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, 2006 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  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.                        Yes |_| 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-accelarated 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,
2006 was 4,640,130.


<PAGE>


                             TARPON INDUSTRIES, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 2006

                                TABLE OF CONTENTS

                                                                            PAGE

PART I - FINANCIAL INFORMATION.................................................2
         ITEM 1.      FINANCIAL STATEMENTS.....................................2
         ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                      FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........23
         ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES
                      ABOUT MARKET RISK.......................................29
         ITEM 4.      CONTROLS AND PROCEDURES.................................30
PART II - OTHER INFORMATION...................................................32
         ITEM 1.      LEGAL PROCEEDINGS.......................................32
         ITEM 2.      DEFAULTS UPON SENIOR SECURITIES.........................32
         ITEM 5.      OTHER INFORMATION.......................................33
         ITEM 6.      EXHIBITS................................................33


<PAGE>


                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                             TARPON INDUSTRIES, INC.

INDEX TO FINANCIAL STATEMENTS

                                                                            Page
Tarpon Industries, Inc.
Consolidated Balance Sheets --- March 31, 2006 and December 31, 2005...........3
Consolidated Statements of Operations --- For the Three Months Ended
     March 31, 2006 and 2005...................................................4
Consolidated Statements of Cash Flows --- For the Three Months Ended
     March 31, 2006 and 2005...................................................5
Notes to Consolidated Financial Statements.....................................6


<PAGE>

<TABLE>
<CAPTION>

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


<S>                                                                                 <C>                  <C>
                                                                              March 31,         December 31,
                                                                                 2006               2005
                                                                            ---------------    ---------------
ASSETS:                                                                      (unaudited)
CURRENT ASSETS:
Cash and cash equivalents                                                      $ 2,282,231        $ 7,317,364
Accounts receivable (less allowance for doubtful accounts for 2006
      of $190,353 and for 2005 of $192,901)                                      8,528,880          7,730,029
Inventories                                                                      7,970,191          6,919,638
Other current assets                                                               518,514            367,681
                                                                            ---------------    ---------------
      Total current assets                                                      19,299,816         22,334,712

Property plant and equipment - net                                              11,071,728         11,139,700
Deferred financing costs                                                         1,549,706          1,973,754
Goodwill                                                                         2,804,594          2,808,800
Intangible assets, net of amortization                                             659,286            693,590
Other assets                                                                        35,828             55,365
                                                                            ---------------    ---------------
TOTAL ASSETS                                                                  $ 35,420,958       $ 39,005,921
                                                                            ===============    ===============


LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Short-term debt                                                               $ 10,070,531       $ 11,344,379
Current maturities on long-term debt                                             9,395,623          9,250,944
Accounts payable - trade                                                         8,762,747         11,270,836
Customer advance payments                                                        2,101,100            121,068
Other current liabilities                                                        1,849,316          1,430,401
                                                                            ---------------    ---------------
      Total current liabilities                                                 32,179,317         33,417,628

Long-term debt less current maturities                                               8,424             10,242
Other long-term liabilities                                                       411,000            382,667
---------------------------                                                 ---------------    ---------------
TOTAL LIABILITIES                                                               32,598,741         33,810,537

SHAREHOLDERS' EQUITY :
Preferred shares; no par value, 2,000,000 authorized; no shares issued
      at March 31, 2006 and at December 31, 2005                                         -                  -
Common shares; no par value, authorized, 20,000,000 shares at March 31,
        2006 and at December 31, 2005; issued and outstanding, 4,640,130 shares at
        March 31, 2006 and at December 31, 2005                                 15,656,249         15,625,625
Accumulated deficit                                                            (13,107,988)       (10,720,870)
Accumulated other comprehensive income                                             273,956            290,629
                                                                            ---------------    ---------------
       Total shareholders' equity                                                2,822,217          5,195,384
                                                                            ---------------    ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                    $ 35,420,958       $ 39,005,921
                                                                            ===============    ===============
</TABLE>





<PAGE>

<TABLE>


<CAPTION>

                    TARPON INDUSTRIES, INC. AND SUBSIDIARIES
                 (Formerly known as Wall St. Acquisitions, Inc.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

                                                                      Three Months Ended March 31,
                                                               ------------------------------------------
<S>                                                                      <C>                  <C>
                                                                         2006                 2005
                                                                -------------------    ----------------
REVENUES:
Sales, net of customer discounts                                    $ 17,007,164        $ 14,018,356

Cost of goods sold                                                    15,699,374          13,255,219
                                                                -------------------    ----------------

     Gross profit                                                      1,307,790             763,137

Selling, general and administrative expenses                           2,699,586           2,337,829
                                                                -------------------    ----------------

OPERATING LOSS                                                        (1,391,796)         (1,574,692)

OTHER (INCOME) EXPENSE:
Miscellaneous  expense (income)                                          (37,784)             13,363
Interest expense                                                         923,018             271,330
Loss from derivatives                                                    101,000                   -
Financing costs                                                           21,638              14,915
Interest income                                                          (25,926)             (4,805)
Foreign exchange loss (gain)                                              13,373            (124,460)
                                                                -------------------    ----------------
     Total other (income) expense                                        995,319             170,343
                                                                -------------------    ----------------

LOSS BEFORE INCOME TAXES                                              (2,387,115)         (1,745,035)
INCOME TAX PROVISION (BENEFIT)                                                                      -            (135,326)
                                                                -------------------    ----------------

NET LOSS                                                            $ (2,387,115)       $ (1,609,709)
                                                                ===================    ================


NET LOSS PER COMMON SHARE - BASIC AND DILUTED                            $ (0.51)            $ (0.57)
                                                                ===================    ================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                   4,640,130           2,830,644
                                                                ===================    ================
</TABLE>



