SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC  20549

                           FORM 10-KSB

       [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

           For the fiscal year ended FEBRUARY 28, 2007

     [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

                Commission file number 000-17741

                          EPOLIN, INC.
         (Name of Small Business Issuer in Its Charter)

New Jersey                                             22-2547226
(State or other jurisdiction                     (I.R.S. Employer
of incorporation or                                Identification
organization)                                             Number)

358-364 Adams Street
Newark, New Jersey                                          07105
(Address of principal                                  (Zip Code)
executive offices)

Issuer's telephone number, including area code:  (973) 465-9495

Securities registered under Section 12(b) of the Exchange Act:
                              None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock (no par value)

Check whether the Issuer is not required to file reports pursuant
to Section 13 or 15(d) of the Exchange Act.       [    ]

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  [  ]

Check  if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B  not contained in this form, and no
disclosure  will  be  contained,  to  the  best  of  Registrant's
knowledge,   in   definitive  proxy  or  information   statements
incorporated by reference in Part III of this Form 10-KSB or  any
amendment to this Form 10-KSB. [   ]

Indicate by check mark whether the registrant is a shell  company
(as defined in Rule 12b-2 of the Exchange Act).
                                        Yes [  ]    No  [ X ]

State Issuer's revenues for its most    recent    fiscal    year:
                                        $3,609,674.

As  of May 1, 2007, the aggregate market value of the voting  and
non-voting  common equity held by non-affiliates  of  the  Issuer
(8,259,310 shares) was approximately $5,864,000.  The  number  of
shares  outstanding of the Common Stock (no  par  value)  of  the
Issuer as of the close of business on May 1, 2007 was 11,966,355.

Documents  Incorporated by Reference:  Portions of the definitive
proxy statement for the Annual Meeting of Stockholders to be held
in 2007 are incorporated by reference into Part III hereof.

Transitional Small Business Disclosure Format: Yes [  ]  No [ X ]

<PAGE>


                          EPOLIN, INC.

                        TABLE OF CONTENTS



                             PART I
                                                       Page

Item 1.        Description of Business                  3

Item 2.        Description of Property                  8

Item 3.        Legal Proceedings                        8

Item 4.        Submission of Matters to a
               Vote of Security Holders                 8

                             PART II

Item 5.        Market for Common Equity,
               Related Stockholder Matters
               and Small Business Issuer
               Purchases of Equity Securities           8

Item 6.        Management's Discussion and
               Analysis or Plan of Operation           11

Item 7.        Financial Statements                    15

Item 8.        Changes in and Disagreements with
               Accountants on Accounting
               and Financial Disclosure                15

Item 8A.       Controls and Procedures                 15

Item 8B.       Other Information                       15


                            PART III

Item 9.        Directors, Executive Officers,
               Promoters, Control Persons and
               Corporate Governance; Compliance
               with Section 16(a)
               of  the Exchange Act                    16

Item 10.       Executive Compensation                  16

Item 11.       Security Ownership of Certain
               Beneficial Owners
               and Management and Related
               Stockholder Matters                     16

Item 12.       Certain Relationships and
               Related Transactions,
               and Director Independence               16

Item 13.       Exhibits                                16

Item 14.       Principal Accountant Fees
               and Services                            16

               Signatures                              17

<PAGE>




                   Forward-Looking Statements

     This report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs
and assumptions made by the Company's management as well as
information currently available to the management.  When used in
this document, the words "anticipate", "believe", "estimate", and
"expect" and similar expressions, are intended to identify
forward-looking statements.  Such statements reflect the current
views of the Company with respect to future events and are
subject to certain risks, uncertainties and assumptions.  Should
one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may
vary materially from those described herein as anticipated,
believed, estimated or expected.  Certain of these risks and
uncertainties are discussed in this report under the caption
"Uncertainties and Risk Factors" in Part I, Item 1 "Description
of Business".  The Company does not intend to update these
forward-looking statements.

                             PART I

Item 1.        Description of Business.

Introduction

     Epolin, Inc. (referred to herein as "Epolin", the "Company",
"we", "us" and "our"), which was incorporated in the State of New
Jersey in May 1984, is a specialized chemical company primarily
engaged in the manufacturing, marketing, research and development
of dyes and dye formulations. Our business is heavily weighted
towards the development, manufacture and sale of near infrared
dyes.  Our principal offices are located at 358-364 Adams Street,
Newark, New Jersey 07105 and our telephone number is (973) 465-
9495.  The Company's web-site can be accessed at www.epolin.com.

     Our wholly-owned subsidiary, Epolin Holding Corp. ("Epolin
Holding"), was incorporated in the State of New Jersey as a real
estate holding company.  Epolin Holding became a wholly-owned
subsidiary in January 1998.

     Following completion of the Company's public offering in
1989, our revenues were then primarily generated through the
synthesis and sale of specialty organic chemical products.
Building upon this base, the Company singled out near infrared
dye technology as a most promising product line and since 1991
has emphasized the development, manufacture and sale of these
dyes.

     Paralleling the growth of the dye business, we maintain a
level of production and sales of specialty products made on a
custom basis. These include additives for plastics, thermochromic
materials for use in paints as well as other specialty chemicals
made in low volume to sell at prices that reflect the value of
the product.  However, unlike the dye business, we do not expect
our specialty chemical business to grow.

     Unless the context otherwise requires, all references herein
to the "Company" refer to Epolin, Inc. and its consolidated
subsidiary, Epolin Holding Corp.

Infrared Dyes

     Based upon our years of experience in the specialty dye
business, we believe that the Company possesses the largest
offering of near infrared (NIR) dyes in the world. Our EpolightT
NIR dyes absorb in the near infrared region of the
electromagnetic light spectrum which is 700nm to 1600nm.
However, we are unaware of any statistical evidence available to
support or contradict the belief that Epolin is the largest NIR
dye producer.

     EpolightT dyes are sold as pure crystalline dyes or
formulated dye mixtures.  The Company can also incorporate its
dyes into customized liquid inks or thermoplastics pellets which
it sells.  Applications for our products cover several markets
which are discussed in the following subsections:

     Eye Protection

     We provide dye products to the safety industry that absorb
or block harmful radiation generated by industrial welding.
International specifications dictate that welding eyewear must
absorb specific amounts of light radiation, including the NIR
light, to protect workers from serious and long term eye damage.
We also develop and market dye products to the laser eye
protection industry.  The original applications for laser
protective eyewear were

<PAGE>

for the military.  Recent growth of
lasers as tools in the medical industry has also been a positive
driver to our eye protection business. A special area of interest
to us is the potential use of our technology in sunglasses.
Consumers are increasingly aware of the risk of macular
degeneration due to long term exposure to the sun's harmful NIR
light waves.

     We offer our eye protection absorbers in the physical form
of EpolightT dye powders and also LuminateT dye pellets.

     Security Ink

     We have a growing business in the sale of EpolightT NIR dyes
and EpolightT NIR screen inks to the security industry.  Our NIR
products have limited visibility to the human eye but can be
easily "seen" or read by near infrared diodes or sensors.  Their
appearance can be completely masked by flooding the NIR message
with a visible dye overcoat.  Nevertheless, the message is easily
visible when viewed with an NIR reader.  This feature makes our
ink products viable tools to thwart counterfeiting and fraud in
the areas of bank cards, currency, secure documents and consumer
goods.

     Light Management

     The other market areas for our technology rely on our
ability to engineer filters that provide absorption or
transmission of specific light wavelengths in the ultra violet,
visible light and near infrared portions of the electromagnetic
spectrum. The ability to "manage light" draws customers with
filter applications as diverse as thermal shields for windows,
optoelectronics, automatic on-off light sensors and infrared
"night vision" used by the military.

Specialty Chemical Products

     Although we are heavily engaged in the manufacture and sale
of dyes, we maintain a level of production and sales of specialty
products made on a custom basis. This custom business, which does
not represent greater than 10% of reported profits or losses of
the Company, involves the preparation and sale of a variety of
specialty chemical products on behalf of companies that sell into
the adhesives, plastics, aerospace, pharmaceutical and flavors
and fragrance industries.

     Our products primarily serve as intermediates, additives or
process aids for complex chemical formulations.  Raw materials
utilized in connection with the preparation of specialty chemical
products are either available from chemical suppliers or made by
us in our own facilities.

Effect of Compliance with Government Regulation

     Manufacturers of chemical products are subject to extensive
Federal and State environmental regulations. Although we believe
that our manufacturing processes do not result in the emission of
volatile organic vapors into the atmosphere, and that we are not
in violation of any State or Federal environmental regulations,
the Company is required to comply with such regulations with
respect to manufacture, storage and/or disposal of toxic
materials. To our knowledge, we are in compliance with present
regulations.  However, no assurances can be given that future
regulations will not be adopted, compliance with which will
result in substantial expense to, and otherwise adversely affect
our business. In addition, we are subject to the State of New
Jersey Industrial Site Recovery Act (ISRA), which, among other
requirements, requires us to obtain prior approval before
relocating our facilities or consummating a transaction that
would result in a change in control of the Company. Our
facilities are subject to inspection to ascertain whether the
Company has complied with State environmental regulations.  While
we believe the Company has complied with such regulations, there
can be no assurance that we will not be required to incur
expenses to remedy any future environmental violations
discovered.  The Company registers all new and proprietary
products with the Toxic Substances Control Agency (TSCA) which is
required in order for us to offer for sale any new chemical
product.  No assurances can be given that such registrations will
be approved for any new product.

     During the years ended February 28, 2007 and February 28,
2006, we expended approximately $22,000 and $21,000,
respectively, for compliance with environmental laws.  Actual
costs to be incurred in future periods may vary from the
foregoing costs, given inherent uncertainties in evaluating
environmental exposures. Subject to the imprecision in estimating
future environmental costs, we do not expect that any sum we may
have to pay in

<PAGE>

connection with environmental matters would have a
materially adverse effect on the Company's financial condition or
results of operations in any one year.

Sources and Availability of Raw Materials

     We purchase chemicals from several large chemical
manufacturers and then further processes them into our saleable
products.  Although the Company limits itself to a relatively
small number of suppliers, we are not restricted to such
suppliers, and Management believes the availability to such raw
materials is widespread.  During the year ended February 28,
2007, no significant difficulties were encountered in obtaining
adequate supplies of raw materials.

Research and Development

    We believe that we have developed substantial research and
development capability.  Our efforts are devoted to
(i) developing new products to satisfy defined market needs,
(ii) providing quality technical services to assure the continued
success of our products for our customers' applications,
(iii) providing technology for improvements to our products,
processes and applications, and (iv) providing support to our
manufacturing plant for cost reduction, productivity and quality
improvement programs.

