)

   On March 15,  1999,  the  Company  provided  a 300,000  share  stock  warrant
   agreement  to an  organization,  with whom the Company  entered into an eight
   month consulting agreement.  The organization was engaged to raise a total of
   $8 million  and  provide  financial  advisory  services,  and will  receive a
   retainer of $7,000 per month (see Note 7). The  warrants are  exercisable  at
   $4.50 per share (fair value at March 15, 1999),  provide certain registration
   rights,  and vest  100,000  shares as of the date of the  agreement,  100,000
   shares when the  Company  has  received $2 million in funding on or about May
   15,  1999 and 100,000  shares  when the  Company  has  received $4 million in
   funding on or about August 15, 1999.  The 200,000  shares  vesting in May and
   August  are  subject  to ratable  reductions  to the  extent  that any of the
   funding is not attributable to the organization. The term of the warrant will
   be through March 15, 2004.

   On March 22,  1999,  the  Company  provided  a  125,000  share  stock  option
   agreement to a  partnership,  with whom the Company  entered into a six month
   consulting  agreement.  The  partnership  will  provide  financial  community
   relations and debt funding services. The options are exercisable at $3.00 per
   share. The options provide certain registration rights to the holder, and are
   exercisable  the  earlier  of  January  1,  2000 or when  the  shares  become
   registered. The exercise period is five years from the date the shares become
   freely tradable. To the extent that the shares underlying the options are not
   registered  within two years of grant  date,  the  holders  have the right to
   exercise the options on a cashless basis for a period of five years.

   On March  24,  1999,  the  Company  issued  eight  convertible  note  payable
   agreements with various unrelated individuals and entities (see Note 2). Each
   note  agreement  also  provides  a warrant  granting  the holder the right to
   purchase three and one half restricted  shares of the Company's  common stock
   for each dollar of  principal  received by the  Company,  for an aggregate of
   700,000 shares.  The warrants have certain  registration  rights, an exercise
   price of $3.00 per share and are exercisable for five years from the date the
   shares become freely tradable.  To the extent that the shares  underlying the
   warrants are not registered  within two years of grant date, the holders have
   the right to exercise the  warrants on a cashless  basis for a period of five
   years.

   On March 31,  1999,  the  Company  provided  a 300,000  share  stock  warrant
   agreement  to an  organization,  with whom the Company  entered into an eight
   month consulting agreement.  The organization was engaged to raise a total of
   $8  million  and  provide  financial  advisory  services.  The  warrants  are
   exercisable at $3.00 per share, provide certain registration rights, and vest
   100,000  shares  as of the date of the  agreement,  100,000  shares  when the
   Company  has  received  $2 million  in  funding on or about May 15,  1999 and
   100,000  shares  when the  Company  has  received $4 million in funding on or
   about  August 31,  1999.  The  200,000  shares  vesting in May and August are
   subject to ratable  reductions  to the extent  that any of the funding is not
   attributable  to the  organization.  The term of the warrant  will be through
   March 22, 2004.



                                       14
<PAGE>
                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




5. Stockholders' equity (continued)

   The following is a summary of stock option and warrant activity:

                                                     Weighted
                                      Option         average
                                      Price per      exercised     Number
                                      share           price      of shares
                                     ------------    ---------   ---------
   Balance December 31, 1998        $1.50 to $4.00    $2.79      1,360,001
   Granted                          $3.00 to $4.50    $3.28      1,600,000
   Exercised                                     -        -              -
                                    --------------  -------     ----------

   Balance March 31, 1999           $1.50 to $4.50     3.06      2,960,001
                                                                 =========


   The  following is  additional  information  with respect to those options and
   warrants outstanding at March 31, 1999:

