UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, DC 20549

                           FORM 10-Q

  [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended August 31, 2008

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

  For the transition period from            to ______

                Commission file number 000-17741

                          EPOLIN, INC.
     (Exact name of Registrant as Specified in its Charter)

New Jersey                                             22-2547226
(State or other jurisdiction                     (I.R.S. Employer
of incorporation or                           Identification No.)
organization)

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

                         (973) 465-9495
      (Registrant's Telephone Number, Including Area Code)

                         Not applicable
 (Former Name, Former Address and Former Fiscal Year, if Changed
                       Since Last Report)


Indicate  by check mark whether the registrant (1) has filed  all
reports  required  to be filed by Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.
                         Yes   [  X  ]  No   [      ]

Indicate  by  check  mark  whether  the  registrant  is  a  large
accelerated filer, an accelerated filer, a non-accelerated filer,
or  a  smaller reporting company.  See the definition  of  "large
accelerated  filer", "accelerated filer" and  "smaller  reporting
company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  [   ]  Accelerated filer          [   ]
Non-accelerated filer    [   ]  Smaller reporting company  [ X ]

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

State  the  number of shares outstanding of each of the  Issuer's
classes  of common stock, as of the latest practicable  date:  no
par  value  per  share: 12,066,355 outstanding as of  October  1,
2008.

<PAGE>

                          EPOLIN, INC.

                        TABLE OF CONTENTS


                                                       Page
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.                            3
Item 2.  Management's Discussion and Analysis
         of Financial Condition and
         Results of Operations.                           3
Item 3.  Quantitative  and Qualitative  Disclosures
         About Market Risk.                               8
Item 4T. Controls and Procedures.                         8

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.                               9
Item 2.  Unregistered Sales of Equity Securities  and
         Use of Proceeds.                                 9
Item 3.  Default   upon   Senior   Securities.            9
Item 4.  Submission of Matters to a Vote of Security
         Holders.                                         9
Item 5.  Other Information.                               9
Item 6.  Exhibits.                                        9

SIGNATURES                                               10

<PAGE>


                 PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements.

      See  the Consolidated Financial Statements annexed to  this
report.


Item  2.  Management's  Discussion and  Analysis  of  Financial
          Condition and Results of Operations.

     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.

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 under the caption "Uncertainties and
Risk Factors" in Part I, Item 1 "Description of Business" of the
Company's Form 10-KSB for the year ended February 29, 2008.  The
Company does not intend to update these forward-looking
statements.

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 six months
ended August 31, 2008, approximately 31.8% of sales were to three
customers.  During the six months ended August 31, 2007,
approximately 40.1% of sales were to three customers.  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 three
and six months ended August 31, 2008 and 2007.

<PAGE>

                         Three Months Ended August 31,

                         2008      2007           % change

Sales                   $851,680  $1,092,558        -22.1%

Gross profit             475,235     644,658        -26.3%

Gross profit
percentage                55.8%        59.0%         -3.2%

Selling, general
& administrative         330,418     343,000         -3.7%

Operating income         144,817     301,658        -52.0%
Other Income              23,004      21,244          8.3%

Income before taxes      167,821     322,902        -48.0%

Income taxes              61,134     126,038        -51.5%

Net income
(after  taxes)          $106,687    $196,864        -45.8%



                         Six Months Ended August 31,

                         2008      2007           % change

Sales                 $1,764,471  $1,934,559         -8.8%

Gross profit             997,964   1,158,002        -13.8%

Gross profit
percentage                 56.6%       60.0%         -3.4%

Selling, general
& administrative         624,065     638,999         -2.3%

Operating income         373,899     519,004        -28.0%
Other Income              40,009      36,184         10.6%

Income before taxes      413,908     555,188        -25.4%

Income taxes             158,069     205,548        -23.1%

Net income
(after taxes)           $255,839    $349,640        -26.8%


Sales

     For the three months ended August 31, 2008, sales were
$852,000 as compared to $1,093,000 for the three months ended
August 31, 2007, a decrease of $241,000 or 22.1%.  Sales
decreased to $1,764,000 for the six months ended August 31, 2008
from $1,935,000 for the six months ended August 31, 2007, a
decrease of $171,000 or 8.8%.

     Such decreases in sales for the three and six months ended
August 31, 2008 compared to the prior year periods is primarily
due to our ink and coating sales which have deteriorated
significantly in recent periods.  For the three months ended
August 31, 2008, sales in the ink and coating market decreased
$286,000 compared to the three months ended August 31, 2007,
while sales for the six months ended August 31, 2008 decreased
$291,000 compared to the six months ended August 31, 2007.  The
decrease in sales in the ink and coating market is primarily due
to reduced sales in the security inks business which had been a
key area of our growth from 2005 to 2007.

<PAGE>

     While sales in the ink and coating market have been
declining, sales in the eye protection market and light
management market have been relatively strong.  Sales in the eye
protection market, which represents our oldest and most
traditional market, increased $46,000 or 6.5% for the six months
ended 2008 compared to the prior year period.  Sales in the light
management market increased $30,000 or 8.6% in the six months
ended August 31, 2008 compared to the prior year period.