     In addition, we have made a commitment of resources to
research and development for new dyes and for improvement of our
capability to provide technical services to our dye customers.
New applications are pursued by a Director of Research with
contributions from Murray S. Cohen, Ph.D., our Chief Scientist
and Chairman of the Board.  Several programs for near infrared
dyes are in various stages of commercialization, as generally
described above.  The Company's website is a constant source of
new development ideas, as the scientific community is aware of
our expertise in the field of NIR dyes.

     New applications under development are in the following
general markets: credit cards, heat blocking films; laser eye
protection, military (night vision); document verification,
military applications; welding and laser eye protection; medical
devices; tagants; and hot melt additives.   Such research and
development activities are primarily undertaken with a specific
customer in mind.  Management believes that the practice of
developing new applications directly for specific customers
reduces the inherent risk of the development portfolio.
Nevertheless, there can be no assurance that such research and
development activities with specific customers in mind will lead
to any significant sales of such new products.  Because of the
uncertainty of these efforts, revenue projections and estimated
completion dates are difficult to measure.

     During the years ended February 28, 2007 and February 28,
2006, the amounts spent on research and development activities
were approximately $441,000 and $447,000, respectively.  All
research and development costs are borne by the Company.

Competition

     Although we generally experience, in management's opinion,
limited competition in all areas of our business, other dye
companies exist which sell infrared dyes.  In most cases,
however, management believes that such other dye companies do not
offer the broad range of dyes as offered by us nor can such other
companies provide the level of technical service as provided by
us.  We believe that our extensive assortment of dyes, product
performance, quality, technical and customer support, and price
are all important factors in our competitiveness.  In the future,
other companies may change their policy and widen their offerings
and expand their technical service.  This will present the
Company with a challenge to its pricing structure and competitive
position.

Technological Obsolescence

     The chemical and plastics industry is characterized by rapid
technological changes. Although the near infrared dyes that form
the major portion of our product line have been used in
protective eyewear since 1976, the field has proven to be an
active one for other applications and we must anticipate
competition to develop.  To remain competitive, the Company has
committed itself to make capital investments to maintain its
position as a key dye supplier in this field.  For example, there
can be no assurance that our dye technology will not be rendered
less competitive, or obsolete, by the development by others of
new methods to achieve laser safety and other forms of eye
protection.  Furthermore, to remain competitive, we may be
required to make large, ongoing capital investments

<PAGE>

to develop
and produce dyes at competitive prices. There is no assurance
that can be given that the funds for such investments will be
available to us.

Patents and Proprietary Protection

     We do not rely upon patents for protection of our dye
business.  There can be no assurance that others may not
independently develop the same, similar or alternative
technologies or otherwise obtain access to the Company's
proprietary technologies.

Sales

     A material portion of our business is dependent on certain
domestic customers, the loss of which could have a material
effect on operations.  During the year ended February 28, 2007,
approximately 37.5% of sales were to four customers.  Two of
these customers, located in the Eastern United States, accounted
for 24.5% of sales.  During the year ended February 28, 2006,
approximately 43.9% of sales were to four customers.  Two of
these customers, located in the Eastern United States, accounted
for 29.6% of sales.

Employees

     We presently employ ten persons on a full time basis.  Our
employees are not represented by labor unions.  We believe that
relations with our employees are good.

Uncertainties and Risk Factors

     In addition to other information and financial data set
forth elsewhere in this report, the following risk factors should
be considered carefully in evaluating the Company.

     OPERATING RESULTS MAY FLUCTUATE.   Our operating results may
fluctuate because of a number of factors, many of which are
beyond our control.  Some of these factors that affect our
results but which are difficult to control or predict are: the
reduction, rescheduling or cancellation of orders by customers
whether as a result of slowing demand for our products,
stockpiling of our products or otherwise; fluctuations in the
timing and amount of customer requests for product shipments;
fluctuations in product life cycles; changes in the mix of
products that our customers buy; competitive pressures on selling
prices; the ability of our customers to obtain products from
their other suppliers; and general economic conditions.

     DEPENDENCE ON KEY CUSTOMERS.  Our customers are
concentrated, so the loss of one or more key customers could
significantly reduce our revenues.  In fiscal 2007, approximately
37.5% of sales were to four customers.  Two of these customers,
located in the Eastern United States, accounted for 24.5% of
sales.  The loss of any of these customers could have a material
adverse effect on the Company.

     TECHNOLOGICAL CHANGES.  The chemical and plastics industry
is characterized by rapid technological changes, so our success
depends heavily on our ability to develop and introduce new
products.   In this regard, we must make ongoing capital
investments to develop and produce dyes at competitive prices.
There is no assurance that can be given that the funds for such
investments will continue to be available to us.

     COMPETITION.  Although we generally experiences, in
management's opinion, limited competition in all areas of our
business, other dye companies exist which sell infrared dyes.  In
most cases, however, management believes that such other dye
companies do not offer the broad range of dyes as offered by us
nor can such other companies provide the level of technical
service as provided by us. We believe that our extensive
assortment of dyes, product performance, quality, technical and
customer support, and price are all important factors in our
competitiveness.  In the future, other companies may change their
policy and widen their offerings and expand their technical
service.  This will present us with a challenge to our pricing
structure and competitive position.

     ENVIRONMENTAL REGULATION.  Manufacturers of chemical
products are subject to extensive Federal and State environmental
regulations.  While we believe the Company has complied with such
regulations, there can be no assurance that we will not be
required to incur expenses to remedy any future environmental
violations discovered.  In addition, no assurances can be given
that future regulations will not be adopted, compliance with
which will result in substantial expense to, and otherwise
adversely affect our business.

<PAGE>

     PATENTS AND PROPRIETARY PROTECTION.  We do not rely upon
patents for protection of our dye business.   There can be no
assurance that others may not independently develop the same,
similar or alternative technologies or otherwise obtain access to
our proprietary technologies.

     SOURCES AND AVAILABILITY OF RAW MATERIALS.   We purchase
chemicals from several large chemical manufacturers and then
further process them into its saleable products.  Although we
limit ourselves to a relatively small number of suppliers, we are
not restricted to such suppliers, and Management believes the
availability to such raw materials is widespread.  Nevertheless,
there can be no assurance that raw materials will continue to be
easily obtainable.  Any difficulty in obtaining raw materials
would have a material adverse effect on our business.

     WE ARE DEPENDENT ON KEY PERSONNEL INCLUDING OUR EXECUTIVE
OFFICERS.  Due to the specialized nature of our business, our
success depends in part upon attracting and retaining the
services of qualified managerial and technical personnel.  The
market for such persons remains competitive and the relative
small size of the Company may make it more difficult for us to
recruit and retain qualified persons.  In addition, and since we
are a small company, a loss of one or more of our current
officers could severely and negatively impact our operations.

     DIVIDENDS.   During fiscal 2007, the Company approved the
adoption of a dividend policy under which the Company will issue
a regular annual cash dividend on shares of its Common Stock.
The amount of the dividend, record date and payment date will be
subject to approval every year by the Board of Directors.  As a
result, any such future dividends will depend on earnings, other
financial requirements and other factors, many of which may be
beyond the control of the Company.

     OUR STOCK PRICE MAY EXPERIENCE VOLATILITY.  The market price
of the Common Stock, which currently is listed in the OTC
Bulletin Board, has, in the past, fluctuated over time and may in
the future be volatile.   We believe that there are a small
number of market makers that make a market in our Common Stock.
The actions of any of these market makers could substantially
impact the volatility of our Common Stock.

     POTENTIAL FUTURE SALES PURSUANT TO RULE 144.  Many of the
shares of Common Stock presently held by management and others
are "restricted securities" as that term is defined in Rule 144,
promulgated under the Securities Act.  Under Rule 144, a person
(or persons whose shares are aggregated) who has satisfied a one-
year holding period, may, under certain circumstances sell within
any three-month period a number of shares which does not exceed
the greater of 1% of the then outstanding shares of Common Stock,
or the average weekly trading volume during the four calendar
weeks prior to such sale.  Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation
by a person who is not an affiliate of the Company and who has
satisfied a two-year holding period.  Such holding periods have
already been satisfied in many instances.  Therefore, actual
sales or the prospect of sales of such shares under Rule 144 in
the future may depress the prices of our securities.

     OUR COMMON STOCK IS A PENNY STOCK. Our Common Stock is
classified as a penny stock, which is traded on the OTCBB.  As a
result, an investor may find it more difficult to dispose of or
obtain accurate quotations as to the price of the shares of the
Common Stock.  In addition, the "penny stock" rules adopted by
the Securities and Exchange Commission subject the sale of the
shares of the Common Stock to certain regulations which impose
sales practice requirements on broker-dealers.  For example,
broker-dealers selling such securities must, prior to effecting
the transaction, provide their customers with a document that
discloses the risks of investing in such securities. Furthermore,
if the person purchasing the securities is someone other than an
accredited investor or an established customer of the broker-
dealer, the broker-dealer must also approve the potential
customer's account by obtaining information concerning the
customer's financial situation, investment experience and
investment objectives.  The broker-dealer must also make a
determination whether the transaction is suitable for the
customer and whether the customer has sufficient knowledge and
experience in financial matters to be reasonably expected to be
capable of evaluating the risk of transactions in such
securities. Accordingly, the Commission's rules may result in the
limitation of the number of potential purchasers of the shares of
the Common Stock.  In addition, the additional burdens imposed
upon broker-dealers by such requirements may discourage broker-
dealers from effecting transactions in the Common Stock, which
could severely limit the market of our Common Stock.

     LIMITATIONS OF THE OTCBB CAN HINDER COMPLETION OF TRADES.
Trades and quotations on the OTCBB involve a manual process that
may delay order processing. Price fluctuations during a delay can
result in the failure of a limit order to execute or cause
execution of a market order at a price significantly different

<PAGE>

from the price prevailing when an order was entered.
Consequently, one may be unable to trade in our Common Stock at
optimum prices.

     THE OTCBB IS VULNERABLE TO MARKET FRAUD.   OTCBB securities
are frequent targets of fraud or market manipulation, both
because of their generally low prices and because OTCBB reporting
requirements are less stringent than those of the stock exchanges
or NASDAQ.

     INCREASED DEALER COMPENSATION COULD ADVERSELY AFFECT STOCK
PRICE.  OTCBB dealers' spreads (the difference between the bid
and ask prices) may be large, causing higher purchase prices and
less sale proceeds for investors.

     Except as required by the Federal Securities Law, the
Company does not undertake any obligation to release publicly any
revisions to any forward-looking statements to reflect events or
circumstances after the date of this Form 10-KSB or for any other
reason.


Item 2.        Description of Property.

