SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, DC 20549

                          FORM 10-QSB

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

        For the quarterly period ended November 30, 2005

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

    For the transition period from            to

                 Commission file number 0-17741

                          EPOLIN, INC.
(Exact name of Small Business Issuer as Specified in its Charter)

New Jersey                                              22-2547226
(State or Other Jurisdiction                      (I.R.S. Employer
of Incorporation or                                 Identification
Organization)                                              Number)

                      358-364 Adams Street
                    Newark, New Jersey 07105
            (Address of Principal Executive Offices)

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

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

                  Yes   [  X   ] No   [      ]

Indicate by check mark whether the Issuer 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  Issuers
classes of common equity, as of the latest practicable date:

Common, no par value per share: 11,815,355 outstanding as of  Nov
ember 30, 2005

<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  or  Plan  of
Operation.

     The  following discussion should be read in conjunction with
the Financial Statements included 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 28, 2005.   The
Company   does   not  intend  to  update  these   forward-looking
statements.

Executive Overview

     Epolin,  Inc.  (the  "Company") is  a  specialized  chemical
company   primarily  engaged  in  the  manufacturing,  marketing,
research  and development of infrared dyes, laser absorbing  dyes
and infrared dye formulations.  The Company's 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.   The
Company   also  manufactures  specialty  chemicals  for   certain
chemical manufacturers.

      The  Company has succeeded in growing over the last  decade
based  on  the development, application and manufacture  of  near
infrared  dyes.  Although the Company does not rely upon  patents
for  protection  of  its  dye business, no  competitors,  to  the
Company's knowledge, actively market the large variety and volume
of  infrared  dyes  as  sold by the Company.    Furthermore,  the
Company  has embarked on an aggressive campaign to make its  dyes
easier  to  use.   In this regard, the Company  offers  technical
service  support for extrusion and injection molding  of  Company
dyes  with  a variety of resin substrates.    The Company's  dyes
can  now be uniquely formulated to each customer's specifications
and manufactured in the Company's own facility.  In addition, the
Company  holds  a broad range of dyes in inventory for  immediate
sale.

       The  Company  sells  its  products  to  manufacturers   of
plastics/resins, credit cards, electronics, glass and other basic
materials.  The Company's customers are located in all regions of
the  world, although 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.   As  the  service
economy continues to dwarf the manufacturing sector in the United
States,  the  Company  anticipates  that  its  products  will  be
increasingly  used by manufacturers located abroad.   During  the
nine months ended November 30, 2005, approximately 41.9% of sales
were  to four customers. Two of these customers, located  in  the
eastern United States, accounted for 28.2% of sales.  During

<PAGE>

the
nine months ended November 30, 2005, approximately 48.8% of sales
were to three customers.  Two of these customers, located in  the
eastern  United States, accounted for 42.9% of sales.   The  loss
of one or more key customers could have a material adverse effect
on the Company.

Results of Operations

      The following table sets forth operations data expressed as
a percentage of sales.

                    Three Months Ended          Nine Months Ended

                    November 30,   November 30, November 30,  November 30,
                    2005           2004         2005          2004





Sales               100%           100%         100%          100%
Cost of sales       28.4           37.5         36.5          35.2

Gross Profit        71.6           62.5         63.5          64.8
Selling, general
& administrative    32.1           33.9         34.1          31.5

Operating Income    39.5           28.6         29.4          33.3

Income before taxes 40.8           30.2         30.7          34.9

Net income
(after taxes)       25.8           15.6         19.2          20.5



Sales

      For  the  three months ended November 30, 2005, sales  were
$966,000  as  compared  to $703,000 for the  three  months  ended
November  30,  2004, an increase of $263,000 or 37.4%.   For  the
nine   months  ended  November  30,  2005,  sales  increased   to
$2,632,000 from $2,007,000 for the nine months ended November 30,
2004,  an  increase  of  $625,000 or 31.1%.   Such  increase  was
primarily  due to increased sales overseas, especially in  Japan,
Korea  and Taiwan for the Company's products and increased orders
for  its  newer security inks and coatings products, as  well  as
increased  orders during the first quarter of the current  fiscal
year  from  many  of  the  Company's  regular  customers  of  its
traditional  products.  The Company has recently begun  providing
greater  technical  service to customers which  has  allowed  the
Company to sell many of its traditional dye products to customers
who may not have known how to best use the Company's products  in
the past.

      While  management  believes that the Company  has  remained
strong  in the sale of dyes in its traditional markets of welding
and  eye  protection, sales did remain relatively  stagnant  from
fiscal 2002 through fiscal 2005.  In order to increase the  level
of  sales of its traditional dyes products, the Company has begun
to place greater emphasis on technical service as mentioned above
which  has resulted in sales to customers who have not  used  the
Company's  products  before  as well as  new  uses  of  such  dye
products  by  regular customers.  The Company also has  increased
its  sales in dyes for the newer security inks products which  is
an area the Company expects to achieve strong growth.

Gross Profit

      Gross  profit,  defined as sales less cost  of  sales,  was
$692,000  or  71.6% of sales for the three months ended  November
30,  2005,  compared to $439,000 or 62.5% of sales for the  three
months  ended  November  30,  2004. For  the  nine  months  ended
November 30, 2005, gross profit was $1,672,000 or 63.5% of  sales
compared  to  $1,301,000 or 64.8% of sales for  the  nine  months
ended  November  30, 2004.  In terms of absolute  dollars,

<PAGE>

gross
profit  increased  $371,000 although the gross profit  percentage
decreased  1.4%  for  the  nine months ended  November  30,  2005
compared to the first nine months of fiscal 2004 due primarily to
increased material and overhead  costs resulting in lower margins
and an increase in certain variable costs.

