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 29, 1996

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

                  Commission file number 0-17741

                        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:  (201) 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: (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         No   X

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. [  ]

State Issuer's revenues for its most recent fiscal year: $1,384,410.

As of August 2, 1996, the aggregate market value of the Common Stock held by
non-affiliates of the Issuer (5,316,631 shares) was approximately $372,160.
The number of shares outstanding of the Common Stock (no par value) of the
Issuer as of the close of business on August 2, 1996 was 11,611,555.

                  Documents Incorporated by Reference:  None
<PAGE>

                              PART I

Item 1.   Description of Business.

Introduction

     Epolin Inc. ("Epolin") is a manufacturing and research and development
company which was incorporated in the State of New Jersey on May 8, 1984.
Epolin, together with its wholly owned subsidiary Accort Labs, Inc.
("Accort"), is engaged in commercial production and sale of specialty
chemicals, especially certain dyes which management believes are useful
materials because they have the capability to absorb near infrared
radiation.  Both Epolin and Accort  are hereinafter collectively referred
to as the "Company" or the "Registrant".  The Company's principal offices
are located at 358-364 Adams Street, Newark, NJ 07105 and its telephone
number is (201) 465-9495.

     In April 1989,  the Company successfully completed an initial public
offering of its securities pursuant to a public offering generating net
proceeds of approximately $1,950,000. Simultaneously, upon closing of the
offering, Epolin acquired 100% of the stock of Accort, then an affiliated
entity.

     Commencing upon completion of the Company's public offering through
January 1990, the Company's efforts were primarily devoted to the
renovation and completion of its 17,000 square foot manufacturing  and
office facility. The principal product(s) that the Company developed were
expanding polymeric coatings. This effort proved to be unsuccessful because
of the high cost of the product and the lower price commanded by similar
products now sold into this maturing market. The Company has more recently
established itself as a supplier of near  infrared dyes as well as other
specialty chemical products. It sells its dyes primarily to lens
manufacturers who serve as the suppliers to the laser protection eyewear
market as well as the welding market.

     Since completion of the Company's public offering, the Company's
revenues had been 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 has emphasized the development, manufacture and sale of these dyes to
the optical industry.

     The Company's prior emphasis on the expanding monomer technology has
been significantly modified. The expanding monomers failed to reach any
significant level of sales and sales growth because the price of UV
coatings, a major application for  the technology, had fallen dramatically
and the market could not sustain the higher pricing for the Company's
product. All research and development on expanding monomer applications was
therefore curtailed and the Company became fully committed to specialty
chemical manufacture especially to near infrared dye development,
manufacture and sales. This part of the product line has proven to be a
successful one to pursue in that the sales of  these dyes have grown at the
rate of approximately 40% a year for the last four years. No assurance can
be given that such trend will continue. The Company believes that its
future lies with dye technology and is formulating long range plans to
exploit new applications for both the near infrared dyes as well as other
dyes. Paralleling the growth of the dye business, the Company has
maintained 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. A discussion of
this market is described in the first subsection that follows. Thereafter
the current market for dyes are described as well as the newer
applications which will be the basis for new markets for dyes.

     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.  The Company does not intend to update these forward-looking
statements.

Specialty Chemical Products

     Although the Company is heavily engaged in the manufacture and sale of
dyes,  specialty chemical manufacture continues to constitute approximately
35% of its sales.  It is currently working on 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.  The Company's products primarily serve as
intermediates, additives and processing aids for complex chemical
formulations. The Company markets its products to other companies who are
in need of low level quantities of unique chemicals which provide
specialized functions and are necessary elements in complex chemical
mixtures manufactured by the Company's respective customers. These products
are produced on a low volume basis in chemical production equipment ranging
from 50 liter size flasks to two hundred gallon reactors. The Company
sustains this business because its customers find it economically
inefficient to manufacture such low volume specialty chemicals for their
own use. Raw materials utilized in connection with the preparation of
specialty chemical products are either available from chemical suppliers or
created by the Company in its own facilities.

     This segment of the Company's business is manufactured on an
individual basis to meet each customers respective needs. Presently, the
Company provides products used as components in plastics, adhesives and
coatings, flavors and odorant mixtures, pharmaceutical and medical products
and aerospace materials.

     Although the specialty chemical business currently commands
approximately 35% of total sales, the Company does not expect this segment
of its business to grow. It has, instead, made a strong research and
development commitment to the growth of the dye business. This market is
described in segments in the following subsections.

Dyes for Laser Protection

     The Company has sold near infrared dyes since 1992 to customers who
manufacture and sell eyewear to protect personnel from the harmful effects
<PAGE>

of laser light. In the first stages of the Company's marketing efforts, the
Company sold dyes that had a special capability to absorb the emissions of
the neodynium-YAG laser. This laser was and is used by the military for
range finders carried by tanks. Following the Company's success in selling
dyes for military usage, new markets were developed selling to
manufacturers of safety eyewear for personnel who worked with lasers or
were exposed to very strong  sources of infrared  radiation.

     The Company sells dyes into a market that requires the use of
absorptive dyes for face shields, helmets and goggles to protect personnel
from the harmful effects of radiation from welding. Nationally prescribed
specifications now state that welding shields must absorb specific levels
of the infrared generated by the welding arc in order to protect personnel
from eye damage. The specifications have come about because a number of
studies had shown that excessive infrared  radiation can cause the
development of premature cataracts. Thus, for different levels of
protection, a specific reduction of ultraviolet, visible and infrared
emissions are now required. As a result, the Company now offers a line of
dyes for welding  that  absorb the entire range of welding radiation. The
welding market is larger than the safety market so that dyes are generally
priced to yield lower margins.  Management believes many welding customers
and potential customers are attracted to the Company's dyes because they
had been tied to dye suppliers who would only sell the dyes if the customer
were to purchase the suppliers resin or formulated resin. Freedom to
formulate any resin and do in plant injection molding of lenses or shields,
has significant cost implications for these customers. The availability of
the Company's dyes has allowed the Company to gain new customers. The
Company expects to see this welding market grow significantly in the future
not only because of increased sensitivity to the health effects of
conventional welding methods but also because of the increasing use of
lasers for welding. These instruments will require closer monitoring for
exposure of personnel to laser light but will also require personnel
peripheral to the welding operation to be protected.

Dyes for Filters

     A smaller but not well characterized market exists for filters that
block certain frequencies in the near infrared and visible spectrum. Most
of the inquiries come from instrument makers who purchase glass filters
containing rare earth oxides. These filters are expensive and are subject
to chipping, shattering and other breakage. Management believes the use of
a clear plastic filter containing the Company's dyes would lower cost and
increase reliability. This high value added market is under development.
No assurance can be given that the Company will be able to successfully
develop this market.

Dyes for Heat Shields

     It has been shown in experimental and theoretical studies that a
window containing near infrared dyes is capable of reducing the internal
heat load of a structure by 40 to 50 percent. This type of  application of
infrared dyes is reported in use for sun roofs of automobiles in Japan. The
specific advantage offered by near infrared dyes is heat reduction coupled
with good visible transparency. This allows high visibility while, at the
same time, effectively blocking the frequencies responsible for
transporting heat. Management believes near infrared dyes can be
effectively used in a wide variety of applications  as heat shields. The
Company has set its sights on this potential market by initiating research
and development studies leading to dyes or dye combinations that  can meet
the tight requirements demanded by this market. Of particular concern to
the Company is the need for  long term performance which, at a minimum,
requires a working lifetime of seven years exposure to  direct sunlight. By
<PAGE>

developing dyes of greatly improved thermal and ultraviolet stability, the
Company believes it can meet the long term exposure requirements for heat
shields.  No assurance can be given that the Company will be able to
successfully develop this market.