<PAGE>

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

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                                               Three Months Ended March 31,
                                                                           -----------------------------------
<S>                                                                              <C>                <C>
                                                                                 2006               2005
                                                                            ----------------   ----------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                       $ (2,387,115)      $ (1,609,709)
Adjustments to reconcile net loss to net cash provided by (used in)
  operating activities:
  Depreciation and amortization                                                     247,244            149,723
  Accretion of note discount and other charges                                      525,613                  -
  Unrealized foreign currency (gain) loss                                                 -            (19,294)
  Stock option expense                                                               30,624                  -
  Non-employee stock options                                                              -            424,200
  Loss on derivative instrument                                                     101,000                  -
  Changes in assets and liabilities:
    Accounts receivable (increase) decrease                                        (766,047)         1,362,835
    Refundable federal income taxes (increase)                                            -           (227,325)
    Inventory (increase) decrease                                                (1,062,885)           850,151
    Prepaid expenses (increase)                                                      (4,451)           (52,309)
    Customer advance payments increase                                            1,980,032            140,690
    Accounts payable and accrued expenses (decrease)                             (2,105,244)          (731,309)
                                                                            ----------------   ----------------
  Net cash provided by (used in) operating activities                            (3,441,229)           287,653
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash received                                                      -0-         (7,622,453)
Capital  expenditures                                                              (169,441)           (32,496)
                                                                            ----------------   ----------------
    Net cash used in investing activities                                          (169,441)        (7,654,949)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common shares (net of issuance costs paid
  in 2005 of $1,154,485)                                                                  -         13,594,265
Financing costs                                                                           -            (20,000)
Net payments on credit facilities                                                (1,240,013)          (766,428)
Proceeds from issuance of long-term debt                                                  -          1,654,474
Repayment of long-term obligations                                                 (177,088)           (75,464)
Repayment of short-term obligations                                                       -         (4,417,707)
                                                                            ----------------   ----------------
    Net cash provided by (used in) financing activities                          (1,417,101)         9,969,140
IMPACT OF FOREIGN CURRENCY EXCHANGE ON CASH                                          (7,362)                 -
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                             (5,035,133)         2,601,844
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    7,317,364            257,786
                                                                            ----------------   ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $ 2,282,231        $ 2,859,630
                                                                            ================   ================

Supplemental disclosure of cash flow information:
    Cash paid during the period for interest                                      $ 392,608          $ 306,212
                                                                            ================   ================
Non-cash transactions:
    Success fee obligation for acquisition                                              $ -          $ 200,000
                                                                            ================   ================
    Stock issued as payment of debt                                                     $ -          $ 303,180
                                                                            ================   ================
    Accrued initial public offering expenditures                                        $ -          $ 427,913
                                                                            ================   ================
</TABLE>



<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, 2006 do not  necessarily  indicate  the results  that should be
expected  for  the  year  ending  December  31,  2006.  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, 2005.

     2. New Accounting Pronouncements

     The Company  adopted  Statement of Financial  Accounting  Standards No. 123
(revised 2004),  Share-Based  Payment ("SFAS 123R"),  effective January 1, 2006.
SFAS 123R requires the recognition of the fair value of stock-based compensation
in the Company's  financial  statements.  Prior to January 1, 2006,  the Company
applied the requirements of APB Opinion No. 25 ("APB 25"), "Accounting for Stock
Issued  to  Employees,"  and  related  interpretations  in  accounting  for  its
stock-based  plans.  Under  APB  25,  generally  no  compensation   expense  was
recognized  for the  Company's  stock-based  plans since the  exercise  price of
granted  employee stock options was greater than or equal to the market value of
the underlying common stock on the date of grant.

     The Company elected the modified prospective transition method for adopting
SFAS 123R.  Under this method,  the  provisions of SFAS 123R apply to all awards
granted or modified after the date of adoption. The Company continues to use the
Black Scholes model for determining stock option  valuations.  The provisions of
SFAS 123R also  apply to awards  granted  prior to  January 1, 2006 that did not
vest before January 1, 2006 (transition  awards).  The compensation cost for the
portion of the transition awards that had not vested by January 1, 2006 is based
on the grant-date  fair value of these  transition  awards as calculated for pro
forma disclosures under the provisions of SFAS 123.  Compensation cost for these
transition  awards are attributed to periods  beginning  January 1, 2006 and use
the Black  Scholes  method  used  under SFAS 123,  except  that an  estimate  of
expected  forfeitures  is used  rather  than actual  forfeitures.  The  expected
forfeiture rate of 50% is based on forfeiture activity through March 31, 2006.

     The  Company  recognized  as an  operating  expense,  non-cash  stock-based
compensation  cost in the amount of $31,000 in the three  months ended March 31,
2006.  This had the effect of  decreasing  net income by  $31,000,  or $0.01 per
diluted  share,  for the  quarter.  As of March 31,  2006,  the total  remaining
unrecognized  compensation  cost related to non-vested stock options amounted to
$167,000, which will be recognized over a weighted average term of 9.10 years.

     SFAS 123R requires the Company to present pro forma information for periods
prior  to  the  adoption  as if the  Company  had  accounted  for  all  employee
stock-based  awards under the fair value method of that statement.  For purposes
of pro forma disclosure,  the estimated fair value of the stock-based  awards at
the date of the grant is amortized to expense over the requisite service period,
which generally equals the vesting period.  The following table  illustrates the
effect on net income and earnings per share for the three months ended March 31,
2005 as if the Company had applied the fair value recognition provisions of SFAS
123R to its stock-based  employee  compensation  plans (in thousands  except per
share amounts):


                                                           Three Months Ended
                                                               March 31, 2005
                                                         ----------------------

Net Loss
--------
As Reported                                                         $(1,610)
Effect of Stock-based Compensation Expense - net
 of tax                                                                 (29)
                                                                     ------
Pro Forma                                                           $(1,639)
                                                                   ========

Loss Per Share
--------------
Basic - As Reported                                                  $(0.57)
Basic - Pro Forma                                                    $(0.58)
Diluted - As Reported                                                $(0.57)
Diluted - Pro Forma                                                  $(0.58)

     As of October 22, 2004,  the board of  directors  and  shareholders  of the
Company  adopted the Tarpon  Industries,  Inc. 2004 Stock Option Plan.  The plan
allows the Company to grant  incentive  stock  options and  non-qualified  stock
options to the directors,  officers, employees,  consultants and advisors of the
Company to purchase up to an aggregate of 650,000 common  shares.  This plan was
approved by the Company's shareholders in June 2005.

     During 2005, the Company granted options for 301,785 shares to officers and
employees of the Company.  The options are exercisable at $5.50 a share and vest
in cumulative annual  installments over three years for the officer and employee
options.  No options  were  granted  during 2004 or 2003 and no options have yet
been exercised.

