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

                                    FORM 10-Q

(Mark One)

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

                For the quarterly period ended March 31, 2007 or

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to ________

                        Commission file number: 001-32428

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

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

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

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

                                       N/A
              (Former name, former address and former fiscal year,
                         if changed since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 6 (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 |_| No |X|

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition 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 Exchange Act).  Yes |_| No |X|

     The number of the  registrant's  common shares  outstanding as of March 31,
2007 was 8,507,797.


<PAGE>

                                Explanatory Note


                             TARPON INDUSTRIES, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 2007

                                TABLE OF CONTENTS

                                                                            PAGE

PART I - FINANCIAL INFORMATION.................................................3


         ITEM 1.      FINANCIAL STATEMENTS.....................................4


         ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                      FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........15


         ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES
                      ABOUT MARKET RISK.......................................18


         ITEM 4.      CONTROLS AND PROCEDURES.................................19


PART II - OTHER INFORMATION...................................................21


         ITEM 1.      LEGAL PROCEEDINGS.......................................21


         ITEM 1A.     RISK FACTORS............................................21


         ITEM 2.      DEFAULTS UPON SENIOR SECURITIES.........................21


         ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.....21


         ITEM 6.      EXHIBITS................................................21


         SIGNATURES...........................................................22

<PAGE>

                         PART I - FINANCIAL INFORMATION



                          ITEM 1. FINANCIAL STATEMENTS

                             TARPON INDUSTRIES, INC.

                      INDEX TO INTERIM FINANCIAL STATEMENTS

                                                                            Page
Tarpon Industries, Inc.
Consolidated Balance Sheets --- March 31, 2007 and December 31, 2006...........4
Consolidated Statements of Operations --- For the Three Months Ended
     March 31, 2007 and 2006...................................................5
Consolidated Statements of Cash Flows --- For the Three Months Ended
     March 31, 2007 and 2006...................................................6
Notes to Consolidated Financial Statements.....................................7


<PAGE>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                              March 31,         December 31,
                                                                                 2007               2006
                                                                             (Unaudited)
                                                                            ---------------    ---------------

ASSETS:
CURRENT ASSETS:
<S>                                                                            <C>               <C>
Cash and cash equivalents                                                      $   920,086       $  1,375,711
Accounts receivable (less allowance for doubtful accounts at March 31,
      2007 of $291,817 and at December 31, 2006 of $269,187)                     8,070,212          8,608,275
Inventories                                                                      6,468,666          6,759,562
Other current assets                                                             1,203,613            841,259
                                                                            ---------------    ---------------
      Total current assets                                                      16,662,577         17,584,807

Property plant and equipment - net                                               5,038,861          5,145,792
Deferred financing costs                                                         1,101,151          1,385,585
                                                                            ---------------    ---------------
TOTAL ASSETS                                                                  $ 22,802,589       $ 24,116,184
                                                                            ===============    ===============


LIABILITIES AND SHAREHOLDERS' DEFICIT:
CURRENT LIABILITIES:
Short-term debt                                                               $  8,597,637       $  9,578,648
Term debt, classified as current                                                 6,444,408          6,458,328
Accounts payable - trade                                                         8,891,310         10,147,486
Other current liabilities                                                        2,524,725          1,248,295
                                                                            ---------------    ---------------
      Total current liabilities                                                 26,458,080         27,432,757

Long-term debt less current maturities                                                 665              2,643
Other long-term liabilities                                                        138,720            108,000
                                                                            ---------------    ---------------
TOTAL LIABILITIES                                                               26,597,465         27,543,400

SHAREHOLDERS' DEFICIT :
Preferred shares; no par value, 2,000,000 authorized; no shares issued
      at March 31, 2007 and at December 31, 2006                                         -                  -
Common shares; no par value, authorized, 20,000,000 shares at March 31,
        2007 and at December 31, 2006; issued and outstanding, 5,853,712
        Shares at March 31, 2007 and 4,993,712 at December 31, 2006             19,036,702         16,856,821
Accumulated deficit                                                            (23,278,100)       (20,713,749)
Accumulated other comprehensive income                                             446,522            429,712
                                                                            ---------------    ---------------
       Total shareholders' deficit                                              (3,794,876)        (3,427,216)
                                                                            ---------------    ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                                    $ 22,802,589       $ 24,116,184
                                                                            ===============    ===============
</TABLE>

NOTE:  The  Balance  Sheet at December  31, 2006 is an excerpt  from the audited
financial  statements  at that date but does not include any of the  information
required by accounting  principles  generally  accepted in the United States for
complete financial statements.



                             SEE ACCOMPANYING NOTES


<PAGE>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>

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

                                                                         2007                 2006
                                                                -------------------    ----------------
REVENUES:
<S>                                                                 <C>                 <C>
Sales, net of customer discounts                                    $ 13,997,444        $ 17,050,261

COST OF GOODS SOLD                                                    13,299,713          15,748,695
                                                                -------------------    ----------------

     Gross profit                                                        697,731           1,301,566

Selling, general and administrative expenses                           1,856,829           2,699,586
                                                                -------------------    ----------------

OPERATING LOSS                                                        (1,159,098)         (1,398,020)

OTHER (INCOME) EXPENSE:
 Miscellaneous  expense (income)                                           4,267             (44,007)
 Loss from derivatives                                                    30,720             101.000
 Loss on extinguishment of debt                                          129,853                   -
 Financing costs                                                         193,064              21,638
 Foreign exchange (gain) loss                                             (3,485)             13,373
                                                                -------------------    ----------------
     Total other expense, net                                            354,419              92,004
                                                                -------------------    ----------------
INTEREST EXPENSE, NET
  Interest expense                                                     1,056,453           1,391,218
  Interest income                                                           (79)             (25,926)
                                                                  -------------------    ----------------
     Interest expense, net                                             1,056,374           1,365,292
                                                                -------------------    ----------------

NET LOSS                                                            $ (2,569,891)       $ (2,855,316)
                                                                ===================    ================


NET LOSS PER COMMON SHARE - BASIC AND DILUTED                            $ (0.43)            $ (0.62)
                                                                ===================    ================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                   5,928,833           4,640,130
                                                                ===================    ================
</TABLE>