Dyes for Security Inks

     Certain of the near infrared dyes absorb very little of the visible
spectrum. These can be used at low concentration in inks and paints and not
be visually detected. However, when viewed by reflection of an infrared
laser or lamp, the presence of dye is easily seen as a black marking.
Mechanical "readers" can be used to detect the presence of dyes by
responding with a simple "go, no-go" signal. Management believes that the
industrial security and currency marking is  potentially a large volume
application for these dyes and the Company plans to pursue this market in
partnership with a company in the ink business.  No assurance can be given
that the Company will be able to successfully develop this market.

Dyes for Hard Coatings

     There are a number of transparent plastics that are difficult to
process with near infrared dyes because they are formed at temperatures
that exceed the dye's thermal stability. As a result, some of the dye is
destroyed in the process. For example, a number of lens manufacturers
cannot extrude or injection mold polycarbonate pellets with these dyes.
However, they still want to incorporate the dyes in their lenses. Since all
polycarbonate lenses and panels have a very soft surface, they must be
protected from abrasion by using a hard coat on the surface. The Company
believes that a successful way to incorporate the dye would be to place it
in the hard coating. Another, larger scale application, is to use the dye
in a coating on shatterproof windows to act as a heat shield. In this
application the structure to be molded is too large for incorporating near
infrared dyes because such large structures have to be heated to too high a
temperature and remain at too high a temperature for the dye to survive.
Management believes coatings, in the form of a hard coat, is a  practical
solution for the use of near infrared dyes. The Company has formed a
cooperative partnership with the Exxene Corporation, a leader in the hard
coating field, and both companies plan to pursue this market vigorously.
No assurance can be given that the Company, together with the Exxene
Corporation, will be able to successfully develop this market.

Licensing Agreement

     The Company's Expanding Monomer technology (which was previously
emphasized by the Company but has since been abandoned) was developed by
the late Dr. William Bailey, a former director of the Company. In June
1983, Dr. Bailey was issued U.S. Patent 4,387,215 which granted Dr. Bailey
broad generic claims in regard to the Expanding Monomer and polymer
systems.  Pursuant to a licensing agreement dated January 31, 1986  (which
terminated and replaced a previous agreement with the Company), and as
amended in 1988, the  Company was granted until the expiration of the
patent (June 2000) the exclusive right to exploit the patent  and to
manufacture, produce, market, use and sell products and materials derived
thereunder.  Pursuant to the agreement, the Company is required to pay a
percentage royalty (based on various levels of sales) and a fixed royalty
fee of $50,000 per year (reduced by percentage royalties, if any, paid
during that year). Fixed royalties have not been paid since 1990 because
the Company decided to postpone payments under the licensing agreement
pending receipt of orders for Expanding Monomer products. Since then, and
as described above, the Company has abandoned this technology.  As provided
in the agreement, Dr. Bailey's sole remedy for non-payment of fixed
royalties shall be the cancellation of the licensing agreement without
further recourse against the Company.   Although the Company has not
received any notification from Dr. Bailey's estate regarding termination or
cancellation of the licensing agreement, any such notice that the Company
would receive would have no material impact on the Company's business since
the Company has previously decided to curtail and cease the development of
Expanding Monomer technology.

Effect of Compliance With Government Regulation

     Manufacturers of chemical products are subject to extensive Federal
and State environmental regulations. Although the Company believes that its
manufacturing processes do not result in the emission of volatile organic
vapors into the atmosphere, and that the Company is 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 the Company's knowledge, it is 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 the
Company's business. In addition, the Company is subject to the State of New
Jersey Industrial Site Recovery Act (ISRA), which, among other
requirements, requires the Company to obtain prior approval before
relocating its facilities or consummating a transaction that would result
in a change in control of the Company. The Company's facilities are subject
to inspection to ascertain whether the Company has complied with State
environmental regulations.  While the Company believes it has complied with
such regulations, there can be no assurance that the Company will not be
required to incur expenses to remedy any future environmental violations
discovered. The Company is in the process of registering certain new and
proprietary products with the Toxic Substances Control Agency (TSCA) which
is required in order for the Company to offer for sale any new chemical
product.  No assurances can be given that such registrations will be
approved.

Research and Development

     The Company has made a commitment of resources to research and
development for new dyes and for improvement of the Company's capability to
provide technical services to its dye customers. In this regard, the
Company has undertaken a dye synthesis effort to develop and produce dyes
with greatly improved thermal stability. There are also plans to make
available to the Company the plastic processing equipment similar to that
used by the Company's customers to extrude and injection mold plastic-dye
formulations. Management expects that this will allow the Company to better
understand its customer's problems and to design solutions.

Competition

     The Company generally experiences significant competition in all areas
of its business from numerous other companies many of which are larger and
better financed.  At the present time, however, the Company believes that
it has a unique position as a supplier of near infrared dyes. Management
believes that the only other suppliers of these dyes use them as a vehicle
<PAGE>

to sell other products.  Management believes that these companies will only
sell the dye to purchasers of their resins or to those who buy their
formulated resin or their finished lenses. Such companies do not sell the
pure dye which is done by the Company. Insofar as the major profit
incentive comes from the manufacture and sale of finished product,
Management believes those companies that have the capability to formulate
dyes in resin and injection mold the formulated resin, have a strong
incentive to purchase the dye without any other requirements.  However, in
the future, other dye manufacturers may change their policy and sell dye
directly.  This will present the Company with a challenge to its pricing
structure. However, because of the Company's low overhead, it is believed
that such a challenge can be met successfully.

     The Company has also invested resources in improved processes for the
manufacture of dyes so that the Company can consider itself a low cost
producer. The research and development program has been designed to
introduce a new family of near infrared dyes that show a marked improvement
in thermal and light stability over existing dyes. The Company believes
that this new family of dyes will allow it to maintain a strong position as
a dye supplier for laser safety and welding  optical wear.

Technological Obsolescence

     The chemical and plastics industry is characterized by rapid
technological changes. Although the near infrared dyes that form the major
portion of the Company's product line have been used in protective eyewear
since 1976, the field has proven to be an active one for other applications
and the Company 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. There can be
no assurance that the Company's 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, the Company may be required to make large, 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 be available to the Company.

Patents and Proprietary Protection

     The Company does not rely upon patents for protection of its dye
business. It has, however, anticipated the need for such proprietary
protection and has acted by applying for patents on a class of new dyes
that it has developed.  Although there can be no assurance, management
expects the patents to issue by year end 1996. The Company has allowed its
patent position on two patents it owns on Expanding Monomers to lapse by
not paying the maintenance fees. This will have no material impact on the
Company's business since the Company decided previously to cease the
development of this technology.  The Company intends to continue an
intensive patent program on new dyes, especially in those instances where
composition of matter claims can be obtained. There can be no assurance
that these patents will be of commercial benefit to the Company, or
otherwise offer the Company protection from competing products. Although
the issuance of a patent entitles the owner to a statutory presumption of
validity, the presumption is not conclusive as to validity or the scope of
enforceability  of the claims therein. The enforceability and validity of a
patent can be challenged by litigation after its issuance and, if the
outcome of litigation is adverse to the owner of the patent, other parties
may be free to use the subject  matter covered by the patent. Moreover, the
cost of defending these patents against infringement could require
substantial expenditures which the Company may decide it is unable to
afford. In addition, persons or entities may have filed patent applications
<PAGE>

and may have been issued patents on inventions or otherwise possess
proprietary rights to technologies potentially useful to the Company. 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.