Activity under these Plans is shown in the following tables:

                                               Three Months Ended
                                                  March 31, 2006
                                      --------------------------------------
                                                     Weighted
                                                     Average       Aggregate
                                                     Exercise    Instrinsic(1)
Shares subject to option                Shares       Price           Value
------------------------                ------       -----           -----
Outstanding at beginning of period      415,085        $5.50         $ --
New Grants (based on fair value of
common stock at dates of grant)              --          --
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         $ --


                                               Three Months Ended
                                                 March 31, 2005
                                      --------------------------------------
                                                                   Aggregate
                                                     Weighted     Instrinsic(1)
                                                     Average         Value
                                                     Exercise        (in
Shares subject to option                 Shares       Price        millions)
------------------------                 ------       -----        ---------
Outstanding at beginning of period           --         --          $ --
New Grants                              346,785      $5.50
Exercised                                    --         --
Expired                                      --         --
Forfeited                                    --         --
                                      ---------
Outstanding at end of period            346,785      $5.50          $ --
Exercisable at end of period                 --         --          $ --


     (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, 2006 was $137,000.

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

                                            Three Months       Three Months
                                                Ended              Ended
                                              3/31/2006          3/31/2005
                                            -----------        -----------
Weighted Average Estimated Fair Value
     Per Share Of Options Granted
     During The Period                             $ -              $3.03
Assumptions:
   Amortized Dividend Yield                          -               0.00%
   Common Stock Price Volatility                     -              60.00%
   Risk Free Rate Of Return                          -               3.78%
   Expected Option Term (in years)                   -               5

The  following  table  summarizes  information  about stock options at March 31,
2006:

<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>
 $5.50 to $5.50              323,190        8.98                $5.50             187,730     $5.50           8.89
</TABLE>



At March 31, 2006,  options  covering  200,215  shares were available for future
grants under the 2004 Plan.


     In February 2006, the Financial  Accounting  Standards  Board (FASB) issued
Statement of  Financial  Accounting  Standards  (FAS) No. 155,  "Accounting  for
Certain Hybrid  Financial  Instruments - an amendment of FASB Statements No. 133
and  140."  This   Statement   resolves   issues   addressed  in  Statement  133
Implementation  Issue  No.  D1,  "Application  of  Statement  133 to  Beneficial
Interests in Securitized  Financial  Assets," and is effective for all financial
instruments  acquired or issued after the beginning of an entity's  first fiscal
year that  begins  after  September  15,  2006.  We do not expect any  financial
statement implications related to the adoption of this Statement.

     In March 2006,  the FASB issued FAS No. 156,  "Accounting  for Servicing of
Financial  Assets - an amendment of FASB  Statement No. 140" (FAS 156).  FAS 156
requires  recognition  of a servicing  asset or liability  when an entity enters
into arrangements to service financial  instruments in certain situations.  This
Statement is effective January 1, 2007. We do not expect any financial statement
implications related to the adoption of this Statement.

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  $13.1 million from its inception on January
16,  2002  through  March 31,  2006 and has  negative  working  capital of $12.9
million and is in violation of its debt  covenants as of March 31, 2006.  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.

     Management's  plans include  completing the cost reduction begun in January
2006, 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. Acquisitions

     In February 2005, Steelbank,  Inc.  ("Steelbank"),  a subsidiary of Tarpon,
completed the  acquisition of  substantially  all of the assets,  other than the
real  estate,  of the Haines  Road  facility  from Bolton  Steel Tube Co.,  Ltd.
("Bolton"),  pursuant to an Asset Purchase Agreement  originally entered into in
July 2004, as amended.  The aggregate  purchase price including expenses related
to the Haines Road acquisition was approximately  $10,190,000 (Cdn. $12,489,000)
consisting of (1) approximately  $9,211,000 (Cdn.  $11,289,000)  payable in cash
and (2)  approximately  $979,000 (Cdn.  $1,200,000)  in a secured,  subordinated
promissory  note,  either  payable  15 months  after  closing  or by  offsetting
adjustments  made after closing or for purchases by Bolton from Haines Road. The
purchase price was allocated as follows:  $9,689,000 (Cdn.  $11,875,000) for the
assets  acquired,  a $200,000  success fee in  connection  with the  transaction
payable  to  Bainbridge   Advisors,   a  related  party,  over  24  months,  and
approximately  $301,000  in  expenses  related to the  transaction.  The Company
funded a portion of the purchase  price with  proceeds  from the initial  public
offering and from a term loan described in Note 7.

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

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

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

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

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

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


5. Goodwill and Intangible Assets

     The change in goodwill is as follows:

     Balance at December 31, 2005                     $ 2,808,800

     Foreign currency impact                               (4,206)
                                                    ----------------

     Balance at March 31, 2006                        $ 2,804,594
                                                    ================


     The Company  completed its annual  impairment test in the fourth quarter of
2005 and  recorded  an  impairment  loss of $1.1  million  to its  goodwill  and
$794,000 to its customer  list  intangibles.  The  Company's  first quarter 2006
results were below the  forecasts  utilized in testing for  goodwill  impairment
during  the  fourth  quarter of 2005.  If the  Company is unable to achieve  its
forecasted levels of  profitability,  the Company may conduct an impairment test
(outside of its annual testing) during the second quarter of 2006 and additional
impairment  losses may need to be recognized.  It is not reasonably  possible to
estimate the amount. However, such loss could be material.

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

                                                   Covenant
                                     Customer      not to
                                     base          compete           Total
                                     --------      -------------    -----------

Balance at December 31, 2005        $ 408,654      $ 284,936        $  693,590

Foreign currency impact                  (386)          (218)             (604)

Amortization                          (17,104)       (16,596)          (33,700)
                                    ---------     --------------   ------------
Balance at March 31, 2006           $ 391,164      $ 268,122        $ 659,286
                                    =========     ==============   ============

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

                 2006                             $  99,145
                 2007                               135,540
                 2008                               132,056
                 2009                               119,165
                 2010                                63,480
                 Thereafter                         109,900
                                                 ----------
                 Total                             $659,286
                                                 ==========


<PAGE>


6. 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,
                                   2006                   2005
                               -----------            -----------
Raw materials                  $ 4,305,655            $ 3,548,251
Work in process                    213,515                303,096
Finished goods                   3,350,797              2,882,126
Supplies                           100,224                186,165
                               -----------            -----------
     Total                     $ 7,970,191            $ 6,919,638
                               ===========            ===========

     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,
                                                  2006                2005
                                              ------------       -------------
Land                                          $  2,646,233       $  2,649,939
Building and leasehold improvements              2,974,204          2,916,370
Machinery and equipment                          5,980,597          5,891,036
Computer equipment                                 336,701            285,406
Transportation equipment                            56,103             56,147
Furniture and fixtures                              74,601             74,683
Construction in progress                            37,174             80,865
                                              ------------       -------------
     Total                                      12,105,613         11,954,446
Accumulated depreciation and amortization       (1,033,885)          (814,746)
                                              ------------       -------------
     Net property, plant and equipment        $ 11,071,728       $ 11,139,700
                                              ============       =============


