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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-Q

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

                  For the quarterly period Ended May 31, 2010

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

            For the transition period from __________ to __________

                        Commission file number 000-17741

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

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements for the past 90 days.

                                           Yes   [X]    No  [ ]

Indicate  by  check mark whether the registrant has submitted electronically and
posted  on  its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this  chapter)  during  the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).

                                           Yes   [ ]   No   [ ]

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

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

Indicate  by check mark whether the registrant is a shell company (as defined by
Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

State the number of shares outstanding of each of the Issuer's classes of common
stock,  as  of  the  latest practicable date: no par value per share: 12,166,355
outstanding as of July 1, 2010.

<PAGE>

<TABLE>
<CAPTION>

                                  EPOLIN, INC.

                               TABLE OF CONTENTS

                                                                                  PAGE
PART I - FINANCIAL INFORMATION

<S>     <C>         <C>                                                            <C>
         Item 1.    Financial Statements.                                           3
         Item 2.    Management's  Discussion   and   Analysis   of   Financial      3
                    Condition and Results of Operations.
         Item 3.    Quantitative and Qualitative Disclosures About Market Risk.     9
         Item 4T.   Controls and Procedures.                                        9

PART II - OTHER INFORMATION

         Item 1.    Legal Proceedings.                                              10
         Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.    10
         Item 3.    Default upon Senior Securities.                                 10
         Item 4.    Submission of Matters to a Vote of Security Holders.            10
         Item 5.    Other Information.                                              10
         Item 6.    Exhibits.                                                       10

SIGNATURES                                                                          11
</TABLE>

                                       2

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

      See the Consolidated Financial Statements annexed to this report.

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

      The  following  discussion  should be read in conjunction with the audited
consolidated  financial  statements and the notes thereto appearing elsewhere in
this report and is qualified in its entirety by the foregoing.

Forward-Looking Statements

      This  report  contains  certain forward-looking statements and information
relating  to  the  Company that are based on the beliefs and assumptions made by
the  Company's  management  as  well  as  information currently available to the
management.  When  used  in  this  document,  the words "anticipate", "believe",
"estimate",  and  "expect"  and  similar  expressions,  are intended to identify
forward-looking  statements.  Such  statements  reflect the current views of the
Company  with  respect  to  future  events  and  are  subject  to certain risks,
uncertainties   and   assumptions.   Should  one  or  more  of  these  risks  or
uncertainties  materialize,  or  should  underlying assumptions prove incorrect,
actual  results  may vary materially from those described herein as anticipated,
believed,  estimated  or  expected. Certain of these risks and uncertainties are
discussed  in  Part I, Item 1A "Risk Factors" of the Company's Form 10-K for the
year  ended  February  28,  2010.  The  Company  does not intend to update these
forward-looking statements.

Executive Overview

      Epolin,  Inc. (the "Company", "we", "us" and "our") which was incorporated
in  the  State  of  New  Jersey  in  May 1984, is a specialized chemical company
primarily  engaged  in the manufacturing, marketing, research and development of
dyes  and  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. Paralleling
the  growth  of the dye business, we maintain a level of production and sales of
specialty products made on a custom basis. These include additives for plastics,
thermochromic  materials  for use in paints as well as other specialty chemicals
made  in  low  volume  to  sell at prices that reflect the value of the product.
However,  unlike  the  dye  business,  we  do  not expect our specialty chemical
business to grow.

      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.  During  the three months ended May 31, 2010, approximately 32.9% of
sales  were  to  three  customers.  During  the three months ended May 31, 2009,
approximately  48.1%  of  sales were to three customers. The loss of one or more
key customers could have a material adverse effect on the Company.

Results of Operations

      The  following tables set forth operations data for the three months ended
May 31, 2010 and 2009.

                                       3
<PAGE>
                             Three Months Ended May 31,
                             --------------------------

                                            2010          2009        % change
                                            ----          ----        --------

    Sales                                 $811,014       $726,169       11.7%

    Gross profit                           412,697        470,514      -12.3%

    Gross profit percentage                   50.9%          64.8%     -13.9%

    Selling, general & administrative      363,901        259,065       40.5%
                                          --------       --------

    Operating income                        48,796        211,449      -76.9%
    Other Income                             3,351         12,367      -72.9%
                                          --------       --------

    Income before taxes                     52,147        223,816      -76.7%

    Income taxes                            20,767         83,950      -75.3%

    Net income (after taxes)              $ 31,380       $139,866      -77.6%
                                          ========       ========

Sales

      For  the  three months ended May 31, 2010, sales were $811,000 as compared
to  $726,000  for the three months ended May 31, 2009, an increase of $85,000 or
11.7%.

      Such  increase  in  sales  for  the  three  months  ended  May 31, 2010 is
primarily  due  to  increased  sales  in the light management market which sales
increased by $168,000 compared to the prior year period, offset by reduced sales
in  the  eye  protection market which sales decreased by $14,000 and the ink and
coating  market  which  sales  decreased  by  $79,000 compared to the prior year
period.  In  both  the three months ended May 31, 2010 and May 31, 2009, the eye
protection  market  represented  our  largest  market  with  sales  in  the  eye
protection  representing  51.5% and 59.5% of sales in the three months ended May
31,  2010  and  2009,  respectively.  Sales  in  the  eye protection market were
$418,000  for  the  three months ended May 31, 2010 compared to $432,000 for the
three  months  ended  May  31, 2009. For the light management market, sales were
$297,000  and  $130,000  for  the three months ended May 31, 2010 and 2009. With
regard  to  the  ink and coating market, sales were $54,000 for the three months
ended May 31, 2010 compared to $132,000 for the three months ended May 31, 2009.
For the three months ended May 31, 2010, sales in the custom market were $40,000
compared to $30,000 for the three months ended May 31, 2009.

      Categorized  by  geographic area, sales in the United States decreased for
the  three  months  ended  May 31, 2010 while sales increased in Asia and Europe
compared  to  the  prior  year  period.  For the three months ended May 31, 2010
compared  to  the  prior  year  period,  sales decreased in the United States to
$569,000  from $665,000, while in Asia sales increased to $107,000 from $21,000,
and in Europe sales increased to $132,000 from $39,000.

Gross Profit

      Gross  profit,  defined as sales less cost of sales, was $413,000 or 50.9%
of  sales  for the three months ended May 31, 2010 compared to $471,000 or 64.8%
of  sales for the three months ended May 31, 2009, a decrease of 13.9%. In terms
of  absolute  dollars,  gross profit decreased $58,000 in the three months ended
May 31, 2010 compared to the prior year period.