      Cost  of  sales  was  $275,000 for the three  months  ended
November  30, 2005 which represented 28.4% of sales  compared  to
$263,000  for  the  three months ended November  30,  2004  which
represented  37.5% of sales.  For the nine months ended  November
30,  2005, cost of sales was $960,000 which represented 36.5%  of
sales compared to $706,000 for the nine months ended November 30,
2004  which represented 35.2% of sales.  The increase in cost  of
sales   as a percentage of sales reflects increased material  and
overhead  costs  resulting in lower margins  on  certain  of  the
Company's  products, as well as an increase in  certain  variable
costs associated with the higher revenue level achieved.

Selling, General and Administrative Expenses

      Selling,  general and administrative expenses increased  to
$310,000, or 32.1% of sales, for the three months ended  November
30,  2005 from $238,000, or 33.9% of sales, for the three  months
ended  November  30,  2004,  an increase  of  $72,000.   Selling,
general  and  administrative expenses increased to  $898,000,  or
34.1% of sales, for the nine months ended November 30, 2005  from
$633,000  or  31.5% of sales, for the nine months ended  November
30,  2004,  an increase of $265,000.  Such increase  in  absolute
dollars  in selling, general and administrative expenses for  the
nine  months  ended November 30, 2005 compared to the  comparable
period  of  the  prior  year was primarily due  to  increases  in
officer  salaries and employee benefits, together with  increases
in commission expenses (resulting from an increase in sales which
are subject to commissions).

Operating Income

      Operating  income for the three months ended  November  30,
2005 increased to $382,000, or 39.5% of sales, from $201,000,  or
28.6%  of  sales, for the three months ended November  30,  2004.
Operating income for the nine months ended November 30, 2005 also
increased to $774,000, or 29.4% of sales, from $668,000, or 33.3%
of  sales, for the comparable period of fiscal 2005.  This change
was  primarily  due to a an increase in sales offset  by  greater
increases   in  operating  expenses  and  selling,  general   and
administrative expenses as described above.

Other Income

      Total other income for the three months ended November  30,
2005  was  $13,000  as compared to $11,000 for the  three  months
ended  November 30, 2004.  Total other income for the nine months
ended  November 30, 2005 was $33,000 as compared to  $32,000  for
the  nine months ended November 30, 2004.  During the nine months
ended  November 30, 2005, the Company realized rental  income  of
$21,000  as  compared  to $27,000 for the first  nine  months  of
fiscal 2005.  Effective November 1, 2002 and through August 2005,
the  Company  subleased approximately 2,500 square  feet  of  its
office  space  to a non-related party to operate  an  optics  and
security   inks  laboratory  at  an  annual  rental  of  $36,000.
Commencing  as  of  September 2005, new  arrangements  have  been
agreed upon for such space with a different non-related party  to
operate  a  laboratory  at  an annual  rental  of  $18,000.   The
Company's  interest  income increased to  $4,000  for  the  three
months  ended November 30, 2005 from $2,000 for the three  months
ended November 30, 2004.  For the nine months ended November  30,
2005,  interest income increased to $12,000 from $5,000  for  the
nine months ended November 30, 2004.

Net Income

     During the three months ended November 30, 2005, the Company
reported  income before taxes of

<PAGE>

$394,000 as compared  to  income
before taxes of $212,000 for the three months ended November  30,
2004.   During  the  nine  months ended November  30,  2005,  the
Company  reported income before taxes of $807,000 as compared  to
income  before  taxes  of  $700,000 for  the  nine  months  ended
November  30,  2004.  Income taxes were $145,000  for  the  three
months ended November 30, 2005 compared to $103,000 for the three
months  ended  November 30, 2004, and income taxes were  $301,000
for the nine months ended November 30, 2005, compared to $288,000
for  the  nine  months ended November 30, 2004.   The  change  in
income  taxes  was generally attributed to ordinary changes  from
period  to period in sales and expenses.  Net income after  taxes
was  $249,000  or  $0.02  per share for the  three  months  ended
November  30,  2005  as  compared to net income  after  taxes  of
$109,000  or $0.01 per share for the three months ended  November
30,  2004.   For  the nine months ended November  30,  2005,  net
income after taxes was $506,000 or $0.04 per share as compared to
net  income  after taxes of $412,000 or $0.03 per share  for  the
nine months ended November 30, 2004.

      Net income in the future will be dependent upon our ability
to increase revenues faster than we increase our selling, general
and  administrative  expenses, research and development  expenses
and  other expenses Although there were modest increases in sales
in the entire 2005 fiscal year compared to the entire 2004 fiscal
year, we have attained a $625,000 increase in sales for the  nine
months  ended November 30, 2005 compared to the prior  year.   We
also  did  incur in absolute dollars greater cost  of  sales  and
selling,  general and administrative expenses for the first  nine
months  of fiscal 2006 compared to the comparable period of  last
year.  Certain  of these expenses are due to costs  and  expenses
related  to  a greater emphasis being placed on marketing,  sales
and technical service.  This meant hiring new staff, consultants,
continuing efforts to upgrade our facility and developing  a  new
web site.  We are encouraged with the increases in sales achieved
in  the first nine months of fiscal 2006, especially in our  less
traditional product areas.

