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 August 31, 2003

     [ ] 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   [      ]

State  the  number of shares outstanding of each of  the  Issuer's
classes of common equity, as of the latest practicable date:

    Common, no par value per share: 11,825,355 outstanding
   as of August 31, 2003 (excluding 816,145 treasury shares)

<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.

Introduction

     Epolin, Inc. (the "Company") is a manufacturing and research
and  development company which was incorporated in the  State  of
New  Jersey  in May 1984.  The Company is principally engaged  in
the  commercial development, production and sale of near infrared
dyes  to  the optical industry for laser protection, for welding,
for security inks and other dye applications as well as specialty
chemicals.

     This report contains certain forward-looking statements  and
information  that  reflect the Company's expectations  about  its
future  operating  results, performance  and  opportunities  that
involve  substantial risks and uncertainties.  When used in  this
document, the words "anticipate",  "believe", "estimate", "plan",
"intend" and "expect" and similar expressions, as they relate  to
Epolin,  Inc.  or  its management are intended to  identify  such
forward-looking statements.  These forward-looking statements are
based  on information currently available to the Company and  are
subject  to  a number of risks, uncertainties, and other  factors
that  could  cause  the  Company's actual  results,  performance,
prospects  and  opportunities  to differ  materially  from  those
expressed  in,  or implied by, these forward-looking  statements.
Certain of these risks and uncertainties are discussed under  the
caption   "Forward-Looking  Statements"  in  Part   I,   Item   1
"Description of Business" of the Company's Annual Report on  Form
10-KSB  for the year ended February 28, 2003.  Except as required
by the Federal Securities Law, the Company does not undertake any
obligation  to  release publicly any revisions  to  any  forward-
looking  statements to reflect events or circumstances after  the
date of this report.

Results of Operations

      During  the  quarter  ended August 31,  2003,  the  Company
reported sales of approximately $681,000 as compared to sales  of
approximately $736,000 during the quarter ended August 31,  2002,
a  decrease  of  approximately $55,000 or 7.5%.  During  the  six
months  ended  August  31, 2003, the Company  reported  sales  of
approximately  $1,367,000 as compared to sales  of  approximately
$1,435,000  during  the  six months  ended  August  31,  2002,  a
decrease of $68,000 or 4.7%.

      Operating income for the three months ended August 31, 2003
increased  to  approximately $279,000 as  compared  to  operating
income  of  approximately $256,000 for  the  three  months  ended
August 31, 2002, an increase of approximately $23,000.  Operating
income  for  the  six months ended August 31, 2003  decreased  to
approximately  $545,000  as  compared  to  operating  income   of
approximately $581,000 for the six months ended August 31,  2002,
a  decrease  of approximately $36,000.  This change for  the  six
months ended August 31, 2003 compared to the comparable period of
the  prior  year resulted primarily from an increase in  selling,
general and administrative expenses combined with a reduction  in
revenues from sales, partially offset by a reduction in  cost  of
sales.

<PAGE>

      Cost of sales for the three and six months ended August 31,
2003  was approximately $205,000 and $433,000, respectively,   as
compared  to cost of sales during the three and six months  ended
August 31, 2002 of approximately $263,000 and $497,000.

      During the three and six months ended August 31, 2003,  the
Company's  selling,  general  and  administrative  expenses  were
approximately $197,000 and $390,000, respectively, as compared to
selling,  general  and administrative expenses  of  approximately
$217,000  and $357,000 for the three and six months ended  August
31, 2002.

      During the three and six months ended August 31, 2003,  the
Company  realized approximately $1,000 and $4,000,  respectively,
in  interest  income,  as  compared to approximately  $7,000  and
$13,000  in  interest income for the comparable  periods  of  the
prior fiscal year.

      During  the  quarter  ended August 31,  2003,  the  Company
reported  income  before  taxes  of  approximately  $280,000   as
compared to income before taxes of approximately $263,000 for the
three  months  ended August 31, 2002.  For the six  months  ended
August  31,  2003, the Company reported income  before  taxes  of
approximately  $568,000  as compared to income  before  taxes  of
approximately $600,000 for the six months ended August 31, 2002.