      Cost  of  sales was $398,000 for the three months ended May 31, 2010 which
represented  49.1%  of sales compared to $256,000 for the three months ended May
31, 2009 which represented 35.3% of sales. In terms of absolute dollars, cost of
sales increased $142,000 for the three months ended May 31, 2010 compared to the
prior year period.

Selling, General and Administrative Expenses

      Selling,  general  and  administrative  expenses  increased to $364,000 or
44.9%  of  sales for the three months ended May 31, 2010 compared to $259,000 or
35.7% of sales for the three months ended May 31, 2009, an increase of $105,000.
Such increase in absolute dollars was primarily due to a substantial increase in

                                       4

<PAGE>

professional fees for services not regularly incurred principally due to actions
taken  in  connection  with  the potential sale of the Company and a much lesser
increase  in  officers'  salaries  and  administrative  salaries  which increase
principally  resulted  from  the timing of the payment of bonuses in the current
fiscal  year,  and  increases  in  commissions  resulting  from  an  increase in
commission sales in Europe.

Operating Income

      Operating  income,  in terms of absolute dollars, decreased to $49,000 for
the three months ended May 31, 2010 from $211,000 for the three months ended May
31,  2009, a decrease of $162,000. While sales increased by $85,000 in the three
months  ended  May 31, 2010 compared to the prior year period, such increase was
offset  by  a  greater  increase  in  cost  of sales and in selling, general and
administrative  expenses  compared to the prior year period. As mentioned above,
cost  of  sales  increased  $142,000  for  the  three  months ended May 31, 2010
compared  to  the  prior  year  period  and  selling, general and administrative
expenses  increased $105,000 for the three months ended May 31, 2010 compared to
the prior year period principally due to the reasons discussed above.

Other Income

      Total  other  income  was  $3,000  for the three months ended May 31, 2010
compared  to  $12,000  for the three months ended May 31, 2009. We had no rental
income  for  the  three  months  ended May 31, 2010 compared to rental income of
$4,500  for  the  three  months  ended  May 31, 2009. In May 2009, our subtenant
abandoned  the  premises  which it had been subleasing since September 2005. Our
interest  income  was $3,000 for the three months ended May 31, 2010 compared to
$8,000 for the prior year period.

Net Income

      During  the  three  months  ended  May 31, 2010, we reported income before
taxes  of  $52,000  as compared to income before taxes of $224,000 for the three
months ended May 31, 2009, a decrease of $172,000. Income taxes were $21,000 for
the  three months ended May 31, 2010 compared to income taxes of $84,000 for the
three  months  ended  May  31,  2009. The changes in income taxes were generally
attributed  to  changes  from period to period in sales and expenses. Net income
after  taxes was $31,000 or $- per share for the three months ended May 31, 2010
as  compared  to  net  income after taxes of $140,000 or $0.01 per share for the
three  months  ended  May  31,  2009. As a percentage of sales, net income after
taxes  was  3.8%  of  sales  for the three months ended May 31, 2010 compared to
19.3% of sales for the three months ended May 31, 2009.

      Net  income  in  the future will be dependent upon our ability to maintain
revenues  in  excess  of  our  cost of sales and other expenses. Prior to fiscal
2007,  sales  had  grown  for  a  number  of  consecutive years. In fiscal 2007,
however, sales decreased by $91,000 compared to fiscal 2006 and, in fiscal 2008,
sales  decreased  by  $17,000  compared to fiscal 2007. The largest reduction in
sales  in recent years occurred in fiscal 2009 with sales decreasing by $501,000
compared  to  fiscal  2008.  While  sales  continued  to decrease in fiscal 2010
compared  to  fiscal 2009, such decrease was not nearly as dramatic as the prior
year  with  sales decreasing by $147,000 in fiscal 2010 compared to fiscal 2009.
Nevertheless,  we  have  had  four  consecutive  years of sales having decreased
compared  to  sales  in the immediate prior year. One positive sign, however, is
that  net  income  did  improve by $142,000 in fiscal 2010 compared to the prior
year.  This  favorably  compares to net income in fiscal 2009 compared to fiscal
2008  in  which  net  income  decreased by $396,000. However, in the first three
months  of  fiscal  2011, while sales increased by $85,000 compared to the prior
year  period,  net  income  decreased  by  $109,000 in the first three months of
fiscal 2011 compared to the first three months of fiscal 2010.

Operations Outlook

      Following  a  period  of  readjustment in our business priorities, we were
able to achieved $3,701,000 in sales for fiscal 2006 which was $821,000 or 28.5%
greater  than the prior fiscal year. In fiscal 2007, however, sales decreased to
$3,610,000,  a  decrease  of 2.5% from the prior year, and in fiscal 2008, sales
decreased  to  $3,593,000,  a  decrease of 0.5% from fiscal 2007. This continued
into  fiscal  2009 in which sales decreased at a much greater rate to $3,092,000
or  14.0%  compared  to fiscal 2008. While sales continued to decrease in fiscal
2010  compared  to  fiscal 2009, such decrease was not nearly as dramatic as the
change  between  fiscal  2008 and 2009. During fiscal 2010 sales were $2,945,000
compared  to  sales  of  $3,092,000  for  fiscal 2009, a decrease of $147,000.
During  these  periods  of  reduced  sales,  we  had a major decline in sales of
security inks for the credit card market which had been a key area of our growth
from  2005  to  2007.  While this market remains a source of business for us, we

                                       5

<PAGE>

will  likely  not be able to achieve the same level of sales in the future which
we  achieved from 2005 to 2007 in the security inks market. Nevertheless, we are
confident  that  with  our  core  group of products, we will be able to maintain
sales  in our principal markets, such as the eye protection market and the light
management market, while always seeking new areas for the use of our dyes.

      As  a  result  of  expressions  of  interest received, management began in
fiscal 2009 to explore strategic alternatives for the Company. In February 2009,
the  Company  retained  Millburn  Capital  Group  as  its  financial  advisor in
connection  with  the Board's decision to explore strategic alternatives for the
Company,  including  the potential sale of the Company. In May 2009, the Company
announced that it had entered into a non-binding letter of intent whereby all of
the  outstanding  capital  stock of the Company would be acquired by a strategic
purchaser.  Pursuant to an amendment entered into in September 2009, the Company
had agreed to negotiate exclusively with such strategic purchaser until December
15,  2009.  In November 2009, such proposed purchaser terminated the non-binding
letter  of  intent  as  a  result of which the Company's obligation to negotiate
exclusively  with such purchaser was terminated as well. Such proposed purchaser
has  recently  resumed  its interest in acquiring the Company and as of June 23,
2010,  the  Company  entered into an exclusivity letter whereby it has agreed to
negotiate  exclusively  with  such  proposed  purchaser for a period of 90 days.
There  can  be  no  assurance  that  such  exclusivity  period  will result in a
definitive  agreement  being  executed by the parties, or, if executed, that any
proposed transaction will be approved by the shareholders of the Company or that
any such transaction will be completed. The Company does not currently intend to
publicly  disclose  additional  information about the status of this process but
will publicly report all required information on a timely basis.

