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, 2006

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

    For the transition period from            to

                Commission file number 000-17741

                          EPOLIN, INC.
(Exact name of 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: 11,966,355 outstanding as of
January 1, 2007

<PAGE>

                          EPOLIN, INC.

                        TABLE OF CONTENTS

                                                            Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.                                3
Item 2. Management's Discussion and Analysis or Plan
        of Operation.                                        3
Item 3. Controls and Procedures.                             8

PART II - OTHER INFORMATION

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

SIGNATURES                                                   10


<PAGE>

                 PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements.

     See the Consolidated Financial Statements annexed to this
report.


Item 2.   Management's Discussion and Analysis 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, 2006.  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.  Our business is heavily weighted
towards the development, manufacture and sale of near infrared
dyes.  Applications for these dyes cover several markets that
include laser protection, welding, sunglasses, optical filters,
glazing and imaging and security inks and tagants.  We also
manufacture specialty chemicals for certain chemical
manufacturers.

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

     We sell our products to manufacturers of plastics/resins,
credit cards, electronics, glass and other basic materials.  Our
customers are located in all regions of the world, although a
material portion of our business is dependent on certain domestic
customers, the loss of which could have a material effect on
operations.  As the service economy continues to dwarf the
manufacturing sector in the United States, we now offer our customers
added service in the form of formulated inks and resins.  This has
resulted in increasing our worldwide sales of these products and,
we believe, lessens the threat of competition from lower cost
dyes manufactured abroad. During the nine months ended November 30,
2006, approximately 41.6% of sales were to four customers.  Two of
these customers, located in the Eastern United States, accounted
for 27.4% of sales.  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.  The loss of one or more key
customers could have a material adverse effect on the Company.

Results of Operations

     The following tables set forth operations data for the three
months ended November 30, 2006 and 2005 and nine months ended
November 30, 2006 and 2005.

<PAGE>

                         Three Months Ended November 30,

                         2006      2005           % change

Sales               $  774,135  $ 966,206          -20.0%

Gross profit           468,862    691,613          -32.2%

Gross profit
percentage              60.6%       71.6%          -11.0%

Selling, general
& administrative       323,343    309,921            4.3%

Operating income       145,519    381,692          -61.9%
Other Income            38,690     12,513          209.2%

Income before taxes    184,209    394,205          -53.3%

Income taxes            46,544    145,109          -67.9%

Net income
(after taxes)        $ 137,665  $ 249,096          -44.7%


                         Nine Months Ended November 30,

                         2006      2005           % change

Sales                 $2,819,116   $2,632,077          7.1%

Gross profit           1,641,798    1,653,516         -0.7%

Gross profit
percentage               58.2%        62.8%           -4.6%

Selling, general
& administrative         971,838      879,872         10.5%

Operating income         669,960      773,644        -13.4%
Other Income              78,156       33,338        134.4%

Income before taxes      748,116      806,982         -7.3%

Income taxes             263,503      300,862        -12.4%

Net income
(after taxes)         $  484,613    $ 506,120         -4.2%


Sales

     For the three months ended November 30, 2006, sales were
$774,000 as compared to $966,000 for the three months ended
November 30, 2005, a decrease of $192,000 or 20.0%.  Sales
increased to $2,819,000 for the nine months ended November 30,
2006 from $2,632,000 for the nine months ended November 30, 2005,
an increase of $187,000 or 7.1%.  While sales overseas remained
relatively stagnant for the nine months ended November 30, 2006,
compared to the nine months ended November 30, 2005, sales in the
United States for the nine months ended November 30, 2006
increased $237,000 compared to the prior year period.  Sales in
Asia increased $23,000 for the nine months ended November 30,
2006, compared to the prior year period, while sales decreased
$86,000 in Europe for the nine months ended November 30, 2006
compared to the same period of the prior year.  During fiscal
2006, and continuing through the second quarter of fiscal 2007,
we experienced strong increases in sales in our newer product
areas, such as our newer security inks and coatings products and
formulated dye mixtures.  While sales in our newer product areas
showed an overall increase for the nine months ended November 30,
2006 compared to the prior year period, sales in our newer
product areas generally declined during the three months ended
November 30, 2006 compared to the three months ended

<PAGE>

November 30,
2005.  Insofar that we have demonstrated growth in these newer
areas for a number of consecutive fiscal quarters, we believe
that the downturn we experienced is only temporary and will not
continue.

Gross Profit

     Gross profit, defined as sales less cost of sales, was
$469,000 or 60.6% of sales for the three months ended November
30, 2006 compared to $692,000 or 71.6% for the three months ended
November 30, 2005.  For the nine months ended November 30, 2006,
gross profit was $1,642,000 or 58.2% of sales compared to
$1,654,000 or 62.8% of sales for the nine months ended November
30, 2005.  In terms of absolute dollars, gross profit decreased
$223,000 for the three months ended November 30, 2006 compared to
the prior year period, and decreased $12,000 for the nine months
ended November 30, 2006 compared to the prior year period.  As a
percentage of sales, gross profit decreased 11.0% and 4.6%,
respectively, for the three and nine months ended November 30,
2006 compared to the prior year periods due primarily to an
increase in cost of materials and factory overhead and lower
margins on certain products.

