UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)
                                    FORM 10-K

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

For the fiscal year ended December 31, 2007 or

[ ] 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:  001-32428


                             TARPON INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

          MICHIGAN                                          30-0030900
(state or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                          Identification No.)

2420 Wills Street, Marysville, Michigan                      48040
(Address of principal executive offices)                   (Zip Code)


Registrant's telephone number, including area code (810) 364-7421

Securities registered pursuant to section 12(b) of the Act:

   Title of each class                 Name of each exchange on which registered
Common Shares, no par value                      OTC Bulletin Board


Securities registered pursuant to section 12(g) of the Act:  NONE

     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act.                    Yes [ ]  No [X]

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant to Section 13 or Section 15(d) of the Act.              Yes [ ]  No [X]



                                       1
<PAGE>

     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 if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.                    Yes [ ]  No [X]

     Indicate by check mark whether the registrant is a large accelerated filer,
an  accelerated  filer,  or a  non-accelerated  filer,  or a  smaller  reporting
company.  See definitions of "accelerated filer and large 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 in Rule 12b-2 of the Act).                               Yes [ ]  No [X]

     State the aggregate market value of the voting and non-voting common equity
held by  non-affiliates  computed by  reference to the price at which the common
equity was last sold, or the average bid and asked priced of such common equity,
as of June 29, 2007: $4,627,247.

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common  stock,  as of the latest  practicable  date.  As of March 31,
2008, it was 13,343,939.



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<PAGE>

                             TARPON INDUSTRIES, INC.

                           ANNUAL REPORT ON FORM 10-K

                      FOR THE YEAR ENDED DECEMBER 31, 2007

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                           PAGE
PART I........................................................................................................4
<S>     <C>                                                                                                  <C>
   ITEM 1.    BUSINESS........................................................................................4
   ITEM 1A.   RISK FACTORS...................................................................................12
   ITEM 1B.   UNRESOLVED STAFF COMMENTS......................................................................22
   ITEM 2.    PROPERTIES.....................................................................................22
   ITEM 3.    LEGAL PROCEEDINGS..............................................................................22
   ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................23
PART II......................................................................................................24
   ITEM 5.    MARKET  FOR THE  REGISTRANT'S  COMMON  EQUITY,  RELATED  SHAREHOLDER  MATTERS  AND  ISSUER
              PURCHASES  OF EQUITY  SECURITIES...............................................................24
   ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........26
   ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................................................38
   ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...........
   ITEM 9A.   CONTROLS AND PROCEDURES........................................................................64
   ITEM 9B.   OTHER INFORMATION..............................................................................66
PART III.....................................................................................................67
   ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............................................67
   ITEM 11.   EXECUTIVE COMPENSATION.........................................................................71
   ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND     MANAGEMENT.............................87
   ITEM 13.   CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS...................................................88
   ITEM 14.   PRINCIPAL ACCOUNTANT'S FEES & SERVICES.........................................................89
PART IV......................................................................................................91
   ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.....................................................91

</TABLE>


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<PAGE>

                                     PART I


ITEM 1.  BUSINESS


Introduction

     We  manufacture  and  sell  engineered   steel  storage  rack  systems  and
structural  and mechanical  steel tubing.  We were  incorporated  in Michigan on
January 16, 2002 and acquired Eugene Welding Co., or "EWCO," in April 2004. EWCO
has two manufacturing facilities in Michigan within 80 miles north of Detroit.

     Our  executive  offices  are  located  at 2420  Wills  Street,  Marysville,
Michigan 48040.  Our telephone  number is (810) 364-7421.  Our e-mail address is
tarponir@tarponind.com  and our web site  address  is  http://www.tarponind.com.
Information accessed on or through our web site does not constitute part of this
report.


Industry Overview

     The steel storage rack systems and steel tubing  industries are fragmented,
with more  than 100  manufacturers  in the  United  States  and  Canada  serving
regional  markets.  Because of the size and weight of structural  and mechanical
steel tubing,  costs of transportation are significant,  and it is generally not
cost effective to ship these products more than 800 miles from the manufacturing
plant.  This and customers'  short lead-time  requirements  limit the geographic
market for steel tubing manufacturers.  Steel storage rack systems can generally
be sold to customers over a larger geographic area.


     Steel Storage Rack Systems

     Steel  storage  rack  systems  are  generally  structural  steel  tubing or
structural  beams,  assembled from  fabricated  metal  components and are welded
together to form frames and beams. These standard components can be assembled to
form:

o    selective  racks,  which  are  typically  used  in  public  and  commercial
     warehouse  applications where the ability to select palletized materials is
     desired,  which represent a substantial  majority of our steel storage rack
     system sales,
o    drive-in/through  racks, which provide  high-density  storage of palletized
     long shelf life products, such as salt,
o    push back racks, another form of high-density storage,  which provides some
     degree of selectivity,
o    cantilevered  racks,  which are typically used in the bulk storage of large
     unit items, such as lumber, plywood and drywall.



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<PAGE>

o    archival  storage  systems,  which are  designed  to provide  high  density
     records storage, including the legal, medical and banking industries.
o    order-picking  systems,  which are designed to incorporate  into the rack a
     conveying system and multi-level  mezzanine from which product can be taken
     off pallets and repackaged for shipment to individual store locations.

     These  systems are used in the home  center,  retail  distribution,  public
warehouse and commercial and industrial  distribution  markets.  Engineering and
system design services are involved in choosing the  appropriate  components for
the system.  Leading  manufacturers of steel storage rack systems are members of
the Rack Manufacturers Institute, which promulgates standards for, and certifies
standard rack components.


     Structural and Mechanical Steel Tubing

     Structural steel tubing, also known as hollow structural sections or "HSS",
is processed  continuously from hot rolled steel coil, roll formed and welded in
line using  high  frequency  welding.  The tubing is cut to length by an in-line
traveling saw or shear.  HSS is  manufactured  in round,  square and rectangular
sections  in sizes  ranging  from 1.5 inches  square and round  through 5 inches
round and 4 inches  square  and  associated  rectangles  and rounds to ASTM A500
Grade B and C  specifications.  HSS is used as structural  members for buildings
and structural  frames and parts for equipment in a variety of applications  and
industries.  Structural steel tubing provides a high  strength-to-weight  ratio,
uniform    strength,    torsional    rigidity,    an    aesthetic    appearance,
cost-effectiveness and recyclability.

     Mechanical  steel  tubing is typically  manufactured  to smaller  sizes,  2
inches square and below.  Mechanical  tubing is produced from hot rolled pickled
and oiled, cold rolled, aluminized, pre-galvanized (G-60 or G-90), and galvalume
steel and galvanneal  strip.  These products are manufactured  typically to ASTM
A513 type 1 or 2  specifications.  Mechanical steel tubing is manufactured  from
low carbon to high  strength,  low alloy  material,  for  greater  strength  and
formability. Using this type of steel allows for lighter weight products for use
in automotive  parts and furniture and in a variety of applications  for machine
and  equipment  parts,  typically  where  formability,  machinability  and fluid
conduction are required.

Our Operations

     We  manufacture  and sell  SpaceRak  (R) steel  storage  rack  systems  and
structural steel tubing at our facilities in Marysville and Marlette,  Michigan.
EWCO  commenced  operations  in 1954 as a  manufacturer  of steel  products.  We
manufacture  steel  storage  rack  systems,   now  including   selective  racks,
drive-in/through  racks, push back racks,  cantilevered racks,  archival storage
systems and order picking systems used in the home center,  retail distribution,
public  warehouse  and  commercial  and  industrial   distribution  markets.  We
manufacture  structural  and  mechanical  steel tubing in sizes ranging from 1.5
inches  round  and  square  to 5.0  inches  round  and 4.0  inches  square,  and
complementary  sizes in rectangular and specialty oval shapes,  typically to the
structural   specification   ASTM  A500  Grade  B  and  C  and  the   mechanical
specification ASTM A513 Grade B. For the twelve month period ending December 31,
2007,  SpaceRak (R) systems  accounted for approximately 79% of our revenues and
tubular products accounted for approximately 21% of our revenues.



                                       5
<PAGE>

Our Business Strategy

     Our business  strategy is to focus and build upon our core  competencies in
the  manufacture  and  distribution  of steel  storage  racks,  steel tubing and
related  products,  and to do so  efficiently.  We see  steel  storage  racks as
engineered, non-commodity products with good margins, and we believe we can be a
competitive  participant in the markets for these products. In the near term, we
plan to concentrate on our current  geographic  market.  To the extent feasible,
given  our  need to  control  our  costs  and  expenses  and  obtain  additional
financing, we will look to expand to additional markets.

     Our steel  storage rack systems are  generally  structural  steel tubing or
structural  beams,  assembled from  fabricated  metal  components and are welded
together to produce  frames and beams in a variety of forms.  These  systems are
used in the home center,  retail  distribution,  public warehouse and commercial
and  industrial  distribution  markets.  Our steel tubing  products are building
blocks for  manufacturers  of other products.  Steel tubing products are used in
original  equipment  manufacturer  automotive,  boating,  industrial  equipment,
construction,  agricultural,  steel service center, and leisure and recreational
vehicle markets.

     We market and sell our steel storage rack systems  products to customers in
the home center industry,  retail distribution,  public warehouse and commercial
and  industrial  distribution  markets and  distributors  to  customers in those
markets.  We market and sell our steel tubing  products to customers in original
equipment manufacturer automotive, boating, industrial equipment,  construction,
agricultural,  steel  service  center,  and  leisure  and  recreational  vehicle
markets.

Our Products

     Steel Storage Rack Systems

     Our  steel  storage  rack  systems  are  used  for  heavy-duty  industrial,
warehouse and retail storage systems. We manufacture  structural and roll-formed
steel selective racks,  drive-in/through  racks,  push back racks,  cantilevered
racks,   archival  storage  systems  and  order  picking  systems.  The  general
difference  between  these  products is the manner in which the stored items are
accessed.  The difference  between structural and roll-formed racks is primarily
the  material  from which the  product  is  manufactured.  Structural  racks use
structural beams as their base material,  for heavier-duty  applications,  while
roll-formed racks use structural steel tubing.

     Our  roll-formed  products  are  "R-mark  certified"  (#5170),  which is an
independent   certification  process  registered  with  the  Rack  Manufacturers
Institute  of North  America.  This  certification  assures that the designs and
capacity tables meet all current Rack Manufacturers Institute, American Iron and
Steel Institute and American Institute of Steel Construction specifications.  It
also makes our products  standardized.  We design our steel storage rack systems
to comply with customer specifications.

SpaceRak (R) products include the following:

o    Selective Rack - Roll Formed: We manufacture this product in five different
     post  cross  sections,  from 3 inch x 1-5/8  inch to 4 inch x 3 inch,  with
     gauges  ranging  from  16  gauge  to 10  gauge  in  most  shapes.  We  also



                                       6
<PAGE>

     manufacture  eight  different  size step beams,  ranging  from 2-1/4 inch x
     2-1/5 inch to 6 inch x 2-1/2 inch rolled in 16 gauge  through 11 gauge.  We
     also offer a large quantity of box beams. We also  manufacture  accessories
     for pallet rack installation,  including special accessories for the retail
     market.  Historically,  this rack has  generated  our largest steel storage
     rack systems sales.
o    Selective  Rack -  Structural  Steel:  We can  furnish  this  product  with
     uprights from 3 inch to 4 inch structural  channels and beams made from any
     structural channel,  I-beam or wide flange section. It makes a special wide
     flange upright frame that also uses bolt on beams.
o    Drive-in/Drive-through  Rack: Using the frames and beams from the selective
     rack,  we design  drive-in  racks using  special arms and rails to hold the
     pallets.
o    Pushback Racks - Roll Formed and Structural Steel: We furnish rolled formed
     and structural  pushback racks.  They use a pushback track system purchased
     from a third party for most of its systems.
o    Cantilever Rack - Roll Formed:  We have a roll formed  cantilever rack that
     is  medium  duty and is used for  smaller  systems  and  furniture  storage
     applications. We also offer accessories to compliment this product.
o    Cantilever Rack - Structural  Steel: We have a structural  steel cantilever
     rack  that is heavy  duty and is used in the  lumber  industry  and  retail
     lumber applications.  We offer columns from 6 inches to 16 inches deep that
     have  matching  arms welded from 3 inch to 5 inch  I-beams and 6 inch and 8
     inch wide flanges. We also offer accessories to compliment this product.
o    Archival storage system: We use our roll formed storage racks with special
     decking options and mezzanine decking options to create a multi-level steel
     storage rack system to store archival records.
o    Order  Picking  Systems:  We use our roll formed  storage racks with pallet
     flow and carton flow products. These systems also require a large amount of
     outside purchased items, including floor decking,  safety grating,  stairs,
     and fire baffles.

     Steel Tubing Products

     Our steel tubing  products are building blocks for  manufacturers  of other
products.  Steel  tubing  products are used in original  equipment  manufacturer
automotive,  boating, industrial equipment,  construction,  agricultural,  steel
service center,  and leisure and recreational  vehicle  markets.  We manufacture
primarily structural steel tubing from plain steel coil.

     Applications  for  structural  and  mechanical  steel  tubing  include  the
following:

o    leisure products:  exercise  equipment,  bicycles,  boating trailers,  boat
     hoists, recreational vehicles and pop-up campers.
o    agricultural/commercial:  greenhouses,  sprinkler  systems,  farm implement
     components, tillage equipment, fork lifts and industrial equipment.
o    commercial construction:  building conduit, handrails, scaffolding, bridges
     and miscellaneous uses.
o    automotive:  various components,  including aftermarket  automotive exhaust
     systems,  trunk  hinges,  trailer  hitches,  storage racks and hydro formed
     components.
o    furniture:  tables,  chairs, stools, closet and curtain rods, beds, futons,
     storage units, and store display racks.
o    appliance: refrigerators, stoves and barbecues.
o    garden and home tools: lawnmowers,  snow blowers, shovels, rakes, and water
     sprinklers.



                                       7
<PAGE>

o    fencing:  residential,  including dog kennels,  commercial,  industrial and
     ornamental.
o    energy and exploration: oil rigging related equipment.

Our Customers

     We market and sell our steel storage rack systems  products to customers in
the home center industry,  retail distribution,  public warehouse and commercial
and  industrial  distribution  markets and  distributors  to  customers in those
markets. During 2007, our ten largest customers represented approximately 68% of
our  combined  net  revenues,   including   Menard,   Inc.,  which   represented
approximately  36% of our combined net  revenues.  During 2006,  our ten largest
customers represented approximately 46% of our combined net revenues,  including
Menard, Inc., which represented  approximately 15% of our combined net revenues.
The  loss of any of  these  customers  or any  significant  reduction  in  their
business would have an adverse effect on our business,  financial  condition and
results of operations. We market and sell our steel tubing products to customers
in original equipment manufacturer  automotive,  boating,  industrial equipment,
construction,  agricultural,  steel service center, and leisure and recreational
vehicle markets.

Our Marketing, Sales and Distribution

     We  currently  sell our steel  storage  rack  systems  and  structural  and
mechanical steel tubing products  primarily  through our direct sales force. Our
steel tubing  products are sold  through two direct  salespersons,  our customer
service department and independent sales representatives. Our steel storage rack
system  products  are sold  through  five  direct  sales  persons  and  customer
representatives, independent distributors and independent sales representatives.

Inventory and Backlog

     We generally produce our products to fill specific orders or for forecasted
requirements  to provide us with some  additional  flexibility  in responding to
customer delivery demands. Inventories of our steel storage rack system products
are generally a  combination  of components  manufactured  by us and  components
purchased from third parties.

     We do not have a backlog  of firm  orders.  We do not  consider  any of our
backlog orders to be firm, as they generally may be cancelled without penalty.

Manufacturing

     The raw material for  manufacturing  structural steel tubing is steel coil.
We purchase  various  gauges of steel coil that is  typically 50 inches wide and
weighs  40,000 to 50,000  pounds.  The steel coil is slit to the desired  width,
typically  between five (5) to sixteen  (16) inches.  The slit steel is then fed
into a tube mill,  which forms the steel into a round  tube,  welds the seam and
then  reforms the tube into the desired  shape:  square,  rectangular,  round or
special  shape.  The tubes are then cut to a desired length and are prepared for
shipment to the customer or moved for further  processing,  such as saw cutting,
punching, drilling, mitering, de-burring, or painting.

     We currently have five tube mill lines primarily producing structural steel
tubing commonly referred to as hollow structural shapes (H.S.S.).  The mills are
capable of producing product within one half the tolerance  specified under ASTM
A500 GRADE B and GRADE C tubing.  Four of the five tube  mills are  conventional



                                       8
<PAGE>

tube mills.  The fifth mill is a form  square,  weld  square  mill that  tightly
controls the physical  dimensions of the tube as well as the  orientation of the
weld seam.

     The  manufacturing  process for roll formed  steel  storage rack systems is
similar to the process for structural and  mechanical  steel tubing.  Slit steel
coil is fed into a tube  mill and  converted  into C and U  shaped  sections  of
various  lengths.  These  parts are then  assembled  together  with a variety of
fabricated  metal  components,  either  produced  by us or  acquired  from third
parties. The parts are assembled in fixtures and welded,  currently primarily by
hand,  into their desired  configuration.  The  completely  welded  "frames" and
"beams" are then painted using an electrostatic  paint system,  the paint system
applies a water-based acrylic enamel coating.

     For  structural  steel  storage rack systems,  we initially cut  structural
beams to the required dimensions.  These structural components are then used for
the  columns or  support  arms of the steel  storage  rack  system.  We then use
equipment  such as shears,  press  brakes,  ironworkers  and  presses to produce
various  fabricated   components  and  then  weld  the  necessary  brackets  and
components to the structural  columns or arms.  The completely  welded parts are
then painted using  hand-applied  electrostatic  baking  enamel,  matched to the
customer's color requirements, on a continuous flow paint line.

     We  currently  have one step tube  mill and five (5) roll  form tube  mills
primarily  producing steel storage rack system products.  Manufacturing time for
an order is typically one week,  although complex or large orders may take up to
several weeks.


Competition

     Our storage  rack  systems  and  structural  and  mechanical  steel  tubing
products   are   generally   manufactured   according   to   standard   industry
specifications.  Substantially  similar  products are available from a number of
manufacturers.   As  a  result,  we  are  subject  to  significant  competition,
principally  based on price and  secondarily  based on how  closely  the product
conforms to specifications,  product availability, delivery and service. Some of
our  competitors  are larger than we are, have larger product  lines,  have more
diversified   businesses,   have   well-established   reputations  and  customer
relationships and have greater financial, engineering, manufacturing, marketing,
distribution and management resources than we do; and therefore, are able to buy
steel in larger quantities and are more able to engage in price competition.

     Because of the size and weight of structural  and  mechanical  steel tubing
and the resulting costs of transportation and price competition, it is generally
not  cost  effective  to ship  these  products  more  than  800  miles  from the
manufacturing  plant.  This and customers' short lead-time  requirements  create
geographic   limits  for  steel  tubing  products  and  limits   competition  to
manufacture in our geographic  area. Steel storage rack systems can generally be
sold to customers over a larger geographic area.

     Our competitors may be more  successful  than we are in  manufacturing  and
marketing their products,  may be able to take advantage of the significant time
and effort we invest in engineering and system design services for steel storage
rack systems and may be better able to endure  business  downturns or periods of
declining  prices of steel tubing and steel  storage rack systems  products.  We
believe that some competitors reduce their prices and gross profits from time to
time to obtain or maintain market share. We also believe that our  manufacturing



                                       9
<PAGE>

costs are higher than some of our competitors.  As a result, our competitors may
be more willing or better able to engage in price competition.

     Our more significant competitors with respect to steel storage rack systems
include  United  Store  Fixtures  Company,  Morgan  Marshall  Industries,  Inc.,
Ridg-u-Rak,  Inc., SpeedRack Products Group, Ltd. and SteelKing Industries, Inc.
We believe that the principal  competitive  factors  affecting our steel storage
rack system products depend on the type of customer.  For sales to distributors,
we believe the principal competitive factors are price and delivery, with little
engineering  and system  design on our part.  For retail  sales,  we believe the
principal competitive factors are price, quality, product availability, delivery
and customer  support  systems that can work with the  logistical and purchasing
functions of the customer.  Engineered large products are generally sold through
systems  consultants  and  manufacturing  representatives.  We believe  that the
principal  competitive  factors  for these  sales are  price,  quality,  product
availability,  delivery and engineering  design knowledge,  including  technical
creativity and project management capabilities.

     Our more significant competitors for structural and mechanical steel tubing
are United  States and Canadian  manufacturers  located  within 800 miles of our
manufacturing  facilities,  including Atlas Tube, Inc., Bull Moose Tube Company,
Levitt Tube Company,  Lockjoint Tube, Inc.,  Sterling Pipe and Tube, Inc., Hanna
Steel  Corporation,  Independence Tube Corporation,  Allied Tube and Conduit,  a
division of Tyco  International  Limited  Company,  Maverick  Tube  Corporation,
Wheatland Tube Company,  Welded Tube of Canada  Limited,  and James Steel & Tube
Company.

Steel

     We use steel coil in the manufacture of our products.  We try to coordinate
our steel purchases with our sales and production forecast,  generally resulting
in a one to two  month  supply  of steel  coil on  hand.  We  currently  seek to
minimize the  potential  adverse  impact of  commodity  price risks of our steel
inventory  by  minimizing  the  amount of steel  inventory  we  carry.  However,
opportunities to purchase larger quantities at below market value are considered
and reviewed against current market conditions. A portion of our working capital
may be used to purchase and store steel when prices are deemed to be favorable.

     We also use  structural  materials in the  manufacture of our steel storage
rack  systems,  such as angle iron,  I-beams,  and flange  beams.  We  generally
purchase items that we use in larger volumes  directly from three steel mills to
obtain the best price and quality,  subject to product  availability and freight
costs.

     In 2007,  we  purchased  approximately  24% of our  steel  coil  from  four
suppliers.  We are  currently on cash terms and also have  payment  plans with a
number  of our  steel  suppliers.  While  we  believe  steel  coil is  generally
available from a number of suppliers,  the loss of any of our present suppliers,
interruption  of  production  at one or more of  these  suppliers  or any  other
disruption  in the supply of steel coil from these  suppliers  could  impair our
ability to manufacture our products or require us to pay higher prices to obtain
steel  coil  from  other  sources.  We do not  intend  to  maintain  significant
inventories of steel coil. Therefore,  we might incur delays in meeting delivery
deadlines  if  a  particular  supplier  is  unable  or  unwilling  to  meet  our
requirements.

     The cost of steel,  the single most  significant  component  of our cost of
sales,  represented  approximately 58% of our net revenues in 2007. As a result,
the steel industry, which is highly volatile and cyclical in nature,  materially



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<PAGE>

affects  our  business.  Steel is a global  commodity,  with its price  based on
worldwide  supply and  demand.  Numerous  factors,  most of which are beyond our
control,  drive the cycles of the steel industry and influence steel prices. The
average  cost  per ton of our base  steel  coil  purchased  in the  years  ended
December 31, 2007 and 2006 was $558 and $612, respectively.

     Steel prices for our base steel coil declined throughout most of 2005, then
stabilized in the fourth quarter of 2005. This deterioration in the U.S. markets
with  declines in shipments,  consumption,  and  production  were due largely to
excess  inventories at both  distributors and original  equipment  manufactures.
Less  robust  economic  growth  and  weakness  in  the  automotive  sector  also
contributed  to the  declines.  Prices  firmed  starting in  September  2005 and
continued to increase gradually  throughout 2006 before tapering off in November
of 2006.  Prices  remained  fairly stable during 2007. We anticipate  increasing
steel costs throughout 2008.

Trademark and Domain Names

     We have  registered  the trademark  SpaceRak (R) in the United  States.  We
believe that SpaceRak (R) is recognizable in the industry and might be important
to our steel storage rack systems business.

     We maintain web sites at www.tarponindustries.net and www.tarponind.com. We
also maintain web sites at www.SpaceRak.net and www.ewco.net.


Environmental, Health and Safety Regulation

     Our business is subject to numerous state and federal laws and  regulations
concerning environmental, health and safety matters, including those relating to
air emissions,  wastewater discharges, storm water drainage, and the generation,
handling,   storage,   transportation,   treatment  and  disposal  of  hazardous
materials.  Violations of such laws and  regulations  could lead to  substantial
fines and penalties.  Also, there are risks of substantial costs and liabilities
relating to the investigation and remediation of past or present  contamination,
at current or former properties used or owned by us and at third-party  disposal
sites,  regardless of fault or the legality of the original  activities that led
to such contamination.

     On  January  19,  2006,  the  Michigan   Occupational   Safety  and  Health
Administration  (MIOSHA)  performed an inspection of our  facilities to identify
any violations of the General Industry Safety Standards. On February 7, 2006, an
exit interview was held with the inspector,  at which time the State  identified
nineteen "Serious" violations and fourteen "Other Than Serious"  violations.  On
April 27,  2006  formal  notification  was  received  from the State of Michigan
outlining  proposed  penalties  totaling  $13,650.  The various  citations  were
subsequently   addressed  by  the   Company,   which   supplied  the   necessary
documentation to the State of Michigan, resulting in a reduction of penalties to
a total of  $6,825,  paid by the  Company on May 17,  2006.  On June 5, 2006 the
Company received notification from the State of Michigan that all violations had
been satisfactorily abated and the investigation was closed.

Seasonality



                                       11
<PAGE>

     There are seasonal  fluctuations in demand for our products.  Historically,
the demand for our steel tubing  products  typically  peaks during the first and
second quarters, while demand for our steel storage rack systems typically peaks
during the third and fourth quarters.  The timing of these fluctuations has been
dependent on the overall  economy and may change as our customer and product mix
change.

Insurance

     Actual or claimed  defects  in our  products  could  give rise to  products
liability  claims  against  us.  We might be sued  because  of  injury or death,
property damage,  loss of production or suspension of operations  resulting from
actual or claimed  defects  in our  products.  We  maintain  products  liability
insurance with a liability limit of $5,000,000.

Employees

     As of December 31, 2007, the Company employed a total of approximately  154
full-time  individuals,  with Tarpon  employing seven and EWCO employing 147. Of
the total, 124 were involved with production and the remaining 30 were executive
and administrative personnel.

     Our future  performance  depends on the continued service of our key sales,
production and senior management personnel and consultants.

     Approximately  124  employees  are  covered  by  a  collective   bargaining
agreement  with the  International  Brotherhood  of  Teamsters  that  expires on
October 15, 2009.  The Teamsters  have  represented  employees at the Marysville
facility  since 1967 and  employees  at the  Marlette  facility  since 2000.  We
believe our employee relations are good.

Where You May Obtain Information We File With The SEC

     We file annual,  quarterly and current reports,  proxy statements and other
information  with the SEC. You may read and copy any  materials we file with the
SEC at the SEC's Public  Reference Room at 100 F Street N.E.,  Washington,  D.C.
20549. You may obtain  information on the operation of the Public Reference Room
by calling the SEC at  1-800-SEC-0330.  The SEC also  maintains an Internet site
that contains  reports,  proxy and information  statements and other information
regarding  issuers,  such as us,  that  file  electronically  with the SEC.  The
address of the SEC's web site is http://www.sec.gov.

     Our   current   Web   sites   are    http://www.tarponindustries.net    and
http://www.tarponind.com.  We will make  available  free of charge on or through
our Web site,  our annual report on Form 10-K,  quarterly  reports on Form 10-Q,
current  reports on Form 8-K and  amendments to those reports filed or furnished
pursuant to Section  13(a) or 15(d) of the  Exchange  Act as soon as  reasonably
practicable after we  electronically  file such material with, or furnish it to,
the SEC. We will voluntarily  provide  electronic or paper copies of our filings
free of charge upon request.


ITEM 1A. RISK FACTORS



                                       12
<PAGE>

You should  carefully  consider the specific factors listed below. If any of the
following risks actually occur, our business,  financial condition or results of
operations could be adversely  affected.  In such case, you may lose all or part
of any investment in our securities.

     Risks Relating to Our Business

     We are dependent on planned additional financing for our survival

     If we are  unable to  generate  adequate  funds  from  operations  or raise
additional funds, we will not be able to repay our existing debt,  including the
notes offered hereby or fund our operations, which may cease.

     There can be no  assurance  that the  Company  will be able to achieve  its
business plan objectives or that it will be able to generate cash flows from its
operations.  If the  Company  is  unable to  generate  adequate  funds  from its
operations or raise  additional  funds, it may not be able to repay its existing
debt or fund  its  operations.  The  financial  statements  do not  include  any
adjustments  relating to the recoverability and classification of asset carrying
amounts or the amount and  classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.

     The Company is seeking to consummate  additional financing and, if it fails
to do so, it will be required to wind down its operations.

     We  have a  history  of  losses,  a lack  of  liquidity  and  current  cash
resources. As a result, we may not be able to continue as a going concern.

     From our  inception on January 16, 2002 through  December 31, 2007, we have
incurred cumulative net losses of approximately $33 million. We have funded such
losses  and  a  portion  of  our  business   acquisition  costs  through  equity
investments,  credit  facilities  and through the proceeds of our initial public
offering and subsequent private offerings.

     Based on our current  business  plan,  we believe  that our  existing  cash
resources  will not be  sufficient  to  sustain  operations  or to meet our debt
servicing  requirements without additional  financing.  We are planning a public
offering of our equity  securities in order to fund our  operations  and provide
financial stability, but there can be no assurance of the success, timing or net
proceeds of the same.


     Management's plans, in addition to obtaining additional financing,  include
continued cost reduction efforts, improved receivables and inventory management,
improving of operating  margins,  and continuing  the  development of additional
customers and markets through its sales initiatives.

     Corrective  actions  undertaken by the Company in 2007 to improve liquidity
include:

     Equity Financing

     The Company raised equity  financing  during the first four months of 2007,
netting the Company $1,159,000 on gross proceeds of $2,615,000,  after repayment
of the December 2006 bridge notes, including accrued interest, totaling $801,000
and a scheduled payment of accrued interest to Laurus of $125,000.  An aggregate
of 3,736,942  shares of common stock were issued in this effort.  The Company is
now pursuing a secondary  equity offering  expected to be completed by September
2008.



                                       13
<PAGE>

Closing of Steelbank

     On September 20, 2007, the Company's Steelbank subsidiary filed a Notice of
Intention to make a Proposal  pursuant to the  Bankruptcy  &  Insolvency  Act in
Canada.  A. Farber & Partners Inc. was appointed Interim Receiver by the Ontario
Superior Court of Justice for the purpose of conducting a sale or liquidation of
Steelbank,  which has sustained  losses  totaling in excess of $14 million since
its inception.  Operations were ceased during the fourth quarter of 2007 and the
full  liquidation  of  Steelbank's  assets was  completed  by December 31, 2007.
Additional obligations, if any, are anticipated to be immaterial.

     Operations and Marketing Efforts

     We added Patrick Peplowski, Vice President of Sales and Marketing, and Doug
Edwards,  Vice President  Operations - SpaceRak,  to our management  team in the
fourth  quarter of 2007,  in hopes of expanding  our customer base and improving
operating efficiencies.

     We plan to continue the  emphasis on our racking  business  through  Eugene
Welding Company's SpaceRak division,  with the expectations that our value-added
solutions should lead to improved gross margins, while continuing to control our
SG&A expenses.

     There can be no assurance that we will be able to achieve our business plan
objectives or that we will be able to generate  cash flows from our  operations.
If we are  unable  to  generate  adequate  funds  from its  operations  or raise
additional  funds  we may not be able to  repay  our  existing  debt or fund our
operations. The consolidated financial statements do not include any adjustments
relating to the  recoverability  and classification of asset carrying amounts or
the amount and  classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.

     If we are  unable to  generate  adequate  funds  from  operations  or raise
additional  funds,  we will not be able to repay our  existing  debt or fund our
operations, which may cease.

     Our level of  indebtedness  materially  affects our operations and even our
survival.

     As of December 31, 2007 our total  consolidated  indebtedness  for borrowed
money, including current maturities, was approximately $14.1 million. Subject to
the limits on our credit facilities, we may incur additional debt in the future.
Our level of  indebtedness  and the debt servicing  costs  associated  with that
indebtedness will require us to dedicate a substantial  portion of our cash flow
from  operations  to  payments on our debt,  reducing  cash flow  available  for
working capital, capital expenditures,  acquisitions and other general corporate
purposes.  In addition,  a material default in our indebtedness  could result in
the failure of our business.