                             SEE ACCOMPANYING NOTES

<PAGE>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>

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

                                                                                 2007               2006
                                                                            ----------------   ----------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                            <C>                <C>
Net loss                                                                       $ (2,569,891)      $ (2,855,316)
Adjustments to reconcile net loss to net cash provided by (used in)
  operating activities:
  Depreciation and amortization                                                     187,423            247,244
  Accretion of note discount and other charges                                      466,287            525,613
  Stock option expense                                                               59,654             30,624
  Non-employee stock options                                                              -                  -
  Loss on derivative instrument                                                      30,720            101,000
  Loss on extinguishment of debt                                                    129,853                  -
  Changes in assets and liabilities:
    Accounts receivable decrease (increase)                                         561,145           (766,047)
    Inventory decrease (increase)                                                   318,973         (1,062,885)
    Other assets (increase)                                                        (361,614)            (4,451)
    Customer advance payments increase                                              727,262          1,980,032
    Accounts payable and accrued expenses (decrease)                               (698,785)          (652,311)
                                                                            ----------------   ----------------
  Net cash used in operating activities                                          (1,148,973)        (2,456,497)

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments of FENCEMaster obligations                                                       -           (984,733)
Capital expenditures                                                                (59,112)          (169,441)
                                                                            ----------------   ----------------
    Net cash used in investing activities                                           (59,112)        (1,154,174)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common shares (net of issuance costs paid
  of $468,986)                                                                    1,422,264                  -
Net payments on credit facilities                                                  (284,296)        (1,240,013)
Repayment of long-term obligations                                                 (161,210)          (177,088)
Repayment of short-term obligations                                                (232,620)                 -
                                                                            ----------------   ----------------
    Net cash provided by (used in) financing activities                             744,138         (1,417,101)

IMPACT OF FOREIGN CURRENCY EXCHANGE ON CASH                                           8,322             (7,361)
NET DECREASE IN CASH AND CASH EQUIVALENTS                                          (455,625)        (5,035,133)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    1,375,711          7,317,364
                                                                            ----------------   ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $   920,086        $ 2,282,231
                                                                            ================   ================

Supplemental disclosure of cash flow information:
    Cash paid during the period for interest                                      $ 411,067          $ 392,608
                                                                            ================   ================

    Non-cash investing and financial transactions:
    Stock issues as payment of debt                                               $ 568,109                  -
                                                                            ================   ================

</TABLE>


                             SEE ACCOMPANYING NOTES
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1. Financial Statement Presentation

     The  unaudited  interim  consolidated  financial  statements in this report
reflect all adjustments which are, in our opinion, necessary to fairly state the
results for the interim periods presented. All adjustments that are material are
of a normal recurring nature.  Our operating results for the three-month  period
ended  March 31, 2007 do not  necessarily  indicate  the results  that should be
expected  for  the  year  ending  December  31,  2007.  The  unaudited   interim
consolidated  financial statements should be read together with the consolidated
financial  statements  and related  notes  included in our Annual Report on Form
10-K for the year ended December 31, 2006. The accounting  policies  followed by
the Company with  respect to the  unaudited  interim  financial  statements  are
consistent With those stated in the Company's Annual Report on Form 10-K.

2. New Accounting Pronouncements

     There have been no new  accounting  pronouncements  since the disclosure in
the Company's Annual Report for 2006.

3. 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  $23.3 million from its inception on January
16, 2002 through March 31, 2007 and has negative working capital of $9.8 million
and is in violation of its debt  covenants as of March 31, 2007.  If the Company
is unable to significantly  decrease its losses and obtain additional  financing
needed for growth and to meet  tightened  vendor  payment  terms,  its financial
resources will not be adequate to satisfy its operating and capital requirements
for the next 12 months.

     The Company  began an equity  financing  during the first  quarter of 2007,
with an initial  closing  occurring in January of 2007 raising gross proceeds of
$602,000 and netting  $565,000 to the Company.  Another  closing ("Raise 1", per
agreement with Laurus.  See  Convertible  Debt) was completed on March 23, 2007,
grossing $1.9 million and netting $582,000 to the Company after the repayment of
bridge notes,  dated December 7, 2006, and the scheduled  payment to Laurus.  On
April 4, 2007,  the Company  received  $120,000 on additional  gross proceeds of
$156,000 related to the March 23, 2007 closing.  "Raise 2" is scheduled to occur
in May 2007 and "Raise 3" is expected to occur no later than August 1, 2007.

     Management's plans include continued cost reduction efforts, improved gross
margins,  improved  receivables  and inventory  management  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.

4. Details of Balance Sheet

     The following table sets forth the components of the Company's inventory as
of the noted dates:

    INVENTORIES:
                                March 31,             December 31,
                                   2007                   2006
                               -----------            -----------
Raw materials                  $ 2,217,587            $ 3,643,846
Work in process                    535,519                481,858
Finished goods                   3,436,369              2,325,008
Supplies                           279,191                308,850
                               -----------            -----------
     Total                     $ 6,468,666            $ 6,759,562
                               ===========            ===========

     The following  table sets forth the  components of the Company's  property,
plant and equipment as of the noted dates:

     PROPERTY, PLANT AND EQUIPMENT:

                                                March 31,         December 31,
                                                  2007                2006
                                              ------------       -------------
Machinery and equipment                       $  6,091,726       $  5,979,418
Leasehold improvements                             177,280            214,454
Computer equipment                                 353,859            343,580
Transportation equipment                            47,253             47,035
Furniture and fixtures                              71,345             67,742
                                              ------------       -------------
     Total                                       6,741,463          6,652,229
Accumulated depreciation and amortization       (1,702,602)        (1,506,437)
                                              ------------       -------------
     Net property, plant and equipment        $  5,038,861       $  5,145,792
                                              ============       =============

5.  Debt

     The following  table sets forth the  components of the Company's debt as of
the noted dates:

Short Term Debt
                                                 March 31,       December 31,
                                                   2007             2006
                                               -----------       ------------
EWCO revolving credit facility                 $ 5,083,034       $ 5,943,115
Steelbank revolving credit facility              3,514,603         2,860,533
Bridge loan payable                                      -           775,000
                                               -----------       ------------
      Total                                    $ 8,597,637       $ 9,578,648
                                               ===========       ============

Term Debt, Classified as Current
                                                   March 31,      December 31,
                                                     2007            2006
                                                  ----------      ------------
EWCO term loan                                     $  720,233      $   789,933
Steelbank term loan                                 1,090,530        1,171,307
Convertible debt (less discounts of $999,114
   and $1,135,570, respectively)                    4,625,886        4,489,430
Other                                                   8,424           10,301
                                                   ----------     ------------
   Total                                            6,445,073        6,460,971
Current portion                                    (6,444,408)      (6,458,328)
                                                   ----------     ------------
Long-term portion                                  $      665       $    2,643
                                                   ==========     ============


     Annual  maturities of long-term debt and capital lease obligations based on
the stated terms of the underlying agreements are as follows:

                2007          $ 6,275,069
                2008              642,975
                2009              526,143
                              -----------
                Total         $ 7,444,187
                              ===========

EWCO Credit Facility - Terms and Default

     Eugene  Welding  Company  ("EWCO"),  a subsidiary  of Tarpon,  has a credit
facility with LaSalle Bank Midwest,  N.A. which includes a revolving credit line
up to $9,000,000 with borrowings  based upon eligible  inventory and receivables
and a  $1,394,000  term  loan  amortizable  in  equal  monthly  installments  of
principal over five years ending August 1, 2009.