     Sales overseas increased in Asia and Europe for the six
months ended August 31, 2008 while sales decreased in the United
States for the six months ended August 31, 2008, compared to the
prior year period.  For the six months ended August 31, 2008,
sales in Asia increased to $348,000 from $257,000 while in
Europe, sales increased to $222,000 from $112,000 for the prior
year period.  In the United States, sales decreased to $1,194,000
in the six months ended August 31, 2008 from $1,565,000 in the
six months ended August 31, 2007.

Gross Profit

     Gross profit, defined as sales less cost of sales, was
$475,000 or 55.8% of sales, compared to $645,000 or 59.0% of
sales for the three months ended August 31, 2007.  For the six
months ended August 31, 2008, gross profit was $998,000 or 56.6%
of sales, compared to $1,158,000 or 60.0% of sales for the six
months ended August 31, 2007.  In terms of absolute dollars,
gross profit decreased $170,000 for the three months ended August
31, 2008 compared to the prior year period, and decreased
$160,000 for the six months ended August 31, 2008 compared to the
six months ended August 31, 2007.

     Cost of sales was $376,000 for the three months ended August
31, 2008 which represented 44.2% of sales compared to $448,000
for the three months ended August 31, 2007 which represented
41.0% of sales.  For the six months ended August 31, 2008, cost
of sales was $767,000 which represented 43.4% of sales, compared
to $777,000 for the six months ended August 31, 2007 which
represented 40.0% of sales.  Total cost of materials decreased
$10,000 in the six months ended August 31, 2008 compared to the
prior year period.  Total factory overhead showed no significant
change in the six months ended August 31, 2008 compared to the
prior year period.  Although there were increases in research and
development salaries, these increases were substantially offset
by decreases in environmental expenses, applied factory overhead
and other miscellaneous overhead costs.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased to
$330,000 for the three months ended August 31, 2008 compared to
$343,000 for the three months ended August 31, 2007, a decrease
of $13,000, while selling, general and administrative expenses
decreased to $624,000 for the six months ended August 31, 2008
from $639,000 for the six months ended August 31, 2007, a
decrease of $15,000.  Such decrease was primarily due to a
decrease in officers' salaries (primarily from the Chairman of
the Board's decision to become a part-time employee with a
corresponding reduction in his base salary), and a decrease in
directors' and officers' insurance in the six months ended August
31, 2008 offset by an increase in administrative salaries,
payroll taxes and employee benefits, professional fees and
applied factory overhead.  In addition, we incurred a placement
fee of $12,000 in the six months ended August 31, 2007 for which
there was no comparable item in the six months ended August 31,
2008.

Operating Income

     Operating income, in terms of absolute dollars, decreased to
$145,000 for the three months ended August 31, 2008 from $302,000
for the three months ended August 31, 2007, a decrease of
$157,000, while operating income decreased to $374,000 for the
six months ended August 31, 2008 from $519,000 for the prior year
period, a decrease of $145,000.  Such change in the three and six
months periods was primarily due to the decrease in sales for the
three and six months ended August 31, 2008 compared to the three
and six months ended August 31, 2007.  As a percentage of sales,
operating income was 17.0% of sales for the three months ended
August 31, 2008 compared to 27.6% of sales for the three months
ended August 31, 2007.  For the six months ended August 31, 2008
compared to the prior year period, operating income decreased as
a percentage of sales to 21.2% from 26.9%.

Other Income

     Total other income was $23,000 and $40,000 for the three and
six months ended August 31, 2008 compared to $21,000 and $36,000
for the three and six months ended August 31, 2007.  We realize
rental income of $4,500 and $9,000 for the three and six months
ended August 31, 2008 compared to rental income of $9,000 and
$9,000 for the three and six months ended August 31, 2007.  Our
interest income was $18,500 and $31,000 for the three and six
months ended August 31, 2008 compared to $12,000 and $27,000 for
the prior year periods.

<PAGE>

Net Income

     During the three months ended August 31, 2008, we reported
income before taxes of $168,000 as compared to income before
taxes of $323,000 for the three months ended August 31, 2007, a
decrease of $155,000.  During the six months ended August 31,
2008, we reported income before taxes of $414,000 as compared to
income before taxes of $555,000 for the six months ended August
31, 2008, a decrease of $141,000.  Income taxes were $61,000 and
$158,000 for the three and six months ended August 31, 2008 while
income taxes were $126,000 and $206,000 for the comparable
periods of 2007.  The changes in income taxes were generally
attributed to changes from period to period in sales and
expenses.  Net income after taxes was $107,000 or $0.01 per share
for the three months ended August 31, 2008 as compared to net
income after taxes of $197,000 or $0.02 per share for the three
months ended August 31, 2007.  For the six months ended August
31, 2008, net income after taxes was $256,000 or $0.02 per share
as compared to net income after taxes of $350,000 or $0.03 per
share for the six months ended August 31, 2007.