      Net  income  after taxes and an extraordinary  item  for  a
litigation  settlement (see below) was approximately  $73,000  or
$.01  per  share for the three months ended August  31,  2003  as
compared to income after taxes of approximately $152,000 or  $.01
per  share for the three months ended August 31, 2002.   For  the
six  months  ended August 31, 2003, net income  after  taxes  and
litigation  settlement was approximately  $243,000  or  $.02  per
share  as  compared  to net income after taxes  of  approximately
$350,000 or $.03 per share for the comparable period of the prior
fiscal year.  This reduction in net income for the three and  six
months   ended  August  31,  2003  is  primarily   due   to   the
extraordinary  item recognized in the quarter  ended  August  31,
2003  in connection with the settlement reached in the litigation
commenced  in  December 2000 by two individuals  (each  a  former
director  and  former employee of the Company).   The  settlement
included  a lump sum payment to the plaintiffs in such action  in
the  amount  of $312,000.  In addition, the Company  bought  back
126,500  shares owned by one of the plaintiffs for the  aggregate
amount  of $69,575 ($0.55 per share).  Subsequent to the  quarter
ended  August 31, 2003, the Company was reimbursed a  portion  of
the  settlement proceeds from its insurance company in the amount
of  $118,560.   The lump sum payment resulted in an extraordinary
loss of $110,261, net of income tax benefit of $83,179.

Liquidity and Capital Resources

      On  August  31,  2003, the Company had working  capital  of
approximately   $1,808,000,  an   equity   to   debt   ratio   of
approximately 7.0 to 1, and stockholders' equity of approximately
$2,522,000.   On  August 31, 2003, the Company had  approximately
$368,000   in  cash  and  cash  equivalents,  total   assets   of
approximately  $2,884,000 and total liabilities of  approximately
$362,000.

     The Company believes that its available cash, cash flow from
operations and projected revenues will be sufficient to fund  the
Companys operations for more than the next 12 months.

      The  Company anticipates that it will incur in fiscal  2004
approximately $55,000 in renovation costs to improve the exterior
of its facility in Newark, New Jersey.  Other than the foregoing,
the  Company  does  not anticipate making any  other  significant
capital  expenditures in fiscal 2004 as it believes  its  present
machinery  and  equipment,  in  conjunction  with  the   interior
renovations previously done to its facility in Newark, New Jersey
in fiscal 2003, will be sufficient to meet its near term needs.

      Inflation has not significantly impacted the Company's
operations.

<PAGE>

       Management   believes  that  future   business   look
promising.  The Company is confident that it can continue to take
advantage of its market position in terms of availability of dyes
and  their  performance.  Management believes that the  Company's
newest  products, such as security inks, came along just  as  the
market  recognized  the  need  for  stronger  security  measures.
Credit  cards,  proprietary  packaging,  official  documents  and
personnel badges can use the near infrared inks the Company makes
because  they  provide  a convenient and rapid  addition  to  the
security  features already in place.  No assurance can be  given,
however,  that this trend will continue or that the Company  will
be able to successfully penetrate this market.

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 fiscal year ended February 28, 2003, a total of 32,500
shares  were repurchased at a cumulative cost of $18,624.  During
the  six months ended August 31, 2003, a total of 135,500  shares
were  repurchased at a cumulative cost of $75,755 which  included
125,500  shares  repurchased from one of the  plaintiffs  in  the
settlement of the aforesaid litigation.   During the fiscal  year
ended   February  28,  2002,  a  total  of  30,000  shares   were
repurchased  at a cumulative cost of $14,837.  Under  a  previous
stock   repurchase  program  authorized  in  March  1998,   which
permitted  the  Company  to repurchase  up  to  $150,000  of  the
Company's  outstanding shares of common stock,  the  Company  had
repurchased  from April 1998 through December  2000  a  total  of
574,700 shares at a cumulative cost of $148,641.

     In August 2003, the Company paid a $.02 cash dividend to its
stockholders.   During the fiscal year ended February  28,  2003,
the  Company  paid two cash dividends, the first being  $.04  per
share in July 2002 and the second being $.03 per share in January
2003.   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.


Item 3.   Controls and Procedures.

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

<PAGE>


                   PART II - OTHER INFORMATION


Item 1.  Legal Proceedings.