Operations Outlook

      We  are currently going through a period of reassessing our
direction  in order to increase value for our shareholders.   Our
business,  though reasonably healthy, has not recently  grown  to
the  degree management anticipated.  For example, the sales level
of $2,880,000 reached during fiscal 2005 was an all time high for
the  Company.  Yet, this was not significantly more than in  2004
($2,734,000), 2003 ($2,690,000) or 2002 ($2,550,000). The plateau
of  sales over the last four years was in contrast to the greater
sales  growth the Company experienced prior to 2002 and beginning
in  1991.  Based upon these observations, we tried to learn  what
could  be  done to stimulate growth and recapture the promise  of
our  early years. Our first task was to draw up a business  plan.
We  believe this highlighted our one major weakness and that  was
in  sales  and marketing.  For years we felt it to be unnecessary
to go out and reach our customers.  We believed that our web site
was  sufficiently explicit to attract anyone interested  in  near
infrared light management to come to us because we were the "only
game in town".  We now realize that the customer has alternatives
which  do  not  include the use of Epolin dyes.  We  believe  the
business   plan   made   clear  the   necessity   of   hiring   a
Sales/Marketing executive (which was accomplished with the hiring
of  Greg Amato) along with back up technical service help  (which
has also been accomplished).  In order to cover the cost of these
additional  personnel  and place a greater  emphasis  on  company
growth,  we  suspended in fiscal 2005 the cash dividends  program
which  we  had been in place during fiscal 2002, 2003  and  2004.
We  believed  that it was in the long term best interest  of  the
shareholders  for  us  to  reinvest profits  for  future  growth.
However,  as  a result of our current cash position, we  declared
and  paid  a $0.02 cash dividend in August 2005.  Although  there
can  be  no assurance, we currently anticipate declaring  another
dividend in the early part of the new upcoming fiscal year  which
will begin March 1, 2006.

      Management  has  recognized that the Company's  traditional
markets   -   serving   welding  and  eye   protection   plastics
manufacturers - have gone through certain changes over  the  last
few  years.   Certain  customers have consolidated  and/or  moved
manufacturing  operations to low-cost countries, usually  in  the
Far East.  In some of these countries, eye protection may not  be
as  highly valued by the citizenry.  Management expects that this
market  will remain important as a continuing source of  revenue.
The  Company also now offers fully formulated dye-resin  packages
to  customers  for  fabrication of finished  parts  by  injection
molding.

<PAGE>

This  has  allowed the Company to  maintain  a  strong
position  in  this market.   Greater emphasis has  recently  been
placed on sales, marketing and technical support in order to grow
the  Company's business.  The new products that are now the  firm
underpinnings for future growth are based upon security inks, new
visible  and  infrared dyes and the forward  integration  of  the
Company's  dyes  into formulated pellets.  For  the  nine  months
ended  November  30,  2005,  sales in  these  new  product  areas
increased  approximately $496,000 from the comparable  period  of
the  prior  year.   Sales in these new product areas  represented
approximately 34% of all Company sales for the nine months  ended
November 30, 2005 compared to the nine months ended November  30,
2004  for  which  sales  in these new product  areas  represented
approximately 21% of all Company sales.

      Another factor that was considered in the business plan was
management  succession.  Murray S. Cohen, the Company's  Chairman
of  the  Board and Chief Executive Officer, previously  announced
his  intention  to  step down as Chief Executive  Officer,  while
continuing to remain as Chairman of the Board and Chief Scientist
for the Company.  As of January 10, 2006, Dr. Cohen did step down
as  CEO, and Greg Amato, who has been our Vice President of Sales
and  Marketing, was appointed to fill this position.   Mr.  Amato
has been employed by the Company since November 2004 and had been
Vice President of Sales and Marketing since January 2005.

Liquidity and Capital Resources

      The  Company's  primary source of funds is cash  flow  from
operations in the normal course of selling products.  On November
30,  2005,  the  Company had working capital (consisting  current
assets  less current liabilities) of $2,506,000, a debt to equity
ratio  of  0.164  to 1, and stockholders' equity  of  $3,368,000,
compared to working capital of $2,276,000, a debt to equity ratio
of 0.159 to 1, and stockholders' equity of $3,034,000 on November
30,  2004.   On November 30, 2005, the Company had $1,301,000  in
cash  and cash equivalents, total assets of $3,921,000 and  total
liabilities of $553,000, compared to $1,250,000 in cash and  cash
equivalents, total assets of $3,517,000 and total liabilities  of
$484,000 on November 30, 2004.

      Net  cash  provided by operating activities  for  the  nine
months  ended November 30, 2005 was $485,000 compared to $789,000
for  the  nine months ended November 30, 2004, which  change  was
primarily  due to an increase in accounts receivable.   Net  cash
used  by  investing activities for the nine months ended November
30,  2005  was $180,000 compared to $90,000 for the  nine  months
ended  November  30, 2004 which change was primarily  due  to  an
increase  in  equipment  purchases.  For the  nine  months  ended
November  30,  2005,  net cash used by financing  activities  was
$236,000 compared to net cash provided by financing activities of
$3,000  for the nine months ended November 30, 2004.  Such change
was  due to the payment of the dividend in the second quarter  of
fiscal   2006  in  which  $236,000  in  cash  was  paid  to   the
shareholders.   There  was not a comparable  item  for  the  nine
months ended November 30, 2004.

      The  Company anticipates, based on currently proposed plans
and assumptions relating to its operations, that its 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.  The Company's contemplated cash requirements for  fiscal
2007 and beyond will depend primarily upon level of sales of  its
products,  inventory  levels,  product  development,  sales   and
marketing   expenditures   and   capital   expenditures.    While
Management believes the Company has remained strong in  the  sale
of dyes in its traditional markets of welding and eye protection,
such  sales  did not increase in volume in the past few  complete
fiscal  years.   As a result, we have begun to  place  a  greater
emphasis  on sales, marketing and technical support in  order  to
grow our dye business and our newer business in security inks and
coatings which we expect to contribute meaningful growth  to  the
Company.

      Inflation  has  not  significantly impacted  the  Company's
operations.

<PAGE>


Significant Accounting Policies

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

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

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

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

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

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

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

<PAGE>

result, we will adopt SFAS 123R on January 1, 2006.