      In order to facilitate the environmental approvals which will be necessary
in  conjunction  with  any  potential  sale or similar transaction involving the
Company,  the  Company  has engaged a licensed site remediation professional and
special  environmental counsel in the State of New Jersey. Certain environmental
testing  has  been done to date and other testing and other related actions will
continue.  Such  efforts  are  expected to be costly and may require funds to be
placed  in  escrow  or  alternative  arrangements to be made in order to satisfy
State of New Jersey requirements.

      The Company maintains a Simplified Employee Pension Plan which was adopted
in 1994 for its employees as a retirement and income tax reduction facility.  We
are currently investigating whether the Plan has met the requirements of the
Internal Revenue Service regarding contribution limits and employee deferral
amounts.  We have taken the steps to have all years of the Plan tested to insure
our compliance and will take any appropriate corrective measures.

Liquidity and Capital Resources

      Our  primary  source  of  funds is cash flow from operations in the normal
course  of  selling  products.  On  May  31,  2010,  we  had  working capital of
$3,178,000,  a  debt  to equity ratio of $0.09 to 1, and stockholders' equity of
$4,069,00  compared  to working capital of $3,099,000, a debt to equity ratio of
0.06  to  1, and stockholders' equity of $4,038,000 on February 28, 2010. On May
31,  2010,  we  had  $2,048,000  in  cash  and cash equivalents, total assets of
$4,419,000 and total liabilities of $349,000, compared to $1,909,000 in cash and
cash  equivalents,  total assets of $4,299,000 and total liabilities of $261,000
on February 28, 2010.

      Net  cash  provided by operating activities for the three months ended May
31,  2010  was $124,000 which was primarily the result of net income of $31,000,
plus  decreases  in  inventories  of  $57,000,  prepaid  expenses of $21,000 and
prepaid taxes of $12,000, and an increase in accounts payable of $82,000, offset
by  an  increase  in  accounts  receivable  of  $115,000.  Net  cash provided by
operating  activities  for  the three months ended May 31, 2009 was $3,000 which
was  primarily  the  result of net income of $140,000, plus decreases in prepaid
expenses  of  $20,000  and  prepaid  taxes  of  $87,000, offset by a decrease in
accrued expenses of $228,000 and increases in accounts receivable of $17,000 and
inventories of $21,000.

      Net  cash  provided by investing activities for the three months ended May
31,  2010 was $15,000 due a decrease in cash value of a life insurance policy of
$20,000 offset by payments for property and equipment of $5,000, compared to net
cash  provided by investing activities of $10,000 for the three months ended May
31,  2009  due  a  decrease  in cash value of a life insurance policy of $38,000
offset by payments for property and equipment of $28,000.

      For  the  three  months ended May 31, 2010 and 2009, there was no net cash
from or used by financing activities.

      We  anticipate, based on currently proposed plans and assumptions relating
to  our  operations,  that  our  current cash and cash equivalents together with

                                       6
<PAGE>

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 2011 and beyond
will  depend  primarily  upon  level of sales of our products, inventory levels,
product development, sales and marketing expenditures and capital expenditures.

      Inflation has not significantly impacted our operations.

Significant Accounting Policies

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

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

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

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

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

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

      Stock-based  Compensation  -  Effective  March  1,  2006,  we have adopted
Statement  of  Financial  Accounting Standards ("SFAS") No. 123(R), "Share-Based
Payment".  SFAS  123R  requires 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,  we  have  adapted  the  modified-prospective transition method. Prior
periods were not restated to reflect the impact of adopting the new standard. We
determine  the  fair  value  of stock-based compensation using the Black-Scholes
option-pricing  model,  which  requires  us to make assumptions regarding future
dividends,  expected  volatility  of  our  stock,  and the expected lives of the
options.  Under  SFAS  123R  we  also  make  assumptions regarding the number of
options and the number of shares of restricted stock and performance shares that
will  ultimately  vest.  As  a  result  of the adoption of FAS 123R, stock-based

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<PAGE>

compensation   expense   recognized   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.

Recently Adopted Accounting Standards

      On  March  1,  2008, we adopted Statement of Financial Accounting Standard
("SFAS") No. 157, "Fair Value Measurements" ("FAS 157") for financial assets and
liabilities,  which clarifies the meaning of fair value, establishes a framework
for  measuring fair value and expands disclosures about fair value measurements.
Fair value is defined under FAS 157 as the exchange price that would be received
for  an  asset  or  paid  to  transfer  a  liability  in  the  principal or most
advantageous  market  for  the  assets  or liabilities in an orderly transaction
between  market participants on the measurement date. Subsequent changes in fair
value  of  these  financial assets and liabilities are recognized in earnings or
other comprehensive income when they occur. The effective date of the provisions
of FAS 157 for non-financial assets and liabilities, except for items recognized
at  fair  value  on  a  recurring  basis,  was  deferred by Financial Accounting
Standards  Board  ("FASB")  Staff  Position  FAS 157-2 ("FSP FAS 157-2") and are
effective  for  the fiscal year beginning March 1, 2009. The adoption of FAS 157
for  financial assets and liabilities did not have an impact on our consolidated
financial position or results of operations.

      Also,  effective  March  1,  2008, we adopted SFAS No. 159 "The Fair Value
Option  for Financial Assets and Financial Liabilities" ("FAS 159") which allows
an  entity  the  irrevocable  option  to  elect  fair  value for the initial and
subsequent  measurement  for  certain  financial  assets  and  liabilities  on a
contract-by-contract  basis.  As  of  February 28, 2010, we have not elected the
fair  value  option  for  any additional financial assets and liabilities beyond
those  already  prescribed  by  accounting  principles generally accepted in the
United States.

      In   October   2008,  the  FASB  issued  Staff  Position  No.  FAS  157-3,
"Determining  the Fair Value of a Financial Asset in a Market That Is Not Active
("FSP  FAS  157-3")."  FSP  FAS  157-3 clarifies the application of FAS 157 in a
market that is not active and defines additional key criteria in determining the
fair  value of a financial asset when the market for that financial asset is not
active. FSP FAS 157-3 applies to financial assets within the scope of accounting
pronouncements that require or permit fair value measurements in accordance with
FAS  157.  FSP  FAS 157-3 was effective upon issuance and the application of FSP
FAS  157-3  did  not  have  a  material  impact  on  our  consolidated financial
statements.