     Cost of sales was $305,000 for the three months ended
November 30, 2006 which represented 39.4% of sales compared to
$275,000 for the three months ended November 30, 2005 which
represented 28.4% of sales.  For the nine months ended November
30, 2006, cost of sales was $1,177,000 which represented 41.8% of
sales, compared to $979,000 for the nine months ended November
30, 2005 which represented 37.2% of sales.  Total cost of
materials increased $128,000 in the nine months ended November
30, 2006 compared to the prior year period.  Total factory
overhead also increased $71,000 in the nine months ended November
30, 2006 compared to the prior year period primarily due to
increases in research and development salaries, and increases in
applied factory overhead.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses increased to
$323,000 or 41.7% of sales, for the three months ended November
30, 2006 from $310,000, or 32.1% of sales, for the three months
ended November 30, 2005, an increase of $13,000.   Selling,
general and administrative expenses increased to $972,000 or
34.5% of sales, for the nine months ended November 30, 2006 from
$880,000 or 33.4% of sales for the nine months ended November 30,
2005, an increase of $92,000.  Such increase in absolute dollars
in selling, general and administrative expenses for the nine
months ended November 30, 2006 compared to the prior year period
was primarily due to increases in salaries and employee benefits.
During the nine months ended November 30, 2006, we had a
substantial increase in health insurance premiums.

Operating Income

     Operating income in terms of absolute dollars, decreased to
$146,000 for the three months ended November 30, 2006 from
$382,000 for the prior year period, a decrease of $236,000.  This
decrease was due to reduced sales for the quarter as well as
increased cost of sales and increased selling, general and
administrative expenses.  Operating income for the nine months
ended November 30, 2006 decreased to $670,000 from $774,000 for
the prior year period, a decrease of $104,000.  While sales
increased for the first nine months of fiscal 2007, we had
greater increases in cost of sales and selling, general and
administrative expenses which resulted in a decrease in operating
income.

Other Income

     Total other income for the three months ended November 30,
2006 was $39,000 as compared to $13,000 for the three months
ended November 30, 2005.  Total other income for the nine months
ended November 30, 2006 was $78,000 as compared to $33,000 for
the nine months ended November 30, 2005.  We realized rental
income of $3,000 and $15,000 for the three and nine months ended
November 30, 2006 compared to rental income of $9,000 and $21,000
for the comparable periods of 2005.  Our interest income
increased to $36,000 and $63,000 for the three and nine months
ended November 30, 2006 from $4,000 and $12,000 for the prior
year periods.

Net Income

     During the three months ended November 30, 2006 we reported
income before taxes of $184,000 as compared to income before
taxes of $394,000 for the three months ended November 30, 2005.
During the nine months ended November 30, 2006, we reported
income before taxes of $748,000 as compared to income before
taxes of $807,000 for the nine months ended November 30, 2005.
Income taxes were $47,000 and $264,000 for the three and nine
months ended November 30, 2006 compared to income taxes of
$145,000 and $300,000 for the three and nine months ended

<PAGE>

November 30, 2005.  The decrease in income taxes is generally
attributed to changes from period to period in sales and
expenses.  Net income after taxes was $138,000 or $0.01 per share
for the three months ended November 30, 2006 as compared to net
income after taxes of $249,000 or $0.02 per share for the three
months ended November 30, 2005.  For the nine months ended
November 30, 2006, net income after taxes was $485,000 or $0.04
per share as compared to net income after taxes of $506,000 or
$0.04 per share for the nine months ended November 30, 2005.  The
decrease in net income after taxes was primarily due to sales not
increasing at a faster rate than increases in cost of sales, and
selling, general and administrative expenses.   While it is not
expected to continue, sales actually declined in the three months
ended November 30, 2006 compared to the prior year, although
sales did increase for the nine months ended November 30, 2006.

     Net income in the future will be dependent upon our ability
to increase revenues faster than increases, if any, in our
selling, general and administrative expenses, research and
development expenses and other expenses.  Although we achieved an
increase of $821,000 in sales for fiscal 2006 compared to fiscal
2005, we have so far in fiscal 2007 only increased sales
$187,000.  This is primarily due to the downturn we experienced
in the third quarter of fiscal 2007.  In addition, we have also
incurred, in dollars, greater cost of sales and selling, general
and administrative expenses in these periods.  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.