Other Information

     In  August  2001,  the  Board of Directors  of  the  Company
authorized a 500,000 share stock repurchase program.  Pursuant to
the  repurchase program, the Company may purchase up  to  500,000
shares  of  its common stock in the open market or  in  privately
negotiated  transactions  from time  to  time,  based  on  market
prices.  The Company indicated that the timing of the buyback  of
the  Company's  shares will be dictated by overall financial  and
market  conditions  and  other  corporate  considerations.    The
repurchase  program  may  be suspended  without  further  notice.
During the nine months ended November 30, 2005, no repurchases of
shares  were made by the Company.  During the fiscal  year  ended
February  28,  2005,  a  total of 50,000 were  repurchased  at  a
cumulative  cost  of  $29,750.   During  the  fiscal  year  ended
February 29, 2004, a total of 184,000 shares were repurchased  at
a  cumulative  cost  of $103,405.  During the fiscal  year  ended
February 28, 2003, a total of 32,500 shares were repurchased at a
cumulative  cost  of $18,624 while during the fiscal  year  ended
February 28, 2002, a total of 30,000 shares were repurchased at a
cumulative cost of $14,837.

      In  July 2005, Herve A. Meillat, age 49,  was appointed  by
the  Board  of  Directors of the Company to serve on  the  Board.
From  1986  through 2004, Mr. Meillat was with  the  Bacou-Dalloz
Group   ("Bacou-Dalloz"),  a  world   leader   in   the   design,
manufacturing and sales of personal protection equipment.   While
with  Bacou-Dalloz, he was Senior Vice President of its  eye  and
face  business  unit from 2001 to 2004, the President  of  Dalloz
Safety  Inc.  from  1996 to 2001 and Chief Operating  Officer  of
Christian Dalloz in France from 1989 to 1995.

     On January 10, 2006, Murray S. Cohen stepped down as CEO and
Greg Amato was elected as Chief Executive Officer of the Company,
effective  immediately.  Mr. Amato, age 49, has been employed  by
the  Company  since November 2004 and had been Vice President  of
Sales  and  Marketing since January 2005.  Dr. Cohen will  remain
Chairman of the Board and Chief Scientist,

      As  mentioned  above,  the Company did  not  pay  any  cash
dividends during the fiscal year ended February 28, 2005 but  did
declare  and  pay a $0.02 cash dividend in August  2005.   During
fiscal 2004, the Company paid two cash dividends, the first being
$.02  per  share  in August 2003 and the second  being  $.02  per
shares  in February 2004.  During the fiscal year ended  February
28,  2003,  the Company also paid two cash dividends,  the  first
being  $.04 per share in July 2002 and the second being $.03  per
share in January 2003.  Prior thereto, and during the fiscal year
ended  February  28,  2002,  the  Company  also  paid  two   cash
dividends,  the  first being $.03 per share in June  2001  (which
represented the first time that a cash dividend was paid  by  the
Company)  and  the second being $.04 per share in February  2002.
As  mentioned  above,  although there can  be  no  assurance,  we
currently anticipate declaring another dividend in the early part
of the new upcoming fiscal year which will begin March 1, 2006.

Off-Balance Sheet Arrangements

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


Item 3.   Controls and Procedures.

     The  Company's  Principal Executive  Officer  and  Principal
Financial Officer have reviewed the Company's disclosure controls
and  procedures  as  of  the end of the period  covered  by  this
report.   Based upon this review, such officers believe that  the
Company's  disclosure controls and procedures  are  effective  in
timely  alerting  them  to material information  required  to  be
included in this report.  There have been no significant  changes
in internal control over financial reporting that occurred during
the  fiscal  quarter covered by this report

<PAGE>

that have  materially
affected,  or  are  reasonably likely to materially  affect,  the
Company's internal control over financial reporting.



                   PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

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


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

      In  June 2005, the Company granted options to each  of  its
four directors to acquire up to 50,000 shares of Common Stock  at
an  exercise  price of $0.54 (the market price of  the  Company's
Common  Stock on the date of grant).   Such options,  which  were
granted under the Company's 1998 Stock Option Plan, will  not  be
exercisable prior to the first anniversary of the grant date, but
thereafter  will become exercisable on a cumulative basis  as  to
50%  of  the  underlying shares on each of the first  and  second
anniversaries of the grant date.

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


Item 3.  Defaults Upon Senior Securities.

     None.


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

     None.


Item 5.  Other Information.

          None.


Item 6.  Exhibits.

          31.1   Certification  of  Principal  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

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


                               EPOLIN, INC.
                               (Registrant)



Dated:  January 11, 2006       By:/s/ Murray S. Cohen
                               Murray S. Cohen,
                               Chairman of the Board
                               (Principal Executive Officer)


Dated:  January 11, 2006       By:/s/ James Ivchenko
                               James Ivchenko,
                               President (Principal Financial
                               Officer)









                           EPOLIN, INC. AND SUBSIDIARY

                              FINANCIAL STATEMENTS

                  NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
<PAGE>

                                    CONTENTS





                                                                          Page
                                                                          ----

Accountant's Review Report                                                  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 - 22
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




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

     We have reviewed the accompanying Consolidated Balance Sheets of Epolin
Inc. and Subsidiary as of November 30, 2005 and 2004 and the related
Consolidated Statements of Income, Stockholders' Equity and Cash Flows for the
nine-month periods then ended. These interim 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
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 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 financial statements for them to be
in conformity with U.S. generally accepted accounting principles.