     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.  Prior to fiscal 2007,
sales had grown for a number of consecutive years.  In fiscal
2007, however, sales decreased by $91,000 compared to fiscal 2006
and, in fiscal 2008, sales decreased by $17,000 compared to
fiscal 2007.   While sales have decreased, net income did improve
in fiscal 2008 by $101,000 compared to fiscal 2007 and net income
increased by $29,000 in fiscal 2007 compared to fiscal 2006.
During the first six months of fiscal 2009, however, sales
decreased by $171,000 and net income decreased to a lesser extent
by $94,000 compared to the first six months of fiscal 2008.

Operations Outlook

     Following a period of readjustment in our business
priorities, we were able to achieved $3,701,000 in sales for
fiscal 2006 which was $821,000 or 28.5% greater than the prior
fiscal year.  In fiscal 2007, however, sales decreased to
$3,610,000, a decrease of 2.5% from the prior year, and in fiscal
2008, sales decreased to $3,593,000, a decrease of 0.5% from
fiscal 2007.  This has continued into the first six months of
fiscal 2009 in which sales decreased $170,000 or 8.8% compared to
the first six months of fiscal 2008.  During these periods of
reduced sales, we had a major decline in sales of security inks
for the credit card market which had been a key area of our
growth from 2005 to 2007.  While this market remains a source of
business for us, we may not be able achieve the same type of
growth in the security inks market in the future.  Nevertheless,
we are confident that with our core group of products, we will be
able to maintain sales in our principal markets, such as the eye
protection market and the light management market, while always
seeking new areas for the use of our dyes.

Liquidity and Capital Resources

     Our primary source of funds is cash flow from operations in
the normal course of selling products.  On August 31, 2008, we
had working capital of $2,530,000, a debt to equity ratio of 0.14
to 1, and stockholders' equity of $3,449,000 compared to working
capital of $2,842,000, a debt to equity ratio of 0.14 to 1, and
stockholders equity of $3,773,000 on August 31, 2007.  On August
31, 2008, we had $1,527,000 in cash and cash equivalents, total
assets of $3,918,000 and total liabilities of $469,000, compared
to $1,548,000 in cash and cash equivalents, total assets of
$4,301,000 and total liabilities of $527,000 on August 31, 2007.

     Net cash provided by operating activities for the six months
ended August 31, 2008 was $333,000 which was primarily the result
of net income of $256,000, plus decreases in accounts receivable
of $116,000 and prepaid expenses of $41,000, offset by increases
in inventories of $12,000 and prepaid taxes of $27,000, and
decreases in accrued expenses of $71,000 and taxes payable of
$37,000.  Net cash provided by operating activities for the six
months ended August 31, 2007 was $82,000 which was primarily the
result of net income of $350,000, plus decreases in prepaid
expenses of $11,000 and inventories of $15,000, and increases in
taxes payable of $27,000, offset by increases in accounts
receivable of $298,000 and decreases in accrued expenses of
50,000 and accounts payable of $13,000.  Net cash used by
investing activities for the six months ended August 31, 2008 was
$67,000 due to equipment purchases of $61,000 and an increase in
cash value of a life insurance policy of $6,000, while net cash
used by investing activities was $46,000 for the six months ended
August 31, 2007 due to equipment purchases of $81,000 offset by a
decrease in cash value of a life insurance policy of $35,000.
For the six months ended August 31, 2008, net cash used by
financing activities was $718,000 and was $239,000 for the six
months ended August 31, 2007 which was due to the payment of
dividends in the first six months of fiscal 2009 and fiscal 2008.

<PAGE>

     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 the balance of
fiscal 2009 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.

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 did adopt SFAS 123R on March 1, 2006.

<PAGE>

Other Information

     Subsequent to the end of fiscal 2006, the Board of Directors
approved the adoption of a dividend policy under which we will
issue a regular annual cash dividend on shares of our 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, a regular annual cash
dividend of $0.02 per share was paid in each of May 2006, May
2007 and May 2008.   In addition, since of the adoption of the
dividend policy in fiscal 2007, a special cash dividend of $0.02
per share has been paid in each of January 2007 and January 2008.
In addition to the foregoing, and considering our cash position,
the Board of Directors recently declared a supplemental special
cash dividend of $0.04 per share which was payable in August
2008.  Although there can be no assurance, it is anticipated that
we will pay another special cash dividend in January 2009 similar
to the special cash dividends we have paid in January of prior
years.

     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.  There were no
repurchases made by the Company of shares of its Common Stock
during the fiscal year ended February 29, 2008 and the first six
months of fiscal 2009.   In prior years, since the adoption of
the program, a total of 331,500 shares were repurchased at a
cumulative cost of $195,766.

     In September 2007, Murray S. Cohen advised the Board of
Directors that beginning as of October 1, 2007 and in accordance
with his employment agreement he will reduce the time he devotes
to Company business to approximately 25% of his time.   Dr. Cohen
had been devoting approximately 50% of his time to the business
since September 2006.  Dr. Cohen has been and will remain
Chairman of the Board and Chief Scientist of the Company.