Operations Outlook

     Since fiscal 2005, we have been going through a period of
reassessing our direction in order to increase value for our
shareholders.  Our business, though reasonably healthy, did not
grow to the degree management anticipated from 2002 to 2005.
While the sales level of $2,880,000 reached during fiscal 2005
was at the time an all time high for the Company, it was not
significantly more than the sales level we achieved in 2004
($2,734,000), 2003 ($2,690,000) or 2002 ($2,550,000). The plateau
of sales during that four years was in contrast to the greater
sales growth the Company experienced in certain years prior to
2002.  Based upon these observations, we tried to learn what
could be done to stimulate growth and recapture the promise of
our early years.  As a result, we assembled a business plan and
began to make changes consistent with such plan.  The plan showed
us that developments coming out of our R&D were not reaching the
marketplace and therefore, not commanding their proper attention.
Through this teamwork of R&D with marketing, we revamped our web
site, streamlined our pricing structure and reached out to our
key customers and agents. We believe the business plan made clear
the necessity of hiring a Sales/Marketing executive along with
back up technical service help, both of which have been
accomplished.  In order to cover the cost of these additional
personnel and place a greater emphasis on company growth, we
suspended in fiscal 2005 the cash dividends program which we had
been in place during fiscal 2002, 2003 and 2004 in order to place
greater emphasis on business growth.  All of the foregoing
resulted in strong sales growth and we achieved $3,701,000 in
sales for fiscal 2006 which was $821,000 or 28.5% greater than
the prior year.  With the first nine months of fiscal 2007, sales
have increased but at a slower rate than the prior year. For the
nine months ended November 30, 2006, sales increased $187,000 or
7.1% greater than the prior year period.   However, our sales
level did fall during the three months ended November 30, 2006
compared to the prior year.  Yet, we are confident that this is
simply a temporary downturn which we do not expect will continue.
Nevertheless, we recognize that net income has not increased like
our revenues have increased.   When we began to reassess our
direction in fiscal 2005, we placed an emphasis on sales growth
which we have now achieved and which we expect will continue.  We
recognize that we still have to gain more control over our costs
and expenses so that we can improve our overall results.  This is
something we are currently undertaking and we have already
instituted certain measures in this regard.  We are confident
that we will be able to successfully meet this challenge like we
have been able to achieve the growth in sales.

     Another factor that was considered in the business plan was
management succession.  Murray S. Cohen, the Company's Chairman
of the Board and our long-time 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

     Our primary source of funds is cash flow from operations in
the normal course of selling products.  On November 30, 2006, we
had working capital of $2,858,000, a debt to equity ratio of 0.15
to 1, and stockholders equity of

<PAGE>

$3,759,000 compared to working
capital of $2,506,000 a debt to equity ratio of 0.16 to 1, and
stockholders equity of $3,368,000 on November 30, 2005.  On
November 30, 2006, we had $1,985,000 in cash and cash
equivalents, total assets of $4,316,000 and total liabilities of
$557,000, compared to $1,301,000 in cash and cash equivalents,
total assets of $3,921,000 and total liabilities of $553,000 on
November 30, 2005.

     Net cash provided by operating activities for the nine
months ended November 30, 2006 was $775,000 which was primarily
the result of net income of $485,000, plus decreases in accounts
receivable of $229,000 and inventories of $37,000, offset by a
decrease in accrued expenses of $55,000.  Net cash provided by
operating activities for the nine months ended November 30, 2005
was $485,000, which was primarily the result of net income of
$506,000, plus a decrease in inventories of $23,000 and an
increase in taxes payable of $40,000, offset by an increase in
accounts receivable of $109,000 and a decrease in accrued
expenses of $47,000.   Net cash used by investing activities for
the nine months ended November 30, 2006 was $71,000 compared to
$180,000 for the nine months ended November 30, 2005 which change
was primarily due to a decrease in equipment purchases.  For the
nine months ended November 30, 2006, net cash used by financing
activities was $235,000 and was $236,000 for the nine months
ended November 30, 2005 which was due to the payment of dividends
which occurred in both the first nine months of 2007 and the
first nine months of 2006.

     We anticipate, based on currently proposed plans and
assumptions relating to our operations, that our current cash and
cash equivalents together with projected cash flows from
operations and projected revenues will be sufficient to satisfy
its contemplated cash requirements for more than the next 12
months.  Our contemplated cash requirements for the balance of
fiscal 2007 and beyond will depend primarily upon level of sales
of our products, inventory levels, product development, sales and
marketing expenditures and capital expenditures.  While we
believe the Company has remained strong in the sale of dyes in
our 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 our operations.

Significant Accounting Policies

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

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

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

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

     Revenue Recognition - We recognize revenue consistent with
the provisions of SEC Staff Accounting Bulletin No. 104, "Revenue
Recognition", which sets forth guidelines in the timing of
revenue recognition based upon factors such as passage of title,
payments and customer acceptance. Any amounts received prior to
satisfying our revenue

<PAGE>

recognition criteria will be recorded as
deferred revenue in the accompanying balance sheet. We recognize
revenue from product sales when there is persuasive evidence that
an arrangement exists, when title has passed, the price is fixed
or determinable, and we are reasonably assured of collecting the
resulting receivable. Our policy is to replace certain products
that do not conform to customer specifications, however
replacements are made at our discretion subject to in house
product lab analysis. There are no terms or conditions set forth
within our sales contracts that provide for product replacements.
We expense replacement costs as incurred.

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

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

Other Information

     As mentioned above, we did not pay any cash dividends during
the fiscal year ended February 28, 2005 but did declare and pay a
$0.02 cash dividend in August 2005.  Subsequent to the end of
fiscal 2006, the Company approved the adoption of a dividend
policy under which the Company will issue a regular annual cash
dividend on shares of its Common Stock.  The amount of the
dividend, record date and payment date will be subject to
approval every year by the Board of Directors.  In accordance
with the new dividend policy, in April 2006, the Board of
Directors declared and the Company paid the first regular annual
cash dividend of $0.02 per share in May 2006.  In addition, in
December 2006 and considering our cash position, the Board of
Directors declared a special cash dividend of $0.02 per share
which was paid on January 3, 2007.