<PAGE>

7.  Debt

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

                                                 March 31,       December 31,
                                                   2006             2005
                                               -----------       ------------
EWCO revolving credit facility                 $ 3,577,969       $ 6,016,786
Steelbank revolving credit facility              3,538,904         2,356,418
First mortgage on Haines Road real estate        2,953,658         2,971,175
                                               -----------       ------------
      Total                                    $10,070,531       $11,344,379
                                               ===========       ============



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

                                                   March 31,      December 31,
                                                     2006            2005
                                                  ----------      ------------
EWCO term loan                                     $  999,033      $ 1,068,733
Steelbank term loan                                 1,439,424        1,531,530
Second mortgage on Haines Road real estate          1,028,160        1,029,600
Third mortgage on Haines Road real estate             428,400          429,000
Convertible debt (less discounts of $509,346
   and $818,980, respectively)                      5,490,654        5,181,020
Other                                                  18,376           21,303
                                                   ----------     ------------
   Total                                            9,404,047        9,261,186
Current portion                                    (9,395,623)      (9,250,944)
                                                   ----------     ------------
Long-term portion                                  $    8,424       $   10,242
                                                   ==========     ============


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

                2006          $ 3,631,123
                2007            2,896,314
                2008            2,703,799
                2009              592,189
                2010               89,964
                              -----------
                Total         $ 9,913,389
                              ===========


EWCO Credit Facility

     Eugene  Welding  Company  ("EWCO"),  a subsidiary  of Tarpon,  has a credit
facility with Standard Federal Bank, N.A., including a revolving credit line for
up to $9,000,000,  subject to a borrowing  base based on eligible  inventory and
receivables,  originally  maturing  August 31, 2007, and a $1,394,000 term loan.
The term loan is payable in equal monthly  installments  of principal based on a
five year amortization ending August 1, 2009, but matures August 31, 2007 if the
revolving  credit  facility is not renewed.  The loans are secured by all of the
assets of EWCO,  approximating  $12.9  million,  and a guarantee by Tarpon.  The
principal amount  outstanding  bears interest,  payable  monthly,  at the bank's
prime  rate  (7.75% at March 31,  2006).  The loan  agreement  requires  EWCO to
maintain a minimum debt service  coverage ratio  (generally net income  adjusted
for depreciation,  capital  expenditures,  and cash  distributions and advances,
divided by  principal  payments  of debt) of at least 1.50 to 1.00.  EWCO's debt
service  coverage ratio as of March 31, 2006 was 12.0 to 1.0. The loan agreement
also requires EWCO to maintain minimum  tangible net worth of ($1,855,000)  plus
80% of its net income for the  preceding  fiscal year,  starting with net income
for 2005.  EWCO's  tangible net worth as of March 31, 2006 was  ($353,840).  The
loan agreement also generally  prohibits  dividends and limits EWCO's ability to
make capital expenditures in excess of $1,500,000 during the 12 months after its
initial public offering and $750,000 a year after such 12-month period.

     EWCO was in  compliance  with its  financial  covenants  at March 31, 2006.
However,  due to cross default provisions relative to certain debts at Steelbank
and Tarpon, EWCO's debt has been classified as current.

     EWCO  must pay a 0.25%  unused  line of credit  fee each  month and is also
subject  to a 1%  prepayment  fee if the  loans  are  prepaid  any  time  before
maturity.  Approximately  $2,042,000  was  available  for  borrowing  under  the
revolving credit facility,  as of March 31, 2006,  without  violating any of the
existing debt covenants.

Steelbank Credit Facility

     On February 17, 2005,  Steelbank entered into a Loan Agreement with LaSalle
Business  Credit, a division of ABN AMRO Bank N.V.,  Canada Branch.  This credit
facility provides for a revolving credit line in the maximum principal amount of
$8,000,000  Canadian  dollars,  subject to a  borrowing  base based on  eligible
inventory and receivables  originally  maturing on February 17, 2008, and a term
loan in the principal amount of $2,100,000  Canadian  dollars.  Principal on the
term loan is payable in sixty equal  monthly  installments  of $35,000  Canadian
dollars  beginning  on April 1,  2005.  The term loan bears  interest,  which is
payable  monthly in arrears,  at a floating rate equal to the Lender's  Canadian
prime rate plus an  applicable  margin of between 1.00% and 1.50% (7.0% at March
31,  2006).  The entire amount of the term loan facility will mature on March 1,
2010.  Borrowings of Canadian  dollars under the revolving  credit facility bear
interest at a floating  rate equal to the Lender's  Canadian  prime rate plus an
applicable  margin  of  between  0.75%  and  1.25%  (7.0%  at March  31,  2006).
Borrowings of U.S.  dollars under the revolving credit facility bear interest at
a  floating  rate  equal  to  the  Lender's  U.S.  prime  rate.   Under  certain
circumstances,  Steelbank  has the  option  to  convert  all or any  part of its
Canadian or United  States  borrowings to an interest rate equal to a Libor rate
plus  an  applicable  margin  of  between  2.25%  and  2.75%  or a BA  (Banker's
Acceptance) rate plus an applicable margin of between 2.25% and 2.75%.  Interest
on the revolving credit facility is payable monthly in arrears.  The obligations
under the Loan  Agreement  are  unconditionally  guaranteed  by Tarpon,  and are
secured by a security  interest in substantially all of the assets of Steelbank,
approximating  $21.3 million,  and Tarpon,  other than Tarpon's common shares of
EWCO.  Steelbank's  obligations  under the Loan  Agreement are also secured by a
pledge  of all the  capital  stock  of  Steelbank  pursuant  to a  share  pledge
agreement between Tarpon and Lender.

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

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

     Steelbank was in violation of the tangible net worth, debt service coverage
and  interest  coverage  covenants  of its loan  agreement as of March 31, 2006,
driven  primarily  by the  losses  sustained  this  year.  As a result  of these
violations, and a going concern qualification,  its debt has been reclassed as a
current  liability.  The  Company is  currently  negotiating  a waiver for these
violations.

     Each  month,  Steelbank  must pay a .50%  unused  line of credit fee and an
administrative fee of approximately $1,700. As of March 31, 2006,  approximately
$758,000  was  available  for  borrowing,  assuming  revision of  existing  debt
covenants.