Off-Balance Sheet Arrangements

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


Item 3.   Quantitative and Qualitative Disclosures About Market
          Risk.

     We are a smaller reporting company as defined by Rule 12b-2
of the Securities Exchange Act of 1934 and are not required to
provide the information under this item.


Item 4T.   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 August 31, 2008, 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
quarter covered by this report that have materially affected, or
are reasonably likely to materially affect, our internal control
over financial reporting.

<PAGE>

                   PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

      There are no material pending legal proceedings to which we
are a party or to which any of our property is subject.


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

     None.


Item 3.  Defaults Upon Senior Securities.

     None.


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

     On August 18, 2008,  an  annual  meeting   of stockholders
was held for the following purposes: (1) to elect five Directors
to  serve as the Board of Directors of the Company until the next
Annual   Meeting  of  Stockholders  and   until   their
successors shall be elected and shall qualify, and (2) to approve
the adoption of the Company's 2008 Stock Incentive Plan (the
"2008 Plan").  At such meeting, with regard to proposal 1, Murray
S. Cohen, James  Ivchenko,  Morris  Dunkel, James R.  Torpey, Jr.
and Herve A. Meillat, each an incumbent director, were duly
elected as directors of the Company.  Murray S. Cohen received
9,410,877 affirmative votes and 8,000 negative votes; James
Ivchenko received 9,016,906 affirmative votes and 401,971
negative votes; Morris Dunkel received 8,972,906 affirmative
votes and 445,971 negative votes; James  R. Torpey, Jr. received
9,418,877 affirmative votes and no negative votes; and, Herve A.
Meillat received 9,351,377 affirmative votes and 67,700 negative
votes.  With regard to proposal 2, such proposal was approved by
a vote of a majority of the votes cast at the meeting, with
5,379,526 votes cast in favor, 982,500 votes cast against and
773,661 abstentions.

     Morris Dunkel died on August 22, 2008.  The Board of
Directors has made no decision as to when the resulting vacancy
on the Board will be filled.


Item 5.  Other Information.

          None.


Item 6.  Exhibits.

     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)

<PAGE>

                           SIGNATURES

     Pursuant to the requirements of the Securities Exchange  Act
of  1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.


                                   EPOLIN, INC.
                                   (Registrant)


Dated: October 14, 2008            By: /s/ Greg Amato
                                       Greg Amato,
                                       Chief Executive Officer



Dated: October 14, 2008            By: /s/  James Ivchenko
                                       James Ivchenko,
                                       President
                                       (Principal Financial Officer)



<PAGE>







                           EPOLIN, INC. AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                                SIX MONTHS ENDED

                            AUGUST 31, 2008 AND 2007








<PAGE>

                                    CONTENTS

                                                                        Page
                                                                        ----

Review Report of Independent Registered Public Accounting Firm           1

Consolidated Financial Statements:

    Consolidated Balance Sheets                                        2 - 3

    Consolidated Statements of Income                                  4 - 5

    Consolidated Statements of Stockholders' Equity                      6

    Consolidated Statements of Cash Flows                                7

Notes to Consolidated Financial Statements                             8 - 21


<PAGE>

         REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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


         We have reviewed the accompanying Consolidated Balance Sheets of Epolin
Inc. and Subsidiary as of August 31, 2008 and 2007 and the related Consolidated
Statements of Income, Stockholders' Equity, and Cash Flows for the six-month
periods then ended. These interim consolidated financial statements are the
responsibility of the Company's management.

         We conducted our review in accordance with the standards of the Public
Company Accounting Oversight Board (United States). A review of interim
consolidated financial information consists principally of applying analytical
procedures and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board,
the objective of which is the expression of an opinion regarding the
consolidated financial statements taken as a whole. Accordingly, we do not
express such an opinion.

         Based on our review, we are not aware of any material modifications
that should be made to the accompanying interim consolidated financial
statements for them to be in conformity with U.S. generally accepted accounting
principles.


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

                                       1
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                           August 31,
                                                  ----------------------------
                                                      2008            2007
                                                  ------------    ------------
Current assets:
  Cash and cash equivalents                       $  1,527,488       1,547,558
  Accounts receivable                                  502,129         845,179
  Inventories                                          654,331         636,198
  Prepaid expenses                                      19,327          66,559
  Prepaid taxes                                         26,690             527
  Deferred tax assets-current portion                   18,750          14,347
                                                  ------------    ------------

    Total current assets                             2,748,715       3,110,368
                                                  ------------    ------------
Plant, property and equipment - at cost:
  Land                                                  81,000          81,000
  Building and improvements                            767,300         710,758
  Laboratory equipment                                 189,300         280,368
  Furniture and office equipment                       220,543         234,105
  Leasehold improvements                               458,495         456,790
                                                  ------------    ------------

    Total                                            1,716,638       1,763,021

Less: Accumulated depreciation and amortization        851,298         901,306
                                                  ------------    ------------