Other Information

      Subsequent  to the end of fiscal 2006, the Board of Directors approved the
adoption  of  a  dividend policy under which we will issue a regular annual cash
dividend  on shares of our Common Stock. The amount of the dividend, record date
and  payment  date  will  be  subject  to  approval  every  year by the Board of
Directors.  In  accordance  with  the new dividend policy, a regular annual cash
dividend of $0.02 per share was paid in each of May 2006, May 2007 and May 2008.
In  addition,  since  of  the  adoption of the dividend policy in fiscal 2007, a
special  cash  dividend  of $0.02 per share was paid in each of January 2007 and
January  2008,  and  a supplemental special cash dividend of $0.04 per share was
paid  in  August  2008.  No  further  dividends have been paid since August 2008
primarily  due  to  the  Company's  decision to seek strategic alternatives. The
Board determined to postpone any action regarding the declaration of the regular
annual cash dividend for 2009 and beyond pending the outcome of this process.

      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.
There  were  no  repurchases  made  by the Company of shares of its Common Stock
during  the fiscal years ended February 29, 2008, February 28, 2009 and February
28,  2010,  and  during  the  first three months of fiscal 2011. In prior years,
since the adoption of the program in August 2001, a total of 331,500 shares were
repurchased at a cumulative cost of $195,766.

                                       8

<PAGE>

Off-Balance Sheet Arrangements

      We  do  not  have  any  off balance sheet arrangements that are reasonably
likely  to have a current or future effect on our financial condition, revenues,
and results of operations, liquidity or capital expenditures.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

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

ITEM 4T. Controls and Procedures.

      Under  the  supervision  and  with  the  participation  of our management,
including  the  Principal  Executive Officer and Principal Financial Officer, we
have  evaluated  the effectiveness of our disclosure controls and procedures (as
defined  in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end
of  the  period  covered by this report. Based on that evaluation, the Principal
Executive Officer and Principal Financial Officer have concluded that, as of May
31, 2010, 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  material changes in internal control over financial
reporting  that  occurred  during the fiscal quarter covered by this report that
have  materially  affected,  or  are  reasonably likely to materially affect our
internal control over financial reporting.

                                       9
<PAGE>
                          PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

         None.

Item 3. Defaults Upon Senior Securities.

         None.

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

         None.

Item 5. Other Information.

                 None.

ITEM 6. Exhibits.

      31.1  Certification  of Chief Executive Officer pursuant to Section 302 of
            the  Sarbanes-Oxley  Act  of 2002 (Rules 13a-14  and 15d-14  of  the
            Exchange Act)
      31.2  Certification of Principal Financial Officer pursuant to Section 302
            of  the Sarbanes-Oxley  Act of 2002 (Rules  13a-14 and 15d-14 of the
            Exchange Act)
      32.1  Certification  pursuant  to Section  906  of  the Sarbanes-Oxley Act
            of 2002 (18 U.S.C. 1350)

                                       10
<PAGE>
                                   SIGNATURES

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

                                              EPOLIN, INC.
                                              (Registrant)



Dated: July 20, 2010                     By: /s/ Murray S. Cohen
                                             ---------------------------
                                             Murray S. Cohen,
                                             Chairman of the Board



Dated: July 20, 2010                     By: /s/ James Ivchenko
                                             ---------------------------
                                             James Ivchenko,
                                             President
                                             (Principal Financial Officer)


                                       11

<PAGE>



                          EPOLIN, INC. AND SUBSIDIARY

                 CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

                               THREE MONTHS ENDED

                             MAY 31, 2010 AND 2009



<PAGE>


                                    CONTENTS

<TABLE>
<CAPTION>
                                                                    PAGE
                                                                    ----
<S>                                                                 <C>
Consolidated Financial Statements:

    Consolidated Balance Sheets (Unaudited)                         2 - 3

    Consolidated Statements of Income (Unaudited)                     4

    Consolidated Statements of Stockholders' Equity (Unaudited)       5

    Consolidated Statements of Cash Flows (Unaudited)                 6

Notes to Consolidated Financial Statements (Unaudited)              7 - 22
</TABLE>


                                       1

<PAGE>


                          EPOLIN, INC. AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                   MAY 31,
                                                                    2010      FEBRUARY 28,
                                                                (UNAUDITED)      2010
                                                                -----------   ------------
<S>                                                             <C>           <C>
CURRENT ASSETS:
   Cash and cash equivalents                                    $ 2,048,287      1,908,752
   Accounts receivable                                              583,735        469,035
   Inventories                                                      626,824        683,995
   Prepaid expenses                                                  34,569         55,094
   Prepaid taxes                                                     21,604         33,870
   Deferred tax assets-current portion                               14,433         14,698
                                                                -----------   ------------

      Total current assets                                        3,329,452      3,165,444
                                                                -----------   ------------

PLANT, PROPERTY AND EQUIPMENT - AT COST:
   Land                                                              81,000         81,000
   Building and improvements                                        774,550        770,537
   Laboratory equipment                                             210,555        210,555
   Furniture and office equipment                                   273,863        273,863
   Leasehold improvements                                           532,773        532,131
                                                                -----------   ------------
      Total                                                       1,872,741      1,868,086
                                                                -----------   ------------

   Less: Accumulated depreciation and amortization                1,029,513      1,008,372
                                                                -----------   ------------
      Net plant, property and equipment                             843,228        859,714
                                                                -----------   ------------

OTHER ASSETS:
   Deferred tax assets-non current portion                           77,349         85,460
   Cash value - life insurance policy                               168,832        188,641
                                                                -----------   ------------

      Total other assets                                            246,181        274,101
                                                                -----------   ------------

         Total                                                  $ 4,418,861      4,299,259
                                                                ===========   ============
</TABLE>

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

                                       2

<PAGE>

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

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                   MAY 31,
                                                                    2010      FEBRUARY 28,
                                                                (UNAUDITED)       2010
                                                                -----------   ------------
                                                                <C>           <C>
CURRENT LIABILITIES:
   Accounts payable                                              $   98,850         16,777
   Accrued expenses                                                  50,304         47,145
   Taxes payable:
     Payroll                                                          2,208          2,208
                                                                -----------   ------------

        Total current liabilities                                   151,362         66,130

OTHER LIABILITIES - Deferred compensation                           198,072        195,082
                                                                -----------   ------------