     On March 30, 2007, the Company  executed a "Waiver and Fourth  Amendment to
Loan  Agreement and  Reaffirmation  of Guaranty" with LaSalle Bank Midwest N.A.,
Eugene Welding Company's lender. The agreement extends the current term by three
years to August  31,  2010 and (1)  waives all  existing  events of default  and
amends the Loan Agreement to adjust the interest  rate,  currently at the bank's
prime  rate  plus 2% to the  prime  rate plus  1.5%  immediately  following  the
completion of "Raise 3" (see  Convertible Debt below) and then subject to a grid
structure on July 1, 2008,  which permits  further rate  reductions tied to debt
service  coverage and excess  availability  and (2)  establishes  new  financial
covenants  for  Tangible  Net Worth and  EBITDA,  with a Debt  Service  Coverage
covenant to become effective for the calendar quarter ending March 31, 2008.

     Both the  revolving  credit  line and term loan are  secured  by all of the
assets  of EWCO,  approximately  $14.1  million  as of  March  31,  2007,  and a
guarantee by Tarpon.

     Outstanding  borrowings  averaged  $4.8  million,  with a weighted  average
interest rate on credit line  borrowings of 10.8% in during the first quarter of
2007.

Steelbank Credit Facility - Terms and Default

     On February 17, 2005,  Steelbank entered into a Loan Agreement with LaSalle
Business  Credit  ("Lender"),  a division of ABN AMRO Bank N.V.,  Canada Branch,
which provides for (1) a revolving credit line maturing February 17, 2008 in the
maximum principal amount of Cdn.  $8,000,000 with borrowings based upon eligible
inventory and  receivables,  and (2) a term loan in the principal amount of Cdn.
$2,100,000.  Borrowings in 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% (9.5% at December 31,  2006).
Borrowings  in U.S.  dollars  under the  revolving  credit  facility  are at the
Lender's U.S. prime rate. The term loan matures March 1, 2010.  Principal on the
term  loan is  payable  in sixty  equal  monthly  installments  of Cdn.  $35,000
beginning on April 1, 2005.  The term loan bears  interest,  payable  monthly in
arrears,  at a floating rate equal to the Lender's  Canadian  prime rate plus an
applicable margin of between 0.75% and 1.25%.  Outstanding  borrowings  averaged
$2.7 million, with a weighted average interest rate on credit line borrowings of
9.03% during the first quarter of 2007.

     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% (9.0% on
March 31, 2007). 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  $10.9  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 its Lender.

     The  loan  agreement  also  requires   compliance  with  several  financial
covenants including adjusted net worth of at least Cdn. $4,864,381. For quarters
ending on or after  September  30, 2005,  the minimum  adjusted net worth of the
previous  quarter  is  increased  by 75% of the  net  income  for  that  quarter
(ignoring  quarters in which there is a loss), and the required minimum adjusted
net worth for this purpose was  $4,864,381.  The loan  agreement  also  requires
Steelbank  to  maintain a 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 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's loan agreement contains other covenants which include limits on
Steelbank's ability to incur or guarantee additional indebtedness, create liens,
pay dividends,  make certain types of investments,  enter into transactions with
affiliates,  make capital  expenditures in excess of Cdn. $500,000 in any fiscal
year,  sell assets,  merge with other  companies  or enter into any  transaction
outside the ordinary course of business.

     Due to  violation  of its debt  service  and  minimum  adjusted  net  worth
covenants as well as the  Company's  going concern  qualification,  the debt has
been classified as a current liability.

     On October 2, 2006,  LaSalle  Business  Credit, a division of ABN AMRO Bank
N.V.,  Canada  Branch,  issued a notice of default to Steelbank,  as a result of
Steelbank's failure to meet its adjusted net worth covenant and its debt service
coverage ratio covenants. From and after October 1, 2006, Steelbank's loans will
bear  interest  at a rate of two per  cent  (2%) per  annum,  in  excess  of the
interest  rate  otherwise  payable  (total  effective  rate of 9.3% at March 31,
2007). LaSalle had agreed to waive default interest through September 30, 2006.

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% (10.25% at March 31, 2007).  As part of
the  Agreement,  the monthly  payments of principal and interest,  under certain
conditions,  are  convertible  into shares of the  Company's no par value common
stock at a fixed  conversion  price of $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.

     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.  Such  discounts  are  being  amortized  using the
effective  interest  method over the term of the related  debt.  The  conversion
feature  itself was deemed to be a derivative  under FASB Statement No. 133. The
Company  estimated the fair value of the conversion  feature to be $13,000 as of
March 31, 2007 and at December 31, 2006. In addition,  the Company incurred fees
in  connection  with  this  financing  aggregating   approximately   $1,472,000,
including  warrants to purchase up to 300,000  shares of common  stock to Joseph
Gunnar and Company,  a related party,  recorded as deferred  financing costs and
amortized  over the life of the  note.  The  300,000  warrants  were  valued  at
approximately  $432,000 using the Black-Scholes model using the same assumptions
described above, except for a term of five years. The warrants were deemed to be
a derivative  instrument as they can be put back to the Company,  and, therefore
the corresponding liability was marked to market and recorded at a fair value of
$138,720 as of March 31, 2007 and $108,000 as of December 31, 2006.  The $30,720
increase  in fair value  during the first  quarter  of 2007 is  included  in the
overall  "Loss from  derivatives"  within the  Statement  of  Operations.  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%
(10.25% on March 31,  2007),  as a result of the  aforementioned  discounts  and
fees, the effective  interest rate of the Note was estimated to be approximately
41.8% per annum at its inception on December 13, 2005.