     Our high level of debt and debt service obligations:

o    Limits our ability to obtain  additional  financing for working  capital or
     acquisitions;

o    Reduces the amount of funds  available to finance our  operations,  capital
     expenditures and activities;

o    Increases our vulnerability to economic downturns and industry  conditions,
     including  increased  competition;  and  place  us at a  disadvantage  when
     compared to our competitors.



                                       14
<PAGE>

     Covenant  restrictions  in our credit  facilities  may limit our ability to
operate our  business  and,  if we do not comply with them,  may prevent us from
borrowing  under those  facilities  and may require us to seek to refinance  our
loans or to liquidate.

     Our senior banking  arrangement  with Laurus Master Fund may  significantly
limit the availability of funds for our present and future operations.


     In August 2007,  we entered into a banking  arrangement  with Laurus Master
Fund,  Ltd.,  which until that time had been only the holder of our subordinated
debt.  The  purpose of the  banking  arrangement  is to provide us with  working
capital,  i.e. liquidity to purchase inventory,  pay labor and generate accounts
receivable.  The new banking  arrangement  is structured  based upon a borrowing
base composed of a certain percentage of our eligible accounts  receivable and a
certain percentage of our inventory. Under the arrangement,  accounts receivable
may be  deemed  ineligible  if there is an  undue  concentration  in one or more
customers,  or for  reasons  related to the  financial  strength  of the account
debtor, and excluded from the borrowing base. In addition,  Laurus can, and has,
created  reserves  against the  borrowing  base,  which further  diminishes  the
capacity  we have to obtain  working  capital.  Since we have  experienced  some
reduction in sales by EWCO and have  disposed of out Steelbank  subsidiary,  the
borrowing  base has been  shrinking.  As a  consequence,  we are  limited in the
amount of working capital available to us under this arrangement. This, in turn,
limits  our  growth  since we are  limited  in the  amount of  inventory  we can
purchase and convert into accounts  receivable.  This may  adversely  affect our
ability to maintain and grow our sales and,  absent funding from another source,
such as the net proceeds from the proposed public offering of our securities, or
purchase order financing,  may result in our company not having sufficient funds
to continue to conduct its operations.

     Tarpon  has a  convertible  term note held by Laurus  which is  secured  by
certain  assets of Tarpon  and its  subsidiaries  and the  equity  interests  of
Tarpon's  subsidiaries.  As long as 25% of the  principal  amount of the note is
outstanding,  Tarpon is, without the prior written consent of Laurus,  prevented
from  declaring  or paying  dividends,  issuing or  redeeming  certain  types of
preferred stock and equity,  materially  altering or reorganizing  the business,
incurring,  assuming,  guaranteeing  or canceling  any  additional  indebtedness
(exclusive  of certain  trade debt,  debt  incurred  to finance the  purchase of
equipment,  financing  incurred to replace debt on terms no less  favorable than
the debt being replaced and other debt not considered to have a material  impact
on the balance sheet).  It also provides Laurus with a first right of refusal to
provide  additional  financing to Tarpon or any of its  subsidiaries  subject to
certain terms and conditions.

     We  are  operating   under  a  waiver  from  Laurus  with  respect  to  our
subordinated convertible debt.

     We have obtained a waiver from Laurus as to certain  issues  related to our
subordinated  convertible  debt which  expires  September  30, 2008,  unless the
Company  secures at least $5.0 million in equity  financing by that date. If the
Company fails to secure such  financing by September  30, 2008,  Laurus may have
the right to accelerate all of our indebtedness to it and to take control of our
business,  in which event we may be unable to meet our  obligations  or continue
our operations.

     Our internal financial reporting  procedures are not in compliance with the
requirements of the  Sarbanes-Oxley  Act anticipated to become effective for the
current fiscal year.

     Our  management  has  evaluated,  with the  participation  of our principal
executive and principal financial officers,  the effectiveness of our disclosure
controls and procedures as of December 31, 2007.  Based on their  evaluation and
review, our principal  executive and principal financial officers have concluded



                                       15
<PAGE>

that our controls  and  procedures  over  financial  reporting,  as designed and
implemented, are not operating effectively.

     Disclosure  controls and procedures  are our controls and other  procedures
that are designed to ensure that  information  required to be disclosed by us in
the  reports  that  we  file or  submit  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported,  within the time periods  specified in the
Securities and Exchange  Commission's rules and forms.  Disclosure  controls and
procedures  include,  without  limitation,  controls and procedures  designed to
ensure that  information  required to be  disclosed by us in the reports that we
file or submit under the Exchange Act is  accumulated  and  communicated  to our
management,  including our principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.

Our  Independent  Registered  Public  Accounting  Firm  identified  a variety of
material weaknesses in our internal controls over financial reporting.

     A material  weakness  is a  significant  deficiency,  or a  combination  of
significant  deficiencies,  that results in more than a remote likelihood that a
material  misstatement of the annual or interim financial statements will not be
prevented or detected. The material weaknesses noted are as follows:

     A lack of formalized accounting policies and procedures,  including written
     procedures for monthly, quarterly and annual closing of financial books and
     records.

     Insufficient  resources to adequately  complete the process of documenting,
     testing,  and evaluating our internal controls over financial  reporting as
     required by the Sarbanes-Oxley Act.

     Insufficient  process to ensure  that  quarterly  and  annual  consolidated
     financial statements  adequately disclose information required by Generally
     Accepted Accounting Principles (GAAP).

     A lack of  adequate  processes  to identify  and ensure  that  non-standard
     journal entries are subject to an appropriate level of review.

     Insufficient process to ensure that all required SEC filings are made.

     An inability to make required SEC filings in a timely manner.

     A lack of  communication  or  monitoring  by  management  or the  board  of
     directors in relation to controls or expectations related to fraud.

     A lack of controls over the authorization, issuance and recording of equity
     transactions  and an overall lack of  knowledge  of the related  accounting
     considerations,  initially resulting in errors, which were corrected in the
     audit process.

     Insufficient  familiarity with historical accounting entries as a result of
     continued turnover in key positions within the accounting department.

     A lack of periodic reviews over account reconciliations.



                                       16
<PAGE>

     The Company is required to comply with the  provisions of Sections 302, 906
and 404 of the Sarbanes-Oxley Act. Section 404 requires the Company to document,
test, and evaluate its internal  controls over financial  reporting and have its
independent  auditor  conduct  an  evaluation  of  and  report  on  management's
evaluation process in the near future. In addition, we are required to report on
the effectiveness of internal controls.  All material  weaknesses  identified in
this process are required to be disclosed in the  Company's  reporting  with the
Securities   and  Exchange   Commission   (SEC).   Our   experience   with  this
documentation,  testing  and  audit  process  has  identified  that  significant
resources  are required to complete  this  exercise and  considerable  costs are
incurred.  We do no believe  that the Company  currently  has the  resources  to
adequately  complete  this  process  which could result in a failure to file the
appropriate reports with the SEC.

     As  a  public  Company,  we  have  significant  requirements  for  enhanced
financial  reporting and internal controls.  We are taking steps to put in place
internal  controls  concerning  accounting  entries and  adjustments,  with full
documentation,  which  are  responsive  to  issues  raised  by  our  independent
auditors,  and, as of this time, we have made progress on these points We are in
the initial planning phase of upgrading our information  technology  systems. We
expect these steps to be completed by December 31, 2008, but it is possible that
they might not be completed by then.

     These efforts require  significant time and resources.  If we are unable to
establish appropriate internal financial reporting controls and procedures,  our
reported  financial   information  may  be  inaccurate  and  we  will  encounter
difficulties  in  the  audit  or  review  of  our  financial  statements  by our
independent  auditors,  which in turn may have material  adverse  effects on our
ability to prepare  financial  statements in accordance with generally  accepted
accounting principles and to comply with our SEC reporting obligations.

     Rising  interest  rates have a substantial  impact on our interest  expense
under our working capital loans which adversely  impacts our ability to make our
debt payments.

     Interest  under our existing and proposed  working  capital  facilities and
convertible note accrues at fluctuating rates.  Rising interest rates could have
a substantial impact on our interest expense and will impact our ability to make
our debt  payments.  As of December  31,  2007,  each 1% increase in prime rates
would  result in an  approximate  increase of  $128,000  in our yearly  interest
expense under such facilities,  assuming borrowings are at the maximum permitted
amounts.

     If we are unable to retain our key  personnel,  and attract  additional key
personnel, our ability to operate our businesses will be adversely impacted.

     Our present and future performance  depends on the continued service of our
key sales,  production and senior management personnel and consultants.  Our key
employees  include James W. Bradshaw,  our Chief Executive  Officer,  Patrick J.
Hook,  our  President  and Chief  Operating  Officer,  Joseph  Lendo,  our Chief
Financial  Officer and Patrick G.  Peplowski,  our Executive  Vice  President of
Sales and  Marketing.  The loss of the services of any of these  individuals  or
entities could have an adverse effect on us. We do not maintain any  significant
key man life insurance on any of our key personnel.

     Our tube  products are viewed as  commodities  and our rack  products  have
commodity aspects, and both are subject to intense competition based principally
on price,  and we may not be able to compete  effectively  with  companies  with
greater financial resources.

     Our structural and mechanical steel tubing products are commodities and our
custom racking products have commodity aspects, although they include design and
engineering  features.  As a result,  we are  subject  to  intense  competition,



                                       17
<PAGE>

principally  based on price and  secondarily  based on how  closely  the product
conforms to specifications,  product availability, delivery and service. Some of
our  competitors  are larger than we are, have larger product  lines,  have more
diversified   businesses,   have   well-established   reputations  and  customer
relationships and have greater financial, engineering, manufacturing, marketing,
distribution and management  resources than we do and are more able to engage in
price  competition.  As a result, our inability to compete  effectively  against
companies  with greater  resources may  negatively  impact our product sales and
revenue growth.

We  have  a  concentration  of  customers  which  could  negatively  impact  our
operations if we were to lose a significant customer.

     During 2007, our ten largest customers represented approximately 68% of our
combined net revenues,  including Menard, Inc., which represented  approximately
36% of our  combined  net  revenues.  During  2006,  our ten  largest  customers
represented  approximately  46% of our combined net revenues,  including Menard,
Inc., which represented approximately 15% of our combined net revenues. The loss
of any of these customers or any  significant  reduction in their business would
have an adverse  effect on our  business,  financial  condition  and  results of
operations.

     Our products have limited  geographic  markets,  which may adversely affect
our ability to grow our sales.

     Because of the size and weight of structural  and  mechanical  steel tubing
and the resulting costs of transportation and price competition, it is generally
not  cost  effective  to ship  these  products  more  than  800  miles  from the
manufacturing plant. This and customers' short lead-time  requirements limit the
market for our steel tubing products and our ability to grow sales.  Our racking
products have a larger  geographic  market area, but the same is also subject to
physical limits.

     The  volatile  nature of steel  prices has and could  adversely  affect our
sales and operating profits.

     The cost of steel,  which is the single largest cost for  manufacturing our
products,  represented  approximately  62%  of  Company  revenues  in  2006  and
approximately 58% in 2007. As a result,  steel prices, which are highly volatile
and cyclical in nature, materially affect our business.  Changes in steel prices
have a significant  impact on the margins of our  products.  While we attempt to
recover any  increase in steel costs by  increasing  the price of our  products,
increases in the prices of our  products  might not fully  compensate  for steel
price  increases  and  can lag  behind  increases  in  steel  prices,  adversely
affecting our gross profit margins.  Due to inventory carrying costs and general
market  dynamics,  decreases  in  steel  costs  have  historically  resulted  in
reduction  of volume and gross profit  margins.  Steel prices for our base steel
coil remained  fairly stable  during 2007,  but are expected to increase  during
2008.

     We are dependent on a few suppliers for a significant portion of our steel,
so  interruption  of that supply  could  impair our ability to  manufacture  our
products or require us to pay higher prices to obtain steel.

     During 2007,  we purchased  approximately  24% in dollar value of our steel
from four  suppliers.  We are  currently  operating  on cash terms and also have
payment  plans with a number of our steel  suppliers.  While we believe steel is
generally  available from a number of suppliers,  the loss of any of our present
suppliers,  interruption  of production at one or more of these suppliers or any
other  disruption in the supply of steel from these  suppliers  could impair our
ability to manufacture our products or require us to pay higher prices to obtain
steel from other sources. We do not intend to maintain  significant  inventories
of steel.



                                       18
<PAGE>

     A majority of our employees are covered by collective bargaining agreements
that could subject us to additional labor costs or strikes.

     As of December  31,  2007,  approximately  124  employees  are covered by a
collective bargaining agreement with the International Brotherhood of Teamsters,
which expires in October 2009. We believe our relations with these employees are
good.  However,  such collective  bargaining  agreements could negatively impact
business operations during a strike or work stoppage event.

     We are  dependent on third  parties to  transport  our  products,  so their
failure to transport our products could adversely affect our earnings, sales and
geographic market.

     We use third  parties for the majority of our  shipping and  transportation
needs.  If these  parties  fail to deliver  our  products  in a timely  fashion,
including due to lack of available  trucks or drivers,  labor  stoppages,  or if
there is an increase in  transportation  costs,  including due to increased fuel
costs, it would have a material  adverse effect on our earnings and could reduce
our sales and geographic market.

     Seasonal  fluctuations  affect  sales for our  products  and may  adversely
affect our cash flow.

     We   experience   seasonal   fluctuations   in  demand  for  our  products.
Historically,  the demand for our steel tubing  products  typically peaks during
the first and second calendar quarters,  while demand for our steel storage rack
systems  typically  peaks  during the third and fourth  calendar  quarters.  The
timing of these  fluctuations  has been dependent on the overall economy and may
change as our customer and product mix change.

     Equipment  failures would  interfere with production and increase costs and
adversely affect our revenues.

     Our  manufacturing   processes  depend  on  production  mills  and  related
equipment,  which are  occasionally  out of  service  as a result of  mechanical
failures.  We may  experience  material  plant  shutdowns  or periods of reduced
production as a result of equipment  failures.  Interruptions  in our production
capabilities  will increase  production costs and reduce our sales and earnings.
Furthermore,  any  interruption in production  capability may require us to make
capital expenditures to remedy the situation, which could have a negative effect
on our  profitability  and cash flows.  In addition to equipment  failures,  our
facilities  are  also  subject  to  the  risk  of   catastrophic   loss  due  to
unanticipated  events  such as fires,  loss of energy,  explosions  and  adverse
weather conditions.

     We are  dependent  on a small sales  force for a majority of our sales,  so
losing any of them would adversely affect our business.

     We currently  have an internal and direct sales force of seven people.  Our
sales force accounted for a substantial  majority of the Company's sales for the
year ended December 31, 2007. Therefore,  the loss of any of our sales employees
may have an adverse effect on our business,  financial  condition and results of
operations.

     We are  dependent  on our  distributors  for a  significant  portion of our
SpaceRak(R)  sales,  so their  failure  to sell our  products  adequately  would
adversely affect our business.



                                       19
<PAGE>

     We depend on our  distributors  for a  significant  portion of our sales of
SpaceRak(R) products.  If our distributors fail to market,  promote and sell our
products adequately, our business, financial condition and results of operations
would be adversely affected.

     Purchasers of our products may assert product  liability claims against us,
which may adversely affect our financial condition.

     Actual or  claimed  defects  in our  products  could  give rise to  product
liability  claims  against  us.  We might be sued  because  of  injury or death,
property damage,  loss of production or suspension of operations  resulting from
actual  or  claimed  defects  in our  products.  Regardless  of  whether  we are
ultimately  determined to be liable,  we might incur  significant legal expenses
not covered by  insurance.  In addition,  products  liability  litigation  could
damage our reputation and impair our ability to market our products.  Litigation
could also impair our ability to retain products liability insurance or make our
insurance more expensive.  We have product liability  insurance with a liability
limit of $5,000,000.  We could incur product  liability  claims in excess of our
insurance  coverage or that are subject to  substantial  deductibles,  or we may
incur uninsured  product  liability  costs. If we are subject to an uninsured or
inadequately  insured  products  liability  claim  based  on our  products,  our
business,  financial  condition  and results of  operations  would be  adversely
affected.

     Environmental,  health and safety  laws  regulating  the  operation  of our
business  could  increase the costs of  producing  our products and expose us to
environmental claims.

     Our business is subject to numerous state and federal laws and  regulations
concerning environmental, health and safety matters, including those relating to
air emissions,  wastewater  discharges and the  generation,  handling,  storage,
transportation,  treatment  and disposal of hazardous  materials.  Violations of
such laws and regulations could lead to substantial  fines and penalties.  Also,
there  are  risks  of  substantial   costs  and  liabilities   relating  to  the
investigation  and remediation of past or present  contamination,  at current or
former  properties  used  or  owned  by us and at  third-party  disposal  sites,
regardless of fault or the legality of the original  activities that led to such
contamination.  Moreover,  future  developments,  such as  changes  in laws  and
regulations,   more  stringent   enforcement  or   interpretation  of  laws  and
regulations, and claims for property damage or personal injury would cause us to
incur  substantial  losses  or  expenditures.  Although  we  believe  we  are in
substantial  compliance  with all applicable  laws and  regulations,  such laws,
regulations,  enforcement  proceedings  or private  claims might have a material
adverse effect on our business, results of operations and financial condition.

     Risks Relating to Our Common Stock

     Our Common  Stock was delisted by the  American  Stock  Exchange and is now
traded on the Over the Counter Bulletin Board,  which could adversely affect the
price of our common stock.

     The American Stock Exchange delisted our Common Stock in November 2007, and
the  Common  Stock  is now  traded  on  the  OTC:BB  under  the  symbol  "TPOS".
Accordingly,  an  investor  could  find  it more  difficult  to  dispose  of our
securities or to obtain  accurate  market  quotations for them. Our Common Stock
has become  subject to Rule 15g9,  under the  Securities  Exchange  Act of 1934,
which imposes sales practice  requirements  on  broker-dealers  that sell "penny
stock"  securities to persons other than  established  customers and  accredited
investors.  Application  of  this  rule  could  adversely  affect  the  ability,
willingness or both of broker-dealers to sell our securities.



                                       20
<PAGE>

     The market price of our Common Stock has fluctuated significantly and there
is presently not a significant trading market for the Common Stock.

     The market price of our Common Stock has been volatile and has been trading
at historical  low prices.  There is currently not a significant  trading market
for the Common  Stock on the OTC:BB,  and holders of our Common Stock might find
it difficult to sell their Common  Stock.  Also,  changes in our  business,  our
results of operations, our financial condition, our industry, the economy, stock
markets in general and trading in our stock in particular could cause the market
price of our shares to fluctuate substantially.

     The market price of our Common  Stock may be  depressed by shares  eligible
for future  sale,  shares  reserved  for future  issuance  upon the  exercise of
options and warrants and registration rights we have granted.

     Future sales of substantial amounts of Common Stock in the public market or
the perception that such sales may occur could adversely affect the market price
of the Common Stock. As of March 31, 2008, there are 13,343,939 shares of Common
Stock outstanding.  Warrants and optional convertible note shares to purchase an
aggregate of 20,555,601 shares of Common Stock were then outstanding and options
to  purchase a total of 709,500  shares of Common  Stock are  granted  under our
option plan. Our outstanding  Common Stock and the Common Stock underlying these
warrants,  convertible  securities  and options are either now eligible for sale
under Rule 144 or will be eligible beginning at varying times in the future. All
of the above  represents a  significant  overhang on the trading  market for our
Common Stock and may serve to depress the trading price of our Common Stock.

     The provisions of our Articles of  Incorporation,  Bylaws and corporate law
have anti-takeover effects.

     Some provisions in our articles of incorporation  and bylaws could delay or
prevent  a change  in  control  of the  Company,  even if that  change  might be
beneficial  to our  shareholders.  Our restated  articles of  incorporation  and
bylaws contain  provisions  that might make  acquiring  control of us difficult,
including  provisions  limiting rights to call special  meetings of shareholders
and  regulating  the  ability of our  shareholders  to  nominate  directors  for
election  at annual  meetings of our  shareholders.  In  addition,  our board of
directors has the authority,  without further approval of our  shareholders,  to
issue  preferred  shares having such rights,  preferences  and privileges as the
board of directors may determine.  Any such issuance of preferred  shares could,
under some circumstances,  have the effect of delaying or preventing a change in
control  of the  Company  and might  adversely  affect  the rights of holders of
Common Stock.

     In  addition,  we are  subject to  Michigan  statutes  regulating  business
combinations,  takeovers and control share acquisitions, which might also hinder
or delay a change in control of the  Company.  Anti-takeover  provisions  in our
restated  articles of incorporation  and bylaws,  anti-takeover  provisions that
could be included in the preferred shares when issued and the Michigan  statutes
regulating business  combinations,  takeovers and control share acquisitions can
depress  the  market  price of our  securities  and can limit the  shareholders'
ability to receive a premium on their shares by discouraging takeover and tender
offer  bids,  even  if  such  events  could  be  viewed  as  beneficial  by  our
shareholders.

     Our  directors  serve  staggered  three-year  terms,  and  directors may be
removed only for cause.  Our  restated  articles of  incorporation  also set the
minimum  number of  directors  constituting  the  entire  Board at three and the
maximum at fifteen,  and they  require  approval of holders of 90% of our voting
shares to amend these  provisions.  These provisions could have an anti-takeover



                                       21
<PAGE>

effect by making it more  difficult to acquire us by means of a tender offer,  a
proxy contest or otherwise or by removing incumbent directors.  These provisions
could  delay,  deter or  prevent  a  tender  offer or  takeover  attempt  that a
shareholder  might  consider  in his  or her  best  interests,  including  those
attempts  that might  result in a premium  over the market  price for the Common
Stock held by our shareholders. See "Description of Securities."

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     Some of the  statements  in this  report  are  forward-looking  statements.
Forward-looking statements include statements relating to our performance in the
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," and "Business"  sections of this report.  In addition,  we may make
forward-looking  statements in future  filings with the  Securities and Exchange
Commission and in written  materials,  press releases and oral statements issued
by us or on our behalf.  Forward-looking statements include statements regarding
the intent,  belief or current  expectations  of us or our  officers,  including
statements  preceded by,  followed by or including  forward-looking  terminology
such as "may," "will,"  "should,"  "believe,"  "expect,"  "anticipate,"  "plan,"
"intend," "propose,"  "estimate,"  "continue," "predict" or similar expressions,
with  respect  to  various  matters.  Our  actual  results  are likely to differ
materially  from  those  projected  in  the  forward-looking  statements  due to
numerous   factors,   particularly   those  discussed  in  "Risk  Factors."  All
forward-looking  statements in this report are based on information available to
us on the date of this report. We do not undertake to update any forward-looking
statements that may be made by us or on our behalf in this report or otherwise.


ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2.  PROPERTIES

     As of December  31, 2007,  the  Company's  facilities  are set forth in the
following table:

                                 Square                               Own /
Location                         footage            Purpose           Lease
--------                         -------            -------           -----
Marysville, Michigan             200,000  *       Manufacturing       Lease
Marlette, Michigan                40,000          Manufacturing       Lease

     * Includes approximately 7,000 square feet of offices.

ITEM 3.  LEGAL PROCEEDINGS

     We are involved from time to time in routine  litigation  incidental to our
business.  This  litigation  arises  principally  from  claims of defects in our
products sold, from  governmental  agency  proceedings  relating to occupational
safety and  health,  wage and hour laws and  similar  employment  and  workplace
regulations, from workers compensation,  and from employment termination claims.
Although  the amount of any  liability  that could  arise with  respect to these
actions cannot accurately be predicted,  in our opinion, such liability will not
have a material adverse effect on our financial position,  results of operations
or cash flows.



                                       22
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



                                       23
<PAGE>

                                     PART II


ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS
          AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Common Equity

     Our common shares have traded on the Over The Counter  Bulletin  Board (OTC
BB) under the trading symbol "TPOS" since November of 2007. Prior to November of
2007,  our common shares traded on the American Stock Exchange under the trading
symbol "TPO".  There was no public  trading  market for our common shares before
February 14, 2005. The following  table sets forth,  for the periods  indicated,
the high and low sales prices for our common  shares as reported by the Over The
Counter  Bulletin  Board  and the  American  Stock  Exchange  for the  indicated
periods:

Fiscal Year Ended December 31, 2007                   High           Low
-------------------------------------------       ----------      ---------
First Quarter..............................      $    1.15       $    0.67
Second Quarter.............................      $    0.83       $    0.40
Third Quarter..............................      $    0.51       $    0.18
Fourth Quarter.............................      $    0.25       $    0.10


Fiscal Year Ended December 31, 2006                  High            Low
-------------------------------------------      ---------       --------
First Quarter .............................      $    3.25       $   2.05
Second Quarter.............................      $    2.96       $   1.24
Third Quarter..............................      $    2.35       $   1.10
Fourth Quarter.............................      $    1.29       $   0.75

     As of March 31, 2008, we had 13,343,939 shares issued and outstanding, held
by 144 shareholders of record.

Dividends

     We have never paid cash dividends on our common shares and do not expect to
pay such dividends in the foreseeable  future. We currently intend to retain any
future earnings for use in our business. Any future payment of dividends will be
in the sole  discretion of our board of directors.  Credit  agreements  with our
subsidiaries prohibit the payment of dividends. See "Management's Discussion and
Analysis of  Financial  Condition  and  Results of  Operations  - Liquidity  and
Capital Resources."

Recent Sales of Unregistered Securities

     1. During the period  January 1, 2007 through April 6, 2007, we conducted a
private placement  offering of common shares, for which Joseph Gunnar & Co., LLC
was our placement  agent.  Our net proceeds,  after  deducting  offering-related
expenses of $490,658,  were  $2,124,701.  A total of 3,736,942 common shares was
issued during this private placement.



                                       24
<PAGE>

     2.  During  the  period  June 14,  2007 to July 5, 2007 we closed a private
placement Bridge Loan offering, under a Financing Agreement dated June 14, 2007,
with High Capital  Funding,  LLC ("HCF")  acting as lead  investor,  aggregating
$1,700,000  and  netting  the  Company  $1,418,000  after  payment  of fees  and
commissions.  The Bridge Loan Notes carry  interest at 12% and are payable  from
proceeds  of a  secondary  stock  offering  anticipated  to occur in the  second
quarter of 2008. In connection  with this private  placement,  170,000  warrants
were issued to  designees  of the  placement  agent to purchase  common stock of
Tarpon at an  exercise  price of $0.52 and  shares  were  issued to Bridge  note
holders  at the rate of 1.5 shares of Tarpon  common  stock for each $1 of loan,
for a total of 2,550,000  shares.  We estimated the fair value of these warrants
to be $72,000  using the  Black-Scholes  Option  Pricing Model with an estimated
term of 5 years,  risk-free  interest  rate of 4.72%,  dividend  yield of 0% and
volatility of 70%.

     The Company  entered into an Amendment and Extension  Agreement on December
24, 2007,  effective as of December 17,  2007,  with High Capital  Funding,  LLC
("HCF") acting as lead investor to the financing  agreement  dated June 14, 2007
granting  Tarpon a three month  extension of the maturity date to March 17, 2008
at an interest  rate of 13% per annum,  as set forth in the original  agreement.
The amendment also permits the granting by HCF of an additional  three one month
extensions  if Tarpon  has not  completed  the  closing  of a  secondary  equity
offering  by March  17,  2008 in  exchange  for  additional  shares  tied to the
offering price.  The Company has since extended an additional  month until April
17, 2008.

Equity Compensation Plan Information

     The following  information is provided as of December 31, 2007 with respect
to compensation plans,  including individual  compensation  arrangements,  under
which our equity securities are authorized for issuance:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                        (a)                      (b)                       (c)
                                      Number of                                     Number of securities
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                  securities to be                                 remaining available for
                                     issued upon            Weighted-average        future issuance under
                                     exercise of             exercise price          equity compensation
                                     outstanding             of outstanding           plans (excluding
                                  options, warrants         options warrants       securities reflected in
Plan category                        and rights                and rights                column (a)
Equity compensation
plans approved by
security holders (1)                         709,500     $        1.15                       290,500
Equity compensation
plans not approved by
security holders (2)                      10,893,089     $        0.54                            --
Total                                     11,602,589                                         290,500
</TABLE>

     (1)  This equity compensation is under the 2004 Stock Option Plan and after
          giving  effect to options  approved  in 2004,  but  granted  effective
          February 17, 2005.

     (2)  These  plans  consist of (a)  warrants to  purchase  an  aggregate  of
          2,681,165  common shares at a weighted average exercise price of $0.78
          a share until  August 16, 2010 issued to 29  participants  in our 2004



                                       25
<PAGE>

          note  financing  in  February,  March and April 2004 and  adjusted per
          their anti-dilution  provision,  (b) warrants to purchase an aggregate
          of 146,521  common shares at an exercise  price of $1.05 a share until
          August 16, 2010 issued to 16 designees of the  placement  agent in our
          2004 note financing in April 2004 and adjusted per their anti-dilution
          provision,  (c)  warrants  to  purchase  251,565  common  shares at an
          exercise  price of $0.95 a share until  February 14, 2010 issued to 12
          designees of the underwriters in our initial public offering of common
          shares  in  February   2005  and  adjusted  per  their   anti-dilution
          provision,  (d) warrants to purchase an  aggregate  of 300,000  common
          shares at an exercise  price of $0.91 a share until  December 13, 2010
          issued to 8 designees of the placement agent in our December 2005 note
          financing,  (e) warrants to purchase an  aggregate  of 390,000  common
          shares at an exercise  price of $3.08 a share until  December 13, 2012
          issued to 1 designee in our December 2005 note financing, (e) warrants
          to purchase  775,000  common  shares at an  exercise  price of $0.91 a
          share  to the 13  holders  of  bridge  notes  in  connection  with our
          December  7, 2006  bridge  note  financing,  (f)  warrants to purchase
          260,755  common  shares  at an  exercise  price of $0.30 a share to 11
          designees of the  placement  agent in our December 7, 2006 bridge note
          financing,  (g)  warrants  to  purchase  276,960  common  shares at an
          exercise  price of $0.35 to  designees of the  placement  agent in our
          private  placement  closing on  January  24,  2007,  (h)  warrants  to
          purchase  770,204  common  shares  at an  exercise  price  of $0.40 to
          designees of the placement agent in our private  placement  closing on
          March 21, 2007,  (i) warrants to purchase  64,124  common shares at an
          exercise  price of $0.36 to  designees of the  placement  agent in our
          private  placement  closing on April 6, 2007, (j) warrants to purchase
          231,629  common  shares at an exercise  price of $0.23 to designees of
          the placement  agent in our bridge loan closing on June 20, 2007,  (k)
          warrants to purchase  145,166  common  shares at an exercise  price of
          $0.21 to designees of the  placement  agent in our bridge loan closing
          on July 2, 2007, (l) warrants to purchase  2,300,000  common shares at
          an exercise price of $0.01 to Laurus in connection  with its refinance
          of the  LaSalle  debt on August 9, 2007 and (m)  warrant  to  purchase
          2,300,000  common  shares at an  exercise  price of $0.25 to Laurus in
          connection  with its  refinance of the LaSalle debt on August 9, 2007.
          Some warrants are subject to anti-dilution  adjustments.  The exercise
          prices of these warrants were at or above the fair market value of the
          underlying  common shares on the date of grant,  except for the Laurus
          warrants  in items (l) and (m) above.  At the time these  options  are
          exercised,  the option  holder must pay the full option  price for all
          shares  purchased  in cash  or by a  cashless  exercise  in  which  we
          withhold  shares with a fair value equal to the  exercise  price.  The
          warrants  may be  assigned,  but we are required to be notified of the
          assignment.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

     The following discussions contain  forward-looking  statements that involve
numerous risks and  uncertainties.  Our actual  results could differ  materially
from those  discussed  in the  forward-looking  statements  as a result of these
risks  and  uncertainties,  including  those  set  forth  in this  report  under
"Forward-Looking  Statements"  and under  "Risk  Factors."  You should  read the



                                       26
<PAGE>

following  discussion in  conjunction  with  "Selected  Financial  Data" and our
consolidated financial statements and notes appearing elsewhere in this filing.

Overview

     We were  incorporated  in January 2002. We acquired our EWCO  subsidiary in
2004. We acquired  Steelbank in 2004 and Steelbank  acquired Haines Raod in 2005
(see note 3,  "Discontinued  Operations").  In February  2005,  we  completed an
initial public offering for our common shares.