        Total liabilities                                           349,434        261,212
                                                                -----------   ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock, $2.50 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;
      13,115,000 shares issued, and 12,166,355 shares
      shares outstanding at May 31, 2010 and February
      2010, repectively                                           2,364,693      2,364,693
   Additional paid-in capital                                       124,820        124,820
   Retained earnings                                              1,930,996      1,899,616
                                                                -----------   ------------

        Total                                                     4,420,509      4,389,129
   Less: Treasury stock - at cost                                   351,082        351,082
                                                                -----------   ------------

      Total stockholders' equity                                  4,069,427      4,038,047
                                                                -----------   ------------

        Total                                                   $ 4,418,861      4,299,259
                                                                ===========   ============
</TABLE>

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

                                       3

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                    THREE MONTHS ENDED MAY 31, 2010 AND 2009

<TABLE>
<CAPTION>
                                                                   2010           2009
                                                               ------------   ------------
<S>                                                            <C>            <C>

SALES                                                          $    811,014        726,169
                                                               ------------   ------------

COST OF SALES AND EXPENSES:
   Cost of sales                                                    398,317        255,655
   Selling, general and administrative                              363,901        259,065
                                                               ------------   ------------

      Total                                                         762,218        514,720
                                                               ------------   ------------

OPERATING INCOME                                                     48,796        211,449
                                                               ------------   ------------

OTHER INCOME:
   Rental income                                                         --          4,500
   Interest                                                           3,351          7,867
                                                               ------------   ------------

      Total                                                           3,351         12,367
                                                               ------------   ------------

INCOME BEFORE TAXES                                                  52,147        223,816

INCOME TAXES                                                         20,767         83,950
                                                               ------------   ------------

NET INCOME                                                     $     31,380        139,866
                                                               ============   ============

PER SHARE DATA:
   Basic earnings per common share                             $         --           0.01
                                                               ============   ============

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

   Weighted average number of common shares outstanding          12,138,095     12,066,355
                                                               ============   ============

   Fully diluted number of common shares outstanding             12,143,195     12,106,791
                                                               ============   ============
</TABLE>

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

                                       4

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
                    THREE MONTHS ENDED MAY 3, 2010 AND 2009

<TABLE>
<CAPTION>
                             NUMBER OF                ADDITIONAL
                              SHARES       COMMON      PAID-IN-    RETAINED   TREASURY    TREASURY   STOCKHOLDERS'
                              ISSUED        STOCK       CAPITAL    EARNINGS    SHARES       STOCK      EQUITY
                            ----------   ----------   ----------   ---------  --------    ---------  -------------
<S>                         <C>          <C>          <C>          <C>        <C>         <C>        <C>
BALANCE - March 1, 2009     13,015,000   $2,364,693     104,820    1,430,546   948,645    (351,082)     3,548,977

NET INCOME                          --           --          --      139,866        --          --        139,866
                            ----------   ----------   ---------    ---------  --------    --------    -----------

BALANCE - May 31, 2009      13,015,000   $2,364,693     104,820    1,570,412   948,645    (351,082)     3,688,843
                            ==========   ==========   =========    =========  ========    ========    ===========

BALANCE - March 1, 2010     13,115,000   $2,364,693     124,820    1,899,616   948,645    (351,082)     4,038,047

NET INCOME                          --           --          --       31,380        --          --         31,380
                            ----------   ----------   ---------    ---------  --------    --------    -----------

BALANCE - May 31, 2010      13,115,000   $2,364,693     124,820    1,930,996   948,645    (351,082)     4,069,427
                            ==========   ==========   =========    =========  ========    ========    ===========
</TABLE>

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

                                       5

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                    THREE MONTHS ENDED MAY 31, 2010 AND 2009

<TABLE>
<CAPTION>
                                                                   2010           2009
                                                               ------------   ------------
<S>                                                            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                  $     31,380        139,866
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation and amortization                                  21,141         25,300
      Deferred tax expense                                            8,376         (2,680)
      Obligation under deferred compensation agreement                2,990          1,423
   (Increase) decrease in:
      Accounts receivable                                          (114,700)       (17,148)
      Inventories                                                    57,171        (20,941)
      Prepaid expenses                                               20,525         20,017
      Prepaid taxes                                                  12,266         86,530
   Increase (decrease) in:
      Accounts payable                                               82,073         (1,640)
      Accrued expenses                                                3,159       (227,658)
                                                               ------------   ------------

         Net cash provided by operating activities                  124,381          3,069
                                                               ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   (Increase) decrease in cash value - life insurance policy         19,809         37,909
   Payments for plant, property and equipment                        (4,655)       (27,575)
                                                               ------------   ------------

         Net cash provided (used) in investing activities            15,154         10,334
                                                               ------------   ------------

INCREASE (DECREASE) IN CASH                                         139,535         13,403

CASH AND CASH EQUIVALENTS:
   Beginning                                                      1,908,752      1,544,966
                                                               ------------   ------------

   Ending                                                      $  2,048,287      1,558,369
                                                               ============   ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
   Income taxes paid                                           $     33,794        127,818
                                                               ============   ============
</TABLE>

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

                                       6

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A - ORGANIZATION:

     We are 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.

     Our wholly owned Subsidiary,  Epolin Holding Corporation, was  incorporated
in  New Jersey as a real estate holding company whose assets consist of land and
a building. On January 29, 1998, we acquired 100% of the stock in Epolin Holding
Corporation. Prior to acquisition, two officers/stockholders 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 our Annual Report on Form 10-K for the fiscal
year  ended  February 28,  2010. Such  interim Consolidated Financial Statements
reflect all normal and recurring adjustments that, in the opinion of management,
are  necessary  for a  fair presentation  of our  financial position, results of
operations   and   cash  flows  for   the  periods  presented.  All  significant
intercompany accounts and transactions have been eliminated.

     The results of operations for the  three-month interim period ended May 31,
2010  and  2009 are not necessarily  indicative of the results of operations for
the fiscal year ending February 28, 2011.

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  - We have 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,  we  periodically evaluate the  stability of the financial institution and
brokerage house.

     Financial instruments, which  potentially subject  us to  concentrations of
credit  risk,  consist principally of  accounts receivable. Generally, we do not
require collateral or other securities to support its accounts receivable. Three
customers represented 39.4% of our trade receivables at May 31, 2010.

SOURCE  OF  RAW MATERIALS  - We  purchase chemicals  from several large chemical
manufacturers,  further processing  them into its saleable products. Although we
limit  ourselves to a relatively small number of suppliers, it is not restricted
to  such  suppliers, and  availability  of  such  raw materials  is  widespread.