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.

     Under the supervision and with the participation of our
management, including the Principal Executive Officer and
Principal  Financial Officer, we have evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rule 13a-
15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of
the period covered by this report. Based on that evaluation, our
Principal Executive Officer and Principal Financial Officer have
concluded that, as of November 30, 2006, these disclosure
controls and procedures were effective to ensure that all
information required to  be disclosed by us in the reports that
we file or submit under the Exchange Act is: (i) recorded,
processed, summarized and reported, within the time periods
specified in the Commission's rule and forms; and (ii)
accumulated and communicated to our management, including our
Principal Executive Officer and Principal Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure.

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

<PAGE>

                   PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

     There are no material pending legal proceedings to which 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.

     During the three months ended May 31, 2006, the Company
issued 31,000 shares of Common Stock upon exercise of previously
granted stock options at an aggregate exercise price of $8,710.
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".  Other than the
foregoing, no additional unregistered shares of equity securities
were issued by the Company during the six months ended August 31,
2006.

     There were no repurchases made by the Company of shares of
its Common Stock during the quarter ended November 30, 2006.   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. Although no
repurchases were made by the Company under this program during
the quarter ended November 30, 2006,   a total of 5,000 shares
have been repurchased during the current fiscal year at a
cumulative cost of $4,550.  Since August 2001, a total of 306,500
shares have been repurchased under the program at a cumulative
cost of $174,766.


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 16, 2007            By:  /s/ Murray S. Cohen
                                        Murray S. Cohen,
                                        Chairman of the Board



Dated: January 16, 2007            By:  /s/ James Ivchenko
                                        James Ivchenko,
                                        President
                                        (Principal Financial Officer)


<PAGE>





                           EPOLIN, INC. AND SUBSIDIARY

                              FINANCIAL STATEMENTS

                  NINE MONTHS ENDED NOVEMBER 30, 2006 AND 2005









<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, 2006 and 2005 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
Branchburg, NJ 08876


December 18, 2006

                                       1
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                                      ASSETS

                                                                   November 30,
                                                           ----------------------------
                                                               2006            2005
                                                           ------------    ------------
<S>                                                        <C>                <C>
Current assets:
 Cash and cash equivalents                                 $  1,984,640       1,301,174
 Accounts receivable                                            467,035         661,612
 Inventories                                                    611,058         727,593
 Prepaid expenses                                                62,759          55,324
 Prepaid taxes                                                      124           1,190
 Deferred tax assets-current portion                              6,358           5,891
                                                           ------------    ------------

     Total current assets                                     3,131,974       2,752,784
                                                           ------------    ------------

Plant, property and equipment - at cost:
 Land                                                            81,000          81,000
 Building and improvements                                      710,758         662,288
 Laboratory equipment                                           272,688         243,958
 Office equipment                                               120,303         108,847
 Leasehold improvements                                         449,190         449,190
                                                           ------------    ------------

     Total                                                    1,633,939       1,545,283

Less:  Accumulated depreciation and amortization                837,829         781,467
                                                           ------------    ------------

     Net plant, property and equipment                          796,110         763,816
                                                           ------------    ------------
Other assets:
 Deferred tax assets-non current portion                        163,380         172,283
 Cash value - life insurance policy                             224,881         232,492
                                                           ------------    ------------

     Total other assets                                         388,261         404,775
                                                           ------------    ------------

     Total                                                 $  4,316,345       3,921,375
                                                           ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        2
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY


                                                                              November 30,
                                                                     ----------------------------
                                                                         2006            2005
                                                                     ------------    ------------
<S>                                                                  <C>                    <C>
Current liabilities:
  Accounts payable                                                   $      4,884           5,117
  Accrued expenses                                                        252,352         196,655
  Taxes payable:
     Payroll                                                                1,653           1,653
     Income                                                                15,200          43,631
                                                                     ------------    ------------

     Total current liabilities                                            274,089         247,056
                                                                     ------------    ------------

Other liabilities - Deferred compensation                                 283,021         306,149
                                                                     ------------    ------------

        Total liabilities                                                 557,110         553,205
                                                                     ------------    ------------
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;
     12,890,000 and 12,729,000 shares issued, 11,966,355 and
     11,815,355 shares outstanding at 2006 and 2005, respectively       2,357,193       2,340,183
     Paid-in capital                                                       55,127           6,486
     Retained earnings                                                  1,676,997       1,343,433
                                                                     ------------    ------------

        Total                                                           4,089,317       3,690,102
  Less: Treasury stock - at cost                                          330,082         321,932
                                                                     ------------    ------------

     Total stockholders' equity                                         3,759,235       3,368,170
                                                                     ------------    ------------

     Total                                                           $  4,316,345       3,921,375
                                                                     ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        3
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                  NINE MONTHS ENDED NOVEMBER 30, 2006 AND 2005