Steelbank Mortgages

     On May 18, 2005,  Steelbank  Tubular,  Inc.  purchased the Haines Road real
estate  assets for  $4,638,000  (Cdn.  $5,870,000),  including  closing fees and
expenses,  consisting of approximately  $530,000 (Cdn.  $670,000) in cash, a one
year first mortgage totaling $2,765,000 (Cdn. $3,500,000) jointly secured by the
Haines  Road real  estate  and a  guarantee  from the  Company  payable in equal
monthly  installments of principal and interest based on a 25 year  amortization
period and  bearing  interest  at 1.25%  above  Canadian  prime  rate  (6.25% at
December 31, 2005), as well as second and third  mortgages from Bolton,  payable
August  18,  2006,  totaling  $948,000  (Cdn.  $1,200,000)  and  $395,000  (Cdn.
$500,000) with interest payable monthly at 8% and 10%, respectively,  per annum.
As of March 31, 2006,  approximately $2,954,000 (Cdn. $3,447,000) and the entire
balances of $1,028,000  (Cdn.  $1,200,000)  and $428,000  (Cdn.  $500,000)  were
outstanding under the first, second, and third mortgages, respectively.

Convertible Debt

     On December  13,  2005,  the Company  entered  into a  Securities  Purchase
Agreement  (the  "Agreement")  with  Laurus  Master  Fund,  Ltd.  ("Laurus")  in
connection  with the private  placement of a convertible  term note (the "Note")
issued by the Company in the  principal  amount of  $6,000,000  due December 13,
2008  and  common  stock  purchase  warrants  (the  "Warrants").   The  Note  is
collateralized  by all present and future assets of Tarpon and its subsidiaries,
including the equity interests of EWCO and Steelbank, subject to a subordination
agreement  between  Tarpon ABN AMRO Bank,  N.V.,  Canadian  Province and LaSalle
Bank,  Midwest,  N.A.  The Note is  payable  in equal  monthly  installments  of
principal  totaling  $187,500  commencing  on April 1, 2006 through the maturity
date and bears  interest at prime plus 2% (9.75% at March 31, 2006).  As part of
the  Agreement,  the monthly  payments of principal and interest,  under certain
conditions,  are  convertible  into shares of the  Company's no par value common
stock at a fixed  conversion  price of $3.27 per share. The Warrants provide for
the  purchase of up to 390,000  shares of common  stock at an exercise  price of
$3.81  until  December  13,  2012.  The  Company  has  agreed,   pursuant  to  a
registration rights agreement,  to use its best efforts to register and maintain
an effective  registration  for the shares of common stock underlying the Laurus
Note and  Warrants  and to process the same to  effectiveness.  Failure to do so
could constitute an event of default, depending on the circumstances,  resulting
in an additional  interest charge of 2% per month on the outstanding  balance of
the note  until the event of default  is cured or  waived.  The  Company is also
subject to a penalty of $500 per day for failure to register the shares  related
to the conversion feature.

     Laurus cannot receive shares upon exercise of the warrants, upon payment of
principal and interest on the note,  or upon  conversion of the note which would
exceed the  difference  between  4.99% of the issued and  outstanding  shares of
common  stock  and the  number  of  shares  beneficially  owned  by  Laurus,  as
determined in accordance with Section 13(d) of the Exchange Act, as amended, and
Regulation 13d-3. This limitation  automatically  becomes null and void upon the
occurrence, and during the continuance, of an event of default as defined in the
Note,  or upon 75 days prior  written  notice to the Company,  except that at no
time shall the  number of shares of common  stock  beneficially  owned by Laurus
exceed 19.99% of the outstanding shares of common stock.  Further, the number of
common shares  issuable by the Company and acquirable by Laurus at a price below
$2.85 per share pursuant to the terms of the note,  the warrant,  the agreement,
any related  agreement or otherwise cannot exceed 927,560 shares of common stock
(subject to appropriate  adjustment for stock splits, stock dividends,  or other
similar  recapitalizations  affecting the common stock),  unless the issuance of
such excess amount of common stock is first approved by the  stockholders of the
Company.

     In  connection  with  this  financing,   the  Company  recorded   discounts
aggregating   approximately   $1,681,000,   of  which   approximately   $608,000
represented the value of 390,000 warrants using the Black-Scholes  model with an
interest rate of 4.4%,  volatility  of 60%, zero  dividends and expected term of
seven years; and  approximately  $1,073,000  represented the conversion  feature
inherent  in the  instrument.  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 $873,000 and
$817,000 as of March 31, 2006 and December 31, 2005,  respectively.  The $56,000
increase in value is shown under "Loss from derivatives" within the Statement of
Operations.  In addition,  the Company  incurred  fees in  connection  with this
financing aggregating approximately  $1,685,000,  including warrants to purchase
up to 300,000  shares of common stock to Joseph  Gunnar and  Company,  a related
party,  recorded as deferred  financing costs and amortized over the life of the
note.  The 300,000  warrants  were valued at  approximately  $432,000  using the
Black-Scholes  model using the same assumptions  described  above,  except for a
term of five years.  The warrants  were deemed to be a derivative  instrument as
they can be put back to the Company, and, therefore the corresponding  liability
was marked to market and recorded at a fair value of $411,000 at March 31, 2006.
These  warrants are  exercisable  through  December 13, 2010 at $3.27 per share.
Although the stated interest rate of the convertible note is the prime rate plus
2%, as a result of the aforementioned discounts and fees, the effective interest
rate of the note is approximately 41.8% per annum.

     As of April 30, 2006,  the Company had not completed the sale and leaseback
of its Haines Road  property  and had received a going  concern  opinion for the
year ended  December 31, 2005 which  violated the terms of the Note. The Company
has obtained a waiver from Laurus for these violations. In addition, the Company
is in  violation of certain  cross  default  provisions  related to the EWCO and
Steelbank credit facilities,  resulting in classifying the convertible debt as a
current  liability.  The Company is  currently  in  negotiations  with Laurus to
obtain a waiver with regard to this  violation.  The Company is maintaining  the
balance of  deferred  finance  costs as it  believes  it will be  successful  in
obtaining this waiver.


7. Comprehensive Loss

   Our comprehensive losses are as follows:


                                               Three Months Ended March 31,
                                              ------------------------------
                                                  2006              2005
                                              -------------     ------------

 Net loss                                     $ (2,387,115)     $ (1,609,709)
 Other comprehensive (loss) -
   foreign currency translation adjustments        (16,673)          (18,366)
                                              -------------     -------------
  Comprehensive loss                          $ (2,403,788)     $ (1,628,075)
                                              =============     =============


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,
                                         ------------------------------------
                                            2006                2005
                                         ------------      ---------------

 Advisory services and expenses           $ 67,901            $109,497
 Stock options granted                           -             333,300
 Salaries and benefits                           -                   -
 Success fees                                    -             200,000
                                         ------------      ---------------
         Total                            $ 67,901            $642,797
                                         ============      ===============


     During the three month periods  ending March 31, 2006 and 2005, the Company
paid the former Chairman of the Board, President and Chief Executive Officer and
his son,  individually  and  through  Bainbridge  Advisors,  Inc.  $142,901  and
$200,608, respectively.