                                       7

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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

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  our plant, property and equipment are as
follows:

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

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

     Depreciation and amortization expense totaled  $21,141  and $25,300 for the
three months ended May 31, 2010 and 2009, respectively.

INCOME  TAXES  - We  account  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.

     FASB Interpretation No. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES - AN
INTERPRETATION  OF FASB STATEMENT NO. 109 (FIN 48), clarifies the accounting for
uncertainty  in  income tax positions, as  defined. FIN 48 requires, among other
matters,  that  we recognize  in our  financial statements, the  impact of a tax
position,  if that position is more likely than not of being sustained on audit,
based  on  the technical  merits  of  the position.  We  became  subject to  the
provisions  of  FIN 48 as of  March 1, 2007,  the beginning of fiscal year ended
2008,  and  analyzed the  filing  positions  in all  of  the  federal and  state
jurisdictions  where it  is required to file  income tax returns, as well as all
open  tax years in  these jurisdictions. The adoption of FIN 48 had no impact on
our  financial  statements for  fiscal year ended  2010. As of  May 31, 2010 and
2009,  we  did not record  any unrecognized tax benefits.  Our policy, if it had
unrecognized benefits, is to recognize accrued interest and penalties related to
unrecognized tax benefits as interest expense and other expense, respectively.

                                       8

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

USE  OF  ESTIMATES - The  preparation of  our 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.  We base  our  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 - We recognize revenue consistent with the provisions of SEC
Staff  Accounting Bulletin  No.  104, "Revenue  Recognition",  which sets  forth
guidelines  in the  timing of  revenue recognition  based upon  factors such  as
passage  of title, payments, and customer acceptance. Any amounts received prior
to  satisfying our  revenue recognition  criteria will  be recorded  as deferred
revenue  in  the accompanying  balance sheet. We  recognize revenue from product
sales  when there  is persuasive evidence that an arrangement exists, when title
has passed, the price is fixed or determinable, and we are reasonably assured of
collecting  the resulting  receivable. Our policy is to replace certain products
that  are  in nonconformity  with 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. Replacement costs are expensed as incurred.

REGULATIONS  - We have expended approximately $15,990 and $5,571 through May 31,
2010  and 2009, respectively, to maintain compliance with certain Federal, 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.

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.

ADVERTISING  COSTS -  Advertising  costs, included  in  operating expenses,  are
expensed  as  incurred. Advertising expenses  amounted to $10,116 and $6,480 for
the three months ended May 31, 2010 and 2009, respectively.

                                       9

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


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

STOCK-BASED COMPENSATION - Effective March 1, 2006, we have adopted Statement of
Financial  Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment". SFAS
123R  requires 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, we have
adapted  the  modified-prospective transition  method.  Prior  periods were  not
restated  to  reflect the impact of  adopting the new standard. We determine the
fair  value  of stock-based  compensation using the Black-Scholes option-pricing
model,  which  requires  us  to make  assumptions  regarding  future  dividends,
expected  volatility of  its stock, and the expected lives of the options. Under
SFAS  123R we  also make  assumptions regarding  the number  of options  and the
number of shares of restricted stock and performance shares that will ultimately
vest.  As a result of the adoption of FAS 123R, stock-based compensation expense
recognized 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.

     Prior to the adoption of FAS 123R and for the year ended February 28, 2007,
no  tax  benefits from the  exercise of stock  options have been recognized. Any
future  excess  tax benefits derived from  the exercise of stock options will be
recorded  prospectively and  reported as cash flows from financing activities in
accordance with FAS 123R.

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

     The weighted average Black-Scholes value of options granted under the stock
plans   during  the  three  months  ended  May  31,  2010  and  2009  was  $.18,
respectively.  The fair  value of each option  grant is estimated on the date of
grant  using the  Black-Scholes option-pricing model with the following weighted
average assumptions used for grants:

                                                               MAY 31,
                                                     -------------------------
                                                         2010           2009
                                                     -----------     ---------
     Weighted average expected life in years               2              2
     Volatility                                          7.0%           7.0%
     Risk-free interest rate                             2.8%           4.0%

                                       10

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

RECENTLY  ADOPTED ACCOUNTING  STANDARDS - On March 1, 2008, we adopted Statement
of  Financial  Accounting Standard  ("SFAS") No.  157, "Fair Value Measurements"
("FAS 157") for financial assets and liabilities, which clarifies the meaning of
fair  value,  establishes a  framework  for  measuring  fair value  and  expands
disclosures  about fair  value measurements. Fair value is defined under FAS 157
as  the exchange price that would be received for an asset or paid to transfer a
liability  in the  principal  or  most advantageous  market  for  the assets  or
liabilities  in  an  orderly  transaction between  market  participants  on  the
measurement  date.  Subsequent changes  in fair value  of these financial assets
and  liabilities  are recognized in  earnings or other comprehensive income when
they  occur.  The effective date of  the provisions of FAS 157 for non-financial
assets and liabilities, except for items recognized at fair value on a recurring
basis,  was deferred  by  Financial Accounting  Standards  Board ("FASB")  Staff
Position  FAS 157-2  ("FSP FAS  157-2") and  are effective  for the  fiscal year
beginning  March 1,  2009. The  adoption  of FAS  157 for  financial assets  and
liabilities  did  not have an  impact on  our consolidated financial position or
results  of  operations.  For  additional  information  on  the  fair  value  of
financial assets and liabilities, see Note N - Fair Value Measurements.

     Also,  effective  March  1, 2008, we adopted SFAS No. 159 "The  Fair  Value
Option  for Financial Assets and Financial Liabilities" ("FAS 159") which allows
an  entity the  irrevocable  option to  elect  fair value  for  the initial  and
subsequent  measurement  for  certain  financial assets  and  liabilities  on  a
contract-by-contract  basis.  As of May  31, 2010, we  have not elected the fair
value  option  for any additional  financial assets and liabilities beyond those
already  prescribed  by accounting  principles generally  accepted in the United
States.

     In October 2008, the FASB issued Staff Position No. FAS 157-3, "Determining
the  Fair  Value of a Financial  Asset in a Market  That Is Not Active ("FSP FAS
157-3")." FSP FAS 157-3 clarifies the application of FAS 157 in a market that is
not  active and defines additional key criteria in determining the fair value of
a  financial asset  when the market for  that financial asset is not active. FSP
FAS   157-3  applies   to  financial  assets  within  the  scope  of  accounting
pronouncements that require or permit fair value measurements in accordance with
FAS  157. FSP  FAS 157-3 was effective  upon issuance and the application of FSP
FAS  157-3  did  not  have  a material  impact  on  our  consolidated  financial
statements.