Marketing and Sales

     The marketing of the Company's dye products is primarily the
responsibility of Mr. Chester Swasey, an executive officer of the Company.
The marketing of  specialty products which primarily include flavors and
fragrances, polymer additives and process aids is handled primarily by Mr.
James Ivchenko, President of the Company, and Dr. Murray Cohen, Chairman of
the Board and Chief Executive Officer of the Company. These specialty
products are marketed to companies who need low volume amounts of unique
chemicals usually used in small amounts in complex chemical formulations.

     The Company has entered into a marketing agreement with the Exxene
Corporation whereby it will sell hard coatings containing the Company's
dyes. This agreement requires Exxene to purchase target amounts of dye in a
specific time period in order for the agreement to stay active.  (See "Dyes
for Hard Coatings" in Part I, Item 1 above.)

     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 fiscal 1996, approximately 71% of sales were to three
customers, one of which totaled 46%.  Two of these customers comprised 49%
of accounts receivable at February 29, 1996.

Employees

     The Company presently employees approximately 9 persons, all on a full
time basis of which approximately five are employed in manufacturing and
production, two in research and development, one in sales and marketing and
one in administration and supervision. The Company's employees are not
represented by labor unions.

Item 2.   Description of Property.

     The Company presently leases approximately 19,500 square feet of
manufacturing, warehouse and administrative space in Newark, New Jersey
which property the Company has occupied since June 1989.  Prior to October
1996, the Company occupied approximately 17,000 square feet of such space.
For the fiscal year ended February 29, 1996, the Company paid approximately
$90,000 in rent, real  estate taxes and insurance. During fiscal 1996,
Management decided to explore the possibility of purchasing said property
from its then owner, a non-affiliated entity which purchase would include
such additional space of approximately 2,500 square feet.  In order to
finance the purchase, the Company was advised by its proposed lender that
the members of the Company's Board of Directors would be required to
guarantee the repayment of any financing.  At a meeting of the Board of
Directors held in June 1996, only Murray S. Cohen and James Ivchenko, each
an officer and director of the Company, agreed to participate in any such
arrangement.  It was agreed that Dr. Cohen and Mr. Ivchenko, or an entity
to be formed by them, would purchase the property and lease the property to
the Company under a long term arrangement.  As a result, Dr. Cohen and Mr.
Ivchenko entered into an agreement to purchase the property for the sum of
$450,000, which agreement was prior to closing assigned to Epolin Holding
<PAGE>

Corp. ("Epolin Holding"), a company formed by Dr. Cohen and Mr. Ivchenko to
acquire the property. Such purchase was completed in October 1996.
Simultaneously with the closing, the Company entered into substantially
similar leasing arrangements with Epolin Holding as then existed with the
former owner of the property.  Such new lease expires in October 2001 (with
three 5 year options) with annual rent of $97,740 subject to annual
adjustments based on increases in the Consumer Price Index.  Such rent
includes real estate taxes and insurance expenses.

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
          and Related Stockholder Matters.

     (a)  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.

Period                                            Bid Prices
Fiscal year ended February 28, 1995:              High      Low

March 1, 1994 to May 31, 1994                     $.01      $.005
June 1, 1994 to Aug. 31, 1994                     $.01      $.006
Sept. 1, 1994 to Nov. 30, 1994                    $.06      $.02
Dec. 1, 1994 to Feb. 28, 1995                     $.06      $.05

Fiscal year ended February 29, 1996:              High      Low

March 1, 1995 to May 31, 1995                     $.04      $.04
June 1, 1995 to Aug. 31, 1995                     $.0625    $.03
Sept. 1, 1995 to Nov. 30, 1995                    $.03      $.02
Dec. 1, 1995 to Feb. 29, 1996                     $.03      $.02
<PAGE>
     (b)  Holders.

     As of August 2, 1996 there were approximately 400 record holders of
the Company's Common Stock.

     (c)  Dividends.

     The Company has never declared any cash dividends on its Common Stock
and does not anticipate declaring cash dividends in the foreseeable future.


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

     The following discussion of the Company's financial condition and
results of operations is based on the Company's Consolidated Financial
Statements and the related notes thereto.  The financial statements for the
year ended February 29, 1996 have been audited.  The financial statements
for the years ended February 28, 1995 and 1994 are unaudited.

Overview

     Epolin, Inc. was incorporated in May 1984 in the State of New Jersey
to develop, manufacture and market a class of monomer and polymer
formulations with applications in the composition and manufacture of a new
type of highly protective and durable materials.  Epolin, Inc.'s activities
during its development stage from May 8, 1984 (inception) through February
28, 1990 had been substantially devoted to developing its principal
products.  Active operations in the monomer and polymer technologies have
ceased.

     Epolin, Inc.'s wholly-owned subsidiary, Accort Labs, Inc. (acquired in
April 1989), is engaged in the manufacture and sales of specialty chemical
products that serve as intermediates and additives used in the dye,
adhesive, plastic, aerospace, pharmaceutical, flavors and fragrance
industries to customers located primarily in the eastern part of the United
States.

     Both Epolin, Inc. and Accort Labs, Inc. are hereinafter together
referred to as "the Company".

Results of Operations

     Fiscal 1996 Compared to Fiscal 1995

     During the year ended February 29, 1996, the Company reported sales of
approximately $1,384,000 as compared to sales of approximately $889,000
during the year ended February 28, 1995, an increase of approximately
$495,000 or 55%.  This increase in sales was primarily attributable to
increased sales of the Company's near infrared absorbing dyes.

     Operating income for fiscal 1996 increased to approximately $338,000
as compared to an operating loss of approximately $(1,800) for fiscal 1995,
an increase of approximately $339,800.  This change resulted primarily from
increases in sales in 1996.  Cost of sales in fiscal 1996 was approximately
$614,000 compared to cost of sales in fiscal 1995 of approximately
$536,000.  In fiscal 1996, the Company's selling, general and
administrative expenses were approximately $433,000 as compared to selling,
general and administrative expenses of approximately $355,000 for the
fiscal year ended February 28, 1995.  This change resulted  primarily from
an increase in expenses related to the Company's increased sales, plus
increases in salaries and benefits.

     During the fiscal year ended February 29, 1996, the Company realized
approximately $7,500 in interest income as compared to approximately $3,500
in interest income from the prior year.  This increase resulted from
increases in available cash in fiscal 1996 resulting from significant
increases in sales.

     During the year ended February 29, 1996, the Company reported net
income of approximately $626,000 or $.05 per share as compared to net
income of approximately $11,000 for the fiscal year ended February 28,
1995.  This increase in net income primarily reflects the effect of the
Company's dramatic increase in sales during fiscal 1996 and a deferred tax
benefit of $284,000.

     Fiscal 1995 Compared to Fiscal 1994

     During the year ended February 28, 1995, the Company reported sales of
approximately $889,000 as compared to sales of approximately $728,000
during the prior year, an increase of approximately $161,000 or 22%.  This
increase in sales was primarily attributable to increased sales of the
Company's near infrared absorbing dyes.

     For fiscal 1995, the Company has an operating loss of approximately
$(1,800) as compared to operating income of approximately $98,000 for
fiscal 1994, a decrease of approximately $99,800.  This change resulted
primarily from an increase in cost of sales from approximately $442,000 in
fiscal 1994 to approximately $536,000 in fiscal 1995, and an increase in
selling, general and administrative expenses in fiscal 1995 of
approximately $355,000 from approximately $189,000 in fiscal 1994.

     During the year ended February 28, 1995, the Company realized
approximately $3,500 in interest income as compared to $1,000 in interest
income from the prior year.  This increase resulted primarily from an
increase in available cash in 1995 compared to 1994.