    Net plant, property and equipment                  865,340         861,715
                                                  ------------    ------------
Other assets:
  Deferred tax assets-non current portion               97,129         135,988
  Cash value - life insurance policy                   207,257         192,664
                                                  ------------    ------------

    Total other assets                                 304,386         328,652
                                                  ------------    ------------

      Total                                       $  3,918,441       4,300,735
                                                  ============    ============

  The accompanying notes are an integral part of these consolidated
                              financial statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                              August 31,
                                                                     ----------------------------
                                                                         2008            2007
                                                                     ------------    ------------
<S>                                                                  <C>                   <C>
Current liabilities:
  Accounts payable                                                   $     17,353          38,431
  Accrued expenses                                                        199,917         194,691
  Taxes payable:
    Payroll                                                                 1,889           1,889
    Income                                                                     --          33,294
                                                                     ------------    ------------

      Total current liabilities                                           219,159         268,305

Other liabilities - Deferred compensation                                 250,035         259,035
                                                                     ------------    ------------

      Total liabilities                                                   469,194         527,340
                                                                     ------------    ------------
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 shares issued, and 11,966,355
    shares outstanding at 2008 and 2007, respectively                   2,364,693       2,364,693
    Additional paid-in capital                                             76,820          73,486
    Retained earnings                                                   1,358,816       1,686,298
                                                                     ------------    ------------

      Total                                                             3,800,329       4,124,477
    Less: Treasury stock - at cost                                        351,082         351,082
                                                                     ------------    ------------

    Total stockholders' equity                                          3,449,247       3,773,395
                                                                     ------------    ------------

      Total                                                          $  3,918,441       4,300,735
                                                                     ============    ============
</TABLE>

       The accompanying notes are an integral part of these consolidated
                             financial statements.

                                        3
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                    SIX MONTHS ENDED AUGUST 31, 2008 AND 2007

                                                               2008            2007
                                                           ------------    ------------
<S>                                                        <C>                <C>
Sales                                                      $  1,764,471       1,934,559
                                                           ------------    ------------
Cost of sales and expenses:
  Cost of sales                                                 766,507         776,556
  Selling, general and administrative                           624,065         638,999
                                                           ------------    ------------

    Total                                                     1,390,572       1,415,555
                                                           ------------    ------------

Operating income                                                373,899         519,004
                                                           ------------    ------------
Other income:
  Rental income                                                   9,000           9,000
  Interest                                                       31,009          27,184
                                                           ------------    ------------

    Total                                                        40,009          36,184
                                                           ------------    ------------

Income before taxes                                             413,908         555,188

Income taxes                                                    158,069         205,548
                                                           ------------    ------------

Net income                                                 $    255,839         349,640
                                                           ============    ============
Per share data:
  Basic earnings per common share                          $       0.02            0.03
                                                           ============    ============
  Fully diluted earnings per common share                  $       0.02            0.03
                                                           ============    ============
  Weighted average number of common shares outstanding       11,966,355      11,966,355
                                                           ============    ============
  Fully diluted number of common shares outstanding          12,006,791      12,003,424
                                                           ============    ============
</TABLE>

       The accompanying notes are an integral part of these consolidated
                              financial statements.

                                        4
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                   THREE MONTHS ENDED AUGUST 31, 2008 AND 2007


                                                               2008            2007
                                                           ------------    ------------
<S>                                                        <C>                <C>
Sales                                                      $    851,680       1,092,558
                                                           ------------    ------------
Cost of sales and expenses:
  Cost of sales                                                 376,445         447,900
  Selling, general and administrative                           330,418         343,000
                                                           ------------    ------------

    Total                                                       706,863         790,900
                                                           ------------    ------------

Operating income                                                144,817         301,658
                                                           ------------    ------------
Other income:
  Rental income                                                   4,500           9,000
  Interest                                                       18,504          12,244
                                                           ------------    ------------

    Total                                                        23,004          21,244
                                                           ------------    ------------

Income before taxes                                             167,821         322,902

Income taxes                                                     61,134         126,038
                                                           ------------    ------------

Net income                                                 $    106,687         196,864
                                                           ============    ============
Per share data:
  Basic earnings per common share                          $       0.01            0.02
                                                           ============    ============
  Fully diluted earnings per common share                  $       0.01            0.02
                                                           ============    ============
  Weighted average number of common shares outstanding       11,966,355      11,966,355
                                                           ============    ============
  Fully diluted number of common shares outstanding          12,006,791      12,003,424
                                                           ============    ============
</TABLE>

       The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       5
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    SIX MONTHS ENDED AUGUST 31, 2008 AND 2007


                                 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, 2007         12,915,000   $2,364,693       62,111    1,575,985       948,645     (351,082)    3,651,707

Dividends paid                          --           --           --     (239,327)           --           --      (239,327)

Valuation of options expensed           --           --       11,375           --            --           --        11,375

