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, 2005 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               American Stock Exchange
  ---------------------------       -----------------------------------------

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]

     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.  See  definitions  of
"accelerated  filer and large  accelerated  filer" in Rule 12b-2 of the Exchange
Act. (Check one):

Large accelerated filer [ ]   Accelerated filer[ ]   Non-accelerated filer [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
March 29, 2006: $13,608,213.

     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 1, 2006
it was 4,640,130.

<PAGE>

TARPON INDUSTRIES, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2005

TABLE OF CONTENTS

PAGE

PART I.......................................................................

        ITEM 1.  BUSINESS....................................................

        ITEM 1A. RISK FACTORS................................................

        ITEM 1B. UNRESOLVED STAFF COMMENTS...................................

        ITEM 2.  PROPERTIES..................................................

        ITEM 3.  LEGAL PROCEEDINGS...........................................

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

PART II......................................................................

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

        ITEM 6.  SELECTED FINANCIAL DATA.....................................

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

        ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                 MARKET RISK.................................................

        ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................

        ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                 ACCOUNTING AND FINANCIAL DISCLOSURE.........................

        ITEM 9A. CONTROLS AND PROCEDURES.....................................

        ITEM 9B. OTHER INFORMATION...........................................

PART III.....................................................................

        ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..........

        ITEM 11. EXECUTIVE COMPENSATION......................................

        ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                 OWNERS AND MANAGEMENT.......................................

        ITEM 13. CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS................

        ITEM 14. PRINCIPAL ACCOUNTANT'S FEES & SERVICES......................

PART IV......................................................................

        ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES..................

<PAGE>
                                     PART I

ITEM 1. BUSINESS

Introduction

     We, through our subsidiary  companies,  manufacture and sell structural and
mechanical  steel tubing and  engineered  steel  storage rack  systems.  We were
incorporated  in Michigan  on January 16, 2002 and have made three  acquisitions
commencing in 2004. Our subsidiaries are Eugene Welding Co., or "EWCO," acquired
in April 2004,  Steelbank,  Inc.,  or  "Steelbank,"  acquired  in May 2004,  and
substantially  all of the assets and  business  of the Haines  Road  facility of
Bolton Steel Tube Co., Ltd., in February 2005,  other than the real estate.  The
Haines Road real estate and buildings  were purchased in May of 2005. The Haines
Road Facility and its  real-estate  were then combined into Steelbank  which was
renamed Steelbank Tubular, Inc.

     EWCO has two manufacturing facilities in Michigan, within 80 miles north of
Detroit,  and Steelbank has a manufacturing  facility in  Mississauga,  Ontario,
Canada, a suburb of Toronto.  We intend to seek other  acquisitions in the steel
tubing and steel fabrication industries.  In August 2005, we signed with Midwest
Tube  Mills  Inc.,  or "MTM" to  acquire  essentially  all of their  assets  and
business  excluding  the  building  and real estate,  and are  terminating  that
agreement because of the unavailability of audited financial statements.

     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  tubing  and the  steel  storage  rack  systems  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.

     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  at EWCO 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.  At EWCO and Steelbank  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.

         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.
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.

Our Operations

     EWCO

     EWCO  manufactures and sells structural steel tubing and SpaceRak (R) steel
storage rack systems at its  facilities  in Marysville  and Marlette,  Michigan.
EWCO  commenced  operations  in  1954  as  a  manufacturer  of  steel  products.
Currently,  EWCO  manufactures  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. In addition, EWCO manufactures 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.  For the twelve month period
ending December 31, 2005,  tubular products  accounted for  approximately 48% of
EWCO's revenues,  and SpaceRak (R) systems  accounted for  approximately  52% of
EWCO's revenues.

     In April 2004,  Tarpon Industries  acquired 100% of the outstanding  common
shares of EWCO from its sole  shareholder,  who was its Chief Executive  Officer
from April to August 2004. Tarpon acquired EWCO for $415,450 in cash paid to its
sole  shareholder  for all of the then  outstanding  EWCO  shares.  Prior to the
acquisition,  EWCO  redeemed  90% of the then  outstanding  shares  from him for
$3,603,144, of which $670,000 was represented by a promissory note that was paid
out of the  proceeds  of our initial  public  offering  in  February  2005.  The
remaining  $2,933,144  of the  redemption  price was retained by EWCO to repay a
note to EWCO from the former sole  shareholder  relating to his  acquisition  of
EWCO in 2001.

     Steelbank

     Steelbank  operated as a structural and mechanical  steel tubing  warehouse
and  distribution  center.   Steelbank  brokered  the  sale  of  structural  and
mechanical tubing that was manufactured by other tubing companies. The operation
serviced  the Canadian  mechanical  market with focus on  automotive  tubing and
various furniture applications.

     On May 14,  2004,  we  acquired  100% of the  outstanding  common  stock of
Steelbank for a total cost of approximately  $1,656,563 U.S. Dollars,  by paying
approximately  $54,263  (Cdn.$75,000) in cash,  issuing a promissory note in the
principal amount of approximately  $574,300  (Cdn.$800,000),  payable in monthly
installments  of  Cdn.$15,000  from  July  1,  2004  to  December  1,  2004  and
Cdn.$200,000  on December 10, 2004, as well as Cdn.$62,500 of the holders' legal
and other  expenses at  maturity,  with the  balance  paid at the earlier of the
closing of our initial  public  offering in  February  2005,  valued at $375,000
Cdn., by issuing  60,636 of our common shares in February  2005,  and by issuing
additional  promissory notes in the aggregate  principal amount of approximately
$290,750   (Cdn.$405,000)   payable   over  three  years  to  the  three  former
shareholders of Steelbank,  unless their employment with Steelbank is terminated
for specified  reasons.  The notes are secured by all of the shares of Steelbank
and the assets of Steelbank.  Canadian  dollars are translated into U.S. dollars
as of the acquisition date of May 14, 2004.

     In February 2005, the Company,  through Steelbank completed the acquisition
of the  assets  of the  Haines  Road  facility,  other  than the land and  plant
building,  and in May 2005 it completed  the  acquisition  of the land and plant
building.  Steelbank,  Inc. combined with the Haines Road business and relocated
to Haines Road. The Haines Road facility has  manufactured  and sold  structural
and  mechanical  steel  tubing at its owned  facility in  Mississauga,  Ontario,
Canada,  a suburb of Toronto,  since 1988. Its customers' use these products for
residential,   commercial  and  industrial  fencing,   scaffolding,   automotive
after-market  exhaust  systems,  racking  and  greenhouses.  On April  6,  2005,
Steelbank,  Inc.  changed its name to  Steelbank  Tubular,  Inc.  and had ceased
substantially all of its prior operations.

     The aggregate  purchase price including expenses related to the Haines Road
acquisition   transaction  was  approximately   $10,190,000  (Cdn.  $12,489,000)
consisting of (1) approximately  $9,211,000 (Cdn.  $11,289,000)  payable in cash
and (2) approximately $979,000 (Cdn.$1,200,000) secured, subordinated promissory
note,  either payable 15 months after closing or by offsetting  adjustments made
after  closing or for purchases by Bolton Steel Tube Co.,  LTD.  ("Bolton")  its
former owner from Haines  Road.  The  purchase  price was  allocated as follows:
$9,689,000 (Cdn. $11,875,000) for the assets acquired, a $200,000 success fee in
connection  with the  transaction,  payable to  Bainbridge  Advisors,  a related
party,  over 24 months,  and  approximately  $301,000 in expenses related to the
transaction.

     Pursuant  to a  guarantee  between  Tarpon and  Bolton,  Tarpon  guaranteed
Steelbank Tubular,  Inc.'s obligations under the secured subordinated promissory
note  executed by  Steelbank  Tubular,  Inc. in favor of Bolton.  As part of the
transaction, Tarpon agreed not to compete with Bolton with respect to hot-dipped
galvanized products for a period of six months after closing. Bolton also agreed
not to compete with Tarpon on the  pre-galvanized  tubing market for six months.
The six month non compete agreements expired on August 17, 2005.

     On May 18, 2005,  Steelbank  purchased the Haines Road real estate  assets,
including  closing  fees  and  expenses,   for  $4,638,000  (Cdn.   $5,870,000),
consisting  of  (1)  approximately   $530,000  (Cdn.   $670,000)  in  cash,  (2)
approximately  $2,765,000 (Cdn.  $3,500,000) one year mortgage bridge financing,
and (3)  seller  financing  of  approximately  $948,000  (Cdn.  $1,200,000)  and
$395,000  (Cdn.  $500,000)  payable August 18, 2006 in second and third mortgage
financing, respectively.


Our Business Strategy

     Our  business   strategy  is  to  become  a  larger  and  more  significant
manufacturer  and distributor of structural and mechanical  steel tubing,  steel
storage rack systems and related products in our current  geographic market, and
then to expand outside our markets. Key elements of our strategy are to:

     Acquire facilities, customers and management through strategic acquisitions
of  other  steel  tubing,   steel  storage  rack  system  and  related   product
manufacturers  or  distributors.  The steel  tubing and the steel  storage  rack
system industries are fragmented, with more than 100 manufacturers in the United
States  and  Canada  serving  regional  markets,  providing  us  with  potential
acquisition  opportunities.  We could use our common shares, other securities or
additional  indebtedness  for possible  strategic  acquisitions of steel tubing,
steel storage rack system and related  product  manufacturers,  distributors  or
both, to expand our  manufacturing  capabilities  within our current  geographic
markets to  realize  purchasing  and  administrative  economies  of scale and to
expand our geographic  markets by acquiring  manufacturing  facilities closer to
additional  customers.   Although  we  regularly  review  potential  acquisition
opportunities,  we have no  agreement,  other than with  respect to Midwest Tube
Mills Inc.

     Integrate the operations of EWCO, and Steelbank,  as appropriate  and other
entities we may acquire. We are using our combined buying power to purchase more
efficiently  and  to  use  senior  management's  purchasing  expertise.  We  are
centralizing some management  functions,  including accounting,  finance,  human
resources  and   administration  and  adopt  consistent   standards,   controls,
procedures and policies.  Because they produce different  products for different
customers,  with EWCO primarily producing  structural steel tubing and Steelbank
primarily producing  mechanical steel tubing, we currently intend to continue to
use the EWCO and Steelbank  facilities to manufacture the types of products they
currently produce.

Our Products

     Tubular Products

     EWCO's and  Steelbank's  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,  leisure and recreational  vehicle markets.
EWCO manufactures primarily structural steel tubing from plain steel coil, while
Steelbank manufactures primarily mechanical steel tubing from coated steels, the
primary  difference  being that  mechanical  steel tube uses thinner,  generally
coated steel,  such as  pre-galvanized,  aluminized and G90 steel, and generally
has closer tolerances,  smaller diameters and more corrosion resistance,  making
it more useful for some consumer products.

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

     Steel Storage Rack Systems

     Our  steel  storage  rack  systems  are  used  for  heavy-duty  industrial,
warehouse  and  retail  storage  systems.   EWCO  manufactures   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
     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.


Our Customers

     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. 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 2005, our ten largest customers represented  approximately
55% of our combined net revenues,  including  Menard,  Inc.,  which  represented
approximately  14% of our  combined  revenues.  During  2004,  our  ten  largest
customers represented approximately 61% of our combined net revenues,  including
Menard, Inc., which represented  approximately 22% 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 Marketing, Sales and Distribution

     We currently  sell our  structural  and  mechanical  steel tubing and steel
storage rack systems products  primarily through our direct sales force.  EWCO's
steel tubing  products are sold through 5 direct  salespersons,  EWCO's customer
service department and independent sales  representatives.  EWCO's steel storage
rack  system  products  are sold  through 5 direct  sales  persons,  independent
distributors and independent sales representatives. Steelbank sells its products
through 3 direct sales persons.

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 EWCO and components
purchased from third parties.

     Neither EWCO nor Steelbank has 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.  Steelbank mechanical
steel tubing  products are primarily  manufactured  from coated steels,  such as
pre-galvanized, aluminized and G90 steel.

     EWCO  currently  has 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 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.

     Steelbank  currently has three  principal tube mills,  primarily  producing
mechanical steel tubing.  It is produced using a variety of steel types and in a
wide  variety  of sizes.  Its close  tolerances  allow the  tubing to be used in
mechanical  parts  with  little  or no metal  removal  or  machining,  making it
cost-effective for many mechanical applications. One of Steelbank's primary tube
mills is a  high-speed  tube  mill  with  quick  change  and  "dimple  free cut"
capability.  This mill has the ability to produce close tolerance tubing at high
run speeds, using more efficient solid-state welding technology.  This mill also
has  remetalizing,   UVC  coating  and  in-line  quality  testing  capabilities.
Steelbank's  other two  primary  mills also have  in-line UVC coating as well as
in-line de-dimpling capability.

     Steelbank's  mills have the  capability  to provide a clear UVC  coating on
products for customers who require or request  additional  corrosion  resistance
for more  severe  applications.  The  coating  is applied  in-line  and is cured
rapidly  using   "ultra-violet"   technology.   It  is  typically  applied  over
zinc-coated  substrates,  such  as  G90,  to  enhance  the  corrosion  resistant
properties and prevent the onset of  "white-rust."  The finish is a smooth clear
paint coating, which is bonded to the substrate. The in-line remetalizing system
for tube products  manufactured from coated  (pre-galvanized)  steel repairs the
weld area of the tube.

     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 a hand-applied  electrostatic  baking enamel,  matched to the
customer's color requirements, on a continuous flow paint line.

     EWCO  currently  has 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 structural  and mechanical  steel tubing and steel storage rack systems
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.

     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 market share.  We also believe that our  manufacturing  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.

     For  structural  and  mechanical   steel  tubing,   our  more   significant
competitors  are United  States and Canadian  manufacturers  located  within 800
miles of our manufacturing facilities,  including Copperweld Corporation,  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.

     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.


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.

     EWCO also uses structural materials in the manufacture of its steel storage
rack systems,  such as angle iron,  I-beams,  and flange beams.  EWCO  generally
purchases  items that it uses in larger volumes  directly from three steel mills
to obtain  the best price and  quality,  subject  to  product  availability  and
freight  costs.  It  typically  maintains  a  one-month  supply of large  volume
materials.  It  purchases  smaller  volume  materials  through  one of two local
service  centers,  which may charge more, but do not require us to carry as much
inventory.

     In 2005,  we  purchased  approximately  34% of our  steel  coil  from  four
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  represented  approximately  67% of our net  revenues  in
2005. As a result, the steel industry,  which is highly volatile and cyclical in
nature,  materially 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  following  was our  average  cost per ton of our base  steel  coil
purchased in the years ended  December 31, 2005,  2004 and 2003 $575,  $649, and
$294, respectively.

     The  United  States  imposed  anti-dumping  tariffs  in March  2002 on some
countries over a three-year period at decreasing rates, reducing foreign imports
of  steel  coil and  increasing  the cost of flat  rolled  steel in 2003.  These
protections  were rescinded in December 2003, but we believe the  devaluation of
the U.S.  dollar  in  relation  to  foreign  currencies  and  increased  Chinese
consumption  of  steel  has  limited  steel  imports.   We  believe  that  these
conditions,  combined with increased  demand from a recovering U.S.  economy and
increased  consolidation  in the domestic steel producing  industry  resulted in
continued  increased  costs of steel coil in the beginning of the second quarter
of 2004,  although steel prices  stabilized in the latter part of 2004..  In the
fourth quarter of 2004, steel prices began to decline. Steel prices for our base
steel coil continued to abate during 2005,  stabilizing 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.

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.

     Tarpon maintains web sites at www.tarponindustries.net (under construction)
and  www.tarponind.com  (under  construction).  EWCO also maintains web sites at
www.SpaceRak.net and www.ewco.net.

Environmental, Health and Safety Regulation

     Our  business  is  subject  to  numerous  US  and  Canadian  local,  state,
provincial 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.

     EWCO is  unaware  of any  material  noncompliance  with its air  permits or
applicable  air,  water  and  waste  management  rules  and  regulations  at its
Marysville or Marlette,  Michigan  facilities,  except that,  in July 2004,  the
Michigan  Department of Environmental  Quality, or "MDEQ," notified EWCO that it
had determined that the Marysville facility was a "major source" for certain air
emissions and that EWCO had failed to apply for a Renewable Operating Permit for
air emissions not covered by its Permit to Install then in effect.  EWCO applied
for a revised  Permit to Install to obviate the need for a  Renewable  Operating
Permit in August 2004,  and  received the revised  Permit to Install in December
2004.  The MDEQ and EWCO  negotiated a resolution of the  violations  alleged by
MDEQ, and EWCO paid a settlement amount of approximately  $31,000 to resolve the
violations alleged by the MDEQ in July 2004.

     Subsequently  in October  2005,  the MDEQ Water  Bureau  cited EWCO for not
having  separate  Storm  Water  Pollution  Prevention  Plans  for each  physical
location  in  Marysville  along with other  minor  infractions.  Since that time
separate plans were developed and submitted to the MDEQ for their approval.  The
Company  incurred  approximately  $28,000  to  remediate  the issue and does not
anticipate any further expenses.

     On  January  19th,  2006,  the  Michigan  Occupational  Safety  and  Health
Administration  (MIOSHA)  performed an  inspection of both the SpaceRak and EWCO
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. There has been no formal notification from the State at this
time indicating the magnitude of the fines that are forthcoming,  however, it is
expected this notification will arrive by mid-April.  In the interim, based upon
the  items  identified  during  the exit  discussion,  an  action  plan has been
developed with  approximately  $19,500 identified in costs required to abate the
citation.

     A  Phase I and II  environmental  report  prepared  in  June  2003  for the
Steelbank facility in Mississauga,  Ontario,  acquired in 2005, did not identify
any  material  noncompliance  with  applicable  environmental   legislation  and
guidelines.  In  connection  with  a  non-functional  bag  house  operation,  it
recommended  that in the event that the bag house  became  operational  that the
facility  determine  whether  it is  required  to  obtain  from the  appropriate
regulatory agencies a certificate of approval for its baghouse operation.

     A Phase I update for the  Steelbank  facility was  performed in April 2005.
The report  reconfirmed  the prior  reports'  conclusions  regarding the need to
determine  whether a  certificate  of approval  is  necessary  for the  baghouse
operation in the event it became operational.

     The  report  also  identified  an  area  of  petroleum   hydrocarbon   soil
contamination  near a  disconnected  electrical  transformer  on the Haines Road
property.  A total of 2.76 metric tons of  contaminated  material  was  removed.
Subsequent soil verification met the applicable standard.

     The Phase I report  identified  a concern  related  to  staining  around an
above-ground  storage tank. The Phase 1 update report reviewed the  above-ground
storage tank and did not observe  significant  staining on the ground surface or
distressed  vegetation near the above-ground  storage tank and did not recommend
any further action.

     The  Phase  1  update  report  also  identified  a  concern  related  to an
underground storage tank (`UST').  The location of the tank was identified.  The
tank was removed and the area remediated to applicable standards.

     We  conducted  a Phase I  review  in  December  2004.  The  Phase I  update
reconfirmed  the prior  reports'  observations  regarding  an area of  petroleum
hydrocarbon soil contamination near a disconnected electrical transformer on the
Steelbank property and also identified an additional, similar staining around an
above-ground fuel storage tank.

Seasonality

     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 have products liability insurance
with a liability  limit of $4,000,000  domestically  and $4,380,000 for Canadian
operations.

Employees

     As of February 12, 2006, the Company employed a total of approximately  216
full-time  individuals,  with Tarpon  employing  eight,  EWCO  employing 156 and
Steelbank  employing  52,  160 of whom were  involved  with  production  and the
remaining 56 of whom 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  121 EWCO  employees  are covered by a collective  bargaining
agreement  with the  International  Brotherhood  of  Teamsters  that  expires on
October 15, 2006.  The Teamsters  have  represented  employees at the Marysville
facility since 1967 and employees at the Marlette facility since 2000.

     The Company has a one year collective  bargaining agreement with the United
Steelworkers Union at Steelbank. The agreement covers approximately  thirty-nine
employees  and expires on November 30, 2006.  We believe our employee  relations
are good.

Financial Information about Geographic Areas

     The following  table sets forth on a proforma basis (after giving effect to
the acquisition of EWCO and Steelbank,  beginning in 2003) information regarding
our revenues from the United States and Canada and long-lived  assets located in
the United States and Canada:

<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                               --------------------------------------------------------------
<S>                                 <C>                 <C>                <C>
Revenues By Country                 2005              2004 Proforma         2003 Proforma
                                    -----             -------------         --------------
                                                  (dollars in thousands)
United States ................ $ 49,732             $      43,188                 $26,769
Canada ....................... $ 11,119             $       7,849                  $7,162
</TABLE>

                                                   As of December 31,
                                           ------------------------------------
Long-Lived Assets Located In:                  2005                  2004
                                               -----                 -----
                                                 (dollars in thousands)
United States............................  $         629          $        568
Canada...................................  $      14,013          $      1,821


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.

     The  Company's  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

     You should carefully  consider the specific factors listed below,  together
with the cautionary statement under the caption "Cautionary  Statement Regarding
Forward Looking  Statements" and the other information  included in this report.
If any of the following risks actually occur, our business,  financial condition
or results of operations could be adversely affected.  In such case, the trading
price of our common  shares could  decline,  and you may lose all or part of any
investment in our common stock.

Risks Relating to Our Business

We have a history of losses,  and may not achieve  profitability  in the future,
which would adversely affect the price of our common shares.

     For the year  ended  December  31,  2005,  we  reported  a net loss of $7.3
million.  From our  inception on January 16, 2002 through  December 31, 2005, we
incurred  net losses of  approximately  $10.7  million.  Tarpon has funded  such
losses and a portion of its acquisition costs through equity investments, credit
facilities and through the proceeds of its initial public offering.  If Tarpon's
operating  subsidiaries  are not able to  attain  profitability,  they  would be
unable to continue operations.

Our liquidity may not be sufficient to sustain operations.

     Based on our current  business  plans,  we believe that our  existing  cash
resources will be sufficient to fund its operating losses, capital expenditures,
debt  payments  and working  capital  requirements  for the next 12 months.  The
estimated  length of time that our cash  resources  will sustain  operations  is
based on management assumptions.  These estimates and assumptions are subject to
change  as a  result  of  actual  experience.  We may  not  be  able  to  attain
profitability.  Failure to generate sufficient  revenues,  achieve certain other
business plan objectives or raise additional funds could have a material adverse
effect  on our  results  of  operations,  cash  flows  and  financial  position,
including our ability to continue as a going concern.

     Management's  plans include  completing the cost reduction begun in January
2006, improved receivables and inventory  management,  maintaining of margins as
steel prices  fluctuate,  and  continuing  the  development of its customers and
markets through its sales initiatives.

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

We have mortgages coming due on Steelbank's plant.

     We currently  have mortgage  financing for the  Steelbank  facility,  which
becomes due in May 2006. We are seeking to pay the same through a potential sale
and lease back  transaction  and have  signed a  definitive  agreement  for this
transaction. If we are unsuccessful in completing this transaction,  Steelbank's
facility could become subject to foreclosure, which could have a material affect
on our  operations.  We could be evicted  from the  premises  which would likely
require us to discontinue Steelbank business for a significant period of time or
even permanently. -

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

     As of December 31, 2005 our total  consolidated  indebtedness  for borrowed
money, including current maturities, was approximately $20.6 million. Subject to
the limits on EWCO and  Steelbank  pursuant to their 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.

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.

     We are currently in violation of certain  financial  covenants for the EWCO
and  Steelbank  credit  facilities.  As a result of these  violations  and cross
collateral  terms in our convertible  note we are in violation of covenants with
the note holder.

     We are currently  negotiating  with our lenders to obtain waivers and reset
our covenant levels in order to comply with our lending agreements.  We are also
in violation with our lender due to the issuance of a qualified opinion. We have
obtained a waiver from our lender of the convertible note concerning this issue.
There can be no assurance  that we will be  successful  in our  negotiations  to
obtain waivers or new covenants.

     EWCO has a credit facility secured by all of its assets. Its loan agreement
requires  it to  maintain a minimum  debt  service  coverage  ratio and  minimum
tangible net worth.  It also  generally  prohibits  dividends  and limits EWCO's
ability to make capital expenditures and incur additional debt.

     Steelbank has a credit  facility  secured by all of its personal  property.
Its  credit   facility   prohibits   Steelbank  from   guaranteeing   additional
indebtedness,  incurring indebtedness,  creating liens, paying dividends, making
certain types of investments, entering into transactions with affiliates, making
capital expenditures,  selling assets,  merging with other companies or entering
into any  transactions  outside  of the  ordinary  course of  business.  It also
requires  it to  maintain  certain  financial  tangible  net worth debt  service
coverage and interest coverage.

     These  covenants for EWCO and  Steelbank  affect our ability to operate our
business  and may limit our  ability to take  advantage  of  potential  business
opportunities as they arise.  Moreover, our failure to comply with the financial
or other  covenants  could result in an event of default  that,  if not cured or
waived,  could prevent us from borrowing  under our credit  facilities and could
cause us to seek to refinance our borrowings.

     Tarpon has a convertible  term note secured by certain assets of Tarpon and
its  subsidiaries and the equity  interests of Tarpon's  subsidiaries.  The note
requires  Tarpon  to use the  proceeds  to repay  certain  obligations,  finance
acquisitions  and fund other working capital needs. In addition,  as long as 25%
of the principal amount of the note is outstanding, Tarpon is, without the prior
written consent of the Purchaser,  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 the
lender with first right of refusal to provide additional  financing to Tarpon or
any of its subsidiaries subject to certain terms and conditions.

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

     Interest  under our existing and proposed  working  capital  facilities and
long term debt financing  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, 2005, each 1% increase in
prime rates would  result in an  approximate  increase of $180,000 in our yearly
interest  expense  under  such  facilities,  assuming  they  are at the  maximum
permitted amounts.

We face the loss of a significant customer

     On October 21, 2005, an involuntary bankruptcy petition was filed against C
& W Industries,  Inc.  (FENCEMaster),  which was  subsequently  converted into a
Chapter 11 filing.  FENCEMaster was an significant  customer to us, representing
approximately  9% of our 2005 sales. In 2005, we wrote off $925,000 in unsecured
debt. On December 15, 2005 the remaining  assets of  FENCEMaster  were sold to a
another  party.  We have  retained the business of such other party through June
2006 and may retain the same  thereafter  although  there can be no assurance of
the same. In any case, there can be no assurances that we will retain either the
same volume or margins experienced in 2005.

There  are  risks  associated  with  our  acquisition  strategy,  including  our
inability to successfully complete acquisitions,  our assumption of liabilities,
dilution  of  your  investment,   significant  costs  and  additional  financing
required.

     We intend to continue to expand our markets and customers through strategic
acquisitions  of other  steel  tubing,  steel  storage  rack  system and related
product  manufacturers,  distributors or both. Risks associated with our current
and  potential  acquisitions  include the  disruption  of our ongoing  business,
problems  retaining  the  employees of the acquired  business,  assets  acquired
proving to be less valuable than expected,  the potential  assumption of unknown
or unexpected  liabilities,  costs and problems,  the inability of management to
maintain uniform standards, controls, procedures and policies, the difficulty of
managing a larger Company, the risk of becoming involved in labor, commercial or
regulatory  disputes  or  litigation  related  to the  new  enterprises  and the
difficulty  of  integrating  the  acquired  operations  and  personnel  into our
existing business.

     We may use our common  shares or other  securities  to finance a portion of
the  consideration  for future  acquisitions,  either by  issuing  them to pay a
portion of the purchase price or selling additional shares to investors to raise
cash to pay a  portion  of the  purchase  price.  If our  common  shares  do not
maintain  sufficient  market  value  or  potential  acquisition  candidates  are
unwilling to accept our common shares as part of the  consideration for the sale
of their  businesses,  we will be required to raise capital  through  additional
sales of debt or equity securities,  which might not be possible,  or forego the
acquisition  opportunity,   and  our  growth  could  be  limited.  In  addition,
securities issued in such acquisitions may dilute the holdings of our current or
future shareholders. Our common shares are now at historically low prices.

Our existing  financial  resources are not  sufficient to finance any additional
acquisitions.

     If we are  unable to  consummate  additional  acquisitions  with our common
shares, which is likely, we will be required to raise capital through additional
sales of debt or equity securities,  which might not be possible,  or forego the
acquisition. We have no arrangements for obtaining such capital at this time.

We do not have a  significant  combined  operating  history  with  our  acquired
companies,  so  historical  financial  information  is  not  necessarily  a good
indicator  of future  results of  operations  or  financial  condition;  we have
limited  experience  operating  and  integrating  steel  tube and pipe and steel
storage rack system manufacturers and distributors.

     In 2004, we acquired EWCO and  Steelbank,  and in 2005, we acquired  Haines
Road which was  combined  with  Steelbank.  All of our senior  management  group
joined us in 2004 or later, and two senior EWCO managers resigned  following our
purchase  of EWCO.  As a  result,  our  experience  as a unified  enterprise  in
operating  steel  manufacturers  and  distributors  is  very  limited,  and  the
financial  information  regarding our acquired companies included in this report
substantially  reflects  their  operations  before  we  acquired,   managed  and
controlled  them and may not be indicators of their future  results of operation
or financial  condition.  In addition,  our lack of a combined operating history
may result in difficulty  integrating our operations,  service  interruptions to
our customers, inefficiencies and conflicts.

Our success depends on our ability to attract and retain key personnel.

     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 J.  Peter  Farquhar,  our Chief  Executive  Officer,  John A.
Mayfield  , our  Senior  Vice  President,  Chief  Financial  Officer  and  Chief
Accounting Officer,  Patrick J. Hook, our President and Chief Operating Officer,
and C. David Weaver, Vice President of Sales & Engineering in EWCO's SpaceRak(R)
division. We have retained Bainbridge Advisors, Inc., an advisory firm primarily
owned by Gary D. Lewis,  our former  Chairman of the Board,  President and Chief
Executive  Officer,  to provide  general advice and services and to assist us in
completing and integrating our acquisitions.  The loss of the services of any of
these  individuals or entities could have an adverse effect on us. Mr.  Mayfield
has notified as he is resigning  upon the filing of this Report on Form 10-K and
we will search for a  replacement,  although we have no  assurance  as to when a
replacement  will be hired.  We do not  maintain  any  significant  key man life
insurance on any of our key personnel.

Our internal  financial  reporting  procedures are still being  developed and we
will  need  to  allocate  significant  resources  to  meet  applicable  internal
financial reporting standards.

     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, 2005.  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, 2005 that has  materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting, except that we hired additional staff, which will help
improve our internal controls 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.

     Until  April  2004,  we  consisted  only  of  a  holding  company  with  no
operations.  In April  and May  2004,  we  acquired  EWCO and  Steelbank.  These
companies were  established  private  companies with  accounting  procedures not
suitable for public company reporting. In February 2005, we acquired Haines Road
which was combined with  Steelbank.  This was one operation of a larger  private
company,  again with  accounting  procedures  which were not suitable for public
company reporting.

     Our Independent  Registered Public Accounting Firm has identified a variety
of material  weaknesses in our internal financial  reporting  procedures.  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. The material weaknesses are as follows:

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

     B.   A lack of common  systems  or a common  chart of  accounts  and we use
          spreadsheets to perform consolidations, which has resulted in errors.

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

     D.   Account reconciliations and supporting documentation not prepared on a
          timely basis.

     E.   Duties and control  activities  within the finance  function  have not
          been appropriately segregated.

     F.   The Company does not have a formal process to ensure that  appropriate
          system access is granted.

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

     H.   Little review or oversight of the reporting process which has resulted
          in the inability to detect errors.

     I.   The Company's invoicing system relies on certain manual controls which
          may not be  sufficient  to  minimize  the  risk of  incorrect  revenue
          recognition, and

     J.   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 will also be required to audit and 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 or knowledge 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 the 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, 2006,
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.

Our products are viewed as  commodities  and are subject to intense  competition
based principally on price.

     Our structural  and mechanical  steel tubing and steel storage rack systems
products is  essentially  a  commodity.  As a result,  we are subject to intense
competition,  principally based on price and secondarily so 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.

Our products have limited geographic markets.

     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.

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

     The cost of steel for manufacturing our products represented  approximately
67% of Company  revenues in 2005. As a result,  steel  prices,  which are highly
volatile and cyclical in nature,  materially  affects 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
product,  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,  which  occurred in 2005.  Steel
prices for our base steel coil declined  approximately  23% over the first eight
months of 2005 and increased approximately 9% over the last four months of 2005.

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.

     In 2005, we purchased  approximately  34% in dollar value of our steel from
four 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.

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

     As of February 12, 2006,  approximately 121 EWCO employees are covered by a
collective bargaining agreement with the International  Brotherhood of Teamsters
that  expires  in  October  2006.  While we  believe  our  relations  with these
employees  are  good,  if we are  unable  to  renew  the  collective  bargaining
agreements on mutually  agreeable  terms, it would result in labor  disruptions,
strikes,  plant shutdowns and increased labor costs,  which could result in lost
sales and increase the costs of producing our products.

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
traffic  delays at the U.S. or Canadian  borders,  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.

Steelbank's  operations  are located in Canada,  and exchange rate  fluctuations
between the US and Canadian dollar will affect our results of operations.

     Steelbank's sales and operating costs are transacted  primarily in Canadian
dollars.  As a  United  States  Company,  we will be  exposed  to cash  flow and
earnings  volatility as a result of fluctuations in relative currency values. In
particular,   our  results  of  operations  may  be  adversely   affected  by  a
strengthening  of the United  States  dollar  against  the  Canadian  dollar.  A
strengthening  of the Canadian  dollar  against the United  States  dollar would
adversely affect our ability to export products manufactured in Canada.

Seasonal fluctuations affect demand for our products.

     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 will interfere with production and increase costs.

     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  depend  on an  internal  sales  force of 13  people.  Our  sales  force
accounted for approximately 90% of the Company's sales in 2005.  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.

     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.

     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 domestic
liability  limit of $4,000,000 and $4,380,000  for our Canadian  operations.  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  U.S.  and  Canadian  local,  state,
provincial 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 Shares

The market price of our common shares has fluctuated  significantly and there is
presently not a significant trading market for the common shares

     There is currently not a significant  trading  market for the common shares
on the American Stock  Exchange,  and holders of our common shares might find it
difficult to sell their common shares. The market price of our common shares has
been volatile.  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.