                                       Weighted
                                       average      Weighted
                                      remaining     average
                                     contractual    exercise        Number
        Option price per share       life in years   price        of shares
        ----------------------       -------------   -----        ---------
                 $2.80                   3.8         $2.80          180,001
                 $1.50                   4.1         $1.50          450,000
                 $4.00                   5.1         $4.00          100,000
                 $3.00                   8.9         $3.00          300,000
                 $4.00                   4.4         $4.00          295,000
                 $4.00                   5.0         $4.00           35,000
                 $3.00                   5.0         $3.00        1,300,000
                 $4.50                   5.0         $4.50          300,000
                                                                  ---------
                                                                  2,960,001
                                                                  =========
                                                                  
   Unearned stock compensation:

   At March 31, 1999, the Company had granted an aggregate of 2,960,001  options
   and warrants of which 2,660,001 were at purchase prices lower than fair value
   of the  stock at date of grant,  including  the stock  options  and  warrants
   disclosed  above and the 450,000  granted to the 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 expense over the
   term of the related agreements.

                                       15
<PAGE>

                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                 March 31, 1999

6. Basic 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 has not been
   presented 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 limited partnership.  The I.B.C.
   Limited  Partnership  participated in the early development of Estrom(R) (the
   medicine) and owned the patent  rights to three patents and all  intellectual
   property rights.  Under the terms of the Agreement,  the Company acquired all
   of the  patent and  intellectual  property  rights in  exchange  for  certain
   compensation to the limited  partners,  which is dependent upon the Company's
   receipt  of  a  marketing  partners  technological  access  fee  and  royalty
   payments. The partnership was subsequently dissolved.  Compensation under the
   agreement  includes  a bonus  payment  of  $96,420 to be paid at the time the
   Company  is  reimbursed  by  a  drug  company  for  past  expenses  paid  for
   development of the medicine,  as well as 64.28% of a decreasing  payment rate
   (3% to 1%) on  cumulative  annual  royalties  received by the Company.  As of
   March 31,  1999,  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% on  cumulative  annual  sales of  products  by the  Company)  until
   October 10, 2004.  From October 10, 2004 until October 10, 2014,  the Company
   will pay the partners  17.86% of the earned  payment.  In accordance with the
   agreement,  the Company has agreed to pay these former  limited  partners the
   amount of $40,000 and a minimum earned payment of $3,572 per calendar quarter
   beginning on December 1, 1989. Such minimum earned payment is to be evidenced
   by a  promissory  note  issued each  quarter and payable  when the Company is
   either  reimbursed  for expenses paid for the  development of the medicine or
   from the  first  income  received  from  the  Company  from net  sales of the
   medicine. The quarterly payments are to be applied against the earned payment
   to be received  by the  limited  partners.  As of March 31,  1999,  the total
   liability  accrued  with  respect to this  agreement  totaled  $173,355.  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.



                                       16
<PAGE>

                                  ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




7. Commitments and contingencies (continued)

   Development and Supply Agreements:

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

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

   License Agreement:

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

   Management agreement:

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




                                       17
<PAGE>

                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)

                      NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                   March 31, 1999




7. Commitments and contingencies (continued)

   The difference between the fair value of the options at date of grant and the
   exercise price,  totaling  approximately  $1,950,000 using the  Black-Scholes
   option - pricing model,  has been recorded as additional  paid-in capital and
   unearned  stock  compensation.  The  unearned  stock  compensation  is  being
   amortized to expense on a  straight-line  basis over the 33 month term of the
   agreement.

   Consulting agreements:

   On January 11, 1999, the Company  entered into a consulting  agreement with a
   company  to  provide   advisory   services   relating  to  the   formulation,
   manufacturing  and packaging of Esterom(R).  Compensation  for the consulting
   agreement  is $2,000  per day with a minimum  of one day per month  which the
   services  must  be  used.  The  term of the  agreement  is  continuous  until
   terminated by either party.

   On March 11, 1999,  the Company signed an agreement with a company to provide
   consulting  services  concerning the  introduction of the Company's  business
   plan to the investment banking community. The term of the agreement is twelve
   months; however, the Company may terminate the agreement after six months. As
   compensation,  the  Company  will pay a retainer  of $3,000 per month and has
   issued an option to purchase  175,000 shares of the Company's common stock at
   an exercise price of $3.00 per share (see Note 5).