     The Company had net income of approximately $11,000 for fiscal 1995 as
compared to net income of $150,000 for fiscal 1994, a decrease in earnings
of approximately $139,000.  The primary causes for this change in earnings
were the increases in cost of sales experienced during 1995 and increases
in selling, general and administrative expenses.

Liquidity and Capital Resources

     On February 29, 1996, the Company had working capital of approximately
$650,000, an equity to debt ratio of 11.6 to 1, and stockholder's equity of
approximately $1,151,000.  On February 29, 1996, the Company had
approximately $232,000 in cash and cash equivalents.  The Company believes
that its available cash, cash flow from operations and projected revenues
will be sufficient to fund the Company's operations for the next 12 months.
<PAGE>

     The Company does not anticipate making any significant additional
capital expenditures in the immediate future as it believes its present
machinery and equipment will be sufficient to meet its near term needs.

     Inflation has not significantly impacted the Company's operations.

Item 7.   Financial Statements.

     See the Consolidated Financial Statements annexed to this report.

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

     None.

                             PART III

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


     Set forth below are the present directors and executive officers of
the Company.  Note that there are no other persons who have been nominated
or chosen to become directors nor are there any other persons who have been
chosen to become executive officers.  There are no arrangements or
understandings between any of the directors, officers and other persons
pursuant to which such person was selected as a director or an officer.
Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have
qualified.  Officers serve at the discretion of the Board of Directors.

                              Present                Has Served
                              Position               As Director
Name                     Age  and Offices            Since

Murray S. Cohen          71   Chairman of the          1984
                              Board,
                              Chief Executive
                              Officer and Director
                              
James Ivchenko           56   President                1993
                              and Director

Chester C. Swasey        53   Vice President of        1994
                              Sales and Marketing,
                              Secretary and
                              Director

Claire Bluestein         70   Director                 1984

Morris Dunkel            67   Director                 1984

Abdelhamid A.H. Ramadan  56   Director                 1994
<PAGE>

     None of the directors and officers is related to any other director or
officer of the Company.

     Set forth below are brief accounts of the business experience during
the past five years of each director and executive officer of the Company
and each significant employee of the Company.

     MURRAY S. COHEN has served as Director, Chief Executive Officer and
Chairman of the Board of the Company since June 1984.  From June 1984 to
August 1994, Dr. Cohen was also President.  Since May 1983, Dr. Cohen has
been an officer of Accort Labs, Inc., a wholly-owned subsidiary of the
Company.  From January 1978 through May 1983, Dr. Cohen was the Director of
Research and Development for Apollo Technologies Inc., a company engaged in
the development of pollution control procedures and devices.  Dr. Cohen was
employed as a Vice President and Technical Director of Borg-Warner
Chemicals from 1973 through January 1978, where his responsibilities
included the organization, project selection and project director of a 76
person technical staff which developed materials for a variety of plastic
products.  He received a Bachelor of Science Degree from the University of
Missouri in 1949 and a Ph.D. in Organic Chemistry from the same institution
in 1953.

     JAMES IVCHENKO has served as Director of the Company since September
1993, President since August 1994, and from February 1992 to August 1994,
he was Technical Director and Vice President of Operations.  Prior thereto,
Mr. Ivchenko was employed by Ungerer & Co. as Plant Manager for the Totowa,
New Jersey and Bethlehem, Pennsylvania facilities from May 1988 to May
1991.  Mr. Ivchenko has over 30 years of experience in the flavor,
fragrance and pharmaceutical intermediate industry.   He received his
Bachelor of Arts Degree, Masters of Science and Masters of Business
Administrations from Fairleigh Dickinson University in New Jersey.

     CHESTER C. SWASEY has served as Director of the Company since 1994 and
Vice President of Sales and Marketing since August 1994.  From 1992 to
1994, Mr. Swasey was employed as a Director of Marketing at Fairmount
Chemical Company.  From 1989 to 1992, he was employed as Manager of New
Business Development at Union Carbide Corporation. Mr. Swasey has received
several United States patents and has published a variety of technical
papers related to the performance of plastics additives.  Mr. Swasey
received a Bachelor of Science degree in Chemistry from the City College of
New York in 1965, and a Master of Business Administration degree from
Fairleigh Dickinson University in 1973.

     CLAIRE BLUESTEIN has served as Director of the Company since June
1984.  Since 1976, Dr. Bluestein has been president and sole shareholder of
Captan Associates, Inc., a company engaged in the development of materials
for commercial applications of radiation curing technology.  Dr. Bluestein
has been issued several patents by the United States Department of
Commerce, Trademark and Patent Offices and has published a variety of
chemistry related articles.  Dr. Bluestein received her Bachelor of Arts
Degree from the University of Pennsylvania in 1947.  In 1948 she received a
Master of Science Degree and in 1950 a Ph.D. in Organic Chemistry from the
University of Illinois.

     MORRIS DUNKEL has served as Director of the Company since June 1984.
From 1976 through 1983, Dr. Dunkel was employed by Tenneco Chemicals, Inc.,
<PAGE>

a firm engaged in chemical production activities, in the capacities of
manager and director of Tenneco's organic chemicals research and
development division.  Dr. Dunkel has been issued several United States
patents and has published numerous articles relating to chemical processes.
He received a Bachelor of Science Degree in 1950 from Long Island
University.  Dr. Dunkel received a Master of Science Degree from Brooklyn
College in 1954 and Ph.D. in Organic Chemistry from the University of
Arkansas in 1956.

     ABDELHAMID A.H. RAMADAN has been a Director of the Company since July
1994, and has served as Manager for Research, Process Development and
Quality Assurance of the Company since November 1993.  From March 1992
through October 1993, he served as production manager at Celgene Corp., and
from 1989 through February 1992, he served as Senior Chemist and Chemical
Hygiene Officer of the Company.  From 1982 through 1988, Mr. Ramadan served
as Production Department Head at Tenneco Chemicals.  Mr. Ramadan received a
Bachelor of Science Degree in Chemistry in 1963 from Ain Shams University -
Cairo - Egypt.

Item 10.  Executive Compensation.

     The following summary compensation table sets forth information
concerning the annual and long-term compensation for services in all
capacities to the Company for the fiscal years ended February 29, 1996,
1995 and 1994, of those persons who were, at February 29, 1996 (i) the
chief executive officer and (ii) the other most highly compensated
executive officers of the Company, whose annual base salary and bonus
compensation was in excess of $100,000 (the named executive officers):

                                    Summary Compensation Table

<TABLE>
<CAPTION>
                              Annual                        Long-Term
                              Compensation                  Compensation
                                                        Restricted   Shares
Name and Principal      Fiscal                          Stock        Underlying
Position                Year        Salary      Bonus   Awards       Options
<S>                     <C>         <C>         <C>     <C>          <C>
Murray S. Cohen(1)      1996        $48,750     $7,000  1,000,000(2) 75,000
Chairman of the         1995        $56,619     $7,500  0            0
Board and Chief         1994        $78,750     $3,500  0            0
Executive Officer

James Ivchenko(3)       1996        $79,166(4)  $7,000  0            75,000  
President               1995        $69,167     $5,833  0            0
                        1994        $53,750     $5,000  100,000      0

Chester C. Swasey(5)    1996        $57,243     $4,000  0            75,000
Vice President of       1995        $21,801     $2,404  100,000      0      
Sales and Marketing
</TABLE>


(1)  Dr. Cohen was also President from June 1984 to August 1994.

(2)  Represents shares issued to Dr. Cohen during fiscal 1996 inlieu of
     $40,000 of accrued salary.