We may not be able to maintain our listing on the American Stock Exchange, which
would adversely affect the price of our common stock.

     Although our common shares are listed on the American  Stock  Exchange,  we
might not meet the criteria for continued listing on the American Stock Exchange
in the future.  If we are unable to meet the continued  listing  criteria of the
American Stock Exchange and became delisted,  trading of our common shares could
be conducted in the  over-the-counter  market in the so-called "pink sheets" or,
if available,  the NASD's  Electronic  Bulletin Board. In such case, an investor
would likely find it more  difficult to dispose of our  securities  or to obtain
accurate market quotations for them. If our common shares were delisted from the
American  Stock  Exchange,  they may  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.

The market price of the common  shares 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 shares in the public market
or the perception  that such sales may occur could  adversely  affect the market
price of the common shares.  As of December 31, 2005, there are 4,640,130 common
shares outstanding.  Options,  warrants and optional  convertible note shares to
purchase  an  aggregate  of  3,837,154  common  shares were  outstanding  and an
additional  234,915  common  shares was reserved for issuance  upon  exercise of
options  which have not yet been granted  under our 2004 stock option plan.  The
common  shares  underlying  these options and warrants will be eligible for sale
under Rule 144 beginning at varying times from the date of this report.  We have
registered for resale 758,800 of these common shares,  including  465,000 common
shares  subject to warrants  issued in our 2004 note  financing,  100,000 common
shares  subject to warrants  issued to designees of the  placement  agent in our
2004 note financing, and 193,800 common shares subject to warrants being granted
to the lead underwriters in connection with our initial public offering,  and we
expect to  register  for resale  2,663,269  of these  common  shares,  including
1,834,862  common shares subject to conversion  rights  associated with our 2005
note  financing,  390,000 common shares  subject to warrants  issued in our 2005
note  financing,  138,407  common shares  subject to warrants  issued related to
non-dilution  provisions  in our 2004  note  financing,  300,000  common  shares
subject to warrants  issued to designees of the placement agent in our 2005 note
financing,  and covering the common shares  issuable under our 2004 stock option
plan.

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 shares.

     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
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
shares held by our shareholders. See "Description of Securities."

The lead underwriter of our initial public offering continue to have significant
influence over us.

     We agreed  that for a period of two years from the  closing of our  initial
public  offering in February  2005,  we would allow Joseph Gunnar & Co., LLC the
right to appoint a non-voting observer to our board of directors.  Joseph Gunnar
& Co.,  LLC  appointed  Stephan  Stein,  its  chief  operating  officer,  as its
non-voting  observer.  The  observer is  entitled to attend all  meetings of the
board of  directors,  to  receive  all  notices  and  other  correspondence  and
communications we send to the board of directors and to receive any compensation
that may be paid to our  non-employee  directors.  We have also  entered into an
agreement  for  Joseph  Gunnar & Co.,  LLC to provide  non-exclusive  investment
banking services to us  indefinitely,  unless either party notifies the other of
its  intention not to renew before the  expiration of the then current  one-year
term.  These  arrangements  may  enable  Joseph  Gunnar  &  Co.,  LLC  to  exert
significant  influence over us through the presence of its designee at our board
meetings and through its provision of investment banking services to us.


            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, 2005,  the  Company's  facilities  are set forth in the
following table:
                                  Square
Location                          footage            Purpose        Own / Lease
--------                          -------            -------        -----------
Marysville, Michigan              200,000 (1)      Manufacturing      Lease
Marlette, Michigan                 40,000          Manufacturing      Lease
Mississauga, Ontario, Canada      100,000 (2)      Manufacturing       Own

(1)  Includes approximately 7,000 square feet of offices.
(2)  Includes  approximately  15,000 square feet of offices and storage.  We are
     seeking to enter into a sale and leaseback of this property.

     Obligations for the leased  facilities are incorporated  within  "Operating
lease  obligations"  under the heading  "Contractual  Obligations"  in Item 7 of
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operation.

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.

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


     None.

                                     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  American  Stock  Exchange  under the
trading  symbol "TPO" since the February 14, 2005.  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 American Stock Exchange.

        Fiscal Year Ended December 31, 2005:                   High        Low
                                                               ----        ---
          First Quarter (2/14/05 to 3/31/05).............   $   5.99    $  4.61
          Second Quarter.................................   $   5.65    $  3.30
          Third Quarter..................................   $   5.20    $  3.19
          Fourth Quarter ................................   $   4.35    $  2.15

     As of March 1, 2006, we had 4,640,130 shares issued and  outstanding,  held
by 31 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. From  December  2002  through  October  2003,  we  privately  placed  114,688
newly-issued common shares to six accredited investors,  at a price of $5.97 per
share,  for gross proceeds of $685,000.  Our net proceeds,  after  deducting the
expenses of the offering,  were approximately  $582,000. As part of the issuance
of these common  shares,  we agreed that upon  completion of our initial  public
offering,  we would issue  additional  common shares to these purchasers so that
the total  common  shares  they  receive  equals (1) 1.35 times the amount  they
invested  in our initial  public  offering,  divided by (2) our  initial  public
offering  price per share.  We issued 70,262  additional  common shares to these
shareholders  as a result of our  initial  public  offering  in  February  2005,
lowering their effective purchase price to $3.70 a share. The common shares were
issued in reliance on the  exemptions  from  registration  contained in Sections
4(2) and 4(6) of the  Securities  Act and Rule 505 and 506 of Regulation D under
the Securities Act.

2. In  February  and March  2004,  we  privately  placed  $150,000 of our junior
subordinated secured promissory notes to two of our existing accredited investor
shareholders.  The notes were issued at their face amount, bore interest at 8% a
year,  15% after January 5, 2005,  and were paid in February 2005 at the closing
of our initial  public  offering.  The notes were  secured by our assets and the
assets of our subsidiaries,  but were subordinate to our  subsidiaries'  secured
bank financing.  Our net proceeds, after deducting the expenses of the offering,
were approximately  $146,000. We also granted the purchasers in the February and
March offerings  warrants to purchase 30,000 common shares at $5.00 a share. The
warrants are exercisable for five years beginning August 16, 2005. The notes and
warrants were issued in reliance on the exemptions from  registration  contained
in Sections 3(a) (3), 4(2) and 4(6) of the  Securities  Act and Rule 505 and 506
of Regulation D under the Securities Act.

3.  In  March  2004,  we  issued  10,000  of  our  common  shares  to one of our
consultants,  in payment of $50,000 for consulting  fees. The common shares were
issued in reliance on the  exemptions  from  registration  contained in Sections
4(2) and 4(6) of the Securities Act.

4.  We  affected  a  1-for-3.69203259  reverse  split  in  December  2003  and a
1-for-1.6176795 reverse stock split in March 2004. The reverse stock splits were
effected in reliance on the  exemption  from  registration  contained in Section
3(a) (9) of the Securities Act.

5. April  2004,  we  privately  placed  $2,000,000  of our  junior  subordinated
promissory  secured notes to 27 accredited  investors.  The notes were issued at
their face amount,  bore interest at 8% a year,  15% after January 5, 2005,  and
were paid in the February 2005 closing of our initial public offering. The notes
were  secured  by our  assets  and the  assets  of our  subsidiaries,  but  were
subordinate to our  subsidiaries'  secured bank  financing.  We also granted the
purchasers in the April offering  warrants to purchase  435,000 common shares at
$5.00 a share.  The warrants are exercisable for five years beginning August 16,
2005.

     Joseph  Gunnar & Co.,  LLC,  the lead  underwriter  in our  initial  public
offering,  was our placement  agent in our April 2004 $2,000,000 note financing.
Joseph  Gunnar & Co., LLC received for its services (1) $200,000 in  commissions
and fees, (2) a $50,000  non-accountable,  non-refundable  retainer  ($25,000 of
which was applied to our initial  public  offering and was credited  against its
non-accountable   expense  allowance  of  our  initial  public  offering),   (3)
reimbursement of its out-of-pocket expenses,  including the fees of its counsel,
subject to (a) a $35,000 limit on legal fees of its counsel in  connection  with
blue sky matters and blue sky filing fees, plus disbursements,  and (b) a credit
of $25,000 for a portion of the retainer received by the placement agent,  which
was credited  against its expenses,  (4) a five year warrant to purchase 100,000
common shares at $6.25 a share, which was issued to its employee designees,  (5)
the right to appoint a  non-voting  observer to our board of  directors  for two
years from the  completion of our April 2004 note  financing,  and (6) a monthly
agreement to provide  investment  banking services to us in consideration  for a
$7,500  a month  retainer  plus  out-of-pocket  expenses  and  success  fees for
business combinations, other than EWCO and Steelbank.

     Our net proceeds, after deducting the commissions and fees and the expenses
of the  offering,  were  approximately  $1,725,000.  The notes and warrants were
issued in reliance on the  exemptions  from  registration  contained in Sections
3(a) (3), 4(2) and 4(6) of the Securities Act and Rule 506 of Regulation D under
the Securities Act.

     We have  registered the resale by the warrant  holders of the common shares
underlying  the warrants  described in Items 1 and 3 above to permit the warrant
holders to resell these shares to the public.

6. In connection with our acquisition of Steelbank, we agreed to issue 60,636 of
our common shares to the three  accredited  investor former owners of Steelbank.
These  common  shares were issued at the  February  2005  closing of our initial
public  offering in reliance on the exemptions  from  registration  contained in
Sections 4(2) and 4(6) of the Securities Act.

7. Effective February 17, 2005 we granted designees of Bainbridge advisor, Inc.,
one of our consultants, J. Peter Farquhar, our Chief Executive Officer, James T.
House,  and our former Chief Financial  Officer,  Patrick J. Hook, our President
and Chief  Operating  Officer,  Jeffrey  Greenberg,  Mark D. Madigan,  and Barry
Seigel,  former owners of Steelbank,  J. Peter  Farquhar,  Dr. Robert H. Pry and
Michael A. Ard, three of our  directors,  and various  employees  (including Mr.
Madigan),  options to purchase 110,000,  50,000, 40,000, 40,000, 18,595, 18,595,
18,595, 10,000, 10,000 and 21,000 common shares,  respectively,  and on December
12, 2005 we granted John Mayfield our Chief Financial  Officer (who is resigning
on the filing of this  Report on Form  10-K) and  various  employees  options to
purchase 40,000 and 55,000 common shares, respectively, all under our 2004 Stock
Option Plan, and we have granted J. Peter Farquhar, one of our directors,  2,000
common shares,  all effective at the February 2005 closing of our initial public
offering.  Bainbridge  designated Gary D. Lewis and his son, Gary N. Lewis,  who
both perform  consulting work for us, as its designees.  The common shares,  the
options,  and the offer of the  underlying  common  shares upon  exercise of the
options, were granted in reliance on the exemptions from registration  contained
in Rule 701 under the Securities Act and Section 4(2) of the Securities Act.

8. We entered into a Securities Purchase Agreement with Laurus Master Fund, Ltd.
("Laurus")  in December  2005.  Proceeds  from the sale of a three-year  secured
convertible note and a seven year common stock purchase warrant were $6,000,000.
Approximately  $1,000,000  of the net  proceeds  of the  sale  was  used for the
repayment  of  seller  notes  associated  with the  Steelbank  purchase  and the
acquisition  of  the  Haines  Road  facility.  Approximately  $4,000,000  of the
proceeds  will be used to provide  additional  working  capital for the existing
businesses  and to provide  funding to move  forward with  acquisitions  and the
remaining $1,000,000 will be used to pay the fees of the financing.

     The note bears  interest at the Wall Street  Journal Prime Rate plus 2% and
is subject to a floor of 8%.  Interest only is payable until April 1, 2006,  and
thereafter  interest plus one thirty-second  (1/32) of the principal $187,500 is
payable  monthly  until  maturity.  Laurus  can elect to take some or all of any
monthly  payment in our stock  initially  valued at $3.27 per share,  subject to
volume  limitations.  In  addition,  Laurus has a warrant to purchase our common
stock,  exercisable for a period of seven years at an initial  exercise price of
$3.81  per  share.  We agreed  to  register  with the  Securities  and  Exchange
Commission the shares of common stock that are issuable,  from time to time upon
conversion  of the note and the shares of common  stock that are  issuable  upon
exercise of the  warrant.  Our  obligations  are secured by the Master  Security
Agreement,  Stock Pledge Agreement and Grant of Security Interest in Trademarks,
pursuant to which Laurus acquired a continuing  security  interest in all of our
present and future assets,  including the stock of the subsidiaries owned by us.
A Subsidiary  Guaranty was also executed by our subsidiaries.  Laurus is subject
to a  subordination  agreement  between  us and ABN AMRO  Bank,  N.V.,  Canadian
Provence and LaSalle Bank,  Midwest,  N.A.,  pursuant to which it has a security
interest  in our  assets  and a first  security  interest  in the  stock  of our
subsidiaries.

     Equity Compensation Plan Information

     The following  information is provided as of December 31, 2005 with respect
to compensation plans,  including individual  compensation  arrangements,  under
which our equity securities are authorized for issuance:
<TABLE>
<CAPTION>

                                                                                        (c)
                                                                                Number of securities
                                    (a)                        (b)              remaining available for
                           Number of securities to     Weighted-average         future issuance under
                           be issued upon exercise     exercise price of        equity compensation plans
                           of outstanding options,     outstanding options      (excluding securities
Plan category              warrants and rights         warrants and rights      reflected in column (a))
-------------              ------------------------    -------------------      ------------------------

Equity compensation
   plans approved by
<S>                 <C>             <C>                     <C>                       <C>
   security holders (1)......       415,085                 $5.50                     234,915
Equity compensation
   plans not approved by
   security holders (2)......     1.587,207                 $4.33                           0
                                  ---------                                           --------
Total........................     2,002,292                                           234.915
                                  =========                                           ========
</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
          533,257  common  shares at an  exercise  price of $4.36 a share  until
          August 16, 2010 issued to 29  participants  in our 2004 note financing
          in February, March and April 2004 and adjusted per their anti-dilution
          provision  with  regards  to our  December  2005 note  financing,  (b)
          warrants to  purchase  an  aggregate  of 120,890  common  shares at an
          exercise  price of $5.17 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  with regards to
          our December  2005 note  financing,  (c) warrants to purchase  243,060
          common shares at an exercise price of $5.98 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  with  regards  to  our  December  2005  note
          financing,  (d) warrants to purchase an  aggregate  of 300,000  common
          shares at an exercise  price of $3.27 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 $3.81 a share until  December 13, 2012
          issued to 1 designee in our December 2005 note financing, The 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.  At the time  these  options  are
          exercised,  the optionee 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 6. SELECTED FINANCIAL DATA


     The following selected financial data is for Tarpon as of and for the years
ended December 31, 2005,  2004,  2003 and 2002 (year of inception),  and for the
years ended  December  31,  2003,  2002 and 2001.  The  financial  data has been
derived from our audited financial statements, some of which appear elsewhere in
this  report  together  with the  reports  of Grant  Thornton  LLP,  Independent
Registered Public  Accounting Firm, whose report on EWCO's financial  statements
includes an explanatory  paragraph  relating to an uncertainty  concerning their
ability to continue as a going  concern.  Individual  data for Steelbank has not
been included because the same is not deemed significant in relation to EWCO and
Haines Road.


Tarpon Industries Inc. and Subsidiaries
<TABLE>
<CAPTION>

                                                                                        Tarpon Industries, Inc.
                                                                       ---------------------------------------------------
                                                                                       Year Ended December 31,
                                                                       ---------------- ------------ ---------- ----------
                                                                            2005           2004           2003       2002
                                                                            ----           ----           ----       ----
                                                                              (in thousands except per share data)
Statement of Operations Data:
<S>                                                                            <C>          <C>       <C>        <C>
Net revenues.....................................................              $60,851      $37,622   $     --   $     --
Gross profit.....................................................                4,950        3,750         --         --
Interest expense.................................................                1,075        1,237         --         --
Depreciation and amortization....................................                  939          141         --         --
Net income (loss) before taxes...................................              (7,411)      (2,065)      (650)      (766)
Net income (loss)................................................              (7,310)      (1,995)      (650)      (766)
Net income (loss) per common share - basic and diluted...........               (1.74)       (1.63)     (0.54)     (0.73)
Weighted average number of common shares outstanding.............                4,194        1,227      1,195      1,050
</TABLE>


<TABLE>
<CAPTION>
                                                                                      Tarpon Industries, Inc.
                                                                          -----------------------------------------------
                                                                                      Year Ended December 31,
                                                                          -------------- ------------ ---------- --------
                                                                              2005          2004        2003       2002
                                                                              ----          ----        ----       ----
Balance Sheet Data:
<S>                                                                             <C>            <C>         <C>       <C>
Cash and cash equivalents.........................................              $7,317         $258        $22       $169
Working capital...................................................            (11,083)      (2,084)         13         81
Total assets......................................................              39,005       21,708        331        269
2004 note financing obligations...................................                  --        2,150         --         --
Long-term obligations, net of current portion.....................                  10        1,314         --         --
Retained earnings (accumulated deficit)...........................            (10,721)      (3,411)    (1,417)      (766)
Shareholder's equity (1)..........................................               5,195      (1,039)         13         81
</TABLE>


                                                     Eugene Welding Co. As of
                                                           December 31,
                                       2003             2002             2001
                                   ---------------- ---------------  ----------

Balance Sheet Data:                                        (In thousands)
Cash and cash equivalents.........   $  270            $   497        $    168
Working capital...................      763              2,284           3,223
Total assets......................   10,467             10,128           9,767
Long-term obligations, net
  of current portion..............      535                699              74
Retained earnings.................    4,145              5,494           3,965
Shareholder's equity..............    1,212              2,561           3,966


                                                     Eugene Welding Co.
                                                 Year Ended December 31,
                                        2003          2002            2001
                                   --------------  --------------  -----------

                                          (in thousands, except per share data)
Statement of Operations Data:
Net revenues..........................  $26,442         $26,644        $28,386
Gross margin..........................    1,479           1,916          3,651
Interest expense......................      200             183            201
Depreciation and
    amortization......................      148             150            235
Net income (loss)
    before taxes......................  (1,260)             (4)          1,188
Net income (loss) (1).................  (1,260)             (4)          1,188

(1)  Does not include any provision or benefit for federal or state income taxes
     for EWCO through December 31, 2003 because it was taxed as an S corporation
     through December 31, 2003.


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
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 and completed our first  acquisition,
EWCO, in April 2004.  Our second  acquisition,  Steelbank,  was completed in May
2004. Our third acquisition, Haines Road, was completed in February 2005, except
for the  purchase of the land and plant  building,  which was  completed  in May
2005. At the completion of the Haines Road acquisition, the Steelbank operations
were merged into the Haines Road  facility and operated as one  operation  under
the name  Steelbank.  Our  information  for 2005,  2004,  and 2003  reflects the
acquisitions for the period of time we owned them.

     We completed an initial  public  offering of our common  shares in February
2005. The net proceeds from this financing were primarily used to repay our 2004
note financing and promissory notes issued to EWCO and Steelbank  sellers and to
partially fund the Haines Road acquisition.

     Tarpon,  our parent  company,  does not  generate  any  revenues.  EWCO and
Steelbank derive revenues from sales of structural,  mechanical steel tubing and
engineered  steel  storage rack systems.  Our primary  expenses are the costs of
steel coil and manufacturing costs, which we expense when the related product is
sold. Our costs also include selling, general and administrative expenses, which
we generally expense as incurred.  On a consolidated  basis our steel costs were
approximately 67% and 68% as a percent of our 2005 and 2004 sales, respectively.
Manufacturing  costs include  manufacturing  overhead,  direct labor and outside
services.  Selling,  general and  administrative  expenses consist  primarily of
management,  accounting,  human  resources,  customer  service  and sales  staff
salaries,  expenses and commissions and travel,  advertising,  insurance,  rent,
utilities,  legal and  professional  fees,  staff  salaries  and  other  payroll
expenses.

     For the year ended  December 31, 2005,  our auditors have issued an opinion
with a "going  concern"  qualification.  Their  qualification  is based upon 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, our financial resources may
not be adequate to satisfy our operating and capital  requirements  for the next
12 months.  We believe,  based on our current  business  plans,  borrowing  base
availability,  current market  conditions,  the completion of our sale and lease
back  transaction  on our Canadian  real estate,  and if we are able to meet our
forecasted  results which have been  difficult to achieve in our short  history,
our existing cash resources will be sufficient to fund our  operations,  capital
expenditures, debt payments and working capital requirements through the next 12
months.  This situation is more fully discussed under the heading  Liquidity and
Capital Resources.


Summary of Recent Operations

     On a  consolidated  basis,  we generated  revenues of  approximately  $60.9
million  in 2005 as  compared  with  $37.6  million,  in 2004,  an  increase  of
approximately  62%.  The  increase  in  revenue  of  $23.3  million  in 2005 was
attributable  to full year ownership of EWCO and the  acquisition of Haines Road
in February  2005.  Tarpon did not have any  revenues in 2003,  as our  business
transformed  from a company with no revenues  seeking target  acquisitions to an
enterprise  with  operating  subsidiaries,  with  the  acquisitions  of EWCO and
Steelbank in 2004.

     Our operations in 2005  reflected a net loss before taxes of  approximately
$7.4  million as compared  with a net loss before  taxes of  approximately  $2.1
million in 2004, and a net loss before taxes of approximately  $650,000 in 2003.
The 2005 loss  includes a non-cash  writedown  of $1.9  million in the  carrying
value of our Steelbank acquisition.

     The  financial  result  for  2005 has  taken  place  in an  environment  of
decreasing  costs for steel,  which  generally puts a  disproportionate  pricing
pressure on companies  such as Tarpon.  In response,  we, like our  competitors,
lowered our selling  prices over the period  which  decreased  our gross  profit
percentage to 8.1% in 2005 as compared with 10.0% in 2004.

     By contrast,  steel prices  increased  significantly  from 2003 to 2004. We
benefited  materially from  inventories of lower priced steel (purchased in 2003
at prices substantially lower than 2004 inventory prices), together with sharply
increasing selling prices, which contributed  substantially to our profitability
in the first quarter of 2004.

     The increase in the net loss for 2005 over 2004 was also adversely impacted
the cost associated with our company  operating as a public entity. We completed
our IPO in February 2005. We incurred an increase in administrative salaries and
benefits of approximately  $1.9 million,  an increase in legal professional fees
of approximately $1,918,000, primarily associated with becoming a public company
and searching for additional acquisitions targets. Our consolidated 2005 results
were also  materially  impacted  by  several  expenses  such as an  increase  in
depreciation and amortization expense of approximately $798,000, associated with
the  acquired  assets  of  EWCO  and  Steelbank.   Bad  debt  expense  increased
approximately  $595,000 in 2005 as compared with 2004  primarily  related to the
bankruptcy  of  a  significant   customer.   Our  interest   expense   decreased
approximately  $162,000, as a result of repayment of a bridge note financing. As
noted  above,  we also  experienced  a $1.9  million  non-cash  writedown in the
carrying value of Steelbank.

     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, 2005 Compared to Year Ended December 31, 2004

Net Revenues

     In 2005 and 2004 our net revenues and shipments  were  (including  EWCO and
Steelbank  since the date of  acquisition,  April  2004 for  EWCO,  May 2004 for
Steelbank, and February 2005 for Haines Road):
<TABLE>
<CAPTION>

                                                      2005            2004                    Change
                                                   -----------     ------------     ----------------------------
                                                       $                $               $               %
                                                   -----------     ------------     ----------     -------------
                                                                      (dollars in thousands)
<S>                                                   <C>              <C>            <C>              <C>
EWCO Tubular .................................        $20,178          $14,622        $ 5,556          38.0%
EWCO SpaceRak (R) ............................         22,851           17,733          5,118          28.9%
Steelbank  (including Haines Road)............         17,822            5,267         12,555         238.4%


                                                     2005             2004                     Change
                                                  -----------      ------------      ---------------------------
                                                     Tons             Tons             Tons              %
                                                  -----------      ------------      ----------      -----------
EWCO Tubular .................................        26,625          16,835           9,790           58.2%
EWCO SpaceRak (R) ............................        17,223          13,393           3,830           28.6%
Steelbank (including Haines Road) (1).........        15,736          N/A              N/A             N/A
</TABLE>


(1)  Steelbank  did not  track  tons  shipped  prior  to the  2005  Haines  road
     acquisition

     The  increase in our net revenues of $23.3  million for 2005 was  primarily
due to the full year revenue  related to our  acquisition  of EWCO  (acquired in
April  2004),  the full year  revenue  related to our  acquisition  of Steelbank
(acquired  in  May  2004)  and  the  partial  year  of  revenue  related  to our
acquisition  of the  Haines  Road  location  in  February  2005  (which was then
combined with Steelbank).  Net revenues  associated with the acquisition of EWCO
added  approximately  $10.7  million in net  revenues  and the  acquisitions  of
Steelbank and Haines Road added approximately $12.6 million.


Cost of Goods Sold and the Related Gross Profit

     In 2005  and 2004 our cost of  goods  sold  and the  related  gross  margin
(including  EWCO and  Steelbank  since the date of  acquisition,  April 2004 for
EWCO, May 2004 for Steelbank, and February 2005 for Haines Road) were:
<TABLE>
<CAPTION>

                                                          2005                        2004                     Cost Change
                                                -------------------------    ------------------------    ------------------------
                                                  COGS $          GM%          COGS $          GM%           $             %
                                                ------------    ---------    ------------    --------    ----------    ----------
                                                                             (dollars in thousands)
<S>                                                 <C>             <C>          <C>           <C>         <C>             <C>
EWCO Tubular ............................           $19,247         4.6%         $12,720       13.0%       $ 6,527         51.3%
EWCO SpaceRak (R)........................            21,457         6.1%          16,706        5.8%         4,751         28.4%
Steelbank (including Haines Road) .......            15,197        14.7%           4,446       15.6%        10,751        241.8%
</TABLE>


     Gross profit was $5.0 million and $3.7 million for the twelve month periods
ended  December  31, 2005 and 2004,  respectively.  The increase in gross profit
dollars in 2005 compared with 2004 was due to the  acquisition of Haines Road in
February 2005.  Gross margins  decreased to 8.1% for 2005 versus 10.0% for 2004.
The  decrease in gross margin as a percent of sales for 2005 as compared to 2004
was  attributable  to falling  steel prices and the  competitive  factors in our
industry  which  caused us to lower  pricing to retain and  maintain our current
sales volume in a soft market.  Reduced steel pricing  created  several  adverse
effects. In addition to reduced margin, it caused many of our customers to defer
purchases in  anticipation  of further price  reductions.  This resulted in both
reduced  selling prices and reduced  tonnage  volume,  which  contrasts with the
benefits we experienced in 2004 as a result of sharply rising steel prices.

Operating Expenses

     In 2005 and 2004,  our  operating  expenses  (including  EWCO and Steelbank
since the date of acquisition,  April 2004 for EWCO, May 2004 for Steelbank, and
February 2005 for Haines Road) were:
<TABLE>
<CAPTION>

                                                     2005                         2004                        Cost Change
                                           -------------------------     ------------------------      --------------------------
                                              $           Sales %           $          Sales %            $           Sales %
                                           ---------    ------------     --------    ------------      --------    --------------
                                                                          (Dollars in thousands)
<S>                                     <C>                           <C>                           <C>                   <C>
Tarpon (unconsolidated)                 $     3,823            N/A    $      929            N/A     $    2,892            311.3%
EWCO............................              3,113            7.2%        2,124            6.6%           989             46.6%
Steelbank (including Haines Road)             5,281           29.6%          884           15.6%         4,397            497.4%
</TABLE>


     Operating expenses were $12.2 million and $3.9 million for the twelve month
periods  ended  December  31, 2005 and 2004.  Operating  expense as a percent of
sales was 20.1% and 10.5% of net revenue,  respectively. We incurred an increase
in: administrative salaries, commissions and benefits of approximately $703,000,
$844,000  and  $503,000  at  Tarpon,  EWCO and  Steelbank  respectively.  Tarpon
incurred  increased legal and  professional  fees of  approximately  $1,660,000,
non-cash,  non-employee  stock option  expense of  $424,200,  and an increase in
insurance  expense of  approximately  $119,000.  These  expenses were  primarily
associated  with becoming a public company in February 2005, the  acquisition of
EWCO in April 2004,  Steelbank  in May 2004,  Haines  Road in February  2005 and
searching for additional companies for acquisitions.  In addition we incurred an
increase  in bad debt  expense of  approximately  $595,000  over 2004  primarily
related to the bankruptcy of a significant  Steelbank customer for which we have
purchase  commitments  through  June 2006 with the new owner.  Depreciation  and
amortization expense increased  approximately  $798,000 primarily as a result of
the  acquisition  of the Haines Road plant and real  estate in February  and May
2005,  respectively.  Our operating  expense will remain high as a percentage of
net  revenues,   until  the  Company  can  increase   sales   through   proposed
acquisitions.  Further,  we  recognized  an  impairment  loss  in our  Steelbank
investment described below.

     We recorded an  impairment  loss of $1.9  million as a result of our annual
impairment  test during the fourth  quarter 2005. As a result of our  impairment
test, the carrying value of the Steelbank  goodwill exceeded the fair value, and
was written down $1.1 million. The definite life intangibles were also tested in
this process.  As a result, the customer base definite life intangible  carrying
value exceeded its fair value. It was written down $794,000.

Interest and Other Expenses

     Tarpon's interest and other expenses decreased approximately $1,734,700 for
2005  as  compared  to  2004.  This  change  was  primarily  due  to a  gain  of
approximately  $322,000 resulting from fair value accounting from the conversion
feature and stock  warrants  issued for financing fees which were required to be
treated as  derivatives.  There was a positive  change in  foreign  exchange  of
approximately  $816,000,  and a decrease  in interest  expense of  approximately
$162,000 in 2005,  compared to 2004.  The decrease  was due to the  repayment of
note financing.

Income Taxes

     We have not recognized a potential tax benefit from our net losses, because
of the  uncertainty  regarding  its ability to realize the future tax benefit of
its net operating  loss carry  forwards.  This  potential  loss carry forward if
utilized would be approximately $ 8.8 million.


Tarpon Industries, Inc.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Net Revenues

     In 2004 and 2003 Tarpon's  (including  EWCO and Steelbank since the date of
acquisition,  April 2004 for EWCO,  and May 2004 for Steelbank) net revenues and
shipments were:

<TABLE>
<CAPTION>

                                          2004            2003                 Change
                                        ---------       ---------       ----------------------
                                           $               $               $            %
                                        ---------       ---------       ---------    ---------
                                                       (dollars in thousands)
<S>                                  <C>             <C>             <C>
EWCO Tubular ...................     $    14,622     $       N/A     $       N/A           --
EWCO SpaceRak (R)...............          17,733             N/A             N/A           --
Steelbank ......................           5,267             N/A             N/A           --


                                          2004          2003               Change
                                        ----------     --------      --------------------
                                          Tons          Tons          Tons          %
                                        ----------     --------      -------      -------
EWCO Tubular..................           16,835          N/A          N/A         --
EWCO SpaceRak (R).............           13,393          N/A          N/A         --
</TABLE>


     Tonnage shipped is not available for consolidated  Steelbank,  prior to the
purchase of Haines Road; therefore,  tonnage reported reflects information since
the acquisition of Haines Road, which occurred in February 2005.


     The increase in our net revenues for 2004 as compared  with 2003 was due to
our  acquisition  of EWCO in April 2004 and our  acquisition of Steelbank in May
2004.  EWCO  added  approximately  $32,355,000  in net  revenues.  EWCO  had the
following increases in average revenue per ton: (1) $14, or 3%, for EWCO's steel
tubing  products,  and (2) $39, or 4%, for EWCO's  steel  storage  rack  systems
products.  The increase in the average  price per ton was primarily due to price
increases  in 2004 in the  industry  generally  as a result of  increased  steel
costs.  Increases in average  revenue per ton for these  products  substantially
moderated in the third and fourth quarters.  The increase in EWCO's net revenues
is also due to the  increase in tons of  SpaceRak(R)  products  shipped and were
partially  offset by the  decrease  in tons of  tubular  products  shipped.  The
increase  in tons of product  shipped  in 2004 was  primarily  due to  increased
shipments of EWCO's  SpaceRak(R)  products,  which we believe resulted from more
focused sales efforts. The decrease in tons of EWCO tubular products shipped was
primarily due to the decreased  availability of hot rolled steel coil. Steelbank
added approximately $5,267,000 in net revenues after we acquired the business.


Cost of Goods Sold and the Related Gross Profit

In 2004 and 2003 our cost of goods sold and the related gross profit  (including
EWCO and Steelbank since the date of  acquisition,  April 2004 for EWCO, and May
2004 for Steelbank) were:

<TABLE>
<CAPTION>

                                                    2004                              2003                        Cost Change
                                         ---------------------------      ----------------------------     --------------------
                                           COGS $            GM%            COGS $              GM%           $            %
                                         ------------     ----------      ------------      ----------     --------    --------
                                                                          (dollars in thousands)
<S>                                   <C>                     <C>      <C>                              <C>
EWCO Tubular ...................      $       12,720          13.0%    $          N/A           --      $      N/A        --
EWCO SpaceRak (R)...............              16,706           5.8%               N/A           --             N/A        --
Steelbank ......................               4,446          15.6%               N/A           --             N/A        --
</TABLE>


     During the twelve month period  ending  December 31, 2004,  Tarpon's  gross
margin percentage was approximately  10.0%.  Margins were positively impacted by
an increase in average revenue per ton described  above,  which more than offset
increased costs of materials  primarily due to rising steel prices:  SpaceRak(R)
did not increase its prices as fast due to a lag between  pricing and  shipping.
EWCO's  SpaceRak(R)  did experience a $43 per ton, or 8.9%,  decrease in average
manufacturing  costs,  due to our fixed  manufacturing  costs being  spread over
higher volume.  Scrap steel sales  increased  approximately  $435,000 at EWCO in
2004,  compared  to 2003,  primarily  as a result of an  increase in scrap steel
prices between those periods.  Also,  reduced overtime and steel  inventories on
hand at EWCO at the end of 2003 that it had purchased at lower prices than first
quarter replacement costs had a positive impact on margins.