   On March 15, 1999, the Company signed a financial  advisory  agreement with a
   company experienced in raising investment capital. Pursuant to the agreement,
   the company is engaged to raise a total of $8 million in three traunches, the
   first $2  million on or about May 15,  1999,  the next $4 million on or about
   August 15, 1999 and the  remaining $2 million on or about  November 15, 1999.
   The initial term of the agreement is eight months,  commencing March 15, 1999
   through  November  15, 1999.  The company will be paid a monthly  retainer of
   $7,000 through the duration of the agreement.  In addition,  the company will
   also be granted a warrant to acquire  300,000 shares of the Company's  common
   stock at an exercise  price of $4.50 per share (see Note 5). The Company will
   also pay contingent  fees of 8% of total  financing,  payable if financing is
   obtained.

8. Financial instruments

   The carrying  values of cash and cash  equivalents,  advances-related  party,
   notes  payable  and  accounts  payable  approximated  fair  value  due to the
   short-term maturities of these instruments.

   The Company believes that it is not practical to estimate a fair market value
   different  from  the  carrying  value  of  long-term  debt.  Long-term  debt,
   excluding  the deferred  royalty  agreement,  was converted  into  redeemable
   preferred stock on January 15, 1998. Both the redeemable  preferred stock and
   the  deferred  royalty  agreement  have  numerous  features  unique  to these
   securities and agreements as described in Notes 4 and 7.

                                       18
<PAGE>

                                 ENTROPIN, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                 March 31, 1999

9. Subsequent events

   On April 20,  1999,  the  Company  completed a private  placement  of 500,000
   shares of its $.001 par value common stock for gross  proceeds of $1,000,000,
   $2.00 per share.

   On April 20, 1999, The Company  amended its 10%  convertible  promissory note
   agreements  to allow the note holders to convert  their  promissory  notes to
   shares  of  common  stock.  Upon  issuing  the  amendment,  all note  holders
   converted their promissory notes, including accrued interest, to common stock
   resulting in new issuances of common stock totaling 100,831 shares.

   On April 20, 1999, the Company commenced a private placement of
   1,600,000 shares of the Company's .001 par value common stock in
   order to raise capital of up to $8,000,000 ($5.00 per share). The
   offering period ends July 19, 1999.





                                       19
<PAGE>
                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)




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

      Plan of Operation:

      Entropin,  Inc. is a development stage pharmaceutical  company and has not
      generated any revenues from operations for the period from August 27, 1984
      (inception) through March 31, 1999. Entropin has devoted substantially all
      it's resources to acquisition of patents,  research and development of the
      medicine, and expenses related to the startup of its business.

      Entropin  has been  unprofitable  since  inception  and  expects  to incur
      substantial  additional  operating  losses for the next twelve months,  as
      well as for the next few years,  as it increases  expenditures on research
      and  development  and  begins  to  allocate   significant  and  increasing
      resources  to  clinical  testing,   marketing  and  other  activities.  As
      described  below,  in January 1998, the Company  successfully  completed a
      private  placement  of both  common  and  Series B  preferred  stock and a
      reverse  acquisition  accounted for as a recapitalization  of the Company.
      These  events  have  provided  additional  liquidity  for the  Company for
      current operations.  The Company conducted an additional private placement
      of $1,227,000  in  convertible  Series B preferred  stock which funds were
      used to fund  operations  through  February  1999,  and in March 1999, the
      Company   received  cash  proceeds   aggregating   $200,000   pursuant  to
      convertible notes payable.  The Company is currently  pursuing  additional
      interim  funding  and/or a strategic  partner to provide total  additional
      funding of up to  $10,000,000  over the next three  years to  successfully
      complete the FDA approval process.