     We presently occupy approximately 19,500 square feet of
manufacturing, warehouse and administrative space in Newark, New
Jersey which property the Company has occupied since June 1989.
The property is currently owned by Epolin Holding Corp. ("Epolin
Holding"), our wholly-owned subsidiary.  We presently occupy the
property pursuant to a lease, effective November 1, 1996, which
was for an initial term of five years with three five years
options with annual rent of $97,740, subject to annual
adjustments based on increases in the Consumer Price Index which
adjustments have been waived by Epolin Holding.   Such rent
includes real estate taxes and insurance expenses.  Generally, we
expect that the lease will be renewed in the normal course of
business.  We believe that the current facility is adequate for
the foreseeable future.

     Effective November 1, 2002 and through August 2005, we
subleased approximately 2,500 square feet of our space to a non-
related party to operate an optics and security inks laboratory
at an annual rent of $36,000.  Commencing as of September 2005,
new arrangements have been agreed upon for such space with a
different non-related party to operate a laboratory at an annual
rental of $18,000.  Such sublease shall terminate on October 31,
2007.


Item 3.   Legal Proceedings.

     There are no material pending legal proceedings to which the
Company is a party or to which any of its property is subject.


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

     No matter was submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders.



                            PART II

Item 5.   Market for Common Equity, Related Stockholder
          Matters and Small Business Issuer Purchases of Equity
          Securities.

Market Information

     The Company's Common Stock is presently being traded in the
over-the-counter market under the symbol "EPLN" and is listed on
the OTC Bulletin Board.  The following chart sets forth the range
of the high and low bid quotations for the Company's Common Stock
for each period indicated.  The quotations represent prices
between dealers and do not include retail markups, markdowns,
commissions or other adjustments and may not represent actual
transactions.

<PAGE>

Period                                    Bid Prices

Fiscal year ended February 28, 2007:   High         Low

March 1, 2006 to May 31, 2006          $.97         $.71
June 1, 2006 to Aug. 31, 2006          $.83         $.65
Sept. 1, 2006 to Nov. 30, 2006         $.87         $.71
Dec. 1, 2006 to Feb. 28, 2007          $.86         $.666

Fiscal year ended February 28, 2006:   High         Low

March 1, 2005 to May 31, 2005          $.59         $.45
June 1, 2005 to Aug. 31, 2005          $.65         $.50
Sept. 1, 2005 to Nov. 30, 2005         $.65         $.55
Dec. 1, 2005 to Feb. 28, 2006          $.76         $.56


Holders

     As of May 1, 2007, there were approximately 280 stockholders
of record of the Company's Common Stock.  This does not reflect
persons or entities that hold their stock in nominee or "street
name".

Dividends

     During fiscal 2006, the Company paid one cash dividend of
$0.02 per share in August 2005.  Subsequent to the end of fiscal
2006, the Company approved the adoption of a dividend policy
under which the Company will issue a regular annual cash dividend
on shares of its Common Stock.  The amount of the dividend,
record date and payment date will be subject to approval every
year by the Board of Directors.  In accordance with the new
dividend policy, in April 2006, the Board of Directors declared
and the Company paid the first regular annual cash dividend of
$0.02 per share in May 2006.  In addition, in December 2006 and
considering our cash position, the Board of Directors declared a
special cash dividend of $0.02 per share which was paid on
January 3, 2007.

Recent Sales of Unregistered Securities

     In fiscal 2005, the Company issued 25,000 shares of Common
Stock upon exercise of previously granted stock options at an
aggregate exercise price of $6,250.  In fiscal 2006, the Company
issued 100,000 shares of Common Stock pursuant to an employment
agreement and issued 30,000 shares of Common Stock upon exercise
of previously granted stock options at an aggregate exercise
price of $8,300.  In fiscal 2007, the Company issued 56,000
shares of Common Stock upon exercise of previously granted stock
options at an aggregate exercise price of $16,210.

     In addition, in fiscal 2005, the Company granted an
aggregate of 100,000 stock options exercisable at $.51 per share;
and, in fiscal 2006, the Company granted an aggregate of 200,000
stock options exercisable at $.54 per share.  In addition, in
fiscal 2006, the Company cancelled the 2004 Stock Options and
issued an equal number of replacement stock options to holders of
the 2004 Stock Options exercisable at $.41 per share.  No options
were granted in fiscal 2007.  All of such stock options expire
five or ten years after the date granted and are subject to
various vesting periods.

     All of such securities were issued in reliance upon the
exemption from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended, for "transactions by the
issuer not involving any public offering".

Equity Compensation Plan Information

      Information  regarding equity compensations  plans,  as  of
February 28, 2007, is set forth in the table below:

<PAGE>




                                                Number of
               Number of                        securities
               securities      Weighted-        remaining
               to be issued    average          available for
               upon            Exercise price   future issuance
               exercise of     of               under
               outstanding     Outstanding      equity
               options,        options,         compensation plans
               warrants and    Warrants and     (excluding
Plan category  rights (a)      rights (b)       securities
                                                reflected
                                                in column (a)) (c)
Equity
compensation
plans          -0-             -0-              -0-
approved by
security
holders
Equity
compensation
plans not      416,000         $0.50            498,000
approved
by security
holders

Total
               416,000         $0.50            498,000

     The foregoing equity compensation plan information relates
to the stock options granted under the 1998 Stock Option Plan, as
well as 100,000 stock option granted outside of the plan to Greg
Amato.

Small Business Issuer Purchases of Equity Securities

     Information regarding repurchases made by the Company of
shares of its Common Stock during the fourth quarter of the
fiscal year ended February 28, 2007, is set forth below:


                                       Total         Maximum
                                       Number of     Number
                                       Shares        of Shares
             Total        Average      Purchased     That May
Period       Number of    Price        as Part of    Yet be
             Shares       Paid per     Publicly      Purchased
             Purchased    Share        Announced     Under the
                                       Plans         Plans or
                                       or            Programs(1)
                                       Programs(1)
Dec. 1,
2006 to
Dec. 31,     25,000       $0.84        25,000        168,500
2006

Jan. 1,
2007 to
Jan. 31,     -0-           -0-           -0-         168,500
2007

Feb. 1,
2007 to
Feb. 28,     -0-           -0-           -0-         168,500
2007

Total
             25,000       $0.84        25,000        168,500

_________________________

(1)  In August 2001, the Board of Directors of the Company
     authorized a 500,000 share stock repurchase program.
     Pursuant to the repurchase program, the Company may purchase
     up to 500,000 shares of its common stock in the open market
     or in privately negotiated transactions from time to time,
     based on market prices.  The Company indicated that the
     timing of the buyback of the Company's shares will be
     dictated by overall financial and market conditions and
     other corporate considerations.   The repurchase program may
     be suspended without further notice.  During the fiscal year
     ended February 28, 2007, a total of 30,000 shares were
     repurchased at a cumulative cost of $25,550; during the
     fiscal year ended February 28, 2006, a total of 5,000 shares
     were repurchased at a cumulative cost of $3,600; during the
     fiscal year ended February 28, 2005, a total of 50,000
     shares were repurchased at a cumulative cost of $29,750;
     during the fiscal year ended February 29, 2004, a total of
     184,000 shares were repurchased at a cumulative cost of
     $103,405; during the fiscal year ended February 28, 2003, a
     total of 32,500 shares were repurchased at a cumulative cost
     of $18,624; and, during the fiscal year ended February 28,
     2002, a total of 30,000 shares were repurchased at a
     cumulative cost of $14,837.

<PAGE>

Item 6.   Management's Discussion and Analysis or Plan of
          Operation.

     The following discussion should be read in conjunction with
the audited consolidated financial statements and the notes
thereto appearing elsewhere in this report and is qualified in
its entirety by the foregoing.

Executive Overview

     Epolin, Inc. (the "Company", "we", "us" and "our") is a
specialized chemical company primarily engaged in the
manufacturing, marketing, research and development of infrared
dyes, laser absorbing dyes and infrared dye formulations.  Our
business is heavily weighted towards the development, manufacture
and sale of near infrared dyes.  Applications for these dyes
cover several markets that include laser protection, welding,
sunglasses, optical filters, glazing and imaging and security
inks and tagants.  We also manufacture specialty chemicals for
certain chemical manufacturers.

     We have succeeded in growing over the last decade based on
the development, application and manufacture of near infrared
dyes.     In recent years, we have embarked on an aggressive
campaign to make our dyes easier to use.  In this regard, we
offer technical service support for extrusion and injection
molding of our dyes with a variety of resin substrates.  Our dyes
can now be uniquely formulated to each customer's specifications
and manufactured in our own facility.  In addition, we hold a
broad range of dyes in inventory for immediate sale.

     We sell our products to manufacturers of plastics/resins,
credit cards, electronics, glass and other basic materials.  Our
customers are located in all regions of the world, although a
material portion of our business is dependent on certain domestic
customers, the loss of which could have a material effect on
operations.  As the service economy continues to dwarf the
manufacturing sector in the United States, we now offer our
customers added service in the form of formulated inks and
resins.  This has resulted in increasing our worldwide sales of
these products and, we believe, lessens the threat of competition
from lower cost dyes manufactured abroad.  During the year ended
February 28, 2007, approximately 37.5% of sales were to four
customers.  Two of these customers, located in the Eastern United
States, accounted for 24.5% of sales.  During the year ended
February 28, 2006, approximately 43.9% of sales were to four
customers.  Two of these customers, located in the Eastern United
States, accounted for 29.6% of sales.  The loss of one or more
key customers could have a material adverse effect on the
Company.

Results of Operations

     The following tables set forth operations data for the year
ended February 28, 2007 and year ended February 28, 2006.

                         Years Ended February  28,

                         2007          2006           % change

Sales                    $3,609,674    $3,700,853       -2.5%

Gross profit              2,155,593     2,219,456       -2.9%

Gross  profit percentage    60.0%         60.0%            0%

Selling, general
& administrative          1,280,547     1,336,977       -4.2%

Operating  income           875,046       882,479       -0.8%
Other Income                 88,451        55,746       58.7%

Income before taxes         963,497       938,225        2.7%

Income  taxes               340,569       343,827       -1.0%

Net  income
(after taxes)             $ 622,928      $594,398        4.8%

<PAGE>

Sales

     For the year ended February 28, 2007, sales were $3,610,000
as compared to $3,701,000 for the year ended February 28, 2006, a
decrease of $91,000 or 2.5%.  Such decrease in sales occurred in
both our overseas markets and in North America.  Sales in Asia
were $508,000 in fiscal 2007 compared to $568,000 in fiscal 2006,
a decrease of $60,000.  In Europe, sales decreased $13,000 to
$308,000 in fiscal 2007 from $321,000 in fiscal 2006.  In North
America, which represents a majority of our sales income, sales
decreased $29,000 to $2,775,000 in fiscal 2007 from $2,804,000 in
fiscal 2006.  With respect to our product groups, sales in our
newer product areas showed an overall increase for the year ended
February 28, 2007 compared to the prior year, while sales in our
traditional product areas generally declined.  Sales in these new
product areas increased by $305,000 in fiscal 2007 compared to
the prior year and represented 46.3% of all Company sales for the
year ended February 28, 2007 while in fiscal 2006 such new
products represented 36.9% of all Company sales.