     Since  our   inception,   we  have  had  continuing   losses,   aggregating
approximately  $33 million through December 31, 2007. We have funded such losses
and a portion of our acquisition costs through equity investments, loans and the
proceeds of our initial public offering. Our total consolidated indebtedness for
borrowed  money was  approximately  $14.1  million as of December 31, 2007.  Our
level  of  indebtedness  and the  debt  servicing  costs  associated  with  that
indebtedness  require us to dedicate a substantial portion of our cash flow from
operations  to payments on our debt,  reducing  cash flow  available for working
capital,   capital  expenditures,   acquisitions  and  other  general  corporate
purposes.

     For the year ended  December 31, 2007,  our auditors have issued an opinion
with a "going concern"  modification.  Their  modification is based upon,  among
other  things,  the losses that we have  incurred  since  inception and concerns
about our ability to have  sufficient  liquidity to continue  operations for the
next 12 months.  If we are unable to reduce or  eliminate  continued  losses and
obtain  additional  financing,  our  financial  resources may not be adequate to
satisfy  our  operating  and  capital  requirements  for the next 12 months.  In
addition,  if we are unable to raise additional capital, our financial resources
will not be adequate to satisfy our operating and capital  requirements  for the
next 12 months.  Our  failure  to  generate  sufficient  revenues,  achieve  our
business  objectives or raise  additional  funds,  will have a material  adverse
effect  on our  results  of  operations,  cash  flows  and  financial  position,
including  our ability to continue as a going  concern.  This  situation is more
fully discussed under the heading Liquidity and Capital Resources below.

     Despite our history of losses and related  issues,  our steel  storage rack
business continues to perform profitably.  We plan to concentrate our efforts on
expanding this area of our business,  which is in a fragmented industry.  We see
steel storage racks as engineered, non-commodity products with good margins, and
we  believe  we can  be a  competitive  participant  in the  markets  for  these
products.

Summary of Recent Operations

     On a consolidated  basis, we generated net revenues of approximately  $35.4
million  in 2007  as  compared  with  $53.6  million  in  2006,  a  decrease  of
approximately  34%.  The  decrease  in  revenue  of  $18.2  million  in 2007 was
primarily   attributable  to  the  continued  weakness  in  the  tubing  market,
elimination of high volume contracts which had very low margins and a disruption
of normal business operations during the change of senior lenders.

     Our operations in 2007 reflected a net loss from  continuing  operations of
approximately  $8.4  million  as  compared  with  a  net  loss  from  continuing
operations of approximately $4.6 million in 2006.

     The financial results for 2007 compared to 2006 were disappointing, in that
our  emphasis  on reduced  manufacturing  costs and  improved  pricing  controls
resulted in net  profitability  at EWCO's  SpaceRak  division,  while our tubing



                                       27
<PAGE>

business at EWCO failed to show such  improvements,  due primarily to market and
competitive factors.

     We currently  seek to minimize the  potential  adverse  impact of commodity
price risks of our steel  inventory by minimizing the amount of steel  inventory
we carry.  We might not be able to raise our  prices,  as we expect  competitive
factors in our  industry to result in more  moderate  gross profit  margins.  We
cannot quantify the impact of these factors on future profitability. Major price
fluctuations are  characteristic  of our industry and typically lead to dramatic
changes in results  of  operations,  including  losses if price  reductions  are
severe.

     We believe that maintaining and growing future profitability will depend on
increasing our sales tonnage and reducing our manufacturing costs, together with
buying steel as cost effectively as possible.  However, we may not be able to do
some or all of these things.

Results of Operations

Tarpon Industries, Inc.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Net Revenues

     Listed in the tables below are the net revenues and tonnage  shipped during
2007 and 2006:

<TABLE>
<CAPTION>

                                          2007             2006                    Change
                                            $               $                $               %
                                      --------------   -------------    ------------    -------------
                                                          (dollars in thousands)
<S>                                   <C>                <C>            <C>                 <C>
EWCO Tubular....................      $      7,354       $   19,424     $ (12,070)          (62.1%)
EWCO SpaceRak(R)................            28,001           34,189        (6,188)          (18.1%)

                                          2007             2006                    Change
                                          Tons             Tons            Tons              %
                                      --------------   -------------   -------------    -------------
EWCO Tubular....................              9,674          24,614        (14,940)          (60.7%)
EWCO SpaceRak(R)................             19,222          24,028         (4,806)          (20.0%)
</TABLE>

     Net revenues decreased 34.1% to $35.4 million in 2007 from $53.6 million in
2006, driven by a reduction in tonnage volume of 40.7%, resulting primarily from
continued  weakness  in the tubing  market and  residential  housing,  which has
impacted the revenue and growth of major retail home  centers ,  elimination  of
high volume  contracts  which had very low margins  and a  disruption  of normal
business operations during the change of senior lenders.

Cost of Goods Sold and the Related Gross Profit

     In 2007 and 2006, our cost of goods sold and the related gross margin were:

<TABLE>
<CAPTION>
                                               2007                            2006                      Cost Change
                                           COGS             GM%            COGS          GM%          $              %
                                       --------------    ----------     ----------- -------------- ---------     ----------
                                                                   (dollars in thousands)
<S>                                   <C>                  <C>       <C>                  <C>       <C>            <C>
EWCO Tubular...................       $   7,173            2.5%      $     18,360         5.5%      (11,187)       (60.9%)
EWCO SpaceRak(R)...............          25,080           10.4%            30,753        10.0%       (5,673)       (18.4%)
</TABLE>



                                       28
<PAGE>

     Gross profit was $3.1 million and $4.5 million for the years ended December
31, 2007 and 2006,  respectively.  The decrease in gross profit  dollars in 2007
compared  with 2006 was  primarily  due to the  reduced  overall  net  revenues,
previously  noted.  Gross margins at the SpaceRak  division improved to 10.4% in
2007 compared with 10.0% in 2006, despite a 20.0% reduction in tons shipped, due
to improved  controls  over  manufacturing  costs and pricing.  Tubing  division
margins  fell to 2.5%  in  2007  from  5.5%  in  2006,  resulting  from  reduced
absorption of manufacturing  overhead on significant reductions in tons shipped.
Overall gross margins increased to 8.8% for 2007 versus 8.4% for 2006.

Selling General and Administration Expense

     Selling,  general and  administrative  expenses ("SG&A")  decreased for the
year ended December 31, 2007 to $5.6 million, or 15.8% of net revenue, from $7.8
million,  or 14.5% of net  revenue for the year ended  December  31,  2006.  The
decrease was primarily attributable to decreases in salaries, wages and benefits
of $1,225,000 and consulting fees of $1,041,000.

Other Income and Expense

     Other  income and expense  resulted in income for 2007 of $74,000  compared
with income of $1,220,000 in 2006.  The reduction in income  resulted  primarily
from a decrease in gain from derivatives, related to a reduction in value of the
convertibility feature and certain warrants issued in connection with the Laurus
convertible  debt  transaction  of December 13,  2005,  to $106,000 in 2007 from
$1,060,000 in 2006.  Additionally,  there was a loss recorded for the conversion
of bridge  debt to common  shares  during  the  private  placement  in the first
quarter of 2007 of $130,000 and a reduction in miscellaneous income of $70,000.

Interest Expense

     Net interest expense increased to $6.2 million in 2007 from $2.5 million in
2006.  Approximately $5.5 million of the 2007 total was incurred by Tarpon, with
$762,000 of interest on  borrowings  under the Laurus senior  convertible  note,
Laurus  term  note  B  and  bridge  loans  ($607,000  in  2006),   $2.8  million
representing  amortization  of  deferred  financing  costs  ($548,000  in 2006),
$566,000  representing  accretion  of note  discounts  under the  Laurus  Senior
Convertible  note  ($487,000  in 2006)  and $1.4  million  of  default  interest
($338,000 in 2006).  Interest  expense under EWCO's line of credit and term note
borrowings  were $625,000  compared with $544,000 in 2006 due to higher  average
borrowings in 2007.

Income Taxes

     We have not recognized a potential tax benefit from our net losses, because
of the  uncertainty  regarding  our ability to realize the future tax benefit of
our net operating  loss carry  forwards.  This  potential  loss carry forward if
utilized would be approximately $ 33.1 million.

Liquidity and Capital Resources



                                       29
<PAGE>

Overview

     At December 31, 2007 we had a working capital  deficit of  $13,598,000,  as
compared with a working capital deficit at December 31, 2006 of $5,525,000.  The
working  capital  deficit  is  due  in  part  to the  recording  of  our  senior
indebtedness  and our  noteholder  indebtedness  as  current  as a result of the
uncertainty  about the  Company's  ability to continue as a going  concern.  The
increase in the working  capital  deficit  during 2007 was due to  reductions in
cash ,  accounts  receivable,  inventory  and  other  assets of  $424,000,  $1.5
million,  $1.5 million and $421,000,  respectively,  reflecting the reduction in
sales over the period. These reductions were partially offset by a net reduction
in accounts payable and accrued expenses of $2.1 million.

     Our primary needs for liquidity in 2007 were: (1) working capital including
increases in accounts receivable and inventories of steel and finished products,
(2) payment of  obligations  under our senior  indebtedness  and our  noteholder
indebtedness,  (3) capital  expenditures for equipment and (4) funding for sales
and marketing activities.

     Although we have taken corrective actions that we believe will permit us to
achieve operating  profitability,  such profits will be absorbed by interest and
financing  charges on our past debts.  Until that debt can be  reduced,  through
paydown and equity refinancing,  we require additional financing.  We received a
small bridge  financing  in February  2008 and are  presently  working on a more
substantial bridge financing to a proposed secondary public offering.  There can
be no assurance  about this bridge  financing or the proposed  secondary  public
offering and, if we fail to achieve the same, we will have to begin winding down
our operations.

Sources and Uses of Cash

     We have  incurred  losses  and  negative  cash flows in each year since our
inception.  We financed our  activities  with funds  received  from sales of our
common  shares,  notes,  warrants  and bank  loans.  As of March  31,  2008,  no
additional  funds  were  available  for  borrowing  under our  revolving  credit
facility.

     On June 14, 2007,  the Company  conducted a private  placement  bridge loan
offering, netting the Company $1.4 million for working capital purposes.

     In the first  quarter of 2007,  we  conducted a private  placement  for our
common stock, netting the Company $2.1 million for working capital purposes.

Year Ended December 31, 2007

Cash Flows From Operating Activities

     Net cash  provided  by  operations  in 2007 was  $2,838,000.  Cash was used
primarily by $8.4 million of losses from continuing operations and a decrease of
$1,922,000 in accounts payable and accrued expenses.  Cash was provided by (1) a
$1,524,000  decrease  in  accounts  receivable,  (2) a  $1,537,000  decrease  in
inventory  and (3) a $421,000  decrease in other current  assets.  Additionally,
$4.5 million was provided from discontinued operations.

Cash Flows From Investing Activities



                                       30
<PAGE>

     The Company's investing activities used $20,000 from continuing  operations
in 2007 for  capital  expenditures  compared  with  $985,000  in 2006.  The 2006
activities were increased by the payments made relating to FENCEMaster, a former
customer,   which  the  Company  unsuccessfully  attempted  to  acquire  out  of
bankruptcy in the fourth  quarter of 2005. The Company  supported  FENCEMaster's
operations in the fourth quarter of 2005,  principally through its trade credit,
and maintained a secured  position behind Wachovia Bank,  FENCEMaster's  lender,
until the sale of FENCEMaster in December,  2005.  Proceeds of the sale returned
to the  Company  in  December  of 2005,  used to pay off the trade  indebtedness
incurred on behalf of FENCEMaster, totaled $985,000.

Cash Flows From Financing Activities

     Our financing activities used $4,346,000 of cash in 2007. Cash was provided
by (1)  $2,125,000 of net proceeds from  issuance of equity  securities  and (2)
$3,400,000  of net proceeds  from  short-term  obligations  and used for (3) net
repayments  on credit  facilities  of  $1,249,000,  (4)  repayment of short-term
obligations of $775,000,  (5) repayment of long-term obligations of $745,000 and
(6) payment of financing costs of $2,724,000.

Year Ended December 31, 2006

Cash Flows From Operating Activities

     Net cash used in operations in 2006 was $5,419,000. Cash was used primarily
by (1) $4,589,000 of losses from continuing operations,  (2) a $945,000 increase
in accounts receivable and (3) a $519,000 increase in prepaid expenses and other
current assets.  Cash was provided from operations by a decrease in inventory of
$426,000 and an increase in accounts  payable and other current  liabilities  of
$1,170,000.

Cash Flows From Investing Activities

     Our  investing   activities  in  2006  used  approximately   $985,000  from
continuing  operations for the payment of obligations for FENCEMaster,  a former
customer,   which  the  Company  unsuccessfully  attempted  to  acquire  out  of
bankruptcy in the fourth  quarter of 2005. The Company  supported  FENCEMaster's
operations in the fourth quarter of 2005,  principally through its trade credit,
and maintained a secured  position behind Wachovia Bank,  FENCEMaster's  lender,
until the sale of FENCEMaster in December,  2005.  Proceeds of the sale returned
to the  Company  in  December  of 2005,  used to pay off the trade  indebtedness
incurred on behalf of FENCEMaster, totaled $985,000.

Cash Flows From Financing Activities

     Our  financing   activities   provided  $34,000  of  cash  from  continuing
operations  in 2006.  Cash was  provided by net  proceeds  from the  issuance of
bridge  notes  of  $585,000.  Cash  was  used  for the  repayment  of  long-term
obligations of $290,000, repayment of short-term obligations of $188,000 and net
repayments on the credit facility of $74,000.

Financing Arrangements

Laurus Master Credit Agreement



                                       31
<PAGE>

     Tarpon entered into a Master Credit Agreement ("The Agreement") with Laurus
Master Fund,  Ltd.  ("Laurus") on August 9, 2007,  including a revolving  credit
agreement  (Revolver) up to  $10,000,000,  subject to borrowing based on capital
availability, inventory and reserves, a $1,700,000 term loan (Term Loan A) and a
$1,700,000  term loan (Term Loan B). As of December 31, 2007, the Company had no
excess availability for borrowing under its revolving credit agreement.

     Term Loan A is payable as interest only until  January 1, 2008,  with equal
monthly  installments  of principal at a fixed monthly  amount of $37,500,  plus
accrued interest  beginning February 1, 2008 through maturity on August 9, 2009,
at which time,  the remaining  unpaid balance and all accrued,  unpaid  interest
will be due. Term Loan B is payable as interest only until maturity on August 9,
2008,  at which time,  the  remaining  unpaid  balance and all  accrued,  unpaid
interest  will be due. The Revolver  will be paid,  or drawn upon,  as necessary
throughout the normal course of business.  Interest on the Revolver will be paid
monthly based on the daily drawn balance at the contract interest rate,  defined
below.

     Interest on the respective  facilities is calculated as follows; 1) for the
Revolver,  interest  shall  accrue at a rate per annum equal to the "prime rate"
published in the Wall Street Journal from time to time (the "Prime Rate"),  plus
one and  three-quarter  percent (1.75%) (the "Contract  Rate"),  2) for the Term
Loan A, interest shall accrue at the Prime Rate plus two percent (2.0%),  but no
less than nine percent (9.0%), and 3) for the Term Loan B, interest shall accrue
at the Prime  Rate  plus  three  percent  (3.0%),  but no less than ten  percent
(10.0%).

     The Agreement contains  customary  covenants that will limit the ability of
the Company, and its subsidiaries,  to, among other things, guarantee additional
indebtedness,  incur  indebtedness,  create liens,  pay dividends,  make certain
types of investments,  enter into transactions with affiliates or enter into any
transaction  outside the  ordinary  course of  business.  The Company was not in
violation of any such covenants as of December 31, 2007.

     The Company granted Laurus a security  interest in all of their  respective
assets including, but not limited to, accounts receivable, inventory, machinery,
equipment,  general intangibles,  stock and deposit accounts.  In addition,  the
Company  issued  warrants to Laurus to purchase  2,300,000  shares of the common
stock of the Company  for an exercise  price of $0.01 per share and a warrant to
purchase  2,300,000  shares of the common  stock of the  Company for an exercise
price of $0.25 per share.  The warrants have been valued at $1,629,000 using the
Black-Scholes  model  with an  interest  rate  of 4%,  volatility  of 70%,  zero
dividends and expected term of ten years. The total value has been recorded as a
deferred  finance cost and is being  amortized over the term of the related debt
using the effective interest method.

     Steelbank  Tubular  Inc.,  MTM  Acquisition  Company,  FM,  Inc.  and  JS&T
Acquisition Company,  other subsidiaries of the Company,  provided guarantees of
this financing transaction secured by all of their respective assets.

     Upon entering this  agreement the Company  retired all debt owed to LaSalle
Bank Midwest N.A. and LaSalle Business Credit.

Laurus Convertible Note



                                       32
<PAGE>

     On December  13,  2005,  the Company  entered  into a  Securities  Purchase
Agreement  (the  "Agreement")  with  Laurus  Master  Fund,  Ltd.  ("Laurus")  in
connection  with the private  placement of a convertible  term note (the "Note")
issued by the Company in the principal  amount of $6,000,000  due August 9, 2009
and common stock purchase warrants (the "Warrants").  The Note is collateralized
by all present and future assets of Tarpon and its  subsidiaries,  including the
equity  interests of EWCO. The Note is payable in equal monthly  installments of
principal totaling $40,000 commencing on April 1, 2008 through the maturity date
and bears  interest at prime plus 4% (11.25% at December 31,  2007).  As part of
the  Agreement,  the monthly  payments of principal and interest,  under certain
conditions,  are  convertible  into shares of the  Company's no par value common
stock at a fixed  conversion  price of $0.50 per share. The Warrants provide for
the  purchase of up to 390,000  shares of common  stock at an exercise  price of
$3.08 until February 17, 2010.

     Laurus cannot receive shares upon exercise of the warrants, upon payment of
principal and interest on the note,  or upon  conversion of the Note which would
exceed the  difference  between  9.99% of the issued and  outstanding  shares of
common  stock  and the  number  of  shares  beneficially  owned  by  Laurus,  as
determined in accordance with Section 13(d) of the Exchange Act, as amended, and
Regulation 13d-3. This limitation  automatically  becomes null and void upon the
occurrence, and during the continuance, of an event of default as defined in the
note,  or upon 75 days prior  written  notice to the Company,  except that at no
time shall the  number of shares of common  stock  beneficially  owned by Laurus
exceed 19.99% of the outstanding shares of common stock.  Further, the number of
common shares  issuable by the Company and acquirable by Laurus at a price below
$2.85 per share pursuant to the terms of the note,  the warrant,  the agreement,
any related  agreement or otherwise cannot exceed 927,560 shares of common stock
(subject to appropriate  adjustment for stock splits, stock dividends,  or other
similar  recapitalizations  affecting the common stock),  unless the issuance of
such excess amount of common stock is first approved by the  stockholders of the
Company.

     In  connection  with  this  financing,   the  Company  recorded   discounts
aggregating   approximately   $1,681,000,   of  which   approximately   $608,000
represented the value of 390,000 warrants using the Black-Scholes  model with an
interest rate of 4.4%,  volatility  of 60%, zero  dividends and expected term of
seven years; and  approximately  $1,073,000  represented the conversion  feature
inherent  in the  instrument.  Such  discounts  are  being  amortized  using the
effective  interest  method over the term of the related  debt.  The  conversion
feature  itself was deemed to be a derivative  under FASB Statement No. 133. The
Company  estimated the fair value of the conversion  feature to be $13,000 as of
December 31, 2007 and December 31, 2006. In addition,  the Company incurred fees
in  connection  with  this  financing  aggregating   approximately   $1,685,000,
including  warrants to purchase up to 300,000  shares of common  stock to Joseph
Gunnar and Company,  a related party,  recorded as deferred  financing costs and
amortized  over the life of the  note.  The  300,000  warrants  were  valued  at
approximately  $432,000 using the Black-Scholes model using the same assumptions
described above, except for a term of five years. The warrants were deemed to be
a derivative  instrument as they can be put back to the Company,  and, therefore
the corresponding liability was marked to market and recorded at a fair value of
$1,680 as of  December  31,  2007 and  $108,000 as of  December  31,  2006.  The
$106,320  decrease in value  during  2007 is shown as a "Gain from  derivatives"
within the  Statement of  Operations.  These  warrants are  exercisable  through
December 13, 2010 at $0.91 per share.  Although the stated  interest rate of the
convertible  note is the prime  rate plus 4%, as a result of the  aforementioned
discounts and fees, the effective  interest rate of the Note was estimated to be
approximately  41.8% per annum at its inception on December 13, 2005. The stated



                                       33
<PAGE>

rate in effect at December 31, 2007 was 11.25%.

     On May 24, 2006, the Company  executed an Omnibus  Amendment to the Secured
Convertible  Term Note between the Company and the Laurus  Master Trust  whereby
the Company executed its payment  obligation of principal due May 1, 2006 in the
amount  of  $187,500  in  common  shares  of  Tarpon  stock  in  lieu  of  cash.
Accordingly,  Tarpon  and  Laurus  agreed  to  amend  the  terms  of the  Senior
Convertible Term Note, and 153,688 shares were issued at $1.22 per share.

     On August 17,  2006,  Tarpon  reached  an  agreement  with the Laurus  fund
whereby  Tarpon  would offer  100,000  shares of Tarpon  common  stock valued at
$190,000  ($1.90 per share) to Laurus in exchange  for Laurus  amending  certain
provisions of its loan agreement. In addition,  Tarpon agreed to award Laurus an
additional  100,000 shares  contingent on Tarpon  completing a successful equity
raise (in process as of December 31, 2007). The agreement provided that the loan
agreement  would be amended  such that an event of  default  with  LaSalle  Bank
Midwest (LaSalle) and/or LaSalle Business Credit (LaSalle) which is not declared
as a default by LaSalle,  would not give rise to default interest due to Laurus.
LaSalle  declared the Company in default on October 2, 2006,  thus triggering an
event of default with Laurus,  for which the Company has been  accruing  default
interest on a monthly basis. At the closing of the Master Credit  Agreement with
Laurus on August 9, 2007,  default  interest  accrued to that date of $1,231,000
was paid with the  proceeds of Term Note B. The results of  operations  for 2007
include  $1,420,000 of default interest expense,  with $513,000 due to Laurus as
of December 31, 2007.

Amendment to Secured Convertible Term Note

     The Company entered into an Omnibus  Amendment and Waiver (the "Amendment")
with Laurus  Master  Fund,  Ltd., a Cayman  Islands  company  ("Laurus"),  as of
December 21, 2007 to waive certain events of default under that certain  Secured
Convertible  Term Note, dated as of December 13, 2005, (the "Note") and to amend
the Note.

     Under the terms of the  Amendment,  Laurus waived certain events of default
by Tarpon including various defaults on payments, defaults relating to Steelbank
Tubular, Inc. and delisting from the American Stock Exchange.

     Several  amendments  were  made to the  Note  including  amendments  to the
Maturity  Date  extending  the same to  August  9,  2009;  the rate of  interest
payable,  amending  the  same to a rate per  annum  equal  to the  "prime  rate"
published in the Wall Street Journal from time to time plus four (4.0%) percent;
providing for principal payments of forty thousand ($40,000) dollars on April 1,
2008 and on the first business day of each succeeding month  thereafter  through
the Maturity Date;  reducing the Fixed  Conversion  Price to $.50 per share; and
increasing  the  limitations  on  conversion  to nine point  ninety nine (9.99%)
percent of the outstanding shares of Common Stock.

Bridge Notes

     On December 7, 2006 Tarpon closed a private  placement Bridge Loan offering
aggregating  $775,000 and netting the Company $562,000 after payment of fees and
commissions.  The Bridge Loan Notes carry interest at 12% and are repayable from
proceeds  of a  secondary  stock  offering  initiated  in  January  of 2007.  In
connection with this private placement, 775,000 warrants were issued to the note
holders and 96,875  warrants were issued to designees of the placement  agent to



                                       34
<PAGE>

purchase  common stock of Tarpon at an exercise price of $0.80.  The Company has
estimated  the  fair  value  of  these   warrants  to  be  $333,000   using  the
Black-Scholes  Option  Pricing  Model  with an  estimated  term  of 4.94  years,
risk-free interest rate of 4.64%, dividend yield of 0% and volatility of 70%.

     The entire  balance of  $775,000,  plus  accrued  interest of $25,729,  was
retired  at the  "Raise 1" closing on March 23,  2007  through  cash  payoffs of
$232,620 and conversion to common shares with a value of $568,109  consisting of
811,584 shares of common stock.

     During the period  June 18,  2007 to July 5, 2007  Tarpon  closed a private
placement Bridge Loan offering, under a Financing Agreement dated June 14, 2007,
aggregating  $1,700,000 and netting the Company $1,418,000 after payment of fees
and  commissions.  The Bridge Loan Notes  carry  interest at 12% and are payable
from proceeds of a secondary  stock offering  anticipated to occur in the second
quarter of 2008. In connection  with this private  placement,  170,000  warrants
were issued to  designees  of the  placement  agent to purchase  common stock of
Tarpon at an  exercise  price of $0.52 and  shares  were  issued to Bridge  note
holders  at the rate of 1.5 shares of Tarpon  common  stock for each $1 of loan,
for a total of 2,550,000 shares valued at $1,183,000.  The Company has estimated
the fair value of these  warrants to be $72,000 using the  Black-Scholes  Option
Pricing  Model with an estimated  term of 5 years,  risk-free  interest  rate of
4.72%, dividend yield of 0% and volatility of 70%.

     The Company  entered into an Amendment and Extension  Agreement on December
24, 2007,  effective as of December 17,  2007,  with High Capital  Funding,  LLC
("HCF")  acting as lead investor  under the financing  agreement  dated June 14,
2007 granting  Tarpon a three month  extension of the maturity date to March 17,
2008  at an  interest  rate of 13%  per  annum,  as set  forth  in the  original
agreement. The amendment also permits the granting by HCF of an additional three
month  extension if Tarpon has not completed  the closing of a secondary  equity
offering  by March  17,  2008 in  exchange  for  additional  shares  tied to the
offering price. The Company has since extended one month to April 17, 2008.

New Accounting Pronouncements

     In September 2006, the FASB issued SFAS No. 157 "Fair Value  Measurements".
This  Statement  replaces  multiple  existing  definitions  of fair value with a
single definition,  establishes a consistent framework for measuring fair value,
and expands financial statement  disclosures  regarding fair value measurements.
This Statement applies only to fair value measurements that are already required
or permitted  by other  accounting  standards  and does not require any new fair
value measurements.  SFAS 157 is effective for fiscal years beginning subsequent
to November 15, 2007.

     In February 2007, the FASB issued Statement No. 159, "The Fair Value Option
for Financial Assets and Financial  Liabilities,  including an amendment of FASB
Statement No. 115" ("SFAS 159").  FAS 159 permits  entities to choose to measure
many  financial  instruments  and certain other items at fair value that are not
currently required to be measured at fair value.  Unrealized gains and losses on
items for which the fair value option has been elected are reported in earnings.
SFAS 159 does not  affect  any  existing  accounting  literature  that  requires
certain  assets  and  liabilities  to be  carried  at fair  value.  SFAS  159 is
effective  for fiscal  years  beginning  after  November  15,  2007.  Management
currently  does not expect  adoption of SFAS 159 will have a material  effect on



                                       35
<PAGE>

the Company's financial position or results of operations.  The Company plans to
adopt SFAS 159 on January 1, 2008.

Critical Accounting Policies and Use of Estimates

     Our  discussion  and  analysis of our  financial  condition  and results of
operations  are  based on the  related  financial  statements,  which  have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States of  America.  The  preparation  of the  financial  statements  in
accordance with accounting principles generally accepted in the United States of
America  requires  our  management  to make  estimates  that affect the reported
amounts of assets and  liabilities,  the  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues  and  expenses  during  the  reporting  period.  Our  most  significant
estimates  relate to allowances  for doubtful  accounts and valuing  options and
warrants  granted to  non-employees.  Actual  results  could  differ  from these
estimates.  We evaluate our estimates primarily based on historical  experience,
business knowledge and various assumptions we believe to be reasonable under the
circumstances.  These  estimates  are  evaluated  by  management  and revised as
circumstances change. We believe that the following critical accounting policies
and estimates  affect our more  significant  estimates and judgments used in the
preparation of our financial statements.

     Bad Debts

     We maintain a reserve for known and unknown bad debts.  We evaluate  credit
risk and the  adequacy  of our  reserve by  monitoring  the age of our  accounts
receivable and the credit worthiness of our customers.  In addition,  we monitor
the  overall  status of the  industries  where our  products  and  services  are
utilized.  Typically,  this reserve is not subject to  significant  fluctuations
from period to period.  However,  if we incur an unusual  amount of bad debt, it
could alter our exposure and the related  reserve.  At December 31, 2007 our Bad
Debt reserves were  $116,000,  a decrease of $73,000 from December 31, 2006. Bad
Debt expense for 2007 was $23,000 compared to $20,000 in 2006.

     Common Stock Options

     The Company elected the modified prospective transition method for adopting
SFAS 123R.  Under this method,  the  provisions of SFAS 123R apply to all awards
granted  or  modified  after the date of  adoption.  We must  account  for stock
options and warrants  granted to non-employees  using the fair value method.  We
use the  Black-Scholes  valuation  model for  determining  the fair value of our
options and warrants.  That model requires us to make assumptions  regarding the
expected life of the security, the expected volatility of our stock price during
the period,  the risk free interest rate and the dividend  yield.  Varying these
assumptions can have a significant  impact on our option and warrant  valuations
and related expenses.  The valuation methodology used an assumed term based upon
the  stated  term of ten  years,  adjusted  down for  estimated  forfeitures,  a
risk-free  rate of  return  represented  by the  U.S.  Treasury  Bond  rate  and
volatility as determined by comparing the Company's risk profile with comparable
public companies.  A dividend yield of 0% was used because the Company has never
paid a dividend and does not anticipate paying dividends in the future.

     The  provisions of SFAS 123R also apply to awards  granted prior to January
1, 2006  that did not vest  before  January  1, 2006  (transition  awards).  The
compensation  cost for the portion of the transition  awards that had not vested



                                       36
<PAGE>

by January  1, 2006 is based on the  grant-date  fair value of these  transition
awards as calculated for pro forma disclosures under the provisions of SFAS 123.
Compensation  cost  for  these  transition  awards  are  attributed  to  periods
beginning January 1, 2006 and use the  Black-Scholes  method as prescribed under
SFAS 123,  except that an estimate of expected  forfeitures  is used rather than
actual forfeitures.

Off Balance Sheet Arrangements

     We do not have any  transactions  that are  considered  off  balance  sheet
arrangements for purposes of financial reporting.



                                       37
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

TARPON INDUSTRIES, INC.
INDEX TO FINANCIAL STATEMENTS


Tarpon Industries, Inc.                                                    Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.....................39
CONSOLIDATED BALANCE SHEETS.................................................40
CONSOLIDATED STATEMENTS OF OPERATIONS.......................................41
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)...................42
CONSOLIDATED STATEMENTS OF CASH FLOWS.......................................43
NOTES TO FINANCIAL STATEMENTS...............................................45



                                       38
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Tarpon Industries, Inc. and Subsidiaries
Marysville, Michigan

     We have audited the consolidated balance sheets of Tarpon Industries,  Inc.
and Subsidiaries (a Michigan  corporation) as of December 31, 2007 and 2006, and
the  related  consolidated   statements  of  operations,   shareholders'  equity
(deficit) and cash flows for the years then ended.  Our audits also included the
financial  statement schedule listed in the index at item 15. These consolidated
financial  statements and financial statement schedule are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
consolidated  financial statements and financial statement schedule based on our
audits.

     We  conducted  our  audits of the  consolidated  financial  statements  and
financial  statement  schedule in  accordance  with the  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that  our  audits  of the  consolidated  financial  statements  and
financial statement schedule provides a reasonable basis for our opinion.

     In our opinion,  such consolidated  financial  statements referred to above
present fairly, in all material respects, the consolidated financial position of
Tarpon  Industries,  Inc. and Subsidiaries as of December 31, 2007 and 2006, and
the  consolidated  results of their operations and their cash flows for the year
then ended, in conformity with accounting  principles  generally accepted in the
United States of America.  Also, in our opinion, the related financial statement
schedule,  when considered in relation to the consolidated  financial statements
taken as a whole, presents fairly in all material respects,  the information set
forth therein.

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming that the Company will continue as a going concern. As described in Note
2, the Company has sustained recurring net losses since its inception and, as of
December 31, 2007, the Company's current liabilities exceeded its current assets
by  $13,597,710.  These  factors,  among  others,  as described in Note 2 to the
consolidated  financial statements,  raise substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.