                                                               2006            2005
                                                           ------------    ------------
<S>                                                        <C>                <C>
Sales                                                      $  2,819,116       2,632,077
                                                           ------------    ------------
Cost of sales and expenses:
  Cost of sales                                               1,177,318         978,561
  Selling, general and administrative                           971,838         879,872
                                                           ------------    ------------

    Total                                                     2,149,156       1,858,433
                                                           ------------    ------------

Operating income                                                669,960         773,644
                                                           ------------    ------------

Other income:
  Rental income                                                  15,000          21,000
  Interest                                                       63,156          12,338
                                                           ------------    ------------

    Total other income                                           78,156          33,338
                                                           ------------    ------------

Income before taxes                                             748,116         806,982

Income taxes                                                    263,503         300,862
                                                           ------------    ------------

Net income                                                 $    484,613         506,120
                                                           ============    ============

Per share data:
  Basic earnings per common share                          $       0.04            0.04
                                                           ============    ============
  Fully diluted earnings per common share                  $       0.04            0.04
                                                           ============    ============
  Weighted average number of common shares outstanding       11,964,211      11,815,355
                                                           ============    ============
  Fully diluted number of common shares outstanding          12,016,011      11,966,537
                                                           ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        4
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                  THREE MONTHS ENDED NOVEMBER 30, 2006 AND 2005

                                                               2006            2005
                                                           ------------    ------------
<S>                                                        <C>                  <C>
Sales                                                      $    774,135         966,206
                                                           ------------    ------------
Cost of sales and expenses:
  Cost of sales                                                 305,273         274,593
  Selling, general and administrative                           323,343         309,921
                                                           ------------    ------------

     Total                                                      628,616         584,514
                                                           ------------    ------------

Operating income                                                145,519         381,692
                                                           ------------    ------------
Other income:
  Rental income                                                   3,000           9,000
  Interest                                                       35,690           3,513
                                                           ------------    ------------

     Total other income                                          38,690          12,513
                                                           ------------    ------------

Income before taxes                                             184,209         394,205

Income taxes                                                     46,544         145,109
                                                           ------------    ------------

Net income                                                 $    137,665         249,096
                                                           ============    ============

Per share data:
  Basic earnings per common share                          $       0.01            0.02
                                                           ============    ============
  Fully diluted earnings per common share                  $       0.01            0.02
                                                           ============    ============
  Weighted average number of common shares outstanding       11,966,355      11,815,355
                                                           ============    ============
  Fully diluted number of common shares outstanding          12,018,155      11,966,537
                                                           ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        5
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  NINE MONTHS ENDED NOVEMBER 30, 2006 AND 2005


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

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

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
                              ==========   ==========   ==========   ==========    ==========   ==========    ==========


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

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

Common stock issued for
 stock option                     31,000        8,710       48,641           --            --           --        57,351

Treasury stock purchased              --           --           --           --         5,000       (4,550)       (4,550)

Net income                            --           --           --      484,613            --           --       484,613
                              ----------   ----------   ----------   ----------    ----------   ----------    ----------

Balance - November 30, 2006   12,890,000   $2,357,193       55,127    1,676,997       923,645     (330,082)    3,759,235
                              ==========   ==========   ==========   ==========    ==========   ==========    ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        6
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED NOVEMBER 30, 2006 AND 2005


                                                                         2006            2005
                                                                     ------------    ------------
<S>                                                                  <C>                  <C>
Cash flows from operating activities:
  Net income                                                         $    484,613         506,120
  Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                         43,682          34,281
     Deferred tax expense                                                   6,584          20,199
     Stock based compensation                                              48,641              --
     Obligation under deferred compensation agreement                     (23,471)         18,059
  (Increase) decrease in:
     Accounts receivable                                                  228,616        (108,601)
     Inventories                                                           36,815          22,823
     Prepaid expenses                                                         313          (5,450)
     Prepaid taxes                                                          1,475            (590)
  Increase (decrease) in:
     Accounts payable                                                      (6,927)          5,117
     Accrued expenses                                                     (54,703)        (46,759)
     Taxes payable                                                          9,346          39,692
                                                                     ------------    ------------

        Net cash provided by operating activities                         774,984         484,891
                                                                     ------------    ------------
Cash flows from investing activities:
  Increase in cash value - life insurance policy                           (9,970)        (26,322)
  Payments for equipment                                                  (60,586)       (153,754)
                                                                     ------------    ------------

        Net cash used by investing activities                             (70,556)       (180,076)
                                                                     ------------    ------------
Cash used from financing activities:
  Issuance of common stock                                                  8,710              --
  Treasury stock purchased                                                 (4,550)             --
  Dividends paid                                                         (239,327)       (236,307)
                                                                     ------------    ------------

        Net cash used by financing activities                            (235,167)       (236,307)
                                                                     ------------    ------------
Increase in cash                                                          469,261          68,508

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

  Ending                                                             $  1,984,640       1,301,174
                                                                     ============    ============
Supplemental information:
  Income taxes paid                                                  $    240,555         156,470
                                                                     ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        7
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

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, 2006. 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,
2006 are not necessarily indicative of the results of operations for the fiscal
year ending February 28, 2007.

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 52.8% of the
Company's trade receivables at November 30, 2006.