Gross Profit

     Gross profit, defined as sales less cost of sales, was
$2,156,000 or 60.0% of sales for the year ended February 28, 2007
compared to $2,219,000 or 60.0% of sales for the year ended
February 28, 2006.  While the gross profit percentage remained
the same from 2006 to 2007, gross profit decreased by $63,000  in
terms of absolute dollars primarily due to cost of sales
remaining relatively constant in 2007 compared to 2006 (a
decrease of only $28,000) while sales decreased $91,000.

     Cost of sales was $1,454,000 for the year ended February 28,
2007 which represented 40.3% of sales compared to $1,481,000 for
the year ended February 28, 2006 which represented 40.0% of
sales.  Total cost of materials decreased $19,000 in fiscal 2007
compared to the prior year, while total factory overhead
decreased $9,000 in fiscal 2007 compared to the prior year.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased to
$1,281,000 or 35.4% of sales for the year ended February 28, 2007
from $1,337,000 or 36.1% of sales for the year ended February 28,
2006, a decrease of $56,000.  Such decrease in absolute dollars
was primarily due to a decrease in officers' salaries in fiscal
2007 resulting essentially from the Chairman of the Board's
decision to become a part-time employee effective in September
2006 with a corresponding reduction in his base salary.  In
addition, none of our executive officers received any cash
bonuses for performance in fiscal 2007.

Operating Income

     Operating income, in terms of absolute dollars, decreased to
$875,000 for fiscal 2007 from $882,000 for fiscal 2006, a
decrease of $7,000.  This decrease was due to reduced sales for
2007 compared to 2006 with total cost of sales and expenses
decreasing at approximately the same rate.

Other Income

     Total other income for the year ended February 28, 2007 was
$88,000 as compared to $56,000 for the year ended February 28,
2006.  We realized rental income of $17,000 for fiscal 2007
compared to rental income of $26,000 for fiscal 2006.  Our
interest income increased to $72,000 for fiscal 2007 from $30,000
in fiscal 2006 primarily due to a higher interest rate for
certain cash on hand in fiscal 2007 compared to the prior year.

Net Income

     During fiscal 2007, we reported income before taxes of
$963,000 as compared to income before taxes of $938,000 for
fiscal 2006.  Income taxes were $340,000 for fiscal 2007 compared
to $344,000 for the year ended February 28, 2006.  Changes in
income taxes are generally attributed to changes from period to
period in sales and expenses.  Net income after taxes was
$623,000 or $0.05 per share for the year ended February 28, 2007
compared to net income after taxes of $594,000 or $0.05 per share
for the year ended February 28, 2006.

     Net income in the future will be dependent upon our ability
to increase revenues faster than increases, if any, in our
selling, general and administrative expenses, research and
development expenses and other expenses.  Although sales have
grown in recent years, we experienced a decrease in sales in 2007
compared to the prior year (a

<PAGE>

decrease of $91,000), primarily due
to the downturn we experienced in the third and fourth quarters
of fiscal 2007.  While sales decreased in 2007, total cost of
sales and expenses also decreased by a relatively comparable
amount ($83,000) in fiscal 2007 compared to fiscal 2006.

Operations Outlook

     Since fiscal 2005, we have been going through a period of
reassessing our direction in order to increase value for our
shareholders.  Our business, though reasonably healthy, did not
grow to the degree management anticipated from 2002 to 2005.
While the sales level of $2,880,000 reached during fiscal 2005
was at the time an all time high for the Company, it was not
significantly more than the sales level we achieved in 2004
($2,734,000), 2003 ($2,690,000) or 2002 ($2,550,000). The plateau
of sales during that four years was in contrast to the greater
sales growth the Company experienced in certain years prior to
2002.  Based upon these observations, we tried to learn what
could be done to stimulate growth and recapture the promise of
our early years.  As a result, we assembled a business plan and
began to make changes consistent with such plan.  The plan showed
us that developments coming out of our R&D were not reaching the
marketplace and therefore, not commanding their proper attention.
Through this teamwork of R&D with marketing, we revamped our web
site, streamlined our pricing structure and reached out to our
key customers and agents. We believe the business plan made clear
the necessity of hiring a Sales/Marketing executive along with
back up technical service help, both of which have been
accomplished.  In order to cover the cost of these additional
personnel and place a greater emphasis on company growth, we
suspended in fiscal 2005 the cash dividends program which we had
been in place during fiscal 2002, 2003 and 2004 in order to place
greater emphasis on business growth.  All of the foregoing
resulted in strong sales growth and we achieved $3,701,000 in
sales for fiscal 2006 which was $821,000 or 28.5% greater than
the prior year.  Nevertheless, in fiscal 2007, sales decreased to
$3,610,000, a decrease of 2.5% from the prior year.  Such
decrease was primarily due to the downturn in sales in the third
and fourth quarters of 2007.  Yet, we are confident that this is
simply a temporary downturn which we do not expect will continue.
Nevertheless, we recognize that net income has not increased like
our revenues have increased.   When we began to reassess our
direction in fiscal 2005, we placed an emphasis on sales growth
which was achieved, although as mentioned above, it has now taken
a downturn.  We recognize that we still have to gain more control
over our costs and expenses so that we can improve our overall
results.  This is something we are currently undertaking and we
have already instituted certain measures in this regard.  Some of
these measures have already had a positive effect such as the
overall decrease in selling, general and administrative for
fiscal 2007 compared to fiscal 2006.

Liquidity and Capital Resources

     Our primary source of funds is cash flow from operations in
the normal course of selling products.  On February 28, 2007, we
had working capital of $2,735,000, a debt to equity ratio of 0.17
to 1, and stockholders' equity of $3,652,000 compared to working
capital of $2,603,000, a debt to equity ratio of 0.18 to 1, and
stockholders' equity of $3,461,000 on February 28, 2006.  On
February 28, 2007, we had $1,751,000 in cash and cash
equivalents, total assets of $4,243,000 and total liabilities of
$591,000, compared to $1,515,000 in cash and cash equivalents,
total assets of $4,094,000 and total liabilities of $633,000 on
February 28, 2006.

     Net cash provided by operating activities for the year ended
February 28, 2007 was $845,000 which was primarily the result of
net income of $623,000, plus decreases in accounts receivable of
$149,000 and increases in accounts payable of $40,000, offset by
a decrease in accrued expenses of $62,000.  Net cash provided by
operating activities for the year ended February 28, 2006 was
$705,000, which was primarily the result of net income of
$594,000, plus a decrease in inventories of $103,000 and an
increase in accrued expenses of $64,000, offset by an increase in
accounts receivable of $143,000.  Net cash used by investing
activities for the year ended February 28, 2007 was $121,000
compared to $191,000 for the year ended February 28, 2006 which
change was primarily due to a decrease in equipment purchases.
For the year ended February 28, 2007, net cash used by financing
activities was $488,000 and was $232,000 for the year ended
February 28, 2006 which was due to two cash dividends having been
paid in fiscal 2007 compared to one cash dividend being paid in
fiscal 2006.

     We anticipate, based on currently proposed plans and
assumptions relating to our operations, that our current cash and
cash equivalents together with projected cash flows from
operations and projected revenues will be sufficient to satisfy
its contemplated cash requirements for more than the next 12
months.  Our contemplated cash requirements for fiscal 2008 and
beyond will depend primarily upon level of sales of our products,
inventory levels, product development, sales and marketing
expenditures and capital expenditures.

     Inflation has not significantly impacted our operations.

<PAGE>

Significant Accounting Policies

     Our discussion and analysis of the Company's financial
condition and results of operations are based upon our
consolidated financial statements which have been prepared in
conformity with U.S. generally accepted accounting principles.
Our significant accounting policies are described in Note B to
the consolidated financial statements included elsewhere herein.
The application of our critical accounting policies is
particularly important to the portrayal of our financial position
and results of operations.  These critical accounting policies
require us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities.  We
believe the following critical accounting policies reflect the
more significant judgments and estimates used in the preparation
of the consolidated financial statements.

     Inventories - Our inventories consist of raw materials,
work in process, finished goods and supplies which we value at
the lower of cost or market under the first-in, first-out
method.

     Plant, Property and Equipment - Our plant, property and
equipment are stated at cost. We compute provisions for
depreciation on the straight-line methods, based upon the
estimated useful lives of the various assets.  We also
capitalize the costs of major renewals and betterments. Repairs
and maintenance are charged to operations as incurred. Upon
disposition, the cost and related accumulated depreciation are
removed and any related gain or loss is reflected in earnings.

     Income taxes - We account for income taxes under Statement
of Financial Accounting Standards No. 109, "Accounting for
Income Taxes", in which the asset and liability method is used
in accounting for income taxes.  We recognize deferred taxes for
temporary differences between the basis of assets and
liabilities for financial statement and for income tax purposes.
Temporary differences relate primarily to different accounting
methods used for depreciation and amortization of property and
equipment and deferred compensation.

     Revenue Recognition - We recognize revenue consistent with
the provisions of SEC Staff Accounting Bulletin No. 104, "Revenue
Recognition", which sets forth guidelines in the timing of
revenue recognition based upon factors such as passage of title,
payments and customer acceptance. Any amounts received prior to
satisfying our revenue recognition criteria will be recorded as
deferred revenue in the accompanying balance sheet. We recognize
revenue from product sales when there is persuasive evidence that
an arrangement exists, when title has passed, the price is fixed
or determinable, and we are reasonably assured of collecting the
resulting receivable. Our policy is to replace certain products
that do not conform to customer specifications, however
replacements are made at our discretion subject to in house
product lab analysis. There are no terms or conditions set forth
within our sales contracts that provide for product replacements.
We expense replacement costs as incurred.

     Stock-based Compensation - We have adopted disclosure-only
provisions of SFAS No. 123 "Accounting for Stock-Based
Compensation," and SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment of FASB
Statement No. 123."  Compensation cost for stock options, if any,
is measured as the excess of the quoted market price of the stock
at the date of grant over the amount an employee must pay to
acquire the stock.

     In December 2004, the FASB issued Statement of Financial
Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment".
SFAS 123R revises SFAS No. 123 and supersedes APB 25 to require
companies to measure and recognize in operations the cost of
employee services received in exchange for an award of equity
instruments based on the grant-date fair value.  That cost will
be recognized over the vesting period during which an employee is
required to provide service in exchange for the award.  On
April 14, 2005, the Securities and Exchange Commission issued a
ruling that amended the effective date for SFAS 123R. As a
result, we will adopt SFAS 123R on March 1, 2006.