         Rehmann Robson


         /s/ Rehmann Robson


         Troy, Michigan
         March 31, 2008



                                       39
<PAGE>
<TABLE>
<CAPTION>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                                                                  December 31,
                                                                            2007                 2006
                                                                      ----------------    -----------------
ASSETS
Current Assets
<S>                                                                    <C>              <C>
Cash and cash equivalents                                              $       456,838  $           880,515
Accounts receivable (less allowance for doubtful accounts of
$115,895 and $189,247, respectively)                                         4,547,909            6,071,499
Inventories, net                                                             2,592,087            4,123,318
Assets of discontinued operations                                                   --           10,469,277
Other current assets                                                           371,339              792,584
                                                                       ----------------    -----------------
Total current assets                                                         7,968,173           22,337,193

Property, plant and equipment, net                                             391,550              463,446
Deferred financing costs, net of amortization                                2,414,052            1,315,545
                                                                       ----------------    -----------------
TOTAL ASSETS                                                           $    10,773,775  $        24,116,184
                                                                       ================    =================

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Short term debt                                                        $     6,438,949  $         6,718,115
Term debt, classified as current                                             7,665,817            5,284,021
Accounts payable - trade                                                     6,118,761            8,293,014
Liabilities of discontinued operations                                              --            6,474,406
Other current liabilities                                                    1,342,356            1,089,913
                                                                       ----------------    -----------------
Total current liabilities                                                   21,565,883           27,862,469


Long-term debt, less current maturities                                             --                2,643
Other long-term liabilities                                                      1,680              108,000
                                                                       ----------------    -----------------
TOTAL LIABILITIES                                                           21,567,563           27,973,112


Commitments and Contingencies (Notes 6, 7 and 11)

Shareholders' Deficit
Preferred shares; no par value 2,000,000 shares authorized;
no shares issued at December 31, 2007 and 2006                                      --                   --
Common shares; no par value, authorized 100,000,000 shares at
December 31, 2007 and 20,000,000 at December 31, 2006; issued
and outstanding,
11,343,939 shares at December 31, 2007, and
4,993,712 shares at December 31, 2006                                       22,215,782           16,856,821
Accumulated deficit                                                       (33,009,570)         (20,713,749)
                                                                       ----------------    -----------------
Total shareholders' deficit                                               (10,793,788)          (3,856,928)
                                                                       ----------------    -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                             $   10,773,775  $        24,116,184
                                                                       ================    =================
</TABLE>

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



                                       40
<PAGE>
<TABLE>
<CAPTION>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                            2007                 2006
                                                       ----------------      --------------
REVENUES
<S>                                                 <C>                   <C>
Sales, net of customer discounts                    $       35,354,803    $     53,613,381
COST OF GOODS SOLD                                          32,253,499          49,113,345
                                                       ----------------      --------------

Gross Profit                                                 3,101,304           4,500,036

OPERATING EXPENSES
Selling, general and administrative                          5,397,506           7,772,231
Loss on disposal of property and equipment                          --               3,893
                                                       ----------------      --------------
Total operating expenses                                     5,397,506           7,776,124
                                                       ----------------      --------------

OPERATING LOSS                                             (2,296,202)         (3,276,088)
                                                       ----------------      --------------

OTHER INCOME (EXPENSE)
Miscellaneous  income                                           97,718             167,729
Gain from derivatives                                          106,320           1,059,874
Loss on extinguishment of debt                               (129,853)                  --
Foreign currency exchange loss                                      --             (3,536)
                                                       ----------------      --------------
Total other income, net                                         74,185           1,224,067
                                                       ----------------      --------------

INTEREST EXPENSE, NET
Interest expense                                             6,226,983           2,571,900
Interest income                                                     --            (35,156)
                                                       ----------------      --------------
Interest expense, net                                        6,226,983           2,536,744
                                                       ----------------      --------------

LOSS FROM CONTINUING OPERATIONS                            (8,449,000)         (4,588,765)
LOSS FROM DISCONTINUED OPERATIONS                          (3,846,821)         (5,404,114)
                                                       ----------------      --------------
NET LOSS                                            $     (12,295,821)    $    (9,992,879)
                                                       ================      ==============

NET LOSS PER COMMON SHARE -
BASIC AND DILUTED

CONTINUING OPERATIONS                               $           (0.94)    $         (0.95)
DISCONTINUED OPERATIONS                                         (0.42)              (1.13)
                                                       ----------------      --------------
                                                    $           (1.36)    $         (2.08)
                                                       ================      ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING                                    9,009,666           4,813,505
                                                       ================      ==============
</TABLE>

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



                                       41
<PAGE>
<TABLE>
<CAPTION>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

                                       Number Total
                                           Of                                             Shareholders'
                                         Common         Common         Accumulated            Equity
                                         Shares         Shares           Deficit            (Deficit)
                                       -----------    ------------    ---------------    -----------------
<S>                <C>                  <C>        <C>             <C>                <C>
Balance at January 1, 2006              4,640,130  $   15,625,625  $    (10,720,870)  $         4,904,755

Issuance of warrants                           --         531,000                 --              531,000
Stock-based compensation                       --         147,407                 --              147,407
Issuance of shares
as compensation                            65,166         112,800                 --              112,800
Shares issued to Laurus
on conversion of debt                     155,177         187,500                 --              187,500
Shares issued to Laurus for
amendment to loan agreement               100,000         190,000                 --              190,000
Shares issued to Director for
payment of interest to Laurus              33,239          62,489                 --               62,489
Net loss                                       --              --        (9,992,879)          (9,992,879)
                                       -----------    ------------    ---------------    -----------------
Balance at December 31, 2006            4,993,712  $   16,856,821  $    (20,713,749)  $       (3,856,928)

Issuance of shares in private
placement                               3,736,942       2,124,701                               2,124,701
Issuance of warrants                                    1,701,205                               1,701,205
Stock-based compensation                                  219,791                                 219,791
Shares issued as part of June 14,
2007 bridge loan transaction            2,613,285       1,183,411                               1,183,411
Loss on conversion of bridge debt in
private placement                                         129,853                                 129,853
Net loss                                                                (12,295,821)         (12,295,821)
                                       -----------    ------------    ---------------    -----------------
Balance at December 31, 2007           11,343,939  $   22,215,782  $    (33,009,570)  $      (10,793,788)
                                       ===========    ============    ===============    =================
</TABLE>

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



                                       42
<PAGE>
<TABLE>
<CAPTION>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                             --------------    --------------
                                                                                 2007              2006
                                                                             --------------    --------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                          <C>            <C>
Net loss                                                                     $(12,295,821)  $    (9,992,879)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities
Loss from discontinued operations                                                3,846,821         5,404,114
Amounts provided by (used in) discontinued operations                            4,519,081       (2,060,939)
Depreciation and amortization                                                       92,237           117,686
Amortization of deferred financing costs                                         2,853,743           596,339
Accretion of note discount and other charges                                       517,422           587,410
Gain from derivatives                                                            (106,320)       (1,059,874)
Loss on extinguishment of debt                                                     129,853                --
Share based option expense                                                         219,791           147,407
Warrant expense                                                                  1,701,205           531,000
Stock issued as compensation                                                            --           112,800
Stock issued for payment of interest                                                    --            62,489
Loss on disposal of property and equipment                                              --             3,891
Changes in operating assets and liabilities which provided (used) cash:
Accounts receivable                                                              1,523,590         (944,854)
Inventories                                                                      1,536,773           426,079
Other current assets                                                               421,245         (519,404)
Accounts payable and other current liabilities                                 (2,121,807)         1,169,604
                                                                             --------------    --------------
Net cash provided by (used in) operating activities                              2,837,813       (5,419,131)
                                                                             --------------    --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payment of FENCEMaster obligations                                                      --         (984,733)
Capital expenditures                                                              (20,342)                --
Amounts provided by discontinued operations                                      1,104,992         4,345,182
                                                                             --------------    --------------
Net cash provided by investing activities                                        1,084,650         3,360,449
                                                                             --------------    --------------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of common shares (net of
issuance costs of $490,658 in 2007 and $1,276,434 in 2005)                       2,124,701                --
Financing costs                                                                (2,723,840)                --
Net payments on credit facilities                                              (1,249,166)          (73,671)
Proceeds from issuance of short-term obligations                                 3,400,000           584,800
Repayment of short-term obligations                                              (775,000)         (187,500)
Repayment of long-term obligations                                               (745,275)         (289,802)
Amounts (used in) discontinued operations                                      (4,377,560)       (4,406,552)
                                                                             --------------    --------------
Net cash (used in) financing activities                                        (4,346,140)       (4,372,725)
                                                                             --------------    --------------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS                                      (423,677)       (6,431,407)
CASH AND CASH EQUIVALENTS AT,
BEGINNING OF YEAR                                                                  880,515         7,311,922
                                                                             --------------    --------------
CASH AND CASH EQUIVALENTS, END OF YEAR                                        $     456,838  $        880,515
                                                                             ==============    ==============
</TABLE>

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



                                       43
<PAGE>
<TABLE>
<CAPTION>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES

Supplemental Disclosure of Cash Flows Information:

                                                                     Year Ended December 31,
                                                                    2007                 2006
                                                               ----------------      --------------
<S>                                                         <C>                   <C>
Cash paid during the year for interest                      $        2,178,376    $        992,479
Non-cash investing and financial transactions:
Stock issued as compensation                                $               --    $        112,800
Stock issued as payment of debt                             $          568,109    $        187,500
Stock issued for payment of interest                        $               --    $         62,489
</TABLE>














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



                                       44
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Company and Summary of Significant Accounting Policies

     A summary of the significant  accounting policies in the preparation of the
accompanying consolidated financial statements follows.

Company and Industry

     Tarpon  Industries,  Inc. (the "Company" "we" or "us") was  incorporated in
Michigan on January 16, 2002.  The Company  completed its  acquisition of Eugene
Welding Co., or "EWCO," in April 2004. EWCO manufactures structural steel tubing
and steel  storage rack  systems at two  manufacturing  facilities  in Michigan,
north of Detroit.

Consolidation

     The consolidated  financial  statements include the accounts of the Company
and  EWCO,  its   wholly-owned   subsidiary.   All   significant   inter-company
transactions and balances have been eliminated.

Cash and Cash Equivalents

     Cash and cash equivalents consist of demand deposits,  cash on hand and all
highly liquid investments purchased with an original maturity of three months or
less.  Periodically  throughout each year, the Company may maintain  balances in
excess of federally  insured limits.  At December 31, 2007 and 2006, the Company
maintained  balances in excess of the $100,000  limit of $346,418 and  $769,266,
respectively.

Accounts Receivable and Concentration of Credit Risk

     Accounts  receivable are due within 30 to 60 days.  Accounts receivable are
stated at the amount  management  expects to collect from outstanding  balances.
The Company  determines  its  allowance for doubtful  accounts by  considering a
number of  factors,  including  the length of time an  account is past due,  the
Company's  previous  loss history,  the  customer's  current  ability to pay its
obligation and the condition of the general economy and the industry as a whole.
Balances that are still outstanding  after the Company has attempted  reasonable
collection  efforts are written off through a charge to the valuation  allowance
and a credit to trade accounts receivable.

     The Company had one major  customer in 2007 and 2006 that accounted for 36%
and  15%  of  net  sales,   respectively.   This  same  customer  accounted  for
approximately  55% and 42% of accounts  receivable  as of December  31, 2007 and
2006,  respectively.  The loss of this customer  would have an adverse impact on
short-term operating results.

Revenue Recognition



                                       45
<PAGE>

     For sales of  products  and  scrap,  revenue  is  recognized  when there is
persuasive  evidence  that an  arrangement  exists,  the  product  is shipped to
customers,  the selling price is fixed or  determinable  and  collectibility  is
reasonably  probable.  Scrap sales are  reported as a reduction in cost of goods
sold.  Shipping  and  handling  costs are  included in cost of goods sold in the
consolidated statements of operations.

Inventories

     Inventories  are  valued at the lower of cost or  market  value,  with cost
being determined using the first-in first-out, (FIFO) method. Management reviews
inventories  monthly to determine  whether a valuation reserve should be made to
adjust the inventory to its net realizable value.

     The Company had four suppliers in 2007 that accounted for approximately 24%
of net purchases. In 2006, four suppliers accounted for 20% of net purchases.

Property, Plant and Equipment

     Property,  plant  and  equipment  are  stated  at  cost.  Depreciation  and
amortization
is computed for financial statement purposes using the straight-line method over
the following estimated useful lives:

                Machinery and equipment         5 - 10 years
                Leasehold improvements          Term of lease
                Computer equipment              3 - 7 years
                Computer software               2 years
                Transportation equipment        5 years
                Furniture and fixtures          5 - 7 years

     Expenditures  for repairs and maintenance are charged to operations.  Major
betterments  and  improvements  that  increase  the  useful  life of  plant  and
equipment  are  capitalized.  Gains and losses on the  disposition  of property,
plant and equipment are recognized at the time of disposal.

Federal Income Taxes

     Deferred  income  taxes are  provided  for  temporary  differences  between
financial  statement  income  and tax  return  income  under the  provisions  of
Statement  of Financial  Accounting  Standard  No. 109,  "Accounting  for Income
Taxes,"  which  requires  deferred  income taxes to be computed on the liability
method and deferred tax assets are recognized only when realization is probable.
Such deferred income tax asset and liability  computations  are based on enacted
tax laws and rates  applicable to periods in which the  differences are expected
to affect taxable income. Valuation allowances are established when necessary to
reduce  deferred tax assets to the amount  expected to be  realized.  Income tax
expense is the tax payable or  refundable  for the year plus or minus the change
during the year in deferred tax assets and liabilities.  The principal  deferred
tax asset arises from net operating loss carry forwards.  The principal deferred
tax liabilities arise from deferred compensation, depreciation and derivatives.




                                       46
<PAGE>

     On January 1, 2007,  we adopted  the  provisions  of  Financial  Accounting
Standards  Board  interpretation  No. 48,  "Accounting for Uncertainty in Income
Taxes" ("FIN 48"),  an  interpretation  of FASB  Statement No. 109 ("SFAS 109").
There was no impact on our financial  statements  upon adoption.  Because of our
historical  significant net operating losses, we have not been subject to income
tax since our  inception.  There were no  unrecognized  tax benefits  during the
periods presented.


Common Stock Options

     The Company elected the modified prospective transition method for adopting
SFAS 123R "Share-Based Payment".  Under this method, the provisions of SFAS 123R
apply to all awards  granted or  modified  after the date of  adoption.  We must
account for stock options and warrants granted to  non-employees  using the fair
value method. We use the Black-Scholes  valuation model for determining the fair
value of our options and warrants.  That model  requires us to make  assumptions
regarding  the expected  life of the  security,  the expected  volatility of our
stock price  during the period,  the risk free  interest  rate and the  dividend
yield. Varying these assumptions can have a significant impact on our option and
warrant  valuations  and related  expenses.  The valuation  methodology  used an
assumed  term  based  upon  the  stated  term of ten  years,  adjusted  down for
estimated  forfeitures,  a  risk-free  rate of  return  represented  by the U.S.
Treasury Bond rate and  volatility as determined by comparing the Company's risk
profile  with  comparable  public  companies.  A  dividend  yield of 0% was used
because  the Company has never paid a dividend  and does not  anticipate  paying
dividends in the future.

     The  provisions of SFAS 123R also apply to awards  granted prior to January
1, 2006  that did not vest  before  January  1, 2006  (transition  awards).  The
compensation  cost for the portion of the transition  awards that had not vested
by January  1, 2006 is based on the  grant-date  fair value of these  transition
awards as calculated for pro forma disclosures under the provisions of SFAS 123.
Compensation  cost  for  these  transition  awards  are  attributed  to  periods
beginning January 1, 2006 and use the Black-Scholes  method used under SFAS 123,
except  that an  estimate  of  expected  forfeitures  is used rather than actual
forfeitures. The expected forfeiture rate of 50% is based on forfeiture activity
through December 31, 2007.

     The  Company  recognized  as an  operating  expense,  non-cash  share-based
compensation  cost in the  amount of  $220,000  in 2007.  This had the effect of
increasing the net loss by $.02 per diluted share.  As of December 31, 2007, the
total  remaining  unrecognized  compensation  cost related to  non-vested  stock
options  amounted to $144,000,  which will be recognized over a weighted average
period of 2.8 years. The total fair value of options that vested during 2007 was
$104,000.

Deferred Financing Costs

     Deferred  financing  costs represent fees paid and other costs incurred (in
the form of cash or  warrants)  to third  parties in  connection  with  securing
financing.  These costs are amortized  using the effective  interest rate method
over the term of the respective loan.

Convertible Debt and Related Discount



                                       47
<PAGE>

     The Company has  allocated  the proceeds  received  from  convertible  debt
instruments between the underlying debt instruments and the detachable warrants,
and has recorded the conversion  feature as a liability in accordance  with SFAS
No. 133,  "Accounting for Derivative  Instruments".  The conversion  feature and
registration rights were considered to be an embedded derivative interest within
the terms of SFAS No.133 as its fair value can be separated from the convertible
note and its  conversion  is  independent  of the  underlying  note  value.  The
conversion  liability  is  marked  to  market  each  reporting  period  with the
resulting gains or losses shown on the Statements of Operations. The Company has
also  recorded  the  resulting  discount  on debt  related to the  warrants  and
conversion  feature and is amortizing the discount using the effective  interest
rate method over the original term of the debt.  The discount is classified as a
deferred financing cost, as described above.

Fair Value of Financial Instruments

     The Company's balance sheets include the following  financial  instruments:
accounts  receivable,  accounts  payable,  lines of credit,  notes  payable  and
derivatives.  The Company  considers the carrying  amounts of current assets and
liabilities  in the  financial  statements to  approximate  fair value for those
financial  instruments,  because of the relatively  short period of time between
their origination and their expected realization or payment. The carrying amount
of the lines of credit and notes  payable  approximate  fair value  because  the
obligations  generally bear interest at a floating rate and such rates take into
consideration  the credit risk of the  Company.  The  derivatives  are marked to
market quarterly.

Net Loss Per Share

     Net loss per share is computed in  accordance  with SFAS No.128,  "Earnings
Per Share" by dividing losses  available to common  shareholders by the weighted
average  number of common  shares  outstanding  during each year and considers a
dual presentation and reconciliation of "basic" and "diluted" per share amounts.
"Diluted" reflects the potential dilution of all common stock equivalents except
in cases where the effect would be anti-dilutive.

Use of Estimates

     The preparation of the consolidated financial statements in conformity with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities  at the  date  of the  consolidated  financial  statements  and  the
reported  amounts of revenues and expenses  during the  reporting  year.  Actual
results could differ from these estimates.

Recent Accounting Pronouncements

     In September 2006, the FASB issued SFAS No. 157 "Fair Value  Measurements".
This  Statement  replaces  multiple  existing  definitions  of fair value with a
single definition,  establishes a consistent framework for measuring fair value,


                                       48
<PAGE>

and expands financial statement  disclosures  regarding fair value measurements.
This Statement applies only to fair value measurements that are already required
or permitted  by other  accounting  standards  and does not require any new fair
value measurements.  SFAS 157 is effective for fiscal years beginning subsequent
to November 15, 2007. The Company will be required to adopt SFAS No. 157 for the
first quarter of 2008, but believes the impact, if any, will be immaterial.

     In February 2007, the FASB issued Statement No. 159, "The Fair Value Option
for Financial Assets and Financial  Liabilities,  including an amendment of FASB
Statement No. 115" ("SFAS 159").  FAS 159 permits  entities to choose to measure
many  financial  instruments  and certain other items at fair value that are not
currently required to be measured at fair value.  Unrealized gains and losses on
items for which the fair value option has been elected are reported in earnings.
SFAS 159 does not  affect  any  existing  accounting  literature  that  requires
certain  assets  and  liabilities  to be  carried  at fair  value.  SFAS  159 is
effective  for fiscal  years  beginning  after  November  15,  2007.  Management
currently  does not expect  adoption of SFAS 159 will have a material  effect on
the Company's financial position or results of operations.  The Company plans to
adopt SFAS 159 on January 1, 2008.

Reclassification

     Certain  amounts in the 2006  consolidated  financial  statements have been
reclassified  to  conform  to the  2007  financial  statement  presentation.  In
accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long
Lived  Assets",  for the years  ended  December  31,  2007 and  2006,  Steelbank
Tubular, Inc. has been presented as discontinued  operations in the consolidated
statements  of  operations  and cash  flows  and all  prior  periods  have  been
reclassified to conform to this presentation.

2. Financial Position

     The accompanying  consolidated financial statements have been prepared on a
going  concern  basis,  which  contemplates  the  realization  of assets and the
satisfaction  of liabilities in the ordinary  course of business.  However,  the
Company has sustained  cumulative net losses of approximately $33.0 million from
its  inception  on January 16, 2002  through  December 31, 2007 and has negative
working  capital of $13.6  million as of December  31,  2007.  If the Company is
unable to significantly decrease its losses or obtain additional financing,  its
financial  resources  will not be adequate to satisfy its  operating and capital
requirements for the next 12 months.

     Corrective  actions  undertaken  by the Company in 2007 to ensure  adequate
liquidity include:

     Equity Financing

     The Company raised equity  financing  during the first four months of 2007,
netting the Company $1,159,000 on gross proceeds of $2,615,000,  after repayment
of the December 2006 bridge notes, including accrued interest, totaling $801,000
and a scheduled payment of accrued interest to Laurus of $125,000.  An aggregate


                                       49
<PAGE>

of 3,736,942  shares of common stock were issued in this effort.  The Company is
now pursuing a secondary equity offering  expected to be completed by September,
2008.

     Closing of Steelbank

     On September 20, 2007, the Company's Steelbank subsidiary filed a Notice of
Intention to make a Proposal  pursuant to the  Bankruptcy  &  Insolvency  Act in
Canada.  A. Farber & Partners Inc. was appointed Interim Receiver by the Ontario
Superior Court of Justice for the purpose of conducting a sale or liquidation of
Steelbank, which has recorded losses totaling in excess of $14 million since its
inception. Operations were ceased during the fourth quarter of 2007 and the full
liquidation of Steelbank's assets was completed by December 31, 2007. Additional
obligations, if any, are anticipated to be immaterial.


     Operations and Marketing Efforts

     The Company added Patrick Peplowski, Vice President of Sales and Marketing,
and Doug Edwards,  Vice President Operations - SpaceRak,  to its management team
in the fourth  quarter of 2007,  in hopes of  expanding  its  customer  base and
improving operations efficiencies.

     The Company plans to continue the emphasis on its racking  business through
Eugene Welding  Company's  SpaceRak  division,  with the  expectations  that its
value-added solutions should lead to improved gross margins, while continuing to
control its SG&A expenses.

     There can be no  assurance  that the  Company  will be able to achieve  its
business plan objectives or that it will be able to generate cash flows from its
operations.  If the  Company  is  unable to  generate  adequate  funds  from its
operations  or raise  additional  funds it may not be able to repay its existing
debt or fund  its  operations.  The  consolidated  financial  statements  do not
include any adjustments  relating to the  recoverability  and  classification of
asset carrying  amounts or the amount and  classification  of  liabilities  that
might be necessary should the Company be unable to continue as a going concern.

3. Discontinued Operations

     On September 20, 2007, the Company's Steelbank subsidiary filed a Notice of
Intention to make a Proposal  pursuant to the  Bankruptcy  &  Insolvency  Act in
Canada.  A. Farber & Partners Inc. was appointed Interim Receiver by the Ontario
superior Court of Justice for the purpose of conducting a sale or liquidation of
Steelbank, which has recorded losses totaling in excess of $14 million since its
inception.  The Company  recorded an impairment  charge of $4.3  million,  as of
September 20, 2007, which is included in loss from discontinued  operations,  in
order  to  adjust  its  inventory  and  property,  plant  and  equipment  to net
realizable value. The liquidation was completed as of December 31, 2007.

     The  components of assets of  discontinued  operations at December 31, 2006
     were as follows:



                                       50
<PAGE>


      -------------------------------------------- --- ---------------
                                                           December
                                                           31, 2006
      -------------------------------------------- --- ---------------
                        Cash                        $         495,196
      -------------------------------------------- --- ---------------
      Accounts receivable                                   2,536,776
      -------------------------------------------- --- ---------------
      Inventory                                             2,636,244
      -------------------------------------------- --- ---------------
      Other current assets                                    48,675
      -------------------------------------------- --- ---------------
      Property, plant and equipment,net                     4,682,346
      -------------------------------------------- --- ---------------
      Other assets                                             70,040
      -------------------------------------------- --- ---------------
                                                    $      10,469,277
      -------------------------------------------- --- ---------------


     The components of liabilities  of  discontinued  operations at December 31,
     2006 were as follows:


      -------------------------------------------- --- --------------
                                                           December
                                                           31, 2006
      -------------------------------------------- --- --------------
      Note payable - bank                           $      2,860,533
      -------------------------------------------- --- --------------
      Notes payable - other                                  751,307
      -------------------------------------------- --- --------------
      Accounts payable                                     1,854,472
      -------------------------------------------- --- --------------
      Accrued expenses                                       588,094
      -------------------------------------------- --- --------------
      Current maturities of long-term debt                   420,000
      -------------------------------------------- --- --------------
                                                    $      6,474,406
      -------------------------------------------- --- --------------


Discontinued  operations  had revenues of $11.3 million and $21.7 and net losses
of $3.8 million and $5.4 million million in 2007 and 2006, respectively.

4. Details of Balance Sheet

     The  following  sets forth the  components  of the  Company's  inventory at
December 31 of the respective years:
<TABLE>
<CAPTION>

                                                                          2007                   2006
                                                                   -------------------     -----------------
<S>                                                             <C>                     <C>
             Raw material                                       $             838,766   $         1,862,253
             Work-in-process                                                  270,636               481,858
             Finished goods                                                 1,396,175             1,656,544
             Supplies                                                          86,510               122,663
                                                                   -------------------     -----------------
             Total                                              $           2,592,087   $         4,123,318
                                                                   ===================     =================

The following table sets forth the components of the Company's  property,  plant
and equipment at December 31 of the respective years:



                                       51
<PAGE>


                                                                          2007                   2006
                                                                    ------------------      ----------------
Machinery and equipment                                          $            450,132    $          395,714
Leasehold improvements                                                        180,378               214,454
Computer equipment                                                            127,069               127,069
Transportation equipment                                                       21,815                21,815
Furniture and fixtures                                                          9,217                 9,217
                                                                    ------------------      ----------------
Total                                                                         788,611               768,269
Less accumulated depreciation and amortization                              (397,061)             (304,823)
                                                                    ------------------      ----------------
Net property, plant and equipment                                $            391,550    $          463,446
                                                                    ==================      ================
</TABLE>

     Each year, the Company reviews its long term assets, other than intangibles
for impairment.  Upon review,  if an asset is deemed to be impaired,  management
makes the  appropriate  valuation  to write down the asset  value to fair market
value.

5. Debt

     The following  table sets forth the  components  of the  Company's  debt at
December 31 of the respective years:

Short Term Debt
---------------
<TABLE>
<CAPTION>
                                                                              2007                2006
                                                                         ---------------     ---------------
      Revolving Credit Facility                                       $       4,738,949   $       5,943,115
<S>                                                                           <C>                   <C>
      Bridge Loan Payable                                                     1,700,000             775,000
                                                                         ---------------     ---------------
      Total                                                           $       6,438,949   $       6,718,115
                                                                         ===============     ===============

Term Debt, Classified as Current

                                                                              2007                 2006
                                                                         ---------------      ---------------
         Laurus Term Note "A"                                         $       1,700,000   $              --
         Laurus Term Note "B"                                                 1,700,000                  --
         LaSalle Term Loan                                                           --             789,933
         Convertible debt (less discount of $569,679 in 2007
         and $1,135,570 in 2006)                                              4,261,577           4,489,430
         Other                                                                    4,240              10,301
                                                                         ---------------      ---------------
         Subtotal                                                             7,665,817           5,289,664

         Less current portion, of long-term debt                            (7,665,817)         (5,287,021)

                                                                         ---------------      ---------------
         Long-term portion of long-term debt                          $              --   $           2,643
                                                                         ===============      ===============
</TABLE>

     Maturities of long-term  debt and capital lease  obligations  for the years
ending December 31 are based on the stated terms of the underlying agreements as
follows:

           2008                            776,740
           2009                          7,458,756
                                     --------------
           Total                   $     8,235,496
                                     ==============

                                       52
<PAGE>

Laurus Master Credit Agreement

     Tarpon entered into a Master Credit Agreement ("The Agreement") with Laurus
Master Fund,  Ltd.  ("Laurus") on August 9, 2007,  including a revolving  credit
agreement  (Revolver) up to  $10,000,000,  subject to borrowing based on capital
availability, inventory and reserves, a $1,700,000 term loan (Term Loan A) and a
$1,700,000  term loan (Term Loan B). As of December 31, 2007, the Company had no
excess availability for borrowing under its revolving credit agreement.

     Term Loan A is payable as interest only until  January 1, 2008,  with equal
monthly  installments  of  principal at a fixed  monthly  amount of $37,500 plus
accrued interest beginning February 1, 2008 until maturity on August 9, 2009, at
which time, the remaining  unpaid balance and all accrued,  unpaid interest will
be due.  Term Loan B is payable as  interest  only until  maturity  on August 9,
2008,  at which time,  the  remaining  unpaid  balance and all  accrued,  unpaid
interest  will be due. The Revolver  will be paid,  or drawn upon,  as necessary
throughout the normal course of business.  Interest on the Revolver will be paid
monthly based on the daily drawn balance at the contract interest rate,  defined
below.

     Interest on the respective  facilities is calculated as follows; 1) for the
Revolver,  interest  shall  accrue at a rate per annum equal to the "prime rate"
published in the Wall Street  Journal from time to time (the "Prime  Rate",7.25%
at December 31, 2007), plus one and three-quarter percent (1.75%) (the "Contract
Rate"),  2) for the Term Loan A,  interest  shall accrue at the "prime Rate plus
two percent (2.0%),  but no less than nine percent  (9.0%),  and 3) for the Term
Loan B, interest shall accrue at the Prime Rate plus three percent  (3.0%),  but
no less than ten percent (10.0%).

     The Agreement contains  customary  covenants that will limit the ability of
the Company, and its subsidiaries,  to, among other things, guarantee additional
indebtedness,  incur  indebtedness,  create liens,  pay dividends,  make certain
types of investments,  enter into transactions with affiliates or enter into any
transaction outside the ordinary course of business.

     The Company granted Laurus a security  interest in all of their  respective
assets including, but not limited to, accounts receivable, inventory, machinery,
equipment,  general intangibles,  stock and deposit accounts.  In addition,  the
Company  issued  warrants to Laurus to purchase  2,300,000  shares of the common
stock of the Company  for an exercise  price of $0.01 per share and a warrant to
purchase  2,300,000  shares of the common  stock of the  Company for an exercise
price of $0.25 per share.  The warrants have been valued at $1,629,000 using the
Black-Scholes  model  with an  interest  rate  of 4%,  volatility  of 70%,  zero
dividends and expected term of ten years. The total value has been recorded as a
deferred finance cost and is being amortized over the term of the related debt.

     Steelbank  Tubular  Inc.,  MTM  Acquisition  Company,  FM,  Inc.  and  JS&T
Acquisition Company,  other subsidiaries of the Company,  provided guarantees of
this financing transaction secured by all of their respective assets.




                                       53
<PAGE>

     Upon entering this  agreement the Company  retired all debt owed to LaSalle
Bank Midwest N.A. and LaSalle Business Credit in the amount of $8,403,795.

Convertible Debt

     On December  13,  2005,  the Company  entered  into a  Securities  Purchase
Agreement  (the  "Agreement")  with  Laurus,   amended  December  21,  2007,  in
connection  with the private  placement of a convertible  term note (the "Note")
issued by the Company in the principal  amount of $6,000,000  due August 9, 2009
and common stock purchase warrants (the "Warrants").  The Note is collateralized
by all present and future assets of Tarpon and its  subsidiaries,  including the
equity  interests  of EWCO.  The note is  payable  in  equal  monthly  principal
installments  of $40,000  beginning  April 1, 2008 through the maturity date and
bears interest at prime plus 4%. As part of the Agreement,  the monthly payments
of principal and interest, under certain conditions, are convertible into shares
of the Company's no par value common stock at a fixed  conversion price of $0.50
per share.  The  Warrants  provide for the  purchase of up to 390,000  shares of
common stock at an exercise price of $3.08 until February 17, 2010.