     As of March 31, 2006, liabilities included $63,889 of the success fees owed
for the EWCO,  Steelbank and Haines Road  acquisitions  consummated  in 2004 and
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. The total amount to be paid would
not increase,  but the total payment term would be reduced from twelve months to
five months for the remaining  success fee related to the  acquisition of Haines
Road.

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

     Joseph Gunnar and Company,  LLC ("Gunnar") was the lead  underwriter in the
Company's  2005 initial  public  offering,  and since such time has assisted the
Company in various financing transactions. Gunnar customers hold collectively, a
significant amount of its common stock.  Gunnar is entitled to participate as an
outside  observer on the Company's board of directors from which it can exercise
significant  influence over the activities of the Company.  For its services for
bridge  financing  in 2004,  Gunnar  received a cash fee of $200,000 and 100,000
warrants,  subsequently  increased  to 120,890  warrants  as a result of certain
anti-dilution  privileges  contained  within the  Company's  warrant  agreement.
Gunnar 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 7), Gunnar received a cash fee of $600,000
and 300,000  warrants with an exercise price of $3.27 and a fair market value of
$432,000. The Gunnar warrants can be put back to the Company, and were deemed to
be a derivative instrument and classified as a liability.  At December 31, 2005,
these  warrants were marked to market with a value of $366,000 and a gain on the
instrument  was  recorded  to gain from  derivatives.  Gunnar  also  receives  a
retainer payable monthly in the amount of $7,500 which expires in December 2006.
The following table summarizes the compensation earned by Gunnar:


                                            Three Months Ended March 31,
                                        ---------------------------------------
                                               2006                2005
                                         -----------------    -----------------

 Fees and expenses                           $23,500            $   57,426
 Initial public offering                           -             1,638,750
                                        --------------------  ------------------
         Total                               $23,500            $1,696,176
                                        ====================  ==================


9.   Contingencies

     As of December 31, 2004, the Michigan  Department of Environmental  Quality
("MDEQ")  notified  the  Company  that it had  concluded  that the Company was a
"major  source"  for certain  air  emissions  and that the Company had failed to
apply for a Renewable  Operating Permit ("ROP") for air emissions not covered by
its Permit to Install  ("Permit"),  then in effect.  The  Company  applied for a
revised  Permit to obviate the need for a ROP and received the revised Permit in
December  2004.  The  MDEQ  and  the  Company  negotiated  a  resolution  of the
violations  alleged  by  MDEQ,  and the  Company  paid a  settlement  amount  of
approximately  $31,000 to  resolve  the  violations  alleged by the MDEQ in July
2004. Subsequently, in October 2005, MDEQ Water Bureau cited EWCO for not having
separate Storm Water Pollution  Prevention  Plans for each physical  location in
Marysville along with other minor infractions.  Since that time,  separate plans
were  developed and submitted to the MDEQ for their  approval.  The Company paid
approximately  $28,000 as of  December  31,  2005 to  remediate  the issue.  The
Company did not incur  additional  costs during the three months ended March 31,
2006 and does not anticipate any further expenses.

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

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, 2006 is  approximately  $11.1 million.  If the Company
achieves profitability, the net operating loss carryforwards may be available to
offset future income taxes.

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.


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

                                EWCO               Steelbank           Other (A)

Total
                               -----------         -----------         ---------
----------------
External revenues              $ 11,876,653        $ 5,130,511         $      --
$  17,007,164

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

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

Operating profit (loss)              88,684           (133,549)      (1,346,931)
(1,391,796)

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

Capital expenditures                     --            169,441                --
169,441


                                      Three Months Ended March 31, 2005

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

                                 EWCO              Steelbank           Other (A)

Total
                                ----------        ----------          ---------
----------------
External revenues               $ 11,503,723      $ 2,514,633         $      --
$ 14,018,356

Inter-segment sales                  228,232           15,070          (243,302)
--

Depreciation and amortization          5,797          100,399           (37,708)
68,488

Operating profit (loss)             (258,434)        (257,324)       (1,058,934)
(1,574,692)

Total assets                      14,061,662       16,134,827          (241,790)
29,954,699

Capital expenditures                  13,734           18,762                 --
32,496


(A)  Other represents information for the Company's parent company, 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,
                               -----------------------------------------------
                                        2006                      2005
                               ----------------------    ---------------------

United States                           $ 13,833,992             $ 11,956,033
Canada                                     3,173,172                2,062,323
                               ----------------------    ---------------------
        Total                           $ 17,007,164             $ 14,018,356
                               ======================    =====================

12.  Subsequent Events

     In April,  2006, J. Peter Farquhar resigned as Chairman and Chief Executive
Officer.  James W. Bradshaw,  formerly Vice  President of Mechanical  Tubing for
Tarpon, has succeeded Mr. Farquhar as Chairman and Chief Executive Officer.  Mr.
Farquhar will be a senior consultant to the Company until January of 2007.

     On April 6, 2006,  Tarpon  signed a  definitive  agreement  to purchase the
assets  of  J&J  Tube,  Inc.,   located  in  Russell  Springs,   Kentucky,   for
approximately $5 million less closing adjustments.  The transaction will be paid
for through a combination of cash, seller notes and Tarpon stock.


<PAGE>

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, 2005.  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.

Overview of Recent Operations

     During the first  quarter of 2006,  the Company  had net  revenues of $17.0
million and a net loss of $2.4 million or ($0.51) per share.  This compares with
first  quarter 2005  revenues of $14.0 million and a net loss of $1.6 million or
($0.57) per share. Our  consolidated  first quarter 2006 results were materially
impacted by the following items:

   o    Amortization of finance costs and accretion of note discount, recorded
        as interest expense, of $532,000
   o    Loss on derivative instruments of $101,000
   o    Stock option expense of $31,000
   o    Severance costs of $94,000

Comparison of Operating Results for the Three Month Periods Ended March 31, 2006
and 2005

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),
                         -----------------------------------------------------------------------------------
                                       2006                                        2005
                         ------------------------------------------ -------------------------------------------
                             Net Revenues         Tonnage           Net Revenues          Tonnage
                         ------------------------------------------ -------------------------------------------
<S>                          <C>                     <C>               <C>                  <C>
EWCO Tubular                 $    5,744              7,726             $  5,172             6,215
EWCO  SpaceRak                    6,133              4,529                6,332             4,469
Steelbank Tubular*                5,130              4,797                2,514             1,849
                                  -----             ------                -----            -------
   Total                     $   17,007             17,052             $ 14,018            12,533
                             ==========            =======             =========           =======
</TABLE>




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

     Net revenue for the first quarter of 2006 increased  approximately 21% over
the same period in 2005 from $14.0 million to $17.0  million,  while volume on a
tonnage basis increased 36%.