      In  December 2000, two individuals (each a former  director
and  former  employee  of  the Company) instituted  suit  in  the
Superior Court of New Jersey, Bergen County-Law Division, against
the  Company  and  the  other directors of the  Company  alleging
claims  pursuant to their past employment as well as a derivative
claim, as minority stockholders.  Such claims included breach  of
contract, civil rights, age discrimination, wrongful termination,
infliction  of  emotional distress and a  shareholder  derivative
claim.   In  June  2003, the Company executed an agreement  which
settled  the  lawsuit  and the action has  been  dismissed.   The
settlement terms included a lump sum payment to the plaintiffs in
the  amount of $312,000.  In addition, the Company agreed to  buy
back  126,500  shares  owned by one of  the  plaintiffs  for  the
aggregate  amount  of  $69,575  ($0.55  per  share).   All   such
settlement  payments have been made, and the 126,500 shares  have
been  bought  back.  Subsequent to the quarter ended  August  31,
2003,  the  Company  was reimbursed a portion of  the  settlement
payments  from its insurance company in the amount  of  $118,560.
Although the Company has denied and continues to deny all  claims
asserted  in  the lawsuit, Management determined, in  conjunction
with advice of counsel, that it was in the best interests of  the
Company and its stockholders to settle the action on the terms as
agreed   taking  into  account  various  factors  including   the
uncertainty  and risks inherent in any litigation.   The  Company
does  not  believe that the terms of the settlement  will  likely
have  a  material  adverse effect on its results  of  operations,
financial position or cash flows.

     Other  than  the  foregoing, there  are  no  other  material
pending legal proceedings to which the Company is a party  or  to
which any of its property is subject.


Item 2.  Changes in Securities.

     None.


Item 3.  Defaults Upon Senior Securities.

     None.


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

        On    August   12,   2003,   an   annual   meeting     of
stockholders  was held to elect six Directors  to  serve  as  the
Board of Directors of the Company until the next Annual   Meeting
of  Stockholders  and   until   their successors shall be elected
and  shall  qualify.   At such meeting, Murray  S.  Cohen,  James
Ivchenko,   Claire Bluestein,  Morris  Dunkel, James R.   Torpey,
Jr.  and  Peter  Kenny,  each an incumbent  director,  were  duly
elected  as directors of the Company. Each of Murray   S.  Cohen,
James  Ivchenko,  Claire  Bluestein and Morris  Dunkel   received
10,825,945 affirmative votes  and  41,000 negative votes,   James
R.  Torpey, Jr. received 10,864,145 affirmative votes  and  2,800
negative votes and  Peter  Kenny received 10,784,145  affirmative
votes  and 82,800 negative votes.


Item 5.  Other Information.

          None.

<PAGE>


Item 6.  Exhibits and Reports on Form 8-K.

          (a)  Exhibits.

        31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of
the Exchange Act)

        31.2 Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and
15d-14 of the Exchange Act)

        32.1 Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

          (b)  Reports on Form 8-K.

          Listed  below are reports on Form 8-K filed during  the
          fiscal quarter ended August 31, 2003.

             None.

<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: October 8, 2003      By: /s/ Murray S. Cohen
                                Murray S. Cohen,
                                Chairman of the Board
                                and Chief Executive Officer



Dated: October 8, 2003      By: /s/ James Ivchenko
                                James Ivchenko,
                                President (Principal Financial
                                Officer)

<PAGE>

<PAGE>

                   EPOLIN, INC. AND SUBSIDIARY

                      FINANCIAL STATEMENTS

                SIX MONTHS ENDED AUGUST 31, 2003
                       AND AUGUST 31, 2002

<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 - 8

Notes to Consolidated Financial Statements              9 - 17


<PAGE>


                   ACCOUNTANT'S REVIEW REPORT




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

  We  have reviewed the accompanying Consolidated Balance  Sheets
of  Epolin Inc. and Subsidiary as of August 31, 2003 and 2002 and
the  related  Consolidated  Statements of  Income,  Stockholders'
Equity and Cash Flows for the six months then ended in accordance
with  Statements on Standards for Accounting and Review  Services
issued by the American Institute of Certified Public Accountants.
All  information  included in these financial statements  is  the
representation of the management of Epolin, Inc. and Subsidiary.

  A   review   consists  principally  of  inquiries  of   Company
personnel  and  analytical procedures applied to financial  data.
It  is  substantially less in scope than an audit  in  accordance
with  generally  accepted auditing standards,  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 August  31,
2003  financial statements in order for them to be in  conformity
with generally accepted accounting principles.