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

     On August 17,  2006,  Tarpon  reached  an  agreement  with the Laurus  fund
whereby  Tarpon  would issue  100,000  shares of Tarpon  common  stock valued at
$190,000  ($1.90 per share) to Laurus in exchange  for Laurus  amending  certain
provisions of its loan agreement. In addition,  Tarpon agreed to award Laurus an
additional  100,000 shares  contingent on Tarpon  completing a successful equity
raise (in process as of March 31, 2007).  The  agreement  provided that the loan
agreement  would be amended  such that an event of  default  with  LaSalle  Bank
Midwest (LaSalle) and/or LaSalle Business Credit (LaSalle) which is not declared
as a default by LaSalle,  would not give rise to default interest due to Laurus.
Because  LaSalle did not declare the Company in default  until  October 2, 2006,
default  interest was therefore not due Laurus until the fourth quarter of 2006.
The results of  operations  for the first  quarter of 2007  include  $372,000 of
default interest due to Laurus.

     On  February  28,  2007,  the  Company  entered  into a debt  restructuring
agreement with Laurus, amended on March 20, 2007, whereby the Company would make
payments of interest and principal in arrears from the  anticipated  proceeds of
three  separate  equity  financing  transactions  scheduled  during  the  period
starting  January 25 and ending not later  than  August 1, 2007.  The  agreement
calls for payments to Laurus during this period of $125,000  toward  interest in
"Raise 1" (completed  March 23,  2007),  $125,000  toward  interest and $250,000
toward  principal  in "Raise 2",  expected to close in May 2007 and 33% of gross
proceeds, which are estimated at $4 million, in "Raise 3", expected to occur not
later than August 1, 2007.  Immediately  after the completion of Raise 2, Laurus
will waive all existing  defaults,  as well as default fees and default interest
accrued on the note.  Upon the  consummation  of Raise 3, Laurus will extend the
maturity of the Convertible Note for three years,  reset the principal  payments
to a five year amortization schedule, amend the default interest rate to 12% per
annum and reset the equity  blocker  to 9.99%.  If,  however,  a minimum of $1.7
million is not paid down on the  principal by December 31, 2007, an amount equal
to the  default  charges  waived  after  Raise 2 will be added to the  principal
amount of the Convertible Note on January 1, 2008.

Bridge Notes

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

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

6.  Leases

     Facilities and equipment are leased under  arrangements  that are accounted
for as operating  leases.  Total rental expense was $191,000 and $88,000 for the
three months ended March 31, 2007 and 2006, respectively.

The following is a schedule of annual future minimum lease payments under
operating leases with remaining non-cancellable lease terms in excess of one
year as of December 31, 2006:

                Year                          Amount
                ----                          ------
                2007                      $  348,296
                2008                         443,033
                2009                         439,510
                2010                         423,483
                2011                         424,627
                Thereafter                 2,317,175
                                          ----------
                Total                     $4,396,124
                                          ==========


7. Comprehensive Loss

   Our comprehensive losses are as follows:


                                               Three Months Ended March 31,
                                              ------------------------------
                                                  2007              2006
                                              -------------     ------------

 Net loss                                     $ (2,569,891)     $ (2,855,316)
 Other comprehensive (loss) -
   foreign currency translation adjustments        (16,810)          (16,673)
                                              -------------     -------------
  Comprehensive loss                          $ (2,586,701)     $ (2,871,989)
                                              =============     =============


8.   Related Party Transactions

     In April 2004, the Company entered into a Management  Consulting  Agreement
with Bainbridge  Advisors,  Inc., an advisory firm primarily 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,
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.  On  December  8, 2005,  this  agreement  was
extended 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.:

                                             Three Months Ended March 31,
                                         ------------------------------------
                                            2007                2006
                                         ------------      ---------------

 Advisory services and expenses           $ 44,515            $ 67,901
                                         ------------      ---------------
         Total                            $ 44,515            $ 67,901
                                         ============      ===============


     During the three month period  ending  March 31, 2007,  the Company made no
cash payments to the former Chairman of the Board, President and Chief Executive
Officer and his son,  individually and through  Bainbridge  Advisors,  Inc. Cash
payments in 2006 totaled $142,901.

     As of March 31, 2007,  liabilities  included  $150,000 of advisory fees and
expenses due to Bainbridge,  included in accounts payable. As of March 31, 2006,
$63,889 of success fees was owed for the Haines Road acquisition  consummated in
2005. This amount was classified as part of accrued expenses.

     In February 2006, the board of directors agreed to accelerate the payout of
the success fees to Bainbridge Advisors, Inc., with final payment made in May of
2006.

     Joseph Gunnar and Company,  LLC ("Gunnar") was the lead  underwriter in the
Company's  2005 initial  public  offering,  and since such time has assisted the
Company in various financing transactions. Gunnar customers hold collectively, a
significant amount of its common stock.  Gunnar is entitled to participate as an
outside  observer on the Company's board of directors from which it can exercise
significant  influence over the activities of the Company.  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 5), 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 March 31, 2007,
these  warrants  were marked to market with a value of $138,720 with the loss on
the instrument recorded to loss from derivatives.  In connection with the bridge
financing  in December of 2006,  Gunnar  received  96,875  warrants  with a fair
market value of $33,906 and earned  additional  fees of $78,000.  In  connection
with the equity raise  closings in the first  quarter of 2007,  Gunnar  received
439,261 warrants with a fair market value of $252,000 and earned additional fees
of $312,598.  Gunnar also receives a retainer  payable  monthly in the amount of
$7,500 which  expires in December  2007.  The  following  table  summarizes  the
compensation earned by Gunnar:

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

The following table summarizes the compensation earned by Gunnar:


                                            Three Months Ended March 31,
                                        ---------------------------------------
                                               2007                2006
                                         -----------------    -----------------

 Fees and expenses                           $   23,500               $23,500
 Warrants expense - Gunnar & Designees          252,519                     -
 Private placement                              312,598                     -
                                        --------------------  ------------------
         Total                               $  588,617               $23,500
                                        ====================  ==================

9.   Stock Options and Warrants

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

     During 2006, the Company granted options for 550,000 shares, 250,000 issued
to James Bradshaw,  Chairman and Chief Executive Officer,  50,000 exercisable at
$2.45 per share and 200,000  exercisable  at $0.88 per share,  110,000 issued to
Patrick Hook,  President and Chief Operating  Officer,  exercisable at $0.88 per
share, 150,000 issued to J. Stanley Baumgartner, former Chief Financial Officer,
40,000 exercisable at $1.75 and 110,000  exercisable at $0.88 per share,  20,000
issued to Jeffrey Greenberg,  a former employee,  exercisable at $0.88 per share
and 10,000 each issued to new  directors  Tracy  Shellabarger  and Gerald Stein,
exercisable  at $2.60 and $0.88 per share  respectively.  All options  that have
been  granted  under the plan to officers  and  employees of the Company vest in
cumulative annual  installments over three years.  Options issued to consultants
and directors vest immediately upon issuance. No options were granted during the
three months ended March 31, 2007 and 2006, respectively.