/s/ WEISMANN ASSOCIATES LLC
---------------------------
Weismann Associates LLC
Livingston, NJ 07039


January 3, 2006

                                       1
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                               November 30,
                                                         -----------------------
Current assets:                                            2005          2004
                                                         ----------   ----------
  Cash and cash equivalents                              $1,301,174    1,250,450
  Accounts receivable                                       661,612      387,587
  Inventories                                               727,593      790,666
  Prepaid expenses                                           55,324       44,206
  Prepaid taxes                                               1,190          270
  Deferred tax assets-current portion                         5,891        4,128
                                                         ----------   ----------

      Total current assets                                2,752,784    2,477,307
                                                         ----------   ----------

Plant, property and equipment - at cost:
  Land                                                       81,000       81,000
  Building and improvements                                 662,288      549,201
  Laboratory equipment                                      243,958      193,335
  Office equipment                                          108,847       83,647
  Leasehold improvements                                    449,190      449,190
                                                         ----------   ----------

      Total                                               1,545,283    1,356,373

  Less:  Accumulated depreciation and amortization          781,467      741,122
                                                         ----------   ----------

      Net plant, property and equipment                     763,816      615,251
                                                         ----------   ----------

Other assets:
  Deferred tax assets-non current portion                   172,283      218,451
  Cash value - life insurance policy                        232,492      206,170
                                                         ----------   ----------

      Total other assets                                    404,775      424,621
                                                         ----------   ----------

      Total                                              $3,921,375    3,517,179
                                                         ==========   ==========

        The accompanying notes are an integral part of these statements.
                                        2
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                          November 30,
                                                                    -----------------------
                                                                       2005         2004
                                                                    ----------   ----------
<S>                                                                 <C>              <C>
Current liabilities:
  Accounts payable                                                  $    5,117       20,456
  Accrued expenses                                                     196,655      137,000
  Taxes payable:
    Payroll                                                              1,653        1,719
    Income                                                              43,631       42,390
                                                                    ----------   ----------

    Total current liabilities                                          247,056      201,565
                                                                    ----------   ----------


Other liabilities - Deferred compensation                              306,149      282,070
                                                                    ----------   ----------


       Total liabilities                                               553,205      483,635
                                                                    ----------   ----------

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;
    12,729,000 and 12,716,500 shares issued, 11,815,355 and
    11,852,855 shares outstanding at 2005 and 2004, respectively     2,340,183    2,337,058
    Paid-in capital                                                      6,486        6,486
    Retained earnings                                                1,343,433      982,182
                                                                    ----------   ----------

      Total                                                          3,690,102    3,325,726
  Less: Treasury stock-at cost                                         321,932      292,182
                                                                    ----------   ----------

    Total stockholders' equity                                       3,368,170    3,033,544
                                                                    ----------   ----------

    Total                                                           $3,921,375    3,517,179
                                                                    ==========   ==========
</TABLE>

        The accompanying notes are an integral part of these statements.
                                        3
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                  NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004


<TABLE>
<CAPTION>
                                                             2005           2004
                                                         ------------   ------------
<S>                                                      <C>               <C>
Sales                                                    $  2,632,077      2,006,984
                                                         ------------   ------------

Cost of sales and expenses:
  Cost of sales                                               959,948        706,225
  Selling, general and administrative                         898,485        632,922
                                                         ------------   ------------

      Total                                                 1,858,433      1,339,147
                                                         ------------   ------------

Operating income                                              773,644        667,837
                                                         ------------   ------------

Other income:
  Rental income                                                21,000         27,000
  Interest                                                     12,338          5,193
                                                         ------------   ------------

      Total other income                                       33,338         32,193
                                                         ------------   ------------

Income before taxes                                           806,982        700,030

Income taxes                                                  300,862        287,968
                                                         ------------   ------------

Net income                                               $    506,120        412,062
                                                         ============   ============

Per share data:
  Basic earnings per common share                        $       0.04           0.03
                                                         ============   ============

  Fully diluted earnings per common share                $       0.04           0.03
                                                         ============   ============

  Weighted average number of common shares outstanding     11,815,355     11,847,828
                                                         ============   ============
</TABLE>

        The accompanying notes are an integral part of these statements.
                                        4
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                  THREE MONTHS ENDED NOVEMBER 30, 2005 AND 2004


<TABLE>
<CAPTION>
                                                             2005           2004
                                                         ------------   ------------
<S>                                                      <C>                 <C>
Sales                                                    $    966,206        702,682
                                                         ------------   ------------

Cost of sales and expenses:
  Cost of sales                                               274,593        263,347
  Selling, general and administrative                         309,921        238,471
                                                         ------------   ------------

      Total                                                   584,514        501,818
                                                         ------------   ------------

Operating income                                              381,692        200,864
                                                         ------------   ------------

Other income:
  Rental income                                                 9,000          9,000
  Interest                                                      3,513          2,127
                                                         ------------   ------------

      Total other income                                       12,513         11,127
                                                         ------------   ------------

Income before taxes                                           394,205        211,991

Income taxes                                                  145,109        102,601
                                                         ------------   ------------

Net income                                               $    249,096        109,390
                                                         ============   ============

Per share data:
  Basic earnings per common share                        $       0.02           0.01
                                                         ============   ============

  Fully diluted earnings per common share                $       0.02           0.01
                                                         ============   ============

  Weighted average number of common shares outstanding     11,815,355     11,847,828
                                                         ============   ============
</TABLE>

        The accompanying notes are an integral part of these statements.
                                        5
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004


<TABLE>
<CAPTION>
                              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, 2004        12,704,000   $  2,333,933         6,486        570,120        863,645       (292,182)     2,618,357

Common stock issued for
  stock option                     12,500          3,125                                                                     3,125

Net income                             --             --            --        412,062             --             --        412,062
                             ------------   ------------  ------------   ------------   ------------   ------------   ------------

Balance - November 30, 2004    12,716,500   $  2,337,058         6,486        982,182        863,645       (292,182)     3,033,544
                             ============   ============  ============   ============   ============   ============   ============



Balance - March 1, 2005        12,729,000   $  2,340,183         6,486      1,073,620        913,645       (321,932)     3,098,357