                                       11

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE C - INCOME TAXES:

1.  Federal and State deferred tax assets include:

                                                            MAY 31,
                                                   ------------------------
                                                       2010         2009
                                                   -----------   ----------
          Temporary differences:
             Accelerated amortization              $     4,318        4,698
             Deferred compensation                      71,410       95,809
             Stock-based compensation                   16,054       16,054
                                                   -----------   ----------
               Total                                    91,782      116,561

          Less: Current portion                         14,433       11,794
                                                   -----------   ----------

          Non-current portion                      $    77,349      104,767
                                                   ===========   ==========

2.  Income tax:

                                                            MAY 31,
                                                   ------------------------
                                                       2010         2009
                                                   -----------   ----------
          Current:
             Federal                               $     8,783       67,200
             State                                       3,608       19,430
                                                   -----------   ----------

               Total current                            12,391       86,630
                                                   -----------   ----------

          Deferred:
             Federal                                     6,055        2,883
             State                                       2,321          203
                                                   -----------   ----------

               Total deferred                            8,376        2,680
                                                   -----------   ----------

                  Total                            $    20,767       83,950
                                                   ===========   ==========

                                       12

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE D - TREASURY STOCK:

Consists  of  948,645 shares at  a net cost  of $351,082 as  of May 31, 2010 and
February 28, 2010, respectively. There were no purchases of treasury shares made
during the three months ended May 31, 2010 and 2009, respectively.

NOTE E - ECONOMIC DEPENDENCY:

     A material  portion  of  our  business  is  dependent  on  certain domestic
customers,  the loss of which could have a material effect on operations. During
the  three months ended May 31, 2010, approximately 32.9% of sales were to three
customers.  During  the three months ended  May 31, 2009, approximately 48.1% of
sales were to three customers.

NOTE F - RENTAL INCOME UNDER SUBLEASE:

     We entered into an agreement with a non-related party  effective  September
1,  2005 for a  term ending October 31, 2007, and continuing on a month-to-month
basis  thereafter  through May 31,  2009. Under the  terms of the agreement, the
tenant  is to  pay a base rent of  $18,000 per year. On May 31, 2009, the tenant
abandoned the property.

NOTE G - RESEARCH AND DEVELOPMENT:

     We have developed  substantial research  and  development  capability.  Our
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  our sponsored  product  research  and
product  development of $100,766 and $100,721 were included in cost of sales for
the three months ended May 31, 2010 and 2009, respectively. Expenditures for the
fiscal  year ended  2011 are projected to remain at approximately the same level
as in fiscal 2010.

NOTE H - EMPLOYEE BENEFITS:

SIMPLIFIED  EMPLOYEE PENSION PLAN - Effective June 1, 1994, we provide a
Simplified Employee Pension 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. We make contributions ranging from three
to five percent. Employer contributions totaled  $11,212 and  $11,085 for the
three  months ended May 31, 2010 and 2009,respectively.  We are currently
investigating whether the Plan has met the requirements of the Internal Revenue
Service regarding contribution limits and employee deferral amounts.  We have
taken the steps to have all years of the Plan tested to insure compliance and
will take any appropriate corrective measures.


                                       13

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE H - EMPLOYEE BENEFITS (CONTINUED):

STOCK  OPTION PLAN -  We adopted the 1998 Stock Option Plan on December 1, 1998.
Under the terms of the plan, we have 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 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  become exercisable as  to 50% of the
shares  underlying the  option on each of the second and fourth anniversaries of
the  date granted.  From inception through May 31, 2010, options granted totaled
1,242,000,  options exercised  totaled 686,000; options cancelled or expired for
all years totaled 311,000.

     A summary of the status of our 1998 stock option plan  as  of May 31, 2010,
and the changes during the three months ended May 31, 2010 and 2009 is presented
below:

                                             WEIGHTED-AVERAGE
FIXED OPTIONS:                     SHARES     EXERCISE PRICE
--------------                    --------   ----------------
Balance - February 28, 2010        245,000          $.49
                                  ========

Balance - May 31, 2010             245,000          $.49
                                  ========

Exercisable at May 31, 2010        245,000          $.49
                                  ========

STOCK OPTION PLANS - The  following  table  summarizes  information  about fixed
stock options outstanding at May 31, 2010:

<TABLE>
<CAPTION>
                  OUTSTANDING OPTIONS                          EXERCISABLE OPTIONS
---------------------------------------------------     ---------------------------------
                       NUMBER      WEIGHTED-AVERAGE       NUMBER
   RANGE OF         OUTSTANDING       REMAINING         EXERCISABLE      WEIGHTED-AVERAGE
EXERCISE PRICE      AT 05/31/10    CONTRACTUAL LIFE     AT 05/31/10       EXERCISE PRICE
--------------      -----------    ----------------     -----------      ----------------
<S>                 <C>            <C>                  <C>              <C>
    $ .41              95,000             3.7              95,000               .32
      .54             150,000             0.1             150,000               .68
</TABLE>

                                       14

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE H - EMPLOYEE BENEFITS (CONTINUED):

STOCK  OPTION AND STOCK-BASED COMPENSATION PLAN - On June 18, 2008, our Board of
Directors  approved and  adopted the Epolin, Inc. 2008 Stock Incentive Plan (the
"2008  Plan"), and  authorized us to issue  up to 1,500,000 shares of our Common
Stock  under the  2008 Plan  (subject  to adjustment  to take  account of  stock
dividends, stock splits, recapitalizations and similar corporate events).  Under
the 2008 Plan, we will have the right to issue stock options, stock appreciation
rights, restricted stock, Common Stock or convertible securities that may or may
not   be  subject   to  restrictions  or  forfeiture,  restricted  stock  units,
performance  shares  and performance  units. With  the adoption  of the new 2008
Plan,  the 1998 Plan  terminated, and we will no longer be able to grant options
under  it.  However, options that have  already been granted under the 1998 Plan
will  continue to  be outstanding. As of  May 31, 2010, 200,000 shares of Common
Stock have been granted and 1,300,000 shares remain to be granted.

     The  purpose  of  the  Plan is to provide  officers,  other  employees  and
directors  of, and consultants  to us, an incentive to (a) enter into and remain
in  our  service or  to provide  services to  us, (b)  enhance the our long-term
performance, (c) acquire a proprietary interest in us.

     The Compensation Committee or another committee of our Board  of  Directors
(or if there is no committee, the Board of Directors itself) will administer the
Plan.  It will  determine the persons to  whom awards will be made, the types of
awards  that will be  made to particular persons, the numbers of shares to which
awards  will relate, the dates when awards will vest in whole or in part and the
other  terms  of awards, including the  payments, if any, that participants will
have to make to benefit from awards.