Net income                              --           --           --      349,640            --           --       349,640
                                ----------   ----------   ----------   ----------    ----------   ----------    ----------
Balance - August 31, 2007       12,915,000   $2,364,693       73,486    1,686,298       948,645     (351,082)    3,773,395
                                ==========   ==========   ==========   ==========    ==========   ==========    ==========


Balance - March 1, 2008         12,915,000   $2,364,693       76,820    1,820,958       948,645     (351,082)    3,911,389

Dividends paid                          --           --           --     (717,981)           --           --      (717,981)

Net income                              --           --           --      255,839            --           --       255,839
                                ----------   ----------   ----------   ----------    ----------   ----------    ----------
Balance - August 31, 2008       12,915,000   $2,364,693       76,820    1,358,816       948,645     (351,082)    3,449,247
                                ==========   ==========   ==========   ==========    ==========   ==========    ==========
</TABLE>

       The accompanying notes are an integral part of these consolidated
                             financial statements.

                                        6
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    SIX MONTHS ENDED AUGUST 31, 2008 AND 2007


                                                                    2008            2007
                                                                ------------    ------------
<S>                                                             <C>                  <C>
Cash flows from operating activities:
  Net income                                                    $    255,839         349,640
  Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                    50,705          42,455
     Deferred tax expense                                              4,276          12,378
     Stock based compensation                                             --          11,375
     Obligation under deferred compensation agreement                  3,352         (26,829)
  (Increase) decrease in:
     Accounts receivable                                             116,316        (298,227)
     Inventories                                                     (11,802)         15,450
     Prepaid expenses                                                 41,085          11,208
     Prepaid taxes                                                   (26,690)          1,393
  Increase (decrease) in:
     Accounts payable                                                  7,693         (13,351)
     Accrued expenses                                                (70,838)        (50,214)
     Taxes payable                                                   (37,400)         26,758
                                                                ------------    ------------

        Net cash provided by operating activities                    332,536          82,036
                                                                ------------    ------------
Cash flows from investing activities:
  (Increase) decrease in cash value - life insurance policy           (5,888)         34,594
  Payments for equipment                                             (61,321)        (81,091)
                                                                ------------    ------------

        Net cash used by investing activities                        (67,209)        (46,497)
                                                                ------------    ------------
Cash flows used from financing activities:
  Dividends paid                                                    (717,981)       (239,327)
                                                                ------------    ------------

Increase (decrease) in cash                                         (452,654)       (203,788)

Cash and cash equivalents:
  Beginning                                                        1,980,142       1,751,346
                                                                ------------    ------------

  Ending                                                        $  1,527,488       1,547,558
                                                                ============    ============
Supplemental disclosures of cash flows:
  Income taxes paid                                             $    214,538         166,842
                                                                ============    ============
</TABLE>

        The accompanying notes are an integral part of these consolidated
                              financial statements.

                                        7
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

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 Corporation, 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 interim Consolidated Financial Statements presented
herein are unaudited and should be read in conjunction with the Consolidated
Financial Statements presented in the Company's Annual Report on Form 10-KSB for
the fiscal year ended February 28, 2008. Such interim 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 intercompany accounts and transactions have been eliminated.

         The results of operations for the six-month interim period ended August
31, 2008 and 2007 are not necessarily indicative of the results of operations
for the fiscal year ending February 29, 2009.

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 39.2% of the
Company's trade receivables at August 31, 2008.

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.

                                       8
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2008

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 August 31, 2008 and for the six months then ended are

<TABLE>
<CAPTION>


                      CONDENSED CONSOLIDATING BALANCE SHEET

                                                           Epolin
                                           Epolin          Holding,
                                             Inc.           Corp.        Eliminations    Consolidated
                                         ------------    ------------    ------------    ------------
<S>                                      <C>                  <C>        <C>               <C>
Current assets                           $  2,435,949         312,766              --       2,748,715
Non-current assets                          1,480,629         668,721        (979,624)      1,169,726
                                         ------------    ------------    ------------    ------------
    Total                                $  3,916,578         981,487        (979,624)      3,918,441
                                         ============    ============    ============    ============

  Total liabilities                      $    467,331          26,298         (24,435)        469,194
                                         ------------    ------------    ------------    ------------
Stockholders' equity:
  Common stock                              2,364,693              --              --       2,364,693
  Additional paid-in capital                   76,820              --              --          76,820
  Retained earnings                         1,358,816         955,189        (955,189)      1,358,816
  Treasury stock                             (351,082)             --              --        (351,082)
                                         ------------    ------------    ------------    ------------

  Total stockholders' equity                3,449,247         955,189        (955,189)      3,449,247
                                         ------------    ------------    ------------    ------------
    Total                                $  3,916,578         981,487        (979,624)      3,918,441
                                         ============    ============    ============    ============

<CAPTION>

                   CONDENSED CONSOLIDATING STATEMENT OF INCOME

                                                           Epolin
                                           Epolin          Holding,
                                             Inc.           Corp.        Eliminations    Consolidated
                                         ------------    ------------    ------------    ------------
<S>                                      <C>                  <C>        <C>               <C>
Sales                                    $  1,764,471              --              --       1,764,471
Rental income                                      --          57,870         (48,870)          9,000
                                         ------------    ------------    ------------    ------------
    Total                                   1,764,471          57,870         (48,870)      1,773,471
                                         ------------    ------------    ------------    ------------