      During 1998, the Company entered into an agreement with the Western Center
      for Clinical Studies, Inc. (WCCS), a California corporation experienced in
      managing  pharmaceutical  development.  During  the 33  month  term of the
      agreement,  WCCS will assist the Company in obtaining FDA approval for its
      product Esterom(R), implementing a business plan and providing experienced
      personnel  to  bring  Esterom(R)  to  commercialization.  The  Company  is
      required to pay management fees of approximately $880,400 over the term of
      the agreement, as well as provide stock options to purchase 450,000 shares
      of Entropin  common stock over the 33 month period at an exercise price of
      $1.50 per share.

      Results of Operations:

      During the three months ended March 31, 1999, Entropin incurred a net loss
      of $1,083,125 as compared to $101,694 for the three months ended March 31,
      1998.  The  increase  resulted  primarily  from an increase of $662,743 in
      general  and  administrative  expenses  and an  increase  of  $314,340  in
      research and  development  expenses.  The  amortization  of unearned stock
      compensation  expense  recorded in conjunction  with the issuance of stock
      options   pursuant   to   various   consulting   agreements    contributed
      significantly  to both  increases,  as well as initiation of the agreement
      with WCCS.

      Entropin's  activities  to date  are not as broad in depth or scope as the
      activities  it must  undertake in the future,  and  Entropin's  historical
      operations  and  financial  information  are not  indicative of Entropin's
      future operating results or financial  condition or its ability to operate
      profitably as a commercial  enterprise when and if it succeeds in bringing
      any product to market.



                                       20
<PAGE>
                                  ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)




      Capital Resources and Liquidity:

      In the  years  since  inception,  Entropin  has  financed  its  operations
      primarily  through  the sale of shares of  Entropin  common and  preferred
      stock, and loans and advances from shareholders.  On January 15, 1998, the
      Company  completed a private  placement of 30 units (10,000  shares of its
      $.001 par value common  stock per unit) at $27,500 per unit,  or $2.75 per
      share,  which resulted in gross proceeds of $825,000.  Concurrent with the
      private  placement,  the Company completed an agreement and plan of merger
      with  Vanden  Capital  Group,  Inc.  to  exchange  all of the  issued  and
      outstanding  common shares of the Company for 5,220,000 shares of Vanden's
      $.001 par value  common  stock.  The Company was merged into  Vanden,  and
      Vanden  changed its name to Entropin,  Inc. For accounting  purposes,  the
      acquisition  has been treated as a  recapitalization  of the Company based
      upon  historical  cost (a reverse  acquisition),  with the  Company as the
      acquirer. Pursuant to the agreement, Vanden provided cash of $220,000.

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

      In July 1998, the Company  completed a private placement of 245,500 shares
      of  Series B  preferred  stock at $5.00 per  share,  for net  proceeds  of
      approximately  $1,143,000.  The Series B preferred  stock is designated as
      redeemable  10% cumulative  non-voting  convertible  preferred  stock with
      $.001 par value.  Dividends  will accrue at the rate of $.50 per share per
      annum and will be paid  annually in arrears  commencing  July 15, 1998. At
      the  Company's  election,  annual  dividends may be paid in cash and/or in
      shares of the Company's common stock valued at $5.00 per share.

      On March 11,  1999,  the Company  provided a 175,000  share  stock  option
      agreement  to an  organization  with whom the  Company  entered a one year
      consulting  agreement.  The organization will provide investment community
      relations services, and will receive compensation of $3,000 per month. The
      option is  exercisable  at $3.00 per share.  The option  provides  certain
      registration  rights to the  holder,  and is  exercisable  the  earlier of
      January 1, 2000 or when the shares become registered.  The exercise period
      is five years from the date the shares  become  freely  tradeable.  To the
      extent that the shares  underlying the options are not  registered  within
      two  years of grant  date,  the  holders  have the right to  exercise  the
      options on a cashless basis for a period of five years.