     These  improvements  were primarily offset by approximately $34 per ton, or
31.8%, increase in average manufacturing costs for EWCO's steel tubing products,
due to our fixed  manufacturing  costs being  spread over a lower  volume.  As a
result of the acquisition of EWCO and Steelbank,  the finished goods inventories
that we  acquired  were  re-valued  by  increasing  their  carrying  amounts  by
approximately  $246,000 pursuant to purchase accounting  practices.  We incurred
costs of goods sold at these  higher  amounts when these  products  were sold in
2004, reducing our margins.

Operating Expenses

     In 2004 and 2003 our operating expenses (including EWCO and Steelbank since
the date of acquisition, April 2004 for EWCO and May 2004 for Steelbank) were:
<TABLE>
<CAPTION>

                                                     2004                          2003                      Cost Change
                                            ------------------------      ------------------------     ----------------------
                                               $          Sales %           $          Sales %            $             %
                                            --------    ------------      -------    -------------     --------    ----------
                                                                          (dollars in thousands)
<S>                                      <C>                  <C>      <C>                          <C>                <C>
Tarpon .........................         $      930            N/A     $     650              N/A   $      780         43.1%
EWCO ...........................              2,099            6.5%          N/A               --          N/A            --
Steelbank.......................                908           17.2%          N/A               --          N/A            --
</TABLE>


     The  increase  in our  total  operating  expense  for  2004  over  2003  of
approximately $3,286,000,  including depreciation, was primarily attributable to
our  acquisitions  of EWCO in April 2004 and Steelbank in May 2004,  $225,000 in
severance expenses,  and $146,000 increase in professional fees. The acquisition
of EWCO added approximately  $2,099,000 of total operating expenses. Major costs
included wages and benefits of approximately  $1,061,000,  professional  fees of
$283,000,  rent,  utilities  and  office  expenses  of  $223,000,  bad  debts of
$190,000,  outside  services of  $122,000,  and  delivery  and auto  expenses of
$72,000.

     The  acquisition  of Steelbank  added  approximately  $908,000 in operating
expenses.  Major costs included wages and benefits of $372,000,  rent, utilities
and office administrative expenses of $119,000, bad debts of $187,000,  delivery
and auto of $112,000, and professional fees of $38,000.

Interest and Other Expenses

     Our interest expense increased  approximately  $1,237,000 in 2004, compared
to 2003. The increase was due to interest expense of  approximately  $128,100 on
the bridge note financing, amortization of warrants of $651,600, $29,700 related
to notes payable to the former shareholders of Steelbank, $40,200 related to the
note payable to the former sole  shareholder  of EWCO, and $262,700 and $165,000
on EWCO and Steelbank indebtedness, respectively.

     Our  miscellaneous   expense  included   financing  costs  which  increased
approximately  $447,700 in 2004 as compared to 2003 and was primarily related to
costs associated with our bridge financing that occurred in 2004.

Income Taxes

     We have not recognized a potential tax benefit from our net losses, because
of the  uncertainty  regarding our ability to realize  future tax benefit of our
net operating loss carry forwards. This potential loss carry forward if utilized
would be approximately $3.2 million.

     EWCO was an S  corporation  until  December  31,  2003.  As a result of its
change to a C  corporation,  EWCO is now subject to income  taxes on its taxable
income and has no  operating  loss carry  forwards  for  taxable  losses  before
January 1, 2004.


Tarpon Industries, Inc.

Pro Forma Year Ended December 31, 2004 Compared to Year Ended December 31, 2003


Net Revenues

     Our 2004 pro forma net revenues and  shipments,  as if we had acquired EWCO
and Haines Road as of January 1, 2004,  and Steelbank as of May 14, 2004, vs our
2003 pro forma net revenues and shipments, as if we had acquired EWCO and Haines
Road as of January 1, 2003, were as follows:


Pro Forma Net revenues
<TABLE>
<CAPTION>
                                                                       Proforma
                                              -----------------------------------------------------------
                                                 2004            2003                   Change
                                              ------------     ----------     ---------------------------
                                                   $               $              $               %
                                              ------------     ----------     -----------     -----------
                                                                (dollars in thousands)
<S>                                        <C>              <C>            <C>                  <C>
EWCO Tubular                               $       20,551   $     13,069   $       7,482        57.25%
EWCO SpaceRak (R)                                  23,051         13,373           9,678        72.37%
Steelbank  (including Haines Road)                 20,664         11,171           9,493        84.98%
  Less Inter-Company                              (1,064)          (255)           (809)
                                              ------------     ----------     -----------     -----------
Total                                              63,202         37,358          25,844        69.18%
                                              ============     ==========     ===========     ===========


Pro Forma Shipments
                                                  2004            2003           Change
                                              ------------     ----------     ----------- --- -----------
                                                  Tons            Tons            Tons             %
                                              ------------     ----------     -----------     -----------
EWCO Tubular                                       24,803         29,750         (4,947)        -16.6%

EWCO SpaceRak (R)                                  18,452         13,053           5,399         41.4%

Steelbank (including Haines Road)                  17,544         16,102           1,442          9.0%
                                              ------------     ----------     -----------     -----------

Total                                              60,799         58,905           1,894         3.2%
                                              ============     ==========     ===========     ===========
</TABLE>

     The  increase  in our pro  forma  net  revenues  for 2004 of  approximately
$25,844,000  reflect an increase in tons of product shipped at EWCO SpaceRak and
Haines Road and the following  increases in average revenue per ton: (1) $14, or
3%, for EWCO's steel tubing  products,  (2) $39, or 4%, for EWCO's steel storage
rack  system  products,  and (3)  $191,  or 20%,  for  Haines  Road.  Also,  the
acquisition of Steelbank in May 2004 added approximately $5,267,000 in revenue.


Cost of Goods Sold and Gross Margin

     The  following  table  reflects  cost of goods sold and the  related  gross
margin percentages for 2004 on a pro forma basis, as if we had acquired EWCO and
Haines Road as of January 1, 2004,  and Steelbank as of May 14, 2004 vs. cost of
goods sold and the  related  gross  margin  percentages  for 2003 on a pro forma
basis, as if we had acquired EWCO and Haines Road as of January 1, 2003, were as
follows:

<TABLE>
<CAPTION>
                                                                               Proforma
                                           ------------------------------------------------------------------------------------
                                                      2004                         2003                        Cost Change
                                           -------------------------     --------------------------      ----------------------
                                                $           GM%              $             GM%               $            %
                                           ------------   ----------     -----------    -----------      ----------   ---------
                                                                        (dollars in thousands)
<S>                                     <C>                   <C>     <C>                  <C>        <C>               <C>
EWCO Tubular                            $       17,599        14.4%   $      12,935        1.0%       $      4,664      36.1%
EWCO SpaceRak (R)                               21,663         6.0%          12,027       10.1%              9,636      80.1%
Steelbank (including Haines Road)               16,930        18.1%           9,674       13.4%              7,256      75.0%
  Less Inter-Company                             (974)                      (1,028)                             54
                                           ------------   ----------     -----------    -----------      ----------  ----------
Total                                   $       55,218        12.6%   $      33,608       10.0%       $     21,610      64.3%
                                           ============   ==========     ===========    ===========      ==========  ==========
</TABLE>

     Gross profit was  approximately  $7,984,000  million and $3,750,000 for the
twelve  month  periods  ended  December 31, 2004 and 2003,  respectively.  Gross
margins increased to 12.6% versus 10.0% for the corresponding periods. Our gross
margin  percentage for 2004 increased  primarily due to the increases in average
revenue per ton  described  above.  EWCO's steel  storage  rack system  products
average  manufacturing costs approximately  decreased $43, or 8.9%.  Steelbank's
products average manufacturing costs approximately  decreased $27 per ton, or an
approximately  14%. Both EWCO's steel storage rack system and Steelbank's  gross
margin improved due to our fixed  manufacturing  cost being spread over a larger
production volume.

     These  decreases  were partially  offset by SpaceRak(R)  not increasing its
prices as fast due to a lag between pricing and shipping, which accounts for its
below  average  margins for the period,  which  accounts  for its below  average
margins for the period.  EWCO's steel tube products average  manufacturing costs
increased  approximately  $34 per ton, or 31.8%, due to our fixed  manufacturing
costs being spread over a lower volume.


Pro Forma Year Ended December 31, 2004

Net Revenues

     Our 2004 pro forma net revenues and  shipments,  as if we had acquired EWCO
and Haines Road as of January 1, 2004, and Steelbank as of May 14, 2004, were as
follows:

                                            2004
                                    ----------------------
                                       $              %
                                    ---------     --------
                                   (dollars in thousands)
EWCO Tubular..................      $20,551         32.5%
EWCO SpaceRak.................       23,051         36.5%
Haines Road...................       15,397         24.4%
Steelbank.....................        5,267          8.3%
  Less Inter-Company..........      (1,064)        (1.7%)
                                  ---------        ------
     Total Pro Forma..........      $63,202        100.0%
                                    =======        ======

                                            2004
                                    ----------------------
                                      Tons            %
                                    ---------     --------
EWCO Tubular..................       24,803         40.8%
EWCO SpaceRak.................       18,452         30.3%
Haines Road...................       17,544         28.9%
                                     ------         -----
     Total....................       60,799        100.0%
                                     ======        ======

     Pro forma revenues for 2004 reflect an increase in tons of product  shipped
at EWCO SpaceRak and Haines Road and the following  increases in average revenue
per ton: (1) $14, or 3%, for EWCO's steel tubing  products,  (2) $39, or 4%, for
EWCO's steel  storage  rack system  products,  and (3) $191,  or 20%, for Haines
Road.  The  increase in the  average  price per ton was  primarily  due to price
increases  in 2004 in the  industry  generally  as a result of  increased  steel
costs.  Increases in average  revenue per ton for these  products  substantially
moderated in the third and fourth  quarters.  We currently  seek to minimize the
amount of steel inventory we carry. The increase in our net revenues is also due
to the  increase  in tons of product  shipped.  The  increase in tons of product
shipped in the 2004 period was  primarily  due to  increased  shipments  of EWCO
SpaceRak and Haines Road products,  which we believe  resulted from more focused
sales  efforts.  EWCO steel  tubular  product  tonnage  decreased as a result of
customers  purchasing lower volumes due to increased product prices. The per ton
information provided above includes inter-company amounts, which are not tracked
internally.


Cost of Goods Sold and Gross Margin

     The  following  table  reflects  cost of goods sold and the  related  gross
margin percentages for 2004 on a pro forma basis, as if we had acquired EWCO and
Haines Road as of January 1, 2004, and Steelbank as of May 14, 2004:

                                            2004
                                   -----------------------
                                       $             GM%
                                   -----------   ---------
                                   (dollars in thousands)
EWCO Tubular..................      $17,599         14.4%
EWCO SpaceRak.................       21,663          6.0%
Haines Road...................       12,484         18.9%
Steelbank.....................        4,446         15.6%
  Less Inter-Company..........        (974)
                                    -------
     Total....................      $55,218         12.6%
                                    =======         -----

     Our pro forma gross margin percentage for 2004 increased,  primarily due to
the increases in average revenue per ton described above, which more than offset
increased costs of materials  primarily due to rising steel prices,  except that
SpaceRak did not  increase  its prices as fast due to a lag between  pricing and
shipping,  which  accounts  for its below  average  margins for the  period,  an
approximately  $43, or 8.9% decrease in average  manufacturing  costs for EWCO's
steel  storage  rack system  products  and an  approximately  $27 per ton, or an
approximately  14%,  decrease for Haines Road's  products,  partially  offset by
approximately  $34, or approximately  31.8%,  increase in average  manufacturing
costs for EWCO's tubular products,  and the steel inventories on hand at EWCO at
the end of 2003  that it had  purchased  at  lower  prices  than  first  quarter
replacement costs; EWCO currently maintains lower inventory levels.


Selling, General and Administrative Expenses

     The following  table  reflects total  selling,  general and  administrative
expenses,  including  depreciation,  for 2004 on a pro forma basis, as if we had
acquired EWCO and Haines Road as of January 1, 2004, and Steelbank as of May 14,
2004. Included are approximately $424,000 in non-employee stock options.

                                            2004
                                  ----------------------------
                                        $          Sales %
                                  ------------    ------------
                                   (dollars in thousands)
Tarpon........................       $1,121            N/A
EWCO..........................        3,162          7.2%
Haines Road...................        1,154          7.4%
Steelbank.....................          908         17.2%
Consolidating adjustment......         (213)
EWCO  adjustment..............           13
Offering adjustment...........          424
Haines Road adjustment........           75
                                    -------
     Total....................       $6,644         10.5%
                                     ======

Interest and Other Expenses

     Pro forma interest expense for 2004 was approximately  $968,000,  primarily
due to increased  borrowings in connection with the Haines Road  acquisition and
increased borrowings at EWCO and Haines Road in 2004.

Income Taxes

     Tarpon and has not  recognized a potential tax benefit from its net losses,
because of the  uncertainty  regarding our ability to realize future tax benefit
of our net  operating  loss  carryforwards.  EWCO ceased to be an S  corporation
effective January 1, 2004. Tarpon's  acquisition of Steelbank's stock results in
a limitation on its use of Steelbank's net operating loss carryforwards.


Pro Forma Year Ended December 31, 2003

Net Revenues

     Our 2003 pro forma net revenues and  shipments,  as if we had acquired EWCO
and Haines Road as of January 1, 2003, were as follows:

                                            2003
                                    ----------------------
                                        $             %
                                    --------    ----------
                                   (dollars in thousands)
EWCO Tubular..................      $13,069         35.0%
EWCO SpaceRak.................       13,373         35.8%
Haines Road...................       11,171         29.9%
  Less Inter-Company..........        (255)         (0.7%)
                                   -------          ------
     Total Pro Forma..........      $37,358        100.0%
                                    =======        ======

                                            2003
                                   ----------------------
                                       Tons           %
                                   --------    ----------
EWCO Tubular..................       29,750         50.5%
EWCO SpaceRak.................       13,053         22.2%
Haines Road...................       16,102         27.3%
                                     ------        ------
     Total....................       58,905        100.0%
                                     ======        ======

     Pro forma revenues for 2003 reflect an increase in tons of product  shipped
at EWCO and a $51, or 7.9%  increase in average  revenue per ton at Haines Road,
partially  offset by the decrease in tons of product shipped at Haines Road, and
by the following decreases in the average revenue per ton: (1) $14, or 3.1%, for
EWCO's steel tubing  products,  and (2) $40, or 3.7%,  for EWCO's steel  storage
rack systems  products.  See "Steel" for a description of changes in our average
cost per ton of  steel.  Haines  Road lost a major  customer  during  2003,  but
partially replaced the customer with a new customer  purchasing the same product
line. As a result, Haines Road's tons shipped and revenues declined in 2003. The
increase  in tons of product  shipped  at EWCO was  primarily  due to  increased
shipments of EWCO Tubular  products,  which we believe  resulted from aggressive
pricing.

     The  decrease in the  average  price per ton at EWCO was  primarily  due to
price decreases in the beginning of 2003 in the industry generally,  we believe,
as a result of the  weaker  economy  and not  raising  our prices as fast as our
steel costs increased at the end of the year.

Cost of Goods Sold and Gross Margin

     The  following  table  reflects  cost of goods sold and the  related  gross
margin percentages for 2003 on a pro forma basis, as if we had acquired EWCO and
Haines Road as of January 1, 2003:

                                            2003
                                   -----------------------
                                        $            GM%
                                   --------    ----------
                                   (dollars in thousands)
EWCO Tubular..................      $12,935          1.0%
EWCO SpaceRak.................       12,027         10.1%
Haines Road...................        9,674         13.4%
  Less Acquisition Adjustments       (1,028)      (303.1)%
                                   ---------
     Total....................      $33,608         10.0%
                                    =======

     Our pro  forma  gross  margin  percentage  for 2003  reflects  a  decrease,
primarily due to the decreases in average  revenue per ton described  above,  an
increase in costs of materials at Haines Road,  primarily  due to higher  priced
inventories  on hand at the  beginning  of the  year,  and a $9 per ton,  or 2%,
increase in average  manufacturing  costs for EWCO's  steel  storage rack system
products, due to a change in product mix toward products requiring greater labor
to produce,  and an  approximately  $20 per ton,  or 16.4%,  increase in average
manufacturing  costs for Haines Road  products,  due to fixed costs being spread
over lower volume.


Selling, General and Administrative Expenses

     The following  table  reflects total  selling,  general and  administrative
expenses,  including  depreciation,  for 2003 on a pro forma basis, as if we had
acquired EWCO and Haines Road as of January 1, 2003:

                                            2003
                                  ----------------------------
                                        $           Sales %
                                  ------------    ------------
                                   (dollars in thousands)
Tarpon........................         $650            N/A
EWCO..........................        2,546          9.6%
Haines Road...................          948          8.5%
Consolidating adjustment......           24          0.1%
Haines adjustment.............          (27)        (0.1%)
                                   ---------
     Total....................       $4,141         11.1%
                                     ======

     Our pro forma total selling, general and administrative expense,  including
depreciation,  for 2003 reflects increases primarily attributable to at EWCO (a)
approximately  $439,000 in  increased  salaries,  payroll  taxes and  recruiting
expenses,  due to increased  headcount and salary  increases,  (b) approximately
$245,000 in increased bad debt expenses in 2003,  (c)  approximately  $40,000 in
increased  health insurance  expenses,  (d)  approximately  $37,000 in increased
legal  expenses,   (e)   approximately   $28,000  in  increased  rent,  and  (f)
approximately  $26,000 in increased travel and related  expenses,  and at Haines
Road: (a) approximately  $72,000 in increased  foreign exchange losses,  and (b)
approximately  $11,000 in increased  professional  fees.  These  increases  were
partially  offset by an  approximately  $116,000  decrease in Tarpon's  selling,
general and administrative  expense,  primarily due to approximately $106,000 in
decreased  consulting  expenses and approximately  $26,000 in abandoned projects
expenses  in  2002  that  were  not  incurred  in  2003.  Selling,  general  and
administrative  expenses decreased as a percentage of net sales primarily due to
the effect of increased sales.

Interest and Other Expenses

     Pro forma interest expense for 2003 was approximately $1,248,000, primarily
due to increased  borrowings in connection with the Haines Road  acquisition and
increased borrowings at EWCO and Haines Road in 2003.

Income Taxes

     Tarpon and has not  recognized a potential tax benefit from its net losses,
because of the  uncertainty  regarding our ability to realize future tax benefit
of our  net  operating  loss  carryforwards.  EWCO  was an S  corporation  until
December 31, 2003,  but the pro forma  statements  provide for an  approximately
$54,000  tax  credit  for EWCO on its 2003  losses as if it had been  subject to
federal income taxes.  Tarpon's  acquisition  of Steelbank's  stock results in a
limitation on its use of Steelbank's net operating loss carryforwards.


Liquidity and Capital Resources

Overview

     Our  cash on hand at  December  31,  2005 was  $7,317,000  as  compared  to
$258,000 at December  31,  2004,  an increase  of  $7,059,000.  The  increase is
attributable to the proceeds received from our financing of a 3 year convertible
note with Laurus of $6,000,000  and the  repayment of our secured  creditor debt
from  the   bankruptcy   proceeds  from  the  sale  of  C&W   Industries,   Inc.
(FENCEMaster).

     At December 31, 2005, we had a working  capital  deficit of  $11,083,000 as
compared to a working  capital  deficit of $2,084,000 at December 31, 2004. This
deficit increase was due to an increase in accounts  payable,  classification of
the  Steelbank  mortgages  coming due  within  one year as short term debt,  the
reclassification  of EWCO and Steelbank term notes to current maturities and the
Laurus  convertible  note to current  maturities.  The  reclassification  of the
Laurus  note is a  result  of the  cross  collateralization  with  the  EWCO and
Steelbank term notes which results in a covenant violation with Laurus. The EWCO
and Steelbank  reclassification  was due to certain covenant violations existing
at December 31, 2005. We are currently  negotiating with our lender to waive the
violations and reset the covenants to levels that we believe are achievable.

     We expect that our primary  needs for  liquidity in 2006 will be (1) to pay
our scheduled  principal and interest on our 2005 convertible note financing and
acquisition  indebtedness,  (2) to pay interest on our working capital loan, (3)
to repay the mortgages that come due on the Haines Road acquisition, (4) to make
capital expenditures for equipment, (5) for working capital, including increased
accounts  receivable and inventories if sales  increase,  and (6) to sustain our
operations, including funding sales and marketing activities.

     We currently  have mortgage  financing for the  Steelbank  facility,  which
becomes due in May 2006. We are seeking to pay the same through a potential sale
and lease back  transaction  and have  signed a  definitive  agreement  for this
transaction. If we are unsuccessful in completing this transaction,  Steelbank's
facility  could be come  subject  to  foreclosure,  which  could have a material
affect on our  operations.  We could be evicted  from the  premises  which would
likely require us to discontinue  Steelbank business for a significant period of
time or even permanently.

     We  believe  that  our  cash  balances,  availability  on our  asset  based
financing  arrangements,  and the closing of the sale and lease back transaction
on  our  Canadian   real  estate  will  be  sufficient  to  meet  our  liquidity
requirements for the next 12 months. The ability to continue operations over the
next 12 months  assumes stable rising prices in the steel market and our ability
to maintain  margins by passing on steel cost  changes.  Our  liquidity  is also
dependent  on meeting our  financial  projections  which have been  difficult to
achieve in our short  operating  history.  It also assumes the completion of our
cost  reduction   activities   begun  in  January  2006.  We  believe  that  the
improvements  made to our sales  organization will contribute to maintaining our
current customer base and growth in sales through new markets.

     In February  2006, we announced a plan to reduce  operating  expenses by an
estimated $1.25 million annually.  The cost to implement the improvement plan in
2006 was approximately  $250,000 with a workforce  reduction of 20 employees and
contractors. We are working to effect the plan.

     Given our substantial  cash  requirements,  a change in our expectations or
events beyond our control could result in a shortfall in our liquidity needs and
a material adverse effect on our business and continued 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  1,  2006,
approximately  $2,087,000  was available for  borrowing  under EWCO's  revolving
credit  facility and  approximately  $776,000 was available for borrowing  under
Steelbank's revolving credit facility.

     On December 13, 2005, we entered into a Securities  Purchase Agreement with
Laurus  Master  Fund,  Ltd.  in  connection  with  the  private  placement  of a
convertible  note in the principal  amount of $6,000,000  due December 13, 2008.
The net proceeds were for working capital purposes and acquisition activities.

     In February  2005,  we concluded an initial  public  offering of our common
stock  and  received  $14,748,750  after  underwriting  commissions  and  before
expenses of $2,802,857.


Tarpon Industries, Inc.

Year Ended December 31, 2005

Cash Flows From Operating Activities

     Net cash used in operations in 2005 was $165,000.  Cash was used  primarily
to  fund  losses  before  depreciation,   amortization,  bad  debt  expense  and
impairment loss of $3,504,000. Cash provided from operations included a decrease
in inventory of $768,000 and increases in accounts  payable and accrued expenses
of $3,025,000.  The increase in accounts  payable  related to the lengthening of
payment periods with our suppliers and the growth of payables as a result of the
Haines Road acquisition.

Cash Flows From Investing Activities

     Our investing activities in 2005 used approximately $9,082,000,  consisting
of $9,093,000 for  acquisitions and $1,105,000 for capital  expenditures.  These
uses were offset by $1,100,000 of proceeds  related to  FENCEMaster,  a customer
who filed for bankruptcy for which we were a secured creditor.

Cash Flows From Financing Activities

     Our financing  activities  provided  $16,127,000 of cash in 2005.  Cash was
provided by  $13,472,000  from the initial  public  offering of common  stock in
February 2005,  net  borrowings on credit  facilities of $1,575,000 and proceeds
from issuance of long-term debt of $7,735,000. Cash was used for financing costs
of $1,287,000,  repayment of long-term  obligations of $926,000 and repayment of
short-term obligations of $5,433,000.


Tarpon Industries, Inc.

Year Ended December 31, 2004


Cash Flows From Operating Activities

     Net cash used in our operations  (including EWCO's since March 31, 2004 and
Steelbank's since May 14, 2004), during 2004 was approximately $3,300,000.  Cash
was used primarily by (1) approximately  $377,000 of losses before depreciation,
amortization  and bad debt expense,  (2) an approximate  $2,598,000  increase in
accounts  receivable,  primarily due to increased sales,  and (3)  approximately
$2,629,000  increase in  inventories  primarily  because of rising steel prices.
These decreases were partially offset by an approximate  $2,451,000  increase in
accounts payable and accrued  liabilities,  primarily due to increased sales and
expenses of our initial public offering.

Cash Flows From Investing Activities

     Our (including  EWCO's since March 31, 2004 and  Steelbank's  since May 14,
2004) investing  activities in 2004, used  approximately  $684,000 in cash. Cash
was used for acquisitions of $566,000  including the deposits on Haines Road and
$118,000 for capital and other expenditures.

Cash Flows From Financing Activities

     Our (including  EWCO's since March 31, 2004 and  Steelbank's  since May 14,
2004) financing  activities provided  approximately  $4,219,000 of cash flows in
2004. Cash was provided  primarily by (1)  approximately  $2,150,000 in proceeds
from notes issued by Tarpon in its 2004 note, and (2) an approximate  $4,516,000
increase in net borrowings by EWCO and  Steelbank.  These sources were partially
offset by  approximately  $708,000  used by EWCO to pay down bank  financing and
approximately  $519,000 of financing costs, and approximately  $1,220,000 of IPO
expenditures incurred by Tarpon.

Financing Arrangements

EWCO Credit Facility

     EWCO has a credit facility with Standard  Federal Bank,  N.A.,  including a
revolving credit line for up to $9,000,000, subject to a borrowing base based on
eligible inventory and receivables,  originally  maturing August 31, 2007, and a
$1,394,000 term loan. The term loan is payable in equal monthly  installments of
principal based on a five year  amortization  ending August 1, 2009, but matures
August 31, 2007 if the revolving  credit facility is not renewed.  The loans are
secured by all of EWCO's assets of  approximately  $14.9 million and a guarantee
by Tarpon. The principal amount outstanding bears interest,  payable monthly, at
the bank's prime rate.

     The loan  agreement  requires  EWCO to  maintain  a  minimum  debt  service
coverage  ratio  (generally  net  income  adjusted  for  depreciation,   capital
expenditures, and cash distributions and advances, divided by principal payments
of debt) of at least 1.50 to 1.00.  EWCO's  debt  service  coverage  ratio as of
December 31, 2005 was 30.56 to 1.00.  The loan  agreement  also requires EWCO to
maintain minimum  tangible net worth of ($1,855,000)  plus 80% of its net income
for the  preceding  fiscal  year,  starting  with net  income  for 2005.  EWCO's
tangible net worth as of December 31, 2005 was  ($373,199).  The loan  agreement
also  generally  prohibits  dividends and limits EWCO's  ability to make capital
expenditures  in excess of  $1,500,000  during the 12 months  after our  initial
public offering and $750,000 a year after such 12-month period.

     At November  30,  2005,  EWCO was in  violation  of its  tangible net worth
covenant.  EWCO was in  compliance  with this  covenant as of December 31, 2005.
Because of this violation,  its debt has been reclassed to current.  The Company
is currently negotiating with its lender to waive this violation.

     EWCO  must pay a 0.25%  unused  line of credit  fee each  month and is also
subject  to a 1%  prepayment  fee if the  loans  are  prepaid  any  time  before
maturity.  As of December 31, 2005,  approximately  $6,017,000  was  outstanding
under the revolving  credit facility,  approximately  $1,069,000 was outstanding
under the term loan,  and  approximately  $423,000 was  available  for borrowing
under the revolving credit facility  without  violating any of the existing debt
covenants.

Steelbank Credit Facility

     On February 17, 2005,  Steelbank entered into a Loan Agreement with LaSalle
Business Credit, a division of ABN AMRO Bank N.V., Canada Branch (the "Lender").
This  credit  facility  provides  for a  revolving  credit  line in the  maximum
principal  amount of Cdn.  $8,000,000,  subject  to a  borrowing  base  based on
eligible  inventory and receivables,  originally  maturing on February 17, 2008,
and a term loan in the  principal  amount of Cdn.  $2,100,000.  Principal on the
term loan is payable in sixty equal  monthly  installments  of $35,000  Canadian
dollars  beginning  on April 1,  2005.  The term loan bears  interest,  which is
payable  monthly in arrears,  at a floating rate equal to the Lender's  Canadian
prime  rate plus an  applicable  margin of between  1.00% and 1.50%.  The entire
amount of the term loan  facility  will mature on March 1, 2010.  Borrowings  of
Canadian dollars under the revolving credit facility bear interest at a floating
rate equal to the  Lender's  Canadian  prime rate plus an  applicable  margin of
between 0.75% and 1.25%.  Borrowings of U.S.  dollars under the revolving credit
facility bear interest at a floating rate equal to the Lender's U.S. prime rate.
Under certain circumstances, Steelbank has the option to convert all or any part
of its Canadian or United States borrowings to an interest rate equal to a Libor
rate  plus an  applicable  margin  of  between  2.25%  and  2.75% or a  Banker's
Acceptance rate plus an applicable  margin of between 2.25% and 2.75%.  Interest
on the revolving credit facility is payable monthly in arrears.  The obligations
under the Loan  Agreement  are  unconditionally  guaranteed  by Tarpon,  and are
secured  by a  security  interest  in  substantially  all  of the  tangible  and
intangible assets of Steelbank,  approximating $20.2 million,  and Tarpon, other
than Tarpon's common shares of Eugene Welding Company.  Steelbank's  obligations
under the Loan  Agreement  are also secured by a pledge of all the capital stock
of Steelbank pursuant to a share pledge agreement between Tarpon and the Lender.

     The Loan Agreement contains customary covenants that will limit the ability
of Steelbank to, among other things,  guarantee additional  indebtedness,  incur
indebtedness,  create liens,  pay dividends,  make certain types of investments,
enter into transactions with affiliates,  make capital expenditures in excess of
$500,000  Canadian  dollars in any fiscal year,  sell  assets,  merge with other
companies or enter into any transaction outside the ordinary course of business.

     The  loan  agreement  also  requires   compliance  with  several  financial
covenants,  including  adjusted  net worth of at least  (Cdn.  $4,841,675).  For
quarters ending on or after June 30, 2005, the minimum adjusted net worth of the
previous  quarter  will be  increased  by 75% of the net income for that quarter
(ignoring quarters in which there is a loss). It also requires Steelbank Tubular
to maintain  debt service  coverage  ratio  (generally  net income  adjusted for
depreciation and amortization,  non-cash transactions,  and capital expenditures
divided  by the total of all  principal  payments  of  long-term  debt,  capital
leases,  subordinated debt and all payments in respect of any distribution),  of
at least 1.25 to 1.00. It also requires  Steelbank to maintain interest coverage
(generally  net income  adjusted for interest  expense,  bank fees and net costs
under interest rate contracts, taxes, depreciation and amortization and non-cash
items  divided by interest  expense plus bank fees and net costs under  interest
rate contracts),  of at least 1.50 to 1.00.  Steelbank used the borrowings under
the  credit   facility  to  provide  partial  funding  for  the  acquisition  of
substantially all of the assets and business of the Haines Road facility and the
cash  portion  of the  Haines  Road real  estate,  to pay  transaction  fees and
expenses, to refinance Steelbank's  full-recourse  factoring arrangement and for
general working capital purposes of Steelbank.

     Steelbank was in violation of the tangible net worth, debt service coverage
and interest  coverage  covenants of its loan agreement as of December 31, 2005,
driven  primarily by the losses  sustained this year, the write-off of a certain
bad debt and the  write-down of certain  intangible  assets and  goodwill.  As a
result of these violations, and a going concern qualification, its debt has been
reclassed to current.  The Company is currently  negotiating  a waiver for these
violations.

     Each  month,  Steelbank  must pay a .50%  unused  line of credit fee and an
administrative   fee  of   approximately   $1,700.   As  of  December  31,  2005
approximately  $2,356,000 was outstanding  under the Revolving  Credit Facility,
approximately  $1,532,000 was outstanding  under the term loan and approximately
$490,000 was  available  for  borrowing  without  violating  any  existing  debt
covenant.

Steelbank Note Payable

     On February 17, 2005,  Steelbank  Tubular,  Inc. as part of the purchase of
the Haines Road Facility obtained $979,000 (Cdn.  $1,200,000) in a one-year note
with interest payable monthly at 8.00% per annum.  This note was paid in full on
December 13,  2005,  with the  proceeds  from the Laurus  financing as discussed
below.

Steelbank Mortgages

     On May 18, 2005,  Steelbank  Tubular,  Inc.  purchased the Haines Road real
estate assets,  for $4,638,000  (Cdn.  $5,870,000),  including  closing fees and
expenses,  consisting of approximately  $530,000 (Cdn.  $670,000) in cash, a one
year first mortgage totaling $2,765,000 (Cdn. $3,500,000) jointly secured by the
Haines  Road real  estate  and a  guarantee  from the  Company  payable in equal
monthly  installments of principal and interest based on a 25 year  amortization
period and  bearing  interest  at 1.25% above  Canadian  prime rate,  as well as
second and third  mortgages  from  Bolton,  payable  August 18,  2006,  totaling
$948,000 (Cdn.  $1,200,000) and $395,000 (Cdn.  $500,000) with interest  payable
monthly  at 8% and  10%,  respectively,  per  annum.  As of  December  31,  2005
approximately $2,971,000 (Cdn. $3,463,000) and the entire balances of $1,030,000
(Cdn. $1,200,000) and $429,000 (Cdn. $500,000) were outstanding under the first,
second and third mortgages respectively.

     Steelbank  has entered into an agreement for the sale and lease back of its
premises. The completion of this transaction anticipates the Steelbank mortgages
of $4.5 million  (Cdn.  $5.2 million)  will be retired with  approximately  $1.0
million (Cdn.  $1.2 million) of proceeds  remaining to reinvest in the business,
provide for roof improvements to the facility and pay the associated transaction
fees.  Steelbank will then become  obligated to pay rents for 10 years. In years
one through five, the estimated  rent is $401,375 (Cdn.  $465,595.) per year and
for years six through ten, $439,240 (Cdn. $509,519). Exchange note conversion of
$1 USD = $1.16 Cdn. at March 20, 2006.