Cost of sales                                 766,507              --              --         766,507
Selling, general and administrative           659,492          13,443         (48,870)        624,065
                                         ------------    ------------    ------------    ------------

    Total                                   1,425,999          13,443         (48,870)      1,390,572
                                         ------------    ------------    ------------    ------------

Operating income                              338,472          44,427              --         382,899
Other income - interest                        25,682           5,327              --          31,009
                                         ------------    ------------    ------------    ------------

Income before taxes                           364,154          49,754              --         413,908
Income taxes                                  153,471           4,598              --         158,069
                                         ------------    ------------    ------------    ------------
Net income                               $    210,683          45,156              --         255,839
                                         ============    ============    ============    ============
</TABLE>

                                        9
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

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 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:

                                                        Estimated Years
                                                        ---------------
Building and improvements           Straight Line               39
Laboratory equipment                Straight Line            5 - 7
Furniture and office equipment      Straight Line            5 - 7
Leasehold Improvements              Straight Line          10 - 39

         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 $50,705 and $42,455 for
the six months ended August 31, 2008 and 2007, 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.

                                       10
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007


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 and $20,516 through August 31,
2008 and 2007, respectively, 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 $9,766 and $4,278 for the
six months ended August 31, 2008 and 2007, respectively.

                                       11
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

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
August 31, 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 six months ended August 31, 2007, the Company recognized
stock-based compensation expenses of $5,688, 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 six months ended August 31, 2008 and 2007 was $.18,
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:

                                                      Six Months Ended
                                                         August 31,
                                                 -------------------------
                                                    2008           2007
                                                 ----------     ----------
Weighted average expected life in years                   3              4
Dividends per share                                    0.06           0.04
Volatility                                              7.0%           6.0%
Risk-free interest rate                                 4.9%           4.9%

                                       12
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

NOTE C - Income Taxes:

1.  Federal and State deferred tax assets include:

                                                     2008           2007
                                                 ------------   ------------
         Temporary differences:
            Accelerated amortization             $     11,877         22,108
            Deferred compensation                      87,948        113,608
            Stock-based compensation                   16,054         14,619
                                                 ------------   ------------
                Total                                 115,879        150,335

         Current portion                               18,750         14,347
                                                 ------------   ------------

         Non-current portion                     $     97,129        135,988
                                                 ============   ============

2.  Income tax expense:

                                                     2008           2007
                                                 ------------   ------------
         Current:
            Federal                              $    122,076        150,600
            State                                      31,717         42,570
                                                 ------------   ------------

                Total current                         153,793        193,170
                                                 ------------   ------------
         Deferred:
            Federal                                     3,176         10,171
            State                                       1,100          2,207
                                                 ------------   ------------

                Total deferred                          4,276         12,378
                                                 ------------   ------------

                   Total                         $    158,069        205,548
                                                 ============   ============



                                       13
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

NOTE D - Treasury Stock:

Consists of 948,645 shares at a net cost of $351,082, as of August 31, 2008 and
2007, respectively.

NOTE E - 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 six months ended August 31, 2008, approximately 31.8% of
sales were to three customers. During the six months ended August 31, 2007,
approximately 40.1% of sales were to three customers, two of these customers,
located in the Eastern United States, accounted for 33.0% of sales.

NOTE F - Rental Income Under Sublease:

         The Company entered into an agreement with a non-related party
effective September 1, 2005 for a term ending October 31, 2007. Under the terms
of the agreement, the tenant is to pay a base rent of $18,000 per year.

NOTE G - 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 $231,891 and
$197,660 were included in cost of sales for the six months ended August 31, 2008
and 2007, respectively. Expenditures for fiscal year 2009 are projected to
remain at approximately the same level as in fiscal 2008.

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 $30,173 and
$24,782 for the six months ended August 31, 2008 and 2007, respectively.

                                       14
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

NOTE H - Employee Benefits (continued):

Stock Option Plan - 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. From inception through August 31,
2008, options granted totaled 1,242,000, options exercised totaled 686,000,
options cancelled or expired for all years totaled 240,000. All cancelled or
expired options are available for future grants.

         A summary of the status of the Company's 1998 stock option plan as of
August 31, 2008, and the changes during the six months ended August 31, 2008 is
presented below:

                                                          Weighted-Average
Fixed Options:                              Shares         Exercise Price
--------------                              -------        --------------

Balance - February 29, 2008                 316,000             $.50
                                            =======

Balance - August 31, 2008                   316,000             $.50
                                            =======

Exercisable at August 31, 2008              316,000
                                            =======

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.