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

Net income                             --             --            --        506,120             --             --        506,120
                             ------------   ------------  ------------   ------------   ------------   ------------   ------------

Balance - November 30, 2005    12,729,000   $  2,340,183         6,486      1,343,433        913,645       (321,932)     3,368,170
                             ============   ============  ============   ============   ============   ============   ============
</TABLE>

        The accompanying notes are an integral part of these statements.
                                        6
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004


<TABLE>
<CAPTION>
                                                                    2005            2004
                                                                ------------    ------------
<S>                                                             <C>                  <C>
Cash flows from operating activities:
  Net income                                                    $    506,120         412,062
  Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                    34,281          25,041
     Deferred tax expense                                             20,199          10,548
     Obligation under deferred compensation agreement                 18,059          18,059
  (Increase) decrease in:
     Accounts receivable                                            (108,601)        255,994
     Inventories                                                      22,823         (32,899)
     Prepaid expenses                                                 (5,450)         13,179
     Prepaid taxes                                                      (590)         70,380
  Increase (decrease) in:
     Accounts payable                                                  5,117          19,197
     Accrued expenses                                                (46,759)        (41,090)
     Taxes payable                                                    39,692          38,682
                                                                ------------    ------------

        Net cash provided by operating activities                    484,891         789,153
                                                                ------------    ------------

Cash flows from investing activities:
  Increase in cash value - life insurance policy                     (26,322)        (39,398)
  Payments for equipment                                            (153,753)        (50,360)
                                                                ------------    ------------

         Net cash used by investing activities                      (180,075)        (89,758)
                                                                ------------    ------------

Cash used from financing activities:
  Issuance of common stock                                                --           3,125
  Dividends paid                                                    (236,307)             --
                                                                ------------    ------------

      Net cash provided (used) by financing activities              (236,307)          3,125
                                                                ------------    ------------

Increase in cash                                                      68,509         702,520

Cash and cash equivalents:
  Beginning                                                        1,232,666         547,930
                                                                ------------    ------------

  Ending                                                        $  1,301,175       1,250,450
                                                                ============    ============

Supplemental information:
  Income taxes paid                                             $    229,800         226,800
                                                                ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.
                                        7

<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


Note A - Organization:

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

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

Note B - Summary of Significant Accounting Policies:

Basis of Presentation - The 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, 2005. 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 nine-month interim period ended November 30,
2005 are not necessarily indicative of the results of operations for the fiscal
year ending February 28, 2006.

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 44.5% of the Company's trade receivables
at November 30, 2005.

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
                           NOVEMBER 30, 2005 AND 2004


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

Principles of Consolidation - The accompanying Consolidated Financial Statements
include the accounts of the Company and Subsidiary. Intercompany transactions
and balances have been eliminated in consolidation. Condensed consolidating
financial statements for the nine months ended November 30, 2005 are:


                      CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>

                                                    Epolin
                                     Epolin         Holding      Eliminations    Consolidated
                                  ------------    ------------   ------------    ------------
<S>                               <C>                  <C>           <C>            <C>
Current assets                    $  2,531,247         221,537             --       2,752,784
Non-current assets                   1,390,128         635,200       (856,737)      1,168,591
                                  ------------    ------------   ------------    ------------
       Total                      $  3,921,375         856,737       (856,737)      3,921,375
                                  ============    ============   ============    ============

     Total liabilities                 553,205         153,686       (153,686)        553,205
                                  ------------    ------------   ------------    ------------

Stockholders' equity:
  Common stock                       2,340,183              --             --       2,340,183
  Additional paid-in capital             6,486              --             --           6,486
  Retained earnings                  1,343,433         703,051       (703,051)      1,343,433
  Treasury stock                      (321,932)             --             --        (321,932)
                                  ------------    ------------   ------------    ------------

     Total stockholders' equity      3,368,170         703,051       (703,051)      3,368,170
                                  ------------    ------------   ------------    ------------

       Total                      $  3,921,375         856,737       (856,737)      3,921,375
                                  ============    ============   ============    ============

<CAPTION>

                   CONDENSED CONSOLIDATING STATEMENT OF INCOME

                                                       Epolin
                                         Epolin        Holding      Eliminations    Consolidated
                                      ------------   ------------   ------------    ------------
<S>                                   <C>                  <C>           <C>           <C>
Sales                                 $  2,632,077             --             --       2,632,077
Other revenue                                   --         94,305        (73,305)         21,000
                                      ------------   ------------   ------------    ------------
    Total                                2,632,077         94,305        (73,305)      2,653,077
                                      ------------   ------------   ------------    ------------

Cost of sales                              959,948             --             --         959,948
Selling, general and administrative        952,921         18,869        (73,305)        898,485
                                      ------------   ------------   ------------    ------------

    Total                                1,912,869         18,869        (73,305)      1,858,433
                                      ------------   ------------   ------------    ------------

Operating income                           719,208         75,436             --         794,644

Other income - interest                     10,982          1,356             --          12,338
                                      ------------   ------------   ------------    ------------

Income before taxes                        730,190         76,792             --         806,982

Income taxes                               293,731          7,131             --         300,862
                                      ------------   ------------   ------------    ------------

Net income                            $    436,459         69,661             --         506,120
                                      ============   ============   ============    ============
</TABLE>

                                        9

<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


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

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

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

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

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

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

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

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

     Depreciation and amortization expense totaled $34,281 and $25,041 for the
nine months ended November 30, 2005 and 2004, 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
                           NOVEMBER 30, 2005 AND 2004


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 $17,562 through November 30,
2005, 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 $17,970 and $18,569 for
the nine months ended November 30, 2005 and 2004, respectively.

                                       11
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


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

Stock-based Compensation - The Company has 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, the Company will adopt SFAS 123R on January 1, 2006.