Laurus Convertible Note

     On December  13,  2005,  the Company  entered  into a  Securities  Purchase
Agreement (the "Agreement") with Laurus in connection with the private placement
of a convertible note (the "Note") issued by the Company in the principal amount
of  $6,000,000  due December 13, 2008 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  and
Steelbank,  subject to a subordination  agreement  between ABN AMRO Bank,  N.V.,
Canadian providence and LaSalle Bank, Midwest, N.A. The note is payable in equal
monthly  installments of principal totaling $187,500 commencing on April 1, 2006
through the  maturity  date and bears  interest  at prime plus 2%. The  warrants
provides for the purchase of up to 390,000 shares of common stock at an exercise
price of $3.81 until  December  13,  2012.  As part of the  Agreement,  the note
together  with 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 $3.27 per share.  The Company has agreed,
pursuant to a Registration Rights Agreement, to use its best efforts to register
and maintain an effective registration for the shares of common stock underlying
the Laurus note and warrants and to process the same to  effectiveness.  Failure
to do so could constitute an Event of Default,  depending on the  circumstances,
resulting  in an  additional  interest  charge  of 2  percent  per  month on the
outstanding  balance  of the note until the Event of Default is cured or waived.
The Company is also subject to a penalty of $500 per day for failure to register
the shares related to the conversion feature.

     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  4.99% 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 warrants,  the purchase
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,  we  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 which meets the
requirements to be accounted for as a derivative under SFAS 133, inherent in the
instrument.  Such  discounts are being  amortized  using the effective  interest
method over the term of the related debt. 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 and cash
commissions.  The 300,000  warrants  were  valued at their fair market  value of
approximately $432,000 using the Black-Scholes method using the same assumptions
described above, except for a term of five years. These warrants are exercisable
through  December  13,  2010 at $3.27  per  share.  The  300,000  warrants  were
determined to be a derivative  instrument  and were marked to market at December
31,  2005  with a fair  market  value of  $366,000.  The cash  commissions  were
$600,000.

     Although the stated interest rate of the convertible note is the prime rate
plus 2%, as a result of the  aforementioned  discounts  and fees,  the effective
interest rate of the note is approximately 41.8% per annum.

     As of  January  31,  2006,  the  Company  had not  completed  the  sale and
leaseback  of its  Haines  Road  property  and has going  concern  qualification
violating  the terms of the Note  agreement.  The Company has  obtained a waiver
from Laurus for these  violations.  In addition,  the Company is in violation of
certain  cross  default  provisions  related  to the EWCO and  Steelbank  credit
facilities resulting in classifying the convertible debt as current. The Company
is currently in negotiations  with Laurus to obtain a waiver with regard to this
violation.  The Company is maintaining the balance of deferred  finance costs as
it believes it will be successful in obtaining this waiver.  If the  outstanding
balances  are  demanded  by  the  lender,  the  remaining  unamortized  deferred
financing costs may be adjusted in the period demanded.

New Accounting Pronouncements

     In May of 2005, the Financial  Accounting  Standards Board issued Statement
of Financial Accounting  Standards No. 154 ("SFAS 154"),  Accounting Changes and
Error  Corrections - a replacement  of APB Opinion No. 20 and FASB Statement No.
3.  Reporting  Accounting  Changes in  Interim  Financial  Statements.  SFAS 154
changes the  requirements  for the  accounting  for and reporting of a change in
accounting principle. This Statement requires retrospective application to prior
periods' financial statements of changes in accounting  principle,  unless it is
impracticable to determine either the period-specific  effects or the cumulative
effect of the change. The Statement defines  "retrospective  application" as the
application of a different  accounting  principle to prior accounting periods as
if that principle had always been used or as the adjustment of previously issued
financial statements to reflect a change in the reporting entity. This Statement
also  redefines  "restatement"  as the revising of previously  issued  financial
statements to reflect the  correction of an error.  This  Statement is effective
for accounting  changes and corrections of errors made in fiscal years beginning
after December 15, 2005. This  pronouncement will have no material effect on our
financial statements.

     During 2005, the Financial  Accounting  Standards Board (FASB) issued three
FASB Staff Positions (FSP) that provide  accounting  guidance on the application
of how companies  should apply the Financial  Accounting  Standards Board issued
Statement No. 123(R) ("SFAS 123(R)"), "Share-Based Payment" more fully discussed
below.  FSP  FAS  123(R)-1,  "Classification  and  Measurement  of  Freestanding
Financial Instruments  Originally Issued in Exchange for Employee Services under
FASB Statement No. 123(R)",  issued August 31, 2005, FSP FAS 123(R)-2 "Practical
Accommodation  to the Application of Grant Date as Defined in FASB Statement No.
123(R)",  issued  October 18, 2005, and FSP FAS 123(R)-3,  "Transition  Election
Related to Accounting  for the Tax Effects of  Share-Based  Payment  Awards" all
provide further  interpretation  to the application of SFAS 123(R).  The Company
will adopt the modified  prospective  transition  method of accounting for share
based  payments  and  estimated  that our expense for 2006 in applying  this new
pronouncement will approximate $1 million.

     In November 2004, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 151 ("SFAS 151"),  "Inventory Costs". SFAS
151 amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing,  to clarify
the accounting for abnormal amounts of idle facility expense,  freight, handling
costs and  spoilage.  This  statement  requires  that these items be expensed as
incurred  and not  included in overhead.  In  addition,  SFAS 151 requires  that
allocation of fixed  production  overhead to conversion costs should be based on
normal  capacity of the production  facilities.  This Statement is effective for
inventory  costs incurred  during fiscal years beginning after June 15, 2005. It
is  anticipated  that this  pronouncement  will have no  material  effect on the
Company's financial statements.

     In December 2004, the Financial Accounting Standards Board issued Statement
of  Financial  Accounting   Standards  No.  153  ("SFAS  153"),   "Exchanges  of
Nonmonetary  Assets".  SFAS 153,  amends APB  Opinion  No. 29,  "Accounting  for
Nonmonetary  Transactions"  for  exchanges  of  similar  productive  assets  and
replaces it with a general  exception for exchanges that do not have  commercial
substance. This Statement is effective for nonmonetary asset exchanges occurring
in fiscal  periods  beginning  after June 15, 2005.  This  pronouncement  had no
material effect on the Company's financial statements.

     In December 2004, the Financial Accounting Standards Board issued Statement
No. 123(R) ("SFAS  123(R)"),  "Share-Based  Payment".  This  statement  replaces
Statement of Financial Accounting Standards No. 123 (SFAS 123"), "Accounting for
Stock-Based  Compensation",  and supersedes APB Opinion No. 25,  "Accounting for
Stock Issued to Employees".  SFAS 123(R) will require compensation costs related
to share-based payment transactions to be recognized in the financial statements
(with  limited  exceptions).  The amount of  compensation  cost will be measured
based on the  grant-date  fair  value of the  equity  or  liability  instruments
issued.  Compensation  cost will be recognized  over the period that an employee
provides  service in exchange for the award.  This  statement is effective as of
the  beginning  of the first  interim  or annual  reporting  period of the first
fiscal year that begins on or after June 15,  2005.  The Company  will adopt the
modified  prospective  transition  method  for stock  based  compensation  which
requires  the Company to record its stock  option  expense  using the fair value
method.  Under this method, the approximate  compensation  expense estimated for
2006 is $1 million.

     In December 2004, the Financial  Accounting  Standards  Board (FASB) issued
two FASB Staff Positions (FSP) that provide accounting guidance on how companies
should  account for the effects of the American  Jobs  Creation Act of 2004 that
was signed into law on October 22,  2004.  FSP FAS 109-1,  "Application  of FASB
Statement  No. 109,  "Accounting  for Income  Taxes",  to the Tax  Deduction  on
Qualified  Production  Activities  Provided by the American Jobs Creation Act of
2004",  states  that  the  manufacturers'  deduction  provided  for  under  this
legislation should be accounted for as a special deduction instead of a tax rate
change.  FSP FAS 109-2,  "Accounting  and  Disclosure  Guidance  for the Foreign
Earnings Repatriation  Provision within the American Jobs Creation Act of 2004",
allows a Company  additional  time to evaluate the effect of the  legislation on
any plan for  reinvestment or  repatriation of foreign  earnings for purposes of
applying Statement of Financial  Accounting  Standards No. 109,  "Accounting for
Income Taxes". These FSP's may affect how a Company accounts for deferred income
taxes. These FSP's,  effective December 21, 2004, did not have a material effect
on our reported financial statements.

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 accounting for business  combinations,  including intangible
assets  acquired,  impairment  of  long-lived  assets,  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.

     Business Combinations and Intangible Assets

     We have adopted SFAS No. 141,  "Business  Combinations,"  and SFAS No. 142,
"Goodwill  and other  Intangible  Assets."  SFAS No. 141  requires  all business
combinations  to be accounted for using the purchase  method of  accounting  and
that  certain  intangible  assets  acquired  in a business  combination  must be
recognized as assets  separate from  goodwill.  In arriving at the fair value of
assets and  liabilities  acquired in our  acquisitions  of EWCO and Steelbank we
have assumed that book values  approximate  fair values,  with the  exception of
equipment  obtained in the  purchase of EWCO,  which was written down due to the
fair value of the assets acquired and liabilities  assumed exceeding the cost of
EWCO, and EWCO and Steelbank inventories, which were written up to resale value.
Adjustments  to  fair  values  of the  assets  and  liabilities  acquired  would
generally  change  the value of  goodwill  recognized  in the  acquisition  by a
corresponding amount.

     SFAS No. 142  addresses the  recognition  and  measurement  of goodwill and
other  intangible  assets  subsequent  to their  acquisition.  SFAS No. 142 also
addresses the initial  recognition and measurement of intangible assets acquired
outside of a business combination, whether acquired individually or with a group
of other assets.  This statement provides that intangible assets with indefinite
lives and goodwill  will not be amortized  but will be tested at least  annually
for impairment and whenever events or changes in circumstances indicate that the
carrying  value of the asset may not be  recovered.  If impairment is indicated,
then the asset will be written down to its fair value,  typically based upon its
future expected undiscounted cash flows. As of December 31, 2005, our intangible
asset consisted of goodwill, customer base and covenants not to compete relating
to the Steelbank acquisition. Goodwill will not be amortized, but will be tested
for   impairment,   at  least  annually  and  whenever   events  or  changes  in
circumstances indicate that the carrying amounts may not be recoverable.

     Long-lived   assets  include   property,   intangible   assets  subject  to
amortization,  and certain other assets. The carrying values of these assets are
periodically   reviewed  for  impairment  or  whenever   events  or  changes  in
circumstances  indicate  that the carrying  amounts may not be  recoverable.  We
evaluate  impairment by comparing the fair value of the  intangible  assets with
indefinite  lives and goodwill with their  carrying  values.  We determine  fair
value of goodwill using the sum of the  undiscounted  cash flows projected to be
generated by the acquired  business giving rise to that goodwill.  This requires
us to make long-term  forecasts of our future  revenues and costs related to the
assets subject to review.  These forecasts require  assumptions about demand for
our  products  and  services,   future  market  conditions,   and  technological
developments.  For  example,  in  evaluating  the  fair  value  of the  goodwill
recognized in  connection  with the  Steelbank  acquisition,  we have assumed no
annual growth in revenues.

     If actual results differ from our estimates,  including if expected  future
cash flows from the acquired business  significantly decline, and the fair value
of goodwill is less than its carrying  value, we would reduce the carrying value
of our goodwill to fair value and recognize an impairment expense in that amount
in our  income  statement  in the  period  in  which it is  determined  that the
carrying  amount is not  recoverable  because it  exceeds  the fair value of the
goodwill.  Recoverability  of  assets  to be  held  and  used is  measured  by a
comparison of the carrying amount of an asset to estimated  undiscounted  future
cash flows  expected to result  from its use and  eventual  disposition.  If the
carrying  amount  of an asset  exceeds  its  estimated  future  cash  flows,  an
impairment  charge is recognized  for the amount by which the carrying  value of
the asset exceeds its fair value.  If a readily  determinable  market price does
not exist,  fair  value is  estimated  using  undiscounted  expected  cash flows
attributable to the assets.

     During  the  fourth  quarter  of 2005,  the  Company  completed  its annual
impairment test and recorded an impairment loss of $1.1 million.  The impairment
relates to the Steelbank  operation.  Fair value was  determined  based upon the
discounted  cash  flows of  Steelbank  using a  discount  rate  averaging  15.5%
dependant on the Steelbank's  residual growth rate of 3%. The market  comparable
approach  consisted  of an  earnings  multiple  of 4.9 times  forecasted  EBITDA
(operating  income  less - interest  ,taxes,  depreciation,  and  amortization).
Future cash flows and EBITDA are affected by future operating performance, which
will be impacted by economic conditions,  many of which are beyond the Company's
control.   Steelbank  can  be  significantly  impacted  by  adverse  changes  in
assumptions.   Considerable   judgment  is  often   involved  in  making   these
determinations.  The use of different  assumptions could result in significantly
different  results.  Management  believes  its  assumptions  and  estimates  are
reasonable  and  appropriate,  however  actual  results  could differ from those
estimates. The company also evaluated its definite life intangibles and recorded
and adjustment to Steelbank customer lists of $794,000.

     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.  We recognized an increase of
$397,000 in 2005 as compared to 2004 related to the bankruptcy of FENCEMaster in
the fourth  quarter  2005.  We also  recognized  an  increase  in our reserve of
$281,800  in 2004.  Approximately  $199,000  increase in bad debt  expenses  was
recognized  in the first  quarter of 2004 compared to the first quarter of 2003,
and a $94,000  increase in bad debt expenses in the last three  quarters of 2004
compared to the last three  quarters  of 2003,  primarily  because of  increased
aging of some receivables and information EWCO identified  during the applicable
quarter indicating that the customers might not be able to pay.

     Options, Warrants, and Convertible Debt

     We have chosen to account for  stock-based  compensation of employees using
the intrinsic value method prescribed in Accounting Principles Board Opinion No.
25,  "Accounting  for Stock Issued to Employees,"  and related  interpretations.
Accordingly,  compensation  costs for stock  options  granted to  employees  are
measured as the excess,  if any, of the market price of our stock at the date of
the grant over the amount an  employee  must pay to acquire  the stock.  We must
account for stock options and warrants granted to  non-employees  using the fair
value method. In addition,  the Financial  Accounting Standards Board has issued
new rules  requiring  stock-based  compensation of employees to be accounted for
using  the fair  value  method.  We use the  Black-Scholes  valuation  model for
determining the fair value of our options,  warrants and financial instrument of
the convertible  debt. 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.

Contractual Obligations

     The following  information is provided as of December 31, 2005 with respect
to  our  known  contractual   obligations  specified  in  the  following  table,
aggregated by type of contractual obligation:
<TABLE>
<CAPTION>

                                                                        Payments due by period
                                                   ------------------------------------------------------------------------
                                                    Total         Less than       1 - 3           3 - 5          More
                                                                                                                 than 5
                                                                   1 year           years           years          years
                                                   ---------     ------------     ----------      ----------     ----------
Contractual Obligations                                                    (dollars in thousands)
                                                   ------------------------------------------------------------------------
Short-term debt obligations (1)                 $    11,344   $       11,344   $         --    $         --   $         --
<S>                        <C>                       <C>               <C>            <C>               <C>
Long-term debt obligations (2) ........              10,080            3,796          5,601             683             --
Operating lease obligations ...........                 338              274             49              15             --
Purchase obligations (3)...............               4,408            4,408             --              --             --
</TABLE>

(1)  The Company is required to pay interest on its short-term debt  obligations
     shown in the table  above  while they are  outstanding  (assuming  the debt
     remains outstanding) of $808,000.

(2)  The Company is required to pay interest on its long-term  debt  obligations
     shown in the table  above  while they are  outstanding  (assuming  the debt
     remains  outstanding) of $325,000 within one year, $487,000 between one and
     three years,  $46,000 between three and five years, and $0 due in more than
     five years.  The long term debt  obligations  are  reflective of the stated
     terms of the underlying agreements.

(3)  Purchase  obligations consist primarily of purchase orders executed for raw
     material inventories.

Off Balance Sheet Arrangements

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


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to risks  associated with changes in foreign currency rates,
interest  rates and  commodity  prices.  We have not used  derivative  financial
instruments to hedge these risks during the periods shown.

     Our Canadian operations are accounted for in Canadian dollars, converted to
the U.S.  dollar  equivalent  based on published  exchange  rates for the period
reported and are, therefore, subject to risk of exchange rate fluctuations.

     We are exposed to interest rate risk under our credit facilities because of
the variable  interest  rates  charged on those  facilities.  See  "Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations -
Liquidity and Capital Resources."

     We are subject to commodity price risk, primarily with respect to purchases
of steel.  Purchased steel represents the most significant portion of EWCO's and
Steelbank's  cost of  goods  sold.  As a  result,  fluctuations  in the  cost of
purchased  steel,  which  can  be  volatile  and  cyclical  in  nature,  have  a
significant  impact on our margins both  positively  and  negatively.  Our steel
costs rose significantly during 2003 and 2004, peaking mid year 2004. In the 4th
quarter  2004,  steel prices  began to decline.  Steel prices for our base steel
coil  continued to abate during 2005,  stabilizing  in the 4th quarter.  We have
generally  been  successful  in  passing  these  higher  steel  costs  on to our
customers  because our competitors  increased their prices too, but we might not
be able to continue to do so in the future.  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. We try to coordinate our steel purchases with
our sales and  production  forecast,  generally  resulting in a one to two month
supply of steel.

     The  tables  below  provide   information  about  Tarpon's   (consolidated)
financial  instruments that are sensitive to changes in interest rates,  foreign
currency  exchange rates,  or both,  consisting of debt  obligations,  including
Canadian dollar-denominated debt obligations.  The tables provide information by
functional currency and present such information in U.S. dollar equivalents. For
these financial instruments,  the tables present principal cash flows based upon
the stated  terms of the  underlying  agreements  and related  weighted  average
interest rates by expected  maturity dates.  Weighted average variable rates are
based on current rates for the applicable  period.  Weighted average fixed rates
are based on the contract  rates.  The  information is presented in U.S.  dollar
equivalents  which is our  reporting  currency.  The  actual  cash  flows of the
instruments are denominated in U.S.  dollars (U.S. $) and Canadian dollars (Cdn.
$), as indicated in parenthesis.

<TABLE>
<CAPTION>

                                 [000's OMITTED]

------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
<S>                         <C>        <C>         <C>          <C>          <C>
                            2005       2006        2007         2008         2009      Thereafter     Total     Fair Value
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
Short Term Debt:
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
Variable Rate (U.S. $)      $6,017                                                                     $6,017       $6,017
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
   Average interest rate       7.3%                                                                       7.3%
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
 Variable Rate (Cdn. $)      $2,356     $2,971                                                          $5,297       $5,297
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
   Average interest rate       6.3%       6.3%                                                            6.3%
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
Long-Term Debt
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
 Variable Rate (U.S. $)                 $1,966       $2,529       $2,341         $233                   $7,069       $5,368
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
   Average interest rate                  9.0%         9.0%         9.0%         7.3%                     8.9%
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
 Variable Rate (Cdn. $)                   $360         $361         $360         $360          $90      $1,531       $1,531
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
   Average interest rate                  6.3%         6.3%         6.3%         6.3%         6.3%        6.3%
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
  Fixed Rate (U.S. $)                      $11           $7           $3                                   $21          $21
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
Average interest rate                     7.6%         5.2%         5.2%                                  6.5%
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
  Fixed Rate (Cdn. $)                   $1,459                                                          $1,459       $1,459
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
   Average interest rate                  8.6%                                                            8.6%
------------------------- ---------- ---------- ------------ ------------ ------------ ------------ ----------- ------------
</TABLE>

     The conversion  feature of our convertible  debt and certain stock warrants
are  considered  derivates  under SFAS 133, and their  valuation is sensitive to
changes in our stock price.

     The tables below provide  information  about the Company's  steel inventory
that is sensitive to changes in commodity prices, specifically steel prices. The
tables present the carrying amount and fair value as of the indicated date.

                        December 31, 2005           December 31, 2004
                        -----------------           -----------------
                        Carrying     Fair          Carrying        Fair
                        Amount       Value         Amount          Value
                                                (U.S.$ equivalent in thousands)

Steel Inventories      $6,919,638   $6,919,638     $7,603,384     $7,603,384


<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

TARPON INDUSTRIES, INC.
INDEX TO FINANCIAL STATEMENTS

                                                                           Page
Tarpon Industries, Inc.
Report of Independent Registered Public Accounting Firm...............      57
Balance Sheets --- December 31, 2005 and 2004.........................      58
Statements of Operations --- For the Years Ended December 31,
  2005, 2004 and 2003.................................................      59
Statements of Shareholders' Equity --- For the Years Ended
  December 31, 2005, 2004 and 2003....................................      60
Statements of Cash Flows --- For the Years Ended December 31,
  2005, 2004 and 2003.................................................      61
Notes to Financial Statements.........................................      64
Quarterly Information.................................................      87
Eugene Welding Co.
Report of Independent Registered Public Accounting Firm...............      88
Balance Sheets --- March 31, 2004 and December 31, 2003 ..............      89
Statements of Operations --- For the Three Months Ended
  March 31, 2004 and For the Year Ended December 31, 2003.............      90
Statements of Shareholders' Equity --- For the Three Months
  Ended March 31, 2004 and For the Year Ended December
  31, 2003............................................................      91
Statements of Cash Flows --- For the Three Months Ended
  March 31, 2004 and For the Year Ended December 31,
  2003................................................................      92
Notes to Financial Statements.........................................      93

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Shareholders of
Tarpon Industries, Inc.

     We have  audited the  accompanying  consolidated  balance  sheets of Tarpon
Industries,  Inc. (a Michigan  corporation)  and subsidiaries as of December 31,
2005  and  2004,  and  the  related   consolidated   statements  of  operations,
shareholders'  equity  (deficit),  and cash flows for each of the three years in
the  period  ended  December  31,  2005.  These  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance  with 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 financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we  engaged to perform  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   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  provide  a
reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in all material  respects,  the  financial  position of Tarpon
Industries,  Inc. and  subsidiaries  as of December  31, 2005 and 2004,  and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 2005, in conformity  with  accounting  principles
generally accepted in the United States of America.

     Our audit was  conducted for the purpose of forming an opinion on the basic
consolidated  financial  statements  taken  as a  whole.  Schedule  II has  been
subjected to auditing  procedures applied in the audit of the basic consolidated
financial  statements and, in our opinion,  is fairly stated, when considered in
relation to the basic consolidated financial statements taken as a whole.

     The accompanying  financial statements have been prepared assuming that the
Company will  continue as a going  concern.  As discussed in Note 2, the Company
incurred a net loss of $7,309,490  during the year ended December 31, 2005, and,
as of that date, the Company's current  liabilities  exceeded its current assets
by $11,082,916,  and the Company was in default of certain debt covenants of its
credit  agreements.  These factors,  among others, as discussed in Note 2 to the
financial  statements,  raise  substantial  doubt about the Company's ability to
continue as a going concern.  Management's  plans in regard to these matters are
also  described  in  Note  2.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.


/s/ GRANT THORNTON LLP

Southfield, Michigan
March 29, 2006


<PAGE>


                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES
                 (Formerly known as Wall St. Acquisitions, Inc.)

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                              -------------------------------------------------
                                                                                      2005                       2004
                                                                              ----------------------    -----------------------
ASSETS
     Current Assets
<S>                                                                            <C>                                <C>
         Cash and cash equivalents                                             $          7,317,364               $    257,786
         Accounts receivable (less allowance for doubtful accounts of                     7,730,029                  8,327,708
            $192,901 and $290,001, respectively)
         Inventories, net                                                                 6,919,638                  7,604,384
         Prepaid expenses                                                                   367,681                    886,708
         Prepaid initial public offering expenses                                                --                  2,076,468
         Capitalized acquisition costs                                                           --                    131,428
                                                                              ----------------------    -----------------------
           Total current assets                                                          22,334,712                 19,284,482

         Property, plant and equipment-net                                               11,139,700                    635,051
         Deferred financing costs                                                         1,973,754                     71,812
         Goodwill                                                                         2,808,800                  1,279,810
         Intangible assets, net of amortization                                             693,590                    436,638
         Other assets                                                                        55,365                         --
                                                                              ----------------------    -----------------------
TOTAL ASSETS                                                                         $   39,005,921              $  21,707,793
                                                                              ======================    =======================

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
     Current Liabilities
         Short term debt                                                             $   11,344,379              $  11,467,706
         Current maturities of long-term debt                                             9,250,944                    405,107
         Accounts payable - trade                                                        11,270,836                  8,345,395
         Accrued expenses                                                                 1,551,469                  1,150,267
                                                                              ----------------------    -----------------------
            Total current liabilities                                                    33,417,628                 21,368,475

         Long-term debt, less current maturities                                             10,242                  1,314,218
         Other long-term liabilities                                                        382,667                     64,286
                                                                              ----------------------    -----------------------
TOTAL LIABILITIES                                                                        33,810,537                 22,746,979
                                                                              ----------------------    -----------------------

     Shareholders' Equity (Deficit)
         Preferred shares; no par value, 2,000,00 authorized;
            no shares issued at December 31, 2005 and 2004                                       --                         --
         Common shares; no par value, authorized, 20,000,000
            shares at December 31, 2005, and 2004; issued and outstanding,
            4,640,130 shares at December 31, 2005, and 1,229,732
            shares at December 31, 2004                                                  15,625,625                  2,130,952
         Accumulated deficit                                                           (10,720,870)                (3,411,380)
         Accumulated other comprehensive income                                             290,629                    241,242
                                                                              ----------------------    -----------------------
         Total shareholders' equity (deficit)                                             5,195,384                (1,039,186)
                                                                              ----------------------    -----------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    (DEFICIT)                                $ 39,005,921              $  21,707,793
                                                                              ======================    =======================
</TABLE>

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


<PAGE>
                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES
                 (Formerly known as Wall St. Acquisitions, Inc.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                              Year Ended December 31,
                                                                2005                      2004                   2003
                                                                ----                      ----                   ----
REVENUES


<S>                                                             <C>                      <C>               <C>
     Sales, net of customer discounts                           $  60,850,620            $  37,621,629     $              --
COST OF GOODS SOLD
     Materials                                                     40,806,125               25,565,410                    --
     Direct labor                                                   4,191,143                2,121,052                    --
     Manufacturing overhead                                        10,903,742                6,185,648                    --
                                                       -----------------------    ---------------------    ------------------
         Total cost of goods sold                                  55,901,010               33,872,110                    --


     Gross profit                                                   4,949,610                3,749,519                    --

OPERATING EXPENSES
     Selling, general and administrative expenses                   8,411,003                3,418,055               650,386
     Provision for bad debt                                           972,427                  377,620                    --
     Depreciation and amortization                                    939,091                  140,989                    --
     Impairment loss                                                1,894,000                       --                    --
                                                       -----------------------    ---------------------    ------------------
        Total operating expenses                                   12,216,521                3,936,664               650,836
                                                       -----------------------    ---------------------    ------------------
OPERATING LOSS                                                    (7,266,911)                (187,145)             (650,386)


OTHER (INCOME) EXPENSE

     Miscellaneous  expense                                            55,248                  455,690                    --
     Interest expense                                               1,074,938                1,237,020                    --
     Gain from derivatives                                          (322,000)                       --                    --
     Interest income                                                 (34,442)                       --                    --
     Foreign exchange                                               (630,077)                  185,645                    --
                                                       -----------------------    ---------------------    ------------------
       Total other expense                                            143,667                1,878,355                    --
                                                       -----------------------    ---------------------    ------------------
LOSS BEFORE INCOME TAXES                                          (7,410,578)              (2,065,500)             (650,386)
PROVISION FOR INCOME TAXES                                          (101,088)                 (70,986)                    --
                                                       -----------------------    ---------------------    ------------------
NET LOSS                                                       $  (7,309,490)           $  (1,994,514)      $      (650,386)
                                                       =======================    =====================    ==================
NET LOSS PER COMMON SHARE -

     BASIC AND DILUTED                                         $       (1.74)           $       (1.63)      $        (0.54)
                                                       =======================    =====================    ==================
WEIGHTED AVERAGE NUMBER OF
     COMMON SHARES

     OUTSTANDING                                                    4,193,955                1,227,300             1,194,998
</TABLE>

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

<PAGE>
                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES
                 (Formerly known as Wall St. Acquisitions, Inc.)

            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>

                                                                                    Accumulated
                            Number of                                                 Other           Total
                             Common          Common             Accumulated        Comprehensive  Shareholders'
                             Shares          Shares              Deficit             Income       Equity (Deficit)
                             ------          -------             -------             ------       ----------------
<S>                           <C>              <C>               <C>               <C>             <C>
Balance at January 1,
   2003                       1,188,760        $ 847,864         $ (766,480)       $      --       $     81,384
Collection of stock
   subscription                      --          400,000                  --              --            400,000
Issuance of stock, less
   issuance costs of
   $3,495                        30,972          181,505                  --              --            181,505
Net loss                             --                            (650,386)              --          (650,386)
                           ------------    --------------     -------------        -----------       ----------
Balance at December
   31, 2003                   1,219,732        1,429,369         (1,416,866)               --            12,503
Stock issued for
   consulting services           10,000           50,000                  --               --            50,000

Issuance of warrants                 --          651,583                  --               --           651,583
Net loss                             --               --         (1,994,514)               --       (1,994,514)
Foreign currency
   translation
   adjustment                        --               --                  --          241,242           241,242
                                                                                                    -----------
Comprehensive loss                                                                                  (1,753,272)
                           ------------    --------------     -------------        -----------       ----------
Balance at December 31,
   2004                       1,229,732        2,130,952         (3,411,380)          241,242       (1,039,186)
Issuance of warrants                 --        1,245,600                  --               --         1,245,600
Shares issued to
   Steelbank owners              60,636          303,180                  --               --           303,180
Initial Public Offering       3,349,762       16,387,500                  --               --        16,387,500
Discounts, commissions,
   fees and other IPO
   costs                             --      (4,441,607)                  --               --       (4,441,607)
Net loss                             --               --         (7,309,490)               --       (7,309,490)
Foreign currency
   translation
   adjustment                        --               --                  --           49,387            49,387
                                                                                                    -----------
Comprehensive loss                   --               --                  --               --       (7,260,103)
                           ------------    --------------      -------------        -----------     -----------

Balance at December 31,
2005                          4,640,130     $ 15,625,625       $(10,720,870)        $ 290,629        $5,195,384
                          =============     ============       =============        ==========       ==========
</TABLE>



<PAGE>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES
                 (Formerly known as Wall St. Acquisitions, Inc.)
<TABLE>
<CAPTION>

                                                                           For the Year Ended December 31,
                                                            -----------------------------------------------------------------
                                                                   2005                    2004                  2003
                                                            ---------------------    ------------------    ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                               <C>                    <C>                   <C>
  Net loss                                                        $  (7,309,490)         $ (1,994,514)         $   (650,386)
  Adjustments to reconcile net loss to net cash used
      in operating activities:
      Depreciation and amortization                                      939,091             1,240,016                    --
       Accretion of note discount and other charges                       80,960                    --                    --
       Impairment loss                                                 1,894,000                    --                    --
       Bad debt expense                                                  972,427               377,620                    --
      (Gain) on derivative instrument                                  (322,000)                    --                    --
      Unrealized foreign currency (gain) loss                          (472,447)               172,334                    --
      Non-employee stock options                                         424,200                    --                    --
      Other                                                                   --                51,265                    --
      Changes in assets and liabilities:
      Accounts receivable (increase) decrease                          (340,117)           (2,597,793)                   --
       Inventory (increase) decrease                                     767,788           (2,629,290)                   --
       Prepaid expenses and other current assets
       (increase) decrease                                               175,794             (369,872)                54,345
      Accounts payable and accrued expenses increase                   3,024,579             2,450,664               131,220
                                                                    -------------          ----------            -----------
         Cash used in operating activities                             (165,215)           (3,299,570)             (464,821)
CASH FLOW FROM INVESTING ACTIVITIES
      Proceeds from FENCEMaster                                        1,116,214                    --                    --
     Acquisitions, net of cash received                              (9,093,446)             (565,510)             (263,341)
     Capital and other expenditures                                  (1,105,469)             (118,728)                    --
                                                                    -------------          ----------            -----------
        Cash used in investing activities                            (9,082,701)             (684,238)             (263,341)
CASH FLOW FROM FINANCING ACTIVITIES
    Proceeds from issuance of common shares
    (net of issuance costs of $1,276,434
    in 2005, $0 in 2004 and $3,495 in 2003)                          13,472,316                    --                581,505
     Initial public offering expenditures                                   --            (1,220,459)                     --
     Financing costs                                                (1,286,850)             (519,494)                     --
     Borrowing on bank loan                                           1,574,536             5,132,249                     --
     Repayment of bank loan                                                  --           (2,968,299)                     --
     Proceeds from 2004 note financing                                       --             2,150,000                     --
     Proceeds from issuance of long-term debt                         7,735,062             1,394,000                     --
     Repayment of long-term obligations                               (925,593)             (708,968)                     --
     Proceeds from issuance of short-term obligations                   991,464             1,171,931                     --
     Repayment of short-term obligations                             (5,433,445)            (211,820)                     --
                                                                    -------------          ----------            -----------
         Cash provided by financing activities                        16,127,490            4,219,140                581,505

IMPACT OF FOREIGN CURRENCY EXCHANGE ON CASH                              180,004                   --                     --
                                                                    -------------          ----------            -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                       7,059,578              235,332              (146,657)
CASH AND CASH EQUIVALENTS AT, BEGINNING OF THE PERIOD                    257,786               22,454                169,111
                                                                    -------------          ----------            -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                            $  7,317,364           $  257,786             $   22,454
                                                                    ============           ==========             ==========
</TABLE>

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

<PAGE>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES
                 (Formerly known as Wall St. Acquisitions, Inc.)