     EWCO Tubular volume on a tonnage basis increased by  approximately  24 % in
2006 over first  quarter 2005 with revenues of $5.7 million or 11.1% higher than
2005.  Revenue  on a per ton  basis  declined  by 10.7%  from  $832 in the first
quarter  of 2005 to $743 in the first  quarter  of 2006,  due to  market  driven
reductions  during the first three quarters of 2005.  Although prices  recovered
slightly  in the  fourth  quarter  of 2005,  they did not  return to the  levels
experienced during the first quarter of 2005.

     EWCO's SpaceRak engineered racking tonnage volumes increased  approximately
1.3% in the first quarter of 2006.  Revenue on a per ton basis  declined by 4.4%
from $1,417 in the first quarter of 2005 to $1,354 in the first quarter of 2006,
due to market  driven  reductions  during  the  first  three  quarters  of 2005.
Although prices  recovered  slightly in the fourth quarter of 2005, they did not
return to the levels  experienced during the first quarter of 2005. Net revenues
of $6.3 million in the first  quarter of 2005 was higher than first quarter 2006
sales of $6.1  million due to a large  December  2004  backlog that carried over
into January 2005.

     Steelbank Tubular had net revenues of $5.1 million for the first quarter of
2006.  Net revenues  increased  significantly  from 2005 levels of $2.5 million.
Revenues for 2005 reflected  Haines Road only after the acquisition by Steelbank
on February 17, 2005.

Cost of Goods Sold and Gross Profit

     Gross  profit for the three  months  ended March 31, 2006 of $1.3  million
increased by $545,000, or 71%, over the three months ended March 31, 2005. Gross
margins  increased  to 7.7%  from  5.4%  for the  corresponding  periods  due to
inventory that was acquired in the Haines Road  transaction and recorded at fair
value,  as well as generally  lower margins caused by the declining steel market
early in 2005.  Steel prices in the first quarter of 2006 were fairly stable and
began to trend  upward  toward the end of the quarter.  Gross  margins were also
improved due to the avoidance of lower margin business.

Selling, General and Administrative Expense

     Selling,  general and administrative  costs increased from $2.3 million, or
16.7% of net revenue, during the first quarter of 2005 to $2.7 million, or 15.9%
of net revenue during the first quarter of 2006.  Cost  increases  include audit
fees of $215,000,  salaries and wages of $468,000  associated  with the acquired
operations of Haines Road and providing  staff to integrate  businesses and grow
the Company's  sales.  These increases were partially  offset by the decrease of
$424,000  associated  with stock options issued to directors and  consultants in
the first quarter of 2005.

Other Income and Expense

     Other  income and expense  changed  from  expense of $170,000 to expense of
$995,000  for the  three  months  ended  March  31,  2005 and  March  31,  2006,
respectively.  The increase is primarily  attributable  to interest  expense and
finance costs associated with the Laurus financing, completed in December 2005.

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, 2006 is  approximately  $11.1 million.  If the Company
achieves profitability, the net operating loss carryforwards may be available to
offset future income taxes.

Net Loss

     Net loss increased  $777,000 to $2,387,000 for the three months ended March
31, 2006,  versus  $1,610,000  for the three months ended March 31, 2005 for the
reasons described above.

Liquidity and Capital Resources

     As of March 31, 2006, we had a net working  capital deficit of $12,874,000,
including  cash and cash  equivalents  of  $2,282,000,  accounts  receivable  of
$8,529,000, inventories of $7,970,000 and total current operating liabilities of
$32,179,000, including accounts payable of $8,763,000 and other accrued expenses
of $3,950,000.  Other current  liabilities at March 31, 2006 include  $7,117,000
outstanding on revolving credit facilities,  a first mortgage on the Haines Road
facility of  $2,954,000,  second and third  mortages on the Haines Road facility
totaling  $1,457,000,  convertible  note  payable to Laurus of  $5,491,000,  and
reclassified  term loans of Steelbank and EWCO totaling  $2,018,000,  due to the
Company not being in compliance with certain financial covenants.

     The Company has $3,631,000 of debt maturing  within the next twelve months.
The  Company  is seeking to obtain  financing  for  working  capital  needs,  to
refinance its short term debts and to finance  possible  acquisitions,  on terms
favorable to the Company.  There can be no assurance  that such financing can be
obtained,  failing which the Company's unmet financing needs may 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
2006 was $3,441,000.  Cash was used primarily by (1) $2,387,000 of losses, (2) a
$766,000  increase  in  accounts  receivable,   (3)  a  $1,063,000  increase  in
inventories  and (4) a  $2,105,000  decrease  in  accounts  payable  and accrued
expenses, partially offset by advance payments from customers of $1,980,000.

Cash Flows From Investing Activities

     The Company's  investing  activities in the first three months of 2006 used
$169,000 in cash, for capital  expenditures, primarily by Steelbank.

Cash Flows From Financing Activities

     The Company's  financing  activities  used  $1,417,000 of cash in the first
three months of 2006,  primarily to pay down credit facilities by $1,240,000 and
long-term obligations by $177,000.

Existing Financing Arrangements

     For information on the Company's existing financing arrangements,  refer to
Footnote  7  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

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

Business Combinations and Intangible Assets

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

     SFAS No. 142  addresses the  recognition  and  measurement  of goodwill and
other  intangible  assets  subsequent  to their  acquisition.  SFAS No. 142 also
addresses the initial  recognition and measurement of intangible assets acquired
outside of a business combination, whether acquired individually or with a group
of other assets.  This statement provides that intangible assets with indefinite
lives and goodwill  will not be amortized  but will be tested at least  annually
for impairment and whenever events or changes in circumstances indicate that the
carrying  value of the asset may not be  recovered.  If impairment is indicated,
then the asset will be written down to its fair value,  typically based upon its
future  expected  undiscounted  cash  flows.  The Company  completed  its annual
impairment test in the fourth quarter of 2005 and recorded an impairment loss of
$1.1 million to its goodwill and $794,000 to its customer list intangibles.  The
Company's  first  quarter  2006  results  were below the  forecasts  utilized in
testing  for  goodwill  impairment  during  the fourth  quarter of 2005.  If the
Company is unable to achieve its forecasted levels of profitability, the Company
may conduct an impairment test (outside of its annual testing) during the second
quarter of 2006 and additional  impairment losses may need to be recognized.  It
is not reasonably possible to estimate the amount.  However,  such loss could be
material.