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, 2006 AND 2005


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

Principles of Consolidation - The accompanying Consolidated Financial Statements
include the accounts of the Company and Subsidiary. Inter-company transactions
and balances have been eliminated in consolidation. Condensed consolidating
financial statements as of November 30, 2006 and for the nine month period then
ended are:

<TABLE>
<CAPTION>

                      CONDENSED CONSOLIDATING BALANCE SHEET

                                                                   Epolin
                                                     Epolin        Holding,
                                                      Inc.          Corp.        Eliminations    Consolidated
                                                 ------------    ------------    ------------    ------------
<S>                                              <C>                  <C>        <C>              <C>
Current assets                                   $  2,860,653         271,321              --       3,131,974
Non-current assets                                  1,455,692         658,889        (930,210)      1,184,371
                                                 ------------    ------------    ------------    ------------
     Total                                       $  4,316,345         930,210        (930,210)      4,316,345
                                                 ============    ============    ============    ============

     Total liabilities                                557,110         134,218        (134,218)        557,110
                                                 ------------    ------------    ------------    ------------

Stockholders' equity:
  Common stock                                      2,357,193              --              --       2,357,193
  Additional paid-in capital                           55,127              --              --          55,127
  Retained earnings                                 1,676,997         795,992        (795,992)      1,676,997
  Treasury stock                                     (330,082)             --              --        (330,082)
                                                 ------------    ------------    ------------    ------------

     Total stockholders' equity                     3,759,235         795,992        (795,992)      3,759,235
                                                 ------------    ------------    ------------    ------------
      Total                                      $  4,316,345         930,210        (930,210)      4,316,345
                                                 ============    ============    ============    ============
<CAPTION>

                   CONDENSED CONSOLIDATING STATEMENT OF INCOME

                                                                   Epolin
                                                     Epolin        Holding,
                                                      Inc.          Corp.        Eliminations    Consolidated
                                                 ------------    ------------    ------------    ------------
<S>                                              <C>                  <C>        <C>              <C>
Sales                                            $  2,819,116              --              --       2,819,116
Other revenue                                              --          88,305         (73,305)         15,000
                                                 ------------    ------------    ------------    ------------
     Total                                          2,819,116          88,305         (73,305)      2,834,116
                                                 ------------    ------------    ------------    ------------

Cost of sales                                       1,177,318              --              --       1,177,318
Selling, general and administrative                 1,025,796          19,347         (73,305)        971,838
                                                 ------------    ------------    ------------    ------------

     Total                                          2,203,114          19,347         (73,305)      2,149,156
                                                 ------------    ------------    ------------    ------------
Operating income                                      616,002          68,958              --         684,960

Other income - interest                                55,417           7,739              --          63,156
                                                 ------------    ------------    ------------    ------------
Income before taxes                                   671,419          76,697              --         748,116

Income taxes                                          256,609           6,894              --         263,503
                                                 ------------    ------------    ------------    ------------
Net income                                       $    414,810          69,803              --         484,613
                                                 ============    ============    ============    ============
</TABLE>

                                       9
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

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 $43,682 and $34,281 for
the nine months ended November 30, 2006 and 2005, 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, 2006 AND 2005

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 $16,849 through November 30,
2006 and $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 and $17,970 for the nine
months ended November 30, 2006 and 2005, respectively.

                                       11
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

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

Stock-based Compensation - Prior to March 1, 2006 the Company accounted for
stock based compensation under Statement of Financial Accounting Standards No.
123 Accounting for Stock-Based Compensation (FAS 123). As permitted under this
standard, compensation cost was recognized using the intrinsic value method
described in Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25). Effective March 1, 2006, the Company has adopted
Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based
Payment". SFAS 123R revises SFAS No. 123 and supersedes APB 25 to require
companies to measure and recognize in operations the cost of employee services
received in exchange for an award of equity instruments based on the grant-date
fair value. In accordance with the provisions of the Securities and Exchange
Commission Staff Accounting Bulletin No. 107, the Company has adapted the
modified-prospective transition method. Prior periods were not restated to
reflect the impact of adopting the new standard. As a result of the adoption of
FAS 123R, stock-based compensation expense recognized for the period ended
November 30, 2006 includes compensation expense for all share-based payments
granted on or prior to, but not yet vested as of March 1, 2006, based on the
grant date fair value estimated in accordance with the original provisions of
FAS 123, and compensation cost for all share-based payments granted on or
subsequent to March 1, 2006, based on the grant date fair value estimated in
accordance with the provisions of FAS 123R.

         During the nine and three months ended November 30, 2006, the Company
recognized stock-based compensation expenses of $15,641 and $5,214 respectively,
related to outstanding stock options according to the provisions of FAS 123R,
using the modified-prospective transition method.

         Prior to the adoption of FAS 123R and for the year ended February 28,
2006, no tax benefits from the exercise of stock options have been recognized.
Any future excess tax benefits derived from the exercise of stock options will
be recorded prospectively and reported as cash flows from financing activities
in accordance with FAS 123R.