      On March 15,  1999,  the Company  provided a 300,000  share stock  warrant
      agreement to an organization,  with whom the Company entered into an eight
      month consulting agreement.  The organization was engaged to raise a total
      of $8 million and provide financial advisory services,  and will receive a
      retainer of $7,000 per month.  The warrants are  exercisable  at $4.50 per
      share (fair value at March 15, 1999), provide certain registration rights,
      and vest 100,000  shares as of the date of the  agreement,  100,000 shares
      when the  Company  has  received $2 million in funding on or about May 15,
      1999 and  100,000  shares  when the  Company  has  received  $4 million in
      funding on or about August 15, 1999. The 200,000 shares vesting in May and
      August are  subject to ratable  reductions  to the extent  that any of the
      funding is not attributable to the  organization.  The term of the warrant
      will be through March 15, 2004.



                                       21
<PAGE>

                                   ENTROPIN, INC.
                           (A DEVELOPMENT STAGE COMPANY)



      On March 22,  1999,  the Company  provided a 125,000  share  stock  option
      agreement to a partnership, with whom the Company entered into a six month
      consulting  agreement.  The partnership will provide  financial  community
      relations and debt funding services.  The options are exercisable at $3.00
      per share. The options provide certain  registration rights to the holder,
      and are  exercisable  the  earlier  of  January 1, 2000 or when the shares
      become  registered.  The  exercise  period is five years from the date the
      shares become freely  tradable.  To the extent that the shares  underlying
      the options are not registered within two years of grant date, the holders
      have the right to exercise the options on a cashless basis for a period of
      five years.

      On March 24, 1999, the Company received cash proceeds aggregating $200,000
      pursuant  to  eight  convertible  note  payable  agreements  with  various
      unrelated individuals and entities. Each note is unsecured, bears interest
      at 10%,  and is due the  earlier of 90 days from the date of issue or upon
      the receipt by the Company of certain  proceeds from a private offering of
      its securities. In the event of default, each note and the unpaid interest
      will be converted by the Company into one share of restricted common stock
      for each two dollars of  principal  and  interest  outstanding.  Each note
      agreement  also  provides  a  warrant  granting  the  holder  the right to
      purchase  three and one half  restricted  shares of the  Company's  common
      stock  for each  dollar  of  principal  received  by the  Company,  for an
      aggregate of 700,000  shares.  On April 20, 1999, The Company  amended the
      promissory  note  agreements  to allow the note  holders to convert  their
      promissory  notes to shares of common stock.  Upon issuing the  amendment,
      all note  holders  converted  their  promissory  notes  including  accrued
      interest  to common  stock  resulting  in new  issuances  of common  stock
      totaling 100,831 shares.

      On March 31,  1999,  the Company  provided a 300,000  share stock  warrant
      agreement to an organization,  with whom the Company entered into an eight
      month consulting agreement.  The organization was engaged to raise a total
      of $8 million and provide financial  advisory  services.  The warrants are
      exercisable at $3.00 per share,  provide certain  registration rights, and
      vest 100,000 shares as of the date of the  agreement,  100,000 shares when
      the  Company  has  received $2 million in funding on or about May 15, 1999
      and 100,000  shares when the Company has received $4 million in funding on
      or about August 31, 1999. The 200,000 shares vesting in May and August are
      subject to ratable reductions to the extent that any of the funding is not
      attributable to the organization.  The term of the warrant will be through
      March 22, 2004.

      On April 20, 1999,  the Company  completed a private  placement of 500,000
      shares  of its  $.001  par  value  common  stock  for  gross  proceeds  of
      $1,000,000, $2.00 per share.

      On April 20, 1999, the Company  commenced a private placement of 1,600,000
      shares  of the  Company's  .001 par value  common  stock in order to raise
      capital of up to $8,000,000. The offering period ends July 19, 1999.


                                       22
<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.

     (c)  During the period covered by this report, the Registrant issued
its stock to the persons set forth below for the cash consideration
indicated in transactions that were not registered under the 1933 Act.