Other Information

     As mentioned above, we did not pay any cash dividends during
the fiscal year ended February 28, 2005 but did declare and pay a
$0.02 cash dividend in August 2005.  Subsequent to the end of
fiscal 2006, the Company approved the adoption of a dividend
policy under which the Company will issue a regular annual cash
dividend on shares of its Common Stock.  The amount of the
dividend, record date and payment date will be subject to
approval every year by the Board of Directors.  In accordance
with the new dividend policy, in April 2006, the Board of
Directors declared and the Company paid the first regular annual
cash dividend of $0.02 per share in May 2006.  In

<PAGE>

addition, in
December 2006 and considering our cash position, the Board of
Directors declared a special cash dividend of $0.02 per share
which was paid on January 3, 2007.

     In August 2001, our Board of Directors authorized a 500,000
share stock repurchase program.  Pursuant to the repurchase
program, the Company may purchase up to 500,000 shares of its
common stock in the open market or in privately negotiated
transactions from time to time, based on market prices.  The
Company indicated that the timing of the buyback of the Company's
shares will be dictated by overall financial and market
conditions and other corporate considerations.   The repurchase
program may be suspended without further notice.  During the
fiscal year ended February 28, 2007, a total of 30,000 shares
were repurchased at a cumulative cost of $25,550; during the
fiscal year ended February 28, 2006, a total of 5,000 shares were
repurchased at a cumulative cost of $3,600; during the fiscal
year ended February 28, 2005, a total of 50,000 shares were
repurchased at a cumulative cost of $29,750; during the fiscal
year ended February 29, 2004, a total of 184,000 shares were
repurchased at a cumulative cost of $103,405; during the fiscal
year ended February 28, 2003, a total of 32,500 shares were
repurchased at a cumulative cost of $18,624; and, during the
fiscal year ended February 28, 2002, a total of 30,000 shares
were repurchased at a cumulative cost of $14,837.

Off-Balance Sheet Arrangements

     The Company has no off-balance sheet arrangements as defined
in Item 303(c) of Regulation S-B.


Item 7.   Financial Statements.

     See the Financial Statements annexed to this report.


Item 8.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure.

     Not applicable.


Item 8A.  Controls and Procedures.

     Under the supervision and with the participation of our
management, including the Principal Executive Officer and
Principal  Financial Officer, we have evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rule 13a-
15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of
the period covered by this report.  Based on that evaluation, our
Principal Executive Officer and Principal Financial Officer have
concluded that, as of February 28, 2007, these disclosure
controls and procedures were effective to ensure that all
information required to  be disclosed by us in the reports that
we file or submit under the Exchange Act is: (i) recorded,
processed, summarized and reported, within the time periods
specified in the Commission's rule and forms; and (ii)
accumulated and communicated to our management, including our
Principal Executive Officer and Principal Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure.

     There have been no significant changes in our internal
controls over financial reporting that occurred during the fiscal
year covered by this report that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.


Item 8B.  Other Information.

     Not applicable.


<PAGE>

                               PART III

Item 9.   Directors, Executive Officers, Promoters, Control
          Persons and Corporate Governance;
          Compliance with Section 16(a) of the Exchange Act.

     There is incorporated by reference herein information which
will be contained in the Company's definitive proxy statement to
be filed within 120 days of the Company's year end in connection
with the Annual Meeting of Stockholders to be held in 2007.


Item 10.  Executive Compensation.

     There is incorporated by reference herein information which
will be contained in the Company's definitive proxy statement to
be filed within 120 days of the Company's year end in connection
with the Annual Meeting of Stockholders to be held in 2007.


Item 11.  Security Ownership of Certain Beneficial Owners
          and Management and Related Stockholder Matters.


     There is incorporated by reference herein information which
will be contained in the Company's definitive proxy statement to
be filed within 120 days of the Company's year end in connection
with the Annual Meeting of Stockholders to be held in 2007.


Item 12.  Certain Relationships and Related Transactions,
          and Director Independence.

     There is incorporated by reference herein information which
will be contained in the Company's definitive proxy statement to
be filed within 120 days of the Company's year end in connection
with the Annual Meeting of Stockholders to be held in 2007.


Item 13.  Exhibits.

     3.1   Epolin Inc.'s certificate of incorporation as amended(1)
     3.2   Epolin Inc.'s by-laws(1)
     4.1   Specimen certificate for common stock(1)
     31.1  Certification of Chief Executive Officer pursuant to
           Section 302 of the Sarbanes-Oxley Act of 2002 (Rules
           13a-14 and 15d-14 of the Exchange Act)
     31.2  Certification of Principal Financial Officer pursuant
           to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules
           13a-14 and 15d-14 of the Exchange Act)
     32.1  Certification pursuant to Section 906 of the Sarbanes-
           Oxley Act of 2002 (18 U.S.C. 1350)


      (1)  Filed  with the Company's Form S-18 Registration
           Statement SEC File 33-25405-NY.


Item 14.  Principal Accountant Fees and Services.

     There is incorporated by reference herein information which
will be contained in the Company's definitive proxy statement to
be filed within 120 days of the Company's year end in connection
with the Annual Meeting of Stockholders to be held in 2007.

<PAGE>
                             SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.


                                   EPOLIN, INC.
                                   (Registrant)



                              By:  /s/ Murray S. Cohen
                                   Murray S. Cohen,
                                   Chairman of the Board


                              Dated:  May 24, 2007


     Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant, and in the capacities and on
the dates indicated:

Signature                   Title                          Date



/s/ Greg Amato            Chief Executive Officer          5/24/2007
Greg Amato                (Principal Executive Officer)



/s/ Murray S. Cohen       Chairman of the Board,           5/24/2007
Murray S. Cohen           Secretary and Director



/s/ James Ivchenko        President and Director           5/24/2007
James Ivchenko            (Principal Financial Officer)



/s/ Morris Dunkel         Director                         5/24/2007
Morris Dunkel



/s/ James R. Torpey, Jr.  Director                         5/24/2007
James R. Torpey, Jr.



/s/ Herve A. Meillat      Director                         5/24/2007
Herve A. Meillat


<PAGE>





                           EPOLIN, INC. AND SUBSIDIARY

                              FINANCIAL STATEMENTS

                     YEARS ENDED FEBRUARY 28, 2007 AND 2006














<PAGE>

                                    CONTENTS

                                                                          Page
                                                                          ----

Independent Auditor's Report                                                1

Consolidated Financial Statements:

    Consolidated Balance Sheets                                           2 - 3

    Consolidated Statements of Income                                       4

    Consolidated Statements of Stockholders' Equity                         5

    Consolidated Statements of Cash Flows                                   6

Notes to Consolidated Financial Statements                                7 - 21

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT
             Report of Independent Registered Public Accounting Firm


To the Board of Directors and Stockholders
EPOLIN, INC. AND SUBSIDIARY
Newark, New Jersey



         We have audited the accompanying Consolidated Balance Sheets of Epolin,
Inc. and it's wholly owned Subsidiary as of February 28, 2007 and 2006 and the
related Consolidated Statements of Income, Stockholders' Equity and Cash Flows
for each of the two years in the period ended February 28, 2007. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

         We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Epolin Inc. and
Subsidiary as of February 28, 2007 and 2006, and the results of its operations
and its cash flows for each of the two years in the period ended February 28,
2007, in conformity with accounting principles generally accepted in the United
States of America.



/s/ WEISMANN ASSOCIATES LLC
---------------------------
Weismann Associates LLC
Branchburg, NJ 08865



April 19, 2007

                                        1
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                                    February 28,
                                                           ----------------------------
                                                               2007            2006
                                                           ------------    ------------
<S>                                                        <C>                <C>
Current assets:
 Cash and cash equivalents                                 $  1,751,346       1,515,379
 Accounts receivable                                            546,952         695,651
 Inventories                                                    651,648         647,873
 Prepaid expenses                                                77,767          63,072
 Prepaid taxes                                                    1,920           1,599
 Deferred tax assets-current portion                             10,288           6,166
                                                           ------------    ------------

    Total current assets                                      3,039,921       2,929,740
                                                           ------------    ------------

Plant, property and equipment - at cost:
 Land                                                            81,000          81,000
 Building and improvements                                      710,758         685,219
 Laboratory equipment                                           272,685         243,958
 Office equipment                                               160,697         113,986
 Leasehold improvements                                         456,790         449,190
                                                           ------------    ------------

    Total                                                     1,681,930       1,573,353

 Less:  Accumulated depreciation and amortization               858,851         794,147
                                                           ------------    ------------

    Net plant, property and equipment                           823,079         779,206
                                                           ------------    ------------

Other assets:
 Deferred tax assets-non current portion                        152,425         170,156
 Cash value - life insurance policy                             227,258         214,911
                                                           ------------    ------------

    Total other assets                                          379,683         385,067
                                                           ------------    ------------

    Total                                                  $  4,242,683       4,094,013
                                                           ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        2
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                       February 28,
                                                                               ----------------------------
                                                                                   2007            2006
                                                                               ------------    ------------
<S>                                                                            <C>                   <C>
Current liabilities:
  Accounts payable                                                             $     51,782          11,811
  Accrued expenses                                                                  244,905         307,055
  Taxes payable:
    Payroll                                                                           1,889           1,653
    Income                                                                            6,536           5,854
                                                                               ------------    ------------

    Total current liabilities                                                       305,112         326,373
                                                                               ------------    ------------


Other liabilities - Deferred compensation                                           285,864         306,492
                                                                               ------------    ------------

        Total liabilities                                                           590,976         632,865
                                                                               ------------    ------------

Commitments and Contingencies

Stockholders' equity:
  Preferred stock, $15.513 par value; 940,000 shares authorized;
    none issued
  Preferred stock, series A convertible non-cumulative, $2.50 par value;
    redemption price and liquidation preference; 60,000 shares authorized;
    5,478 shares issued and redeemed
  Common stock, no par value; 20,000,000 shares authorized; 12,915,000 and
    12,859,000 shares issued, 11,966,355 and 11,940,355 shares outstanding
    at 2007 and 2006, respectively                                                2,364,693       2,348,483
    Paid-in capital                                                                  62,111           6,486
    Retained earnings                                                             1,575,985       1,431,711
                                                                               ------------    ------------

        Total                                                                     4,002,789       3,786,680
    Less: Treasury stock - at cost                                                  351,082         325,532
                                                                               ------------    ------------

      Total stockholders' equity                                                  3,651,707       3,461,148
                                                                               ------------    ------------

      Total                                                                    $  4,242,683       4,094,013
                                                                               ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        3
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED FEBRUARY 28, 2007 AND 2006