     Laurus cannot receive shares upon exercise of the warrants, upon payment of
principal and interest on the Note,  or upon  conversion of the Note which would
exceed the  difference  between  9.99% of the issued and  outstanding  shares of
common  stock  and the  number  of  shares  beneficially  owned  by  Laurus,  as
determined in accordance with Section 13(d) of the Exchange Act, as amended, and
Regulation 13d-3. This limitation  automatically  becomes null and void upon the
occurrence, and during the continuance, of an event of default as defined in the
Note,  or upon 75 days prior  written  notice to the Company,  except that at no
time shall the  number of shares of common  stock  beneficially  owned by Laurus
exceed 19.99% of the outstanding shares of common stock.  Further, the number of
common shares  issuable by the Company and acquirable by Laurus at a price below
$2.85 per share pursuant to the terms of the Note,  the warrant,  the agreement,
any related  agreement or otherwise cannot exceed 927,560 shares of common stock
(subject to appropriate  adjustment for stock splits, stock dividends,  or other
similar  recapitalizations  affecting the common stock),  unless the issuance of
such excess amount of common stock is first approved by the  stockholders of the
Company.

     In  connection  with  this  financing,   the  Company  recorded   discounts
aggregating   approximately   $1,681,000,   of  which   approximately   $608,000
represented the value of 390,000 warrants using the Black-Scholes  model with an
interest rate of 4.4%,  volatility  of 60%, zero  dividends and expected term of
seven years; and  approximately  $1,073,000  represented the conversion  feature
inherent  in the  instrument.  Such  discounts  are  being  amortized  using the
effective  interest  method over the original 36 month term of the related debt.
The conversion feature itself was deemed to be a derivative under FASB Statement
No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities".  The
Company  estimated the fair value of the conversion  feature to be $13,000 as of
December 31, 2007 and at December 31, 2006.  In addition,  the Company  incurred
fees in connection  with this financing  aggregating  approximately  $1,472,000,
including  warrants to purchase up to 300,000  shares of common  stock to Joseph
Gunnar and Company,  a related party,  recorded as deferred  financing costs and
amortized over the original 36 month term of the Note. The 300,000 warrants were
valued at approximately  $432,000 using the  Black-Scholes  model using the same




                                       54
<PAGE>

assumptions  described above, except for a term of five years. The warrants were
deemed to be a  derivative  instrument  as they can be put back to the  Company,
and, therefore the corresponding  liability was marked to market and recorded at
a fair value of $1,680 as of December  31, 2007 and  $108,000 as of December 31,
2006. The $106,320 decrease in fair value during 2007 is included in the overall
"Gain from derivatives" within the Statements of Operations.  These warrants are
exercisable  through  December 13, 2010 at $3.27 per share.  Although the stated
interest  rate of the  convertible  note was  originally  the prime rate plus 2%
(9.25% on December 13, 2005),  as a result of the  aforementioned  discounts and
fees, the effective  interest rate of the Note was estimated to be approximately
41.8% per annum at its inception on December 13, 2005.

     On May 24, 2006, the Company  executed an Omnibus  Amendment to the Secured
Convertible  Term Note  between the  Company and the Laurus  whereby the Company
executed its payment  obligation  of principal  due May 1, 2006 in the amount of
$187,500 in common shares of Tarpon stock in lieu of cash.  Accordingly,  Tarpon
and Laurus agreed to amend the terms of the Senior  Convertible  Term Note,  and
155,177 shares were issued at $1.22 per share.

     On August 17, 2006,  Tarpon reached an agreement with Laurus whereby Tarpon
would issue 100,000 shares of Tarpon common stock valued at $190,000  ($1.90 per
share) to Laurus in exchange for Laurus amending certain  provisions of its loan
agreement.  In addition,  Tarpon  agreed to award Laurus an  additional  100,000
shares  contingent on Tarpon completing a successful equity raise (in process as
of December 31, 2007).  The agreement  provided that the loan agreement would be
amended such that an event of default with LaSalle Bank Midwest (LaSalle) and/or
LaSalle Business Credit (LaSalle) which is not declared as a default by LaSalle,
would not give rise to default  interest  due to Laurus.  LaSalle  declared  the
Company in default on October 2, 2006,  thus triggering an event of default with
Laurus,  for which the Company has been accruing  default  interest on a monthly
basis.  At the closing of the Master Credit  Agreement  with Laurus on August 9,
2007,  default  interest  accrued to that date of  $1,231,000  was paid with the
proceeds of Term Note B. The results of operations  for 2007 include  $1,420,000
of default  interest  expense,  with  $513,000  due to Laurus as of December 31,
2007.

Bridge Notes

     On December 7, 2006 Tarpon closed a private  placement Bridge Loan offering
aggregating  $775,000 and netting the Company $562,000 after payment of fees and
commissions.  The Bridge Loan Notes carry interest at 12% and are repayable from
proceeds  of a  secondary  stock  offering  initiated  in  January  of 2007.  In
connection with this private placement, 775,000 warrants were issued to the note
holders and 96,875  warrants were issued to designees of the placement  agent to
purchase  common stock of Tarpon at an exercise price of $0.80.  The Company has
estimated  the  fair  value  of  these   warrants  to  be  $333,000   using  the
Black-Scholes  Option  Pricing  Model  with an  estimated  term  of 4.94  years,
risk-free interest rate of 4.64%, dividend yield of 0% and volatility of 70%.

     The entire  balance of  $775,000,  plus  accrued  interest of $25,729,  was
retired  at the  "Raise 1" closing on March 23,  2007  through  cash  payoffs of
$232,620 and conversion to common shares with a value of $568,109  consisting of
811,584 shares of common stock.



                                       55
<PAGE>

     During the period  June 14,  2007 to July 5, 2007  Tarpon  closed a private
placement Bridge Loan offering, under a Financing Agreement dated June 14, 2007,
aggregating  $1,700,000 and netting the Company $1,418,000 after payment of fees
and  commissions.  The Bridge Loan Notes  carry  interest at 12% and are payable
from proceeds of a secondary  stock offering  anticipated to occur in the second
quarter of 2008. In connection  with this private  placement,  170,000  warrants
were issued to  designees  of the  placement  agent to purchase  common stock of
Tarpon at an  exercise  price of $0.52 and  shares  were  issued to Bridge  note
holders  at the rate of 1.5 shares of Tarpon  common  stock for each $1 of loan,
for a total of 2,550,000  shares.  The Company has  estimated  the fair value of
these warrants to be $72,000 using the  Black-Scholes  Option Pricing Model with
an estimated term of 5 years,  risk-free interest rate of 4.72%,  dividend yield
of 0% and volatility of 70%.

     The Company  entered into an Amendment and Extension  Agreement on December
24, 2007,  effective as of December 17,  2007,  with High Capital  Funding,  LLC
("HCF")  acting as lead investor  under the financing  agreement  dated June 14,
2007 granting  Tarpon a three month  extension of the maturity date to March 17,
2008  at an  interest  rate of 13%  per  annum,  as set  forth  in the  original
agreement. The amendment also permits the granting by HCF of an additional three
month  extension if Tarpon has not completed  the closing of a secondary  equity
offering  by March  17,  2008 in  exchange  for  additional  shares  tied to the
offering price. The Company has since extended one month to April 17, 2008.

6. Leases

     Facilities and equipment are leased under  arrangements  that are accounted
for as operating leases.  Total rental expense was $316,000 and $321,000 for the
years ended  December 31, 2007 and 2006,  respectively.  Steelbank's  lease with
Agellan  Capital,  which  extends to  October,  2016 at the rate of $39,000  per
month,  has been  guaranteed  by the Company.  By  agreement,  Agellan must seek
another tenant or sell the  facilities,  at which time the Company's  obligation
will cease.  The Company is in the process of  negotiating  a settlement  of the
existing lease obligation with Agellan and does not expect this settlement to be
material in amount.

The  following  is a schedule of annual  future  minimum  lease  payments  under
operating  leases with  remaining  non-cancellable  lease terms in excess of one
year as of December 31, 2007, including the lease with Agellan Capital:

                Year                              Amount
                ----                              ------
                2008                       $         755,428
                2009                                 751,848
                2010                                 743,105
                2011                                 744,463
                2012                                 650,568
                Thereafter                         2,202,271
                                             ---------------
                Total                      $       5,847,683
                                             ===============

7. Income Taxes



                                       56
<PAGE>

     There was no income tax expense for the years ended  December  31, 2007 and
2006. As a result of the valuation  allowances applied to the net operating loss
carryforwards and other net deferred tax assets,  the Company did not report any
net income tax  benefits  for either of the years  ended  December  31, 2007 and
2006.

     A reconciliation  of income taxes computed using the federal statutory rate
to the taxes reported in the statements of operations is as follows:

<TABLE>
<CAPTION>

                                                         -----------------      ---------------
                                                               2007                  2006
                                                         -----------------      ---------------
<S>                                                   <C>                    <C>
Net loss before income taxes                          $      (20,954,986)    $     (4,588,765)
Federal statutory rate                                                34%                  34%
Tax benefit computed at federal statutory rate                (7,124,695)          (1,560,180)

Effect of nondeductible expense                                    11,682                6,744
Effect of non taxable income                                           --                   --
Foreign tax rate differential                                          --                   --
Valuation allowance                                             7,312,882            1,629,233
Provision for prior years                                       (199,869)             (75,797)
                                                         -----------------      ---------------
Reported income tax benefits                          $                --    $              --
                                                         =================      ===============


Deferred  tax assets and  (liabilities)  consist of the  following  amount as of
December 31:


                                                         -----------------      ---------------
                                                               2007                  2006
                                                         -----------------      ---------------
Net operating loss carry-forwards                    $         11,262,416    $       4,513,900
Allowance for doubtful accounts                                    39,404               64,344
Accrued expenses                                                   85,000
Property and equipment                                             35,438               29,060
Deferred compensation                                             190,554              141,750
Stock options and warrants                                        327,379                   --
Intangible assets                                                   9,388               16,899
Gain on financial instrument                                    (505,986)            (469,837)
Foreign exchange losses (gains)                                        --            (165,375)
                                                         -----------------      ---------------
Deferred tax assets                                            11,443,593            4,130,711
Valuation allowance                                          (11,443,593)          (4,130,711)
                                                         -----------------      ---------------
Net deferred tax asset                               $                 --    $              --
                                                         =================      ===============
</TABLE>

     Due to the  historical  losses  incurred by the Company,  a full  valuation
allowance for the net deferred tax assets has been  provided.  The Company's net
operating  loss  carry-forward  at  December  31, 2007 was  approximately  $33.1
million and expires as follows:





                                       57
<PAGE>

                Year                     Amount
                ----                     ------

                2022                $       760,397
                2023                        535,826
                2024                      1,338,932
                2025                      4,951,452
                2026                      5,093,484
                2027                     20,444,662
                                      --------------
                                    $    33,124,753
                                      ==============


     Under the rules  established by the Internal  Revenue Code,  changes in the
Company's  ownership  may  adversely  effect how the  Company is able to utilize
these net operating  losses.  If the Company achieves  profitability,  these net
operating losses may not be available to offset future income taxes.

     There were no income tax payments made in 2007 or 2006.

     On January 1, 2007,  we adopted  the  provisions  of  Financial  Accounting
Standards  Board  interpretation  No. 48,  "Accounting for Uncertainty in Income
Taxes" ("FIN 48"),  an  interpretation  of FASB  Statement No. 109 ("SFAS 109").
There was no impact on our financial  statements  upon adoption.  Because of our
historical  significant net operating losses, we have not been subject to income
tax since our  inception.  There were no  unrecognized  tax benefits  during the
periods presented.

     We classify all interest  and  penalties as income tax expense.  We did not
have any accrued interest and penalties related to uncertain tax positions as of
December 31, 2007.

     We file income tax returns in the United States  federal  jurisdiction  and
various  state  jurisdictions.  The tax years 2002  through  2007 remain open to
examination by taxing  jurisdictions to which we are subject. As of December 31,
2007, we did not have any tax examinations in process.

8. Related Party Transactions

     In April 2004, the Company entered into a Management  Consulting  Agreement
with Bainbridge Advisors, Inc., an advisory firm owned by the former Chairman of
the Board,  President  and Chief  Executive  Officer and his son. On December 8,
2005, this agreement was amended in accordance  with the original  agreement for
an  additional  one year term  commencing  April 7, 2007.  The  following  table
summarizes  the  compensation  earned  by the  former  Chairman  of  the  Board,
President  and Chief  Executive  Officer and his son,  individually  and through
Bainbridge Advisors, Inc.




                                       58
<PAGE>

                                            --------------     ----------------
                                                2007                2006
                                            --------------     ----------------
        Advisory services and expenses    $        44,515    $        261,656
                                            ==============     ================

     During 2007,  the Company  notified  Bainbridge  that it had terminated the
Management Consulting Agreement and, therefore, made no payments in 2007. During
2006,  the Company paid the former  Chairman of the Board,  President  and Chief
Executive  Officer and his son,  individually and through  Bainbridge  Advisors,
Inc. $295,640.

     As of December 31, 2007 and 2006,  liabilities  included $0 and $105,485 of
advisory fees and expenses,  respectively,  due to  Bainbridge  Advisors,  Inc.,
classified in accounts payable.

     In February 2006, the board of directors agreed to accelerate the payout of
the success fees to Bainbridge Advisors,  Inc. The total amount to be paid would
not increase,  but the total payment term would be reduced from twelve months to
five months for the remaining  success fee related to the  acquisition of Haines
Road. The payment of such success fees, earned in 2005, was completed in June of
2006.

     Joseph Gunnar and Company,  LLC ("Gunnar") was the lead  underwriter in the
Company's  2005 initial  public  offering,  and since such time has assisted the
Company in various financing transactions.  Gunnar customers hold, collectively,
a significant  amount of its common stock.  Gunnar is entitled to participate as
an  outside  observer  on the  Company's  board of  directors  from which it can
exercise significant influence over the activities of the Company. In connection
with the bridge  financing in December of 2006,  Gunnar received 96,875 warrants
with a fair  market  value of $33,906  and earned  additional  fees of  $78,000.
Gunnar also  receives a retainer  payable  monthly in the amount of $7,500 which
expires in December 2007.

     In April 2007,  Gunnar received 27,857 warrants with a fair market value of
$14,252 in  connection  with the private  placement  completed on April 4, 2007.
Additionally,  in July of 2007,  Gunnar  received  170,000  warrants with a fair
market value of $72,000 in  connection  with the bridge  financing  completed on
July 5, 2007.

     The value of warrants  issued for bridge loan financing is being  amortized
over the term of the loans.  The value of warrants  issued and fees and expenses
paid for the private placement have been netted against the gross proceeds.

     In accordance with its agency  agreement,  dated August 15, 2006, Gunnar is
to be  compensated at the rate of 12% of the gross proceeds from shares sold, 3%
of the amount of restructured or replaced debt (1.5% for $1.0 million or less of
debt) and warrants  equal to 12.5% of shares sold at an exercise  price equal to
the price of such shares.

     The following table summarizes the compensation earned by Gunnar:




                                       59
<PAGE>
<TABLE>
<CAPTION>

                                                             --------------     ----------------
                                                                 2007                2006
                                                             --------------     ----------------
<S>                                                       <C>                <C>
        Fees and Expenses                                 $        591,318   $          168,500
        Warrants Expense - Gunnar and
        designees                                         $        338,886   $           33,906
                                                             --------------     ----------------
        Total                                             $        930,204   $          202,406
                                                             ==============     ================
</TABLE>

9. Common Stock Options and Warrants

     As of October 22, 2004,  the board of  directors  and  shareholders  of the
Company  adopted the Tarpon  Industries,  Inc. 2004 Stock Option Plan.  The plan
allows the Company to grant  incentive  stock  options and  non-qualified  stock
options to the directors,  officers, employees,  consultants and advisors of the
Company to purchase up to an aggregate of 1,000,000 common shares. This plan was
approved by the Company's shareholders in June 2005.

     During 2006, the Company granted options for 550,000 shares, 250,000 issued
to James Bradshaw,  Chairman and Chief Executive Officer,  50,000 exercisable at
$2.45 per share and 200,000  exercisable  at $0.88 per share,  110,000 issued to
Patrick  Hook,  exercisable  at $0.88 per share,  150,000  issued to J.  Stanley
Baumgartner,  former Chief Financial  Officer,  40,000  exercisable at $1.75 per
share and  110,000  exercisable  at $0.88 per share,  10,000  each issued to new
directors Tracy  Shellaberger  and Gerald Stein,  exercisable at $2.60 and $0.88
per share respectively,  and 20,000 issued to a former salesperson,  exercisable
at $0.88 per share. During 2007, the Company granted options for 275,000 shares,
100,000 each to Patrick  Peplowski  and Joseph Lendo,  exercisable  at $0.20 and
$0.10 per share, respectively,  65,000 to Doug Edwards, exercisable at $0.11 per
share,  and 10,000 to new  director,  Frank  Gesuale,  exercisable  at $0.70 per
share.  All  options  that have been  granted  under  the plan to  officers  and
employees  of the Company  vest in  cumulative  annual  installments  over three
years.  Options  issued to  consultants  and  directors  vest  immediately  upon
issuance. No options have yet been exercised.

Activity under this plan is shown in the following tables:





                                       60
<PAGE>
<TABLE>
<CAPTION>

                                                          2007                                         2006
                                                          ----                                         ----
                                                          Weighted                                   Weighted
                                                          Average       Aggregate                     Average      Aggregate
                                                          Exercise      Intrinsic                    Exercise      Intrinsic (1)
Shares Subject to Option                 Shares            Price        (1) Value      Shares          Price         Value
------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>        <C>                                <C>         <C>
Outstanding at beginning of               673,190    $          2.88       --           415,085     $       5.50       --
  Period
New Grants (based on fair
  Value of common stock at                275,000               0.14       --           550,000             1.07       --
  dates of grant
Exercised                                      --                 --       --                --               --       --
Expired                                        --                 --       --                --               --       --
Forfeited                               (238,690)               5.05       --         (291,895)             2.99       --
                                       -----------                                   -----------
Outstanding at end of period              709,500    $          1.15       --           673,190     $       2.88       --
Exercisable at end of period              183,000    $          2.19       --           204,397     $       5.09       --

     (1)  The  intrinsic  value of a stock  option  is the  amount  by which the
          current  market  value of our  underlying  common  stock  exceeds  the
          exercise price of the option.
</TABLE>

     The  estimated  fair value as of the date options were granted  during 2007
presented using the Black Scholes option-pricing model, was as follows:


                                                       2007             2006
                                                     ----------     ----------
Weighted Average Estimated Fair Value Per
Share of Options Granted During the Period         $     0.12       $     0.90
Assumptions
Amortized dividend yield                                0.00%            0.00%
Common Stock price volatility                          70.00%           70.00%
Risk free rate of return                                3.25%            4.72%
Expected option term (in years)                             5                5


     The following table summarizes  information about stock options at December
31, 2007:
<TABLE>
<CAPTION>

                                    OPTIONS OUTSTANDING                               OPTIONS EXERCISABLE
                                        Weighted                                           Weighted           Weighted
                                        Average             Weighted                       Average             Average
 Range of Exercise                     Remaining            Average                       Remaining           Exercise
       Prices            Shares     Contractual Life     Exercise Price     Shares     Contractual Life         Price
--------------------- ------------- ----------------- -- --------------- ------------- ----------------- -- --------------
<S> <C>      <C>         <C>                  <C>   <C>                     <C>                  <C>   <C>
    $0.10 to $5.50       709,500              8.89  $            1.15       183,000              7.86  $           2.19
</TABLE>

     At December 31, 2007,  options  covering  290,500 shares were available for
future grants under the 2004 Plan.



                                       61
<PAGE>

     The following  table  provides  additional  information  about  outstanding
warrants categorized by exercise price at date of grant:

<TABLE>
<CAPTION>


                                                  Warrants            Expiration            Exercise
Party                                            Outstanding             Date                Price
<C>                                                  <C>                 <C>   <C>     <C>
2004 Gunnar - Bridge Financing                       146,521**           12/31/2010    $         1.05*
2004 Private Placement                             2,681,165**           12/13/2012              0.78*
2005 Gunner - IPO                                    251,565**           04/05/2009              0.95*
2005 Gunnar - Laurus
Convertible Note                                       300,000           04/05/2009               0.91
2005 Laurus Warrants Associated
with Convertible Note                                  390,000           02/17/2010               3.08
2006 Bridge Note Holders                               775,000           12/07/2011               0.91
2006 Gunnar - Bridge Financing                       260,755**           12/07/2011              0.30*
2007 Gunnar - Private Placement                      276,960**           01/24/2012              0.35*
2007 Gunnar - Private Placement                      770,204**           03/23/2012              0.40*
2007 Gunnar - Private Placement                       64,124**           04/04/2012              0.36*
2007 Gunnar - Bridge Financing                       376,796**           06/26/2012              0.22*
2007 Laurus Warrants Associated
         With LaSalle refinance                      2,300,000           08/09/2014               0.25
2007 Laurus Warrants Associated
         With LaSalle refinance                      2,300,000        No expiration               0.01
                                               ----------------
Total                                               10,893,090
                                               ================
</TABLE>

     *Decreased from original amount due to anti-dilutive provisions
     **Increased from original amount due to anti-dilutive provisions

     The Company  accounts for the issuance of common  stock  purchase  warrants
issued in connection with capital financing  transactions in accordance with the
provisions  of  Emerging  Issues  Task Force  Issue No.  00-19  "Accounting  for
Derivative  Financial  Instruments  Indexed  to, and  Potentially  Settled in, a
Company's Own Stock" ("EITF 00-19").  Based on the provisions of EITF 00-19, the
Company classifies as equity any contracts that (i) require physical  settlement
or  net-share  settlement  or (ii)  gives  the  Company  a  choice  of  net-cash
settlement  or settlement  in its own shares  (physical  settlement or net-share
settlement).  The Company classifies as assets or liabilities any contracts that
(i) require net-cash settlement  (including a requirement to net-cash settle the
contract  if an event  occurs and if that event is  outside  the  control of the
Company)  or (ii) gives the  counterparty  a choice of  net-cash  settlement  or
settlement in shares (physical settlement or net-share settlement).

10. Contingencies

     The  Company  from time to time is a party to  various  litigation  matters
arising in the ordinary  course of business.  The ultimate  legal and  financial
liability of this litigation cannot be estimated with certainty,  but management
believes,  based on their  examination of these matters,  experience to date and



                                       62
<PAGE>

discussions  with counsel,  that the ultimate  liability will not be material to
the Company's business, financial condition or results of operations.

11. Employee benefit plans

     EWCO has three 401(k) plans.  Two of these plans cover union  employees who
have attained 18 years of age with six months of service.  The  participants can
contribute  up to 15% of their  compensation.  EWCO  matches 50% of the employee
contributions based on the collective bargaining agreement,  not to exceed 5% of
compensation.  The employer  contributions  for these two plans were $49,807 and
$8,472, respectively, in 2007 and $67,227 and $10,679 respectively, in 2006.

     The third 401(k) plan is for  employees who are not covered by a collective
bargaining agreement, who have attained 18 years of age and who have 1,000 hours
and six months of service.  The  participants  can contribute up to 15% of their
salary and are eligible for an employer discretionary contribution. EWCO matches
50% of the employee  contributions  up to 5% of employees'  wages.  The employer
matching contributions were $26,440 and $33,759 in 2007 and 2006,  respectively.
No discretionary contributions were made in 2007 or 2006.

     The Company's  union  employees have a contributory  pension plan for which
the Company withholds from the employee and remits to the union on their behalf.
At the end of December 31, 2007 and 2006, all withheld  amounts had been paid to
the union on the employees' behalf.

12. Subsequent Events

     On February  12, 2008 the Company and Laurus  entered  into an amendment to
the Omnibus Amendment and Waiver ("OA&W") with Laurus,  dated December 21, 2007,
which  provides  that the  Company  will  obtain at least  $1.0  million of debt
financing  privately  by March  15,  2008 and at least  $5.0  million  of equity
financing  publicly by June 30, 2008, among other matters,  in order to keep the
OA&W in effect.  The Company is in the process of  negotiating an amendment with
Laurus,  which will revise the private placement  provisions and extend the date
for  public  equity   financing  to  September  30,  2008,  along  with  pricing
modifications  to  existing  warrants  held by  Laurus  and  expects  that  such
amendment will be formalized no later than April 1, 2008.

     On February 22, 2008 the Company  consummated,  pursuant to a  subscription
agreement,  promissory  note and  related  documents,  a bridge  financing  (the
"Financing")  in the amount of $400,000,  representing a sale of Units comprised
of promissory notes (the "Notes") and an aggregate of 2,000,000 shares of common
stock. In connection  with the Notes,  the Company will pay interest at the rate
of eight (8%) percent per annum.  The principal and the interest accrued thereon
shall be due and  payable at the earlier of: (a) two months from the date of the
Notes, and (b) the receipt of Mandatory Repayment Funds (defined below) but only
to the extent  thereof.  "Mandatory  Repayment  Funds"  shall  mean sixty  (60%)
percent of the gross  proceeds of any financing to the Company after the date of
the Notes as and when received by the Company. The Financing is intended only as
a bridge to an additional  private placement which the Company has commenced and


                                       63
<PAGE>

intends to conclude by April 15,  2008,  the  successful  consummation  of which
there can be no assurance.

ITEM 9A. CONTROLS AND PROCEDURES

     Our  management  has  evaluated,  with the  participation  of our principal
executive and principal financial officers,  the effectiveness of our disclosure
controls and procedures as of December 31, 2007.  Based on their  evaluation and
review, our principal  executive and principal financial officers have concluded
that these  controls  and  procedures,  as  designed  and  implemented,  are not
operating  effectively.  There  was no  change  in  our  internal  control  over
financial reporting  identified in connection with such evaluation that occurred
during our fourth  fiscal  quarter ended  December 31, 2007 that has  materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting.

     Disclosure  controls and procedures  are our controls and other  procedures
that are designed to ensure that  information  required to be disclosed by us in
the  reports  that  we  file or  submit  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported,  within the time periods  specified in the
Securities and Exchange  Commission's rules and forms.  Disclosure  controls and
procedures  include,  without  limitation,  controls and procedures  designed to
ensure that  information  required to be  disclosed by us in the reports that we
file or submit under the Exchange Act is  accumulated  and  communicated  to our
management,  including our principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.

     Our Independent  Registered  Public Accounting Firm identified a variety of
material  weaknesses in our internal  controls over financial  reporting.  These
material  weaknesses stem in significant part from the acquisition  policy which
we are following in which private,  unrelated  companies are being  combined.  A
material weakness is a significant  deficiency,  or a combination of significant
deficiencies,  that  results  in more than a remote  likelihood  that a material
misstatement of the annual or interim financial statements will not be prevented
or detected by our internal controls. The material weaknesses are as follows:

     A lack of formalized accounting policies and procedures,  including written
     procedures for monthly, quarterly and annual closing of financial books and
     records.

     Insufficient  resources to adequately  complete the process of documenting,
     testing,  and evaluating our internal controls over financial  reporting as
     required by the Sarbanes-Oxley Act.

     Insufficient  process to ensure  that  quarterly  and  annual  consolidated
     financial statements  adequately disclose information required by Generally
     Accepted Accounting Principles (GAAP).

     A lack of  adequate  processes  to identify  and ensure  that  non-standard
     journal entries are subject to an appropriate level of review.

                                       64
<PAGE>

     Insufficient process to ensure that all required SEC filings are made.

     An inability to make required SEC filings in a timely manner.

     A lack of  communication  or  monitoring  by  management  or the  board  of
     directors in relation to controls or expectations related to fraud.

     A lack of controls over the authorization, issuance and recording of equity
     transactions  and an overall lack of  knowledge  of the related  accounting
     considerations,  initially resulting in errors, which were corrected in the
     audit process.

     Insufficient  familiarity with historical accounting entries as a result of
     continued turnover in key positions within the accounting department.

     A lack of periodic reviews over account reconciliations.

     The Company is required to comply with the  provisions of Sections 302, 906
and 404 of the Sarbanes-Oxley Act. Section 404 requires the Company to document,
test, and evaluate its internal  controls over financial  reporting and have its
independent  auditor  conduct  an  evaluation  of  and  report  on  management's
evaluation process in the near future. In addition, we are required to report on
the effectiveness of internal controls.  All material  weaknesses  identified in
this process are required to be disclosed in the  Company's  reporting  with the
Securities and Exchange  Commission (SEC). Our experience with is documentation,
testing and audit process has identified that significant resources are required
to complete this exercise and considerable costs are incurred.  We do no believe
that the Company currently has the resources to adequately complete this process
which could result in a failure to file the appropriate reports with the SEC.

     As  a  public  company,  we  have  significant  requirements  for  enhanced
financial  reporting  and  internal  controls.  We are taking steps to unify the
financial  reporting  of  all  of  our  component  companies,  to  increase  our
accounting  and  information  technology  staff  and to put  in  place  internal
controls concerning accounting entries and adjustments, with full documentation,
which are responsive to issues raised by our  independent  auditors,  and, as of
this time, we have made progress on these points We have hired  additional staff
and are in the initial  planning phase of upgrading our  information  technology
systems.  We expect these steps to be completed by December 31, 2008,  but it is
possible that they might not be completed by then.

     These efforts require  significant time and resources.  If we are unable to
establish appropriate internal financial reporting controls and procedures,  our
reported  financial   information  may  be  inaccurate  and  we  will  encounter
difficulties  in  the  audit  or  review  of  our  financial  statements  by our
independent  auditors,  which in turn may have material  adverse  effects on our
ability to prepare  financial  statements in accordance with generally  accepted
accounting principles and to comply with our SEC reporting obligations.

     Management of the Company is responsible for  establishing  and maintaining
adequate internal control over financial reporting.  Our internal control system


                                       65
<PAGE>

was  designed to provide  reasonable  assurance to  management  and the board of
directors regarding the effectiveness of our internal control processes over the
preparation and fair presentation of published financial statements.

     We have assessed the  effectiveness of our internal controls over financial
reporting  as of  December  31,  2007.  In making this  assessment,  we used the
criteria set forth by the Committee of Sponsoring  Organizations of the Treadway
Commission  (COSO) in Internal  Control - Integrated  Framework.  Because of the
material weaknesses  described above,  management concluded that, as of December
31, 2007, our internal control over financial  reporting was not effective based
on the criteria established in Internal Control - Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission.

     Prior to the  complete  remediation  of these  material  weaknesses,  there
remains risk that the processes and  procedures on which we currently  rely will
fail to be sufficiently  effective,  which could result in material misstatement
of  our  financial   position  or  results  of  operations  and  require  future
restatements.  Moreover,  because of the  inherent  limitations  in all  control
systems,  no  evaluation  of controls - even where we conclude  the controls are
operating  effectively - can provide absolute assurance that all control issues,
including  instances  of fraud,  if any,  have  been  detected.  These  inherent
limitations  include the  realities  that  judgments in  decision-making  can be
faulty,   and   breakdowns  can  occur  because  of  simple  error  or  mistake.
Additionally,  controls  can be  circumvented  by the  individual  acts  of some
persons,  by collusion of two or more people,  or by management  override of the
controls.  The  design  of any  system  of  controls  also is based in part upon
certain  assumptions about the likelihood of future events,  and there can be no
assurance  that any design will succeed in achieving  its stated goals under all
potential future conditions. Over time, our control systems, as we develop them,
may  become  inadequate  because  of  changes  in  conditions,  or the degree of
compliance  with the  policies or  procedures  may  deteriorate.  Because of the
inherent  limitations in a cost-effective  control system,  misstatements due to
error or fraud may  occur  and not be  detected  and  could be  material  to our
financial statements.

     This annual report does not include an attestation  report of the Company's
registered  public  accounting  firm regarding  internal  control over financial
reporting.  Management's  report was not subject to attestation by the Company's
registered  public  accounting  firm pursuant to the rules of the Securities and
Exchange  Commission that permit the Company to provide only management's report
in this annual report.


ITEM 9B. OTHER INFORMATION

     None.