                           IWA FINANCIAL CONSULTING LLC

September 18, 2003




<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS


                                                                August 31,
                                                         -----------------------
                                                            2003         2002
                                                         ----------   ----------
Current assets:
  Cash and cash equivalents                              $  367,782    1,221,649
  Accounts receivable                                       831,410      363,365
  Inventories                                               687,018      603,116
  Prepaid expenses                                           30,523       16,284
  Deferred tax assets-current portion                         1,376        1,758
                                                         ----------   ----------

     Total current assets                                 1,918,109    2,206,172
                                                         ----------   ----------

Plant, property and equipment - at cost:
  Land                                                       81,000       81,000
  Building                                                  369,000      369,000
  Machinery and equipment                                   243,111      220,567
  Furniture and fixtures                                     12,223       12,223
  Leasehold improvements                                    591,543      534,287
                                                         ----------   ----------

     Total                                                1,296,877    1,217,077

  Less: Accumulated depreciation and amortization           702,291      674,069
                                                         ----------   ----------

     Net plant, property and equipment                      594,586      543,008
                                                         ----------   ----------

Other assets:
  Deferred tax assets-non current portion                   226,816      286,685
  Cash value - life insurance policy                        144,413      122,700
                                                         ----------   ----------

     Total other assets                                     371,229      409,385
                                                         ----------   ----------

     Total                                               $2,883,924    3,158,565
                                                         ==========   ==========



        The accompanying notes are an integral part of these statements.


<PAGE>

<TABLE>
<CAPTION>
                                EPOLIN, INC. AND SUBSIDIARY

                          CONSOLIDATED BALANCE SHEETS (CONTINUED)

                           LIABILITIES AND STOCKHOLDERS' EQUITY


                                                                           August 31,
                                                                    -----------------------
                                                                       2003         2002
                                                                    ----------   ----------
<S>                                                                 <C>               <C>
Current liabilities:
  Accounts payable                                                  $    8,099        5,769
  Accrued expenses                                                      98,664       91,767
  Taxes payable:
    Payroll                                                              1,737        6,334
    Income                                                               1,819       11,080
                                                                    ----------   ----------

    Total current liabilities                                          110,319      114,950
                                                                    ----------   ----------

Other liabilities:
  Deferred compensation                                                251,971      335,519
  Loans payable-officers                                                    --           --
                                                                    ----------   ----------

    Total other liabilities                                            251,971      335,519
                                                                    ----------   ----------

      Total liabilities                                                362,290      450,469
                                                                    ----------   ----------

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;
    12,641,500 and 12,529,000 shares issued and outstanding
    at 2003 and 2002, respectively                                   2,320,808    2,295,183
  Paid-in capital                                                        6,486        6,486
  Retained earnings                                                    458,872      576,580
                                                                    ----------   ----------

      Total                                                          2,786,166    2,878,249
  Less: Treasury stock-at cost                                         264,532      170,153
                                                                    ----------   ----------

    Total stockholders' equity                                       2,521,634    2,708,096
                                                                    ----------   ----------

    Total                                                           $2,883,924    3,158,565
                                                                    ==========   ==========
</TABLE>


              The accompanying notes are an integral part of these statements.


<PAGE>

<TABLE>
<CAPTION>
                             EPOLIN, INC. AND SUBSIDIARY

                          CONSOLIDATED STATEMENTS OF INCOME
                      SIX MONTHS ENDED AUGUST 31, 2003 AND 2002


                                                             2003           2002
                                                         ------------   ------------

<S>                                                      <C>               <C>
Sales                                                    $  1,367,485      1,434,764
                                                         ------------   ------------

Cost of sales and expenses:
  Cost of sales                                               432,590        497,349
  Selling, general and administrative                         389,525        356,582
                                                         ------------   ------------

    Total                                                     822,115        853,931
                                                         ------------   ------------

Operating income                                              545,370        580,833
                                                         ------------   ------------

Other income:
  Rental income                                                18,000             --
  Interest                                                      4,277         12,771
  Gain on sale of assets                                           --          6,200
                                                         ------------   ------------
    Total other income                                         22,277         18,971
                                                         ------------   ------------

Income before taxes                                           567,647        599,804

Income taxes                                                  214,107        249,913
                                                         ------------   ------------

Income before extraordinary item                              353,540        349,891

Extraordinary item - litigation settlement (net of
income tax benefit of $83,179)                                110,261             --
                                                         ------------   ------------

Net income                                               $    243,279        349,891
                                                         ============   ============

Per share data:
  Basic earnings per common share                                0.02           0.03
                                                         ============   ============

  Fully diluted earnings per common share                        0.02           0.03
                                                         ============   ============

  Weighted average number of common shares outstanding     11,909,447     11,881,855
                                                         ============   ============
</TABLE>


        The accompanying notes are an integral part of these statements.