Activity under these Plans is shown in the following tables:

                                               Three Months Ended
                                                  March 31, 2007
                                      --------------------------------------
                                                     Weighted
                                                     Average       Aggregate
                                                     Exercise    Instrinsic(1)
Shares subject to option                Shares       Price           Value
------------------------                ------       -----           -----
Outstanding at beginning of period      673,190        $2.88         $ --
New Grants (based on fair value of
common stock at dates of grant)              --          --
Exercised                                    --          --
Expired                                      --          --
Forfeited                               (38,595)      $3.11
                                      ----------    ----------    ----------
Outstanding at end of period            634,595       $2.87         $ --
Exercisable at end of period            223,063       $5.12         $ --


                                               Three Months Ended
                                                 March 31, 2006
                                      --------------------------------------
                                                                   Aggregate
                                                     Weighted     Instrinsic(1)
                                                     Average         Value
                                                     Exercise        (in
Shares subject to option                 Shares       Price        millions)
------------------------                 ------       -----        ---------
Outstanding at beginning of period      415,085      $5.50          $ --
New Grants                                   --         --
Exercised                                    --         --
Expired                                      --         --
Forfeited                               (91,895)     $5.50
                                      ---------    ----------    ----------
Outstanding at end of period            323,190      $5.50          $ --
Exercisable at end of period            187,730      $5.50          $ --


     (1)  The intrinsic value of a stock option is the amount by which the
          current market value of the underlying stock exceeds the exercise
          price of the option.

          The total fair value of shares vested during the three months ended
          March 31, 2007 was $194,000.

     The following table summarizes information about stock options at March 31,
2007:


<TABLE>
<CAPTION>

                                         Options Outstanding                              Options Exercisable
                           ------------------------------------------------  -------------------------------
                                             Weighted         Weighted                   Weighted   Weighted
                                             Average          Average                    Average     Average
                                            Remaining         Exercise                   Exercise  Remaining
Range of Exercise Prices      Shares     Contractual Life     Price           Shares      Price    Contractual
                                                                                                        Life
------------------------      ------     ----------------     --------       ------      -----      ----------

<S>       <C>                <C>            <C>               <C>            <C>         <C>           <C>
 $0.88 to $5.50              634,595        8.88              $2.87          223,063     $5.12         8.06

</TABLE>


     At March 31, 2007,  options  covering  365,405  shares were  available  for
future grants under the 2004 Plan.

     The following  table  provides  additional  information  about  outstanding
warrants  categorized by exercise price at date of grant using the Black-Scholes
model:


<TABLE>
<CAPTION>
                                                                Warrants                  Expiration            Exercise
Party                                                         Outstanding                   Date                 Price
<C>                                                               <C>                     <C>   <C>        <C>
2004 Gunnar - Bridge Financing                                    123,614                 12/31/2010       $       1.25
2004 Private Placement                                            893,806                 12/13/2012               2.33
2005 Gunner - IPO                                                 243,360                 04/05/2009               0.98
2005 Gunnar - Laurus
Convertible Note                                                  300,000                 04/05/2009               0.91
2005 Laurus Warrants Associated
with Convertible Note                                             390,000                 02/17/2010               3.81
2006 Bridge Note Holders                                          775,000                 12/07/2011               0.80
2006 Gunnar - Bridge Financing                                     96,875                 12/07/2011               0.80
2007 Gunnar - Private Placement                                   107,500                 01/24/2012               0.91
2007 Gunnar - Private Placement                                   331,761                 03/23/2012               0.94
                                                              -----------
Total                                                           3,261,916
                                                              ===========
</TABLE>

9.   Contingencies

     The  Company  from time to time is a party to  various  litigation  matters
arising in the ordinary  course of business.  The ultimate  legal and  financial
liability of this litigation cannot be estimated with certainty,  but management
believes,  based on their  examination of these matters,  experience to date and
discussions  with counsel,  that the ultimate  liability will not be material to
the Company's business, financial condition or results of operations.

10.   Income Taxes

     Tarpon has not recognized  potential U.S. or Canadian  federal tax benefits
from its net losses because of the uncertainty  regarding its ability to realize
future tax benefits of its net operating loss carryforwards.  The potential loss
carryforward at March 31, 2007 is  approximately  $19.6 million.  If the Company
achieves profitability, the net operating loss carryforwards may be available to
offset future income taxes.

     In April,  2007 the Internal  Revenue Service notified the Company of a tax
audit for the year ended December 31, 2004. Such audit is currently in process.

     The Company has not yet  completed  its  assessment of the impact of FIN 48
and,  therefore,  will not adjust opening accumulated deficit for the cumulative
effects, if any, of applying this interpretation.  Such adjustment,  expected by
the Company to be immaterial,  will be reflected in the results of operation for
2007.

11.  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>

                        Three Months Ended March 31, 2007
                ------------------------------------------------

                                EWCO               Steelbank           Other (A)       Total
                               -----------         -----------         ---------   -------------
<S>                            <C>                 <C>                 <C>         <C>
External revenues              $ 10,364,982        $ 3,632,462         $      --   $   13,997,444

Inter-segment sales                  98,880            118,843          (217,723)              --

Depreciation and amortization        22,962            167,050                --          190,012

Operating profit (loss)             (11,191)          (371,021)         (776,886)      (1,159,098)

Total assets                     14,149,211         10,853,672        (2,200,291)       22,802,592

Capital expenditures                 20,342             38,770                --           59,112

</TABLE>

<TABLE>
<CAPTION>

                        Three Months Ended March 31, 2006

                ------------------------------------------------

                                 EWCO              Steelbank           Other (A)       Total
                                ----------        ----------          ---------    --------------
<S>                             <C>               <C>                 <C>           <C>
External revenues               $ 11,919,750      $ 5,130,511         $      --     $ 17,050,261

Inter-segment sales                  187,405               --          (187,405)              --

Depreciation and amortization         28,973          218,271                --          247,244

Operating profit (loss)               82,460         (133,549)       (1,346,931)      (1,398,020)

Total assets                      12,862,967       21,256,928         1,301,063       35,420,958