     In March 1999, the Registrant entered into an agreement with J. Paul
Consulting Corporation ("JPC"). As partial consideration for JPC's services
under the agreement, the Registrant issued JPC an option to purchase
175,000 shares of the Registrant's common stock, exercisable at $3.00 per
share.  The option would become exercisable the earlier of January 1, 2000,
or when the shares become registered.  The exercise period is five (5)
years from the date the shares become freely tradeable.  The issuance of
the option to JPC was made in reliance upon the exemption from registration
provided by Section 4(2) of the 1933 Act.  No broker/dealers were involved
in the sale and no commissions were paid.  JPC represented that JPC
acquired the option for investment and not with a view to distribution.

     In March 1999, the Registrant entered into an agreement with GJM
Trading Partners, Ltd.("GJM"). As partial consideration for GJM's services
under the agreement, the Registrant issued GJM an option to purchase
125,000 shares of the Registrant's common stock, exercisable at $3.00 per
share.  The option would become exercisable the earlier of January 1, 2000,
or when the shares become registered.  The exercise period is five (5)
years from the date the shares become freely tradeable.  The issuance of
the option to GJM was made in reliance upon the exemption from registration
provided by Section 4(2) of the 1933 Act.  No broker/dealers were involved
in the sale and no commissions were paid.  GJM represented that GJM
acquired the option for investment and not with a view to distribution.

     In March 1999, the Registrant entered into an agreement with
Transition Partners, Limited ("TPL"). As partial consideration for TPL's
services under the agreement, the Registrant issued TPL a warrant to
purchase up to 300,000 shares of the Registrant's common stock at $4.50 per
share, exercisable as follows: 100,000 shares exercisable immediately; an
additional 100,000 shares shall become exercisable provided that the
Registrant has received $2 million in funding on or before May 5, 1999;
and, the remaining 100,000 shares shall become exercisable provided that
the Registrant has received an additional $4 million in funding on or
before August 15, 1999, subject to ratable reductions to the extent that
any of the funding is not attributable to TPL.  The

                                  -23-

<PAGE>

warrant expires March 15, 2004.  The issuance of the warrant to TPL was
made in reliance upon the exemption from registration provided by Section
4(2) of the 1933 Act.  No broker/dealers were involved in the sale and no
commissions were paid.  TPL represented that TPL acquired the option for
investment and not with a view to distribution.

     In March 1999, the Registrant entered into an agreement with Grayson
& Associates, Inc. ("G&A"). As partial consideration for G&A's services
under the agreement, the Registrant issued G&A a warrant to purchase up to
300,000 shares of the Registrant's common stock at $3.00 per share,
provided however, if the average of the closing bid/ask price for Entropin
Common Stock for the 20 consecutive trading days prior to March 30, 2000 is
less than $3.00 per share, the exercise price for the first 100,000 Shares
represented by the Warrant will be adjusted down to reflect a 25% discount
from the average of the closing bid/ask price for such period, exercisable
as follows: 100,000 shares exercisable immediately; an additional 100,000
shares shall become exercisable provided that the Registrant has received
$2 million in funding on or before May 15, 1999; and, the remaining 100,000
shares shall become exercisable provided that the Registrant has received
an additional $4 million in funding on or before August 31, 1999, subject
to ratable reductions to the extent that any of the funding is not
attributable to G&A.  The warrant expires March 22, 2004.  The issuance of
the warrant to G&A was made in reliance upon the exemption from
registration provided by Section 4(2) of the 1933 Act.  No broker/dealers
were involved in the sale and no commissions were paid.  G&A represented
that G&A acquired the option for investment and not with a view to
distribution.