                                       66
<PAGE>
                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  following  table  sets forth the names and ages of our  directors  and
executive officers and the positions they hold with us as of March 31, 2008:

  Name                          Age    Position
  James W. Bradshaw             56     Chief Executive Officer, Chairman of
                                         the Board of Directors (Class I),
                                         Secretary
  Patrick J. Hook               41     President, Chief Operating Officer
  Joseph T. Lendo               51     Chief Financial Officer
  Michael A. Ard                50     Director (Class III)
  Tracy L. Shellabarger         50     Director (Class III)
  Frank Gesuale                 62     Director (Class II)

     James W.  Bradshaw.  Mr.  Bradshaw  joined us in 2005 as Vice  President of
Mechanical  Tubing,  based at our former  Steelbank  subsidiary and became Chief
Executive  Officer in April  2006.  Prior to  joining  us,  Mr.  Bradshaw  was a
consultant  with  Greybrooke  &  Associates,  Inc.  From  2002 to  2003,  he was
President and General Manager for International Technical Coating, Inc., a steel
wire manufacturing company with 130 employees and customers including Home Depot
and Lowes.  From 1991 to 1997,  Mr.  Bradshaw was President and Chief  Operating
Officer of American Tube and Pipe, a $120 million steel pipe and tubing  company
which was purchased by Tyco  International  Ltd. in 1997. Earlier in his career,
he served as General Manager for Wheatland Tube Company, and President of Reeves
Southeastern Corporation.

     Patrick J. Hook.  Mr. Hook has served as our President and Chief  Operating
Officer  since  February  2005.  Mr.  Hook  served  as  Operations  Manager  for
Copperweld  Corporation,  Chicago Division,  a steel tubing  manufacturer,  from
September 2001 to January 2005. In this capacity,  Mr. Hook was responsible for
all  operating  activities  for  the  Chicago  and  Bedford  Park  divisions  of
Copperweld.  From  February  2000 to  September  2001,  Mr. Hook served as Plant
Manager of  Copperweld's  Birmingham  Division.  From September 1999 to February
2000,  Mr. Hook reported  directly to the Copperweld U. S.  Structural  Division
Vice President.  In this capacity,  Mr. Hook was responsible for integrating the
operations of four U.S.  Structural  Steel Tubing  Divisions  that were acquired
through  acquisition.  From August 1997 through  October 1999,  Mr. Hook was the
Plant Manager of LTV Corporation - Youngstown  Division,  a steel  manufacturer.
Mr.  Hook's  previous   experience  includes  several  positions  of  increasing
responsibilities in the engineering and operating arenas while employed with LTV
Steel at the  Indiana  Harbor  Works  Division.  Mr.  Hook  received  a B.S.  in
mechanical engineering from Michigan Technological  University and is a graduate
of the University of Michigan  Executive  Manufacturing  Program.  Mr. Hook is a
member of the Tube and Pipe Association,  International and of the Tube and Pipe
Producing Technology Council.

     Joseph T. Lendo. Mr. Lendo, a certified public accountant (CPA), joined the
Company as Chief  Financial  Officer  in  November  2007.  Mr.  Lendo  served as
president and owner of Elite Lawn Irrigation & Maintenance from 1999 to 2007. On
February  6, 2007,  Elite  filed a Chapter  11  petition  in the  United  States
Bankruptcy  Court in the Eastern  District of Michigan,  under which it received


                                       67
<PAGE>

extended financing from a lender to enable it to operate and enter into an Asset
Purchase  Agreement with the lender to sell  substantially  all of its assets to
the lender.  The  Bankruptcy  Court  approved the Asset  Purchase  Agreement and
dismissed the Chapter 11 proceeding on July 19, 2007.  Prior to Elite, Mr. Lendo
was President,  CEO and CFO of AIP Inc., an automotive  supplier.  Mr. Lendo was
also  Manager  -  International   Accounting  and  Finance  with   Federal-Mogul
Corporation  and a Senior  Auditor with Ernst & Young.  Mr. Lendo is a member of
the  American  Institute  of  Certified  Public  Accountants  and  the  Michigan
Association of Certified Public Accountants.

     Michael A. Ard.  Mr. Ard has served as our Class III director and as EWCO's
director  since October 2004. He has served as Director of Sales and  Marketing,
Storage  Condo  Division,  of  Aardex  Corporation,  a  commercial  real  estate
developer,  since March 2003.  He served as Western Area Sales  Manager of LiDCO
Limited,  a start-up medical device  manufacturer  and distributor,  from August
2001 to August 2002. He served as Director of Global  Marketing,  from June 1998
to July 2001,  and as U.S.  Area  Manager,  from  February 1996 to June 1998, of
Deltex Medical Group, a start-up  cardiac monitor  manufacturer and distributor.
Mr. Ard received a B.S. degree in broadcast  communications  from the University
of Florida.

     Tracy L. Shellabarger.  Mr. Shellabarger joined our Board of Directors as a
Class III director in January 2006. From 1994 to 2004, Mr.  Shellabarger  served
as Chief  Financial  Officer for Steel  Dynamics,  Inc., a publicly traded steel
manufacturer.  During his tenure at Steel  Dynamics,  Mr.  Shellabarger  led its
finance, accounting, tax, insurance, and legal efforts, spearheading the initial
public  offering  and driving  sales to more than $2 billion.  Prior to his role
with Steel Dynamics, from 1987 to 1994, Mr. Shellabarger served as Controller of
a division of Nucor Corporation, a Fortune 400 steel manufacturer. He also spent
more than seven years with former "Big 8" accounting  firm Touche Ross & Company
as a tax  manager.  Mr.  Shellabarger  earned a Bachelor  of  Science  Degree in
Accounting  from  the  University  of  North  Carolina,  Chapel  Hill,  and is a
certified public accountant (CPA) and member of the AICPA.

     Frank  Gesuale.  Mr.  Gesuale  joined our Board of  Directors as a Class II
director in May 2007.  Since 2005, Mr.  Gesuale has worked for Sunwest  Mortgage
LLC, which is active in residential and commercial real estate finance. Prior to
Sunwest, from 2004 to 2005, Mr. Gesuale worked for Lendex Mortgage. From 1992 to
2004, Mr. Gesuale led his own management  company,  GreyBrooke & Associates LLC,
which provided direction,  support and financial sources for emerging growth and
under-performing  companies.  Prior to 1992,  Mr.  Gesuale  was Chief  Operating
Office  and a  board  member  of  Southwest  Financial  Systems,  where  he  was
responsible for sales,  finance,  marketing,  strategic planning and third party
support,   and  was   instrumental   in  completing  a  complex   financial  and
organizational  restructuring.  Mr.  Gesuale has also served as Chief  Financial
Officer and a member of the board of directors of Rossborough Manufacturing Inc,
a producer of  metallurgical  additives and equipment for primary domestic steel
companies in the United States and Canada. He began his career with Westinghouse
Electric,  where he served as a controller of a $200 million  Systems  Furniture
Business.

     Messrs.  Ard,  Shellabarger  and Gesuale are the sole members of our Audit,
Compensation and Nominating Committees.




                                       68
<PAGE>

Meetings and Committees of the Board of Directors

     During the year ended  December 31, 2007, our Board of Directors held seven
meetings.  Our board of directors has determined that Mr. Ard, Mr.  Shellabarger
and Mr. Gesuale, who was elected a director on May 14, 2007, are independent.

Audit Committee

     Our Board of Directors has  established a  separately-designated,  standing
Audit  Committee  that consists of three  directors and is  established  for the
purpose of  overseeing  our  accounting  and financial  reporting  processes and
audits of our financial  statements.  Mr. Ard, Mr.  Shellabarger and Mr. Gesuale
are the current members of this committee.

     The Audit Committee is scheduled to meet at least quarterly and:

     o    is directly responsible for the appointment,  compensation,  retention
          and oversight of the work of our independent public accounting firm,

     o    approves the engagement of our independent  public  accounting firm to
          render audit or non-audit  services  before the services  begin;  this
          pre-approval  authority may be delegated to one or more members of the
          Audit Committee,

     o    takes, or recommends that the full Board takes,  appropriate action to
          oversee the independence of our independent public accounting firm,

     o    reviews audit and other reports from our independent public accounting
          firm and provides it with access to report on any and all  appropriate
          matters,

     o    reviews and discusses the audited financial statements and the matters
          required to be discussed by SAS 61 with management and the independent
          accountants,

     o    recommends  to the Board  whether  the  audited  financial  statements
          should be included in our Annual Report on Form 10-K,

     o    reviews with management and the independent  accountants the quarterly
          financial information before we file our Form 10-Qs,

     o    discusses with management and the independent  accountants the quality
          and adequacy of our internal controls,

     o    establishes procedures for (1) the receipt,  retention,  and treatment
          of complaints received by us regarding accounting, internal accounting
          controls,  or  auditing  matters,  and  (2)  confidential,   anonymous
          submission  by  our  employees  of  concerns  regarding   questionable
          accounting or auditing matters,

     o    reviews  related  party  transactions  required to be disclosed in our
          proxy  statement for  potential  conflict of interest  situations  and
          approves all such transactions, and



                                       69
<PAGE>

     o    discusses  with  management  the  status of pending  litigation  as it
          pertains to the financial statements and disclosure and other areas of
          oversight as the committee deems appropriate.

During the year ended December 31, 2007, our Audit Committee held six meetings.

Audit Committee Financial Expert

     Our Board of  Directors  has  determined  that Tracy L.  Shellabarger,  who
serves on our Audit Committee,  is a financial expert and meets the criteria for
independence,  as described  in the  Securities  and  Exchange  Act of 1934,  as
amended.

Compensation Committee

     Our Board of Directors has a standing Compensation Committee which consists
of three  directors.  Mr. Ard, Mr. Gesuale and Mr.  Shellabarger are the current
members of this committee. Each of Mr. Ard, Mr. Gesuale and Mr. Shellabarger are
independent.  The Compensation  Committee makes  recommendations to the Board of
Directors  with respect to  compensation  arrangements  and plans for our senior
management,  officers and directors, and administers our 2005 Stock Option Plan.
During the year ended  December 31, 2007,  the  Compensation  Committee  held no
meetings.

Nominating Committee

     Our Board of Directors has a standing  Nominating  Committee which consists
of three  directors.  Mr. Ard, Mr. Gesuale and Mr.  Shellabarger are the current
members of this committee.  The Nominating Committee  identifies  individuals to
become  Board  members and selects,  or  recommends  for the Board's  selection,
director nominees to be presented for shareholder approval at the annual meeting
of  shareholders  or to fill any  vacancies.  During the year ended December 31,
2007, the Nominating Committee held one meeting.

     The Nominating  Committee's  policy is to consider any director  candidates
recommended  by  shareholders.  Such  recommendations  must be made  pursuant to
timely notice in writing to our  Secretary,  at Tarpon  Industries,  Inc.,  2420
Wills  Street,  Marysville,  Michigan  48040.  To be timely,  the notice must be
received at our offices at least 120 days before the  anniversary of the mailing
of our proxy statement  relating to the previous Annual Meeting of Shareholders.
The notice  must set forth (1) with  respect to the  director  candidate,  among
other things,  information about the candidate's name, age, principal occupation
or employment,  shares owned, independence,  other boards on which the candidate
serves, transactions, relationships, arrangements and understandings between the
candidate  and us and  between  the  candidate  and the  shareholder  giving the
notice,  and any other  information  relating to the candidate  that we would be
required  to  disclose  in our  proxy  statement,  and (2) with  respect  to the
shareholder  giving  the  notice,  among  other  things,  information  about the
shareholder's name, address, shares owned and the period they have been held.



                                       70
<PAGE>

     The   Nominating   Committee   has  not   established   specific,   minimum
qualifications for recommended  nominees or specific qualities or skills for one
or more of our directors to possess.  The Nominating Committee uses a subjective
process for  identifying  and  evaluating  nominees for  director,  based on the
information  available  to, and the  subjective  judgment of, the members of the
Nominating Committee and our then current needs, although the committee does not
believe  there  would be any  difference  in the  manner  in which it  evaluates
nominees based on whether the nominee is recommended by a shareholder.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities  Exchange Act of 1934 requires our officers
and directors,  and persons who own more than ten percent of a registered  class
of our equity securities,  to file reports of ownership and changes in ownership
with the Securities  and Exchange  Commission.  Officers,  directors and greater
than ten-percent shareholders are required by Securities and Exchange Commission
regulation to furnish us with copies of all Section 16(a) reports they file. Our
officers and directors and persons who own more than ten percent of a registered
class of our equity  securities  were not subject to these  filing  requirements
until the February 14, 2005 effective date of our initial public offering. Based
solely on review of the copies of such  reports  furnished  to us during or with
respect to fiscal 2005 through  December 31,  2005,  or written  representations
that no Forms 5 were  required,  we believe  that during 2005 from  February 14,
2005 through December 31, 2005, all Section 16(a) filing requirements applicable
to our officers,  directors and greater than ten-percent  beneficial owners were
complied with.

Code of Business Conduct and Ethics

     We adopted a Code of  Business  Conduct  and  Ethics in  October  2004 that
applies to all of our employees, officers and directors, including our principal
executive officer,  principal financial officer, principal accounting officer or
controller,  or  persons  performing  similar  functions.  Our Code of  Business
Conduct and Ethics  contains  written  standards  that we believe are reasonably
designed to deter  wrongdoing  and to promote  (1) honest and  ethical  conduct,
including  the  ethical  handling of actual or  apparent  conflicts  of interest
between  personal and  professional  relationships,  (2) full,  fair,  accurate,
timely,  and  understandable  disclosure in reports and  documents  that we file
with, or submit to, the Securities and Exchange  Commissions and in other public
communications we make, (3) compliance with applicable  governmental laws, rules
and regulations,  (4) the prompt internal reporting of violations of the code to
an appropriate  person or persons named in the code, and (5)  accountability for
adherence to the code made to our  Secretary at Tarpon  Industries,  Inc.,  2420
Wills Street, Marysville, Michigan 48040.

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

     The following  discussion and analysis of compensation  arrangements of our
named executive  officers for 2007 should be read together with the compensation
tables and related disclosures set forth below.



                                       71
<PAGE>

     The primary  objectives of our board of directors with respect to executive
compensation are to attract and retain the best possible  executive  talent,  to
tie annual and long-term cash and stock  incentives to achievement of measurable
corporate and individual  performance  objectives,  to be affordable  within the
context of our operating expense model, to be fairly and equitably  administered
and to reflect  our  values.  Overall,  the total  compensation  opportunity  is
intended to create an executive compensation program that is based on comparable
public companies and any other considerations that we deem to be relevant.

Compensation Components

     Base Salary.  Base salaries for our executives are established based on the
scope  of  their  responsibilities,   taking  into  account  competitive  market
compensation  paid by other  companies  for  similar  positions.  Generally,  we
believe  that  executive  base  salaries  should be in the range of salaries for
executives in similar positions and with similar  responsibilities at comparable
companies in line with our compensation  philosophy.  Base salaries are reviewed
by our  compensation  committee  annually,  and  take  into  account  individual
responsibilities, performance and experience.

     Annual Bonus.  In addition to base salaries,  we believe  performance-based
cash bonuses are important in providing  incentives to achieve  corporate goals.
Cash bonuses are intended to reward individual  performance  during the year and
can therefore be highly  variable from year to year. The goals for our executive
officers  are  communicated  to them  after  being  determined  by our  board of
directors. In 2008, the goals will be established by the compensation committee.
Our  compensation  committee has not yet  determined  the corporate  performance
goals it will apply in determining our executive officers' bonuses for 2008.

     Long-Term  Incentive  Program.  We believe that  long-term  performance  is
achieved through an ownership culture that encourages  long-term  performance by
our executive  officers through our grants of stock-based  awards. Our long-term
equity  incentive  compensation  is currently  exclusively  in the form of stock
options to acquire our common stock,  issued in conjunction with our Amended and
Restated 2004 Stock Option Plan (the "Stock Option Plan").  Our equity incentive
plan was established to provide our employees, including our executive officers,
with incentives to help align those employees'  incentives with the interests of
our stockholders.  We have granted awards to our employees primarily through our
Stock Option Plan. In 2006, certain of our named executive officers were granted
options  pursuant  to our Stock  Option  Plan in the  amounts  indicated  in the
section below entitled "Grants of Plan Based Awards."

     In the past,  our practice  has been to review  annually  equity  awards to
existing employees, including our executive officers, and make additional awards
if  appropriate.  With  respect to newly hired  employees,  including  executive
officers,  we typically grant options upon the  commencement of employment or at
the first meeting of the board of directors following such employee's hire date.
Like our other pay  components,  we intend  that the annual  aggregate  value of
these awards will be set in line with that of comparable companies.





                                       72
<PAGE>

     In 2007,  we  granted  options to  purchase  a total of  210,000  shares as
follows: 10,000 to new director Frank Gesuale,  100,000 to Patrick G. Peplowski,
Executive  Vice President of Sales and Marketing and 100,000 to Joseph T. Lendo,
Chief Financial  Officer.  Our board of directors does not apply a rigid formula
in  allocating  stock  options  to  executive  officers  as a  group  or to  any
particular  executive  officer.  Instead,  our board of directors  exercises its
judgment  and  discretion  and  considers,  among  other  things,  the  role and
responsibility  of the executive  officer,  competitive  factors,  the amount of
stock-based  equity  compensation  already held by the  executive  officer,  the
non-equity  compensation  received by the executive officer and the total number
of  options to be granted  to all  participants  during the year.  The number of
stock  options  granted  to each  named  executive  officer  is set forth in the
"Grants of Plan-Based  Awards Table." The value of such grants, as determined in
accordance  with FAS 123(R) for each individual  named executive  officer is set
forth in the column "Option Awards" in the "Summary Compensation Table."

     We do not have specific  share  retention and ownership  guidelines for our
executive officers.

     Stock Appreciation  Rights. To date no stock appreciation  rights have been
awarded to any of our executive officers.  However, our compensation  committee,
in its discretion,  may in the future elect to make such grants to our executive
officers if it deems it advisable.

     Restricted  Stock Grants or Awards.  We did not grant  restricted  stock or
restricted  stock  awards to any of our  executive  officers  in the year  ended
December 31, 2006. However, our compensation committee,  in its discretion,  may
in the future elect to make such grants to our executive officers if it deems it
advisable.

     Other  Compensation.  All of our executive  officers may participate in our
health programs, such as medical and dental coverage, and our 401(k) plan.

     The  compensation   committee,   which  is  comprised  solely  of  "outside
directors"  as defined for purposes of Section  162(m) of the  Internal  Revenue
Code, may elect to adopt plans or programs providing for additional  benefits if
the compensation committee determines that doing so is in our best interests.

     Stock Ownership  Guidelines.  We have not currently adopted stock ownership
guidelines.  We may  implement  guidelines  regarding  the issuance of new stock
option  awards  in  the  future  in  order  to  assure  that  our  officers  are
appropriately incentivized.

Equity Incentive Plan

     Amended and Restated 2004 Stock Option Plan

     Our board of directors adopted the Stock Option Plan, which was amended and
restated in 2007 and approved by our  shareholders at a meeting held on February
12, 2007.



                                       73
<PAGE>

     Awards.  The Stock Option Plan  provides  for the grant of incentive  stock
options and non-qualified stock options  (collectively,  "stock awards"), all of
which  may  be  granted  to  employees  (including  officers),   directors,  and
consultants; provided, however, that incentive stock options may only be granted
to employees.

     Share Reserve.  The aggregate number of shares of our common stock that may
be issued  pursuant  to stock  awards  under the Stock  Option  Plan  (including
incentive stock options) is 1,000,000 shares.

     Administration.  Subject  to  the  terms  of the  Stock  Option  Plan,  our
compensation  committee determines  recipients,  dates of grant, the numbers and
types of stock awards to be granted,  and the terms and  conditions of the stock
awards, including the period of their exercisability and vesting. Subject to the
limitations set forth below, the compensation  committee will also determine the
exercise price of stock options granted.

     Stock  Options.  Incentive  and  non-qualified  stock  options  are granted
pursuant to incentive and non-qualified  stock option agreements  adopted by the
compensation committee. The compensation committee determines the exercise price
for a stock  option,  within the terms and  conditions of the Stock Option Plan,
provided  that the exercise  price of an incentive  stock option  cannot be less
than 100% of the fair market  value of our common stock on the date of grant and
the exercise  price of a  non-qualified  stock option cannot be less than 85% of
the fair  market  value of our  common  stock on the date of  grant.  All  stock
options  granted  under the Stock Option Plan vest at the rate  specified by the
compensation committee.

     The  compensation  committee  determines the term of stock options  granted
under the Stock Option Plan, up to a maximum of ten years (except in the case of
incentive stock options granted to any person who, at the time of grant, owns or
is deemed to own stock  possessing  more than 10% of our total  combined  voting
power or that of any of our affiliates,  in which case the term of the incentive
stock  option must not exceed  five  years).  Unless the terms of an  optionee's
stock option agreement provide otherwise, if an optionee's relationship with us,
or any of our  affiliates,  ceases for any reason other than disability or death
or for cause, the optionee may exercise any vested stock options for a period of
three months  following  the  cessation  of service.  If an  optionee's  service
relationship  with us, or any of our  affiliates,  ceases due to  disability  or
death,  the optionee or a  beneficiary  may  exercise  any vested  options for a
period of 12 months from the date of death or disability.  In no event, however,
may a stock option be exercised beyond the expiration of its term.

     Acceptable  consideration  for the purchase of common stock issued upon the
exercise of a stock option will be determined by the compensation  committee and
may include (a) cash or check,  (b) the tender of common stock  previously owned
by the  optionee,  and  (c)  other  legal  consideration  approved  by the  plan
administrator.

     Unless  the  compensation  committee  provides  otherwise,   stock  options
generally  are  not  transferable  except  by will or the  laws of  descent  and
distribution,  and in the  case of  non-qualified  stock  options,  pursuant  to
certain trusts or by gift to certain family members.

                                       74
<PAGE>

     Changes  to Capital  Structure.  In the event that there is a change in our
capital structure,  such as a stock split,  appropriate adjustments will be made
to (i) the  number of shares  reserved  under the Stock  Option  Plan,  (ii) the
maximum  number of options that can be granted in a fiscal  year,  and (iii) the
number of shares and exercise  price, if applicable,  of all  outstanding  stock
awards.

401(k) Plan

     We maintain a defined  contribution  employee  retirement  plan,  or 401(k)
plan, for our employees. Our executive officers are also eligible to participate
in the 401(k) plan on the same basis as our other employees.  The 401(k) plan is
intended to qualify as a tax-qualified plan under Section 401(k) of the Internal
Revenue Code. The 401(k) plan provides that each  participant  may contribute up
to 15% of his or her pre-tax  compensation,  up to the statutory limit, which is
$15,500 for calendar year 2007. Participants that are 50 years or older can also
make  "catch-up"  contributions,  which in  calendar  year  2007 may be up to an
additional $5,000.

     Under the  401(k)  plan,  each  participant  is fully  vested in his or her
deferred  salary  contributions,  when  contributed.  We do  not  make  matching
contributions.  Participant  contributions  are held and  invested by the plan's
trustee.


Summary Compensation Table

     The following table sets forth information regarding compensation earned by
our Chief  Executive  Officer,  our Chief  Financial  Officer and certain  other
executive officers during the three years ended December 31, 2007:

<TABLE>
<CAPTION>

                                                                             Non-
                                                                            Equity
                                                                            Incentive Change
                                                                              Plan      in      All Other
                                                          Stock    Option    Compen-  Pension   Compen-
 Name and Principal Position   Year    Salary     Bonus   Awards   Awards    sation    Value    sation    Total
-------------------------------------------------------------------------------------------------------------------
<S>                            <C>      <C>            <C>                <C>                             <C>
James W. Bradshaw, Chief       2007     $200,000       $0 $20,000         0                               $200,000
Executive Officer (1)          2006      183,077        0          $126,000                                329,077

Patrick J. Hook, President     2007      199,385        0                 0                                199,385

                               2006      204,231        0            39,600                                243,831

                               2005      186,798   30,331           121,200                         404    338,733

Joseph T. Lendo, Chief
Financial Officer (7)          2007       16,558        0             7,700                                 24,258

J. Peter Farquhar, Former      2006      202,634        0                 0                           0
Chairman of the Board, Chief
Executive Officer and          2005      224,122        -           181,800                       5,457    202,634
Secretary (until February
2005) President (2)                                                                                        411,379

J. Stanley Baumgartner, Jr.,


                                       75
<PAGE>

Former Chief Financial         2006       91,781        0                 0                           0
Officer (3)                                                                                                 97,781

John A. Mayfield, Former
Chief Financial Officer (4)    2006       50,481        0                 0                           0     50,481

James T. House, Former Chief   2006      105,116        0                 0                           0    105,116
Financial Officer (6)
                               2005      157,370   25,000           121,200                     153,179    456,749
                                                                                                     (6)
</TABLE>


(1)  Mr. Bradshaw became our Chief Executive Officer in April 2006.

(2)  Mr. Farquhar  became our Chief Executive  Officer in August 2004 and ceased
     to act as such on April 23, 2006. The  compensation  shown in the table for
     fiscal  2006  represents  compensation  for  2006  services  rendered  plus
     payments received in connection with Mr. Farquhar's Termination Agreement.

(3)  Mr.  Baumgartner  became our Chief  Financial  Officer in June 2006 serving
     until December 2006.

(4)  Mr. Mayfield  became our Chief  Financial  officer in November 2005 serving
     until March 2006.

(5)  Amounts for 2005 for Mr. Farquhar  include $3,000 for director fees paid to
     him prior to his  employment  as CEO and  $2,457 for  401(K)  plan  Company
     matched amounts.

(6)  Mr.  House  resigned  as CFO in  December  2005.  The  amount  of  $150,650
     represents severance and consulting compensation as part of his termination
     agreement. The remaining amount of $2,529 represents 401(K) matched amounts
     from the Company.

(7)  Mr. Lendo became our Chief Financial Officer in November 2007.


Compensation Committee Interlocks and Insider Participation

     During  fiscal 2006 J. Peter  Farquhar  served as one of the members of our
Compensation  Committee.  He was replaced on the Committee by Tracy Shellabarger
in February 2006. Mr.  Farquhar did not  participate in any Committee  decisions
regarding his own compensation.


     None  of our  directors  had  any  other  relationship  with  us  requiring
disclosure by us pursuant to Securities and Exchange  Commission rules regarding
disclosure of related-party transactions.

     In  April  2004,  we  entered  into  a  Management   Consulting   Agreement
(subsequently  amended on April 15, 2005 and  December 8, 2005) with  Bainbridge
Advisors,  Inc., an advisory firm primarily  owned by Gary D. Lewis,  our former
Chairman of the Board,  President and Chief Executive Officer.  Mr. Lewis is the
President,  Chief Executive Officer and majority owner of Bainbridge.  Mr. Lewis


                                       76
<PAGE>

founded  Tarpon,  then known as Wall St.  Acquisitions,  Inc., and served as its
Chairman of the Board and Chief  Executive  Officer and as one of its  directors
from its inception in January 2002 until the closing of our initial acquisition,
EWCO,  in April 2004 and served as its  President  from January 2003 until April
2004. He had been primarily  responsible for implementing our business strategy,
including identifying the EWCO, Haines Road and Steelbank acquisitions.

     The initial term of the initial  Management  Consulting  Agreement  expired
April 7, 2007  (subsequently  extended on December 8, 2005 for an additional one
year term commencing  April 7, 2007) and has not been extended.  Pursuant to the
agreement,  Bainbridge,  primarily  through Gary D. Lewis,  provided  consulting
services  for us  concerning  the  integration  of the  EWCO,  Haines  Road  and
Steelbank  acquisitions,  the  further  development  and  implementation  of our
business and financing plans and strategy,  our expansion and acquisition  plans
and other areas, all to the extent we and Bainbridge mutually agreed. Tarpon was
required  to pay  the  advisory  and  transaction  fees  even  if it did not use
Bainbridge for the allotted hours under the agreement.

     In exchange for Bainbridge's  consulting  services,  we paid Bainbridge (1)
$15,000 a month,  increased  to $20,000 a month  effective  April 2005,  (2) all
reasonable  expenses  incurred by Bainbridge in connection  with the  agreement,
including (a) fees and expenses of legal counsel retained at our direction,  (b)
legal  fees up to  $7,500  in  connection  with  preparing  the  agreement,  (c)
out-of-pocket costs incurred in performing the agreement, and (d) up to $5,000 a
year for  professional  liability  errors and  omissions  insurance  relating to
Bainbridge's  services, (3) 4% of the total consideration paid in an acquisition
approved by our board,  with a minimum of $200,000 and a maximum of $300,000 for
each transaction,  provided that the $300,000 maximum shall be increased by 0.2%
of the  enterprise  value of any  transaction,  but only to the extent that such
transaction  exceeds  $50,000,000,  (4) a  stock  option  to  Bainbridge  or its
designees to purchase  110,000  common shares at an exercise  price of $5.50 per
share,  which was granted to Gary D. Lewis and his son in February 2005, and (5)
a one-time  payment of $50,000 in  consideration  of certain  advisory  services
rendered to the Company that were not  originally  contemplated  by the parties.
The success fee was generally paid over 12 months after closing, except that the
fee for the EWCO, Haines Road and Steelbank acquisitions, totaling $600,000, are
payable  $22,222 a month  until the  February  17,  2005  closing of our initial
public offering,  when the remaining amount will be paid equally over the period
ending 24 months from the closing.  To the extent  payments  exceeded  $60,000 a
month,  the excess was  deferred  until the next month in which it could be paid
and not exceed $60,000 a month.

     We have also agreed to indemnify Gary D. Lewis, obtain additional directors
and officers insurance  coverage and reimburse him for legal fees incurred,  all
in connection  with certain  services  performed by Mr. Lewis in his capacity as
one of our former  officers.  We expect the legal fees and additional  insurance
premiums paid by us to be approximately $11,130.

Grants of Plan Based Awards

     All options granted to our named  executive  officers in 2007 are qualified
stock options.  The exercise price per share of each option granted to our named


                                       77
<PAGE>

executive officers was determined in good faith by our board of directors on the
date of the  grant.  All of the stock  options  granted  to our named  executive
officers in 2007 were granted under our Stock Option Plan.

     The following  table sets forth  certain  information  regarding  grants of
plan-based  awards to our named  executive  officers  for the fiscal  year ended
December 31, 2007:



                                       78
<PAGE>

<TABLE>
<CAPTION>

                                       Grants of Plan-Based Awards
                                                          Estimated Future        All Other    All Other
                       Estimated Future Payouts Under     Payouts Under Equity    Stock        Option
                      Non-Equity Incentive Plan Awards    Incentive Plan Awards   Awards(1):   Awards:
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         Grant Date
                                                                                     Number     Number of   Exercise of  Fair Value
                                                                                     of Shares  Securities  Base Price   of Stock
                  Grant                                                              of Stock   Underlying  of Option    and Options
    Name          Date      Threshold  Target  Maximum  Threshold   Target  Maximum  or Units   Options     Awards       Awards
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>   <C>                                                                        <C>         <C>
Joseph T. Lendo     11/20/07

                                 -          -      -        -            -        -        -       100,000         0.10    0.08
</TABLE>






                                       79
<PAGE>

Outstanding Equity Awards At 2007 Fiscal Year-End

     The following table sets forth certain information  regarding equity awards
granted to our named executive officers outstanding as of December 31, 2007:


<TABLE>
<CAPTION>
                                                                                                    Stock Awards
                                         Option Awards                                               Equity       Incentive
                                                                                                     Incentive      Plan
                                                                                            Market    Plan        Awards:
                                                                                            Value    Awards:      Market
                                                                                              of     Number       or Payout
                                                 Equity                          Numbers    Shared     of         Value of
                                               Incentive                          of          or     Unearned     Unearned
                                                  Plan                           Shares     Units    Shares,      Shares,
                 Number of      Number of       Awards:                          or Units     of     Units, or    Units or
                Securities     Securities      Number of                         of Stock   Stock     Other        Other
                Underlying     Underlying      Securities                         That       That    Rights       Rights
Name and        Unexercised    Unexercised     Underlying  Option   Option        Have       Have     That         That
Principal         Options        Options        Unearned   Exercise Expiration     Not        Not    Have Not     Have Not
Position        Exercisable   Unexercisable     Options    Price    Date         Vested     Vested   Vested       Vested
----------------------------------------------------------------------------------------------------------------------------

<S>                   <C>              <C>             <C>        <C>        <C>   <C>
James W.          16,667            33,333            0        $2.45    04/26/16         -        -           -           -
Bradshaw,
Chief              66,667          133,333            0         0.88    10/12/16
Executive
Officer

                   26,667           13,333            0         5.50    02/17/15         -        -           -           -
Patrick
Hook,              36,667           73,333            0         0.88    10/12/16
President

Joseph T.                                                                                -        -           -           -
Lendo,                  0          100,000            0         0.10    11/20/17
Chief
Financial
Officer
</TABLE>


Option Exercises and Stock Vested

     No options were exercised by our named executive officers in 2007.

Pension Benefits

     We do not currently  maintain  qualified or  non-qualified  defined benefit
pension plans.

Non-qualified Deferred Compensation

     We do not currently maintain non-qualified defined contribution  retirement
plans or other deferred compensation plans.