<TABLE>
<CAPTION>

                                                                    2005                    2004                    2003
                                                             -------------------      ------------------     -------------------
<S>                                                                <C>                     <C>                    <C>
Cash paid during the period for interest                           $    456,694            $   380,563            $     --
Non-cash transactions:
   Success fee obligation for acquisitions                         $         --            $   400,000            $     --
   Obligations incurred in Steelbank acquisition                   $         --            $ 1,312,480            $     --
   Stock issued for consulting services                            $         --            $    50,000            $     --
   Issuance of stock warrants                                      $  1,253,400            $   651,583            $     --
   Acquisition of land and building with debt                      $  4,461,600            $        --            $     --
Supplemental Disclosure of Cash Flow Information:
</TABLE>


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

<PAGE>


                          NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

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

Company and Industry

     Tarpon  Industries,  Inc. (formerly known as Wall St.  Acquisitions,  Inc.)
(the  "Company") was  incorporated  in Michigan on January 16, 2002. The Company
completed two  acquisitions in 2004,  Eugene Welding Co., or "EWCO," acquired in
April 2004,  and Steelbank,  Inc., or  "Steelbank,"  acquired in May 2004.  EWCO
manufactures  structural  steel  tubing and steel  storage  rack  systems at two
manufacturing  facilities in Michigan,  north of Detroit.  In February 2005, the
Company,  through Steelbank completed the acquisition of the assets,  other than
the land and  building,  of the Haines Road  facility of Bolton  Steel Tube Co.,
Ltd., or "Haines Road", and in May 2005 it completed the acquisition of the land
and building.  The Haines Road facility,  located near Toronto,  Ontario Canada,
manufactures  primarily mechanical steel tubing. As a result of the acquisition,
Steelbank,  Inc., combined with the Haines Road business and relocated to Haines
Road. On April 6, 2005,  Steelbank,  Inc. changed its name to Steelbank Tubular,
Inc.

     The  Company  changed its name from Wall St.  Acquisitions,  Inc. to Tarpon
Industries, Inc. in March 2004.

Consolidation

     The consolidated  financial  statements include the accounts of the Company
and  all  of  its  wholly-owned  subsidiaries.   All  significant  inter-company
transactions  and  balances  have been  eliminated.  The assets of the  acquired
subsidiaries have been adjusted to fair values as of the date of acquisition and
goodwill has been  recognized for the difference  between the purchase price and
fair value of the assets  acquired  for the acquired  subsidiaries.  The Company
operates in two segments. (See Note 14).

Cash and Cash Equivalents

     All highly liquid investments  purchased with an original maturity of three
months or less are considered to be cash  equivalents.  Periodically  throughout
each year, the Company maintained a balance in one bank account in excess of the
federally insured limit of $100,000.  At December 31, 2005 and 2004, the Company
maintained  balances in excess of the $100,000 limit of $7,063,961 and $104,011,
respectively.

Accounts Receivable and Concentration of Credit Risk

     Accounts  receivable are due within 30 to 60 days and are stated at amounts
due from customers net of an allowance for doubtful accounts.  Accounts that are
outstanding  longer than the  contractual  terms are  considered  past due.  The
Company  determines its allowance 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. Accounts receivable are written off
to expense when they become uncollectible and payments  subsequently received on
such receivables are credited to the allowance for doubtful accounts.

     The Company had one major  customer in 2005 and 2004 that accounted for 14%
and  22%  of  net  sales,   respectively.   This  same  customer  accounted  for
approximately  24% and 44% of accounts  receivable  as of December  31, 2005 and
2004,  respectively.  The Company had four  suppliers in 2005 that accounted for
approximately 34% of net purchases,  and in 2004, one supplier accounted for 20%
of the purchases.

Revenue Recognition

     For sales of  products  and scrap,  revenue is  recognized  at the time the
product is shipped to  customers.  Scrap sales are  recognized as a reduction in
cost of goods sold.

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
its inventories  monthly to determine  whether or not a valuation reserve should
be made to recognize a lower value.

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 as follows:

        Machinery and equipment                       5 - 10 years
        Leasehold improvements                        Life of lease
        Computer equipment                            3 - 7 years
        Computer software                             2 years
        Transportation equipment                      5 years
        Furniture and fixtures                        5 - 7 years
        Buildings                                     20-30 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 fixed assets
are recognized at the time of disposal.

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.  The  principal  deferred  tax asset arises from net
operating loss carry forwards.

Stock Options

     The Company  accounts for  stock-based  compensation of employees using the
intrinsic value method prescribed in Accounting  Principles Board Opinion No. 25
"Accounting  for  Stock  Issued  to  Employees,"  and  related  interpretations.
Accordingly,  compensation  costs for stock  options  granted to  employees  are
measured as the excess,  if any, of the market price of the  Company's  stock at
the date of the grant over the amount an employee must pay to acquire the stock.
Stock options and warrants granted to non-employees  are all accounted for using
the fair value method.  The Company uses the  Black-Scholes  valuation model for
determining  the fair value of its options  and  warrants.  That model  requires
assumptions regarding the expected life of the security, the expected volatility
of the stock  price  during  the  period,  the risk free  interest  rate and the
dividend yield.  Had  compensation  expense for stock options that vested in the
twelve month period ending December 31, 2005 been  determined  based on the fair
value of the options on the grant date pursuant to the  methodology  of SFAS No.
123,  its  results  of  operations,  on a pro forma  basis,  would  have been as
follows:

                                                                    2005
                                                               ---------------
          Net loss                                             $(7,310,000)
           Deduct: Stock-based employee compensation
              expense had fair value method been applied       $ (735,000)
                                                               ---------------
          Pro forma net loss                                   $ (8,045,000)
                                                               ===============
          Net loss per common share - basic and diluted        $   (1.74)
                                                               ===============
          Pro forma net loss per common share -
                basic and diluted                              $   (1.92)
                                                               ===============

     The fair value of options  granted was estimated at the date of grant using
the  Black-Scholes  option  pricing  model with the  following  weighted-average
assumptions for option grants during the twelve month period ending December 31,
2005:  risk-free  interest  rate of 3.78% for  options  issued  during the first
quarter 2005 and risk-free  interest rate of 4.48% for options issued during the
fourth quarter 2005;  dividend yield of 0%;  volatility  factors of the expected
market price of the  Company's  common  stock of 60% for all options  granted in
2005;  and a  weighted-average  expected  life of the options of five years.  No
options were granted during 2004 or 2003.


Goodwill and Intangible Assets

     The Company  adopted SFAS No. 141,  "Business  Combinations,"  and SFAS No.
142, "Goodwill and other Intangible  Assets." SFAS No. 141 requires all business
combinations  to be accounted for using the purchase  method of  accounting  and
that  certain  intangible  assets  acquired  in a business  combination  must be
recognized  as  assets  separate  from  goodwill.  SFAS No.  142  provides  that
intangible  assets with indefinite  lives and goodwill will not be amortized but
will be tested at least annually for  impairment and whenever  events or changes
in  circumstances  indicate  that the  carrying  value of the  asset  may not be
recovered. If the asset is impaired, it will be written down to its fair value.

     The Company  completed its annual impairment test as of October 1, 2005 and
recorded an  impairment  loss of $1.1  million.  The  impairment  relates to the
Steelbank operation.  The Company employed a discounted cash flow analysis and a
market  comparable  approach in conducting its impairment  test.  Fair value was
determined  based upon the discounted  cash flows of Steelbank  using a discount
rate  averaging  15.5% and a residual  growth rate of 3%. The market  comparable
approach  consisted  of an  earnings  multiple  of 4.9 times  forecasted  EBITDA
(operating  income  less - interest,  taxes,  depreciation,  and  amortization).
Future cash flows and EBITDA are affected by future operating performance, which
will be impacted by economic conditions,  many of which are beyond the Company's
control.  The Company also evaluated its definite life  intangibles and recorded
an  adjustment  to Steelbank  customer  lists of $794,000.  The use of different
assumptions could result in significantly different results. Management believes
its  assumptions  and estimates are reasonable and  appropriate,  however actual
results could differ from those estimates.

     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. As of December 31, 2005, long term assets other than intangibles were not
impaired.

Foreign Currency Translation and Currency Risk

     Assets and liabilities  have been translated at exchange rates in effect at
the balance sheet date.  Income and expenses are translated at average  exchange
rates during the period. Exchange gains or losses resulting from translation are
reflected in accumulated other comprehensive income.

     During 2005,  the Company had an  inter-company  loan  denominated  in U.S.
dollars  in the amount of  $9,266,700  (Cdn.  $10,800,300)  to  Steelbank  which
generated  approximately  $472,447  of  foreign  exchange  gain.  This  loan was
designated as along term  investment in December  2005,  and will no longer give
rise to gains or losses in the future.

     At December  31,  2005,  Steelbank's  receivables  include  $788,518  (Cdn.
$919,615) and payables include $1,890,026 (Cdn. $2,202,828,166 ).

     The Company also recognized  $157,630 of gain on foreign exchange sales and
purchases related to Steelbank's operation.

Deferred Financing Costs

     Deferred financing costs represent fees paid to third parties that provided
services in connection with securing financing.  These costs are amortized using
the effective interest rate method over the term of the loan.

Discount on Debt

     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.  The  conversion  feature and  registration  right were  considered  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 Statement 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 three  year  life of the  debt.  The
discount is classified as a deferred financing cost.

Earnings Per Share

     Basic  earnings  per share is  computed  in  accordance  with SFAS No.  128
"Earnings  Per Share" by  dividing  earnings  on common  shares by the  weighted
average number of common shares outstanding during each year.

Use of Estimates

     The  preparation  of 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  financial  statement  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from these
estimates.

New Accounting Pronouncements

     In May of 2005, the Financial  Accounting  Standards Board issued Statement
of Financial Accounting  Standards No. 154 ("SFAS 154"),  Accounting Changes and
Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3
Reporting Accounting Changes in Interim Financial  Statements.  SFAS 154 changes
the  requirements for the accounting for and reporting of a change in accounting
principle.  This Statement requires retrospective  application to prior periods'
financial  statements  of  changes  in  accounting   principle,   unless  it  is
impracticable to determine either the period-specific  effects or the cumulative
effect of the change.  The Statement  defines  retrospective  application as the
application of a different  accounting  principle to prior accounting periods as
if that principle had always been used or as the adjustment of previously issued
financial statements to reflect a change in the reporting entity. This Statement
also  redefines  restatement  as the  revising of  previously  issued  financial
statements to reflect the  correction of an error.  This  Statement is effective
for accounting  changes and corrections of errors made in fiscal years beginning
after  December 15, 2005.  This  pronouncement  will have no material  effect on
these  financial  statements,  but could  have an effect on the  Company  in the
future to the extent the Company has a change in accounting, or correction of an
error.

     During 2005, the Financial  Accounting  Standards Board (FASB) issued three
FASB Staff Positions (FSP) that provide  accounting  guidance on the application
of how companies  should apply the Financial  Accounting  Standards Board issued
Statement  No.  123  (R)  ("SFAS  123(R)"),  "Share-Based  Payment"  more  fully
discussed  below.  FSP  FAS  123  (R)-1,   "Classification  and  Measurement  of
Freestanding  Financial  Instruments  Originally Issued in Exchange for Employee
Services  under  FASB  Statement  No.  123  (R)",  FSP FAS  123(R)-2  "Practical
Accommodation  to the Application of Grant Date as Defined in FASB Statement No.
123 (R)", and FSP FAS 123 (R)-3,  "Transition Election Related to Accounting for
the  Tax  Effects  of   Share-Based   Payment   Awards"   all  provide   further
interpretation  to the  application  of SFAS 123(R).  The Company will adopt the
modified  prospective  transition  method  for stock  based  compensation  which
requires  the Company to record its stock  option  expense  using the fair value
method.  Under this method the approximate  compensation  expense  estimated for
2006 is $200,000.

     In November 2004, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 151 ("SFAS 151"),  "Inventory Costs". SFAS
151 amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing,  to clarify
the accounting for abnormal amounts of idle facility expense,  freight, handling
costs and  spoilage.  This  statement  requires  that these items be expensed as
incurred  and not  included in overhead.  In  addition,  SFAS 151 requires  that
allocation of fixed  production  overhead to conversion costs should be based on
normal  capacity of the production  facilities.  This Statement is effective for
inventory costs incurred during fiscal years beginning after June 15, 2005. This
pronouncement   will  have  no  material  effect  on  the  Company's   financial
statements.


     In December 2004, the Financial Accounting Standards Board issued Statement
of  Financial  Accounting   Standards  No.  153  ("SFAS  153"),   "Exchanges  of
Nonmonetary  Assets".  SFAS 153,  amends APB  Opinion  No. 29,  "Accounting  for
Nonmonetary  Transactions",  for  exchanges  of  similar  productive  assets and
replaces it with a general  exception for exchanges that do not have  commercial
substance. This Statement is effective for nonmonetary asset exchanges occurring
in fiscal  periods  beginning  after June 15, 2005.  This  pronouncement  had no
material effect on the Company's financial statements.


Reclassification

     Certain  amounts in prior periods have been  reclassified to conform to the
2005 financial statement presentation.

2. Financial Position

     The accompanying 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  losses of  approximately  $10.8 million from its inception on January
16, 2002 through  December 31, 2005 and has  negative  working  capital of $11.1
million and is in  violation of its debt  covenants as of December 31, 2005.  If
the Company is unable to significantly  decrease its losses,  obtain  additional
financing,  or other cash flows, its financial resources will not be adequate to
satisfy its operating and capital requirements for the next 12 months.

     Based on its current business plans, the Company believes that its existing
cash  resources  will  be  sufficient  to fund  its  operating  losses,  capital
expenditures,  debt payments and working  capital  requirements  for the next 12
months.  The  estimated  length of time  that its cash  resources  will  sustain
operations is based on management  assumptions.  These estimates and assumptions
are subject to change as a result of actual  experience.  The Company may not be
able to attain profitability.  Failure to generate sufficient revenues,  achieve
certain other business plan  objectives or raise  additional  funds could have a
material adverse effect on the Company's  results of operations,  cash flows and
financial position, including its ability to continue as a going concern.

     Management's  plans include  completing the cost reduction begun in January
2006, improved receivables and inventory  management,  maintaining of margins as
steel prices  fluctuate,  and  continuing  the  development of its customers and
markets through its sales initiatives.

     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.

3. Acquisitions

EWCO

     In April 2004, the Company  completed the  acquisition of 100% of the stock
of Eugene Welding Co., which  manufactures  and sells  structural and mechanical
steel tubing and steel storage rack systems at two  manufacturing  facilities in
Michigan north of Detroit.  The aggregate  purchase price for EWCO was $699,490.
The Company  acquired EWCO for $415,450 in cash paid to its sole shareholder for
all of the then  outstanding  EWCO  shares.  The  Company  paid a  consultant  a
$200,000   success  fee  in  connection   with  the   acquisition  and  incurred
approximately  $84,040 in expenses  related to the  acquisition,  which has been
added to the cost of the acquisition.

     In April 2004 and in connection  with its  acquisition of EWCO, the Company
entered  into an  employment  agreement  with  EWCO's then  President  and Chief
Executive  Officer.  In August  2004,  the Company  entered  into a  Termination
Agreement with him, pursuant to which he resigned from all of his positions with
the Company,  and agreed to the following:  render  consulting  services for one
year, a release of claims, keep the Company's information confidential,  and not
to  compete  for a  period  of  two  years  following  the  termination  of  his
consultation.  His  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,  (4)  reimbursement  of his  attorney  fees  incurred  in
connection with the negotiation of legal matters up to $9,850 and (5) payment of
the  outstanding  principal and interest on the loan in connection with the 2003
GMC Sierra  pick-up  truck  currently  used by him, two years of  insurance  and
transfer title to him for the vehicle.

Steelbank

     In May 2004, the Company  completed the acquisition of 100% of the stock of
Steelbank,  Inc., which acts as a distributor and sales  representative  for the
sale of  structural  and  mechanical  steel  tubing  and is based in a suburb of
Toronto, Ontario, Canada. The acquisition complemented the Company's acquisition
of EWCO by providing a sales  organization for EWCO's products.  Because much of
Steelbank's value to the Company is the value of its sales  organization and not
the value of its assets,  a majority of the purchase price has been allocated to
goodwill. The aggregate purchase price for Steelbank was $1,656,563. The Company
acquired  Steelbank  by paying  approximately  $54,263  (Cdn.  $75,000) in cash,
issuing a promissory  note in the  principal  amount of  approximately  $574,300
(Cdn.  $800,000),  and by issuing  additional  promissory notes in the aggregate
principal amount of  approximately  $290,750 (Cdn.  $405,000).  The Company also
paid Cdn. $62,500 of the holders' legal and other expenses at maturity, agreeing
to issue a number of its common shares equal to  approximately  $303,180 divided
by the $5.00 public  offering price of its shares in its initial public offering
(recorded in notes payable - other). Additionally, the Company paid a consultant
a  $200,000  success  fee  in  connection  with  the  acquisition  and  incurred
approximately  $268,018 in expenses related to the  acquisition,  which has been
added to the cost of the acquisition.  Canadian dollars are translated into U.S.
dollars as of the acquisition date of May 14, 2004.

     The  results  of  operations  of EWCO and  Steelbank  are  included  in the
consolidated  statement  of  operations  from April 2, 2004,  and May 14,  2004,
respectively.

     The following table  summarizes the final  allocation of the purchase price
to the assets acquired and liabilities assumed at the date of acquisition:

                                               EWCO                Steelbank
                                      ------------------    -------------------
Current assets                               $9,972,486             $1,805,420
Property, plant and equipment                   573,891                 62,175
Goodwill                                             --              1,106,279
Other intangible assets                              --                410,000
Other assets                                     75,800                     --
Current liabilities                         (9,380,408)            (1,727,311)
Long term liabilities                         (542,279)                     --
                                      ------------------    -------------------
Net assets acquired                   $         699,490             $1,656,563
                                      ==================    ===================

     The following unaudited proforma consolidated information is provided as if
the  acquisitions  of EWCO and Steelbank had occurred as of the beginning of the
applicable  period.  The  unaudited  proforma  information  should  be  read  in
conjunction with the related  historical  information,  and does not reflect any
benefits from  synergies  that might be achieved from  combining  operations and
does not  reflect  the  actual  results  that  would  have  occurred,  nor is it
necessarily   indicative  of  future  results  of  operations  of  the  combined
companies.  The unaudited pro forma amounts include  adjustments  that are based
upon available information and various assumptions that the Company believes are
reasonable.

                                                  Year ended December 31,
                                           ----------------------------------
                                                  Pro forma and Unaudited
                                           ----------------------------------
                                                   2004                  2003
                                           --------------    ----------------
Net sales                                  $  51,037,000       $   33,931,000
Net loss before taxes                      $ (1,340,000)       $  (1,557,000)
Net loss                                   $ (1,328,000)       $  (1,546,000)
Net loss per common share - basic and
  diluted                                  $      (1.08)       $       (1.29)
Weighted average number of common shares
   outstanding                                 1,227,300            1,194,998

Haines Road

     The aggregate  purchase price including expenses related to the Haines Road
acquisition   transaction  was  approximately   $10,190,000  (Cdn.  $12,489,000)
consisting of (1) approximately  $9,211,000 (Cdn.  $11,289,000)  payable in cash
and (2)  approximately  $979,000 (Cdn.  $1,200,000)  in a secured,  subordinated
promissory  note,  either  payable  15 months  after  closing  or by  offsetting
adjustments  made after closing or for purchases by Bolton Steel Tube Co., LTD.,
("Bolton")  from Haines  Road.  The  purchase  price was  allocated  as follows:
$9,689,000 (Cdn. $11,875,000) for the assets acquired, a $200,000 success fee in
connection  with the  transaction,  payable to  Bainbridge  Advisors,  a related
party,  over 24 months,  and  approximately  $301,000 in expenses related to the
transaction.  The Company  funded a portion of the purchase  price with proceeds
from the initial public offering and from a term loan described in Note 6.

     Pursuant  to a  guarantee  between  Tarpon and  Bolton,  Tarpon  guaranteed
Steelbank's  obligations under the secured subordinated promissory note. As part
of the  transaction,  Tarpon  agreed not to compete  with Bolton with respect to
hot-dipped galvanized products for a period of six months after closing.  Bolton
also agreed not to compete with Tarpon on the  pre-galvanized  tubing market for
six months. The six month non compete agreements expired on August 17, 2005.

     On May 18, 2005,  Steelbank  purchased the Haines Road real estate  assets,
including  closing  fees  and  expenses,   for  $4,638,000  (Cdn.   $5,870,000),
consisting  of  (1)  approximately   $530,000  (Cdn.   $670,000)  in  cash,  (2)
approximately  $2,765,000  (Cdn.  $3,500,000)  in a  one  year  mortgage  bridge
financing,  and (3) seller financing of approximately $948,000 (Cdn. $1,200,000)
and  $395,000  (Cdn.  $500,000)  payable  August  18,  2006 in second  and third
mortgage financing, respectively.

     The  Company  had  leased  the Haines  Road real  estate  during the period
between  the  acquisition  closing  date and the real estate  closing  date at a
monthly rent of approximately $62,300 (Cdn. $75,000).

     The following  table  summarizes the assets acquired in connection with the
acquisition of Haines Road converted at the exchange rate in effect at the dates
of acquisition:

                                                               Haines Road
                                                      ---------------------

              Current assets                                   $ 1,183,000
              Property, plant, and equipment                     5,356,000
              Goodwill                                           2,439,000
              Other intangible assets                            1,212,000
              Land and buildings                                 4,638,000
                                                      ---------------------
              Total assets acquired                           $ 14,828,000
                                                      =====================


     The following  unaudited pro forma consolidated  information is provided as
if the  acquisition  of the Haines Road facility and EWCO had occurred as of the
beginning of the applicable period. For 2004, the pro forma data includes Haines
Road and EWCO as if the Company owned them for the full year. The pro forma data
for 2004 and 2005 includes  Steelbank as of its May 14, 2004  acquisition  date.
The  unaudited  pro forma  information  should be read in  conjunction  with the
related historical information, and does not reflect any benefits from synergies
that might be achieved from combining operations and does not reflect the actual
results that would have  occurred,  nor is it  necessarily  indicative of future
results of operations of the combined companies. The unaudited pro forma amounts
include  adjustments  that are based  upon  available  information  and  various
assumptions that the Company believes are reasonable.

                                                Year ended December 31,
                                         --------------------------------------
                                                Pro forma and Unaudited
                                         --------------------------------------
                                                2005                 2004
                                         -----------------   ------------------
Net sales                                   $  63,616,000       $ 63,202,000
Net income (loss) before taxes              $ (7,360,000)       $    348,000
Net income (loss)                           $ (7,120,000)       $     23,000
Net loss per common share -
  basic and diluted                         $      (1.53)       $         --
Weighted average number of common
   shares outstanding                       $   4,640,130       $  4,640,130


Midwest Tube Mill, Inc. Agreement

     On August 30, 2005, MTM Acquisition Company ("MTM  Acquisition"),  a wholly
owned  subsidiary  of  Tarpon  Industries,   formed  for  the  purpose  of  this
acquisition, entered into an Asset Purchase Agreement ("Agreement") with Midwest
Tube Mills,  Inc.  ("Midwest"),  a manufacturer of mechanical steel tubing,  and
certain  stockholders of Midwest,  for the acquisition of  substantially  all of
Midwest's assets and business (the  "Transaction").  In the fourth quarter,  the
Company  wrote off $192,000 of due  diligence  costs due to the  uncertainty  of
completing the transaction.  On March 28, 2006, the Company informed MTM that it
would  terminate  the  Agreement  based on MTM's  inability  to provide  audited
financial statements.


4. Goodwill and Intangible Assets

     The change in goodwill is as follows:

                                              2005               2004
                                         ---------------    ---------------
Beginning balance  January 1                $ 1,279,810            $    --
Acquisition of Steelbank                             --          1,106,279
Acquisition of Haines Road                    2,460,122                 --
Foreign currency impact                         168,868            173,531

Impairment                                  (1,100,000)                 --
                                            -----------        -----------

Ending balance December 31                  $ 2,808,800        $ 1,279,810
                                            ===========        ===========

     Goodwill  impairment  tests are  completed  for each  reporting  unit on an
annual basis,  or more  frequently  in certain  circumstances  where  impairment
indicators  arise. The annual impairment test as of October 1, 2005 indicated an
impairment of goodwill at Steelbank.  The  impairment  principally  results from
rising, competitive pricing pressures and lower expected sales volume growth. As
of October 1, 2005,  the excess of fair value of the  Steelbank  reporting  unit
exceeded its carrying value by approximately $1,100,000 million.

     The Company's  intangibles assets are valued based on independent appraisal
and consist of the following:
<TABLE>
<CAPTION>

                                                                Covenant
                                             Customer             not to
                                              base               compete                 Total
                                        -----------------   ------------------      ----------------
<S>                <C>                         <C>                 <C>                    <C>
Balance at January 1, 2004                     $      --           $       --             $      --

Additions                                         80,000              330,000               410,000

Foreign currency impact                           12,556               51,790                64,346

Amortization                                     (3,333)             (34,375)              (37,708)
                                        -----------------   ------------------      ----------------
Balance at December 31, 2004                      89,223              347,415               436,638

Additions                                      1,212,000                   --             1,212,000

Foreign currency impact                           59,988                8,585                68,573

Amortization                                   (158,557)             (71,064)             (229,621)

Impairment                                     (794,000)                   --             (794,000)
                                        -----------------   ------------------      ----------------
Balance at December 31, 2005                 $   408,654          $   284,936            $  693,590
                                        =================   ==================      ================
</TABLE>


     As part of the annual  impairment  review of  goodwill,  the  Company  also
evaluated  the carrying  value of its definite  life  intangibles  in the fourth
quarter 2005. The undiscounted  cash flows are compared to the carrying value of
the  definite  life  intangibles.  For  customer  base,  the fair  market  value
(discounted cash flows) exceeded the carrying value by $794,000, and this amount
was charged to impairment loss in 2005. This charge was the result of the higher
than expected turnover in the existing customer base during 2005.

     The customer base is being  amortized over 10 years and the covenant not to
compete is being amortized over the term of the covenant, 6 years. The following
is a schedule of future amortization expense for intangible assets:

                 2006                              $ 133,449
                 2007                                135,540
                 2008                                132,056
                 2009                                119,165
                 2010                                 63,480
                 Thereafter                          109,900
                                             ----------------
                 Total                              $693,590
                                            ================

     Goodwill of $2,460,122  and customer base of $1,212,000  are deductible for
tax purposes as a result of the Haines Road acquisition.


5. Details of Balance Sheet

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

        INVENTORIES:                          2005               2004
                                         ---------------    ---------------
        Raw material                       $3,548,251         $4,289,648
        Work-in-process                       303,096            602,390
        Finished goods                      2,882,126          2,599,276
        Supplies                              186,165            113,070
                                         ---------------    ---------------
          Total                            $6,919,638         $7,604,384
                                         ===============    ===============


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

<TABLE>
<CAPTION>
        PROPERTY PLANT AND EQUIPMENT:                            2005                 2004
                                                            -----------------    -----------------
<S>                                                                  <C>                    <C>
           Machinery and Equipment                                  $5,891,036             $394,554
           Building and leasehold improvements                       2,916,370              186,817
           Computer equipment                                          285,406               32,710
           Land                                                      2,649,939                   --
           Transportation equipment                                     56,147               24,500
           Furniture and fixtures                                       74,683               77,090
           Construction in progress                                     80,865               24,805
                                                            ------------------    -----------------
            Total                                                   11,954,446              740,476
           Less accumulated depreciation and amortization            (814,746)            (105,425)
                                                            ------------------    -----------------
            Net property, plant and equipment                      $11,139,700            $ 635,051
                                                            ==================    =================
</TABLE>


6. Debt

     The following  table sets forth the components of the Company's  short-term
debt at December 31 of the respective years:
<TABLE>
<CAPTION>

                                                                   2005                    2004
                                                         ---------------------       ----------------
<S>                                                           <C>                    <C>
          EWCO Revolving Credit Facility                      $  6,016,786           $    6,711,387
          Steelbank Revolving Credit Facility                    2,356,418                       --
          First Mortgage on Haines Road Real Estate              2,971,175                       --
          Note issued in connection with redemption of
              EWCO shares                                               --                  670,000
          Notes issued with acquisition of Steelbank
                                                                        --                  764,388
          Steelbank full recourse factoring liabilities
                                                                        --                1,171,931
          Bridge loan payable                                                             2,150,000
                                                         ---------------------      ----------------
           Total                                              $  11,344,379         $    11,467,706
                                                         =====================      ================
</TABLE>


     The following  table sets forth the  components of the Company's  long-term
debt at December 31 of the respective years:
<TABLE>
<CAPTION>

                                                                   2005                    2004
                                                         ---------------------       ----------------
<S>                                                           <C>                    <C>
          EWCO term loan                                      $ 1,068,733               $1,347,533
          Steelbank term loan                                   1,531,530                       --
          Second mortgage on Haines Road real estate            1,029,600                       --
          Third mortgage on Haines Road real estate               429,000                       --
          Convertible debt (less discount of $818,980)          5,181,020                       --

          Notes payable to former shareholders of Steelbank            --                  336,272
          Other                                                    21,303                   35,520
                                                         ---------------------       ----------------
           Subtotal                                             9,261,186                1,719,325

               Less current portion, of long-term debt        (9,250,944)                (405,107)
                                                         ---------------------       ----------------
           Long-term portion of long-term debt                  $  10,242               $1,314,218
                                                         =====================       ================
</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:

                2006                     $ 3,796,262
                2007                       2,896,818
                2008                       2,704,303
                2009                         592,693
                2010                          90,090
                                         -----------
                Total                    $10,080,166
                                         ===========

EWCO Credit Facility

     EWCO has a credit facility with Standard  Federal Bank,  N.A.,  including a
revolving credit line for up to $9,000,000, subject to a borrowing base based on
eligible inventory and receivables,  originally  maturing August 31, 2007, and a
$1,394,000 term loan. The term loan is payable in equal monthly  installments of
principal based on a five year  amortization  ending August 1, 2009, but matures
August 31, 2007 if the revolving  credit facility is not renewed.  The loans are
secured  by all of the  assets  of  EWCO,  approximating  $14.9  million,  and a
guarantee by Tarpon.  The principal amount  outstanding bears interest,  payable
monthly,  at the bank's  prime  rate  (7.25% at  December  31,  2005).  The loan
agreement  requires  EWCO to  maintain a minimum  debt  service  coverage  ratio
(generally net income adjusted for depreciation,  capital expenditures, and cash
distributions and advances,  divided by principal  payments of debt) of at least
1.50 to 1.00.  EWCO's debt  service  coverage  ratio as of December 31, 2005 was
30.56 to  1.00.  The loan  agreement  also  requires  EWCO to  maintain  minimum
tangible net worth of ($1,855,000)  plus 80% of its net income for the preceding
fiscal year,  starting with net income for 2005. EWCO's tangible net worth as of
December 31, 2005 was  ($373,199).  The loan agreement also generally  prohibits
dividends and limits EWCO's  ability to make capital  expenditures  in excess of
$1,500,000 during the 12 months after its initial public offering and $750,000 a
year after such 12-month period.

     At November  30,  2005,  EWCO was in  violation  of it  tangible  net worth
covenant.  EWCO was in  compliance  with this  covenant as of December 31, 2005.
Because of this violation,  its debt has been reclassed as a current  liability.
The Company is currently negotiating with its lender to waive this violation.

     EWCO  must pay a 0.25%  unused  line of credit  fee each  month and is also
subject  to a 1%  prepayment  fee if the  loans  are  prepaid  any  time  before
maturity.  Approximately  $6,017,000 and $6,711,000  was  outstanding  under the
revolving  credit  facility  as of  December  31,  2005 and 2004,  respectively.
Approximately  $1,069,000 and $1,348,000 was outstanding  under the term loan as
of the  aforementioned  dates and  approximately  $423,000  and  $1,714,000  was
available for borrowing under the revolving credit facility,  as of December 31,
2005  and  2004,  respectively,  without  violating  any  of the  existing  debt
covenants.

Steelbank Credit Facility

     On February 17, 2005,  Steelbank entered into a Loan Agreement with LaSalle
Business  Credit, a division of ABN AMRO Bank N.V.,  Canada Branch.  This credit
facility provides for a revolving credit line in the maximum principal amount of
$8,000,000  Canadian  dollars,  subject to a  borrowing  base based on  eligible
inventory and receivables  originally  maturing on February 17, 2008, and a term
loan in the principal amount of $2,100,000  Canadian  dollars.  Principal on the
term loan is payable in sixty equal  monthly  installments  of $35,000  Canadian
dollars  beginning  on April 1,  2005.  The term loan bears  interest,  which is
payable  monthly in arrears,  at a floating rate equal to the Lender's  Canadian
prime  rate plus an  applicable  margin  of  between  1.00% and 1.50%  (6.50% at
December 31,  2005).  The entire amount of the term loan facility will mature on
March 1,  2010.  Borrowings  of  Canadian  dollars  under the  revolving  credit
facility bear interest at a floating rate equal to the Lender's  Canadian  prime
rate plus an applicable margin of between 0.75% and 1.25% (6.25% at December 31,
2005).  Borrowings  of U.S.  dollars under the  revolving  credit  facility bear
interest at a floating rate equal to the Lender's U.S. prime rate. Under certain
circumstances,  Steelbank  has the  option  to  convert  all or any  part of its
Canadian or United  States  borrowings to an interest rate equal to a Libor rate
plus  an  applicable  margin  of  between  2.25%  and  2.75%  or a BA  (Banker's
Acceptance) rate plus an applicable margin of between 2.25% and 2.75%.  Interest
on the revolving credit facility is payable monthly in arrears.  The obligations
under the Loan  Agreement  are  unconditionally  guaranteed  by Tarpon,  and are
secured by a security  interest in substantially all of the assets of Steelbank,
approximating  $20.2 million,  and Tarpon,  other than Tarpon's common shares of
EWCO.  Steelbank's  obligations  under the Loan  Agreement are also secured by a
pledge  of all the  capital  stock  of  Steelbank  pursuant  to a  share  pledge
agreement between Tarpon and Lender.