<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                   THREE MONTHS ENDED AUGUST 31, 2003 AND 2002


                                                         2003           2002
                                                     ------------   ------------

Sales                                                $    680,718        736,408
                                                     ------------   ------------

Cost of sales and expenses:
  Cost of sales                                           204,839        262,902
  Selling, general and administrative                     196,937        217,388
                                                     ------------   ------------

    Total                                                 401,776        480,290
                                                     ------------   ------------

Operating income                                          278,942        256,118
                                                     ------------   ------------

Other income - interest                                     1,435          6,683
                                                     ------------   ------------

Income before taxes                                       280,377        262,801

Income taxes                                               96,699        110,392
                                                     ------------   ------------

Income before extraordinary item                          183,678        152,409

Extraordinary item - litigation settlement (net of
income tax benefit of $83,179)                            110,261             --
                                                     ------------   ------------

Net income                                           $     73,417        152,409
                                                     ============   ============

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

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

  Weighted average number of
    common shares outstanding                          11,909,447     11,881,855
                                                     ============   ============



        The accompanying notes are an integral part of these statements.


<PAGE>

<TABLE>
<CAPTION>
                                      EPOLIN, INC. AND SUBSIDIARY

                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                               SIX MONTHS ENDED AUGUST 31, 2003 AND 2002


                                            Additional      Retained
                               Common        Paid-in-       Earnings        Treasury      Stockholders'
                                Stock        Capital        Deficit           Costs           Equity
                            ------------   ------------   ------------    ------------    ------------

<S>                         <C>                   <C>         <C>             <C>            <C>
Balance - March 1, 2002     $  2,295,183          6,486        701,963        (170,153)      2,833,479

Dividends paid                        --             --       (475,274)             --        (475,274)

Net income                            --             --        349,891              --         349,891
                            ------------   ------------   ------------    ------------    ------------

Balance - August 31, 2002   $  2,295,183          6,486        576,580        (170,153)      2,708,096
                            ============   ============   ============    ============    ============



Balance - March 1, 2003     $  2,304,558          6,486        452,700        (188,777)      2,574,967

Common stock issued for
  stock option                    16,250             --             --              --          16,250

Dividends paid                        --             --       (237,107)             --        (237,107)

Treasury stock purchased              --             --             --         (75,755)        (75,755)

Net income                            --             --        243,279              --         243,279
                            ------------   ------------   ------------    ------------    ------------

Balance - August 31, 2003   $  2,320,808          6,486        458,872        (264,532)      2,521,634
                            ============   ============   ============    ============    ============
</TABLE>



        The accompanying notes are an integral part of these statements.


<PAGE>

<TABLE>
<CAPTION>
                               EPOLIN, INC. AND SUBSIDIARY

                          CONSOLIDATED STATEMENTS OF CASH FLOWS

                        SIX MONTHS ENDED AUGUST 31, 2003 AND 2002


                                                                   2003          2002
                                                                ----------    ----------
<S>                                                             <C>              <C>
Cash flows from operating activities:
  Net income                                                    $  243,279       349,891
  Adjustments to reconcile net income to net cash provided by
   operating activities:
    Depreciation and amortization                                   14,871        13,170
    Deferred tax expense                                            57,184         2,353
    Obligation under deferred compensation agreement               (95,587)       12,038
    Gain on sale of assets                                              --        (6,200)
  (Increase) decrease in:
    Accounts receivable                                           (459,949)        2,470
    Inventories                                                    (57,706)       39,521
    Prepaid expenses                                               110,459        24,845
    Notes receivable                                                14,139            --
  Increase (decrease) in:
    Accounts payable                                                 1,689       (14,805)
    Accrued expenses                                               (60,258)      (57,639)
    Taxes payable                                                    1,416       (92,931)
                                                                ----------    ----------

      Net cash provided by operating activities                   (230,463)      272,713
                                                                ----------    ----------

Cash flows from investing activities:
  Increase in cash value - life insurance policy                   (15,827)      (11,770)
  Sale of equipment                                                     --         8,000
  Payments for equipment                                           (58,793)      (89,895)
                                                                ----------    ----------

      Net cash used by investing activities                        (74,620)      (93,665)
                                                                ----------    ----------
</TABLE>



        The accompanying notes are an integral part of these statements.


<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                    SIX MONTHS ENDED AUGUST 31, 2003 AND 2002


                                                        2003            2002
                                                     ----------      ----------
Cash flows from financing activities:
  Issuance of common stock                               16,250              --
  Dividends paid                                       (237,107)       (475,274)
  Treasury stock purchased                              (75,755)             --
                                                     ----------      ----------

    Net cash used by financing activities              (296,612)       (475,274)
                                                     ----------      ----------

Increase (decrease) in cash                            (601,695)       (296,226)

Cash and cash equivalents:
  Beginning                                             969,477       1,517,875
                                                     ----------      ----------

  Ending                                             $  367,782       1,221,649
                                                     ==========      ==========

Supplemental information:
  Income taxes paid                                  $  186,400         345,182
                                                     ==========      ==========



        The accompanying notes are an integral part of these statements.