                                                               2007            2006
                                                           ------------    ------------
<S>                                                        <C>                <C>
Sales                                                      $  3,609,674       3,700,853
                                                           ------------    ------------
Cost of sales and expenses:
  Cost of sales                                               1,454,081       1,481,397
  Selling, general and administrative                         1,280,547       1,336,977
                                                           ------------    ------------

    Total                                                     2,734,628       2,818,374
                                                           ------------    ------------

Operating income                                                875,046         882,479
                                                           ------------    ------------
Other income:
  Rental income                                                  16,500          25,500
  Interest                                                       71,951          30,246
                                                           ------------    ------------

    Total other income                                           88,451          55,746
                                                           ------------    ------------

Income before taxes                                             963,497         938,225

Income taxes                                                    340,569         343,827
                                                           ------------    ------------

Net income                                                 $    622,928         594,398
                                                           ============    ============
Per share data:
  Basic earnings per common share                          $       0.05            0.05
                                                           ============    ============

  Fully diluted earnings per common share                  $       0.05            0.05
                                                           ============    ============

  Weighted average number of common shares outstanding       11,964,806      11,919,688
                                                           ============    ============

  Fully diluted number of common shares outstanding          12,003,424      12,074,197
                                                           ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        4
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED FEBRUARY 28, 2007 AND 2006


                               Number of                Additional
                              Outstanding    Common      Paid-in-     Retained      Treasury     Treasury    Stockholders'
                                Shares       Stock       Capital      Earnings       Shares       Costs         Equity
                              ----------   ----------   ----------   ----------    ----------   ----------    ----------
<S>                           <C>          <C>               <C>      <C>             <C>         <C>          <C>
Balance - March 1, 2005       12,729,000   $2,340,183        6,486    1,073,620       913,645     (321,932)    3,098,357

Dividends paid                        --           --           --     (236,307)           --           --      (236,307)

Common stock issued for
 stock option                    130,000        8,300           --           --            --           --         8,300

Treasury stock purchased              --           --           --           --         5,000       (3,600)       (3,600)

Net income                            --           --           --      594,398            --           --       594,398
                              ----------   ----------   ----------   ----------    ----------   ----------    ----------

Balance - February 28, 2006   12,859,000   $2,348,483        6,486    1,431,711       918,645     (325,532)    3,461,148
                              ==========   ==========   ==========   ==========    ==========   ==========    ==========


Balance - March 1, 2006       12,859,000   $2,348,483        6,486    1,431,711       918,645     (325,532)    3,461,148

Dividends paid                        --           --           --     (478,654)           --           --      (478,654)

Common stock issued for
  stock option                    56,000       16,210       55,625           --            --           --        71,835

Treasury stock purchased              --           --           --           --        30,000      (25,550)      (25,550)

Net income                            --           --           --      622,928            --           --       622,928
                              ----------   ----------   ----------   ----------    ----------   ----------    ----------

Balance - February 28, 2007   12,915,000   $2,364,693       62,111    1,575,985       948,645     (351,082)    3,651,707
                              ==========   ==========   ==========   ==========    ==========   ==========    ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        5
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED FEBRUARY 28, 2007 AND 2006

                                                                    2007            2006
                                                                ------------    ------------
<S>                                                             <C>                  <C>
Cash flows from operating activities:
  Net income                                                    $    622,928         594,398
  Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                    64,704          46,960
     Deferred tax expense                                             13,609          22,051
     Stock based compensation                                         55,625              --
     Obligation under deferred compensation agreement                (20,628)         18,402
  (Increase) decrease in:
     Accounts receivable                                             148,699        (142,640)
     Inventories                                                      (3,775)        102,543
     Prepaid expenses                                                (14,695)        (13,198)
     Prepaid taxes                                                      (321)           (999)
  Increase (decrease) in:
     Accounts payable                                                 39,971          11,811
     Accrued expenses                                                (62,150)         63,641
     Taxes payable                                                       918           1,915
                                                                ------------    ------------

        Net cash provided by operating activities                    844,885         704,884
                                                                ------------    ------------
Cash flows from investing activities:
  Increase in cash value - life insurance policy                     (12,347)         (8,741)
  Payments for equipment                                            (108,577)       (181,823)
                                                                ------------    ------------

        Net cash used by investing activities                       (120,924)       (190,564)
                                                                ------------    ------------
Cash used from financing activities:
  Issuance of common stock                                            16,210           8,300
  Treasury stock purchased                                           (25,550)         (3,600)
  Dividends paid                                                    (478,654)       (236,307)
                                                                ------------    ------------

        Net cash used by financing activities                       (487,994)       (231,607)
                                                                ------------    ------------

Increase in cash                                                     235,967         282,713

Cash and cash equivalents:
  Beginning                                                        1,515,379       1,232,666
                                                                ------------    ------------

  Ending                                                        $  1,751,346       1,515,379
                                                                ============    ============
Supplemental information:
  Income taxes paid                                             $    322,000         315,400
                                                                ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        6
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note A - Organization:

         The Company is engaged in the development, production and sale of near
infrared dyes to the optical industry for laser protection and welding
applications, and other dyes and specialty chemical products that serve as
intermediates and additives used in the adhesive, plastic, aerospace, credit
card security and protective documents industries to customers located in the
United States and throughout the world.

         The Company's wholly owned Subsidiary, Epolin Holding, Corp., was
incorporated in New Jersey as a real estate holding company whose assets consist
of land and a building. On January 29, 1998, the Company acquired 100% of the
stock in Epolin Holding Corporation. Prior to acquisition, two
officers/stockholders of the Company controlled it.

Note B - Summary of Significant Accounting Policies:

Basis of Presentation - The Consolidated Financial Statements reflect all normal
and recurring adjustments that, in the opinion of management, are necessary for
a fair presentation of the financial position, results of operations and cash
flows of the Company for the periods presented. All significant inter-company
accounts and transactions have been eliminated.

Cash and Cash Equivalents - Includes cash in bank and money market accounts for
purposes of preparing the Statement of Cash Flows.

Concentrations of Credit Risks - The Company and its Subsidiary at various times
of the year had cash deposits in financial institutions and a brokerage house in
excess of the amount insured by the agencies of the federal government. In
evaluating this credit risk, the Company periodically evaluates the stability of
the financial institution and brokerage house.

         Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of accounts receivable.
Generally, the Company does not require collateral or other securities to
support its accounts receivable. Three customers represented 40.7% of the
Company's trade receivables at February 28, 2007.

Source of Raw Materials - The Company purchases chemicals from several large
chemical manufacturers, further processing them into its saleable products.
Although the Company limits itself to a relatively small number of suppliers, it
is not restricted to such suppliers, and availability of such raw materials is
widespread.

                                       7
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 and 2006

Note B - Summary of Significant Accounting Policies (continued):

Principles of Consolidation - The accompanying Consolidated Financial Statements
include the accounts of the Company and Subsidiary. Inter-company transactions
and balances have been eliminated in consolidation. Condensed consolidating
financial statements as of February 28, 2007 and for the year then ended are:
<TABLE>
<CAPTION>

                                                CONDENSED CONSOLIDATING BALANCE SHEET

                                                         Epolin
                                         Epolin          Holding,
                                           Inc.           Corp.        Eliminations    Consolidated
                                       ------------    ------------    ------------    ------------
<S>                                    <C>                  <C>                           <C>
Current assets                         $  2,748,345         291,576              --       3,039,921
Non-current assets                        1,494,338         652,535        (944,111)      1,202,762
                                       ------------    ------------    ------------    ------------
     Total                             $  4,242,683         944,111        (944,111)      4,242,683
                                       ============    ============    ============    ============

   Total liabilities                        590,976         128,552        (128,552)        590,976
                                       ------------    ------------    ------------    ------------

Stockholders' equity:
  Common stock                            2,364,693              --              --       2,364,693
  Additional paid-in capital                 62,111              --              --          62,111
  Retained earnings                       1,575,985         815,559        (815,559)      1,575,985
  Treasury stock                           (351,082)             --              --        (351,082)
                                       ------------    ------------    ------------    ------------

   Total stockholders' equity             3,651,707         815,559        (815,559)      3,651,707
                                       ------------    ------------    ------------    ------------

     Total                             $  4,242,683         944,111        (944,111)      4,242,683
                                       ============    ============    ============    ============
<CAPTION>

                                                 CONDENSED CONSOLIDATING STATEMENT OF INCOME

                                                         Epolin
                                         Epolin          Holding,
                                           Inc.           Corp.        Eliminations    Consolidated
                                       ------------    ------------    ------------    ------------
<S>                                    <C>                  <C>                           <C>
Sales                                  $  3,609,674              --              --       3,609,674
Other revenue                                    --         114,240         (97,740)         16,500
                                       ------------    ------------    ------------    ------------
     Total                                3,609,674         114,240         (97,740)      3,626,174
                                       ------------    ------------    ------------    ------------

Cost of sales                             1,454,081              --              --       1,454,081
Selling, general and administrative       1,352,586          25,701         (97,740)      1,280,547
                                       ------------    ------------    ------------    ------------

     Total                                2,806,667          25,701         (97,740)      2,734,628
                                       ------------    ------------    ------------    ------------

Operating income                            803,007          88,539              --         891,546

Other income - interest                      63,721           8,230              --          71,951
                                       ------------    ------------    ------------    ------------

Income before taxes                         866,728          96,769              --         963,497

Income taxes                                333,170           7,399              --         340,569
                                       ------------    ------------    ------------    ------------

Net income                             $    533,558          89,370              --         622,928
                                       ============    ============    ============    ============
</TABLE>

                                        8

<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note B - Summary of Significant Accounting Policies (continued):

Accounts receivable - Accounts receivable are stated at the amount management
expects to collect from outstanding balances. Management provides for probable
uncollectible amounts though a charge to earnings and a credit to a valuation
allowance based on its assessment of the current status of individual accounts.
This allowance is an amount estimated by management to be adequate to absorb
possible losses. Balances that are still outstanding after management has used
reasonable collection efforts are written off through a charge to the valuation
allowance and a credit to accounts receivable.

Inventories - Consists of raw materials, work in process, finished goods and
supplies valued at the lower of cost or market under the first-in, first-out
method.

Fair Value of Financial Instruments - The carrying amount of all reported assets
and liabilities, which represent financial instruments, approximate the fair
values of such amounts due to the nature of their relatively short maturity.

Plant, Property and Equipment - Stated at cost. Provisions for depreciation are
computed on the straight-line methods, based upon the estimated useful lives of
the various assets.

