SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
MAY 25, 2001
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(Date of Report)
ENTROPIN, INC
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(Exact name of small business issuer as specified in its charter)
COLORADO 33-23693 84-1090424
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(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
organization)
45926 OASIS STREET, INDIO, CA 92201
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(Address of principal executive offices)
(760) 775-8333
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(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year, if changed since
last report)
ITEM 5. OTHER EVENTS.
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Entropin, Inc. ("Entropin") issued the following press release on
May 24, 2001:
NEWS RELEASE
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ENTROPIN REPORTS FIRST QUARTER FINANCIAL RESULTS
NASDAQ REMOVES "E" FROM STOCK SYMBOL
INDIO, CALIF. (MAY 24, 2001) - Entropin, Inc. (NASDAQ: ETOP; ETOPW), a
pharmaceutical research and development company, today reported financial
results for the three months ended March 31, 2001.
HIGHLIGHTS OF THE FIRST QUARTER AND SUBSEQUENT WEEKS INCLUDE:
* $11.4 million in cash and cash equivalents as of March 31, 2001
* Cash used in operating activities of approximately $575,000 for first
quarter 2001
* Results of Phase IIIA study analyzed and subsequent Phase II/III study
planned following a meeting with Food and Drug Administration (FDA)
representatives
* No safety issues found with Esterom(R) in Phase IIIA study, adding to
cumulative safety data required by the FDA
* New clinical team assembled for upcoming Phase II/III study
* Randall L. Carpenter, expert in clinical development, joins the
Entropin Board of Directors
* Award of the commercial clinical packaging contract for Esterom(R) to
Automatic Liquid Packaging, a subsidiary of Cardinal Health
"Recently, we have made excellent progress in analyzing data gathered under
our Phase IIIA study with Esterom(R) and in establishing the near-term
clinical timetable for developing this important therapeutic," said Thomas
G. Tachovsky, Ph.D., president and chief executive officer. "Under the
close supervision of Entropin senior management and our Blue Ribbon panel
of experts, during the third quarter of 2001 we look forward to initiating
a Phase II/III study with Esterom(R) in treating impaired range of motion
associated with acute painful shoulder and acute lower back sprain."
The Company recently engaged Deloitte & Touche LLC as its independent
auditors, succeeding the regional accounting firm previously utilized.
Patricia G. Kriss, Entropin's chief financial
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officer, commented, "The appointment of Deloitte & Touche, a Big 5
accounting firm with extensive public audit experience, is critical at this
stage in the Company's growth. The delay in filing our Form 10-KSB allowed
time to review the valuation methodology previously used to record
compensation expense associated with stock options, which were granted in
exchange for services. The adjustments being evaluated were non-cash
accounting charges that had no impact on on-going operations and did not
effect the Company's cash position."
Ms. Kriss noted that pursuant to the filing of Entropin's annual report on
Form 10-KSB with the Securities and Exchange Commission ("SEC") on May 15,
2001, the Company is now current with all SEC filing requirements and the
NASDAQ has removed the "E" previously appended to the Company's stock
ticker symbols.
FIRST QUARTER 2001 FINANCIAL RESULTS
The Company's net cash used in operating activities was approximately
$575,000 during the first quarter of 2001, compared with $646,000 for the
same period in 2000. The cash used in operations was primarily related to
general operating expenses and expansion of research and development
activities. As of March 31, 2001, the Company had approximately $11.4
million in cash, cash equivalents and short-term investments.
The net loss for the first quarter of 2001 was $543,000, or $0.06 per basic
and diluted share on approximately 9.7 million weighted common shares
outstanding. In comparison, the net loss for the first quarter of 2000 was
$1.3 million, or $0.17 per share on approximately 7.6 million weighted
average common shares outstanding.
Research and development ("R&D") expenses for the first quarter of 2001
were $309,000, compared with $394,000 for the first quarter of 2000. The
decrease of approximately $85,000 resulted primarily from a decrease in
non-cash charges associated with compensation expense related to stock
options previously granted for services. R&D expenses, exclusive of these
non-cash charges, were relatively unchanged for the three months ended
March 31, 2001, compared with the same period in 2000.
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General and administrative ("G&A") expenses were $391,000 for the three
months ended March 31, 2001, compared with $933,000 for the three months
ended March 31, 2000. The decrease of approximately $542,000 resulted
primarily from a decrease in non-cash charges associated with compensation
expense related to stock options previously granted for services. G&A
expenses, exclusive of these non-cash charges, were $306,000 for the three
months ended March 31, 2001, compared with $346,000 for the same period in
2000.
Net interest income was approximately $180,000 for the three months ended
March 31, 2001, compared with approximately $44,000 for the same period in
2000. The increase resulted from larger cash, cash equivalent and short-
term investment balances during 2001, reflecting the investment of proceeds
from the Company's secondary public offering completed in May 2000.