<PAGE>
                   EPOLIN, INC. AND SUBSIDIARY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         AUGUST 31, 2003



NOTE A - ORGANIZATION AND BASIS OF PRESENTATION:

   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. Prior to being acquired on
January  29,  1998,  two  officers/stockholders  of  the  Company
controlled it.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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
had cash deposits in a financial institution and brokerage house
in  excess  of  the amount insured by agencies  of  the  federal
government  in amounts of $267,800 and $1,200,025 at August  31,
2003 and 2002, respectively. In evaluating this credit risk, the
Company  periodically evaluates the stability of  the  financial
institution and brokerage house.

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 - All reported assets  and
liabilities, which represent financial instruments,  approximate
the carrying values of such amounts.

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

Depreciation and amortization expense totaled $14,871 and $13,170
for the six months ended August 31, 2003 and 2002, respectively.

<PAGE>


                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 31, 2003


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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 six months ended August 31, 2003 are:

<TABLE>
<CAPTION>
                              CONDENSED CONSOLIDATING BALANCE SHEET

                                                         Epolin
                                         Epolin          Holding     Eliminations    Consolidated
                                      ------------    ------------   ------------    ------------

<S>                                   <C>                  <C>           <C>            <C>
Current assets                        $  1,795,006         123,103             --       1,918,109
Non-current assets                       1,087,099         521,021       (642,305)        965,815
                                      ------------    ------------   ------------    ------------
   Total                              $  2,882,105         644,124       (642,305)      2,883,924
                                      ============    ============   ============    ============
     Total liabilities                     360,471         175,965       (174,146)        362,290
                                      ------------    ------------   ------------    ------------

Stockholders' equity:
   Common stock                          2,320,808              --             --       2,320,808
   Additional paid-in capital                6,486              --             --           6,486
   Retained earnings                       458,872         468,159       (468,159)        458,872
   Treasury stock                         (264,532)             --             --        (264,532)
                                      ------------    ------------   ------------    ------------
     Total stockholders' equity          2,521,634         468,159       (468,159)      2,521,634
                                      ------------    ------------   ------------    ------------
        Total                         $  2,882,105         644,124       (642,305)      2,883,924
                                      ============    ============   ============    ============


                           CONDENSED CONSOLIDATING STATEMENT OF INCOME

                                                         Epolin
                                         Epolin          Holding     Eliminations    Consolidated
                                      ------------    ------------   ------------    ------------

Sales                                 $  1,367,485              --             --       1,367,485
Other revenue                                   --          66,870        (48,870)         18,000
                                      ------------    ------------   ------------    ------------
   Total                                 1,367,485          66,870        (48,870)      1,385,485
                                      ------------    ------------   ------------    ------------

Cost of sales                              432,590              --             --         432,590
Selling, general and administrative        541,354           7,302        (48,870)        499,786
                                      ------------    ------------   ------------    ------------

   Total                                   973,944           7,302        (48,870)        932,376

Operating income                           393,541          59,568             --         453,109

Other income - interest                      3,589             688             --           4,277
                                      ------------    ------------   ------------    ------------
Income before taxes                        397,130          60,256             --         457,386

Income taxes                               208,687           5,420             --         214,107
                                      ------------    ------------   ------------    ------------
Net income                            $    188,443          54,836             --         243,279
                                      ============    ============   ============    ============
</TABLE>





                   EPOLIN, INC. AND SUBSIDIARY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         AUGUST 31, 2003

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

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.

Stock  Options  -  As permitted by FASB Statement  of  Financial
Accounting  Standards  No. 123, and explained  in  Note  G,  the
Company  accounts for employee stock options in accordance  with
the  provisions of Accounting Principles Board Opinion  No.  25,
under  which  compensation expense is  recognized  only  to  the
extent  that the market price for stock options granted  exceeds
the exercise price of the underlying common stock at the date of
grant.  As of August 31, 2003 market price in excess of exercise
price  of certain options was deemed immaterial to the financial
statements.

Use  of  Estimates - The preparation of financial statements  in
conformity   with   generally  accepted  accounting   principles
requires  management  to  make estimates  and  assumptions  that
affect  the  reported  amounts of  assets  and  liabilities  and
disclosure of contingent assets and liabilities at the  date  of
the  financial statements and the amounts of sales and  expenses
during  the  reporting period. Actual results could differ  from
those estimates.