A summary of the major categories of the Company's plant property and equipment
are as follows:

Building and improvements           Straight Line 39 Years
Machinery and equipment             Straight Line 5 - 7 Years
Furniture and Fixtures              Straight Line 7 Years
Leasehold Improvements              Straight Line 10 - 39 Years

         The costs of major renewals and betterments are capitalized. Repairs
and maintenance are charged to operations as incurred. Upon disposition, the
cost and related accumulated depreciation are removed and any related gain or
loss is reflected in earnings.

         Depreciation and amortization expense totaled $64,704 and $46,960 for
the years ended February 28, 2007 and 2006, respectively.

Income taxes - The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes", wherein
the asset and liability method is used in accounting for income taxes. Deferred
taxes are recognized for temporary differences between the basis of assets and
liabilities for financial statement and for income tax purposes. Temporary
differences relate primarily to different accounting methods used for
depreciation and amortization of property and equipment and deferred
compensation.

                                       9
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note B - Summary of Significant Accounting Policies (continued):

Use of Estimates - The preparation of the Company's financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates, judgments and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
expenses during the reporting period. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

Revenue Recognition - The Company recognizes revenue consistent with the
provisions of SEC Staff Accounting Bulletin No. 104, "Revenue Recognition",
which sets forth guidelines in the timing of revenue recognition based upon
factors such as passage of title, payments, and customer acceptance. Any amounts
received prior to satisfying our revenue recognition criteria will be recorded
as deferred revenue in the accompanying balance sheet. The Company recognizes
revenue from product sales when there is persuasive evidence that an arrangement
exists, when title has passed, the price is fixed or determinable, and the
Company is reasonably assured of collecting the resulting receivable. The
Company's policy is to replace certain products that are in nonconformity with
customer specifications; however, replacements are made at the discretion of the
Company subject to in house product lab analysis. There are no terms or
conditions set forth within the Company's sales contracts that provide for
product replacements. Replacement costs are expensed as incurred.

Regulations - The Company expended approximately $22,305 through February 28,
2007 and $21,073 through February 28, 2006, to maintain compliance with certain
Federal and State and City government regulations relative to the production of
near infrared dyes and specialty chemicals.

Net Income Per Share - Basic net income per share is calculated on the basis of
the weighted average number of shares outstanding during the period, excluding
dilution. Diluted net income per share is computed on the basis of the weighted
average number of shares plus potentially dilutive common shares arising from
the assumed exercise of stock options.

Advertising Costs - Advertising costs, included in operating expenses, are
expensed as incurred. Advertising expenses amounted to $13,855 and $19,304 for
the years ended February 28, 2007 and 2006, respectively.

                                       10
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note B - Summary of Significant Accounting Policies (continued):

Stock-based Compensation - Prior to March 1, 2006 the Company accounted for
stock based compensation under Statement of Financial Accounting Standards No.
123 Accounting for Stock-Based Compensation (FAS 123). As permitted under this
standard, compensation cost was recognized using the intrinsic value method
described in Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25). Effective March 1, 2006, the Company has adopted
Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based
Payment". SFAS 123R revises SFAS No. 123 and supersedes APB 25 to require
companies to measure and recognize in operations the cost of employee services
received in exchange for an award of equity instruments based on the grant-date
fair value. In accordance with the provisions of the Securities and Exchange
Commission Staff Accounting Bulletin No. 107, the Company has adapted the
modified-prospective transition method. Prior periods were not restated to
reflect the impact of adopting the new standard. As a result of the adoption of
FAS 123R, stock-based compensation expense recognized for the period ended
February 28, 2007 includes compensation expense for all share-based payments
granted on or prior to, but not yet vested as of March 1, 2006, based on the
grant date fair value estimated in accordance with the original provisions of
FAS 123, and compensation cost for all share-based payments granted on or
subsequent to March 1, 2006, based on the grant date fair value estimated in
accordance with the provisions of FAS 123R.

         During the year ended February 28, 2007, the Company recognized
stock-based compensation expenses of $22,625, related to outstanding stock
options according to the provisions of FAS 123R, using the modified-prospective
transition method.

         Prior to the adoption of FAS 123R and for the year ended February 28,
2007, no tax benefits from the exercise of stock options have been recognized.
Any future excess tax benefits derived from the exercise of stock options will
be recorded prospectively and reported as cash flows from financing activities
in accordance with FAS 123R.

         Deferred charges for options granted to non-employees are determined in
accordance with FAS No. 123 and EITF 96-18 "Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services" as the fair value of the consideration or the fair
value of the equity instruments issued, whichever is more reliably measured.

         The weighted average Black-Scholes value of options granted under the
stock plans during the years ended February 28, 2007 and 2006 was $.18 and $.10,
respectively. The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants:

Years Ended February 28,                            2007         2006
                                                 ----------   ----------
   Weighted average expected life in years                3            4
   Dividends per share                                 0.04         0.02
   Volatility                                           6.0%         6.0%
   Risk-free interest rate                              4.5%         4.0%


                                       11
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note B - Summary of Significant Accounting Policies (continued)

Stock-based Compensation - The Company's pro forma net earnings and pro forma
earnings per share based upon the fair value at the grant dates for awards under
Epolin's plans are disclosed below.

                                                                  Year Ended
                                                              February 28, 2006
                                                              -----------------
Net earnings as reported                                      $         594,398

Deduct total additional stock-based employee
compensation cost, net of tax that
would have been included in net earnings under
fair value method                                                        25,800
                                                              -----------------

Proforma net earnings                                         $         568,598
                                                              =================

Basic earnings per share:
As reported                                                                0.05
                                                              =================
Proforma                                                                   0.05
                                                              =================

Average common shares outstanding                                    11,919,688
                                                              =================

Diluted earnings per share:
   As reported                                                             0.05
                                                              =================
   Proforma                                                                0.05
                                                              =================

Total diluted common shares outstanding                              12,074,197
                                                              =================


Note C - Inventories:
                                                            February 28,
                                                    ---------------------------
                                                        2007           2006
                                                    ------------   ------------
Raw materials and supplies                          $     74,317         38,600
Work in process                                          183,142        197,228
Finished goods                                           394,189        412,045
                                                    ------------   ------------

  Total                                             $    651,648        647,873
                                                    ============   ============

                                       12
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note D - Income Taxes:

1. Federal and State deferred tax assets include:

                                                     2007            2006
                                                 ------------    ------------
    Temporary differences:
         Accelerated amortization                $     30,063          44,530
         Deferred compensation                        122,922         131,792
         Stock based compensation                       9,728              --
                                                 ------------    ------------
             Total                                    162,713         176,322

    Current portion                                    10,288           6,166
                                                 ------------    ------------

    Non-current portion                          $    152,425         170,156
                                                 ============    ============

2. Income tax expense:
                                                     2007            2006
                                                 ------------    ------------
    Current:
         Federal                                 $    259,342         255,744
         State                                         67,618          66,032
                                                 ------------    ------------

             Total current                            326,960         321,776
                                                 ------------    ------------
    Deferred:
         Federal                                       10,845          17,436
         State                                          2,764           4,615
                                                 ------------    ------------

             Total deferred                            13,609          22,051
                                                 ------------    ------------

                 Total                           $    340,569         343,827
                                                 ============    ============

3. Reconciliation of income tax at the statutory rate to the Company's effective
rate:

                                                     2007            2006
                                                 ------------    ------------
    Computed at the statutory rate               $    304,598         299,257
    State income taxes (net)                           67,618          66,032
    (Increase) Decrease in deferred tax asset          13,609          22,051
    General business credits                          (36,040)        (29,206)
    Non-deductible items                               (9,216)        (14,307)
                                                 ------------    ------------

             Effective tax                       $    340,569         343,827
                                                 ============    ============

                                       13
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note E - Treasury Stock:

         Consists of 948,645 shares as of February 28, 2007 at a net cost of
$351,082 and 918,645 shares as of February 28, 2006 at a net cost of $325,532,
respectively.

         The Company purchased 30,000 shares during the year ended February 28,
2007 and 5,000 shares during the year ended February 28, 2006.

Note F - Economic Dependency:

         A material portion of the Company's business is dependent on certain
domestic customers, the loss of which could have a material effect on
operations. During the year ended February 28, 2007, approximately 37.5% of
sales were to four customers. Two of these customers, located in the Eastern
United States, accounted for 24.5% of sales. During the year ended February 28,
2006, approximately 43.9% of sales were to four customers, two of these
customers, located in the Eastern United States, accounted for 29.6% of sales.

Note G - Rental Income Under Sublease:

         The Company entered into a sublease agreement with a non-related party
effective November 1, 2002 through November 30, 2005. Under the terms of the
lease, the tenant is to pay a base rent of $36,000 per year. The Company entered
into a new agreement with another non-related party effective September 1, 2005
for a term ending October 31, 2007. Under the terms of the new agreement, the
tenant is to pay a base rent of $18,000 per year.

Note H - Employee Benefits:

Simplified Employee Pension Plan - Effective June 1, 1994, the Company provides
a SAR/SEP plan to its employees as a retirement and income tax reduction
facility. Full time employees are eligible to participate immediately. Employees
may make pre-tax and after-tax contributions subject to Internal Revenue Service
limitations. Company contributions range from three to five percent after
completion of one year of service. Employer contributions totaled $47,677 and
$49,940 for the years ended February 28, 2007 and 2006, respectively.

                                       14
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note H - Employee Benefits (continued):

Stock Option Plan - The Company previously adopted The 1986 Stock Option Plan.
As of April 1996, under the terms of the Plan, options may no longer be granted.
On December 1, 1995, options to acquire up to 490,000 shares of the Company's
common stock were granted. Options exercised for all prior years totaled
455,000. Options cancelled for all prior years totaled 35,000. There were no
outstanding options as of February 28, 2007.

         The Company adopted the 1998 Stock Option Plan on December 1, 1998.
Under the terms of the plan, the Company reserved 750,000 shares of common stock
for issuance pursuant to the exercise of options to be granted under the Plan,
which do not meet the requirements of Section 422 of the Code. On September 15,
2001, the Board of Directors increased the reserve to 1,500,000. Options granted
expire five or ten years after the date granted and are subject to various
vesting periods as follows: (1) none exercisable prior to the first anniversary
of the date of grant, and (2) certain options will become exercisable as to 50%
of the shares underlying the option on each of the first and second
anniversaries of the date granted (3) certain options will become exercisable as
to 50% of the shares underlying the option on each of the second and fourth
anniversaries of the date granted. Options exercised through February 28, 2007
totaled 686,000. Options cancelled or expired for all years totaled 240,000. All
cancelled options are available for future grants.