The Company expects to incur total monthly expenses of approximately
$400,000-$450,000 until the completion of the Esterom(R) Phase II/III
clinical study.
FINAL YEAR-END 2000 FINANCIAL RESULTS
The Company previously reported preliminary results for the year-ended
December 31, 2000.
The final audited results shown in the following financial tables, include
a net loss from operations during 2000 of $5.2 million, or $0.57 basic and
diluted net loss per common share, with approximately 9.1 million weighted
average common shares outstanding. This compares with the restated net
loss for the year ended December 31, 1999 of $6.7 million, or $1.00 basic
and diluted net loss per common share with approximately 6.7 million
weighted average common shares outstanding. The final results for 2000 and
the restated results for 1999, reflect the recalculation of non-cash
compensation expense associated with stock options previously granted in
exchange for services.
Entropin, Inc. is a pharmaceutical research and development company,
initially focused on the development of Esterom(R), a novel topical
therapeutic for back and shoulder pain resulting from injury to soft
tissue. The Company recently completed a Phase III clinical study with
Esterom(R) in patients with impaired shoulder function, and plans to
initiate a subsequent Phase II/III clinical study in the third quarter of
2001.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: THIS NEWS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS THAT REFLECT
ENTROPIN'S CURRENT VIEWS WITH RESPECT TO FUTURE
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EVENTS AND FINANCIAL PERFORMANCE. THE WORDS "BELIEVE," "EXPECT,"
"ANTICIPATE," AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS.
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO A VARIETY OF RISKS,
UNCERTAINTIES, AND OTHER FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE EXPRESSED IN ANY SUCH FORWARD-LOOKING STATEMENTS.
THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO: (1) THE ABILITY TO
SUCCESSFULLY COMPLETE DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS,
INCLUDING THE COST, SCOPE AND RESULTS OF PRECLINICAL AND CLINICAL TESTING;
(2) THE ABILITY TO SUCCESSFULLY COMPLETE PRODUCT RESEARCH AND FURTHER
DEVELOPMENT, INCLUDING PRE-CLINICAL AND CLINICAL STUDIES; (3) THE TIME,
COST AND UNCERTAINTY OF OBTAINING REGULATORY APPROVALS; (4) THE ABILITY TO
OBTAIN SUBSTANTIAL ADDITIONAL FUNDING; (5) THE ABILITY TO DEVELOP AND
COMMERCIALIZE PRODUCTS BEFORE COMPETITORS; AND (6) OTHER FACTORS DETAILED
FROM TIME TO TIME IN FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
###
-- Financial Tables Follow -
ENTROPIN, INC.
(A development-stage company)
CONDENSED BALANCE SHEETS
March 31, 2001 December 31, 2000
(Unaudited) (Audited)
ASSETS -------------- -----------------
CURRENT ASSETS
Cash and cash equivalents $ 6,759,076 $ 6,018,187
Short-term investments 4,499,516 5,821,069
Other current assets 258,195 231,639
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Total current assets 11,516,787 12,070,895
OTHER ASSETS 333,453 335,096
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TOTAL ASSETS $ 11,850,240 $ 12,405,991
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 111,690 $ 271,035
LONG-TERM LIABILITIES AND REDEEMABLE
PREFERRED STOCK 4,106,392 4,130,105
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock 9,706 9,688
Additional paid-in capital 28,465,477 28,241,664
Deficit accumulated during the development stage (20,678,877) (20,159,065)
Unearned Stock Compensation (164,148) (87,436)
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Total stockholders' equity (deficit) 7,632,158 8,004,851
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,850,240 $ 12,405,991
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ENTROPIN, INC.
(A development-stage company)
CONDENSED STATEMENTS OF OPERATIONS
For the three months ended
March 31, For the year ended
2001 2000 December 31, 2000
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(Unaudited) (Audited)
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EXPENSES
Research and development $ 309,025 $ 394,033 $ 3,102,424
General and administrative 390,854 933,063 2,691,669
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Total expenses (699,879) (1,327,096) (5,794,093)
OTHER INCOME (EXPENSE) $ 180,067 $ 44,411 $ 688,938
NET INCOME (LOSS) (519,812) (1,282,685) (5,105,155)
ACCRUED DIVIDEND - SERIES B PFD STOCK (23,188) (28,813) (120,772)
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NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $ (543,000) $ (1,311,498) $ (5,225,927)
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Basic and diluted net income (loss)
per common share $ (.06) $ (.17) $ (.57)
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Shares used in computing basic and
diluted net income (loss)
per common share 9,711,000 7,646,000 9,134,000
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: May 25, 2001 ENTROPIN, INC.
By /s/ Thomas G. Tachovsky
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Thomas G. Tachovsky
President and Chief Executive Officer
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