     The 2008 Plan  provides  that each year, commencing September 1, 2008, each
person  who  serves as  a Director  during the  current year shall automatically
receive  a stock award of 25,000 shares of Common Stock. The dollar value of the
shares  of Common  Stock granted  each year  is calculated  based upon  the fair
market value of our Common Stock at the date of grant.

                                       15

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE I - SEGMENT REPORTING:

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

Sales by geographic area are as follows:

                                    THREE MONTHS ENDED
                                          MAY 31,
                               ----------------------------
                                 2010                2009
                               ---------          ---------
      United States            $ 569,235            664,920
      Asia                       107,270             20,674
      Europe                     131,914             38,530
      Other nations                2,595              2,045
                               ---------          ---------

         Total                 $ 811,014            726,169
                               =========          =========

     Two customers, located in the United States, accounted for more than 10% of
revenues  from continuing  operations. These  customers accounted  for 23.8%  of
sales of infrared dies.

     Long-lived  assets  include  net  plant,  property and  equipment.  We  had
long-lived  assets of  $843,228 and $859,714 located in the United States at May
31, 2010 and February 28, 2010, respectively.

                                       16

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE J - ACCRUED EXPENSES:

     Accrued expenses consisted of  the following as of May 31, 2010  and  2009,
respectively:

                                   MAY 31,   FEBRUARY 28,
                                    2010         2010
                                  --------   ------------
Salaries and wages                $ 22,465           --
     Purchases                       3,149        3,455
     Insurance                          --           --
     Commissions                    10,545       10,545
     Rent                            8,145        8,145
     Professional fees               6,000       25,000
                                  --------     --------

        Total accrued expenses    $ 50,304       47,145
                                  ========     ========

NOTE K - INVENTORIES:

                                   MAY 31,   FEBRUARY 28,
                                    2010         2010
                                  --------   ------------
Raw materials and supplies        $195,097      160,387
Work in process                    112,402       92,421
Finished goods                     319,325      431,187
                                  --------     --------

        Total                     $626,824      683,995
                                  ========     ========

                                       17

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE L - EARNINGS PER SHARE:

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

                                                    THREE MONTHS ENDED
                                                          MAY 31,
                                                 --------------------------
                                                    2010           2009
                                                 ----------      ----------

      BASIC EARNINGS PER COMMON SHARE:

      Net income                                     31,380         139,866
                                                 ==========      ==========

      Average common shares outstanding          12,138,095      12,066,355
                                                 ==========      ==========

      Basic earnings per common share                    --            0.01
                                                 ==========      ==========

      DILUTED EARNINGS PER COMMON SHARE:

      Net income                                     31,380         139,866
                                                 ==========      ==========

      Average common shares outstanding          12,138,095      12,066,355

      Common shares issuable with respect
         to options issued to employees
         with a dilutive effect                       5,100          40,436
                                                 ----------      ----------

      Total diluted common shares outstanding    12,143,195      12,106,791
                                                 ==========      ==========

      Diluted earnings per common share                  --            0.01
                                                 ==========      ==========

                                       18

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE M - COMMITMENTS AND CONTINGENCIES:

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

LEASE  OBLIGATIONS  - We lease  our 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
$24,435 for the three months ended May 31, 2010 and 2009, respectively.

Future minimum payments for the current option period:

     FISCAL YEARS ENDING FEBRUARY:
     -----------------------------
                  2011                       $ 40,725

DEFERRED  COMPENSATION -  On  December  29, 1995,  we  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. On May 14, 2010, the Board
of Directors agreed to surrender the life insurance policy and pay the remaining
balance due in a lump sum payment during the current year.

     On January 1, 1996, we 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. On May 14, 2010, the Board of Directors agreed to pay the balance due
during the current year.

                                       19

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE N - FAIR VALUE MEASUREMENTS:

     Effective March 1, 2008, we adopted FAS 157, which  defines  fair  value as
the  exchange  price that would be  received for an  asset or paid to transfer a
liability  (an exit  price) in the principal or most advantageous market for the
asset  or liability in an orderly transaction between market participants at the
measurement  date.  FAS 157 establishes  a three-level fair value hierarchy that
prioritizes  the inputs  used to  measure  fair value.  This hierarchy  requires
entities  to maximize  the use  of  observable inputs  and minimize  the use  of
unobservable  inputs. The  three levels of inputs used to measure fair value are
as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices included in Level 1, such
          as quoted prices for similar assets and liabilities in active markets;
          quoted prices for identical or similar assets and liabilities in
          markets that are not active; or other inputs that are observable or
          can be corroborated by observable market data.

Level 3 - Unobservable inputs that are supported by little or no market activity
          and that are significant to the fair value of the assets or
          liabilities. This includes certain pricing models, discounted cash
          flow methodologies and similar techniques that use significant
          unobservable inputs.

All  financial assets  that are measured at  fair value on a recurring basis (at
least  annually) have been segregated into the most appropriate level within the
fair value hierarchy based on the inputs used to determine the fair value at the
measurement  date. These  assets measured at fair value on a recurring basis are
summarized below:

<TABLE>
<CAPTION>
                                           MAY 31, 2010         FEBRUARY 28, 2010
                                     ----------------------   ----------------------
                                      CARRYING       FAIR     CARRYING       FAIR
                                       AMOUNT       VALUE      AMOUNT        VALUE
                                     ----------   ---------   ---------    ---------
<S>                                  <C>          <C>         <C>          <C>
ASSETS:
Cash and cash equivalents            $2,048,287   2,048,287   1,908,752    1,908,752
Other assets:
   Cash value - life insurance          168,832     168,832     188,641      188,641
                                     ----------   ---------   ---------    ---------

Total assets at fair value           $2,217,119   2,217,119   2,097,393    2,097,393
                                     ==========   =========   =========    =========

LIABILITIES:

Deferred compensation                $  198,072     198,072     195,082      195,082
                                     ==========   =========   =========    =========
</TABLE>

                                       20

<PAGE>

                          EPOLIN, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE N - ENVIRONMENTAL MATTERS

     Our 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  do we expect such compliance to have,
any  material  effect upon expected  capital expenditures, net income, financial
condition,  or  competitive position. We  believe that our current practices and
procedures   comply  with  applicable  regulations.  Our  policy  is  to  accrue
environmental and related costs of a non-capital nature when it is both probable
that  a liability  has  been incurred  and  that the  amount  can be  reasonably
estimated. No such amounts have been accrued in these statements.

                                       21