(3)  Mr. Ivchenko has been President since August 1994.  Prior thereto, he
     was Technical Director and Vice President of Operations.
<PAGE>

(4)  Does not include $19,645 being deferred pursuant to an Deferred
     Compensation Agreement entered into in December 1995 with Mr.
     Ivchenko.

(5)  Mr. Swasey has been employed by the Company since August 1994.

Stock Options Granted in Fiscal 1996

     The following table sets forth information concerning individual
grants of stock options made during fiscal 1996 to each of the named
executive officers of the Company.  No other stock appreciation rights were
granted to any of the named executive officers during fiscal 1996.  In the
table below, the amounts shown as "potential realizable value" are based
upon the average of the closing bid and asked prices of the Company's
Common Stock on the date of grant and on arbitrarily assumed annualized
rates of Common Stock price appreciations of five percent and ten percent
over the full term of the options, as required by Securities and Exchange
Commission regulations.  Actual gains, if any, are dependent upon the
actual performance of the Common Stock as well as the continued employment
of such persons.

                                % of Total
                                Options
                                Granted to   Exercise or
                   Options      Employees in Base Price
Name               Granted      Fiscal 1996  (per share)
Murray S. Cohen    75,000       15.3%        $.04
James Ivchenko     75,000       15.3%        $.04
Chester C. Swasey  75,000       15.3%        $.04
<PAGE>

                                   Potential
                                   Realizable Value
                                   at Assumed
                                   Annual Rates
                                   of Stock Price
                                   Appreciation
                    Expiration     For Option Term
Name                Date           5%         10%
Murray S. Cohen     12/1/2005      $5,625     $7,500
James Ivchenko      12/1/2005      $5,625     $7,500
Chester C. Swasey   12/1/2005      $5,625     $7,500


Stock Options Exercised in Fiscal 1996;
Fiscal Year-End Values

     During the fiscal year ended February 29, 1996, none of the named
executive officers exercised any stock options.

     The following table indicates the total number of exercisable and
unexercisable stock options held by each named executive officer on
February 29, 1996, the last day of fiscal 1996, and the value of "in the
money" options held by each named executive officer on such date.

                    Number of Unexercised
                    Options Held at
                    February 29, 1996

Name                Exercisable    Unexercisable

Murray S. Cohen          0         75,000
James Ivchenko           0         75,000
Chester C. Swasey        0         75,000


                    Value of Unexercised
                    In-the-Money Options
                    February 29, 1996(1)
Name                Exercisable    Unexercisable

Murray S. Cohen      0        $3,750
James Ivchenko       0        $3,750
Chester C. Swasey    0        $3,750
<PAGE>

(1)  Based on the average of the closing bid and asked prices of the
     Company's Common Stock at February 29, 1996.


Compensation of Directors

     Since inception, no director has received any cash compensation for
his services as such. In the past, directors have been and will continue to
be reimbursed for reasonable expenses incurred on behalf of the Company.

Employment Contracts

     In December 1995, the Company entered into a Deferred Compensation
Agreement with James Ivchenko, President of the Company, pursuant to which
annual compensation of $19,645 plus interest will be deferred until Mr.
Ivchenko reaches the age of 65 or his employment is terminated.  Annual
payments of $32,000 for ten consecutive years shall commence the first day
of the month following the executive reaching the age of 65 or termination
of his employment.  Such obligation is being funded with a life insurance
policy owned by the Company.

Employee Stock Option Plan

     The Company previously  adopted an Employee Stock Option Plan (the
"Plan") .  As of April 1996, options may no longer be granted under the
Plan.  Under the terms of the Plan, options granted thereunder could be
designated as options which qualify for incentive stock option treatment
under Section 422A of the Internal Revenue Code of 1986, as amended, or
options which do not so qualify.  In December 1995, options to acquire up
to 490,000 shares of the Company's Common Stock were granted under the
Plan.  Such options expire on December 1, 2005.  None of such options have
been exercised.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

     The following table sets forth, as August 2, 1996, certain information
with regard to the record and beneficial ownership of the Company's Common
Stock by (i) each stockholder owning of record or beneficially 5% or more
of the Company's Common Stock, (ii) each director individually, (iii) all
officers and directors of the Company as a group:

                              Amount and Nature of     Percent
Name                          Beneficial Ownership     of Class
Murray S. Cohen(1)*              2,800,958(2)           24.0%
James Ivchenko(1)*               1,644,587              14.1%
Chester C. Swasey(1)*              705,822               6.0%
Claire Bluestein*                  945,155               8.1%
Morris Dunkel*                     200,000               1.7%
Abdelhamid R.H. Ramadan(1)*        298,402               2.6%

All Officers and Directors
as a Group (6 persons)           6,594,924               55.4%
<PAGE>

*    Indicates a Director of the Company.  The address for each is 358-364
     Adams Street, Newark, New Jersey 07105.

(1)  Includes 75,000 which he has the right to acquire within 60 days
     pursuant to the exercise of stock options.

(2)  Includes 1,000,000 shares owned by three grandchildren of Dr. Cohen,
     which shares are held by Dr. Cohen's daughters as custodian.  Dr.
     Cohen holds a proxy with respect to such shares which proxy expires in
     2000.  As a result, Dr. Cohen may be deemed to be the beneficial owner
     of such shares.

Item 12.  Certain Relationships and Related Transactions.

     See Part I, Item 2 for information on the leasing arrangements entered
into between  Epolin Holding Corp. ("Epolin Holding"), a company owned and
controlled by Murray S. Cohen and James Ivchenko, and the Company.  As
described therein, in October 1996, Epolin Holding purchased the premises
then leased by the Company for $450,000 and simultaneously with the closing
entered into a lease with the Company, as tenant.  The downpayment of
$100,000 was obtained from the Company evidenced by a five year promissory
note of $75,565 (after charge for three months security deposit under the
terms of the lease) payable in monthly principal payments of $1,541
including interest at an annual rate of 8.25%.

Item 13.  Exhibits and Reports on Form 8-K.

     (a)  Exhibits.

          3.1       Registrant's certificate of incorporation as amended
                    (1)
          3.2       Registrant's by-laws(1)
          4.1       Specimen certificate for common stock(1)
          ___________________

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

     (b)  Reports on Form 8-K.

     Listed below are reports on Form 8-K filed during the last quarter of
the period covered by this report:

     None.

<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,
                                        Chief Executive Officer

                                   Dated November 8, 1996

     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/Murray S. Cohen            Chief Executive Officer, 11/08/96    
Murray S. Cohen               Chairman of the Board,
                              Director (Principal
                              Executive Officer and
                              Principal Financial
                              Officer)

/s/James Ivchenko             President, Director      11/08/96    
James Ivchenko

/s/Chester C. Swasey          Vice President of        11/08/96
Chester C. Swasey             Sales and Marketing,
                              Secretary, Director

/s/Claire Bluestein           Director                 11/08/96
Claire Bluestein

/c/Morris Dunkel              Director                 11/08/96
Morris Dunkel

/s/Abdelhamid A.H.
   Ramadan                    Director                 11/08/96
Abdelhamid A.H. Ramadan

<PAGE>


                        EPOLIN, INC. AND SUBSIDIARY

                             FEBRUARY 29, 1996



<PAGE>
                        EPOLIN, INC. AND SUBSIDIARY

                             FEBRUARY 29, 1996

                                 CONTENTS




                                                          PAGE
Report of Independent Certified Public Accountants        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 - 7
Notes to Consolidated Financial Statements                8 - 16
<PAGE>


                   INDEPENDENT AUDITOR'S REPORT


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

 We have audited the accompanying balance sheet of Epolin, Inc. &
Subsidiary as of February 29, 1996, and the related statements of income,
stockholder's equity, and cash flows for the year then ended.  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 audit.