Revenue  Recognition - Revenue is recorded on the accrual  basis
and is recognized at the point of sale as products are shipped.

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.

Advertising  Costs  -  Advertising costs, included  in  operating
expenses, are expensed as incurred. Advertising expenses amounted
to $1,765 and $3,808 for the six months ended August 31, 2003 and
2002, respectively.

Regulations  -  The  Company expended  approximately  $11,338  to
maintain  compliance  with certain Federal  and  State  and  City
government  regulations  relative  to  the  production  of   near
infrared dyes and specialty chemicals.

<PAGE>

                   EPOLIN, INC. AND SUBSIDIARY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         AUGUST 31, 2003

NOTE C - ECONOMIC DEPENDENCY:

   A  material portion of the Company's business is dependent  on
certain  domestic  customers, the loss  of  which  could  have  a
material effect on operations. During the six months ended August
31,  2003,  approximately 67.0% of sales were to four  customers.
Three  of these customers, located in the Eastern United  States,
accounted for 58.6% of sales. During the six months ended  August
31,  2002,  approximately 55.4% of sales were to four  customers,
three  of these customers, located in the Eastern United  States,
accounted for 44.1% of sales.

NOTE D - RENTAL INCOME UNDER SUBLEASE:

The  Company entered into a sublease agreement with a non-related
party  effective  November 1, 2002 for a  five-year  term  ending
October 31, 2007. Under the terms of the lease, the tenant is  to
pay  a base rent of $36,000 per year. In addition, the tenant  is
to  reimburse the Company for all costs and expenses incurred  by
the Company for improvements to such leased property in excess of
$75,000. The excess amount was recorded on the balance sheet as a
note  receivable.  Payments  on the  note  were  $2,500  a  month
including interest of 6% a year. The note was paid in full as  of
August 31, 2003.

NOTE E - INVENTORIES:

                                        2003     2002
     Raw materials and supplies     $  59,448    48,346
     Work in process                  119,596   171,644
     Finished goods                   507,974   383,126

     Total                           $687,018   603,116

NOTE F - INCOME TAXES:
                                             2003    2002
1.  Federal and State deferred tax assets include:

  Temporary differences - principally from
    accelerated amortization of leasehold
    improvements for book purposes and
     deferred compensation                 $228,192 288,443

  Current portion                             1,376   1,758

  Non-current portion                      $226,816 286,685


<PAGE>


                   EPOLIN, INC. AND SUBSIDIARY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         AUGUST 31, 2003


NOTE F - INCOME TAXES (continued):

2.  Income tax expense:

                                       2003           2002
     Current:
     Federal                        $157,780        191,700
     State                            45,417         55,860

       Total current                 203,197        247,560

  Deferred:
     Federal                           8,910          1,861
     State                             2,000            492

       Total deferred                 10,910          2,353

           Total                    $214,107        249,913


NOTE G - EMPLOYEE BENEFITS:

Simplified  Employee  Pension Plan  -  Effective  June  1,  1994,
covering   all  eligible  participating  employees  as   defined.
Employer  contributions totaled $18,515 and $12,212 for  the  six
months ended August 31, 2003 and 2002, respectfully.

Incentive  Compensation  Plan - On  December  1989,  the  Company
approved the 1989 Incentive Compensation Plan for the purpose  of
attracting  and  retaining key personnel. All  employees  of  the
Company are eligible to participate in the plan whereby incentive
bonuses  are determined by the Board of Directors and payable  in
shares  of  common stock. Shares issued are determined  at  fifty
percent  of the closing bid price, vested, and delivered  over  a
three-year  period.  During the year  ended  February  28,  1999,
20,000  shares of common stock were issued covering a  previously
awarded bonus to an employee on May 18, 1998.

Employee  Option Plan - The Company previously adopted  The  1986
Stock  Option  Plan. As of April 1996, no options  were  granted.
Under  the terms of the Plan, options granted could be designated
as  portions, which qualify for incentive stock option  treatment
under  Section  422A of the Internal Revenue  Code  of  1986,  as
amended,  or options, which do not qualify. On December 1,  1995,
options  to acquire up to 490,000 shares of the Company's  common
stock  were  granted and expire on December 1, 2005.  During  the
year  ended February 28, 2002, the Company issued 185,000  shares
of  common stock to three employees. Common stock issued for  all
prior  years  totaled  270,000 shares.  Options  totaling  35,000
expired for all prior years. There were no outstanding options as
of August 31, 2003.