     The Loan Agreement contains customary covenants that will limit the ability
of Steelbank to, among other things,  guarantee additional  indebtedness,  incur
indebtedness,  create liens,  pay dividends,  make certain types of investments,
enter into transactions with affiliates,  make capital expenditures in excess of
$500,000  Canadian  dollars in any fiscal year,  sell  assets,  merge with other
companies or enter into any transaction outside the ordinary course of business.

     The  loan  agreement  also  requires   compliance  with  several  financial
covenants,  including  adjusted  net worth of at least  (Cdn.  $4,841,765).  For
quarters ending on or after June 30, 2005, the minimum adjusted net worth of the
previous  quarter  will be  increased  by 75% of the net income for that quarter
(ignoring quarters in which there is a loss). It also requires Steelbank Tubular
to maintain  debt service  coverage  ratio  (generally  net income  adjusted for
depreciation and amortization,  non-cash transactions,  and capital expenditures
divided  by the total of all  principal  payments  of  long-term  debt,  capital
leases,  subordinated debt and all payments in respect of any distribution),  of
at least 1.25 to 1.00. It also requires  Steelbank to maintain interest coverage
(generally  net income  adjusted for interest  expense,  bank fees and net costs
under interest rate contracts, taxes, depreciation and amortization and non-cash
items  divided by interest  expense plus bank fees and net costs under  interest
rate contracts),  of at least 1.50 to 1.00.  Steelbank used the borrowings under
the  credit   facility  to  provide  partial  funding  for  the  acquisition  of
substantially all of the assets and business of the Haines Road facility and the
cash  portion  of the  Haines  Road real  estate,  to pay  transaction  fees and
expenses, to refinance Steelbank's  full-recourse  factoring arrangement and for
general working capital purposes of Steelbank.

     Steelbank was in violation of the tangible net worth, debt service coverage
and interest  coverage  covenants of its loan agreement as of December 31, 2005,
driven  primarily by the losses  sustained this year, the write-off of a certain
bad debt and the  write-down of certain  intangible  assets and  goodwill.  As a
result of these violations, and a going concern qualification, its debt has been
reclassed as a current liability.  The Company is currently negotiating a wavier
for these violations.

     Each  month,  Steelbank  must pay a .50%  unused  line of credit fee and an
administrative   fee  of   approximately   $1,700.   As  of  December  31,  2005
approximately  $2,356,000  and $1,532,000  was  outstanding  under the Revolving
Credit Facility, and the term loan, respectively, and approximately $490,000 was
available for borrowing without violating any existing debt covenant.

Steelbank Note Payable

     On February 17, 2005,  Steelbank  Tubular,  Inc. as part of the purchase of
the Haines Road Facility obtained $979,000 (Cdn.  $1,200,000) in a one-year note
with interest payable monthly at 8.00% per annum.  This note was paid in full on
December 13,  2005,  with the  proceeds  from the Laurus  Financing as discussed
below.

Steelbank Mortgages

     On May 18, 2005,  Steelbank  Tubular,  Inc.  purchased the Haines Road real
estate  assets for  $4,638,000  (Cdn.  $5,870,000),  including  closing fees and
expenses,  consisting of approximately  $530,000 (Cdn.  $670,000) in cash, a one
year first mortgage totaling $2,765,000 (Cdn. $3,500,000) jointly secured by the
Haines  Road real  estate  and a  guarantee  from the  Company  payable in equal
monthly  installments of principal and interest based on a 25 year  amortization
period and  bearing  interest  at 1.25%  above  Canadian  prime  rate  (6.25% at
December 31, 2005), as well as second and third  mortgages from Bolton,  payable
August  18,  2006,  totaling  $948,000  (Cdn.  $1,200,000)  and  $395,000  (Cdn.
$500,000) with interest payable monthly at 8% and 10%, respectively,  per annum.
As of December 31, 2005,  approximately  $2,971,000  (Cdn.  $3,463,000)  and the
entire balances of $1,030,000  (Cdn.  $1,200,000)  and $420,000 (Cdn.  $500,000)
were outstanding under the first, second, and third mortgages, respectively.

Convertible Debt

     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 December 13,
2008  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 and Steelbank, subject to a subordination
agreement  between  Tarpon ABN AMRO Bank,  N.V.,  Canadian  Province and LaSalle
Bank,  Midwest,  N.A.  The Note is  payable  in equal  monthly  installments  of
principal  totaling  $187,500  commencing  on April 1, 2006 through the maturity
date and bears  interest at prime plus 2% (9.25% at December 31, 2005).  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 $3.27 per share. The Warrants provide for
the  purchase of up to 390,000  shares of common  stock at an exercise  price of
$3.81  until  December  13,  2012.  The  Company  has  agreed,   pursuant  to  a
registration rights agreement,  to use its best efforts to register and maintain
an effective  registration  for the shares of common stock underlying the Laurus
Note and  Warrants  and to process the same to  effectiveness.  Failure to do so
could constitute an event of default, depending on the circumstances,  resulting
in an additional  interest charge of 2% per month on the outstanding  balance of
the note  until the event of default  is cured or  waived.  The  Company is also
subject to a penalty of $500 per day for failure to register the shares  related
to the conversion feature.

     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  4.99% 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.  The accounting for the conversion  feature and the
warrants are described in Note 1. Such discounts are being  amortized  using the
effective  interest  method over the term of the related debt. 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 life of the note. 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.  At December 31, 2005, the Warrants can be put back to
the Company,  and, therefore were marked to market and recorded at a fair market
value of $366,000.  These Warrants are exercisable  through December 13, 2010 at
$3.27 per share.  Although the stated interest rate of the  convertible  Note is
the prime rate plus 2%, as a result of the  aforementioned  discounts  and fees,
the effective interest rate of the Note is approximately  41.8% per annum.

     As of  January  31,  2006,  the  Company  had not  completed  the  sale and
leaseback  of its  Haines  Road  property  and has going  concern  qualification
violating  the terms of the Note.  The Company has obtained a waiver from Laurus
for these violations.  In addition, the Company is in violation of certain cross
default provisions related to the EWCO and Steelbank credit facilities resulting
in  classifying  the  convertible  debt as a current  liability.  The Company is
currently  in  negotiations  with  Laurus to obtain a waiver with regard to this
violation.  The Company is maintaining the balance of deferred  finance costs as
it believes it will be successful in obtaining this waiver.

Note Issued in Connection with Redemption of EWCO Shares

     Prior  to its  acquisition  by  Tarpon,  EWCO  redeemed  90%  of  the  then
outstanding  shares from its shareholder  for $3,603,144,  of which $670,000 was
represented by a promissory  note, with interest  payable at 8% per annum,  paid
out of the proceeds of the Company's initial public offering of common shares in
February 2005.

Notes Issued in Connection with the Acquisition of Steelbank

     In  connection  with the  acquisition  of  Steelbank,  Tarpon  issued three
promissory notes. The first note totaled approximately $654,000 (Cdn. $800,000),
with interest payable at 8% per annum,  and was payable in monthly  installments
of $15,000  Canadian  dollars from July 1, 2004 to December 1, 2004 and $200,000
Canadian dollars on December 10, 2004. The outstanding  balance on this note was
$453,025 at December 31,  2004.  The balance was paid out of the proceeds of the
Company's initial public offering of common shares in February 2005.

     Tarpon also issued a note payable in the amount of  approximately  $229,000
(Cdn. $375,000) payable in Tarpon common stock at the initial public offering of
common  shares.  As of December  31, 2004 the balance on this note was  $311,963
(Cdn. $375,000).

     In addition,  Tarpon  issued a promissory  note of  approximately  $301,320
(Cdn. $405,000) payable to the former shareholders of Steelbank. The installment
notes  were due in  annual  installments  of  $112,091  beginning  in 2005  plus
interest at 8.0% per annum through  December  2007. The  outstanding  balance on
these notes at December 31, 2004, was $336,372 (Cdn. $405,000). These notes were
paid in full with the proceeds from the Laurus financing on December 13, 2005.

Steelbank Full Recourse Factoring Arrangement

     At  December  31,  2004,  Steelbank  Inc.  had  a  full-recourse  factoring
arrangement with Greenfield  Commercial Credit,  Inc. for the extension of up to
approximately  $1,246,000 of credit,  representing  approximately  $1,557,000 in
face  amount of  eligible  receivables  sold and  outstanding  at any time.  The
facility was secured by all of the assets of Steelbank  and all  obligations  of
Steelbank  under the  arrangements  are  guaranteed  by the  Company.  Steelbank
received  80% of the face  amount of  receivables  that it  desired  to sell and
Greenfield  Commercial  Credit,  Inc.  agreed,  in its  discretion,  to buy. The
full-recourse  factoring  arrangement was terminated with the closing of the IPO
in February  2005.  As of December 31, 2004,  approximately  $1,172,000  in face
amount of receivables were sold and not yet collected.

Bridge Loans

     In February and March 2004, the Company  raised  $150,000 in an offering of
notes and warrants in anticipation of, and under the same terms associated with,
the April 2004 note financing  described  below.  The notes were issued at their
face amount,  bore interest at 8% a year,  15% after  January 5, 2005,  and were
paid at the February 2005 closing of its initial public offering. The notes were
secured by the  Company's  assets and the assets of its  subsidiaries,  but were
subordinate  to its  subsidiaries'  secured bank  financing.  The  Company's net
proceeds,  after  deducting  the expenses of the  offering,  were  approximately
$146,000.  The Company also granted the purchasers in the offerings  warrants to
purchase  30,000 common shares  exercisable  at $5.00 a share.  The warrants are
exercisable  for five  years  beginning  August  16,  2005.  The  warrants  were
capitalized as deferred finance costs and amortized over the life of the loan.

     In April 2004, the Company  closed a private note financing  which provided
the Company with $2,000,000 in gross proceeds,  approximately  $1,725,000  after
the placement agent's fees and the expenses of the offering. These proceeds were
used  primarily to  facilitate  the  acquisition  of EWCO and  Steelbank and for
working capital and general  corporate  purposes,  including the payment of then
accrued expenses and expenses in connection with the Company's  proposed initial
public  offering  of common  shares.  The debt was issued at its face amount and
bears interest at 8% per annum, 15% after January 5, 2005, with debt and accrued
interest payable in cash upon maturity.  Maturity  occurred at the February 2005
closing of its initial public offering of common shares.  The notes were secured
by the Company's assets and the assets of its subsidiaries, but were subordinate
to its  subsidiaries'  secured  bank  financing.  The Company  also  granted the
purchasers in this note offering  five-year  warrants to purchase 465,000 common
shares at $5.00 a share with a fair market value of  $651,583.  The warrants are
exercisable  for five years  beginning  August 16,  2005 and were  amortized  as
interest expense in 2004.


7. Leases

     Other  facilities  and  equipment  are leased under  arrangements  that are
accounted  for as  operating  leases.  Total  rental  expense was  $513,000  and
$261,000  for the years  ended  December  31,  2005 and 2004,  respectively.  No
expense was incurred in 2003.

Future minimum operating lease payments for the years ending are as follows:

                2006                    $    274,083
                2007                          29,134
                2008                          19,550
                2009                          14,809
                                        ------------
                Total                   $    337,576
                                        ============


8. Income Taxes

     Total income tax expense for the year ended December 31, 2005 was a benefit
of  $101,088.  The benefit is due to a refund  related to a  reduction  in prior
period tax expense in the United States. As a result of the valuation allowances
applied to the net  operating  losses and other net  deferred  tax  assets,  the
Company  did not incur any  additional  tax  expense  for the three  years ended
December 31, 2005, 2004, and 2003.

     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>
                                                                                Year Ended December 31,
                                                            -----------------------------------------------------------------
                                                                   2005                     2004                   2003
                                                            -------------------       -----------------       ---------------
<S>                                                         <C>                           <C>                     <C>
                  Net loss before income taxes              $     (7,410,578)             $(2,065,500)            $(650,386)
                  Federal statutory rate                                   34%                     34%                   34%
                                                            -------------------       -----------------       ---------------
                  Tax computed at federal statutory                (2,519,597)               (702,270)             (221,131)
                      rate

                  Effect of nondeductible items                         14,622                  14,743                    --
                  Effect of non taxable items                         (15,507)                      --                    --
                  Foreign tax rate differential                             --                 (9,101)                    --
                  Valuation allowance                                2,330,922                 625,642               221,131
                  Provision for prior years                             88,472                      --                    --
                                                            -------------------       -----------------       ---------------
                  Reported income taxes                           $  (101,088)             $  (70,986)              $    --
                                                            ===================       =================       ===============


  Deferred tax assets and liabilities consist of the following:

                                                                                 Year Ended December 31,
                                                            --------------------------------------------------------------
                                                                   2005                  2004                     2003
                                                            -------------------     ----------------      ----------------
             Net operating loss carry-forwards                    $  2,991,162      $     1,083,879             $ 481,734
             Allowance for doubtful accounts                            36,415               22,600                    --
             Property and equipment                                   (80,944)               28,501                    --
             Deferred compensation                                     184,936                   --                    --
             Intangible assets                                         678,007                   --                    --
             Gain on financial instrument                            (109,480)                   --                    --
             Foreign exchange losses (gains)                         (165,375)               63,400                    --
                                                            -------------------     ----------------      ----------------
             Deferred tax assets                                     3,534,721            1,198,380               481,734
             Valuation allowance                                   (3,534,721)          (1,198,380)             (481,734)
                                                            -------------------     ----------------      ----------------
             Net deferred tax asset                                  $      --      $            --          $         --
                                                            ===================     ================      ================
</TABLE>


     Due to the  historical  losses  incurred by the Company,  a full  valuation
allowance  for  deferred  tax assets has been  provided to reduce  deferred  tax
assets to an amount  that is,  more  likely  than not,  to be  realized.  If the
Company  achieves  profitability,  these deferred tax assets may be available to
offset future income taxes.  The Company's net operating loss  carry-forward  at
December  31, 2005 and 2004 was  approximately  $8.8  million and  $3.1 million,
respectively, and expire as follows:

                        Year
                     ------------

                        2015                 $  1,275,000
                        2022                      760,400
                        2023                      535,800
                        2024                    1,338,900
                        2025                    4,877,400
                                             ------------
                                             $  8,787,500
                                             ============

     The components of earnings (loss) before income taxes are as follows:

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                           -----------------------------------------------------------------
                                                  2005                     2004                   2003
                                           -------------------       -----------------       ---------------
<S>                                          <C>                      <C>                     <C>
                United States                $(4,384,253)             $(1,798,451)            $(650,836)
                Foreign                       (3,026,325)                (267,049)                    --
                                             ------------             ------------            ----------
                Total                        $(7,410,578)             $(2,065,500)            $(650,836)
                                             ============             ============            ==========
</TABLE>

     The components of income tax (benefit) expense by country are as follows:

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                           -----------------------------------------------------------------
                                                  2005                     2004                   2003
                                           -------------------       -----------------       ---------------
<S>                                          <C>                      <C>                     <C>
                United States                $    (131,079)             $         --            $      --
                Canada                               29,992                 (70,986)                   --
                                             --------------             ------------            ----------
                Total                        $    (101,087)             $   (70,986)            $      --
                                             ==============             ============            ==========
</TABLE>



9. 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 April 15, 2005,
the Company amended the Management  Consulting  Agreement to (1) make 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,  (2) increase the
monthly fee from $15,000 to $20,000,  effective  April 2005,  and (3) revise the
calculation of the maximum  success fee to provide that the maximum  success fee
shall be $300,000 plus 0.2% of the enterprise value of an acquisition,  but only
to the extent that the enterprise value of such transaction exceeds $50,000,000.
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.:

                                                      December 31,
                                             --------------------------------
                                                2005                 2004
                                             -------------      -------------
        Advisory services and expenses          $ 320,740           $163,900
        Salaries and benefits                          --            130,177
        Success fees                              200,000            400,000
                                             -------------      -------------
            Total                               $ 520,740           $694,077
                                             =============      =============


     During 2005 and 2004,  the Company  paid the former  Chairman of the Board,
President  and Chief  Executive  Officer and his son,  individually  and through
Bainbridge  Advisors,  Inc.  $659,629 and $330,163,  respectively.  In addition,
non-cash stock options were granted in the amount of $333,300 in 2005.

     As of December 31, 2005,  liabilities included $138,889 of the success fees
owed for the EWCO,  Steelbank and Haines Road  acquisitions  consummated in 2004
and 2005. This amount was classified in accrued expenses.

     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.

     Between  January and August 2004, the Company  engaged one of its directors
to provide consulting services to the Company concerning its operations, general
management  and  business  development,  at times  and  places  and in an amount
determined by mutual  agreement.  The Company  accrued $22,000 in fees for these
services  including  $10,000  payable  in common  shares at the  closing  of its
initial public offering. The Company issued 2,000 common shares to this director
in February 2005.

     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.  For its services for
bridge  financing  in 2004,  Gunnar  received a cash fee of $200,000 and 100,000
warrants  subsequently,  increased  to 120,890  warrants  as a result of certain
anti-dilution  privileges  contained within the Company's warrant agreement.  It
also  received cash  payments of $83,500 in 2004.  The original  warrants had an
exercise price of $ 6.25 with a term of 5 years.  The revised exercise price was
reset to $5.17 as a result of the  issuance  of  additional  warrants.  The 2004
warrants  when  issued had a fair market  value of  $101,966.  In  exchange  for
serving as the  underwriter  for the Company's  Initial Public offering (IPO) in
2005,  Gunnar received a cash fee of $1,638,750.  For its assistance in securing
the convertible  note financing (Note 6), Gunnar received a cash fee of $600,000
and 300,000 warrants with an exercise price of $3.27 with a fair market value of
$432,000. The Gunnar warrants can be put back to the Company, and were deemed to
be a derivative instrument and classified as a liability.  At December 31, 2005,
these  warrants  were marked to market with a value of $366,000 with gain on the
instrument  recorded to gain from  derivatives.  In 2005,  it also received cash
payments of $154,962.  Gunnar also  receives a retainer  payable  monthly in the
amount of $7,500 which expires in December 2006. The total consideration paid to
Gunnar during the years December 2005 and 2004,  respectively,  were  $2,393,712
and $283,500. There were no fees paid to them in 2003.


10. Capitalization

     In connection with the Company's formation on January 16, 2002, four of its
shareholders  and their family members received 904,131 of its common shares for
an aggregate purchase price of $794.

     From March 2002 through June 2002,  the Company  privately  placed  200,913
newly-issued  common shares to eight accredited  investors,  at a price of $3.73
per share,  for gross  proceeds of $750,000.  The Company's net proceeds,  after
deducting the expenses of the offering, were approximately $747,000.

     From  December  2002 through  October 2003,  the Company  privately  placed
114,688  newly-issued common shares to six accredited  investors,  at a price of
$5.97 per share,  for gross  proceeds of $685,000.  The  Company's net proceeds,
after deducting the expenses of the offering,  were approximately  $685,000.  As
part of the  issuance of these  common  shares,  the  Company  agreed that if an
initial public offering is completed,  the Company will issue additional  common
shares to these  purchasers so that the total common shares they receive  equals
(1) 1.35 times the amount they invested in its initial public offering,  divided
by (2) its  initial  public  offering  price per share.  The  Company  issued an
additional 70,262 shares to these shareholders as a result of its initial public
offering, lowering their effective purchase price to $3.70 a share.

     The Company affected a 1-for-3.69203259  reverse split in December 2003 and
a 1-for-1.6176795  reverse stock split in March 2004. The share numbers in these
footnotes have been adjusted to reflect these reverse stock splits.

11. 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 650,000 common  shares.  This plan was
approved by the Company's shareholders in June 2005.

     During 2005, the Company granted options for 441,785 shares to consultants,
officers, employees and directors of the Company. The options are exercisable at
$5.50 a share and vest immediately, for the consultant and director options, for
which  $424,200  was  expensed in the first  quarter,  or in  cumulative  annual
installments over three years for the officer and employee options, for which no
expense was recorded. No options were granted during 2004 or 2003 and no options
were exercised in 2005, 2004 or 2003.

     The Company also agreed to grant the three former shareholders of Steelbank
options to  purchase  a number of common  shares  equal to a  combined  total of
approximately  $138,889  per year divided by the fair market value of the common
shares  on the date of  grant,  which  will be  exercisable  at 110% of the fair
market  value of the common  shares on the date of grant.  The  options  will be
granted  to each of them after the  calendar  years  2005,  2006,  and 2007,  if
certain  performance  targets are met. In 2005, none of the performance  targets
were met, and, therefore no options were granted.

                                                     2005
                                       -------------------------------------
                                                                   Weighted
                                       Shares Subject               Average
                                           To Options           Exercise Price
                                       -------------------     -----------------
       Outstanding at the
         beginning of the year                  --              $  --
       Granted                             441,785              $ 5.50
       Exercised                                --              $  --
       Expired/forfeited                  (26,700)              $ 5.50
                                       -------------------
       Outstanding at the end of
         the year                          415,085              $ 5.50
                                       ===================


     The following  table  presents  additional  information  about  outstanding
options granted and remaining at the end of 2005.

       Weighed average fair value of options granted during year         $5.50
       Options exercisable at end of year                               140,000
       Weighted average exercise price of options exercisable at
       end of year                                                      $  5.50
       Options available for grant at December 31, 2005                 234,915
       Weighted average remaining contractual life (in years)              9.30


     The following  table  provides  additional  information  about  outstanding
warrants  categorized by exercise price.  And fair market value at date of grant
calculated us9ing the Black Scholes model.


<TABLE>
<CAPTION>
                                                                    Exercise
          Party                     Warrants      Expiration         price
---------------------------    --------------    --------------    ------------
<S>                                   <C>         <C>   <C>         <C>
  2004 Gunnar - Bridge
    Financing                         120,890     12/31/2010        $ 5.17
  2004 Private Placement              533,257     12/13/2012        $ 4.36
  2005 Gunnar - IPO                   243,060     04/05/2009        $ 5.98
  2005 Gunnar - Laurus
    convertible note                  300,000     04/05/2009        $ 3.27
  2005 Laurus warrants
    associated with
    convertible note                  390,000     02/17/2010        $ 3.81
                                    ---------
   Total                            1,587,207
                                    =========
</TABLE>



12. Contingencies

     As of December 31, 2004, the Michigan  Department of Environmental  Quality
("MDEQ")  notified  the  Company  that it had  concluded  that the Company was a
"major  source"  for certain  air  emissions  and that the Company had failed to
apply for a Renewable  Operating Permit  ("ROP")for air emissions not covered by
its Permit to Install  ("Permit"),  then in effect.  The  Company  applied for a
revised  Permit to obviate the need for a ROP and received the revised Permit in
December  2004.  The  MDEQ  and  the  Company  negotiated  a  resolution  of the
violations  alleged  by  MDEQ,  and the  Company  paid a  settlement  amount  of
approximately  $31,000 to  resolve  the  violations  alleged by the MDEQ in July
2004. Subsequently, in October 2005, MDEQ Water Bureau cited EWCO for not having
separate Storm Water Pollution  Prevention  Plans for each physical  location in
Marysville along with other minor infractions.  Since that time,  separate plans
were  developed and submitted to the MDEQ for their  approval.  The Company paid
approximately  $28,000 as of December 31, 2005 to  remediate  the issue and does
not anticipate any further expenses.

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

13. Employee benefit plans

     EWCO has three  separate  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
$51,564 and $6,815,  respectively,  in 2005 and $39,644 and $6,924 respectively,
in 2004.

     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 $26,151 and $17,797 in 2005 and 2004,  respectively.
No discretionary contributions were made in 2005 or 2004.

     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, 2005 and 2004, all withheld  amounts had been paid to
the union on the employees' behalf.

14. Segment and Geographic Information

     The Company operates in business segments that are distinguished  primarily
on geographic  location.  The EWCO United States operation  includes  mechanical
tube production as well as engineered racking system  production.  The Steelbank
Canadian  operation  includes   mechanical  tube  production  with  emphasis  on
galvanized tube. The products and services, customer base, distribution channel,
manufacturing  process,  procurement  and economic  characteristics  are similar
throughout all of the Company's  operations.  The following table sets forth the
Company's segment data.

<TABLE>
<CAPTION>

                                                            Year Ended December 31 2005
                                 -----------------------------------------------------------------------
                                          EWCO          Steelbank            Other (A)          Total
                                          ----          ---------            ---------          -----
<S>                                  <C>              <C>                    <C>          <C>
External revenues                    $ 43,028,462     $ 17,822,158           $     --     $  60,850,620

Inter-segment sales                       578,865               --           (578,865)               --

Depreciation and amortization             109,873          866,926            (37,708)          939,091

Operating profit (loss)               (1,039,283)      (2,706,169)         (3,521,459)      (7,266,911)

Total assets                           14,864,631       20,205,972           3,935,318       39,005,921

Capital expenditures                      170,736          934,733                  --        1,105,469


                                                         Year Ended December 31 2004
                                 -----------------------------------------------------------------------
                                        EWCO            Steelbank            Other (A)          Total
                                        ----            ---------            ---------          -----
External revenues                   $32,354,528      $   5,267,101           $     --        $ 37,621,629

Inter-segment sales                     698,532                --            (698,532)                 --

Depreciation and amortization            84,190            19,091               37,708            140,989

Operating profit (loss)                 569,079           152,560            (908,784)          (187,145)

Total Assets                         15,544,384         4,782,327            1,381,082         21,707,793

Capital expenditures                    110,034             8,694                   --            118,728
</TABLE>

(A)  Other represents information for the Company's parent company, Tarpon which
     is not allocated into the operating segments.

     Revenues by country for the year ended December 31 are as follows:

                                            2005                2004
                                            ----                ----
           United States                $49,732,000         $ 32,484,000
           Canada                        11,119,000            5,138,000
                                         ----------            ---------
                    Totals              $60,851,000         $ 37,622,000
                                        ===========         ============

     Long-lived assets by geographic region as of December 31 are as follows:

                                            2005                2004
                                            ----                ----
           United States (EWCO)         $   629,000          $  568,000
           Canada (Steelbank)            14,013,000           1,821,000
                                         ----------          ----------
                     Totals             $14,642,000          $2,389,000
                                        ===========          ==========

Revenues by geographic area were determined based on origin of sale.  Geographic
data on long-lived assets is based on physical location of those assets.


15. Subsequent Events

     On March 20, 2006, the Company  entered into  definitive  agreement for the
sale and leaseback of all of its land and buildings of its Steelbank  operations
located in Canada.  The  proceeds  from the  transaction  are  estimated at $5.5
million (Cdn.  $6.4 million).  It is  anticipated  that the Company will use the
proceeds  to  retire  mortgages  on the  property  of $4.5  million  (Cdn.  $5.2
million),  complete  roof  improvements  of $215,  500 (Cdn.  $250,000) and have
available for  operational  purposes  $690,000 (Cdn.  $800,000)  after fees. The
estimated  rents  payable by the  Company  are  anticipated  at  $401,375  (Cdn.
$465,595) per year in years one thorough five, and $439,240 (Cdn.  $509,519) per
year in years six through ten. The amounts in Canadian  dollars are converted at
the  exchange  rate  in  effect  on  March  20,  2006 (1 USD = 1.16  Cdn.).  The
completion of this  transaction  is a requirement of the Laurus  financing.

     On  February  6,  2006,  the  Company's  Board  of  Directors  amended  the
compensation payable to directors effective on that date. Non-employee Directors
will  receive on  election:  (1) an option to purchase  10,000  shares of Tarpon
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,  (2) a monthly
cash  retainer of $1,000,  and (3) on May 31 of each year at the current  market
price,  a stock grant of $8,000 of Tarpon  common  stock for  directors  in good
standing for the current and previous  year.  In addition on a quarterly  basis,
committee  chairs will receive $500 and the audit  committee  chair will receive
$1,000. Directors will receive $1,000 for attendance in person at board meetings
and $250 for each telephonic  conference board meeting,  or otherwise.  Employee
Directors  in good  standing  for the current and  previous  year will receive a
stock  grant of  $8,000  of  Tarpon  common  stock on May 31 of each year at the
current market price.  For special  projects  requested by the Board,  the board
agreed to a special fee to be approved by the Board.

     In February 2006, the Company announced a plan to reduce operating expenses
by an estimated  $1.25 million  annually.  The cost to implement the improvement
plan in 2006 was approximately $250,000.

<PAGE>

16. QUARTERLY INFORMATION (unaudited)

     The following is a summary of Tarpon's quarterly  operating results for the
year ended December 31, 2005 and 2004:

        Year Ending December 31, 2005
        -----------------------------
<TABLE>
<CAPTION>
                                                                     Quarter
                                                    First        Second      Third       Fourth
                                                    -----        ------      -----       ------
                                                    (in thousands, except per share data)
<S>                                                 <C>         <C>         <C>         <C>
Net sales...................................        $14,018     $15,086     $15,341     $16,406
Gross profit................................            784         894       1,258       2,014
Net income (loss)...........................        (1,610)     (1,468)     (1,413)     (2,819)
Net income (loss) per common share -basic and
diluted.....................................        $(0.57)     $(0.32)     $(0.30)     $(0.61)


Year Ending  December 31, 2004
                                                                     Quarter
                                                    First        Second      Third       Fourth
                                                   -----        ------      -----       ------
                                                   (in thousands, except per share data)
Net sales...................................        $     --     $11,993     $12,959     $12,670
Gross profit................................              --       1,502       1,453         795
Net income (loss)...........................           (165)       (213)       (591)      (1026)
Net income (loss) per common share -basic and
diluted.....................................        $ (0.14)     $(0.17)     $(0.48)     $(0.83)
</TABLE>

     The Company  acquired EWCO and Steelbank in the second quarter of 2004. The
Company acquired Haines Road in the first quarter of 2005.


<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Shareholders of Eugene Welding Co.


     We have  audited  the  balance  sheets of Eugene  Welding  Co. (a  Michigan
corporation)  as of March 31, 2004 and December 31, 2003,  and the statements of
operations,  shareholders'  equity,  and cash flows for the three  month  period
ended March 31, 2004,  and the year ended  December 31,  2003.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted our audits in accordance  with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable  assurance about whether the financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we  engaged to perform  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial   reporting  as  basis  for  designating  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   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  provide  a
reasonable basis for our opinion.

     In our opinion,  these financial statements present fairly, in all material
respects,  the  financial  position  of the  Company  as of March  31,  2004 and
December 31, 2003,  and the results of its operations and its cash flows for the
three month period ended March 31, 2004,  and the year ended  December 31, 2003,
in conformity with accounting principles generally accepted in the United States
of America.

     Our audit was  conducted for the purpose of forming an opinion on the basic
consolidated  financial  statements  taken  as a  whole.  Schedule  II has  been
subjected to auditing  procedures applied in the audit of the basic consolidated
financial  statements and, in our opinion,  is fairly stated, when considered in
relation to the basic consolidated financial statements taken as a whole.


/s/ GRANT THORNTON LLP

Southfield, Michigan
April 1, 2005

<PAGE>
<TABLE>
<CAPTION>

                               EUGENE WELDING CO.
                                 BALANCE SHEETS
                                                                                 March 31,           December 31,
                                                                              -----------------    --------------------
                                                                                    2004                  2003
                                                                              -----------------    --------------------
                                                            ASSETS
CURRENT ASSETS:
<S>                                                                                   <C>                    <C>
     Cash and cash equivalents                                                        $431,739               $269,555
     Accounts receivable (less allowance for doubtful accounts of                    4,868,290              3,847,022
        $222,988 at March 31, 2004, $321,941 at December 31,
        2003, and $38,099 at December 31, 2002) ........................
     Inventories........................................................             4,370,151              5,117,905
     Prepaid expenses ..................................................               142,705                249,038
                                                                                       -------                -------
        Total current assets ...........................................             9,812,885              9,483,520
Property, Plant equipment - Net ........................................               910,989                937,926
OTHER ASSETS:
     Note receivable - other............................................                45,607                 45,607
     Deferred tax asset ................................................                75,800                     --
                                                                              -----------------    -------------------
        Total other assets .............................................               121,407                 45,607
                                                                              -----------------    -------------------
TOTAL ASSETS                                                                       $10,845,281            $10,467,053
                                                                              =================    ===================

                                             LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
     Note payable - bank ...............................................            $4,035,485             $4,065,315
     Accounts payable ..................................................             3,507,750              3,958,350
     Accounts payable - inter-Company ..................................               143,677                     --
     Distributions payable .............................................                    --                 19,616
     Accrued expenses ..................................................               678,079                436,512
     Income taxes payable ..............................................               135,713                     --
     Current maturities on long-term debt ..............................               209,704                240,487
                                                                              -----------------    -------------------
        Total current liabilities ......................................             8,710,408              8,720,280

LONG-TERM DEBT, LESS CURRENT MATURITIES: ...............................               486,179                534,528
COMMITMENTS AND CONTINGENCIES DEFERRED INCOME TAXES:....................                56,100                     --
SHAREHOLDER'S EQUITY:
     Common shares; par value $10 per share; authorized, 5,000                             400                    400
        shares; issued and outstanding, 40 shares at March 31,
        2004, and 40 shares at December 31, 2003, and 2002
     Shareholder note receivable                                                   (2,933,144)            (2,933,144)
     Retained earnings                                                               4,525,338              4,144,989
                                                                              -----------------    -------------------
        Total shareholder's equity                                                   1,592,594              1,212,245
                                                                              -----------------    -------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY .............................           $10,845,281            $10,467,053
                                                                              =================    ===================
</TABLE>


     The accompanying notes are an integral part of the financial statements

<PAGE>
                               EUGENE WELDING CO.