                                       15
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

NOTE H - Employee Benefits (continued):

Stock Option Plans - The following table summarizes information about fixed
stock options outstanding at August 31, 2008:

<TABLE>
<CAPTION>

              Outstanding Options                          Exercisable Options
-------------------------------------------------    -------------------------------
                     Number      Weighted-Average      Number
    Range of      Outstanding       Remaining        Exercisable    Weighted-Average
Exercise Price     at 8/31/08    Contractual Life     at 8/31/08     Exercise Price
--------------     ----------    ----------------    -----------     ---------------
<S>                  <C>               <C>              <C>              <C>
    $.41             116,000           5.4              116,000          .41
     .51             100,000           1.2              100,000          .51
     .54             200,000           1.8              200,000          .54
</TABLE>

There are 498,000 options attributable to future grants.


NOTE I - Inventories:

                                                          August 31,
                                                 ----------------------------
                                                     2008            2007
                                                 ------------    ------------
Raw materials and supplies                       $    187,723          63,255
Work in process                                       109,922         200,189
Finished goods                                        356,686         372,754
                                                 ------------    ------------
  Total                                          $    654,331         636,198
                                                 ============    ============

                                       16
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

NOTE J - 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.

Sales by geographic area are as follows:

                                                      Six Months Ended
                                                          August 31,
                                                 ----------------------------
                                                     2008            2007
                                                 ------------    ------------
         United States                           $  1,193,719       1,565,041
         Asia                                         348,392         256,779
         Europe                                       221,760         112,488
         Other nations                                    600             250
                                                 ------------    ------------
             Total                               $  1,764,471       1,934,558
                                                 ============    ============

         One customer, located in Asia, accounted for more than 10% of revenues
from continuing operations. This customer accounted for 13.0% of sales. All
sales to this customer were near infrared dies.

         Long-lived assets include net plant, property and equipment. The
Company had long-lived assets of $865,340 and $861,715 located in the United
States at August 31, 2008 and 2007, respectively.

NOTE K - Accrued Expenses:

         Accrued expenses consisted of the following as of August 31, 2008 and
2007, respectively:

                                                     2008            2007
                                                 ------------    ------------
         Commissions                             $     14,549          12,025
         Employment agreement                         141,158         146,764
         Insurance                                         --          29,902
         Purchases                                     27,310              --
         Professional fees                              6,000           6,000
         Pension contribution                          10,900              --
                                                 ------------    ------------
          Total accrued expenses                 $    199,917         194,691
                                                 ============    ============

                                       17
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

NOTE L - 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:

<TABLE>
<CAPTION>

                                         Three Months Ended            Six Months Ended
                                              August 31,                  August 31,
                                      -------------------------   -------------------------
                                         2008          2007          2008          2007
                                      -----------   -----------   -----------   -----------
<S>                                   <C>             <C>         <C>               <C>
Basic Earnings Per Common Share:

Net income                            $   106,687       196,864   $   255,839       349,640
                                      ===========   ===========   ===========   ===========
Average common shares
 outstanding                           11,966,355    11,966,355    11,966,355    11,966,355
                                      ===========   ===========   ===========   ===========
Basic earnings per
 common share                         $      0.01          0.02   $      0.02          0.03
                                      ===========   ===========   ===========   ===========
Diluted Earnings Per Common Share:

Net income                            $   106,687       196,864   $   255,839       349,640
                                      ===========   ===========   ===========   ===========
Average common shares
 outstanding                           11,966,355    11,966,355    11,966,355    11,966,355

Common shares issuable with respect
 to options issued to employees
 with a dilutive effect                    40,436        37,069        40,436        37,069
                                      -----------   -----------   -----------   -----------
Total diluted common shares
 outstanding                           12,006,791    12,003,424    12,006,791    12,003,424
                                      ===========   ===========   ===========   ===========
Diluted earnings per
 common share                         $      0.01          0.02   $      0.02          0.03
                                      ===========   ===========   ===========   ===========
</TABLE>

                                       18
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

NOTE M - 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
for the six months ended August 31, 2008 and 2007, respectively.

Future minimum payments for the current option period:

      Fiscal Years Ending February:
      -----------------------------
                   2009                            $48,870
                   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 $3,352 and $5,171 was charged to selling, general and administrative expenses
for the six months ended August 31, 2008 and 2007, respectively.

         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
                            AUGUST 31, 2008 AND 2007

NOTE M - 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 August 31, 2008 and 2007 was and $146,764, 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.

                                       20
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2008 AND 2007

NOTE N - Dividends:

         In July 2008, the Company's Board of Directors declared a cash dividend
of $0.04 per share on all common shares outstanding. The dividend, in the amount
of $478,654 was paid on August 7, 2008 to shareholders of record at the close of
business on July 24, 2008.

         In April 2008, the Company's Board of Directors declared a cash
dividend of $0.02 per share on all common shares outstanding. The dividend, in
the amount of $239,327 was paid on May 14, 2008 to shareholders of record at the
close of business on April 30, 2008.

         In April 2007, the Company's Board of Directors declared a cash
dividend of $0.02 per share on all common shares outstanding. The dividend, in
the amount of $239,327 was paid on May 14, 2007 to shareholders of record at the
close of business on April 30, 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