 We conducted our audit in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  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.  We believe that our audit
provides a reasonable basis for our opinion.

 In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Epolin Inc. &
Subsidiary as of February 29, 1996, and the results of its operations and
its cash flows for the year then ended in conformity with generally
accepted accounting principles.

 The February 28, 1995 financial statements and the February 28, 1994
statements of income, retained earnings, and cash flows were not audited by
us and, accordingly, do not express any opinion or other form of assurance
on them.  As a result, these financial statements are not in conformity
with Regulation S-B, Item 310(a) of the Securities and Exchange Commission.


                                               /s/I. Weismann Associates
                                               CERTIFIED PUBLIC ACCOUNTANTS


September  4, 1996, except for Note 12,
as to which the date is October 9, 1996
<PAGE>

                        EPOLIN, INC. AND SUBSIDIARY

                        CONSOLIDATED BALANCE SHEETS

                                  ASSETS


                                   February 29,   February 28,
                                   1996           1995
                                                  (unaudited)
Current assets:
  Cash and cash equivalents        $   231,800       57,307
 Accounts receivable (Note 3)          164,266      120,000
 Inventories (Note 4)                  245,426       99,812
 Prepaid expenses                       11,311       14,927
 Deferred taxes (Note 5)                92,820             -

       Total current assets            745,623      292,046

Property, plan and equipment -
 at cost:
  Machinery and equipment              166,306      159,158
  Furniture and fixtures                38,892       31,060
  Leasehold improvements               415,526      415,526

       Total                           620,724      605,744

Less:  Accumulated depreciation 
 and amortization                      430,573      371,730

 Net depreciated cost                  190,151      234,014

   Patents (net of accumulated
   amortization
   of $3,551 for 1995)                       -        8,212
   Deferred taxes (Note 5)             294,649       66,474
   Security deposits                    12,635       12,635
  Cash value - life insurance policy
     (Note 11)                           6,569            -

       Total other assets              313,853       87,321

       Total                        $1,249,627      613,381



       The accompanying notes are an integral part of these statements.
<PAGE>

                      EPOLIN, INC. AND SUBSIDIARY
                CONSOLIDATED BALANCE SHEETS (CONTINUED)
                 LIABILITIES AND STOCKHOLDERS' EQUITY

                                    February 29,   February 28,
                                    1996           1995
                                                   (unaudited)
Current liabilities:
 Accounts payable                   $   49,160       22,977
 Accrued expenses                       11,426        9,000
 Accrued salaries (Note 6)                   -       89,948
 Taxes payable:
   Payroll                                   -        5,179
   Income                               34,975        1,648

       Total current liabilities        95,561      128,752

Deferred compensation (Note 11)          3,274            -

       Total liabilities                98,835      128,752

Commitments (Notes 2 and 11)

Stockholders' equity:
 Preferred stock, $2.50 
  par value;
  940,000 shares authorized; 
  none issued                                -            -
 Series A convertible non-
  cumulative
  preferred stock, $15,513 
  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;
  11,654,000 shares issued 
  (Note 6)                           2,206,984    2,166,984
 Common stock unissued (Note 7)         10,000       10,000

Additional paid-in capital               6,486        6,486
Accumulated deficit                 (1,072,678)  (1,698,841)

                       Total         1,150,792      484,629
Less:  Treasury stock (Note 8)               -            -
Total stockholders' equity           1,150,792      484,629
                       Total        $1,249,627      613,381

       The accompanying notes are an integral part of these statements.
<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY

                      CONSOLIDATED  STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                 YEARS ENDED
                                      FEBRUARY 29,     FEBRUARY 28,
                                      1996             1995     1994
                                                   (UNAUDITED) (UNAUDITED)
<S>                                   <C>          <C>         <C>
Sales (Notes 2 and 3)                 $1,384,410   889,079     728,320

Cost and expenses:
 Cost of sales                           613,879   535,772     441,911
 Selling, general and
  administrative expenses
  (Notes 2, 6, 7, 9 & 11)                432,783   355,155     188,832
       Total                           1,046,662   890,927     630,743

Operating income (loss)                  337,748    (1,848)     97,577

Other income (expenses):
 Interest income                           7,518     3,536       1,001
 Loss on disposal of assets               (3,570)        -      (3,668)

Income before taxes                      341,696     1,688      94,910

Income taxes (Note 5)                   (284,467)   (9,634)        415

Net income before cumulative
effect of accounting change              626,163    11,322      94,495

Cumulative effect of accounting
  change (Note 2)                              -         -      55,505

Net income                            $   626,163   11,322     150,000

Per share data:
 Net  income per common share         $      0.05        -        0.01
 Weighted average number of
  shares of common outstanding         11,444,888  10,611,555  10,503,222
</TABLE>

The accompanying notes are an integral part of these statements.
<PAGE>

                      EPOLIN, INC. AND SUBSIDIARY

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

            (AMOUNTS PRIOR TO MARCH 1, 1995 ARE UNAUDITED)



<TABLE>
<CAPTION>
                                         ADDITIONAL               STOCK-
                             COMMON      PAID-IN-    ACCUMULATED  HOLDERS'
                             STOCK       CAPITAL     DEFICIT      EQUITY
<S>                          <C>         <C>         <C>          <C>
Balance - March 1, 1993      $2,172,984   6,486      (1,860,163)    319,307

Common stock issued for 
 incentive compensation             500       -               -         500

Net income - Year ended 
February 28, 1994                     -       -         150,000     150,000

Balance - 
February 28, 1994             2,173,484   6,486      (1,710,163)    469,807

Common stock issued for 
incentive compensation            3,500       -               -       3,500

Net income - Year ended 
February 28, 1995                     -       -          11,322      11,322

Balance - 
February 28, 1995             2,176,984   6,486      (1,698,841)    484,629

Common stock issued for 
 accrued salary
 (Note 6)                        40,000        -              -      40,000

Net income - Year ended 
February 29, 1996                     -        -        626,163     626,163

Balance - 
February 29, 1996            $2,216,984    6,486     (1,072,678)  1,150,792
</TABLE>

       The accompanying notes are an integral part of these statements.
<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                             YEARS ENDED
                                  FEBRUARY 29,      FEBRUARY 28,
                                  1996            1995        1994
                                                  (unaudited)    (unaudited)
<S>                               <C>             <C>            <C>
Cash flows from operating 
activities:
 Net income                        $626,163        11,322        150,000
 Adjustments to reconcile 
 net profit to net cash 
 provided by operating
 activities:
 Depreciation and amortization       70,677        69,053         68,405
    Deferred taxes                 (320,995)      (11,259)       (55,215)
    Loss on disposal of assets        3,570             -          3,668
    Obligation under deferred 
    compensation  agreement           3,274             -              -
    Incentive stock compensation          -         3,500            500
    Stock issued in lieu of 
    accrued salary (Note 6)          40,000             -              -
 Changes in assets and 
 liabilities:
    Accounts receivable             (44,266)      (23,994)       (18,249)
    Inventories                    (145,614)      (42,405)       (47,413)
    Prepaid expenses                  3,616        (3,605)             - 
    Accounts payable                 26,183         6,959        (32,505)
    Accrued expenses                  2,426         7,500              -
    Accrued salaries                (89,948)      (31,927)        (3,750)
    Taxes payable:
       Payroll                       (5,179)        1,440          2,457
       Income                        33,328         1,574             50

    Net cash provided (used) by
      operating activities          203,235       (11,842)        67,948

</TABLE>
       The accompanying notes are an integral part of these statements.