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                         Three Months
                                                            Ended               Year Ended
                                                            March 31,           December 31,
                                                       -----------------    -------------------
                                                             2004                  2003
                                                       -----------------    ------------------
REVENUES:
<S>                                                         <C>                   <C>
  Sales................................................     $10,606,365           $26,611,349
  Less discounts allowed...............................          57,584               169,678
                                                       -----------------    ------------------
       Net revenues....................................      10,548,781            26,441,671
COST OF GOODS SOLD:
    Materials..........................................       5,937,979            15,102,702
    Direct labor.......................................         713,215             2,212,416
    Manufacturing overhead.............................       2,485,814             7,647,425
                                                       -----------------    ------------------
    Total cost of goods sold...........................       9,137,008            24,962,543
       Gross profit....................................       1,411,773             1,479,128
OTHER OPERATING EXPENSES:
    Selling, general and administrative expenses.......         814,027             2,398,850
    Depreciation and amortization......................          35,445               147,508
    Loss on disposal of property and equipment.........              --                 4,029
                                                       -----------------    ------------------
       Total operating expenses........................         849,472             2,550,387
                                                       -----------------    ------------------
OPERATING INCOME (LOSS):...............................         562,301           (1,071,259)
OTHER INCOME (EXPENSE):
  Miscellaneous income/(expense).......................        (14,549)                11,298
  Interest expense.....................................        (51,390)             (200,234)
  Interest and dividend income.........................              --                    41
                                                       -----------------    ------------------
       Total other income (expense)....................        (65,939)             (188,895)
INCOME (LOSS) BEFORE
    INCOME TAXES:......................................         496,362           (1,260,154)
PROVISION FOR INCOME TAXES:
    Income tax expense.................................         135,713                    --
    Deferred income taxes..............................        (19,700)                    --
                                                       -----------------    ------------------
       Provision for income taxes......................         116,013                    --
                                                       -----------------    ------------------
NET INCOME (LOSS)......................................        $380,349          ($1,260,154)
                                                       =================    ==================
</TABLE>

     The accompanying notes are an integral part of the financial statements

<PAGE>
                               EUGENE WELDING CO.
                              SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>

                                           Number of                                           Shareholder          Total
                                             Common           Common          Retained            Note           Shareholder's
                                             Shares           Shares          Earnings         Receivable          Equity
<S>                <C>                         <C>                 <C>         <C>              <C>                  <C>
Balance at January 1, 2003...........          40                  $400        $5,493,673       ($2,933,144)         $2,560,929
Net loss.............................                                         (1,260,154)                           (1,260,154)
Shareholder distributions ...........                                            (88,530)                              (88,530)
                                          -------------     ------------    --------------   ----------------  -----------------
Balance at December 31, 2003 ........          40                  $400        $4,144,989       ($2,933,144)         $1,212,245
Net income ..........................                                             380,349                               380,349
                                          -------------     ------------    --------------   ----------------  -----------------
Balance at March 31, 2004 ...........          40                  $400        $4,525,338       ($2,933,144)         $1,592,594
                                          =============     ============    ==============   ================  =================
</TABLE>


     The accompanying notes are an integral part of the financial statements

<PAGE>


                               EUGENE WELDING CO.
                             STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                 Three
                                                                 Months
                                                                 Ended          Year ended
                                                                 March 31,      December 31,
                                                              --------------    ---------------
                                                                  2004               2003
                                                              --------------    ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                <C>             <C>
  Net income (loss) ......................................         $380,349     $  (1,260,154)
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operations:
Depreciation and amortization ............................           35,445            147,508
Loss on disposals of property and equipment...............               --              4,028
Deferred income taxes ....................................         (19,700)                 --
Changes in assets and liabilities:
Accounts receivable (increase) decrease...................      (1,021,268)          (776,833)
Inventory (increase) decrease ............................          747,753            244,072
Prepaid expenses (increase) decrease .....................          106,332           (26,189)
Note receivable - other (increase) .......................               --           (45,607)
Refundable taxes increase(decrease) ......................               --                 --
Distributions payable (decrease) .........................         (19,616)                 --
  Accounts payable and accrued expenses
     increase (decrease) .................................         (65,354)          1,315,104

Accrued income taxes increase ............................          135,713                 --
                                                              --------------    ---------------
Cash provided by (used in ) operations ...................     $  279,654       $    (398,071)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment .....................          (8,506)          (113,709)
                                                              --------------    ---------------
  Net cash used in investing activities ..................          (8,506)          (113,709)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (repayments) borrowings under lines of credit.......         (29,830)            539,333
  Proceeds from long-term debt ...........................           13,057            185,893
  Principal payments on long-term debt....................         (92,191)          (352,509)
  Shareholder distributions ..............................               --           (88,530)
                                                              --------------    ---------------
  Cash provided by (used for) financing activities........        (108,964)            284,187
INCREASE (DECREASE) IN CASH AND CASH AND CASH EQUIVALENTS           162,184          (227,593)
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD......................................          269,555            497,148
                                                              --------------    ---------------
CASH AND CASH EQUIVALENTS
  END OF PERIOD ..........................................     $    431,739     $     269,555
                                                              ==============    ===============
Supplemental Cash Flow Information
  Non-cash transaction - Note Receivable
     Shareholder..........................................     $         --     $       198,967
                                                              ==============    ===============
Cash paid during the period for interest..................     $     51,390     $       198,967
                                                              ==============    ===============
Non-cash exchange of note for receivable .................
                                                               $         --     $        45,607
                                                              ==============    ===============
</TABLE>


    The accompanying notes are an integral part of the financial statements

<PAGE>
                               EUGENE WELDING CO.

                          NOTES TO FINANCIAL STATEMENTS

1. Organization

     Eugene  Welding Co. (the  "Company")  is a Michigan  corporation  formed in
1954. The Company  manufactures  structural  steel tubing and steel storage rack
systems at two  manufacturing  facilities  in  Michigan,  north of  Detroit.  We
currently manufacture  structural steel tubing, which is used as a component for
products in original  equipment  manufacturer  automotive,  boating,  industrial
equipment,  construction,   agricultural,  steel  service  center,  leisure  and
recreational  vehicle markets,  such as trailer hitches,  storage racks, boating
trailers,  boat hoists,  fork lifts,  scaffolding,  farm  implement  components,
recreational  vehicles,  exercise  equipment  and  barbecues.  In  addition,  we
manufacture   steel   storage   rack   systems,   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.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

     The  Company  considers  all highly  liquid  investments  purchased  with a
maturity date of three months or less to be cash equivalents.

Accounts Receivable and Concentration of Credit Risk

     Periodically  throughout each year, the Company maintained a balance in one
bank account in excess of the federally insured limit of $100,000.

     Accounts  receivable are due within 30 to 60 days and are stated at amounts
due  from  customers  net  of  an  allowance  for  doubtful  accounts.  Accounts
outstanding  longer than the  contractual  terms are  considered  past due.  The
Company  determines its allowance 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. Accounts receivable are written off
when they  become  uncollectible  and  payments  subsequently  received  on such
receivables are credited to the allowance for doubtful accounts.

     The Company had two major  customers  in the three  months  ended March 31,
2004 that accounted for ten percent or more of net sales in those periods. Sales
to these customers amounted to approximately 36%. Accounts  receivable  balances
due from two  significant  customers at March 31,  2004,  and December 31, 2003,
were 23% and 31% of total accounts receivable, respectively.

Revenue Recognition

     For sales of  products  and scrap,  revenue is  recognized  at the time the
product is shipped to  customers.  Scrap sales are  recognized as a reduction in
cost of goods sold.

Income Taxes

     Through   December  31,  2003,  the  Company,   with  the  consent  of  its
shareholders,   had  elected  under  the  Internal  Revenue  Code  to  be  an  S
corporation.  In lieu of  corporation  income taxes,  the  shareholders  of an S
corporation  are taxed on their  proportionate  share of the  Company's  taxable
income.  Therefore,  no  provision  or  liability  for federal  income  taxes is
included in these  financial  statements for twelve month periods ended December
31, 2003,  2002, or 2001. EWCO ceased to be taxed as an S corporation  effective
January 1, 2004,  and since that date has  recognized a provision  for corporate
income taxes.

     Beginning  January  1,  2004  when  the  Company  ceased  to be  taxed as a
Subchapter  S  Corporation,  deferred  income  taxes  are  provided  for  timing
differences  between financial  statement income and tax return income under the
provisions of Statement of Financial  Accounting  Standards No. 109, "Accounting
for Income  Taxes," which requires  deferred  income taxes to be computed on the
asset and  liability  method and  deferred tax assets are  recognized  only when
realization   is  certain.   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.  The  principal
timing difference arises from non-deductible reserves and use of accelerated tax
depreciation for tax purposes.

     The effect of such difference is included  annually on the income statement
and on the balance sheet as an adjustment to deferred income taxes. At March 31,
2004, deferred income tax assets in the amount of $19,700 were calculated.

Inventories

     Inventories  are  valued at the lower of cost or  market  value,  with cost
being determined on the average cost method.  Major classes of inventory consist
of the following:

                                      March 31,          December 31,
                                       2004                 2003
                                  ---------------    -------------------
        Raw materials............    $2,346,152             $2,736,418
        Work in process..........       617,766                523,908
        Finished goods...........     1,303,331              1,714,831
        Supplies.................       102,902                142,748
                                  ---------------    -------------------
        Total....................    $4,370,151             $5,117,905
                                  ===============    ===================


     Property and Equipment

     Property and  equipment  are stated at cost.  The  principal  categories of
     property, plant and equipment are as follows:

                                                    March 31,
                                                      2004         December 31,
                                                  (unaudited)         2003
                                                  -----------      ------------
     Machinery and equipment..................   $ 5,888,928       $ 5,827,540
     Leasehold improvements...................       856,348           909,229
     Computer equipment.......................       775,619           775,619
     Transportation equipment.................       588,482           588,481
     Furniture and fixtures...................       115,126           115,126
                                                  -----------      ------------
        Total.................................     8,224,503         8,215,995
     Less accumulated depreciation and
       amortization...........................     7,313,514         7,278,069
                                                  -----------      ------------
           Net property, plant and equipment     $   910,989       $   937,926
                                                 ===========       ===========

     The  Company's  policy is to  compute  depreciation  and  amortization  for
financial  statement purposes using  straight-line and accelerated  methods over
the following estimated useful lives:

             Machinery and equipment....................   5 - 10 years
             Leasehold improvements.....................   life of lease
             Computer equipment.........................   3 - 7 years
             Transportation equipment...................   5 years
             Furniture and fixtures.....................   5 - 7 years

     Expenditures  for repairs and  maintenance  are charged to  operations  and
major betterments are capitalized.

Use of Estimates

     The  preparation  of 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 financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from these
estimates.

3. Shareholder Note Receivable

     Shareholder  note receivable  consists of a demand note receivable from the
Company's  shareholder  in the amount of  $2,933,144,  which was  recorded as an
offset  against  retained  earnings.  This note  bears  interest  at 1% over the
prevailing bank prime lending rate, payable monthly.  The Company fully reserved
the interest revenue due on this note for the three month period ended March 31,
2004 and year ended December 31, 2003.

4. Note Receivable - Other

     Note  receivable - other at December 31, 2003 consists of a note receivable
from a customer,  pursuant to the customer's  reorganization plan. This note was
written off as uncollectible after March 31, 2004

5. Note Payable - Bank

     The  Company  had a  demand  revolving  credit  facility  with a  bank  for
$5,000,000,  bearing  interest at the prevailing prime lending rate plus 1/2% at
March 31, 2004 and 0% at December 31, 2003.  Borrowings under this facility were
secured  by all  assets  of the  Company,  and  were  further  supported  by the
individual  guarantee of the  Company's  stockholder.  In  aggregate,  the total
obligation  of the  guarantor  was not to exceed  $912,846.  This  facility  was
cross-liened and cross defaulted with the Company's  installment note due to the
bank  (see Note 6).  At  December  31,  2003,  the  Company  has  borrowings  of
$4,065,315, respectively against the facility. As of December 31, 2003 there was
$964,515  and  $934,685,  respectively  of unused  availability  for the  credit
facility.  The loan  agreements  required it to maintain  minimum  debt  service
coverage and debt to tangible net worth ratios.  They also limited the Company's
ability to pay dividends or incur additional debt.

     At December 31, 2003, the Company was in default of certain  financial loan
covenants.  Subsequent  to the  balance  sheet  date,  the  Company and the bank
entered into an agreement  whereby the bank agreed to forebear,  until March 31,
2004,  from  taking  any  action to  collect  upon  this note and the  Company's
installment note (see Note 6), subject to certain  conditions.  These conditions
include  increasing  the  interest  rates on these  borrowings  to 1/2% over the
prevailing  prime  lending  rate.  Subsequent  to  the  year-end  the  note  was
refinanced with the bank.

6.  Long-Term Debt
<TABLE>
<CAPTION>
                                                                              March 31,         December 31,
                                                                            ---------------    ---------------
                                                                                 2004               2003
                                                                            ---------------    ---------------
A financing arrangement with a finance Company,
  payable in monthly installments of $17,165,
  including finance charges of 5.995%,
<S>                <C>                                                       <C>                <C>
  through.February 2004...................................................   $      --            $33,489
A capital lease payable in monthly installments of $3,586,
  including financial costs at 7.38% through April 2003...................          --                 --
A capital lease payable in monthly installments of $5,062,
  including finance costs at 6.64%, through April 2003....................          --                 --
A capital lease payable in monthly installments of $3,562,
  including finance costs at 7.38%, through April 2004....................       3,562             14,117
A capital lease payable in monthly installments of $219, including
  finance costs at 14.04%, through August 2006............................       5,352              5,809
A capital lease payable in monthly installments of $199, including
  finance costs at 10.71%, through November 2006..........................       5,510              5,951
An installment note payable to a transportation Company in monthly
  installments of $1,000, bearing no interest, through April 2005.........      13,057                 --
An installment note payable to a bank in monthly installments of
  $15,214, plus interest at 4.5% and 4.25% at March 31, 2004 and December
  31, 2003, respectively, through August 2007. This note is secured by
  all assets of the Company and was further supported by the individual
  guarantee of the Company's stockholder until April 2004. In aggregate,
  the total obligation of the guarantor is not to exceed $912,846. This
  note is cross liened and cross Defaulted with the Company's revolving
  credit facility (see Note 5)............................................     638,992            684,635
A secured equipment note payable to a bank in monthly installments of
  $668, including interest at 5.24%, through April 2008...................      29,410             31,014
                                                                             ---------            --------
              Total.......................................................    $695,883           $775,015
Less current portion......................................................     209,704            240,487
                                                                              --------           --------
Long-term portion.........................................................    $486,179           $534,528
                                                                              ========           ========
</TABLE>

<PAGE>


                    NOTES TO FINANCIAL STATEMENTS (continued)


Maturities  of long-term  debt for the three months ending March 31, 2004 are as
follows:

               2005........................................    $     209,704
               2006........................................          193,953
               2007........................................          192,517
               2008........................................           99,044
               2009........................................              665
                                                               -------------
                                                               $     695,883
                                                               =============

7. Income Taxes

     EWCO was an S corporation until December 31, 2003. As such did not record a
provision for current or deferred income taxes. As a result of its change to a C
corporation,  it is now subject to income  taxes on its taxable  income,  had no
deferred tax assets, liabilities or operating loss carry-forwards before January
01, 2004.

Income tax expense includes the following:

                                                         March 31, 2004
                                                         --------------
        Current federal income tax expense               $    135,713
        Deferred federal income tax expense                  (19,700)
                                                         ------------
        Total income tax expense                         $    116,013
                                                         ============


Deferred tax asset and (liabilities) consist of the following:

     Deferred tax assets (liabilities) consist of the following:

                                                         March 31, 2004
                                                         --------------
        Property and equipment......................    $     (56,100)
        Accounts receivable and other...............            75,800
                                                         --------------
        Net deferred tax assets.....................            19,700
        Valuation allowance.........................                --
                                                        --------------
        Net deferred tax asset......................    $       19,700
                                                        ==============


A  reconciliation  of actual federal income tax expense to the expected  amounts
computed by applying the  statutory  tax rate percent to earnings  before income
taxes is as follows:

                                                             Three Months Ended
                                                                March 31, 2004
                                                                --------------

        Net income (loss) before income taxes.............      $  496,362
        Federal statutory rate............................             34%
                                                               ------------
        Tax computed at federal statutory rate............         168,763
        Increase or decrease in taxes from:
        Effect of conversion to C corporation status......        (52,750)
                                                               ------------
        Reported income taxes.............................     $   116,013
                                                                ===========


8. Commitments and Contingencies


     The Company leases  facilities  and equipment used in its operations  under
lease agreements expiring through October 2006. The operating lease requires the
Company to pay the  taxes,  insurance  and  maintenance  expense  related to the
leased property. Rent expense, including month-to-month rentals was $102,900 for
the three months  ended March 31, 2004.  Minimum  future  lease  payments  under
non-cancelable leases at March 31, 2004 are summarized as follows:

        Year Ended December 31,
              2004........................................    $     223,343
              2005........................................          293,191
              2006........................................          234,659
              2007........................................           16,548
              2008........................................           11,658
              2009........................................            5,829
                                                              -------------
                                                              $     785,228
                                                              =============

9. Employee Benefit Plans

     The Company has three separate 401(k) plans. Two of these plans cover union
employees who have attained 18 years of age with three months of service and 500
hours.  The  participants  can contribute up to 15% of their  compensation.  The
Company matches the employee  contributions  based on the collective  bargaining
agreement,  not to exceed 5 percent of compensation.  The employer contributions
for these two plans for the  three  months  ended  March 31,  2004 and the years
ended December 31, 2003,  2002,  and 2001,  were $16,270,  $69,846,  $67,995 and
$76,721, respectively.

     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.  The
Company matches the employee contributions 50% up to 5% of employees' wages. The
employer  matching  contributions for the three months ended March 31, 2004, and
the year ended December 31, 2003,  2002,  and 2001,  were $5,703,  $26,912,  and
$31,102 respectively.

10. Product Sales

     Products  sold to external  customers  were as follows for the three months
ended March 31, 2004, and the years ended December 31, 2003, 2002, and 2001.

                                          Three Months
                                        Ended Year Ended
                                           March 31,          December 31,
                                       --------------------------------------
                                              2004               2003
                                       --------------------------------------
 Manufactured by us:
      Structural Steel Tubing..........         $4,916,144      $ 12,418,466
      Mechanical Steel Tubing..........            304,877           628,043
      Steel Storage Rack Systems.......          5,318,567        13,372,884
                                                 ---------        ----------
          Total........................        $10,539,588       $26,419,393
                                               ===========       ===========

 Manufactured by others:
      Mechanical Steel Tubing..........          $   9,193         $  22,278
                                                 =========         =========


11. Subsequent Events

     In November 2003, the Company's  sole  shareholder  signed a Stock Purchase
Agreement to sell all of the issued and  outstanding  stock of the  Company.  In
April  2004,  Tarpon  Industries,  Inc.  and the  Company  acquired  100% of the
Company's outstanding common shares pursuant to the agreement described above.

     On April 21,  2004,  Tarpon  Industries  acquired  100% of the  outstanding
common  shares of EWCO from its sole  shareholder,  who was its Chief  Executive
Officer from April to August  2004.  Tarpon  acquired  EWCO for $415,450 in cash
paid to its sole shareholder for all of the then outstanding EWCO shares.  Prior
to the acquisition,  EWCO redeemed 90% of the then  outstanding  shares from him
for $3,603,144,  of which $670,000 was represented by a promissory note that was
paid out of the proceeds of our initial  public  offering in February  2005. The
remaining  $2,933,144  of the  redemption  price was retained by EWCO to repay a
note to EWCO from the former sole  shareholder  relating to his  acquisition  of
EWCO in 2001.

     On April 6, 2004, the Company  refinanced its credit facility with Comerica
Bank,  including a revolving credit facility for up to $6,000,000 secured by its
accounts receivable,  inventory and its equipment. The revolving credit facility
was due on demand and was based on a borrowing base based on qualifying accounts
receivable and inventories.

     In August 2004, the Company  refinanced  its credit  facility with Standard
Federal Bank, N.A.,  including a revolving credit facility for up to $7,000,000,
which was increased to $9,000,000 in December 2004,  subject to a borrowing base
based on eligible  inventory and  receivables , originally  maturing  August 31,
2007,  a  $1,394,000  term  loan.  The term  loan is  payable  in equal  monthly
installments  of principal  based on a five year  amortization  ending August 1,
2009,  but  matures  August 31,  2007 if the  revolving  credit  facility is not
renewed.  The  loans are  secured  by all of EWCO's  personal  property  and are
guaranteed by Tarpon. The principal amount  outstanding bears interest,  payable
monthly,  at the bank's prime rate, plus, until completion of our initial public
offering,  0.375%  (at a total of  5.63%  as of  December  31,  2004).  The loan
agreement  requires EWCO to maintain a minimum debt service  coverage  ratio and
minimum  tangible net worth.  It also generally  prohibits  dividends and limits
EWCO's ability to make capital expenditures. EWCO paid a 1% closing fee and must
pay a 0.25% unused line of credit fee.  EWCO is also subject to a 1%  prepayment
fee if the loans are prepaid any time before maturity.  As of December 31, 2004,
$6,711,387 was outstanding  under the revolving credit  facility,  approximately
$1,348,000 was outstanding under the term loan, and approximately $1,375,000 was
available for borrowing under the revolving credit facility.

<PAGE>

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

     None.

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, 2005.  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, 2005 that has  materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting, except that we hired additional staff, which will help
improve our internal controls 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.

     Until  April  2004,  we  consisted  only  of  a  holding  company  with  no
operations.  In April  and May  2004,  we  acquired  EWCO and  Steelbank.  These
companies were  established  private  companies with  accounting  procedures not
suitable  for public  company  reporting.  In July 2004,  we agreed to  purchase
Haines Road,  and in February 2005 we completed our  acquisition  of Haines Road
except for real  estate.  This was one  operation of a larger  private  company,
again with  accounting  procedures  which were not suitable  for public  company
reporting.

     Our Independent  Registered Public Accounting Firm has 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. The material weaknesses are as follows:

A.   A lack of formalized accounting policies and procedures,  including written
     procedures for monthly, quarterly and annual closing of financial books and
     records.
B.   A  lack  of  common  systems  or a  common  chart  of  accounts  an  use of
     spreadsheets to perform consolidations, which resulted in errors.
C.   Insufficient  resources or knowledge to adequately  complete the process of
     documenting,  testing,  and evaluating our internal controls over financial
     reporting as required by the Sarbanes-Oxley Act.
D.   Insufficient  process to ensure financial  statements  adequately  disclose
     information required by Generally Accepted Accounting Principles (GAAP).
E.   Account  reconciliations  and  supporting  documentation  not prepared on a
     timely basis.
F.   Duties and control  activities  within the finance  function  have not been
     appropriately segregated.
G.   The  Company  does not have a formal  process  to ensure  that  appropriate
     system access is granted.
H.   A lack of adequate process to identify and ensure that non-standard journal
     entries are subject to an appropriate level of review.
I.   The Company's  invoicing system relies on certain manual controls which may
     not be sufficient to minimize the risk of incorrect revenue recognition.
J.   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 will
     also be  required  to audit and  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 or knowledge 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, 2006,  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.

ITEM 9B. OTHER INFORMATION

     On January 12, 2005, we entered into an employment  agreement with J. Peter
Farquhar  effective as of August 20,  2004,  pursuant to which he is employed as
our  Chairman of the Board,  Chief  Executive  Officer and  Secretary or in such
other position as the board of directors determines, for a period ending January
12, 2007 or his earlier death,  disability or termination for cause. 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
continues  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 may receive a
discretionary  bonus  of  up  to  50%  of  his  salary,  as  determined  by  the
Compensation  Committee,  (4) Mr.  Farquhar is  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 has 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
its  subsidiaries  consummate  a  transaction  in which they acquire 100% of the
outstanding  common stock or substantially  all of the assets of a Company,  the
Company is 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  are  engaged  during  the term of his  employment
agreement.

     In April 2004,  we entered  into a  Management  Consulting  Agreement  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 founded the Company, 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 has been  primarily  responsible  for  implementing  our
business  strategy,  including  identifying the EWCO,  Haines Road and Steelbank
acquisitions.  Pursuant to the agreement,  Bainbridge, primarily through Gary D.
Lewis,  provides  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 agree. In exchange for Bainbridge's  consulting services,  we agreed to
pay Bainbridge  (1) $15,000 a month,  (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,  and (4) a stock
option to Bainbridge or its  designees to purchase  110,000  common shares at an
exercise price equal to 110% of our initial public offering price.

     On April 15, 2005, we amended the Management  and  Consulting  Agreement to
(1) make 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,  and (2) increase  the monthly fee from  $15,000 to $20,000,  effective
April 2005,  and (3) to revise the  calculation  of the  maximum  success fee to
provide  that the  maximum  success  fee  shall  be  $300,000  plus  0.2% of the
enterprise  value of an acquisition,  but only to the extent that the enterprise
value of such transaction exceeds $50,000,000.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table sets forth the names and ages of the Company's
directors and executive officers and the positions they hold with the Company:

Name                             Age       Position
----                             ---       --------
J. Peter Farquhar                50        Chief Executive Officer,
                                           Chairman of the Board
                                           (Class I), Secretary
Dr. Robert Pry                   82        Director (Class II)
Michael A. Ard                   48        Director (Class III)
Tracy L. Shellabarger            49        Director (Class III)
Patrick J. Hook                  39        President, Chief Operating Officer
John A. Mayfield                 50        Chief Financial Officer



     J. Peter  Farquhar.  Mr.  Farquhar has served as our Class I director since
December 2003, our Secretary since March 2004, our  non-officer  Chairman of the
Board since April 2004 and our Chief  Executive  Officer since August 2004.  Mr.
Farquhar  has served as a director  of EWCO  since  April 2004 and of  Steelbank
since May 2004 and as Chief Executive Officer of EWCO and Steelbank since August
2004. He also served as our, EWCO's and  Steelbank's  President from August 2004
to February 2005.  Mr.  Farquhar also served as our Treasurer from April 2004 to
August  2004.  Since  April  2002,  he also  served as Project  Manager  for FCL
Builders,   Inc.,  a  design-build   general  contractor,   managing  commercial
construction  projects in the  Chicago  area.  From June 2001 to March 2002,  he
served as a self-employed  consultant,  performing work for several companies in
the primary steel and steel tubing  industries.  From November 2000 to May 2001,
he served as Chief  Operating  Officer and from July 2000 to November  2000,  as
Vice  President  --   Integration,   for  Concord  Steel,  a  fabricated   steel
counterweight  manufacturer  and a retailer of certified  chemistry steel plate.
From January 1998 to June 2000,  he served as Director of Business  Development,
and from March 1995 to January 1998, he served as Vice  President of Operations,
of Welded Tube of America,  a manufacturer  of structural  steel tubing.  Before
that,  he served in various  senior  management  and operating  capacities  with
Katayama American Company, a roll formed and stamped steel automotive  supplier,
and ITT Automotive  Inc., a tubular and stamped steel automotive  supplier.  Mr.
Farquhar  received a BA Sc degree in Mechanical  Engineering from the University
of Waterloo and an MBA from the University of Michigan.

     Dr. Robert Pry. Dr. Pry has served as our Class II director  since December
2003.  He has also served as a director  of EWCO since  April 2004.  He has been
retired for at least the past five years.  He served as an Adjunct  Professor at
Massachusetts  Institute of Technology in its Sloan School of Management  and in
its  Department  of Metallurgy  in 1986.  Dr. Pry is the retired Vice  Chairman,
Technology  of Gould Inc.,  an  international  manufacturer  of  electrical  and
electronic  products,  where he served  from 1977 to 1983.  Previously  Dr.  Pry
served  for  25  years  with  General   Electric   Corporation,   a  diversified
manufacturer and marketer of a wide range of consumer and commercial electronics
and defense products, where he managed both General Electric's Central Materials
Research  and  Development  and Central  Electrical,  Electronics  and  Software
Research and Development. He also served as Chairman of Somanetics Corporation's
Scientific  Advisory  Board from 1984 to 1987.  Dr. Pry  received a BS degree in
Physics from Texas A&I, an MS degree in Physics from Rice University,  and a PhD
degree in Physics from Rice University.

     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 2004, Mr. Shellabarger served as Controller of
a division of Nucor Corporation,  a Fortune 400 steel  manufacturer,  for almost
seven years.  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.

     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, Inc., Chicago Division, a steel tubing manufacturer,  from September
2001 to  February  2005.  In this  capacity,  Mr. Hook was  responsible  for all
operating  activities  for the Chicago and Bedford Park divisions of Copperweld.
From  March  2001 to  September  2001,  Mr.  Hook  served  as Plant  Manager  of
Copperweld's  Birmingham  Division.  From November 1999 to March 2001,  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. Mr. Hook is a party to an employment agreement with us that requires us
to elect him to the offices he has agreed to hold with us.

     John A.  Mayfield.  Mr.  Mayfield  became  our Chief  Financial  Officer in
December 2005. Before joining Tarpon, in 2005, Mr. Mayfield held the position of
Vice  President  of Finance  of  Industrial  Products  Division,  a division  of
Precision  Castparts  Corporation,  a publicly  traded  Company and  diversified
manufacturer  of  highly-complex  components  for  aerospace,   automotive,  and
specialty industry segments.  In 2004, Mr. Mayfield served as the Vice President
and  Controller  of  Operations  for  Illinois  Tool  Works,  a publicly  traded
manufacturer  and  distributor  of highly  engineered  products  and  industrial
systems.  From 1987 to 2003, he served in various senior financial capacities at
Illinois Tool Works.  Mr. Mayfield is a certified public  accountant  (CPA), and
received  an MBA  degree  from the  Kellogg  Graduate  School of  Management  at
Northwestern University,  and a BSBA degree in Accounting from the University of
Missouri. Mr. Mayfield is resigning upon the filing of this Report on Form 10-K.

Meetings and Committees of the Board of Directors

     During the year ended  December  31, 2005,  our Board of Directors  held 10
meetings.  Our board of directors has  determined  that Mr. Ard, Dr. Pry and Mr.
Shellabarger, who was elected a director on February 6, 2006, are independent as
independence is defined in the American Stock Exchange's listing standards.

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, Dr. Pry and Mr.  Shellabarger 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

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, 2005, our Audit Committee held 4 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,  Dr. Pry and Mr.  Shellabarger  are the  current
members of this  committee.  Each of Dr. Pry, Mr. Ard and Mr.  Shellabarger  are
"independent" as such term is defined in the American Stock  Exchange's  listing
standards,   as  those  standards  have  been  modified  or  supplemented.   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, 2005, the Compensation Committee held no meetings.

Nominating Committee

     Our Board of Directors has a standing  Nominating  Committee which consists
of three  directors.  Mr.  Ard,  Dr. Pry 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,
2005, the Nominating Committee held no meetings.

     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.

     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.
Historically,  our  directors  have been existing  directors,  associates of our
founder or an owner of a business we acquired.

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


Summary Compensation Table

     The  following  table sets forth  information  for each of the fiscal years
ended  December  31,  2005,  2004 and 2003  concerning  compensation  of (1) all
individuals   serving  as  our  Chief   Executive   Officer  and  (2)  our  most
highly-compensated  other executive officers whose total annual salary and bonus
exceeded $100,000:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                                                  Long-Term
                                                                                  Compensation
                                                                                  Awards
                                              Annual Compensation
                                                                                  Securities
Name and Principal Position                                                       Underlying          All other
                                    Year      Salary ($)          Bonus ($)       Options             Compensation ($)
                                    ----      ----------          ---------       -----------         ----------------
<S>                                 <C>       <C>                                 <C>                 <C>   <C>
J. Peter Farquhar, Chairman of      2005      224,122             -               181,800             5,457 (3)
the Board, Chief Executive
Officer and Secretary (until        2004      21,333              0               0                   22,000 (3)
February 2005) President (1)

Patrick J. Hook, President          2005      186,798             30,331          121,200             404

James T. House, Former CFO
                                    2005      157,370             25,000          121,200             153,179
                                    2004      58,301              -               -                   -

Gary D. Lewis, former Chairman of                                 0               0
  the Board, President and Chief
  Executive Officer (until April    2004      82,306              0               0                   563,900 (5)
  2004)(2)
                                    2003      350,000                                                 0

Charles A. Vanella, former          2004      119,922             0               0                   227,692 (6)
  President and Chief Executive
  Officer  (April to August         2003      125,000             0               0                   3,185
  2004); President and Chief
  Executive Officer of EWC0
</TABLE>


(1) Mr.  Farquhar  became  our  Chief  Executive  Officer  in August  2004.  The
Compensation shown in the table for fiscal 2004 represents  compensation paid to
him in all  capacities in 2004.  See  "Employment  Contracts and  Termination of
Employment  and  Change-in-Control   Arrangements"  for  a  description  of  our
employment agreement with Mr. Farquhar.

(2) Mr. Lewis resigned as our Chairman of the Board, President, Treasurer, Chief
Executive  Officer and as one of our directors in April 2004  effective upon the
acquisition of EWCO and we entered into a Management  Consulting  Agreement with
Bainbridge  Advisors,  Inc. at the same time. Mr. Lewis is the President,  Chief
Executive  Officer and majority owner of Bainbridge,  which we currently  retain
for acquisition  and other  consulting  services.  See  "Compensation  Committee
Interlocks  and  Insider  Participation"  for a  description  of our  Management
Consulting  Agreement with  Bainbridge.  We also paid Mr. Lewis $350,000 for his
services to us in 2002 and $45,390 for his services to us in 2001 and reimbursed
him for automobile  lease  payments and excess mileage  charges in the amount of
$11,140 in 2004, $9,552 in 2003 and $8,987 in 2002.

(3) Amounts for 2004 for Mr. Farquhar,  represent  $12,000 in director fees paid
him prior to his  employment  as CEO and we issued 2,000 of our common shares to
Mr.  Farquhar in February 2005 in payment for $10,000 of consulting  services he
rendered to us in 2004 before he became our Chief Executive Officer.

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

(4)  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.

(5) Amounts for 2004 for Mr. Lewis  include an aggregate of $563,900  payable to
Mr. Lewis under the Management  Consulting  Agreement with Bainbridge  Advisors,
Inc., including  retainers,  success fees in connection with our acquisitions of
EWCO and Steelbank  (which are payable in  installments),  and  reimbursement of
legal fees,  insurance costs and other fees and expenses,  but not including the
stock option granted to designees of Bainbridge.

(6) Amounts for 2004 for Mr. Vanella,  include an aggregate of $225,427  payable
under  a  Termination  Agreement  with  Mr.  Vanella,  and  $2,265  in  matching
contributions paid by us into our 401(k) plan.