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

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

Bad Debts

     We  maintain  a reserve  for bad debts.  We  evaluate  credit  risk and the
adequacy of our reserve by monitoring the age of our accounts receivable and the
credit worthiness of our customers.  In addition,  we monitor the overall status
of the industries where our products and services are utilized.  Typically, this
reserve  is not  subject  to  significant  fluctuations  from  period to period.
However,  if we incur an unusual amount of bad debt, it could alter our exposure
and the related reserve.

Grants of Options and Warrants

     The Company  adopted  Statement of Financial  Accounting  Standards No. 123
(revised 2004),  Share-Based  Payment ("SFAS 123R"),  effective January 1, 2006.
SFAS 123R requires the recognition of the fair value of stock-based compensation
in the Company's  financial  statements.  Prior to January 1, 2006,  the Company
applied the requirements of APB Opinion No. 25 ("APB 25"), "Accounting for Stock
Issued  to  Employees,"  and  related  interpretations  in  accounting  for  its
stock-based  plans.  Under  APB  25,  generally  no  compensation   expense  was
recognized  for the  Company's  stock-based  plans since the  exercise  price of
granted  employee stock options was greater than or equal to the market value of
the underlying common stock on the date of grant.

     The Company elected the modified prospective transition method for adopting
SFAS 123R.  Under this method,  the  provisions of SFAS 123R apply to all awards
granted or modified after the date of adoption. The Company continues to use the
Black Scholes model for determining stock option  valuations.  The provisions of
SFAS 123R also  apply to awards  granted  prior to  January 1, 2006 that did not
vest before January 1, 2006 (transition  awards).  The compensation cost for the
portion of the transition awards that had not vested by January 1, 2006 is based
on the grant-date  fair value of these  transition  awards as calculated for pro
forma disclosures under the provisions of SFAS 123.  Compensation cost for these
transition  awards are attributed to periods  beginning  January 1, 2006 and use
the Black  Scholes  method  used  under SFAS 123,  except  that an  estimate  of
expected forfeitures is used rather than actual forfeitures.

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

Contractual Obligations

     As of March 31,  2006,  EWCO and  Steelbank  were in  violation  of certain
financial  covenants of its Loan Agreement,  resulting primarily from the losses
sustained this year. The Companies have not obtained a waiver from their lenders
to waive the violation as of March 31, 2006.  Accordingly,  the related debt has
been shown as current as of March 31, 2006.  Management believes that it will be
successful  in its  negotiations  with  its  lenders  to  revise  the  financial
covenants to levels that are attainable by the Company; however, there can be no
assurance that an agreement will be reached.

     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, 2005 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.  2005 was the  continuation  of the declining
steel market that began late in the third quarter of 2004 and bottomed  early in
the fourth  quarter of 2005.  Steel  prices  remained  relatively  stable in the
fourth quarter of 2005 and began  trending  upward in the first quarter of 2006.
It was  anticipated  that steel  imports  would begin to have an impact on steel
prices  late in the first  quarter,  but this did not  occur  due to  world-wide
demand for steel.

     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>

                                                              March 31, 2006
                                                          Expected Maturity Dates
                                         2006      2007      2008      2009        2010      Thereafter      Total       Fair Value
                                                                        (U.S.$ equivalent in thousands)

<S>                     <C>            <C>        <C>        <C>        <C>                                  <C>          <C>
Short-term Debt:
    Variable Rate (U.S.$)              $3,578                                                                $3,578       $ 3,578
         Average interest rate          7.75%
     Variable Rate (Cdn.$)             $6,493                                                                $6,493       $ 6,493
           Average interest rate        6.89%
Long-term Debt:
     Variable Rate (U.S.$)             $1,897     $2,529     $2,341     $ 232                                $6,999       $ 6,999
          Average interest rate         9.53%      9.52%      9.52%     7.75%
     Fixed Rate (U.S.$)                 $   8      $   8      $   2                                          $   18       $    18
           Average interest rate        7.43%      5.24%      5.24%
     Variable Rate (Cdn.$)              $ 270      $ 360      $ 360     $ 360       $  89                    $1,439       $ 1,439
          Average interest rate         7.00%      7.00%      7.00%     7.00%
</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, 2006
                         --------------------------------------------------
                               Carrying Amount              Fair value
                         --------------------------------------------------
                                (U.S.$ equivalent in thousands)
                         --------------------------------------------------
Steel Inventories......          $7,970             $7,970


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, 2006.  Based on their  evaluation  and
review, our principal  executive and principal financial officers have concluded
that these  controls  and  procedures,  as  designed  and  implemented,  are not
operating  effectively.  There  was no  change  in  our  internal  control  over
financial reporting  identified in connection with such evaluation that occurred
during  our  first  fiscal  quarter  ended  March 31,  2006 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 July 2004,  we agreed to  purchase
Haines Road,  and in February 2005 we completed our  acquisition  of Haines Road
except for real  estate.  This was one  operation of a larger  private  company,
again with  accounting  procedures  which were not suitable  for public  company
reporting.

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

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

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

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

D.   Insufficient  process to ensure financial  statements  adequately  disclose
     information required by Generally Accepted Accounting Principles (GAAP).

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

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

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

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

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


     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  Registered  Public
Accounting Firm, and, as of this time, we have made progress on these points. We
have hired  additional  staff and are in the initial planning phase of upgrading
our  information  technology  systems.  We expect these steps to be completed by
December 31, 2006, but it is possible that they might not be completed by then.

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

                           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 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  footnotes 5 and 6 in the
Tarpon  Industries,  Inc. and  Subsidiaries  - Notes to  Consolidated  Financial
Statements contained elsewhere in this report on Form 10-Q.

ITEM 5. OTHER INFORMATION

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 for
the year ended December 31, 2005,  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.



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 15, 2006                        By:    /s/ James W. Bradshaw
                                                  -----------------------------
                                                       James W. Bradshaw
                                            Its:  Chief Executive Officer and
                                                  Acting 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.