                          EPOLIN, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (CONTINUED)

<TABLE>
<CAPTION>
                                        YEARS ENDED
                                     FEBRUARY 29,       FEBRUARY 28,
                                         1996      1995      1994
                                                   (unaudited)  (unaudited)
<S>                                  <C>           <C>          <C>
Cash flows from investing 
activities:
 Patents (net)                          7,588               -            -
 Cash value - life insurance 
  policy                               (6,569)              -            -
 Payments for equipment               (29,761)        (10,224)        (800)

    Net cash used by investing
     activities                       (28,742)        (10,224)        (800)

Increase (decrease) in cash           174,493         (22,066)      67,148

CASH AND CASH EQUIVALENTS:

 Beginning                             57,307          79,373       12,225

 Ending                              $231,800          57,307       79,373

SUPPLEMENTAL DISCLOSURE OF 
 CASH FLOW INFORMATION:
 Income taxes paid                   $  1,662              50           50
 Interest paid                       $     28               -            -
</TABLE>
       The accompanying notes are an integral part of these statements.
<PAGE>

                     EPOLIN, INC. AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (INFORMATION WITH RESPECT TO THE YEARS ENDED
                FEBRUARY 28, 1995 AND 1994 IS UNAUDITED)
                           FEBRUARY 29, 1996


NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

Epolin, Inc. (the "Company") was incorporated on May 8, 1984 pursuant to the
laws  of  the State of New Jersey to develop, manufacture and market a class
of monomer and polymer formulations with applications in the composition and
manufacture  of  a new type of highly protective and durable materials.  The
Company's  activities   during  its  development  stage  from  May  8,  1984
(inception) through February  28,  1990  had  been  substantially devoted to
developing its principal products.  Active operations  in  the  monomer  and
polymer technologies have ceased.

The  Company's wholly-owned subsidiary, Accort Labs, Inc., is engaged in the
manufacture   and   sale  of  specialty  chemical  products  that  serve  as
intermediates and additives  used  in the dye, adhesive, plastic, aerospace,
pharmaceutical, flavors and fragrance industries to customers located in the
eastern part of the United States.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

A.   PRINCIPLES OF CONSOLIDATION - The  accompanying  consolidated financial
     statements  include  the  accounts of the Company and  its  subsidiary.
     Intercompany  transactions  and   balances   have  been  eliminated  in
     consolidation.  The consolidation is accounted  for  as  a  "pooling of
     interests"  under  generally accepted accounting principles.  Condensed
     consolidating financial statements for the year ended February 29, 1996
     follows:

          CONDENSED CONSOLIDATING BALANCE SHEET

<TABLE>
<CAPTION>
                       EPOLIN        ACCORT    ELIMINATIONS  CONSOLIDATED
<S>                    <C>           <C>       <C>           <C>
Current assets         $   423,995   414,814    (93,177)        745,632
Non-current assets         745,646    15,653   (257,304)        503,995
 Total                 $ 1,169,641   430,467   (350,481)      1,249,627

Total liabilities      $    18,849   173,163    (93,177)         98,835
Stockholders' equity:
  Common stock           2,216,984       100       (100)      2,216,984
  Additional
   paid-in capital           6,486     6,486     (6,486)          6,486
  Accumulated 
   earnings 
  (deficit)             (1,072,678)  250,718   (250,718)     (1,072,678)
 Total stockholders' 
  equity                 1,150,792   257,304   (257,304)      1,150,792

        Total          $ 1,169,641   430,467   (350,481)      1,249,627

</TABLE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

              CONSOLIDATING STATEMENT OF INCOME
<TABLE>
<CAPTION>
                         Epolin     Accort     Eliminations  Consolidated
<S>                      <C>        <C>        <C>           <C>
Sales                    $      -   1,384,410         -      1,384,410
Other revenue             767,441           -  (767,441)             -
 Total                    767,441   1,384,410  (767,441)     1,384,410

Cost of sales                   -     613,879         -        613,879
Gross profit              767,441     770,531  (767,441)       770,531
Selling, general
 and Administrative       594,726     389,383  (547,756)       436,353
Operating income          172,715     381,148  (219,685)       334,178

Interest income             7,518           -         -          7,518

Income before taxes       180,233     381,148  (219,685)       341,696

Income tax (benefit)     (445,930)    161,463         -       (284,467)

Net income               $626,163    (219,685) (219,685)       626,163
</TABLE>

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

C. PROPERTY AND EQUIPMENT - Stated at cost less  accumulated depreciation.
   Provisions for depreciation are computed on the straight-line  and 
   declining balance methods, based upon the estimated useful lives of the 
   assets.

LEASEHOLD  IMPROVEMENTS  -  Stated  at  cost  less accumulated amortization,
amortized over the lesser of the term of the related  lease or the estimated
useful lives of the assets.

Depreciation and amortization expense totaled $70,053,  $68,429  and $67,781
for the years 1996, 1995 and 1994, respectively.
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

D. PATENTS - Costs amortized on the straight-line method over a period
   of  seventeen  years.   Patents  of  no value costing $11,763 along with
   accumulated amortization totaling $4,175  were allowed to lapse and were
   written off during the year ending February  29,  1996.  The unamortized
   cost  of  $7,588  was  included  in  selling, general and administrative
   expenses.

E. CHANGE  IN ACCOUNTING PRINCIPLE -  The  Company  adopted  Financial
   Accounting  Standards  Board  No.  109,  ACCOUNTING  FOR  INCOME  TAXES,
   beginning March 1, 1993, whereby deferred tax assets and liabilities are
   recognized for  future tax consequences of events that have already been
   recognized in the  Company's  financial  statements or tax returns.  The
   cumulative  effect  of  the  charge on years prior  to  March  1,  1993,
   increased income for the year ended February 28, 1994 by $55,505.

F. The cost of employee benefits  and  compensated  absences  were not
   accrued  for  the  year  ended  February  29,  1996  as the amounts were
   considered immaterial.

NOTE 3 - 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 29, 1996, approximately
 71% of sales were to three customers, one of which totaled 46%.   Two
 of these customers comprised  49%  of accounts receivable at February
 29, 1996 with locations in New Jersey,  Pennsylvania,  Massachusetts,
 Florida and Rhode Island.


NOTE 4 - INVENTORIES:

   Raw materials and supplies       $   12,613
   Work in process                      83,966
   Finished goods                      148,847
                                      $245,426
<PAGE>

NOTE 5 - INCOME TAXES:

Deferred  tax  assets at February 29, 1996 represents recognition  of  net
operating loss carryforwards  and  for  differences  in  using accelerated
depreciation methods for book purposes as follows:

                                       1996         1995       1994

Total deferred tax assets              $502,611     600,379    591,217
Less:valuation allowance                115,142     533,905    536,002
                                        387,469      66,474     55,215

   Current portion                       92,820           -          -
Non-current portion                    $294,649      66,474     55,215
Deferred tax assets include 
 the following:

Net operating loss carryforwards       $306,794           -      4,228
Temporary differences - 
 principally accelerated 
 amortization of leasehold
 improvements for book purposes          80,675      66,474     50,987
                                       $387,469      66,474     55,215

A  valuation allowance has been provided for that portion of deferred
tax  assets (net operating loss carryforwards) that are not likely to
be realized before they expire in future years.