<PAGE>

Option Grants Table

     No  individual  stock  options  were  granted  during 2004 or earlier.  The
following table sets forth  information  concerning  individual  grants of stock
options that we made during 2005 to each of our executive  officers named in the
Summary Compensation Table above:

<TABLE>
<CAPTION>

                                                         Option Grants at March 1, 2006

                                 Individual Grants
--------------------------------------------------------------------------------------
                                                                                                 Potential
                                                % of                                         Realizable Value at
                                                Total                                          Assumed Annual
                               Number of       Options                                      Rates of Stock Price
                              Securities     Granted to                                         Appreciation
                              Underlying      Employees      Exercise                          for Option Term
                                Options       in Fiscal        Price        Expiration  ---------------------------
        Name                  Granted (#)       Year          ($/Sh)           Date        5% ($)        10% ($)
        ----                  -----------   -----------     -----------    -----------  -----------  --------------

<S>                            <C>     <C>      <C>            <C>          <C>  <C>       <C>           <C>
J. Peter Farquhar..........    60,000  (1)      19.9%          $5.50        2/17/15        158,668       448,123
Gary D. Lewis..............   110,000  (1)      36.4%          $5.50        2/17/15        290,892       821,558
Patrick J. Hook............    40,000  (1)      13.3%          $5.50        2/17/15        105,779       298,748
John A. Mayfield...........    40,000  (2)      13.3%          $5.50        12/12/15       105,779       298,748
</TABLE>

------------------
(1)  The options listed in the table were granted to Mr. Farquhar,  Mr. Hook and
     Mr. Lewis  (including  options to purchase  30,000 common shares granted to
     his son)  effective at the February 17, 2005 closing of our initial  public
     offering,  under our 2004 Stock  Option  Plan,  exercisable  at 110% of the
     initial public offering price of our common shares.  The option to purchase
     50,000  common  shares  granted to Mr.  Farquhar and 40,000  common  shares
     granted  to  Mr.  Hook  are  exercisable  in  one-third  cumulative  annual
     increments  beginning  February  17,  2005 and they will also  become  100%
     exercisable immediately 10 days before or upon specified changes in control
     of the Company.  The option to purchase 10,000 common shares granted to Mr.
     Farquhar and the option granted to Mr. Lewis and his son became exercisable
     on the date of grant.

(2)  The options listed in the table were granted to Mr.  Mayfield  effective at
     the December 12, 2005 under our 2004 Stock Option Plan, exercisable at 110%
     of the initial public  offering  price of our common shares.  These options
     granted to Mr.  Mayfield are  exercisable  in one-third  cumulative  annual
     increments  beginning  December  12,  2005 and they will also  become  100%
     exercisable immediately 10 days before or upon specified changes in control
     of the Company. Mr. Mayfield is resigning upon the filing of this Report on
     Form 10-K.


Employment  Contracts  and  Termination  of  Employment  and   Change-in-Control
Arrangements

     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 is employed as our Chairman of the Board,  Chief Executive  Officer and
Secretary or in such other position as the board of directors determines,  for a
period ending 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 is entitled to various fringe  benefits under the agreement,  including
$5,000,000 of directors and officers liability insurance. He is 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 continues 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 may receive a  discretionary  bonus of up to 50% of
his salary,  as determined by the  Compensation  Committee,  (4) Mr. Farquhar is
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  has 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 its  subsidiaries  consummate  a
transaction  in which  they  acquire  100% of the  outstanding  common  stock or
substantially all of the assets of a Company, the Company is 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 are engaged during the term of his employment agreement.

     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.

     John A. Mayfield. In November 2005, we entered into an employment agreement
with John A. Mayfield,  pursuant to which he is employed as our Chief  Financial
Officer  beginning  December  2005,  or in such other  position  as the board of
directors  determines,  for a period  ending  December,  2008,  which  term will
automatically  renew for one additional year unless either party gives the other
at least  180 days  notice  of  termination.  Mr.  Mayfield's  annual  salary is
currently  $175,000,  which may be increased  by the Board of  Directors  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 is also entitled to  participate  in any bonus plan  established by the
Compensation  Committee of the Board of Directors.  Mr.  Mayfield is 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 is terminated  without cause. Mr.
Mayfield has agreed not to compete with us during  specified  periods  following
the termination of his employment.  Mr. Mayfield is resigning upon the filing of
this Report on Form 10-K.

     James T. House.  On July 8, 2004, we entered into an  employment  agreement
with James T. House,  pursuant  to which he is  employed as our Chief  Financial
Officer  beginning  August  2004,  or in such  other  position  as the  board of
directors  determines,  for a period  ending July 8, 2007.  Mr.  House's  annual
salary is currently $160,000,  which may be increased by the board of directors.
If we have two  consecutive  quarters after the February 17, 2005 closing of our
initial public  offering in which our net income before  extraordinary  items is
greater  than  $10,000,  we have  agreed to  increase  his  salary to  $190,000.
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 is  entitled  to  participate  in any  bonus  plan  established  by the
Compensation  Committee  of the board of  directors.  Mr.  House is  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  is
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
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.


Compensation Committee Interlocks and Insider Participation


     During  fiscal 2005 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
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  expires
April 7, 2007  (subsequently  extended on December 8, 2005 for an additional one
year  term  commencing  April  7,  2007)  and  is  automatically  extended  on a
year-to-year  basis  unless  either  party gives 120 days notice of  termination
before the end of the initial term or 60 days notice of  termination  before the
end of any  extension  of  the  term.  Pursuant  to the  agreement,  Bainbridge,
primarily through Gary D. Lewis,  provides 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  agree.  Bainbridge will have  satisfactorily  provided the
required  availability  to perform its services so long as, with respect to Gary
D. Lewis,  Mr.  Lewis has  provided an average of at least an  aggregate  of 120
hours of service a month during the term through  February  2006 and at least an
aggregate  of 70 hours of service a month during the term after  February  2006,
unless  Tarpon  enters into an  acquisition  other than the EWCO,  Steelbank and
Haines Road acquisitions. Tarpon is required to pay the advisory and transaction
fees even if it does not use Bainbridge for the allotted hours.

     In exchange for  Bainbridge's  consulting  services,  we have agreed to pay
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 is 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.  If payments  exceed
$60,000 a month,  the excess will be deferred until the next month in which they
can 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.

Board Compensation Committee Report on Executive Compensation

     General.   The  Compensation   Committee's   overall   compensation  policy
applicable  to our  executive  officers  is to  provide a  compensation  package
intended to attract and retain  qualified  executives  and to provide  them with
incentives to achieve our goals and increase shareholder value. The Compensation
Committee implements this policy through salaries, bonuses, equity incentives, a
401(k) plan, and employment agreements and miscellaneous personal benefits.

     Salaries.  The Compensation  Committee's policy is to provide salaries that
it  believes  are  necessary  to attract  and retain  qualified  executives.  In
determining its recommendations for executive officer salaries, the Compensation
Committee  consults other members of the Board or  Compensation  Committee,  but
generally  relies  to a  significant  extent  on  recommendations  of our  Chief
Executive Officer (except for the Chief Executive Officer's  compensation).  The
Compensation Committee also considers its members' knowledge of salaries paid by
companies of comparable size in the steel tubing industry, negotiations with new
executive  officers,  individual  performance,  the  executive's  position,  our
financial  resources,  performance  and  prospects and the salaries of our other
officers  and  employees.  Salaries for fiscal 2005 were  determined  based on a
subjective  evaluation  of the  factors  described  above,  without  giving  any
specific  priority or weighting to any of the  factors,  and based  primarily on
negotiations  with Mr.  Farquhar,  Mr. Hook, and Mr. Mayfield in connection with
engaging  them  as  new  executive  officers,   the  Chief  Executive  Officer's
recommendation,  the executive's position, our financial resources,  performance
and prospects and the salaries of our other officers and employees.

     Bonuses.  The Compensation  Committee's policy is to recommend bonuses that
are  necessary  to attract  executive  officers  and that  compensate  executive
officers for  achieving our goals.  In addition,  the  Compensation  Committee's
policy is to  consider  discretionary  bonuses,  determined  near the end of the
fiscal year, to compensate  executive  officers for  performance or achievements
during the fiscal year not covered by bonuses paid earlier in the year.

     For 2005,  we did not adopt a bonus  plan for  executive  officers,  but we
agreed to a  signing  bonus  for Mr.  Hook  primarily  to  attract  him to us by
replacing his lost bonus from his former employer.

     Stock Options. The Compensation  Committee's policy has been to award stock
options  to each of our  officers  and  directors  in amounts  reflecting  their
position and ability to influence our overall  performance,  determined based on
the  Committee's  subjective  judgment  after  reviewing  the  number of options
previously  granted to such person,  the number of options granted to persons in
similar  positions both at Tarpon and at other companies deemed comparable to us
(based on the members'  knowledge of options  granted by other  companies),  the
number   of   options   remaining   available   for   grant   and   management's
recommendations.

     The Compensation  Committee's  policy has been to grant options with a term
of ten years to provide a long-term  incentive and to fix the exercise  price of
the options at or above the fair market  value of the  underlying  shares on the
date of  grant.  Such  options  only  provide  compensation  if the price of the
underlying shares  increases.  In addition,  the Committee's  policy has been to
grant  options  to  officers  that vest over a specific  period to  provide  the
executive with an incentive to remain with us. Generally, options granted to our
executives  vest in three equal  annual  installments  beginning  on the date of
grant.  The  Committee's  policy has also been to provide  new  executives  with
options  to  attract  them to us based  on  negotiations  with  new  executives,
management's  recommendations and the Committee's  subjective judgment primarily
after reviewing the number of options granted to our other  executives.  In 2004
and 2005 options  were  granted to new  executive  officers  primarily  based on
negotiations  with  new  executives,   management's   recommendations   and  the
Committee's (or the Board's,  as the case may be) subjective  judgment primarily
after  reviewing the number of options  available and to be granted to our other
executives, employees and consultants.

     The  purposes of our 2004 Stock  Option Plan are to provide key  employees,
directors,  consultants  and  advisors  with  an  increased  incentive  to  make
significant and  extraordinary  contributions  to our long-term  performance and
growth,   to  join  the  interests  of  optionees  with  the  interests  of  our
shareholders  and to facilitate  attracting  and  retaining  our key  employees,
consultants and advisors.

     Generally,   the   Compensation   Committee   reserves  the  right  to  pay
compensation  to our  executives in amounts it deems  appropriate  regardless of
whether such compensation is deductible for federal income tax purposes.  Equity
incentives  granted to  executives  are subject to limits on  permitted  federal
income  tax  deductions  related to those  equity  incentives,  including  under
current  treasury  regulations   concerning  the  $1,000,000  cap  on  executive
compensation  deductions  under Section  162(m) of the Internal  Revenue Code of
1986, as amended.  The Committee believes that such awards are more important to
us than the potential loss of related compensation  deductions relating to those
equity  incentives,  especially in light of our net operating loss carryforwards
and the non-cash nature of deductions available relating to some of these equity
incentives.

     401(k)  Plan.  EWCO has  adopted  401(k)  plans  to  provide  all  eligible
employees  a means to  accumulate  retirement  savings.  Participants  may defer
specified   portions  of  their  compensation  and  we  match  50%  of  employee
contributions  up to  employee  contributions  equal  to 5%  of  the  employee's
compensation.

     Employment Agreements and Miscellaneous Personal Benefits. The Compensation
Committee's  policy has been to have  employment  agreements  with our executive
officers to attract them and to provide them with specified  minimum  positions,
periods of employment,  salaries,  fringe benefits and severance benefits. These
benefits  are  intended  to  permit  these  executive  officers  to focus  their
attention on performing their duties to us, rather than on the security of their
employment,   and  to  provide  such  officers  with  benefits   deemed  by  the
Compensation  Committee  to be  suitable  for their  offices.  The  Compensation
Committee's  policy,  however,  is that personal  benefits (other than severance
pay) should not exceed 10% of the executive's salary and bonus for the year.

     Fiscal 2005 Compensation Decisions Concerning Executive Officers.

     In January 2005, the Compensation Committee,  with Mr. Farquhar abstaining,
recommended  that we enter into an employment  agreement with J. Peter Farquhar.
The Compensation Committee recommended approval of this agreement, including the
salary  provided in the  agreement,  based on its  subjective  evaluation of its
members' consultation with other members of the committee, negotiations with Mr.
Farquhar in connection with his employment agreement,  the directors' collective
knowledge of salaries paid by others and paid by Tarpon to others, including its
previous Chief  Executive  Officers and recently hired  employees,  the proposed
services to be  provided  by Mr.  Farquhar  and his  proposed  position as Chief
Executive Officer,  and its subjective  judgment of what was necessary to retain
Mr. Farquhar's services as Chief Executive Officer.  The Compensation  Committee
recommended  that we enter into an  employment  agreement  with Mr.  Farquhar to
provide him with a specified period of employment,  salary,  fringe benefits and
severance  benefits to permit Mr.  Farquhar to focus his attention on performing
his duties to us, rather than on the security of his employment,  and to provide
him with benefits  deemed by the  Compensation  Committee to be suitable for his
office.  His personal  benefits  (other than severance pay) do not exceed 10% of
his salary and bonus for the year.

     In February 2005, the Compensation Committee recommended that we enter into
an  employment  agreement  with  Patrick J.  Hook.  The  Compensation  Committee
recommended  approval of this  agreement,  including the salary  provided in the
agreement,  based on its subjective evaluation of its members' consultation with
other members of the committee,  negotiations  with Mr. Hook in connection  with
his employment  agreement,  the directors' collective knowledge of salaries paid
by others and paid by Tarpon to others,  including its previous  Presidents  and
Chief Operating Officers and recently hired employees,  the proposed services to
be  provided  by Mr.  Hook  and his  proposed  position  as  President,  and its
subjective  judgment  of what was  necessary  to retain Mr.  Hook's  services as
President and Chief Operating Officer.  The Compensation  Committee  recommended
that we enter into an employment  agreement  with Mr. Hook to provide him with a
specified period of employment,  salary,  fringe benefits and severance benefits
to permit Mr. Hook to focus his attention on performing his duties to us, rather
than on the security of his employment,  and to provide him with benefits deemed
by the  Compensation  Committee  to be  suitable  for his office.  His  personal
benefits  (other than  severance  pay) do not exceed 10% of his salary and bonus
for the year.

     In November 2005, the Compensation Committee recommended that we enter into
an  employment  agreement  with John A.  Mayfield.  The  Compensation  Committee
recommended  approval of this  agreement,  including the salary  provided in the
agreement,  based on its subjective evaluation of its members' consultation with
other members of the  committee,  negotiations  with Mr.  Mayfield in connection
with his employment  agreement,  the directors' collective knowledge of salaries
paid by others  and paid by Tarpon  to  others,  including  its  previous  Chief
Financial  Officers and recently hired  employees,  the proposed  services to be
provided by Mr. Mayfield and his proposed  position as Chief Financial  Officer,
and its  subjective  judgment  of what was  necessary  to retain Mr.  Mayfield's
services as Chief Financial Officer. The Compensation Committee recommended that
we enter into an employment  agreement  with Mr.  Mayfield to provide him with a
specified period of employment,  salary,  fringe benefits and severance benefits
to permit Mr.  Mayfield to focus his attention on  performing  his duties to us,
rather than on the security of his employment,  and to provide him with benefits
deemed by the Compensation Committee to be suitable for his office. His personal
benefits  (other than  severance  pay) do not exceed 10% of his salary and bonus
for the year.  Mr.  Mayfield is resigning upon the filing of this Report on Form
10-K.


                           Michael A. Ard
                           Dr. Robert Pry
                           Peter Fraquhar (1)

(1) Mr. Farquhar served on the Compensation Committee during fiscal 2005 and was
replaced by Mr.  Shellabarger  in February  2006.  Mr.  Farquhar  obstained from
voting on any matter involving his own compensation.

Compensation of Directors

     We refer to our  directors who are not our officers or employees as Outside
Directors.  During 2005, our Outside  Directors  received  $1,000 for each board
meeting attended in person, $250 for each telephonic board meeting attended, and
$250 for each board committee  meeting attended on a date other than the date of
a board  meeting.  We also  reimbursed  Outside  Directors for their  reasonable
expenses of  attending  board and board  committee  meetings.  In  addition,  we
granted to each of our  directors  on the  February 17, 2005 closing date of our
initial public offering options to purchase 10,000 common shares  exercisable at
$5.50 a share,  110% of our initial public offering price. We granted options to
purchase  3,500 common  shares to Outside  Directors  who  continued to serve as
Outside Directors each year commencing May 17, 2005.

     Commencing  February 6, 2006, our compensation policy for Outside Directors
is as follows:


     o    On  election  - Options to  purchase  10,000  shares of Tarpon  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.

     o    Monthly - Cash retainer of $1,000

     o    May 31 of each year - For  directors in good  standing for the current
          and previous  year, a stock grant of $8,000 of Tarpon  common stock at
          the current market price.

     o    Quarterly - Committee chairs, $500; Audit committee chair, $1,000

     o    Per in person Board meeting - $1,000

     o    Per telephone conference, Board, meeting or otherwise - $250

     o    For  special  projects  requested  by the  Board - fee  agreed  to and
          approved by the Board.

     For  our  employee  Directors,  the  policy  was  revised  to  provide  the
following:

     o    May 31 of each year - For  directors in good  standing for the current
          and  previous  year,  stock grant of $8,000 of Tarpon  common stock at
          current market price as of May 31 of that year.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Holders of Our Voting Securities

     The following information is furnished as of April 25, 2005 with respect to
our nominee for  election as one of our  directors,  with respect to each person
whose term of office as one of our directors  will  continue  after the meeting,
with respect to one person whose term of office as one of our directors will not
continue after the meeting,  with respect to each of our executive  officers who
is named in the Summary Compensation Table below, and with respect to all of our
directors and executive officers as a group:

                                                      Amount and     Percentage
                                                       Nature of         of
                                                     Common Shares     Common
                                                     Beneficially      Shares
     Name                                                Owned        Owned (1)
     ----                                                -----        ---------

J. Peter Farquhar..................................  33,667  (2)        *
Dr. Robert H. Pry..................................  10,000  (3)        *
Michael A. Ard.....................................  10,000  (4)        *
Tracy L. Shellabarger..............................  10,000  (5)        *
Patrick Hook.......................................  13,334  (6)        *
John A. Mayfield...................................       0  (7)        *
Gary D. Lewis...................................... 389,751  (8)        8.4%
c/o Bainbridge Advisors, Inc.
P.O. Box 36940 Grosse Pointe, Michigan 483236

All directors and executive officers as a
group (6 persons)..................................  77,001  (9)        1.7%

* Less than 1%

(1)  Based on 4,640,130 common shares outstanding as of March 1, 2006.

(2)  Includes  26,667 common  shares that Mr.  Farquhar has the right to acquire
     with in 60 days of December 31, 2005. Does not include 33,333 common shares
     which are not exercisable with 60 days of December 31, 2005.

(3)  Includes  10,000 common shares that Dr. Pry has the right to acquire within
     60 days of December 31, 2005.

(4)  Includes  10,000 common shares that Mr. Ard has the right to acquire within
     60 days of December 31, 2005.

(5)  Includes  10,000  common  shares  that Mr.  Shellabarger  has the  right to
     acquire within 60 days of December 31, 2005.

(6)  Includes  13,667  common shares that Mr. Hook has the right to acquire with
     in 60 days of December  31, 2005.  Does not include  26,666  common  shares
     which are not exercisable with 60 days of December 31, 2005.

(7)  Does not include  40,000  common shares which are not  exercisable  with 60
     days of December 31,  2005.  Mr.  Mayfield is resigning  upon the filing of
     this Report on Form 10-K.

(8)  Includes (a) 309,751  common shares owned jointly with his wife,  with whom
     he shares voting and investment power and (b) 80,000 common shares that Mr.
     Lewis has the right to acquire  within 60 days of December 31,  2005.  Does
     not include (a) 8,371  common  shares  owned by an adult son,  who does not
     live with him, (b) 8,371 common  shares  owned by his adult  daughter,  who
     does not live with him, (c) 41,858 common  shares  owned,  or 30,000 common
     shares that Mr.  Lewis's adult son Gary N. Lewis,  has the right to acquire
     within  60 days of  December  31,  2005.  Mr.  Lewis  disclaims  beneficial
     ownership of the common shares held by his adult children.

(9)  Includes 77,001 common shares that all executive  officers and directors as
     a group have the right to acquire within 60 days of December 31, 2005.


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.


ITEM 14. PRINCIPAL ACCOUNTANT'S FEES & SERVICES


     Grant Thornton LLP are our independent accountants and have reported on the
financial statements in this 2005 Annual Report.


     The following  table  presents  aggregate fees billed for each of the years
ended  December 31, 2005 and 2004 for  professional  services  rendered by Grant
Thornton LLP in the following categories:


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

                                   2005                      2004
                                   ----                      ----

Audit Fees(1)                   $630,000                   $1,190,000

Audit-Related Fees              $142,000                   $        0

Tax Fees(2)                     $     0                    $        0

All Other Fees                  $     0                    $        0

(1)  Consists of fees for the audit of our annual financial  statements,  review
     of interim  financial  statements and other services provided in connection
     with our Registration  Statement on Form S-1 in connection with our initial
     public offering. Our financial statements were not audited before 2004.

(2)  Consists of tax return preparation fees.


     In  accordance  with  Section  10A(i) of the  Exchange  Act,  before  Grant
Thornton  LLP 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, 2005 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, 2005 be included in our Annual Report
on Form 10-K for the year ended December 31, 2005 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
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 are
not employees of the Company and we may not be, and may not represent themselves
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."

                          Michael A. Ard

                          Dr. Robert Pry

                         Peter J. Farquhar (1)



(1) Mr.  Farquhar  served  on the Audit  Committee  during  fiscal  2005 and was
replaced by Mr. Shellabarger in February 2006.

<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:
<TABLE>
<CAPTION>

                                                                                                    Page
Tarpon Industries, Inc.

<S>                                                                                                  <C>
Report of Independent Registered Public Accounting Firm.........................................     60
Balance Sheets --- December 31, 2005 and 2004...................................................     61
Statements of Operations --- For the Years Ended December 31, 2005, 2004 and 2003...............     62
Statements of Shareholders' Equity --- For the Years Ended December 31, 2005,
     2004 and 2003..............................................................................     63
Statements of Cash Flows --- For the Years Ended December 31, 2005, 2004 and 2003...............     64
Notes to Financial Statements...................................................................     66
Quarterly information...........................................................................     94
Eugene Welding Co.
Report of Independent Registered Public Accounting Firm.........................................     95
Balance Sheets --- March 31, 2004 and December 31, 2003 ........................................     96
Statements of Operations --- For the Three Months Ended March 31, 2004
     and For the Years Ended December 31, 2003..................................................     97
Statements of Shareholders' Equity --- For the Three Months Ended March 31, 2004
     and For the Years Ended December 31, 2003..................................................     98
Statements of Cash Flows --- For the Three Months Ended March 31, 2004
     and For the Year Ended December 31, 2003...................................................     99
Notes to Financial Statements...................................................................    100
</TABLE>

     (b) Financial Statement Schedules.

         Schedule                                                       Page

         Schedule II - Tarpon Valuation and Qualifying Accounts         S-1
         and Reserves for the years ended December 31, 2005, 2004
         and 2003.
         Schedule II - EWCO Valuation and Qualifying Accounts           S-2
         and Reserves for the three month period ended March
         31, 2004 and the years ended December 31,
         2003.

     (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.


<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 INDUSTRIES, INC.
                                          (Registrant)

Dated: March 31, 2006                By:  /s/ J. Perter Farquhar
                                          -------------------------------------
                                          J. Peter Farquhar
                                          Its:  Chief Executive 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


                                        Chief Executive Officer and a Director
<S>                                                                                                  <C> <C>
   /s/ J. Peter Farquhar                (Principal Executive Officer)                          March 31, 2006
------------------------------------                                                   ------------------------
     J. Peter Farquhar

                                        Senior Vice President, Chief Financial Officer,
                                        Chief Accounting Officer, Treasurer
                                        (Principal Financial Officer and Principal              March 31, 2006
    /s/ John A. Mayfield                           Accounting Officer)
------------------------------------                                                   ------------------------
      John A. Mayfield


     /s/ Dr. Robert Pry                                  Director                               March 31, 2006
------------------------------------                                                   ------------------------
       Dr. Robert Pry


     /s/ Michael A. Ard                                  Director                               March 31, 2006
------------------------------------                                                   ------------------------
       Michael A. Ard


   /s/ Tracy Shellabarger                                Director                               March 31, 2006
------------------------------------                                                   ------------------------
     Tracy Shellabarger
</TABLE>
<PAGE>

                      SCHEDULE II - TARPON INDUSTRIES, INC.
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                 For the years ended December 31, 2005 and 2004
<TABLE>
<CAPTION>


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

                                                                      (1, 4)            (2)            (3)
                                                                      ------            ---            ---
                                                                                    Charge to
                                                Balance at       Charged to Costs   Other                        Balance at End
                                           Beginning of Period     and Expenses     Accounts      Deductions        of Period
                                           --------------------- ------------------ ------------- -------------- ----------------
Allowance for Doubtful Accounts


<S>                 <C> <C>                            <C>              <C>            <C>           <C>                <C>
Year ended December 31, 2005                          $290,001          $1,000,018     $(20,645)     $1,076,473        $  192,901
Year ended December 31, 2004                          $     --          $  379,972     $ 243,130     $  346,692        $  290,001
Year ended December 31, 2003                          $     --          $       --     $      --     $      --         $       --


Tax Valuation Allowance

Year ended December 31, 2005                          $1,198,380        $3,534,721     $      --     $      --         $4,733,101
Year ended December 31, 2004                          $  481,734        $  716,646     $      --     $      --         $1,198,380
Year ended December 31, 2003                          $       --        $  481,734     $      --     $      --         $  481,734
</TABLE>


     Note: (1) Reserve of additional uncollectible accounts
     Note: (2) Acquisition of Steelbank's and EWCO's net assets
     Note: (3) Write-off  uncollectible  accounts,  net of recoveries
     Note: (4) Increase in valuation  allowance  for net  operating  losses
               and deferred tax assets  should the Company not achieve
               profitability in future years.

<PAGE>
                        SCHEDULE II - EUGENE WELDING CO.
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                  For the three months ended March 31, 2004 and
                     for the years ended December 31, 2003.

                         Allowance for Doubtful Accounts
<TABLE>
<CAPTION>

                                           Column B             Column C               Column D       Column E
                                           --------      --------------------          --------       --------
                                                                Additions
                                                         --------------------
                                                            (2)         (3)
                                          Balance at     Charged to   Charged to            (1)        Balance at
                                           Beginning      Costs and  Other Accts.,      Deductions,      End of
                                           of Period      Expenses     Describe          Describe        Period
                                           ---------      --------     --------          --------        ------

    Three month period ended
<S>            <C> <C>                     <C>            <C>          <C>               <C>             <C>
         March 31, 2004                    $ 321,941      $ 199,276    $   --            $ 298,229       $ 222,988
         Year ended December 31, 2003         38,099        283,842        --                   --         321,941

         Inventory reserve for obsolescence:
         Three month period ended
              March 31, 2004               $      --      $      --    $   --             $    --        $      --
         Year ended December 31, 2003             --             --        --                  --               --
</TABLE>

     Note: (1) Write-off uncollectible accounts, net of recoveries
     Note: (2) Reserve of additional uncollectible accounts, net of recoveries.
     Note: (3) Write-off obsolete, excess inventory, net of recoveries.

<PAGE>

                                  EXHIBIT INDEX

Exhibit           Description
-------           -----------

2.1  Stock Purchase  Agreement,  dated as of November 23, 2003,  between Charles
     Vanella and Wall St.  Acquisitions,  Inc.  (now know 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  2.1  to the
     registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on November 1, 2004.

2.2  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.

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

2.4  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 the
     registrant's registration statement on Form S-1 (file no. 333-120117) filed
     on January 14, 2005.

2.5  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 Exhibit
     2.5 to amendment no. 1 to the registrant's  registration  statement on Form
     S-1 (file no. 333-120117) filed on January 14, 2005.

2.6  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.

2.7  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.

2.8  First  Amending  Agreement,  dated as of December 15, 2004,  between Bolton
     Steel Tube Co. Ltd.,  BST  Acquisition,  Ltd.  and Winston  Penny and Henry
     Koury,  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.

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

2.10 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.

2.11 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.

2.12 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.

3(i) 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(ii) Amended and Restated Bylaws of Tarpon  Industries,  Inc.,  incorporated by
     reference to Exhibit 3(ii) 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.

4.2  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.

4.3  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.

4.4  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.

4.5  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.

4.6  Subordination  Agreement,  dated August 11, 2004  between  Anand Dhanda 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.

4.7  Subordination  Agreement,  dated August 11, 2004  between  Riyaz Jinnah 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.

4.8  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.

4.9  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.

4.10 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.

4.11 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.

4.12 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.

4.13 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.

4.14 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.

4.15 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.

4.16 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.

4.17 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.

4.18 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.

4.19 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.

4.20 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.

10.1 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.

10.2 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.

10.3 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.

10.4 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.

10.5 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.

10.6 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.

10.7 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.

10.8 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.

10.9 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.

10.10 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.

10.11 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.

10.12 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.

10.13 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.

10.14 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,

10.15 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.

10.16 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.

10.17 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.

10.18 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.

10.19 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.

10.20 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.

10.21 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.

10.22 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.

10.23 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.

10.24 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.

10.25 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.

10.26 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.

10.27 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.

10.28 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.

10.29 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.

10.30 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.

10.31 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.

10.32 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.

10.33 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.

10.34 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.

10.35 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.

10.36 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.

10.37 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.

10.38 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.

10.39 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.

10.40 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.

10.41 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.

10.42 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.

10.43 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.

10.44 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.

10.45 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.

10.46 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.

10.47 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.

10.48 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.

10.49 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.

10.50 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.

10.51 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

10.52 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.

10.53 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.

10.54 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.

10.55 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.

10.56 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.

10.57 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.

10.58 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.

10.59 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.

10.60 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.

10.61 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.

10.62 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.

21.1 Subsidiaries of Tarpon Industries, Inc.

32.1 Certifications  of Chief  Executive  Officer  and Chief  Financial  Officer
     Pursuant to 18 U.S.C.  Section 1350, as Adopted  Pursuant to Section 906 of
     the Sarbanes-Oxley Act of 2002.


<PAGE>
                                                               EXHIBIT 21.1



SUBSIDIARIES OF TARPON INDUSTRIES, INC.

Name                            Jurisdiction of Incorporation
----                            -----------------------------

Eugene Welding Co.                    Michigan

FM, Inc.*                             Michigan

JS&T Acquisition Company              Michigan

MTM Acquisition Company               Michigan

Steelbank Tubular, Inc.               New Brunswick, Canada

* 100% owned by Registrant's wholly owned subsidiary Eugene Welding Co.



<PAGE>

                                                              EXHIBIT 31.1

                                 CERTIFICATIONS

I, J. Peter Farquhar, certify that:

1.   I have reviewed this annual report on Form 10-K of Tarpon Industries, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)  designed  such  disclosure  controls  and  procedures,  or caused  such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant,  including its
     consolidated  subsidiaries,  is made  known to us by  others  within  those
     entities,  particularly  during the  period in which  this  report is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  and  presented  in  this  report  our  conclusions   about  the
     effectiveness of the disclosure  controls and procedures,  as of the end of
     the period covered by this report based on such evaluation; and

     c) disclosed in this report any change in the registrant's internal control
     over financial  reporting that occurred during the registrant's most recent
     fiscal  quarter (the  registrant's  fourth fiscal quarter in the case of an
     annual report) that has  materially  affected,  or is reasonably  likely to
     materially  affect,  the  registrant's   internal  control  over  financial
     reporting; and

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a) all significant  deficiencies  and material  weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely  affect the  registrant's  ability to record,  process,
     summarize and report financial information; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees who have a significant role in the registrant's  internal control
     over financial reporting.


Date:  March 31, 2006


                                    /s/ J. Peter Farquhar
                                    ------------------------------------------
                                    J. Peter Farquhar, Chief Executive Officer

<PAGE>


                                                                EXHIBIT 31.2
                                 CERTIFICATIONS

I, John A. Mayfield, certify that:

1.   I have reviewed this annual report on Form 10-K of Tarpon Industries, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)  designed  such  disclosure  controls  and  procedures,  or caused  such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant,  including its
     consolidated  subsidiaries,  is made  known to us by  others  within  those
     entities,  particularly  during the  period in which  this  report is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  and  presented  in  this  report  our  conclusions   about  the
     effectiveness of the disclosure  controls and procedures,  as of the end of
     the period covered by this report based on such evaluation; and

     c) disclosed in this report any change in the registrant's internal control
     over financial  reporting that occurred during the registrant's most recent
     fiscal  quarter (the  registrant's  fourth fiscal quarter in the case of an
     annual report) that has  materially  affected,  or is reasonably  likely to
     materially  affect,  the  registrant's   internal  control  over  financial
     reporting; and

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a) all significant  deficiencies  and material  weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely  affect the  registrant's  ability to record,  process,
     summarize and report financial information; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees who have a significant role in the registrant's  internal control
     over financial reporting.


Date:  March 31, 2006


                                      /s/ John A. Mayfield
                                      ------------------------------------
                                      John A. Mayfield, Senior Vice President
                                      and Chief Financial Officer


<PAGE>

                                                                 EXHIBIT 32.1


                    CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
                     AND CHIEF FINANCIAL OFFICER PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In  connection  with the  Annual  Report of Tarpon  Industries,  Inc.  (the
"Company")  on Form 10 for the year ended  December  31,  2005 as filed with the
Securities and Exchange  Commission on the date hereof (the "Periodic  Report"),
we, J. Peter  Farquhar,  Chief  Executive  Officer of the  Company,  and John A.
Mayfield,  Senior Vice  President  and Chief  Financial  Officer of the Company,
certify,  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

          1.   the  Periodic  Report fully  complies  with the  requirements  of
               Section  13(a) or 15(d) of the  Securities  Exchange Act of 1934;
               and

          2.   the information contained in the Periodic Report fairly presents,
               in all material respects,  the financial condition and results of
               operations of the Company.




Dated:  March 31, 2006                       /s/ J. Peter Farquhar
                                             -----------------------
                                             J. Peter Farquhar, Chief
                                             Executive  Officer


Dated:  March 31, 2006                      /s/ John A. Mayfield
                                            -------------------------------
                                            John A. Mayfield, Senior Vice
                                            President and Chief Financial
                                            Officer