                                       80
<PAGE>

Employee Agreements and Potential Payments Upon Termination or Change in Control

     The following  summaries set forth the employment  agreements and potential
payments  payable to our executive  officers upon termination of employment or a
change in control of us under their current employment  agreements and our other
compensation programs.

     James W.  Bradshaw.  We entered into an employment  agreement with James W.
Bradshaw  on April 26,  2006,  which  provides  for a term of two years and then
continues from year to year unless  terminated by either party.  Mr.  Bradshaw's
base salary is $200,000 per year. Mr.  Bradshaw  received  $20,000 of our common
stock as of the date of commencement  of the employment  agreement and an option
to purchase  50,000  shares of common  stock under our Stock  Option  Plan.  Mr.
Bradshaw  is  eligible  to  participate  in all fringe  benefits  offered by us,
including,  without limitation,  major medical and dental insurance and a 401(k)
plan. If Mr. Bradshaw's  employment  agreement is terminated due to his death or
disability,  or for cause,  Mr. Bradshaw shall be entitled only to reimbursement
of   expenses,   unpaid   compensation   actually   earned  and   accrued,   and
indemnification.  If Mr.  Bradshaw  is  terminated  without  cause,  he shall be
entitled to  severance  equal to aggregate  compensation  paid to him during the
preceding  12 months,  plus medical and dental  benefits  for such  period.  Mr.
Bradshaw  has  agreed not to  compete  with us for a period of 1 year  following
termination of his employment with us.

     Patrick J. Hook. In February 2005, we entered into an employment  agreement
with  Patrick J. Hook,  pursuant to which he is employed  as our  President  and
Chief Operating  Officer  beginning  February 2005, or in such other position as
the board of directors  determines,  for a period ending  February,  2008, which
term will automatically  renew for one additional year unless either party gives
the other at least 180 days notice of  termination.  Mr. Hook's annual salary is
currently  $210,000,  which may be increased by the board of directors.  We also
paid him a bonus of  $30,331,  equal to the lost  bonus for 2004 from his former
employer. Pursuant to this agreement, effective at the February 17, 2005 closing
date of our initial public  offering,  we granted Mr. Hook an option to purchase
40,000 common shares  exercisable  at $5.50 a share,  110% of our initial public
offering  price.  Mr.  Hook is also  entitled to  participate  in any bonus plan
established by the Compensation Committee of the board of directors. Mr. Hook is
entitled to various  fringe  benefits  under the  agreement,  including a $750 a
month car allowance,  a cell phone,  four weeks of vacation,  reimbursement  for
books and tuition for an M.B.A.  program and one year of salary and  benefits if
his employment  under the agreement is terminated  without  cause.  Mr. Hook has
agreed not to compete with us during specified periods following the termination
of his employment.

     Joseph T. Lendo.  We entered into an  employment  agreement  with Joseph T.
Lendo as of November  20, 2007 to be Chief  Financial  Officer for a term of two
years.  Mr Lendo's annual base salary is $165,000 and he is eligible for bonuses
at the  discretion of the Board of Directors.  The base salary will be increased
to $180,000 upon  successful  completion of (1) a secondary  equity raise in the
minimum  amount of $6 million and (2) when the Company's  accounting  consulting
fees have been reduced by a minimum of fifty percent. Mr. Lendo has been granted
an option to purchase 100,000 shares of our common stock, vesting in three equal
installments at an exercise price of $0.10. In addition,  upon consummation of a


                                       81
<PAGE>

public  offering of our common  shares,  Mr. Lendo will be granted an additional
option to purchase  50,000 common shares at the public  offering  price.  If Mr.
Lendo's  employment  is  terminated  without  cause,  he  shall be  entitled  to
severance  payments of salary  plus the pro rata  portion of any bonus or profit
sharing  to which he is  entitled,  for the  shorter  of six  months or the time
remaining in the term of this agreement.

     J. Stanley  Baumgartner,  Jr.. We entered into an employment agreement with
J. Stanley  Baumgartner,  Jr. as of June 7, 2006 to be Chief Financial  Officer,
the term of which began on June 26, 2006. Mr. Baumgartner's employment agreement
provides  for a term of two years.  Mr.  Baumgartner's  annual  base  salary was
$175,000  and he was  eligible  for  bonuses at the  discretion  of the Board of
Directors. Mr. Baumgartner was issued 40,000 shares of our common stock upon the
commencement  of his  employment and has also been granted an option to purchase
40,000 shares of our common stock,  vesting in 3 equal annual installments at an
exercise price of $1.75. On November 27, 2006 Mr. Baumgartner advised us that he
would be resigning.  He indicated that he had received an unsolicited  offer and
had  accepted a position in New England and desired to return his family to that
area. We and Mr.  Baumgartner  agreed to a December 18, 2006 termination date of
his  employment.  Mr.  Baumgartner  indicated that after  termination,  he would
remain  available to consult with us, our advisors and our current and potential
investors, without charge, until we retain a successor.

     J. Peter  Farquhar.  On January 12,  2005,  we entered  into an  employment
agreement  with J. Peter Farquhar  effective as of August 20, 2004,  pursuant to
which he was employed as our Chairman of the Board,  Chief Executive Officer and
Secretary  for a  period  to end on  January  12,  2007  or his  earlier  death,
disability or termination for cause. Mr.  Farquhar's annual salary was $100,000,
but the  portion due for the period from August 20, 2004 to January 12, 2005 was
deferred  until  after the  February  17,  2005  closing of our  initial  public
offering. Pursuant to this agreement, effective at the February 17, 2005 closing
date of our  initial  public  offering,  we granted  Mr.  Farquhar  an option to
purchase 50,000 common shares  exercisable at $5.50 a share, 110% of our initial
public  offering  price.  Mr.  Farquhar was entitled to various fringe  benefits
under the agreement,  including  $5,000,000 of directors and officers  liability
insurance.  He was also  entitled to an amount equal to his  one-year  aggregate
compensation  and  medical  and  dental  benefits  if his  employment  under the
agreement is terminated  without cause.  If his employment is terminated  within
six  months  after a change in  control,  he is  entitled  to two  times  annual
aggregate  compensation and medical and dental benefits for 24 months.  In April
of 2005, Mr.  Farquhar agreed to devote all of his business time to the Company,
and as a  result,  in  April  2005,  we  amended  and  restated  Mr.  Farquhar's
employment   agreement  to  appropriately   compensate  him  for  his  increased
commitment to the Company.  Under the amended and restated employment agreement,
Mr.  Farquhar  continued  to be entitled to all of the rights under his original
employment  agreement,  except that (1) the agreement was amended  provided that
upon expiration,  it would renew on the same terms and conditions  unless either
party provides the other party with 180 days' written notice of termination, (2)
Mr. Farquhar's annual salary was increased to $250,000, effective as of the date
of such amended and restated employment agreement, (3) Mr. Farquhar was entitled
to receive a  discretionary  bonus of up to 50% of his salary,  as determined by
the Compensation Committee,  (4) Mr. Farquhar was entitled to certain additional
fringe  benefits  under the amended and restated  agreement,  including a $750 a
month allowance for automobile expenses and four weeks of paid vacation, (5) Mr.
Farquhar had the right to terminate the employment agreement for good reason, in
which case he would be entitled to  severance  payments  equal to his  aggregate
salary and benefits for one year,  and (6) in the event that that the Company or


                                       82
<PAGE>

its  subsidiaries  consummated a  transaction  in which they acquire 100% of the
outstanding  common stock or substantially  all of the assets of a Company,  the
Company was required to pay Mr.  Farquhar's  membership  initiation  fee, annual
dues  and  monthly   membership  fees  at  country  club,   subject  to  certain
limitations.  In addition, Mr. Farquhar's covenant not to compete was amended to
provided  that he would not  engage in  activity  that is  reasonably  likely to
compete  with the Company or its  subsidiaries  and he agreed not to be employed
by,  consult with, or have any interest in, any entity which conducts a business
in which the Company or its  subsidiaries  were  engaged  during the term of his
employment  agreement.  On April 23,  2006,  J. Peter  Farquhar,  then our Chief
Executive Officer, ceased to act as such. On April 26, 2006, we and Mr. Farquhar
entered into a Termination  Agreement.  The Termination  Agreement provides that
Mr. Farquhar's  compensation,  partially at a reduced level, will continue until
January 31, 2007 and that he will render consulting services until such date. We
agreed to continue our indemnification  obligations to Mr. Farquhar as set forth
in the Termination Agreement and Mr. Farquhar provided us a release.

     John A. Mayfield. In November 2005, we entered into an employment agreement
with John A. Mayfield,  pursuant to which he was employed as our Chief Financial
Officer beginning December 2005, for a period to end December,  2008, subject to
an automatic one year renewal of termination.  Mr.  Mayfield's annual salary was
$175,000,  and an annual  bonus of up to 50% of the  annual  base  compensation.
Pursuant to this agreement, we granted Mr. Mayfield an option to purchase 40,000
common shares  exercisable at $5.50 a share, 110% of our initial public offering
price.  Mr.  Mayfield  was  also  entitled  to  participate  in any  bonus  plan
established  by the  Compensation  Committee  of the  Board  of  Directors.  Mr.
Mayfield was entitled to various fringe benefits under the agreement,  including
a $500 a month car allowance, a cell phone, four weeks of vacation, and one year
of salary and benefits if his  employment  under the  agreement  was  terminated
without cause.  Mr. Mayfield has agreed not to compete with us during  specified
periods  following the  termination of his  employment.  Mr.  Mayfield  resigned
effective  upon the filing of our Report on Form 10-K for the fiscal  year ended
December 31, 2005.

     James T. House.  On July 8, 2004, we entered into an  employment  agreement
with James T. House,  pursuant to which he was  employed as our Chief  Financial
Officer  beginning  August 2004,  for a period to end July 8, 2007.  Mr. House's
annual  salary was  $160,000,.  Pursuant  to this  agreement,  effective  at the
February 17, 2005 closing date of our initial  public  offering,  we granted Mr.
House an option to purchase  40,000 common shares  exercisable at $5.50 a share,
110% of our initial public  offering price.  Pursuant to the agreement,  we also
paid Mr. House a $25,000  signing bonus on the February 17, 2005 closing date of
our initial  public  offering and agreed that he was entitled to  participate in
any  bonus  plan  established  by the  Compensation  Committee  of the  board of
directors.  Mr.  House  was  entitled  to  various  fringe  benefits  under  the
agreement,  including a $500 a month car allowance and one year of salary if his
employment  under the  agreement was  terminated  without  cause.  Mr. House has
agreed not to compete with us during specified periods following the termination
of his  employment.  This  agreement was terminated on December 30, 2005 and Mr.
House became a consultant until April 15, 2006 at a fee of $13,333 per month.

     Charles A. Vanella. In April 2004 and in connection with our acquisition of
EWCO, we entered into an employment agreement with Charles A. Vanella,  pursuant
to which he was employed as our President and Chief Executive Officer. In August
2004,  we entered into a Termination  Agreement  with Mr.  Vanella,  pursuant to
which he resigned from all of his positions with us, agreed to render consulting


                                       83
<PAGE>

services to us for one year,  agreed to a release of claims,  agreed to keep our
information  confidential  and agreed not to compete with us for a period of two
years following the termination of his consultation.  Mr. Vanella's compensation
under the agreement  includes (1) payment of $100,000 a year for two years,  (2)
payment for his current health insurance  coverage for 18 months, (3) payment of
his country club dues for 2004 and 2005, up to $5,000 a year,  and (4) continued
use of his truck and payment of premiums for insurance on his truck. In December
of 2004, as part of an extension of the promissory note made by EWCO in favor of
Mr. Vanella, we agreed to pay up to approximately  $9,000 of legal fees incurred
by Mr. Vanella in connection  with his separation from the Company and agreed to
pay the approximately $24,500 balance owing on a truck and transfer title to the
truck to him in approximately two years.

Non-Employee Director Compensation

     The following table sets forth a summary of the compensation we paid to our
non-employee directors in 2007:


                                       84
<PAGE>

<TABLE>
<CAPTION>



                                                                                  Change in Pension
                                                                                      Value and
                            Fees                                                     Nonqualified
                          Earned or                                Non-Stock           Deferred             All
                            Paid         Stock       Option      Incentive Plan      Compensation          other
           Name             Cash        Awards       Awards       Compensation         Earnings         Compensation      Total
           ----             ----        ------       ------       ------------         --------         ------------      -----
<S>                        <C>                                                                                           <C>
Tracy L. Shellabarger      $20,250                                                                                       $20,250
Michael A. Ard              17,200                                                                                        17,200
Frank Gesuale               11,250           -        6,485                 -                 -                 -         17,735
</TABLE>


Principal provisions of the Plan

     The following summary of the Plan, as adopted by the Board of Directors and
approved by  shareholders on February 12, 2007, is qualified by reference to the
full text of the Plan.

                           Director Compensation Plan
<TABLE>
<CAPTION>

-------------------------------------------- -------------------------------- ----------------------------------------
Name and Position                            Dollar Value ($)                 Number of Units
<S>                                          <C>                              <C>
-------------------------------------------- -------------------------------- ----------------------------------------

-------------------------------------------- -------------------------------- ----------------------------------------
Non-Employee Directors
-------------------------------------------- -------------------------------- ----------------------------------------
         On election                                                          Options to purchase 10,000 shares of
                                                                              the Company's common stock, vested
                                                                              immediately and exercisable for a
                                                                              period of ten years, with an exercise
                                                                              price of 100% of market value at the
                                                                              date of issue
-------------------------------------------- -------------------------------- ----------------------------------------
         Monthly                             Cash retainer of $1,000
-------------------------------------------- -------------------------------- ----------------------------------------
         May 31 of each year                                                  For directors in good standing for the
                                                                              current and previous year, a stock
                                                                              grant of $8,000 of the Company's
                                                                              common stock at the current market
                                                                              price
-------------------------------------------- -------------------------------- ----------------------------------------
         Per in person Board        meeting  $1,000
-------------------------------------------- -------------------------------- ----------------------------------------
         Per telephone conference            $250
-------------------------------------------- -------------------------------- ----------------------------------------
         For special projects                Fee to be agreed to an
         requested by the Board              approved by the Board
-------------------------------------------- -------------------------------- ----------------------------------------
Committee Chairs                             $500 and $1,000 for the Audit
                                             Committee Chair
-------------------------------------------- -------------------------------- ----------------------------------------
Employee Directors                                                            May 31 of each year, for directors
                                                                              in good standing for the current
                                                                              and previous year, stock grant of
                                                                              $8,000 of Company common stock at
                                                                              current market price as of May 31 of
                                                                              that year
-------------------------------------------- -------------------------------- ----------------------------------------
</TABLE>



                                       85
<PAGE>


Administration

     The Plan may be administered by the board of directors or the  compensation
committee.  The Board of  Directors  and the  Compensation  Committee,  in their
respective  roles,  are referred to as the  "Granting  Authority".  The Granting
Authority  designates the persons to be granted awards from among those eligible
and the type and amount of awards to be granted and has  authority  to interpret
the Plan, adopt, alter and repeal administrative regulations,  and determine and
amend the terms of awards.

Eligibility

     Awards   under   the   Plan  may   only  be  made  to   outside   directors
(non-employees).  Outside directors are automatically  granted cash compensation
and common stock pursuant to the terms specified in the Plan.

Automatic awards to Non-Employee Directors

     The Plan provides for the automatic grant of cash  compensation  and common
stock to non-employee directors on the terms provided above.

Stockholder approval of compensation paid to an employee Director.

     In  connection  with his  appointment  as Chief  Executive  Officer  of the
Company,  we issued Mr. James W. Bradshaw 8,163 shares of our Common Stock.  The
American  Stock Exchange  Rules,  which then governed our  activities,  required
shareholder approval when issuing equity to certain employees.  However,  equity
issuances to certain  employees in  connection  with their hiring by the Company
are exempt  from this rule.  As Mr.  Bradshaw  was  previously  employed  by the
Company in a different  position,  this issuance was not exempt from shareholder
approval.  Therefore,  we sought  and  received  shareholders  approval  of this
issuance to Mr. Bradshaw at a meeting of shareholders held on February 12, 2007.

Limitations on Directors' Liability and Indemnification Agreements

     As permitted by Michigan law, we have adopted provisions in our amended and
restated  certificate  of  incorporation  that limit or  eliminate  the personal
liability  of  directors  for a  breach  of  their  fiduciary  duty of care as a
director. The duty of care generally requires that, when acting on behalf of the
corporation,  a director  exercise an informed  business  judgment  based on all
material  information  reasonably  available  to him  or  her.  Consequently,  a
director will not be personally  liable to us or our  stockholders  for monetary
damages for breach of fiduciary duty as a director,  except for liability for:

     o    any  breach  of  the   director's   duty  of  loyalty  to  us  or  our
          stockholders;

     o    any act or  omission  not in good faith or that  involves  intentional
          misconduct or a knowing violation of law;

     o    any act  related to  unlawful  stock  repurchases  or  redemptions  or
          payments of dividends; or

     o    any transaction from which the director  derived an improper  personal
          benefit.



                                       86
<PAGE>

     These  limitations of liability do not limit or eliminate our rights or any
stockholder's  rights to seek non-monetary  relief, such as injunctive relief or
rescission. These provisions will not alter a director's liability under federal
securities laws.

     As permitted by Michigan law, our bylaws also provide that:

     o    we will  indemnify our directors  and executive  officers,  subject to
          certain  exceptions,  and may indemnify our other officers,  employees
          and agents, to the fullest extent permitted by law;

     o    subject  to  certain  exceptions,  we  will  advance  expenses  to our
          directors and executive officers in connection with a legal proceeding
          to the fullest extent permitted by law; and

     o    the rights provided in our bylaws are not exclusive.

     The limitation of liability and  indemnification  provisions in our amended
and restated certificate of incorporation and bylaws may discourage stockholders
from  bringing a lawsuit  against our directors and officers for breach of their
fiduciary  duty.  They may also reduce the  likelihood of derivative  litigation
against our directors and officers, even though an action, if successful,  might
benefit us and other  stockholders.  Further, a stockholder's  investment may be
adversely  affected to the extent that we pay the costs of settlement and damage
awards  against  directors  and  officers as  required by these  indemnification
provisions.  Currently,  there is no pending litigation or proceeding  involving
any of our directors, officers or employees for which indemnification is sought,
and we are not aware of any threatened  litigation that may result in claims for
indemnification.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Principal Holders of Our Voting Securities

     The  following  table sets forth  certain  information  with respect to the
beneficial  ownership  of shares of Common  Stock as of March 1, 2008,  based on
information  obtained from the persons named below,  by (i) each person known to
the Company to beneficially own more than 5% of the outstanding shares of Common
Stock,  (ii) each executive  officer and director of the Company,  and (iii) all
officers and directors of the Company as a group:





                                       87
<PAGE>
                                                    Amount
                                                    Nature of        Percentage
                                                    Common             Of
                                                    Shares           Common
                                                    Beneficially      Shares
        Name                                        Owned            Owned (1)
        ----                                        -----            ---------

        James W. Bradshaw                          116,326(2)        1.0%
        Patrick Hook                               76,667 (3)         *
        Joseph T. Lendo                                     0        0%
        Michael A. Ard                             14,420 (4)         *
        Tracy L. Shellabarger                      43,239 (5)         *
        Frank Gesuale                               10,000(6)         *
        Neil T. Anderson                            2,739,500       20.5%
        Laurus Master Fund, Ltd.                      872,192        6.5%

All directors and executive officers
as a group  (6 persons)                           260,652 (8)        2.0%

     * Less than 1%

(1)  Based on 13,343,939 common shares outstanding as of March 31, 2008.

(2)  Includes  options  to  purchase  100,000  shares of Common  Stock  that Mr.
     Bradshaw has the right to acquire within 60 days of March 1, 2008. Does not
     include options to purchase  150,000 shares of Common Stock,  which are not
     exercisable within 60 days of March 1, 2008.

(3)  Includes  options to purchase  76,667  shares of Common Stock that Mr. Hook
     has the right to acquire within 60 days of March 1, 2008.  Does not include
     options  to  purchase  73,333  shares  of  Common  Stock,   which  are  not
     exercisable within 60 days of March 1, 2008.

(4)  Includes options to purchase 10,000 shares of Common Stock that Mr. Ard has
     the right to acquire within 60 days of March 1, 2008.

(5)  Includes  options  to  purchase  10,000  shares  of Common  Stock  that Mr.
     Shellabarger has the right to acquire within 60 days of March 1, 2008.

(6)  Includes options to purchase 10,000 shares of Common Stock that Mr. Gesuale
     has the right to acquire within 60 days of March 1, 2008.




ITEM 13. CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS

     See "Executive Compensation - Compensation Committee Interlocks and Insider
Participation" for a description of relationships between us and Gary D. Lewis.



                                       88
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT'S FEES & SERVICES

     Rehmann Robson is our independent registered public accounting firm and has
reported on the consolidated financial statements in this 2007 Annual Report, as
well as the 2006 Annual Report.

     The following  table  represents  aggregate  fees billed for the year ended
December  31,  2007  by  Rehmann  Robson  and  the  aggregate  fees  billed  for
professional  services  rendered for the year ended December 31, 2006 by Rehmann
Robson and Grant Thornton LLP, our  predecessor  independent  registered  public
accounting firm in the following categories:

                                           Year Ended December 31,
                                     -------------------------------------

                                              2007               2006
        Audit fees (1)                $       320,000     $       595,929
        Tax Fees (2)                  $        19,000     $         2,000
        All Other Fees                $             -     $        16,000

(1)  Consists of fees for the audit of our annual financial  statements,  review
     of interim  financial  statements and services  provided in connection with
     potential Registration Statement filings.

(2)  Consists of tax return preparation fees.

     In  accordance  with Section  10A(i) of the Exchange  Act,  before  Rehmann
Robson is engaged by us to render audit or non-audit services, the engagement is
approved  by our  Audit  Committee.  None of the  audit-related,  tax and  other
services  described  in the table  above were  approved  by the Audit  Committee
pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

Audit Committee Report

     Our Audit  Committee  has:

     o    reviewed and discussed our audited  financial  statements for the year
          ended December 31, 2007 with our management;

     o    discussed  with our  independent  auditors the matters  required to be
          discussed by SAS 61 (Codification of Statements on Auditing Standards,
          AU 380), as it has been modified or supplemented;

     o    received the written  disclosures  and the letter from our independent
          accountants  required by  Independence  Standards Board Standard No. 1
          (Independence Standards Board Standard No. 1, Independence Discussions
          with Audit Committees), as it has been modified or supplemented; and

     o    discussed   with   our   independent   accountants   our   independent
          accountants' independence.

     Based on the review and discussions described above in this paragraph,  our
Audit Committee recommended to our Board of Directors that the audited financial
statements for the year ended December 31, 2007 be included in our Annual Report
on Form 10-K for the year ended December 31, 2007 for filing with the Securities
and Exchange Commission.

     Management is responsible  for the Company's  financial  reporting  process
including  its  system  of  internal   control,   and  for  the  preparation  of
consolidated   financial   statements  in  accordance  with  generally  accepted


                                       89
<PAGE>

accounting  principles.  The Company's  independent auditors are responsible for
auditing those financial statements. Our responsibility is to monitor and review
these  processes.  It is not the Audit  Committees'  duty or  responsibility  to
conduct auditing or accounting reviews or procedures. The Audit Committee is not
employees of the Company and we may not be, and may not represent  them to be or
to serve as,  accountants  or auditors by  profession or experts in the field of
accounting  or auditing.  Therefore,  the Audit  Committee  has relied,  without
independent  verification,  on  management's  representation  that the financial
statements  have been prepared with integrity and  objectivity and in conformity
with accounting  principles  generally  accepted in the United States of America
and on the representations of the independent  auditors included in their report
on the Company's financial statements.  The Audit Committees' oversight does not
provide us with an independent basis to determine that management has maintained
appropriate  accounting  and  financial  reporting  principles  or policies,  or
appropriate  internal controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. Furthermore, the Audit
Committees'  considerations  and discussions with management and the independent
auditors do not assure that the Company's financial  statements are presented in
accordance with generally accepted accounting principles,  that the audit of our
Company's financial statements has been carried out in accordance with generally
accepted auditing standards or that our Company's independent accountants are in
fact "independent."

Tracy L. Shellabarger

Michael A. Ard

Frank Gesuale












                                       90
<PAGE>




                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a.) Financial Statements

     Our financial  statements for the following years and entities are included
in response to item 8 of this report:

                                                                            Page


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM......................39
CONSOLIDATED BALANCE SHEETS..................................................40
CONSOLIDATED STATEMENTS OF OPERATIONS........................................41
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)....................42
NOTES TO FINANCIAL STATEMENTS................................................45


     (b.) Financial Statement Schedules.

        Schedule                                                      Page

     Schedule II - Valuation and Qualifying Accounts and              S-1
     Reserves for the years ended December 31, 2007 and 2006.

     (c.) Exhibits.

     The  exhibits  to this  report are as set forth in the "Index to  Exhibits"
immediately  following the Financial  Statement  Schedules in this report.  Each
management  contract or compensatory  plan or arrangement filed as an exhibit to
this report is identified in the "Index to Exhibits"  with an asterisk after the
exhibit number.


                                       91
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                               TARPON INDUSTIRES, INC.
                                                    (Registrant)

Dated: March 31, 2008                By:        /s/ James W. Bradshaw
                                           ------------------------------------
                                                  James W. Bradshaw
                                             Its: Chief Executive Officer


Dated: March 31, 2008                By:       /s/ Joseph T. Lendo
                                           ------------------------------------
                                                   Joseph T. Lendo
                                             Its: Chief Financial Officer



     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed by the following  persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

           Signature                                    Title                                  Date

 <S>     <C>    <C>    <C>    <C>    <C>    <C>

   /s/ James W. Bradshaw                   Chief Executive Officer and a Director        March 31, 2008
-------------------------------------            (Principal Executive Officer)         --------------------
       James W. Bradshaw


   /s/ Tracy Shellabarger                            Director                            March 31, 2008
-------------------------------------                                                   --------------------
       Tracy Shellabarger


   /s/ Michael A. Ard                                Director                            March 31, 2008
-------------------------------------                                                   --------------------
       Michael A. Ard


   /s/ Frank Gesuale                                 Director                            March 31, 2008
-------------------------------------                                                   --------------------
       Frank Gesuale

</TABLE>

                                       92
<PAGE>


                      SCHEDULE II - TARPON INDUSTRIES, INC.
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                 For the years ended December 31, 2007 and 2006
<TABLE>
<CAPTION>

                                                Column B              Column C Additions              Column D           Column E
                                              --------------    -------------------------------     -------------      -------------

                                                                   (1, 3)                               (2)
                                                                -------------      ------------     -------------
                                                 Balance
                                              at Beginning       Charged to         Charge to                           Balance at
                                                   of            Costs and            Other                               End of
                                                 Period           Expenses          Accounts         Deductions           Period
                                              --------------    -------------      ------------     -------------      -------------

Allowance for Doubtful Accounts

<S>                 <C> <C>                <C>               <C>                <C>              <C>                <C>
Year ended December 31, 2007               $        189,247  $        67,480    $           --   $       140,832    $       115,895
Year ended December 31, 2006               $        107,101  $       134,944    $           --   $        52,798    $       189,247

Tax Valuation Allowance

Year ended December 31, 2007               $      4,130,711  $     7,312,882    $           --   $            --    $    11,443,593
Year ended December 31, 2006               $      2,501,480  $     1,629,231    $           --   $            --    $     4,130,711

</TABLE>

Note: (1) Reserve of additional uncollectible accounts

Note: (2) Write-off uncollectible accounts, net of recoveries

Note: (3) Increase in valuation  allowance for net operating losses and deferred
          tax assets should the Company not achieve profitability in future
          years





                                       93
<PAGE>

                                  EXHIBIT INDEX

Exhibit     Description

1.1  Investment  Banking  Agreement,  dated as of April 5, 2004,  between Tarpon
     Industries,  Inc. and Joseph Gunnar & Co., LLC.,  incorporated by reference
     to Exhibit  10.27 to the  Registrant's  registration  statement on Form S-1
     (file no. 333-120117) filed on November 1, 2004.

1.2  Form of Underwriting Agreement, incorporated by reference to Exhibit 1.1 to
     amendment  no. 3 to the  Registrant's  registration  statement  on Form S-1
     (file no. 333-120117) filed on February 11, 2005.

1.3  Form of Lead Underwriters' Warrant Agreement,  incorporated by reference to
     Exhibit 1.2 to amendment no. 3 to the Registrant's  registration  statement
     on Form S-1 (file no. 333-120117) filed on February 11, 2005.

3(i).1 Amended and  Restated  Articles of  Incorporation  of Tarpon  Industries,
     Inc.,  incorporated  by  reference  to  Exhibit  3(i)  to the  Registrant's
     registration  statement on Form S-1 (file no. 333-120117) filed on November
     1, 2004.

3(i).2 Certificate of Amendment to Articles of Incorporation  dated December 10,
     2007  incorporated  by  reference to Exhibit 3.1 to  Registrant's  Form 8-K
     filed on December 20, 2007.

3(i).3 Certificate of Amendment to Articles of Incorporation  dated December 13,
     2007 incorporated by reference to Exhibit 3.2. to the Registrant's Form 8-K
     filed on December 20, 2007.

3(i).4  Certificate  of  Correction  dated  December  18, 2007  incorporated  by
     reference to Exhibit 3.3 of the Registrant's Form 8-K filed on December 20,
     2007.

3(ii).1 Amended and 3 Restated Bylaws of Tarpon Industries,  Inc.,  incorporated
     by reference to Exhibit to the Registrant's  registration statement on Form
     S-1 (file no. 333-120117) filed on November 1, 2004.

4.1  Specimen  Stock  Certificate,  incorporated  by reference to Exhibit 4.1 to
     amendment  no. 1 to the  Registrant's  registration  statement  on Form S-1
     (file no. 333-120117) filed on January 14, 2005.

10.1 Stock Purchase  Agreement,  dated as of November 23, 2003,  between Charles
     Vanella and Wall St.  Acquisitions,  Inc. (now known as Tarpon  Industries,
     Inc.),  including First Amendment to Share Purchase Agreement,  dated as of
     February 1, 2004, Second Amendment to Share Purchase Agreement, dated as of
     February 18, 2004, Third Amendment to Share Purchase Agreement, dated as of
     March 23, 2004, and Fourth Amendment to Share Purchase Agreement,  dated as
     of  April  2,  2004,   incorporated  by  reference  to  Exhibit  2.1to  the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.

10.2 Redemption Agreement, dated as of April 2, 2004, between Eugene Welding Co.
     and  Charles  Vanella,  incorporated  by  reference  to Exhibit  2.2 to the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.

10.3 Share Purchase Agreement, dated as of April 2, 2004, among BST Acquisitions
     Ltd., Tarpon Industries, Inc., Jeffrey Greenberg, Mark D. Madigan and Barry


                                       94
<PAGE>

     Seigel,  incorporated  by  reference  to  Exhibit  2.3 to the  Registrant's
     registration  statement on Form S-1 (file no. 333-120117) filed on November
     1, 2004

10.4 Amending  Agreement,  dated as of May 5, 2004, among Barry Seigel,  Jeffrey
     Greenberg   and   Mark   Madigan,   BST   Acquisition   Ltd.   and   Tarpon
     Industries,Inc.,  incorporated by reference to Exhibit 2.4 to amendment no.
     1  to  theRegistrant's   registration  statement  on  Form  S-1  (file  no.
     333-120117) filed on January 14, 2005.

10.5 Second  Amending  Agreement,  dated as of December  10,  2004,  among Barry
     Seigel,  Jeffrey  Greenberg and Mark Madigan,  BST Acquisition Ltd., Tarpon
     Industries,   Inc.  and  Steelbank  Inc.,   incorporated  by  reference  to
     Exhibit2.5 to amendment no. 1 to the Registrant's registration statement on
     Form S-1 (file no. 333-120117) filed on January 14, 2005.

10.6 Asset  Purchase  Agreement,   dated  as  of  June  21,  2004,  between  BST
     Acquisition,  Ltd.  and Bolton  Steel Tube Co.,  Ltd.,  including  forms of
     notes,  incorporated  by  reference  to  Exhibit  2.4 to  the  Registrant's
     registration  statement on Form S-1 (file  no.333-120117) filed on November
     1, 2004.