     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 nine months ended November 30, 2005 and 2004 was $.10 and $.11,
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:

Nine Months Ended November 30,                           2005            2004
                                                       --------        --------

  Weighted average expected life in years                   4               5
  Dividends per share                                    0.04            0.03
  Volatility                                             6.0%            6.0%
  Risk-free interest rate                                3.9%            4.1%

                                       12
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


Note B - Summary of Significant Accounting Policies (continued)

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

                                                          Nine Months Ended
                                                            November 30,
                                                     ---------------------------
                                                         2005           2004
                                                     ------------   ------------

Net earnings as reported                             $    506,120        412,062

Deduct total additional stock-based employee
compensation cost, net of tax that would
have been included in net earnings under
fair value method                                          28,550         34,050
                                                     ------------   ------------

Proforma net earnings                                $    477,570        378,012
                                                     ============   ============

Basic earnings per share:
  As reported                                        $       0.04           0.03
                                                     ============   ============
  Proforma                                           $       0.04           0.03
                                                     ============   ============

Average common shares outstanding                      11,815,355     11,847,828
                                                     ============   ============

Diluted earnings per share:
  As reported                                        $       0.04           0.03
                                                     ============   ============
  Proforma                                           $       0.04           0.03
                                                     ============   ============

Total diluted common shares outstanding                11,966,537     12,029,919
                                                     ============   ============


Note C - Inventories:
                                                 November 30,
                                           ------------------------
                                              2005          2004
                                           ----------    ----------
   Raw materials and supplies              $   49,477        53,550
   Work in process                            250,031       312,956
   Finished goods                             428,085       424,160
                                           ----------    ----------

       Total                               $  727,593       790,666
                                           ==========    ==========

                                       13
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


Note D - Income Taxes:

1.  Federal and State deferred tax assets include:

                                                           2005          2004
                                                        ----------    ----------
Temporary differences:
     Accelerated amortization                           $   46,530        80,226
     Deferred compensation                                 131,644       142,353
                                                        ----------    ----------
               Total                                       178,174       222,579

         Current portion                                     5,891         4,128
                                                        ----------    ----------

Non-current portion                                     $  172,283       218,451
                                                        ==========    ==========


2.  Income tax expense:
                                                           2005          2004
                                                        ----------    ----------
     Current:
         Federal                                        $  221,831       214,900
         State                                              58,832        62,520
                                                        ----------    ----------

              Total current                                280,663       277,420
                                                        ----------    ----------

     Deferred:
         Federal                                            15,971         8,432
         State                                               4,228         2,116
                                                        ----------    ----------

              Total deferred                                20,199        10,548
                                                        ----------    ----------

                  Total                                 $  300,862       287,968
                                                        ==========    ==========


Note E - Treasury Stock:

     Consists of 913,645 shares as of November 30, 2005 at a net cost of
$321,932 and 863,645 shares as of November 30, 2004 at a net cost of $292,182.

There were no treasury share purchases made by the Company during the nine
months ended November 30, 2005 and 2004, respectively.

                                       14
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


Note F - Economic Dependency:

     A material portion of the Company's business is dependent on certain
domestic customers, the loss of which could have a material effect on
operations. During the nine months ended November 30, 2005, approximately 41.9%
of sales were to four customers. Two of these customers, located in the Eastern
United States, accounted for 28.2% of sales. During the nine months ended
November 30, 2004, approximately 48.8% of sales were to three customers, two of
these customers, located in the Eastern United States, accounted for 42.9% of
sales.


Note G - Rental Income Under Sublease:

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


Note H - Employee Benefits:

Simplified Employee Pension Plan - Effective June 1, 1994, the Company provides
a SAR/SEP plan to its employees as a retirement and income tax reduction
facility. Full time employees are eligible to participate immediately. Employees
may make pre-tax and after-tax contributions subject to Internal Revenue Service
limitations. Company contributions range from three to five percent after
completion of one year of service. Employer contributions totaled $38,696 and
$30,072 for the nine months ended November 30, 2005 and 2004, respectively.

                                       15
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


Note H - Employee Benefits (continued):

Stock Option Plan - The Company previously adopted The 1986 Stock Option Plan.
As of April 1996, under the terms of the Plan, options may no longer be granted.
On December 1, 1995, options to acquire up to 490,000 shares of the Company's
common stock were granted. Options exercised for all prior years totaled
455,000. Options cancelled for all prior years totaled 35,000. There were no
outstanding options as of November 30, 2005.

     The Company adopted the 1998 Stock Option Plan on December 1, 1998. Under
the terms of the plan, the Company reserved 750,000 shares of common stock for
issuance pursuant to the exercise of options to be granted under the Plan, which
do not meet the requirements of Section 422 of the Code. On September 15, 2001,
the Board of Directors increased the reserve to 1,500,000. Options granted
expire five or ten years after the date granted and are subject to various
vesting periods as follows: (1) none exercisable prior to the first anniversary
of the date of grant, and (2) certain options will become exercisable as to 50%
of the shares underlying the option on each of the first and second
anniversaries of the date granted (3) certain options will become exercisable as
to 50% of the shares underlying the option on each of the second and fourth
anniversaries of the date granted. Options exercised through November 30, 2005
totaled 600,000. Options cancelled for all years totaled 120,000.