Capital expenditures                      --          169,441                --          169,441
</TABLE>


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


     Revenues by country for the three months ended March 31 are as follows:


                                             Three Months Ended
                                                  March 31,
                               -----------------------------------------------
                                        2007                      2006
                               ----------------------    ---------------------

United States                           $ 11,101,724             $ 13,877,089
Canada                                     2,895,720                3,173,172
                               ----------------------    ---------------------
        Total                           $ 13,997,444             $ 17,050,261
                               ======================    =====================

12.  Subsequent Events

     On April  30,  2007,  the  Company  executed  a "Second  Amendment  to Loan
Agreement  and   Reaffirmation   of  Guaranty"  with  LaSalle  Business  Credit,
Steelbank's  lender.  The  agreement  extends the current term by three years to
August 31, 2010 and (1) waives the existing events of default,  specifically the
tangible net worth covenant and the debt service coverage ration, and amends the
Loan Agreement to adjust the interest  rate,  currently at the bank's prime rate
plus  2%  and  then  subject  to a  grid  structure  immediately  following  the
completion  of "Raise 3", which  permits  further rate  reductions  tied to debt
service  coverage and excess  availability  and (2)  establishes  new  financial
covenants  for  Tangible  Net Worth and  EBITDA,  with a Debt  Service  Coverage
covenant to become effective for the calendar quarter ending March 31, 2008.

     On May 4, 2007,  Gerald Stein,  director  since October 12, 2006,  resigned
from the Board of Directors for personal  reasons.  On May 14, 2007, the Company
announced the election of Frank Gesuale as director.

     By letter dated May 11, 2007, LaSalle Bank Midwest N.A. issued a "Notice of
Events of  Default;  Reservation  of Rights"  letter to Eugene  Welding  Company
noting  that the delay of "Raise 2" of the equity  raise  beyond the agreed upon
date of May 1, 2007,  constitutes an immediate event of default and that LaSalle
reserves  the  right  to  immediately   accelerate  the  liabilities  under  the
respective loan agreements and commence  enforcement  action against the Company
and the loan collateral.


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Cautionary Statement Regarding Forward Looking Statements

     Management's discussion and analysis should be read in conjunction with the
unaudited interim consolidated  financial statements and the accompanying notes.
As you read the material  below,  we urge you  carefully  consider our financial
statements and related information provided herein.

     Some of the statements in this report contain forward  looking  statements.
Forward  looking  statements  include  statements  relating  to  performance  in
"Management's  discussion  and  Analysis of Financial  Condition  and Results of
Operations."  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 our company and or its officers,  including  statements preceded
by or including  forward looking  terminology such as "may",  "will",  "should",
"expect",  "anticipate",  "believe",  "plan", "intend",  "propose",  "estimate",
"continue",  "predict"  or other  similar  expressions  with  respect to various
matters.  Our actual results may differ  materially  from those projected in the
forward looking statements due to numerous factors, particularly those discussed
in the  "Risk  Factors"  in our  annual  report  on Form 10K for the year  ended
December 31, 2006.  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 otherwise.

     Effective September 30, 2006, the Company's Steelbank subsidiary was not in
compliance  with  covenants  relating  to its  revolving  credit  line  and  was
therefore  technically  in default  with its  agreement  with  LaSalle  Business
Credit,  a division  of ABN AMRO Bank N.V.,  Canada  Branch.  As a result of the
cross default  provisions in the loan  agreements  with LaSalle Bank Midwest and
the Laurus  Master  Trust  ("Laurus"),  the Company is therefore in default with
respect to these  agreements as well, and is subject to default interest expense
at the rate of two per cent (2%) per annum on the LaSalle agreements and two per
cent (2%) per month on the Laurus agreement.


Overview of Recent Operations

     During the first  quarter of 2007,  the Company  had net  revenues of $14.0
million and a net loss of $2.6 million or ($0.43) per share.  This compares with
first  quarter 2006  revenues of $17.1 million and a net loss of $2.9 million or
($0.62) per share. Our  consolidated  first quarter 2007 results were Materially
impacted by the following items:

   o    Amortization of finance costs and accretion of note discount, recorded
        as interest expense, of $466,000
   o    Loss on extinguishment of debt $130,000
   o    Penalty interest of $372,000
   o    Stock option expense of $60,000


Comparison of Operating Results for the Three Month Periods Ended March 31, 2007
and 2006

Net Revenues

     Listed in the tables below are the net revenues and tonnage shipped for the
three months ended March 31, 2006 and 2005:


<TABLE>
<CAPTION>
                            Three Months Ended March 31(dollars in thousands),
                         --------------------------------------------------------------------------
                                       2007                                        2006
                         ------------------------------------------ -------------------------------
                             Net Revenues         Tonnage           Net Revenues          Tonnage
                         ------------------------------------------ -------------------------------

<S>                          <C>                     <C>               <C>                  <C>
EWCO Tubular                 $    2,639              3,179             $  5,787             7,726
EWCO  SpaceRak                    7,726              5,423                6,133             4,529
Steelbank Tubular*                3,632              3,605                5,130             4,797
                                  -----             ------                -----            -------
   Total                     $   13,997             12,207             $ 17,050            17,052
                             ==========            =======             =========           =======

</TABLE>


     Net revenue for the first quarter of 2007 decreased  approximately 18% over
the same period in 2006 from $17.1 million to $14.0  million,  while volume on a
tonnage basis decreased 28%.

     EWCO Tubular volume on a tonnage basis  decreased by  approximately  59% in
the first quarter of 2007  compared to the first  quarter 2006.  Net revenues of
$2.6  million  in the first  quarter  of 2007 were 54% lower  than in 2006.  The
decline  resulted  from  continued  softening  of the tubing  market  during the
quarter.  Revenue  on a per ton  basis  increased  by 11% from $749 in the first
quarter  of 2006 to $830 in the first  quarter of 2007,  due to tighter  pricing
controls and targeting our efforts away from low margin business.

     EWCO's SpaceRak  engineered racking tonnage volumes declined  approximately
12% in the first quarter of 2007 compared to the first quarter of 2006.  Revenue
on a per ton basis  increased by 5.2%from $1,354 in the first quarter of 2006 to
$1,425 in the first quarter of 2007, due primarily to tighter pricing  controls.
Net revenues of $7.7 million in the first  quarter of 2007  represented  a 26.0%
increase  over first  quarter  2006 sales of $6.1  million due to a more focused
effort  to drive  sales  in our  racking  division,  as well as  improved  price
controls.