Income tax expense consists of the following components:

                                      1996           1995       1994
   Current:
            State                     $  36,528        1,625         125

   Deferred:
            Federal                    (318,053)     (12,246)    (12,281)
            State                        (2,942)         987      12,571
                    Total deferred     (320,995)     (11,259)        290

                             Total    ($284,467)      (9,634)        415
<PAGE>


NOTE 5 - INCOME TAXES (CONTINUED):


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

 Computed at the statutory rate       $116,177      1,764   32,439
 State income taxes (net)               24,108      1,072       83
 Decrease in deferred tax asset
  valuation allowance                 (418,763)    (2,097)  (33,705)
 Non-deductible items                   (5,989)   (10,373)    1,598

      Total provision for taxes      ($284,467)    (9,634)      415

For  Federal tax purposes, the Company has approximately $902,000  of
net operating  loss  carryforwards  as  of  February  29, 1996, which
expire in the years 2005 through 2007.  In addition, there  are State
net  operating  loss carryforwards of approximately $1,279,000  which
expire in the years 1996 through 2003.

NOTE 6 - ACCRUED SALARIES:

Four officers and  one  former employee previously elected to defer a
portion of their salaries  to  preserve  the Company's cash position.
Salaries of three officers and the former  employee were removed from
the books during 1996 and 1995 and credited to income.

On April 25, 1995, the Board of Directors authorized  the issuance of
1,000,000 shares of common stock to the remaining officer  in lieu of
$40,000  of  his  remaining accrued salary of $89,948.  The remaining
unpaid  balance of $49,948  was  credited  to  selling,  general  and
administrative expenses.

NOTE 7 - EMPLOYEE BENEFITS:

SIMPLIFIED  EMPLOYEE  PENSION  PLAN  -  Effective  June  1, 1994, the
Company initiated a prototype Simplified Employee Pension  Plan (SEP)
covering  all  eligible  participating employees as defined. Employer
contributions totaled $5,744 for the year ended February 29, 1996.

INCENTIVE COMPENSATION PLAN  - On December 1989, the Company approved
the 1989 Incentive Compensation Plan  for the purpose of attracting and  
retaining key personnel.  All employees of the Company are eligible to
<PAGE>


NOTE 7 - EMPLOYEE BENEFITS (CONTINUED):

participate in the  plan  whereby incentive bonuses are determined by
the Board of Directors and payable in shares of common stock.

Shares issued are determined  at  fifty  percent  of  the closing bid
price and vested and delivered over a three year period.

At February 29, 1996, 20,000 vested shares of common stock covering a
previously awarded bonus have not been issued to an employee.

EMPLOYEE  STOCK  OPTION  PLAN  -  The  Company previously adopted  an
Employee Stock Option Plan ("Plan").  As  of  April 1996, options may
no longer be granted under the Plan.  Under the  terms  of  the Plan,
options  granted  thereunder  could  be  designated as portions which
qualify for incentive stock option treatment  under  Section  422A of
the  Internal  Revenue Code of 1986, as amended, or options which  do
not qualify.

Outstanding Options:

Shares allocated                             490,000

Option price                                 $  0.04

Balance outstanding February 28, 1994              -

Balance outstanding February 28, 1995              -

        Granted                              490,000
        Expired                                    -
        Exercised                                  -

Balance outstanding February 29, 1996        490,000

All outstanding options are exercisable currently.

NOTE 8 - TREASURY STOCK:

Represents  42,445  shares  returned  to  Company  when shares were
deemed to have no market value.
<PAGE>

NOTE 9 - RESEARCH AND DEVELOPMENT:

Included in selling, general and administrative expenses  are costs of
$152,700,  $126,300,  and $101,300 for the years 1996, 1995 and  1994,
respectively.

NOTE 10 - ACQUISITION:

On April 5, 1989, the Company  acquired  Accort  Labs,  Inc. in a business
combination accounted for as a pooling of interests which became a wholly-
owned  subsidiary through the exchange of 896,424 shares of  common  stock
for all of its outstanding stock.

NOTE 11 - COMMITMENTS:

LEASE -  Five  year term commencing June 1, 1989.  Renewed for three years
effective June 1, 1994 through May 31, 1997 with minimum annual rentals of
$64,709 and with cost of living adjustments for the second and third years
and additional cost  responsibilities,  including  real  estate  taxes and
insurance.

Minimum annual rentals for the renewal term:

   YEARS ENDED FEBRUARY 28,                   AMOUNTS
        1997                                  $64,709
        1998                                   16,177

Rental expense charged to operations amounted to $90,437, $86,867  and
$92,428 for the years 1996, 1995 and 1994, respectively.

DEFERRED COMPENSATION - On December 29, 1995, the Company entered into
a   deferred   compensation   agreement  with  an  officer  whereby  annual
compensation of $19,645 plus interest would be deferred until such time the
officer reaches age 65 or is terminated.   The  obligation  is being funded
with  a  life  insurance  policy.   Annual  payments  of  $32,000  for  ten
consecutive  years shall commence the first day of the month following  the
executive's 65th birthday or termination.

LICENSING  AGREEMENT  - The Company entered into a licensing agreement
in November 1985 (amended 1988) with one of its stockholders (now deceased)
for  the exclusive right to manufacture,  produce,  market,  use  and  sell
products and materials under U.S. Patent 4,387,215 related to the Company's
now abandoned expanding monomer technology.
<PAGE>

NOTE 11 - COMMITMENTS (CONTINUED):

Included  in  its  terms  was  the Company's commitment for payment of
annual fixed royalties of $50,000 and  royalty  payments as a percentage of
gross sales.

Payment due November 30, 1989 was paid over  the  twelve  month period
ending  May  1990,  with  subsequent payments postponed until such time  as
demand for Expanding Monomer  technology  commenced.  The Company abandoned
this technology and has since reversed to income all accruals made in prior
years that related to unpaid FIXED royalty payments.

Under the terms of the agreement, the  licensor's  only remedy against
the  Company  for  non-payment  of  any  prior  fixed  royalty  payment  is
cancellation  of  the license agreement. To date, no notification regarding
the  termination or  cancellation  of  the  licensing  agreement  has  been
received from the licensor's estate.

NOTE 12 - SUBSEQUENT EVENT:

On October  17,  1996,  the  premises  leased  from  350 South Street
Partnership was purchased for $450,000 by Epolin Holding Corp., a New
Jersey Corporation, controlled by Dr. Murray S. Cohen  and  Mr. James
A.  Ivchenko,  officers/stockholders of Epolin, Inc. This transaction
was approved by  the  Board  of Directors in June 1996 based upon the
terms of a $350,000 mortgage obtained  from  the  Broad National Bank
wherein personal guarantees of Dr. Murray S. Cohen  and  Mr. James A.
Ivchenko  were  mandatory.   Other officers/stockholders declined  to
participate in this transaction.

The  down  payment  of  $100,000  was  obtained  from  Epolin,  Inc.,
evidenced by a five (5) year promissory note of $75,565 (after charge
for three (3) months security deposit  under  the terms of a five (5)
year lease) payable in monthly principal payments of $1,541 including
interest at an annual rate of 8.25%.

The  lease,  entered  into  on the same day as the  purchase  of  the
property, is for a term of five  (5)  years  with  three (3) five (5)
year options at annual rentals of $97,740 subject to a Cost of Living
Index  adjustment from the start of the second year.   Rent  includes
reimbursed  real  estate  taxes and insurance expenses under terms of
the lease.
<PAGE>

NOTE 12 - SUBSEQUENT EVENT (CONTINUED):


In view of the purchase of  the  building  as noted herein, the future
rent  liability  as stated in Note 11 is superseded,  and  amounts  to
$30,530 for the period March 1, 1996  through October 17, 1996.

The revised minimum annual rentals under the new lease as stated above
are as follows:

      YEARS ENDED
      FEBRUARY 28,        AMOUNTS

         1997             $32,580
         1998              97,740
         1999              97,740
         2000              97,740
         2001              97,740
         2002              65,160



<PAGE>