     A summary of the status of the Company's 1998 stock option plan as of
November 30, 2005, and the changes during the nine months ended November 30,
2005 is presented below:

                                                              Weighted-Average
Fixed Options:                                     Shares      Exercise Price
--------------                                    --------     --------------
Balance - March 1, 2004                            392,000       $    .29
     Granted                                            --             --
     Cancelled                                     (45,000)           .30
     Exercised                                     (25,000)           .25
                                                  --------

Balance - February 28, 2005                        322,000            .30
     Granted                                       200,000            .54
     Exercised                                          --             --
                                                  --------

Balance - November 30, 2005                        522,000       $    .39
                                                  ========


Exercisable at November 30, 2005                   180,000

                                       16
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004



Note H - Employee Benefits (continued):

Stock Option Plan - The following table summarizes information about fixed stock
options outstanding at November 30, 2005:

<TABLE>
<CAPTION>
                Outstanding Options                              Exercisable Options
---------------------------------------------------      ---------------------------------
                      Number       Weighted-average        Number
Range of            Outstanding       Remaining          Exercisable       Weighted-average
Exercise Price      at 11/30/05    Contractual Life      at 11/30/05        Exercise Price
--------------      -----------    ----------------      -----------        --------------
<S>                   <C>             <C>                  <C>                  <C>
    $.25              155,000         0.8 years            155,000              $ .25
     .30               25,000         2.0                   25,000                .30
     .35              142,000         8.2                       --                .30
     .54              200,000         4.6                       --                .54
</TABLE>

There are 258,000 options attributable to future grants.


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.


Note I - Segment Reporting:

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

                                       17
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


Note I - Segment Reporting (continued):

Sales by geographic area are as follows:

                                     Nine Months Ended November 30,
                                     ------------------------------
                                          2005           2004
                                      ------------   ------------

               United States          $  1,858,997      1,693,343
               Asia                        455,448        187,374
               Europe                      306,093        124,802
               Other nations                11,539          1,465
                                      ------------   ------------

                   Total              $  2,632,077      2,006,984
                                      ============   ============

Two customers, located in the Eastern United States, accounted for more than 10%
of revenues from continuing operations. One customer accounted for 16.9% of
sales of which 10.0% was near infrared dyes and 6.9% was security inks. The
other customer accounted for 11.3% of sales of near infrared dyes.

Long-lived assets include net property and equipment. The Company had long-lived
assets of $763,815 and $615,251 located in the United States at November 30,
2005 and 2004, respectively.


Note J - Accrued Expenses:

Accrued expenses consisted of the following as of November 30, 2005 and 2004,
respectively:

                                                2005         2004
                                             ----------   ----------
            Salaries and wages               $   11,807        7,511
            Employment agreement                171,086      120,419
            Professional fees                     5,900        5,000
            Property taxes                        7,862        4,070
                                             ==========   ==========

                Total accrued expenses       $  196,655      137,000
                                             ==========   ==========

                                       18
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


Note K - Earnings per Share:

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

<TABLE>
<CAPTION>
                                                Nine Months Ended             Three Months Ended
                                                   November 30,                  November 30,
                                           ---------------------------   ---------------------------
                                               2005           2004           2005           2004
                                           ------------   ------------   ------------   ------------
<S>                                        <C>              <C>          <C>              <C>
     Basic Earnings Per Common Share:

     Net income                            $    506,120        412,062   $    249,096        109,390

     Average common shares
       outstanding                           11,815,355     11,847,828     11,815,355     11,847,828
                                           ============   ============   ============   ============

     Basic earnings per
       common share                        $       0.04           0.03   $       0.02           0.01
                                           ============   ============   ============   ============

     Diluted Earnings Per Common Share:

     Net income                            $    506,120        412,062   $    249,096        109,390
                                           ============   ============   ============   ============

     Average common shares
       outstanding                           11,815,355     11,847,828     11,815,355     11,847,828

     Common shares issuable with respect
     to options issued to employees
     with a dilutive effect                     147,545        182,091        147,545        182,091
                                           ------------   ------------   ------------   ------------

     Total diluted common shares
       outstanding                           11,966,537     12,029,919     11,966,537     12,029,919
                                           ============   ============   ============   ============

     Diluted earnings per
       common share                        $       0.04           0.03   $       0.02           0.01
                                           ============   ============   ============   ============
</TABLE>

                                       19
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


Note L - Commitments and Contingencies:

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

Lease Obligations:

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

     Rental expense charged to operations, eliminated in consolidation, amounted
to $73,305 for the nine months ended November 30, 2005 and 2004, respectively.

Future minimum payments for the current option period:

        Fiscal years ending February:
        -----------------------------
                     2006                               $24,435
                     2007                                97,740
                     2008                                97,740
                     2009                                65,160


Deferred Compensation - On December 29, 1995, the Company entered into a
deferred compensation agreement with an officer 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. Annual payments to the officer of $32,000 for ten consecutive years
shall commence the first day of the month following his 65th birthday or
termination.

     In connection with this agreement, deferred compensation of $18,060 was
charged to selling, general and administrative expenses for the nine months
ended November 30, 2005 and 2004, respectively.

     On January 1, 1996, the Company entered into a deferred compensation
agreement with another officer 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.

                                       20
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


Note L - Commitments and Contingencies (continued):

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

     Murray S. Cohen, PhD, Chairman of the Board and Chief Executive Officer -
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 2.00% on gross
annual sales of no more than $3,000,000, effective with the year ended February
28, 2001, increasing by 0.25% a year during the term of the agreement.

     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, 2001, increasing by 0.25% a year
during the term of the agreement.

     Accrued compensation included in selling, general and administrative as of
November 30, 2005 and 2004 was $171,085 and $120,419, respectively.

Note M - 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 $325,744 and
$302,307 were included in cost of sales for the nine months ended November 30,
2005 and 2004, respectively. Expenditures in 2006 are projected to remain at
approximately the same level as in 2005.

                                       21
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2005 AND 2004


NOTE N - STOCK DIVIDENDS:

In June 2003, the Company's Board of Directors declared a cash dividend of two
cents per share on all common shares outstanding. The dividend was paid on
August 3, 2005 to shareholders of record July 27, 2005.

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.

                                       22