     Steelbank Tubular had net revenues of $3.6 million for the first quarter of
2007. Net revenues decreased significantly from 2006 levels of $5.1 million as a
result of continued  softening of the tubing market and the loss of  FENCEMaster
business.

Cost of Goods Sold and Gross Profit

     Gross  profit  for the  three  months  ended  March  31,  2007 of  $698,000
decreased  by  $604,000,  or 46%,  compared to the three  months ended March 31,
2006. Gross margins  decreased to 5.0% from 7.6% for the  corresponding  periods
due to the  declining  market for  tubing,  which  resulted  in lower  sales and
unabsorbed  manufacturing overhead. Steel prices were fairly stable in the first
quarter of 2007 and thus did not impact margins.

Selling, General and Administrative Expense

     Selling,  general and administrative  costs decreased from $2.7 million, or
15.8% of net revenue, during the first quarter of 2006 to $1.9 million, or 13.3%
of net revenue  during the first  quarter of 2007.  The decrease  was  primarily
attributable to a $400,000  reduction in audit and other professional fees and a
$391,000  reduction in salaries and benefits as a result of cost cutting efforts
begun in 2006.

Other Income and Expense

     Other  income and  expense  changed  from  expense of $92,000 to expense of
$354,000  for the  three  months  ended  March  31,  2006 and  March  31,  2007,
respectively.  The increase is primarily attributable to increased finance costs
of $171,000  associated  with the bridge loan financing that was paid off at the
closing of equity financing,  completed in March 2007, loss on extinguishment of
debt of  $130,000  and  miscellaneous  expense of  $48,000,  offset by a $70,000
reduction in loss from derivatives and foreign exchange gains of $17,000.

Income Taxes

     Tarpon has not recognized  potential U.S. or Canadian  federal tax benefits
from its net losses because of the uncertainty  regarding its ability to realize
future tax benefits of its net operating loss carryforwards.  The potential loss
carryforward at March 31, 2007 is  approximately  $19.6 million.  If the Company
achieves profitability, the net operating loss carryforwards may be available to
offset future income taxes.

     The Company has not yet  completed  its  assessment of the impact of FIN 48
and, therefore, will not adjust retained earnings for the cumulative effects, if
any, of applying this interpretation.  Such adjustment,  expected by the Company
to be immaterial, will be reflected in the results of operation for 2007.

Net Loss

     Net loss decreased  $285,000 to $2,570,000 for the three months ended March
31, 2007,  versus  $2,855,000  for the three months ended March 31, 2006 for the
reasons described above.

Liquidity and Capital Resources

     As of March 31, 2007, we had a net working  capital  deficit of $9,796,000,
including  cash  and  cash  equivalents  of  $920,000,  accounts  receivable  of
$8,070,000, inventories of $6,469,000 and total current operating liabilities of
$26,458,000, including accounts payable of $8,891,000 and other accrued expenses
of $2,525,000.  Other current  liabilities at March 31, 2007 include  $8,598,000
outstanding on revolving credit  facilities,  convertible note payable to Laurus
of  $4,626,000,  and  reclassified  term loans of  Steelbank  and EWCO  totaling
$1,811,000,  due to the Company not being in compliance  with certain  financial
covenants.

     The Company has $6,275,000 of debt maturing  within the next twelve months.
The Company is in the process of obtaining  equity financing for working capital
needs and  refinancing  its short term debts, on terms favorable to the Company.
There can be no assurance  that  adequate  financing  will be obtained,  failing
which the Company's unmet financing needs will have a material adverse effect on
its operations and continuance of business operations.

Cash Flows From Operating Activities

     Net cash used by the Company's  operations during the first three months of
2007 was $1,175,000.  Cash was used primarily by (1) $2,409,000 of losses, (2) a
$362,000  increase  in other  assets and (3) a  $725,000  decrease  in  accounts
payables and accrued  expenses,  partially offset by (4) a $561,000  decrease in
accounts  receivable,  (5) a $319,000 decrease in inventories and (6) a $727,000
increase in advance payments from customers.

Cash Flows From Investing Activities

     The Company's  investing  activities in the first three months of 2007 used
$59,000 in cash for capital expenditures.

Cash Flows From Financing Activities

     The Company's  financing  activities provided $744,000 of cash in the first
three  months of 2007.  Cash was  provided by equity  financing  that netted the
Company  $1,422,000,  offset  by (1) net  repayments  on  credit  facilities  of
$284,000,  (2) repayment of long-term  obligations of $161,000 and (3) repayment
of bridge loans Of $233,000.

Existing Financing Arrangements

     For information on the Company's existing financing arrangements,  refer to
Footnote  5  in  the  Tarpon  Industries,  Inc.  and  Subsidiaries  -  Notes  to
Consolidated  Financial  Statements  contained  elsewhere in this report on Form
10-Q.

Critical Accounting Policies and Use of Estimates

     There have been no material changes for the Company's  critical  accounting
policies as reported in the Company's Annual Report for 2006 on Form 10-K/A.

Contractual Obligations

     As of March 31,  2007,  Steelbank  was in  violation  of certain  financial
covenants of its Loan Agreement,  resulting  primarily from the losses sustained
this year. On April 30, 2007, the Company  executed a "Second  Amendment to Loan
Agreement  and   Reaffirmation   of  Guaranty"  with  LaSalle  Business  Credit,
Steelbank's  lender.  The  agreement  extends the current term by three years to
August 31, 2010 and (1) waives the existing events of default,  specifically the
tangible net worth covenant and the debt service coverage ration, and amends the
Loan Agreement to adjust the interest  rate,  currently at the bank's prime rate
plus  2%  and  then  subject  to a  grid  structure  immediately  following  the
completion  of "Raise 3", which  permits  further rate  reductions  tied to debt
service  coverage and excess  availability  and (2)  establishes  new  financial
covenants  for  Tangible  Net Worth and  EBITDA,  with a Debt  Service  Coverage
covenant to become effective for the calendar quarter ending March 31, 2008.

     There have been no other material  changes  outside the ordinary  course of
business in the contractual  obligations  disclosed in our Annual Report on Form
10-K for the fiscal year ended December 31, 2006 under the caption  "Contractual
Obligations".


ITEM 3. 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 for any purpose during the periods shown.

     Our Canadian  operations,  Steelbank and Haines Road,  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
Haines  Road'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.

     Significant  changes in the cost of steel products can cause changes in the
buying  patterns of customers.  In a declining  market,  many  customers  become
conservative,  reduce steel purchases and drive down  inventories.  The opposite
tends to occur in a rising market.