10.7 Form of Real Estate Purchase Agreement between 1387746 Ontario Inc. and BST
     Acquisition Ltd., incorporated by reference to Exhibit 2.7 to amendment no.
     1 to  the  Registrant's  registration  statement  on  Form  S-1  (file  no.
     333-120117) filed on January 14, 2005.

10.8 First  Amending  Agreement  dated as of December 15, 2004,  between  Bolton
     Steel Tube Co. Ltd.,  BST  Acquisition,  Ltd.  and Winston  Penny and Henry
     Koura,  incorporated  by reference to Exhibit 2.8 to amendment no. 1 to the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on January 14, 2005.

10.9 Second Amending  Agreement,  dated as of February 11, 2005,  between Bolton
     Steel Tube Co. Ltd.,  BST  Acquisition,  Ltd.  and Winston  Penny and Henry
     Koura, incorporated by reference to Exhibit 2.3 to the Registrant's Current
     Report on Form 8-K, dated February 17, 2005.

10.10 Guarantee,  dated as of February 17, 2005,  executed by Tarpon Industries,
     Inc. in favor of Bolton Steel Tube Co., Ltd.,  incorporated by reference to
     Exhibit 2.4 to the Registrant's  Current Report on Form 8-K, dated February
     17, 2005.

10.11 Asset Purchase Agreement dated as of August 30, 2005, by and among Midwest
     Tube Mills,  Inc.,  Richard L. Russell,  individually and as Trustee of the
     Richard  L.  Russell  2004  Annuity  Trust,  and MTM  Acquisition  Company,
     incorporated by reference to Exhibit 2 to the  Registrant's  Form 8-K filed
     August 30, 2005.

10.12 Amended and Restated  Asset  Purchase  Agreement  dated as of November 11,
     2005,  by and among C&W  Manufacturing,  Inc.,  David  Perkins  and Deborah
     Carpenter, individually, and FM, Inc., incorporated by reference to Exhibit
     2 to the Registrant's Form 8-K filed November 11, 2005.

10.13 Loan and Security Agreement,  dated as of August 11, 2004 between Standard
     Federal Bank N.A. and Eugene Welding Co., including forms of Revolving Note
     and Term Note, incorporated by reference to Exhibit 4.2 to the Registrant's
     registration  statement on Form S-1 (file no. 333-120117) filed on November
     1, 2004.



                                       95
<PAGE>

10.14 Continuing  Unconditional Guaranty of Tarpon Industries,  Inc. to Standard
     Federal Bank,  N.A.,  dated August 11, 2004,  incorporated  by reference to
     Exhibit 4.3 to the  Registrant's  registration  statement on Form S-1 (file
     no. 333-120117) filed on November 1, 2004

10.15 Securities  Pledge  Agreement,  dated  August  11,  2004,  between  Tarpon
     Industries, Inc. and Standard Federal Bank, N.A., incorporated by reference
     to Exhibit 4.4 to the Registrant's registration statement on Form S-1 (file
     no. 333-120117) filed on November 1, 2004.

10.16 Subordination Agreement,  dated August 11, 2004 between Charles A. Vanella
     and Standard Federal Bank,  N.A.,  incorporated by reference to Exhibit 4.5
     to  the  Registrant's   registration   statement  on  Form  S-1  (file  no.
     333-120117) filed on November 1, 2004

10.17 Subordination  Agreement,  dated August 11, 2004 between An and Dander and
     Standard  Federal Bank,  N.A.,  incorporated by reference to Exhibit 4.6 to
     the Registrant's  registration  statement on Form S-1 (file no. 333-120117)
     filed on November 1, 2004

10.18 Subordination  Agreement,  dated August 11, 2004  between  Rivas Jonah and
     Standard  Federal Bank,  N.A.,  incorporated by reference to Exhibit 4.7 to
     the Registrant's  registration  statement on Form S-1 (file no. 333-120117)
     filed on November 1, 2004.

10.19 Subordination  Agreement,  dated August 11, 2004,  between Joseph Gunnar &
     Co., LLC, as agent of the note holders,  and Standard  Federal Bank,  N.A.,
     incorporated by reference to Exhibit 4.8 to the  Registrant's  registration
     statement on Form S-1 (file no. 333-120117) filed on November 1, 2004.

10.20 Factoring  Agreement,  dated  as  of  May  14,  2004,  between  Greenfield
     Commercial Credit, Inc. and Steelbank,  Inc.,  incorporated by reference to
     Exhibit 4.9 to the  Registrant's  registration  statement on Form S-1 (file
     no. 333-120117) filed on November 1, 2004.

10.21 Security  Agreement,   dated  as  of  May  14,  2004,  between  Greenfield
     Commercial Credit, Inc. and Steelbank,  Inc.,  incorporated by reference to
     Exhibit 4.10 to the Registrant's  registration  statement on Form S-1 (file
     no. 333-120117) filed on November 1, 2004.

10.22 Guarantee,  dated as of May 14,  2004,  from  Tarpon  Industries,  Inc. to
     Greenfield  Commercial Credit,  Inc.,  incorporated by reference to Exhibit
     4.11 to the  Registrant's  registration  statement  on Form S-1  (file  no.
     333-120117) filed on November 1, 2004.

10.23 Subordination  Agreement,  dated May 2004 among Anand Dhanda, Riyaz Jinnah
     and  Greenfield  Commercial  Credit,  Inc.,  incorporated  by  reference to
     Exhibit 4.12 to the Registrant's  registration  statement on Form S-1 (file
     no. 333-120117) filed on November 1, 2004.

10.24 Subordination Agreement, dated as of May 14, 2004, between Joseph Gunnar &
     Co., LLC, as agent of the note holders,  and Greenfield  Commercial Credit,
     Inc.,  incorporated  by  reference  to  Exhibit  4.13  to the  Registrant's
     registration  statement on Form S-1 (file no. 333-120117) filed on November
     1, 2004.

10.25 Subordination  Agreement,  dated as of May 14, 2004,  among Barry  Seigel,
     Jeffrey Greenberg,  Mark Madigan and Greenfield  Commercial  Credit,  Inc.,
     incorporated by reference to Exhibit 4.14 to the Registrant's  registration
     statement on Form S-1 (file no. 333-120117) filed on November 1, 2004.



                                       96
<PAGE>

10.26 Amendment to Loan and Security Agreement,  dated December 24, 2004 between
     Standard  Federal Bank N.A. and Eugene Welding Company,  including  amended
     revolving note,  incorporated by reference to Exhibit 4.15 to amendment no.
     1 to  the  Registrant's  registration  statement  on  Form  S-1  (file  no.
     333-120117) filed on January 14, 2005.

10.27 Loan  Agreement,  dated as of  February  17,  2005,  by and among  LaSalle
     Business  Credit,  a  division  of ABN AMRO Bank  N.V.,  Canada  Branch and
     Steelbank   Inc.,   incorporated  by  reference  to  Exhibit  10.1  to  the
     Registrant's Current Report on Form 8-K, dated February 17, 2005.

10.28 Guarantee,  dated as of February 17, 2005,  executed by Tarpon Industries,
     Inc. in favor of LaSalle Business Credit, a division of ABN AMRO Bank N.V.,
     Canada   Branch,   incorporated   by  reference  to  Exhibit  10.2  to  the
     Registrant's Current Report on Form 8-K, dated February 17, 2005.

10.29 General  Security  Agreement,  dated as of February 17, 2005,  executed by
     Steelbank Inc. in favor of LaSalle  Business Credit, a division of ABN AMRO
     Bank N.V., Canada Branch,  incorporated by reference to Exhibit 10.3 to the
     Registrant's Current Report on Form 8-K, dated February 17, 2005.

10.30 General  Security  Agreement,  dated as of February 17, 2005,  executed by
     Tarpon Industries,  Inc. in favor of LaSalle Business Credit, a division of
     ABN AMRO Bank N.V.,  Canada  Branch,  incorporated  by reference to Exhibit
     10.4 to the  Registrant's  Current  Report on Form 8-K,  dated February 17,
     2005.

10.31 Share Pledge Agreement,  dated as of February 17, 2005, executed by Tarpon
     Industries,  Inc. in favor of LaSalle  Business  Credit,  a division of ABN
     AMRO Bank N.V., Canada Branch, incorporated by reference to Exhibit 10.5 to
     the Registrant's Current Report on Form 8-K, dated February 17, 2005.

10.32 Form of Promissory  Note made by Eugene Welding Co. in favor of Charles A.
     Vanella,  including  Guaranty of Tarpon Industries,  Inc.,  incorporated by
     reference  to  Exhibit  10.1  to  amendment  no.  1  to  the   Registrant's
     registration  statement on Form S-1 (file no.  333-120117) filed on January
     14, 2005.

10.33 Form of First  Amendment to Promissory  Note made by Eugene Welding Co. in
     favor of Charles A. Vanella,  incorporated  by reference to Exhibit 10.2 to
     amendment  no. 1 to the  Registrant's  registration  statement  on Form S-1
     (file no. 333-120117) filed on January 14, 2005.

10.34 Stock Pledge  Agreement  between Eugene Welding Co. and Charles A. Vanella
     and Cusmano & Co., P.C., effective April 2, 2004, incorporated by reference
     to  Exhibit  10.3  to  amendment  no.  1 to the  Registrant's  registration
     statement on Form S-1 (file no. 333-120117) filed on January 14, 2005.

10.35 Lease  Agreement,  dated October 22, 2001,  between Eugene Welding Co. and
     the  Charles J. Loznak  Trust,  concerning  its  Marysville  and  Marlette,
     Michigan  facilities,  incorporated  by  reference  to Exhibit  10.1 to the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.



                                       97
<PAGE>

10.36 Form of Promissory  Note made by Steelbank  Inc. in favor of Barry Seigel,
     Jeffrey  Greenberg  and  Mark  Madigan,  in  the  principal  amount  of Cdn
     $800,000,  incorporated  by reference to Exhibit 10.5 to amendment no. 1 to
     the Registrant's  registration  statement on Form S-1 (file no. 333-120117)
     filed on January 14, 2005

10.37 Form of Promissory  Note made by Steelbank  Inc. in favor of each of Barry
     Seigel, Jeffrey Greenberg and Mark Madigan, each in the principal amount of
     Cdn $135,000,  incorporated by reference to Exhibit 10.6 to amendment no. 1
     to  the  Registrant's   registration   statement  on  Form  S-1  (file  no.
     333-120117) filed on January 14, 2005.

10.38 General Security Agreement,  dated May 14, 2004, made by Steelbank Inc. to
     and  in  favor  of  Barry  Seigel,  Jeffrey  Greenberg  and  Mark  Madigan,
     incorporated  by  reference  to  Exhibit  10.7 to  amendment  no.  1 to the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on January 14, 2005.

10.39 Securities Pledge  Agreement,  dated May 14, 2004, made by BST Acquisition
     Ltd. and Steelbank Inc. to and in favor of Barry Seigel,  Jeffrey Greenberg
     and Mark  Madigan,  incorporated  by reference to Exhibit 10.8 to amendment
     no. 1 to the  Registrant's  registration  statement  on Form S-1  (file no.
     333-120117) filed on January 14, 2005.

10.40 Guarantee,  dated May 14, 2004,  made by Steelbank Inc. to and in favor of
     Barry Seigel, Jeffrey Greenberg and Mark Madigan, incorporated by reference
     to  Exhibit  10.9  to  amendment  no.  1 to the  Registrant's  registration
     statement on Form S-1 (file no. 333-120117) filed on January 14, 2005.

10.41 Lease Agreement, dated July 1, 2001, between Ciriaco Forgione and Filomena
     Forgione  and  Tube  Distributors,  Inc.  (assigned  to  Steelbank,  Inc.),
     concerning its Mississauga,  Ontario facility, incorporated by reference to
     Exhibit 10.2 to the Registrant's  registration  statement on Form S-1 (file
     no. 333-120117) filed on November 1, 2004.

10.42 Tarpon Industries,  Inc. 2004 Stock Option Plan, incorporated by reference
     to Exhibit  10.3 to the  Registrant's  registration  statement  on Form S-1
     (file no. 333-120117) filed on November 1, 2004.

10.43 Forms  of  Stock  Option  Agreement  under  the 2004  Stock  Option  Plan,
     incorporated by reference to Exhibit 10.4 to the Registrant's  registration
     statement on Form S-1 (file no. 333-120117) filed on November 1, 2004.

10.44 Employment  Agreement,   dated  as  of  January  12,  2004,  among  Tarpon
     Industries, Inc., Eugene Welding Co. and J. Peter Farquhar, incorporated by
     reference  to  Exhibit  10.13  to  amendment  no.  1  to  the  Registrant's
     registration  statement on Form S-1 (file no.  333-120117) filed on January
     14, 2005.

10.45 Amended and  restated  employment  agreement,  dated as of April 15, 2005,
     among Tarpon Industries,  Inc., Eugene Welding Co., Steelbank Tubular, Inc.
     and J. Peter  Farquhar,  incorporated  by reference to Exhibit 10.14 to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     2004.



                                       98
<PAGE>

10.46 Employment  Agreement,  dated as of July 8, 2004, among Tarpon Industries,
     Inc.,  Eugene Welding Co. and James T. House,  incorporated by reference to
     Exhibit 10.6 to the Registrant's  registration  statement on Form S-1 (file
     no. 333-120117) filed on November 1, 2004.

10.47 Employment  Agreement,  dated May 14, 2004,  between  Steelbank,  Inc. and
     Jeffrey  Greenberg,  incorporated  by  reference  to  Exhibit  10.7  to the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.

10.48 Employment Agreement, dated May 14, 2004, between Steelbank, Inc. and Mark
     D. Madigan,  incorporated by reference to Exhibit 10.8 to the  Registrant's
     registration  statement on Form S-1 (file no. 333-120117) filed on November
     1, 2004.

10.49 Employment  Agreement,  dated May 14, 2004,  between  Steelbank,  Inc. and
     Barry Seigel, incorporated by reference to Exhibit 10.9 to the Registrant's
     registration  statement on Form S-1 (file no. 333-120117) filed on November
     1, 2004.

10.50 Employment  Agreement,  dated as of November 1, 2002,  between EWCO and C.
     David   Weaver,   incorporated   by  reference  to  Exhibit  10.10  to  the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.

10.51 Employment  Agreement,   dated  as  of  February  1,  2005,  among  Tarpon
     Industries,  Inc., Eugene Welding Company,  Steelbank Inc., BST Acquisition
     Ltd.  and Patrick  Hook,  incorporated  by  reference  to Exhibit  10.19 to
     amendment  no. 2 to the  Registrant's  registration  statement  on Form S-1
     (file no. 333-120117) filed on February 3, 2005.

10.52 Termination  Agreement,  dated  as of  September  3,  2004,  among  Tarpon
     Industries, Inc., Eugene Welding Co., Steelbank, Inc., BST Acquisition Ltd.
     and Charles A. Vanella,  incorporated  by reference to Exhibit 10.11 to the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.

10.53 Management  Consulting  Agreement,  dated  April 7, 2004,  between  Tarpon
     Industries,  Inc. and  Bainbridge  Advisors,  Inc.  and First  Amendment to
     Management  Consulting  Agreement,  dated as of October 13, 2004, effective
     April  7,  2004,   incorporated  by  reference  to  Exhibit  10.12  to  the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.

10.54 Second amendment to Management and Consulting Agreement, dated as of April
     15, 2005,  between Tarpon  Industries,  Inc., Eugene Welding Co., Steelbank
     Tubular,  Inc. and Bainbridge Advisors,  Inc.  Incorporated by reference to
     Exhibit 10.22 to the  Registrant's  Annual Report on Form 10-K for the year
     ended December 31, 2004

10.55 Agency Agreement,  dated as of March 25, 2004,  between Tarpon Industries,
     Inc.  and  Joseph  Gunnar  & Co.,  LLC,  concerning  2004  note  financing,
     incorporated by reference to Exhibit 10.13 to the Registrant's registration
     statement on Form S-1 (file no. 333-120117) filed on November 1, 2004

10.56 Form of Warrant  to  Purchase  Common  Stock of Tarpon  Industries,  Inc.,
     issued  to  purchasers  of  notes  in  February,   March  and  April  2004,
     incorporated by reference to Exhibit 10.14 to the Registrant's registration
     statement on Form S-1 (file no. 333-120117) filed on November 1, 2004.



                                       99
<PAGE>

10.57 Form of Warrant  to  Purchase  Common  Stock of Tarpon  Industries,  Inc.,
     issued to designees of Joseph Gunnar & Co., LLC, the placement agent in our
     April 2004 note  financing,  incorporated  by reference to Exhibit 10.15 to
     the Registrant's  registration  statement on Form S-1 (file no. 333-120117)
     filed on November 1, 2004.

10.58 Form of Tarpon  Industries,  Inc. 8% Junior Secured Promissory Note issued
     in  February,  March and April 2004,  incorporated  by reference to Exhibit
     10.16 to the  Registrant's  registration  statement  on Form S-1  (file no.
     333-120117) filed on November 1, 2004.

10.59 Form of Agency Appointment  Agreement,  dated as of April 5, 2004, between
     Joseph  Gunnar & Co., LLC and each of the  purchasers of our notes in April
     2004,  incorporated  by  reference  to  Exhibit  10.17 to the  Registrant's
     registration  statement on Form S-1 (file no. 333-120117) filed on November
     1, 2004.

10.60 General  Security  Agreement,  dated as of April 5, 2004,  between  Tarpon
     Industries,  Inc. and Joseph  Gunnar & Co., LLC, as  representative  of the
     note   holders,   incorporated   by  reference  to  Exhibit  10.18  to  the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.

10.61 Guaranty,  dated as of April 5, 2004,  from  Eugene  Welding Co. to Joseph
     Gunnar & Co., LLC, as representative  of the note holders,  incorporated by
     reference to Exhibit 10.19 to the  Registrant's  registration  statement on
     Form S-1 (file no. 333-120117) filed on November 1, 2004.

10.62 General  Subordinated  Security  Agreement,  dated as of  April  5,  2004,
     between Eugene Welding Co. and Joseph Gunnar & Co., LLC, as  representative
     of the note  holders,  incorporated  by reference  to Exhibit  10.20 to the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.

10.63 Guaranty,  dated as of May 18, 2004,  from Eugene  Welding Co. to Riyaz H.
     Jinnah and Anand M. Dhanda,  incorporated  by reference to Exhibit 10.21 to
     the Registrant's  registration  statement on Form S-1 (file no. 333-120117)
     filed on November 1, 2004.

10.64 General Subordinated  Security Agreement,  dated as of April 2004, between
     Eugene Welding Co. and Riyaz H. Jinnah and Anand M. Dhanda, incorporated by
     reference to Exhibit 10.22 to the  Registrant's  registration  statement on
     Form S-1 (file no. 333-120117) filed on November 1, 2004.

10.65 Guaranty, dated as of May 18, 2004, from Steelbank,  Inc. to Joseph Gunnar
     &  Co.,  LLC,  as  representative  of the  note  holders,  incorporated  by
     reference to Exhibit 10.23 to the  Registrant's  registration  statement on
     Form S-1 (file no. 333-120117) filed on November 1, 2004.

10.66 General Subordinated Security Agreement, dated as of May 18, 2004, between
     Steelbank, Inc. and Joseph Gunnar & Co., LLC, as representative of the note
     holders,  incorporated  by reference to Exhibit  10.24 to the  Registrant's
     registration  statement on Form S-1 (file no. 333-120117) filed on November
     1, 2004.



                                      100
<PAGE>

10.67 Guaranty,  dated as of May 18,  2004,  from  Steelbank,  Inc.  to Riyaz H.
     Jinnah and Anand M. Dhanda,  incorporated  by reference to Exhibit 10.25 to
     the Registrant's  registration  statement on Form S-1 (file no. 333-120117)
     filed on November 1, 2004.

10.68 General Subordinated Security Agreement, dated as of May 14, 2004, between
     Steelbank,  Inc. and Riyaz H. Jinnah and Anand M. Dhanda,  incorporated  by
     reference to Exhibit 10.26 to the  Registrant's  registration  statement on
     Form S-1 (file no. 333-120117) filed on November 1, 2004.

10.69 Form of  Promissory  Note to be made by BST  Acquisition  Ltd. in favor of
     Bolton Steel Tube Co. Ltd.,  incorporated  by reference to Exhibit 10.36 to
     amendment  no. 2 to the  Registrant's  registration  statement  on Form S-1
     (file no. 333-120117) filed on February 3, 2005.

10.70 Form of General Security Agreement to be made between BST Acquisition Ltd.
     and Bolton Steel Tube Co. Ltd.,  incorporated by reference to Exhibit 10.37
     to amendment no.2 to the  Registrant's  registration  statement on Form S-1
     (file no. 333-120117) filed on February 3, 2005.

10.71 Form of Guarantee to be made by Tarpon Industries, Inc. in favor of Bolton
     Steel  Tube  Co.  Ltd.,  incorporated  by  reference  to  Exhibit  10.38 to
     amendment  no. 2 to the  Registrant's  registration  statement  on Form S-1
     (file no. 333-120117) filed on February 3, 2005.

10.72 Form of Lock-up  Agreement  between  Joseph  Gunnar & Co.,  LLC and Tarpon
     Industries,   Inc.  shareholders  and  holders  of  options  and  warrants,
     incorporated  by  reference  to  Exhibit  10.40 to  amendment  no. 3 to the
     Registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on February 11, 2005.

10.73 Subordination  Agreement,  dated  May 18,  2005,  by and  among  Steelbank
     Tubular,  Inc.,  Tarpon  Industries,  Inc., The Equitable Trust Company and
     LaSalle  Business  Credit,  a  division  of ABN Amro  N.V.  Canada  Branch,
     incorporated  by  reference to Exhibit  10.1 to the  Registrant's  Form 8-K
     filed May 18, 2005.

10.74 Commitment  Letter,  dated  May 12,  2005,  by and  among  First  National
     Corporation,  on behalf of The Equitable Trust Company,  Steelbank Tubular,
     Inc. and Tarpon Industries, Inc., incorporated by reference to Exhibit 10.2
     to the Registrant's Form 8-K filed May 18, 2005.

10.75 Charge/Mortgage, dated May 18, 2005, by Steelbank Tubular Inc. in favor of
     The Equitable  Trust Company,  incorporated by reference to Exhibit 10.3 to
     the Registrant's Form 8-K filed May 18, 2005.

10.76 General  Security  Agreement,  dated  as of  May  18,  2005,  executed  by
     Steelbank   Tubular,   Inc.  in  favor  of  The  Equitable  Trust  Company,
     incorporated  by  reference to Exhibit  10.4 to the  Registrant's  Form 8-K
     filed May 18, 2005.

10.77 Guarantee and Postponement of Claim, dated as of May 18, 2005, executed by
     Tarpon   Industries,   Inc.  in  favor  of  The  Equitable  Trust  Company,
     incorporated  by  reference to Exhibit  10.5 to the  Registrant's  Form 8-K
     filed May 18, 2005.

10.78 Securities  Purchase  Agreement,  dated as of December  13,  2005,  by and
     between Tarpon Industries,  Inc. and Laurus Master Fund, Ltd., incorporated
     by reference to Exhibit 99.1 to the  Registrant's  Form 8-K filed  December
     13, 2005.




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10.79 Secured  Convertible  Promissory  Note,  dated as of  December  13,  2005,
     executed by Tarpon  Industries,  Inc. in favor of Laurus Master Fund, Ltd.,
     incorporated  by  reference to Exhibit  99.2 to the  Registrant's  Form 8-K
     filed December 13, 2005

10.80 Common Stock Purchase Warrant, dated as of December 13, 2005, incorporated
     by reference to Exhibit 99.3 to the  Registrant's  Form 8-K filed  December
     13, 2005.

10.81 Subsidiary  Guaranty,  dated as of  December  13,  2005,  executed  by the
     wholly-owned  subsidiaries  of Tarpon  Industries,  Inc.,  incorporated  by
     reference to Exhibit 99.4 to the  Registrant's  Form 8-K filed December 13,
     2005.

10.82 Stock Pledge  Agreement,  dated as of December 13, 2005,  incorporated  by
     reference to Exhibit 99.5 to the  Registrant's  Form 8-K filed December 13,
     2005.

10.83 Master Security Agreement,  dated as of December 13, 2005, incorporated by
     reference to Exhibit 99.6 to the  Registrant's  Form 8-K filed December 13,
     2005.

10.84 Registration  Rights  Agreement,  dated as of December 13, 2005, by Tarpon
     Industries,  Inc. in favor of Laurus  Master Fund,  Ltd.,  incorporated  by
     reference to Exhibit 99.7 to the  Registrant's  Form 8-K filed December 13,
     2005.

10.85 Grant of Security  Interest in Trademarks,  dated as of December 13, 2005,
     by  Tarpon  Industries,   Inc.  in  favor  of  Laurus  Master  Fund,  Ltd.,
     incorporated  by  reference to Exhibit  99.8 to the  Registrant's  Form 8-K
     filed December 13, 2005.

10.86 First Amendment to Loan Agreement and  Reaffirmation  of Guarantee,  dated
     December  13, 2005,  by and between  Steelbank  Tubular,  Inc. and ABN AMRO
     Bank,  N.V.,  Canada  Branch,  and reaffirmed by Tarpon  Industries,  Inc.,
     incorporated  by  reference to Exhibit  99.9 to the  Registrant's  Form 8-K
     filed December 13, 2005.

10.87 Second Amendment to Loan Agreement and  Reaffirmation  of Guaranty,  dated
     December  13,  2005,  by and between  Eugene  Welding Co. and LaSalle  Bank
     Midwest N.A., and reaffirmed by Tarpon  Industries,  Inc.,  incorporated by
     reference to Exhibit 99.10 to the Registrant's  Form 8-K filed December 13,
     2005.

10.88 Security  Agreement,  dated  December  13,  2005,  by and  between  Tarpon
     Industries,  Inc. and LaSalle Bank Midwest N.A.,  incorporated by reference
     to Exhibit 99.11 to the Registrant's Form 8-K filed December 13, 2005.

10.89 Subordination  Agreement,  dated December 13, 2005, by and between LaSalle
     Bank Midwest N.A. and ABN AMRO Bank, N.V., Canada Branch,  and consented to
     by Tarpon Industries, Inc. and its subsidiaries,  incorporated by reference
     to Exhibit 99.12 to the Registrant's Form 8-K filed December 13, 2005.

10.90 Director  Compensation  Plan adopted by the Board of Directors on February
     6, 2006,  incorporated by reference to Registrant's Form 8-K filed February
     9, 2006.



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<PAGE>

10.91 Agreement dated March 20, 2006 between  Agellan  Investments and Steelbank
     Tubular,  Inc.  for the sale and  leaseback  of its  Mississauga,  Ontario,
     incorporated  by reference to Exhibit  99.2 of the  Registrant's  report on
     Form 8-K dated March 20, 2006.

10.92 Asset  Purchase  Agreement  dated as of April 4, 2006 by and among J And J
     Tube, Inc., Ken Jimerson,  Kevin Jimmerson,  and J And J Acquisition Corp.,
     incorporated  by  reference to Exhibit  99.1 to the  Registrant's  Form 8-K
     filed April 6, 2006.

10.93 Employment Agreement dated April 26, 2006 between Tarpon Industries,  Inc.
     and James W.  Bradshaw,  incorporated  by  reference to Exhibit 99.3 to the
     Registrant's Form 8-K filed April 27, 2006.

10.94 Employment  Agreement dated June 7, 2006 between Tarpon  Industries,  Inc.
     and J. Stanley Baumgartner,  Jr., incorporated by reference to Exhibit 99.1
     to the Registrant's Form 8-K filed June 9, 2006.

10.95 Agency Agreement dated August 15, 2006 between Tarpon Industries, Inc. and
     Joseph Gunnar & Co., Ltd.

10.96 Letter Agreement by and between Tarpon Industries,  Inc. and Laurus Master
     Fund,  Ltd.  dated February 28, 2007  incorporated  by reference to Exhibit
     99.1 to the Registrant's Form 8-K filed March 6, 2007.

10.97 Amendment dated March 20, 2007 by and between Tarpon Industries,  Inc. and
     Laurus Master Fund,  Ltd.  incorporated by reference to Exhibit 99.1 to the
     Registrant's Form 8-K filed March 26, 2007.

10.98 Commitment  Letter  dated March 20, 2007 by and among  Tarpon  Industries,
     Inc.,  LaSalle Bank Midwest N.A. and LaSalle Business Credit, a Division of
     ABN AMRO Bank,  N.V.  incorporated  by  reference  to  Exhibit  99.2 to the
     Registrant's Form 8-K filed March 26, 2007.

10.99 Fourth  Amendment  to Loan and  Reaffirmation  of  Guaranty  by and  among
     LaSalle  Bank  Midwest,  N.A.,  Eugene  Welding  Company,  Inc.  and Tarpon
     Industries,  Inc.  dated March 30, 2007  incorporated  by  reference to the
     Registrant's Form 8-K filed April 2, 2007.

10.100  Bridge  Note  Financing  Agreement  dated  June  18,  2007  between  the
     Registrant and High Capital Funding LLC and related Forbearance  Agreement.
     LaSalle   Subordination   Agreement  and  Laurus  Subordination   Agreement
     incorporated  by  reference  to  Exhibits  10.1,  10.2,  10.3  and  10.4 to
     Registrant's Form 8-K filed on June 22, 2007.

10.101  Exclusive   Consulting  Agreement  dated  August  3,  2007  between  the
     Registrant and Dr. Jean R. Fusilier Sr. and Exclusive  Definitive Agreement
     dated  August 3, 2007  between the  Registrant  and  Fusilier  Holding LLC,
     incorporated  by reference to Exhibits 99.1 and 99.2 to  Registrant's  Form
     8-K filed on August 7, 2007.

10.102 Amended and Restated  Master Security  Agreement  between the Registrant,
     its  subsidiaries  and Laurus Master Fund,  Ltd. dated as of August 9, 2007
     and related  Amended  and  Restated  Stock  Pledge  Agreement,  Amended and
     Restated Subsidiary  Guaranty,  Trademark Security Agreement,  Registration
     Rights Agreement, Secured Revolving Note, Secured Term Note A, Secured Term
     Note B, Grant of  Security  Interest,  Common  Stock  Purchase  Warrant and


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<PAGE>

     Security  Agreement  incorporated  by reference to Exhibits 10.1 - 10.12 to
     the Registrants' Form 8-K filed on August 14, 2007.

10.103 Purchase Agreement for certain of the assets of Steelbank  Tubular,  Inc.
     dated  October 12, 2007  incorporated  by  reference to Exhibit 10.1 to the
     Registrant's Form 8-K filed on October 17, 2007.

10.104 Employment  Agreement  between the Registrant and Patrick Peplowski dated
     October  25,  2007  incorporated  by  reference  to  Exhibit  10.1  to  the
     Registrant's Form 8-K filed on November 1, 2007.

10.105 Employment  Agreement  between the  Registrant  and Joseph T. Lendo dated
     November  20,  2007  incorporated  by  reference  to  Exhibit  10.1  to the
     Registrant's Form 8-K filed on November 26, 2007.

10.106 Omnibus  Amendment  and  Waiver  dated  December  14,  2007  between  the
     Registrant and Laurus Master Fund,  Ltd.  incorporated  by reference to the
     Registrant's  Form 8-K filed on  December  26, 2007 and  Amendment  thereto
     dated  February 12, 2008  incorporated  by reference to Exhibit 10.1 to the
     Registrant's Form 8-K filed on February 15, 2008.

10.107 Amendment  to  Financing  Agreement  dated  December 24, 2007 between the
     Registrant and High Capital  Funding,  LLC incorporated by reference to the
     Registrant's Form 8-K filed December 28, 2007.

10.108 Form of Promissory Note used by the Registrant for a bridge  financing of
     $400,000,  incorporated  by reference  to Exhibit 10.1 to the  Registrant's
     Form 8-K filed on February 28, 2008.

16.1 Letter from Grant  Thornton  dated  September  13,  2006,  incorporated  by
     reference to Exhibit 99.2 to the Registrant's  Form 8-K filed September 13,
     2006.

16.2 Letter  from Grant  Thornton  dated  November  27,  2006,  incorporated  by
     reference to Exhibit 99.2 to the  Registrant's  Form 8-K filed November 28,
     2006.

21.1 Subsidiaries  of Tarpon  Industries,  Inc.  incorporated  by  reference  to
     Exhibit 21.1 of the Registrant's report on Form 10-K dated March 31, 2006

31.1 Certification of Chief Executive Officer (filed herewith)

31.2 Certification of Chief Accounting Officer (filed herewith)

32.1 Certification of Chief Executive Officer (filed herewith)

32.2 Certification of Chief Accounting Officer (filed herewith)



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