         A summary of the status of the Company's 1998 stock option plan as of
February 28, 2007, and the changes during the year ended February 28, 2007 is
presented below:

                                                           Weighted-Average
Fixed Options:                                Shares        Exercise Price
-------------                             --------------    --------------
Balance - March 1, 2005                          322,000    $          .30
     Granted                                     200,000               .54
     Cancelled                                   (35,000)              .25
     Exercised                                   (30,000)              .28
                                          --------------

Balance - February 28, 2006                      457,000               .42
     Granted                                          --                --
     Cancelled and expired                       (85,000)              .25
     Exercised                                   (56,000)              .28
                                          --------------

Balance - February 28, 2007                      316,000    $          .37
                                          ==============


Exercisable at February 28, 2007                 155,000

                                       15
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note H - Employee Benefits (continued):

         Stock Option and Stock-Based Employee Compensation - On November 1,
2004, the Company entered into an "Option Agreement and Investment Agreement"
with an employee, the terms of which are as follows:

         1.       Stock Option - An option to purchase 100,000 shares of common
         stock at an exercise price equal to the fair market value of the
         Company's common stock at the date of grant. The option is exercisable
         only after the completion of the second year of employment.

         2.       Stock-based Employee Compensation - A grant of 100,000 shares
         of restricted common stock one year from the date of the agreement,
         provided the employee is then employed by the Company. In connection
         with this agreement, compensation in the amount of $33,000 was charged
         to selling, general and administrative expenses for the year ended
         February 28, 2007.


Stock Option Plans - The following table summarizes information about fixed
stock options outstanding at February 28, 2007:
<TABLE>
<CAPTION>

              Outstanding Options                          Exercisable Options
-------------------------------------------------     -----------------------------
                     Number      Weighted-average       Number
   Range of       Outstanding       Remaining         Exercisable   Weighted-average
Exercise Price    at 2/28/07     Contractual Life     at 2/28/07     Exercise Price
--------------   ------------    ----------------     ----------     --------------
<S>  <C>              <C>              <C>                <C>             <C>
    $ .41             116,000          7.0                55,000          .41
      .51             100,000          2.7               100,000          .51
      .54             200,000          3.3               100,000          .54
</TABLE>

There are 498,000 options attributable to future grants.

Note I - Segment Reporting:

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

                                       16
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006


Note I - Segment Reporting (continued):

Sales by geographic area are as follows:

                                                   Years Ended February 28,
                                                 ----------------------------
                                                     2007            2006
                                                 ------------    ------------
         United States                           $  2,775,135       2,798,627
         Asia                                         508,235         567,848
         Europe                                       308,278         321,143
         Other nations                                 18,026          13,235
                                                 ------------    ------------

         Total                                   $  3,609,674       3,700,853
                                                 ============    ============


         One customer, located in the Southeastern United States, accounted for
more than 10% of revenues from continuing operations. This customer accounted
for 15.7% of sales of which 3.3% was near infrared dyes and 12.4% was security
inks.

         Long-lived assets include net property and equipment. The Company had
long-lived assets of $823,079 and $779,206 located in the United States at
February 28, 2007 and 2006, respectively.

Note J - Accrued Expenses:

Accrued expenses consisted of the following as of February 28, 2007 and 2006,
respectively:

                                                     2007            2006
                                                 ------------    ------------
Salaries and wages                                      2,234          40,434
Employment agreement                                  210,000         195,000
Professional fees                                      32,671          26,900
Consulting fees                                            --          11,840
Commissions                                                            20,419
Property taxes                                             --          12,462
                                                 ------------    ------------

Total accrued expenses                           $    244,905         307,055
                                                 ============    ============

                                       17
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note K - Earnings per Share:

         Basic earnings per share are computed on the basis of the weighted
average number of shares of common stock outstanding during the period. Diluted
earnings per share is computed on the basis of the weighted average number of
shares of common stock plus the effect of dilutive potential common shares
outstanding during the period using the treasury stock method. Dilutive
potential common shares include outstanding stock options. The components of
basic and diluted earnings per share are as follows:

                                                   Years Ended February 28,
                                                 ----------------------------
                                                     2007            2006
                                                 ------------    ------------

Basic Earnings Per Common Share:

Net income                                       $    622,928         594,398

Average common shares
 outstanding                                       11,964,806      11,919,688
                                                 ============    ============
Basic earnings per
 common share                                    $       0.05            0.05
                                                 ============    ============

Diluted Earnings Per Common Share:

Net income                                       $    622,928         594,398
                                                 ============    ============
Average common shares
 outstanding                                       11,964,806      11,919,688

Common shares issuable with respect
to options issued to employees
with a dilutive effect                                 38,618         154,509
                                                 ------------    ------------
Total diluted common shares
 outstanding                                       12,003,424      12,074,197
                                                 ============    ============
Diluted earnings per
 common share                                    $       0.05            0.05
                                                 ============    ============

                                       18
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note L - Commitments and Contingencies:

         Losses for contingencies such as litigation and environmental matters
are recognized in income when they are probable and can be reasonably estimated.
Gain contingencies are not recognized in income.

Lease Obligations - The Company leases its real estate under an operating lease
with a related party. The lease effective November 1, 1996 was for a term of
five (5) years with three (3) five (5) year options at annual rentals of
$97,740. The Cost of Living Index adjustment effective with the second year has
been waived by the subsidiary. Rent includes reimbursed insurance costs.
Generally, management expects that the lease will be renewed in the normal
course of business.

         Rental expense charged to operations, eliminated in consolidation,
amounted to $97,740 for the years ended February 28, 2007 and 2006,
respectively.

Future minimum payments for the current option period:

          Fiscal years ending February:
          -----------------------------
                       2008                                     $97,740
                       2009                                      97,740
                       2010                                      97,740
                       2011                                      65,160

Deferred Compensation - On December 29, 1995, the Company entered into a
deferred compensation agreement with James Ivchenko, President, whose additional
annual compensation of $19,645 plus interest is deferred until he reaches age 65
or is terminated. The obligation is funded by the cash value in a life insurance
policy. Commencing on December 2005, annual payments will be made to the officer
in the amount of $32,000 for ten consecutive years.

         In connection with this agreement, deferred compensation in the amount
of $26,212 was charged to selling, general and administrative expenses for the
year ended February 28, 2006.

         On January 1, 1996, the Company entered into a deferred compensation
agreement with Dr. Murray S. Cohen, PhD, Chairman of the Board, wherein $25,000
per year was accrued. This agreement, with unfunded accruals of $79,041,
terminated on June 25, 1998, and will be paid upon retirement in either equal
consecutive monthly payments for a period not exceeding sixty (60) months or a
single payment equal to the then present value of the account, said selection to
be at the discretion of the Company.

                                       19
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note L - Commitments and Contingencies (continued):

Employment Agreements - Effective March 1, 1999, the Company entered into
ten-year employment agreements with officers/directors:

         Murray S. Cohen, PhD, Chairman of the Board - To be paid an annual
salary of not less than the greater of his annual base salary in effect
immediately prior to the effective date of the agreement or any subsequently
established annual base salary. Dr. Cohen is to receive 2.00% on gross annual
sales of no more than $3,000,000, effective with the year ended February 28,
2000, increasing by 0.25% a year during the term of the agreement. In the event
of partial retirement, (50% employment), Dr. Cohen will receive fifty percent
salary and 100% additional compensation. In the event of substantial retirement,
(25% employment), Dr. Cohen will receive 25% percent salary and 100% additional
compensation. In the event of full retirement, Dr. Cohen will receive 50%
additional compensation. In the event of death or disability, while fully
employed during the fiscal year, Dr. Cohen or his estate will receive 100% of
his annual salary plus additional compensation as described above, and 50% of
his annual salary plus additional compensation each subsequent year for the
remainder of the ten-year term. If at the time of death or disability Dr. Cohen
was retired, then other percentage rates are provided for based upon his
retirement status.

         James Ivchenko, President - To be paid an annual salary of not less
than the greater of his annual base salary in effect immediately prior to the
effective date of the agreement or any subsequently established annual base
salary. He is to receive 1.5% on gross annual sales of no more than $3,000,000,
effective with the year ended February 28, 2000, increasing by 0.25% a year
during the term of the agreement. In the event of death or disability during the
fiscal year, Mr. Ivchenko or his estate will receive 100% of his annual salary
plus additional compensation as described above, and 50% of his annual salary
plus additional compensation each subsequent year for the remainder of the
ten-year term.

         Accrued compensation included in selling, general and administrative as
of February 28, 2007 and 2006 was $210,000 and $195,000, respectively.


Bonus Agreement - Effective for the year ending February 28, 2006, the company
shall pay Gregory Amato, CEO, bonus compensation in an amount equal to ten
percent of the increase, if any, in the Company's current year consolidated net
income as compared to the consolidated net income for the fiscal year ending
February 28, 2006. The term net income shall mean consolidated net income after
taxes but before any extraordinary items. For subsequent fiscal years, the
employee shall be eligible for cash bonuses in such amounts as determined by the
Compensation Committee.

         Accrued bonus compensation in the amount of $10,100 was included in
selling, general and administrative expenses for the year ended February 28,
2006.

                                       20
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2007 AND 2006

Note M - Dividends:

         In December 2006, the Company's Board of Directors declared a cash
dividend of two cents per share on all common shares outstanding. The dividend,
in the amount of $239,327 was paid on January 3, 2007 to shareholders of record
on December 18, 2006.

         In April 2006, the Company's Board of Directors declared a cash
dividend of two cents per share on all common shares outstanding. The dividend,
in the amount of $239,327 was paid on May 1, 2006 to shareholders of record on
April 20, 2006.

         In June 2005, the Company's Board of Directors declared a cash dividend
of two cents per share on all common shares outstanding. The dividend, in the
amount of $236,307 was paid on August 3, 2005 to shareholders of record on July
27, 2005.

Note N - Research and Development:

         The Company has developed substantial research and development
capability. The Company's efforts are devoted to (i) developing new products to
satisfy defined market needs, (ii) providing quality technical services to
assure the continued success of its products for its customers' applications,
(iii) providing technology for improvements to its products, processes and
applications, and (iv) providing support to its manufacturing plant for cost
reduction, productivity and quality improvement programs. Expenditures for
Company sponsored product research and product development of $441,354 and
$446,916 were included in cost of sales for the years ended February 28, 2007
and 2006, respectively. Expenditures for fiscal year 2008 are projected to
remain at approximately the same level as in fiscal 2007.

Note O - Environmental Matters

         The Company's past and present daily operations include activities,
which are subject to extensive federal, and state environmental and safety
regulations. Compliance with these regulations has not had, nor does the Company
expect such compliance to have, any material effect upon expected capital
expenditures, net income, financial condition, or competitive position of the
Company. The Company believes that its current practices and procedures comply
with applicable regulations. The Company's policy is to accrue environmental and
related costs of a non-capital nature when it is both probable that a liability
has been incurred and that the amount can be reasonably estimated. No such
amounts have been accrued in these statements.

                                       21