<PAGE>




                   EPOLIN, INC. AND SUBSIDIARY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         AUGUST 31, 2003


NOTE G - EMPLOYEE BENEFITS (continued):

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  a  vesting period  as  follows:  (1)  none
exercisable prior to the first anniversary of the date of  grant,
and (2) each of the 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. Options totaling 400,000  were
exercised throughout the year ended February 28, 2003.

Options   totaling  75,000  were  exercised  during  the  current
quarter.


Options granted as of August 31, 2003:

Number of   Exercise      Date            Expiration
Shares       Price        Granted            Date
425,000     $.15     December 1, 1998   December 1, 2008
25,000      $.15     February 10, 1999  February 10, 2009
25,000      $.15     February 10, 2000  February 10, 2010
50,000      $.15     September 1, 2001  September 1, 2006
330,000     $.25     September 15, 2001 September 15, 2006
 25,000     $.30     December 1, 2002   December 1, 2007


There are 620,000 options attributable to future grants.

NOTE H - TREASURY STOCK:

Consists of 816,145 shares as of August 31, 2003 at a net cost of
$264,532.

The  Company  made  purchases of 136,500 shares  during  the  six
months ended August 31, 2003.

NOTE I - RESEARCH AND DEVELOPMENT:

Amounts of $184,330 and $141,019 were included in cost of  sales
for the six months ended August 31, 2003 and 2002, respectively.
All costs were borne by the Company.

<PAGE>




                   EPOLIN, INC. AND SUBSIDIARY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         AUGUST 31, 2003


NOTE J - ACQUISITIONS:

On  January  29,  1998, the Company acquired 100%  of  stock  in
Epolin Holding Corp.

NOTE K - 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.


NOTE L - COMMITMENTS AND CONTINGENCIES:


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.

Rental   expense   charged   to   operations,   eliminated    in
consolidation,  amounted to $48,870 for  the  six  months  ended
August 31, 2003 and 2002, respectively.

Future minimum payments for the current option period:

   Fiscal years ending February:
             2004                $48,870
             2005                 97,740
             2006                 97,740
             2007                 97,740
             2008                 65,160

<PAGE>




                   EPOLIN, INC. AND SUBSIDIARY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         AUGUST 31, 2003


NOTE L - COMMITMENTS AND CONTINGENCIES (continued):

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  being funded by 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.

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. The Company entered  into  a
second deferred compensation agreement with the same officer  on
June  25, 1998, which provided for the payment of certain  funds
for a period of ten years beginning two weeks after the date  of
his retirement. This agreement was terminated March 1, 1999.

Effective   March   1,   1999,  the  Company   adopted   deferred
compensation agreements for two of its employees. Under the  term
of  the  agreement, each employee would receive one twenty  sixth
(1/26)  of  fifty percent (50%) of their annual salary (excluding
bonuses)  as  of the date of retirement. Each has a death-vesting
schedule. These agreements are no longer operative as a result of
the  settlement of the lawsuit, which had been instituted by such
two  former employees, the terms of which are detailed under Note
M - Extraordinary Item.

Deferred  compensation of $12,040 was charged to operations  for
the six months ended August 31, 2003 and 2002, respectively.

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.

<PAGE>



                   EPOLIN, INC. AND SUBSIDIARY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         AUGUST 31, 2003


NOTE M - EXTRAORDINARY ITEM:


In  December  2000, two individuals (each a former  director  and
former  employee of the Company) instituted suit in the  Superior
Court  of  New  Jersey, Bergen County-Law Division,  against  the
Company  and  the other directors of the Company alleging  claims
pursuant to their past employment as well as a derivative  claim,
as   minority  stockholders.  Such  claims  included  breach   of
contract, civil rights, age discrimination, wrongful termination,
infliction  of  emotional distress and a  shareholder  derivative
claim.  In  June  2003, the Company executed an agreement,  which
settled  the  lawsuit,  and the action has  been  dismissed.  The
settlement included a lump sum payment to the plaintiffs  in  the
amount  of $312,000. In addition, the Company agreed to buy  back
126,500  shares owned by one of the plaintiffs for the  aggregate
amount  of  $69,575  ($0.55 per share)  as  treasury  stock.  The
Company  will be reimbursed a portion of the settlement  payments
from it's insurance company in the amount of $118,560.

The  lump  sum  payment  resulted in  an  extraordinary  loss  of
$110,261, net of income tax benefit of $83,179.