     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 our 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 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>              <C>           <C>
                                2007           2008          2009           2010       There after       Total        Fair Value
Short Term Debt:
Variable Rate (U.S.$)          $5,083                                                                   $5,083          $5,083
Average Interest rate           10.3%                                                                    10.3%
Variable Rate (Cdn.$)
                               $3,515                                                                   $3,515          $3,515
Average interest rate            9.5%                                                                     9.5%
Long-Term Debt
Variable Rate (U.S. $)         $5,904          $441                                                     $6,345          $6,345
Average interest rate           10.3%         10.3%          10.3%                                       10.3%
Variable Rate (Cdn. $)           $364          $364           $363                                      $1,091          $1,091
Average interest rate            9.5%          9.5%           9.5%           9.5%                         9.5%
Fixed Rate (U.S. $)                $8                                                                       $8              $8
Average interest rate            5.2%                                                                     5.2%
</TABLE>


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

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

                                         March 31, 2007
                         --------------------------------------------------
                               Carrying Amount              Fair value
                         --------------------------------------------------
                                (U.S.$ equivalent in thousands)
                         --------------------------------------------------
Steel Inventories......          $6,469                      $6,469


ITEM 4. 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 March 31, 2007.  Based on their  evaluation  and
review, our principal  executive and principal financial officers have concluded
that these  controls  and  procedures,  as  designed  and  implemented,  are not
operating  effectively.  There have been no  material  changes  in our  internal
control over financial  reporting  identified in connection with such evaluation
that  occurred  during the  quarter  ended  March 31,  2007 that has  materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting.

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

     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,  also with accounting  procedures  which were not suitable for
public company reporting.

     Our Independent  Registered  Public Accounting Firm identified a variety of
material  weaknesses in our internal  controls over financial  reporting.  These
material  weaknesses stem in significant part from the acquisition  policy which
we are following in which private,  unrelated  companies are being  combined.  A
material weakness is a significant  deficiency,  or a combination of significant
deficiencies,  that  results  in more than a remote  likelihood  that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. 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.   A lack of adequate  process to identify  and ensure that  non-standard
          journal entries are subject to an appropriate level of review.

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

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

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

     K.   A lack of controls over the  authorization,  issuance and recording of
          equity  transactions  and an overall lack of knowledge of  stock-based
          compensation accounting initially resulting in errors in the recording
          of expense, which were corrected in the audit process.

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

     M.   A lack  of  periodic  reviews  over  account  reconciliations.  N.  An
          inability to make required SEC filings in a timely manner.

     N.   An  inability  to implement  the  provisions  of FIN48 by the required
          effective date.

     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 its 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, 2007,  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.


                           PART II - OTHER INFORMATION


ITEM 1. 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 1A. RISK FACTORS

     Please  refer to,  and  carefully  consider,  the "Risk  Factors  and Risks
Related to Our  Business"  section  listed in our Annual  Report on Form 10-K as
amended for the year ended  December  31,  2006,  together  with the  cautionary
statement  under the caption  "Cautionary  Statement  Regarding  Forward Looking
Statements" and the other information included in this report for information on
significant  risks  affecting our business,  including,  but not limited to, our
losses and the financing requirements we are experiencing. If any of these risks
actually occur, our business, financial condition or results of operations could
be materially  adversely  affected.  There have been no material  changes to the
Company's  risk factors since the Company's  Annual Report for 2006 on Form 10-K
as amended.


ITEM 2.  DEFAULTS UPON SENIOR SECURITIES

     The Company is not in compliance with certain financial  covenants with its
lending  institutions,  for which it has  obtained  non-binding  commitments  to
adjust such  covenants  and  maintain  compliance.  See footnote 5 in the Tarpon
Industries,  Inc. and Subsidiaries - Notes to Consolidated  Financial Statements
contained elsewhere in this report on Form 10-Q.


ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

     A Special Meeting of Tarpon  stockholders was held on February 12, 2007. At
the  Special  Meeting,  the  Tarpon  stockholders  voted upon and  approved  the
following  matters:  (1) a  proposal  to  approve a  transaction  involving  the
issuance of up to $6,000,000 of shares of Tarpon's  Common Stock,  at a price of
$.70 per share pursuant to a private  placement  offering,  for which the voting
results were as follows: FOR - 3,088,104;  AGAINST - 113,324;  ABSTAIN - 20,625;
BROKER  NON-VOTE - 0; (2) a proposal  to amend  Tarpon's  Amended  and  Restated
Articles of Incorporation to increase the authorized Common Stock, no par value,
from 20,000,000 shares to 30,000,000  shares,  for which the voting results were
as  follows:  FOR -  3,092,375;  AGAINST -  112,278;  ABSTAIN  - 17,400;  BROKER
NON-VOTE - 0; (3) a proposal to amend the Tarpon Amended and Restated 2004 Stock
Option Plan to increase  the shares  subject  thereto  from 650,000 to 1,000,000
shares, for which the voting results were as follows: FOR - 2,909,312; AGAINST -
148,422;  ABSTAIN - 164,319;  BROKER  NON-VOTE - 0; and (4) a proposal to ratify
the Tarpon outside  director  compensation  plan and certain  compensation to an
employee  director,  for  which  the  voting  results  were  as  follows:  FOR -
2,627,970; AGAINST - 139,587; ABSTAIN - 454,496; BROKER NON-VOTE - 0.


ITEM 6. EXHIBITS

Exhibit   Description

31.1      Certitifications of Chief Executive Officer and Acting Chief Financial
          Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302
          of the Sarbanes-Oxley Act of 2002.
31.2      Certifications of Chief Accounting Officer Pursuant to Rule 13a-14(a),
          as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1      Certifications of Chief Executive Officer and Acting Chief Financial
          Officer and Chief Accounting Officer Pursuant to 18 U.S.C. Section
          1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
          2002.


<PAGE>


                                   SIGNATURES

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

                                            TARPON INDUSTRIES, INC.
                                                 (Registrant)

Dated:  May 21, 2007                        By:    /s/ James W. Bradshaw
                                                  -----------------------------
                                                  James W. Bradshaw
                                            Its:  Chief Executive Officer and
                                                  Chief Financial Officer


<PAGE>

                                  EXHIBIT INDEX


Exhibit   Description

31.1      Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a),
          as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2      Certifications of Chief Accounting Officer Pursuant to Rule 13a-14(a),
          as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1      Certifications of Chief Executive Officer and Chief Accounting Officer
          Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002.