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

         The weighted average Black-Scholes value of options granted under the
stock plans during the nine months ended November 30, 2006 and 2005 was $.18 and
$.10, respectively. The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option-pricing model with the following
weighted average assumptions used for grants:

Nine Months Ended November 30,                      2006           2005
                                                 ----------     ----------
         Weighted average expected life in years          3              4
         Dividends per share                           0.02           0.04
         Volatility                                     6.0%           6.0%
         Risk-free interest rate                        4.5%           3.9%

                                       12
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

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.
<TABLE>
<CAPTION>

                                                Three Months Ended   Nine Months Ended
                                                 November 30, 2005   November 30, 2005
                                                 -----------------   -----------------
<S>                                              <C>                 <C>
Net earnings as reported                         $         249,096   $         506,120

Deduct total additional stock-based employee
compensation cost, net of tax that would
have been included in net earnings under
fair value method                                            3,750              28,550
                                                 -----------------   -----------------

Proforma net earnings                            $         245,346   $         477,570
                                                 =================   =================

Basic earnings per share:
  As reported                                                 0.02                0.04
                                                 =================   =================
  Proforma                                                    0.02                0.04
                                                 =================   =================

Average common shares outstanding                       11,815,355          11,815,355
                                                 =================   =================
Diluted earnings per share:
  As reported                                                 0.02                0.04
                                                 =================   =================
  Proforma                                                    0.02                0.04
                                                 =================   =================

Total diluted common shares outstanding                 11,966,537          11,966,537
                                                 =================   =================

<CAPTION>

Note C - Inventories:
                                                              November 30,
                                                 -------------------------------------
                                                       2006                 2005
                                                 -----------------   -----------------
<S>                                              <C>                            <C>
  Raw materials and supplies                     $          71,662              49,477
  Work in process                                          193,207             250,031
  Finished goods                                           346,189             428,085
                                                 -----------------   -----------------
  Total                                          $         611,058             727,593
                                                 =================   =================
</TABLE>

                                       13
<PAGE>
<TABLE>
<CAPTION>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

Note D - Income Taxes:

1.  Federal and State deferred tax assets include:
                                                                                     2006            2005
                                                                                 ------------    ------------
<S>                                                                              <C>                   <C>
         Temporary differences:
              Accelerated amortization                                           $     41,313          46,530
              Deferred compensation                                                   121,699         131,644
                  Stock based compensation                                              6,726              --
                                                                                 ------------    ------------
                  Total                                                               169,738         178,174

         Current portion                                                                6,358           5,891
                                                                                 ------------    ------------

         Non-current portion                                                     $    163,380         172,283
                                                                                 ============    ============
<CAPTION>

2.  Income tax expense:
                                                                                     2006            2005
                                                                                 ------------    ------------
<S>                                                                              <C>                   <C>
         Current:
              Federal                                                            $    204,700         221,831
              State                                                                    52,219          58,832
                                                                                 ------------    ------------

                  Total current                                                       256,919         280,663
                                                                                 ------------    ------------
         Deferred:
              Federal                                                                   7,557          15,971
              State                                                                       973           4,228
                                                                                 ------------    ------------

                  Total deferred                                                        6,584          20,199
                                                                                 ------------    ------------

                      Total                                                      $    263,503         300,862
                                                                                 ============    ============
</TABLE>

                                       14
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

Note E - Treasury Stock:

         Consists of 923,645 shares as of November 30, 2006 at a net cost of
$330,082 and 913,645 shares as of November 30, 2005 at a net cost of $321,932,
respectively.

         The Company purchased 5,000 shares during the nine months ended
November 30, 2006.


Note F - Economic Dependency:

         A material portion of the Company's business is dependent on certain
domestic customers, the loss of which could have a material effect on
operations. During the nine months ended November 30, 2006, approximately 41.6%
of sales were to four customers. Two of these customers, located in the Eastern
United States, accounted for 27.4% of sales. 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.


Note G - Rental Income Under Sublease:

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


Note H - Employee Benefits:

Simplified Employee Pension Plan - Effective June 1, 1994, the Company provides
a SAR/SEP plan to its employees as a retirement and income tax reduction
facility. Full time employees are eligible to participate immediately. Employees
may make pre-tax and after-tax contributions subject to Internal Revenue Service
limitations. Company contributions range from three to five percent after
completion of one year of service. Employer contributions totaled $37,746 and
$38,696 for the nine months ended November 30, 2006 and 2005, respectively.

                                       15
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

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, 2006.

         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, 2006
totaled 661,000. Options cancelled or expired for all years totaled 240,000. All
cancelled options are available for future grants.

         A summary of the status of the Company's 1998 stock option plan as of
November 30, 2006, and the changes during the nine months ended November 30,
2006 is presented below:

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

Balance - February 28, 2006                 457,000          .42
     Granted                                     --           --
     Cancelled and expired                  (85,000)         .25
     Exercised                              (31,000)         .28
                                       ------------
Balance - November 30, 2006                 341,000         $.39
                                       ============

Exercisable at November 30, 2006            180,000

                                       16
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

Note H - Employee Benefits (continued):

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

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

         2. Stock-based Employee Compensation - A grant of 100,000 shares of
         restricted common stock one year from the date of the agreement,
         provided the employee is then employed by the Company. In connection
         with this agreement, compensation in the amount of $33,000 was charged
         to selling, general and administrative expenses for the nine months
         ended November 30, 2006.