     In March 1999, the Registrant conducted a private offering of its 10%
90-Day Promissory Notes, as amended ("Note"), convertible at the election
of the note holders into shares of the Registrant's common stock, $.001 par
value per share, at $2.00 per share, to the following:

Name                                    Consideration      No. of Warrants*
----                                    -------------      ----------------

J. Paul Consulting Corp.                     $60,000            210,000

James Toot                                   $30,000            105,000

Claudia McAdam                               $15,000             52,500

GJM Trading Partners, LTD                    $15,000             52,500

Great Expectations Family L.P.               $30,000            105,000

Bateman Dynasty                              $30,000            105,000

Cambridge Holdings, Ltd.                     $15,000             52,500

Underwood Family Partners                     $5,000             17,500
                                              ------             ------
     Total                                  $200,000            700,000
                                            ========            =======
______________________
     *    Three and one-half warrants for each $1 of Promissory Note
purchased, exercisable over a five year period commencing March 24, 1999 at
$3.00 per share.

                                  -24-

<PAGE>

     The offers and sales set forth above were made in reliance upon the
exemption from registration provided by Section 4(2) of the 1933 Act and/or
Regulation D and Rule 506 adopted thereunder.  Based upon information known
to the Registrant, and representations made by each of the purchasers, the
Registrant believes that all of the purchasers were accredited investors. 
No broker/dealers were involved in the sale and no commissions were paid. 
All of such purchasers represented that they purchased the securities for
investment, and all Notes and Warrants issued to the purchasers were
impressed with a restrictive legend advising that the Notes and Warrants
may not be sold, transferred, pledged or hypothecated without having first
been registered or the availability of an exemption from registration
established.

     In April 1999, the Registrant issued the following shares at $2.00 per
share, in exchange for the surrender of  its 10% 90-Day Convertible
Promissory Notes, as amended ("Notes"), and the unpaid accured interest on
such Notes:


                                  Principal Amount of Note
                                  ------------------------
Name                                    plus Interest      No. of Shares
----                                    -------------      -------------

J. Paul Consulting Corp.                     $60,500             30,250

James Toot                                   $30,250             15,125

Claudia McAdam                               $15,124              7,562

GJM Trading Partners, LTD                    $15,124              7,562

Great Expectations Family L.P.               $30,250             15,125

Bateman Dynasty                              $30,250             15,125

Cambridge Holdings, Ltd.                     $15,124              7,562

Underwood Family Partners                     $5,040              2,520
                                              ------              -----

     Total                                  $201,662            100,831
                                            ========            =======

     The offers and sales set forth above were made in reliance upon the
exemption from registration provided by Section 4(2) of the 1933 Act and/or
Regulation D and Rule 506 adopted thereunder.  Based upon information known
to the Registrant, and representations made by each of the purchasers, the
Registrant believes that all of the purchasers were accredited investors. 
No broker/dealers were involved in the sale and no commissions were paid. 
All of such purchasers represented that they purchased the securities for
investment, and all Notes and Warrants issued to the purchasers were
impressed with a restrictive legend advising that the Notes and Warrants
may not be sold, transferred, pledged or hypothecated without having first
been registered or the availability of an exemption from registration
established.



                                  -25-

<PAGE>

     In April 1999, the Registrant completed a private placement of Common
Stock at a price of $2.00 per share as follows:

Name                                    Consideration      No. of Shares
----                                    -------------      -------------

Deloras Decker Hunter, Trustee               $50,000             25,000

W. Douglas Moreland                          $40,000             20,000

L. Michael Underwood                         $15,000              7,500

Gladys F. Decker, Trustee                    $23,000             11,500

Paul C. and Carol A. Rivello                 $14,000              7,000

Max Gould                                    $15,000              7,500

John J. Turk, Jr.                            $10,000              5,000

Myron A. Leon                                $20,000             10,000

Michael J. Kirby                             $10,000              5,000

Kenton Roy Holden IRA                        $10,000              5,000

Inverness Investment Profit Sharing Plan     $15,000              7,500

Bleu Ridge Consultants Profit                $10,000              5,000

Danny Yu Defined Benefit Pension Plan        $18,000              9,000

Gulfstream Financial Partners, LLC           $15,000              7,500

Frank J. Kostro                              $15,000              7,500

Samuel F. Trussell                           $20,000             10,000

David M. Chapman                             $20,000             10,000

Richard F. and Barbara A. Vandresser         $10,000              5,000

Charles C. Bruner                             $6,500              3,250

Anthony B. Petrelli                           $6,500              3,250

Eugene L. Neidiger                            $7,000              3,500

Heather Evans                                 $2,000              1,000

Steve Schulz Defined Benefit Trust           $25,000             12,500

Nancy Nita Macy, Trustee                     $40,000             20,000

William E. Ambrose                           $10,000              5,000

                                  -26-

<PAGE>

Name                                    Consideration      No. of Shares
----                                    -------------      -------------

C. Richard and Johanna W. Harrison           $10,000              5,000

Business Development Corporation             $10,000              5,000

Nanna B. Schov Custodian for
Davie Mork and Andreas B. Mork                $8,000              4,000

Barry A. Bates                               $15,000              7,500

Thomas A. Forti, DDS                         $25,000             12,500

Brad Rhodes                                  $10,000              5,000

Ronald Glosser                               $20,000             10,000

Brian P. and Cheri Bertelsen                 $10,000              5,000

Jeanette Y. Mihaly                           $10,000              5,000

Benedetto Casale                             $20,000             10,000

Colin David Rickson                          $10,000              5,000

Arthur Kassoff                               $16,000              8,000

Michael O'Hare                               $10,000              5,000

Arianne Nemelka                              $30,000             15,000

Boulder Family Partnership, Ltd.             $50,000             25,000

Heribert Obser                                $5,000              2,500

Carla Johnson                                $10,000              5,000

Patrick N. Kephart                            $5,000              2,500

Dale Duncan                                  $15,000              7,500

Len Rothstein                                $15,000              7,500

Abdallah E. Ghusn                            $12,000              6,000

Leona Connelly                               $10,000              5,000

Albert W. White                              $10,000              5,000

David L. Gertz                               $10,000              5,000

Gregory Pusey                                $10,000              5,000

Jill Pusey, Custodian for Jacqueline Pusey    $5,000              2,500

                                  -27-

<PAGE>

Name                                    Consideration      No. of Shares
----                                    -------------      -------------

Jill Pusey, Custodian for Christopher Pusey   $5,000              2,500

Cambridge Holdings, Ltd.                     $50,000             25,000

Arthur Marsh Lavenue                         $10,000              5,000

Paul Ernst                                   $30,000             15,000

Sharon M. McDonald                           $30,000             15,000

Douglas L. Ray                                $8,000              4,000

Scott Deitler                                $10,000              5,000

Michael P. Noonan                            $15,000              7,500

Russell L. Davis Profit Sharing Plan         $20,000             10,000

Cardiovascular Associates, PC
FBO L. Lockspeiser, M.D.                     $10,000              5,000

Charles Kirby                                $24,000             12,000
                                             -------             ------
TOTAL                                     $1,000,000            500,000
                                          ==========            =======

     The Company claims the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, and/or Rule 506 of
Regulation D adopted thereunder for the transactions described above.  All
of the purchasers were either known to the Registrant, or were referred to
the Registrant by a consultant to the Company.  Based upon the Registrant's
knowledge of the purchasers and upon written representations made by the
purchasers, the Company believes each purchaser was capable of evaluating
the merits and risks of an investment in the Company's securities.  All
certificates were endorsed with a legend restricting the sale or transfer
of the securities except in accordance with federal securities laws.  No
brokers or dealers received compensation in connection with the sale of
these shares.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

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

          Exhibit 27     Financial Data Schedule

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

          There were no reports on Form 8-K filed during the three months
          ended March 31, 1999.

                                  -28-

<PAGE>

          (1)  Form 8-K, dated May 7, 1999, reporting developments in the
               Company's business under Item 5 thereof, filed with the
               Securities and Exchange Commission on May 7, 1999.


                               SIGNATURES

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


                                   ENTROPIN, INC.


Date: May 17, 1999                 By: /s/ WELLINGTON A. EWEN
                                      ------------------------------
                                      Wellington A. Ewen
                                      Chief Financial Officer









                                  -29-