Stock Option Plans - The following table summarizes information about fixed
stock options outstanding at November 30, 2006:
<TABLE>
<CAPTION>

                 Outstanding Options                           Exercisable Options
   -----------------------------------------------       -------------------------------
                       Number     Weighted-average         Number
      Range of      Outstanding       Remaining          Exercisable    Weighted-average
   Exercise Price   at 11/30/06   Contractual Life       at 11/30/06     Exercise Price
   --------------   -----------   ----------------       -----------    ---------------
<S>     <C>            <C>               <C>                <C>                <C>
        $.30           25,000            1.0                25,000             .30
         .41          116,000            7.2                55,000             .41
         .51          100,000            2.9               100,000             .51
         .54          200,000            3.6               100,000             .54
</TABLE>

There are 498,000 options attributable to future grants.


Note I - Segment Reporting:

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

                                       17
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

Note I - Segment Reporting (continued):

Sales by geographic area are as follows:

                                           Nine Months Ended
                                              November 30,
                                       ----------------------------
                                           2006            2005
                                       ------------    ------------
         United States                 $  2,096,168       1,858,997
         Asia                               478,349         455,448
         Europe                             220,231         306,093
         Other nations                       24,368          11,539
                                       ------------    ------------

         Total                         $  2,819,116       2,632,077
                                       ============    ============


         One customer, located in the Southeastern United States, accounted for
more than 10% of revenues from continuing operations. This customer accounted
for 18.1% of sales of which 6.2% was near infrared dyes and 11.9% was security
inks.

         Long-lived assets include net property and equipment. The Company had
long-lived assets of and $763,815 located in the United States at November 30,
2006 and 2005, respectively.


Note J - Accrued Expenses:

Accrued expenses consisted of the following as of November 30, 2006 and 2005,
respectively:


                                           2006            2005
                                       ------------    ------------
Salaries and wages                           13,876          11,807
Employment agreement                        197,338         171,086
Professional fees                             6,000           5,900
Insurance premiums payable                   31,000              --
Property taxes                                4,138           7,862
                                       ------------    ------------
   Total accrued expenses              $    252,352         196,655
                                       ============    ============

                                       18
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

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>

                                          Three Months Ended          Nine Months Ended
                                              November 30,               November 30,
                                      -------------------------   -------------------------
                                          2006          2005          2006          2005
                                      -----------   -----------   -----------   -----------
<S>                                   <C>               <C>           <C>           <C>
Basic Earnings Per Common Share:

Net income                            $   137,665       249,096       484,613       506,120

Average common shares
  outstanding                          11,966,355    11,815,355    11,964,211    11,815,355
                                      ===========   ===========   ===========   ===========
Basic earnings per
  common share                        $      0.01          0.02          0.04          0.04
                                      ===========   ===========   ===========   ===========
Diluted Earnings Per Common Share:

Net income                            $   137,665       249,096       484,613       506,120
                                      ===========   ===========   ===========   ===========
Average common shares
  outstanding                          11,966,355    11,815,355    11,964,211    11,815,355

Common shares issuable with respect
to options issued to employees
with a dilutive effect                     51,800       151,182        51,800       151,182
                                      -----------   -----------   -----------   -----------
Total diluted common shares
  outstanding                          12,018,155    11,966,537    12,016,011    11,966,537
                                      ===========   ===========   ===========   ===========
Diluted earnings per
  common share                        $      0.01          0.02          0.04          0.04
                                      ===========   ===========   ===========   ===========
</TABLE>

                                       19
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

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, 2006 and 2005,
respectively.

Future minimum payments for the current option period:

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

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

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

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

                                       20
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

Note L - Commitments and Contingencies (continued):

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

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

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

         Accrued compensation included in selling, general and administrative as
of November 30, 2006 and 2005 was $197,338 and $171,085, respectively.


Bonus Agreement - Effective for the year ending February 28, 2006, the company
shall pay Gregory Amato, CEO, bonus compensation in an amount equal to ten
percent of the increase, if any, in the Company's current year consolidated net
income as compared to the consolidated net income for the fiscal year ending
February 28, 2005. The term net income shall mean consolidated net income after
taxes but before any extraordinary items. For subsequent fiscal years, the
employee shall be eligible for cash bonuses in such amounts as determined by the
Compensation Committee.


                                       21
<PAGE>

                           EPOLIN, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2006 AND 2005

Note M - Dividends:

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

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


Note N - Research and Development:

         The Company has developed substantial research and development
capability. The Company's efforts are devoted to (i) developing new products to
satisfy defined market needs, (ii) providing quality technical services to
assure the continued success of its products for its customers' applications,
(iii) providing technology for improvements to its products, processes and
applications, and (iv) providing support to its manufacturing plant for cost
reduction, productivity and quality improvement programs. Expenditures for
Company sponsored product research and product development of $355,507 and
$223,494 were included in cost of sales for the nine months ended November 30,
2006 and 2005, respectively. Expenditures for fiscal year 2007 are projected to
remain at approximately the same level as in fiscal 2006.


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