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 June 30, 2007 or

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

                        Commission file number: 001-32428

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

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

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

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

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

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

     The number of the  registrant's  common shares  outstanding  as of June 30,
2007 was 8,730,654.


<PAGE>

                             TARPON INDUSTRIES, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 2007

                                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........................18
         ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                   RISK.......................................................25
         ITEM 4.   CONTROLS AND PROCEDURES....................................26

PART II - OTHER INFORMATION...................................................29

         ITEM 1.   LEGAL PROCEEDINGS..........................................29
         ITEM 1A.  RISK FACTORS...............................................29
         ITEM 2.   DEFAULTS UPON SENIOR SECURITIES............................29
         ITEM 6.   EXHIBITS...................................................29


                                       1
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                    TARPON INDUSTRIES, INC.

INDEX TO FINANCIAL STATEMENTS

                                                                            Page
Tarpon Industries, Inc.
Consolidated Balance Sheets --- June 30, 2007 and December 31, 2006............3
Consolidated Statements of Operations --- For the Three and Six Months
     Ended June 30, 2007 and 2006..............................................4
Consolidated Statements of Cash Flows --- For the Six Months Ended June
     30, 2007 and 2006.........................................................5
Notes to Consolidated Financial Statements.....................................6



                                       2
<PAGE>
<TABLE>
<CAPTION>

                           CONSOLIDATED BALANCE SHEETS

<S>                                                                                <C>                    <C>
                                                                                       June 30, 2007         December 31, 2006
                                                                                      ----------------       ------------------
ASSETS:                                                                                 (unaudited)
CURRENT ASSETS:

Cash and cash equivalents                                                          $          669,118     $          1,375,711
Accounts receivable (less allowance for doubtful accounts for 2007 of
$285,405 and for 2006 of $307,137)                                                          7,225,897                8,608,275
Inventories                                                                                 4,374,242                6,759,562
Other current assets                                                                          326,338                  841,259
                                                                                      ----------------       ------------------
       Total current assets                                                                12,595,595               17,584,807

Property plant and equipment - net                                                          5,254,567                5,145,792
Deferred financing costs - net                                                              1,041,221                1,385,585
                                                                                      ----------------       ------------------
TOTAL ASSETS                                                                       $       18,891,383     $         24,116,184
                                                                                      ================       ==================

LIABILITIES AND SHAREHOLDERS' (DEFICIT):
CURRENT LIABILITIES:
Short-term debt                                                                    $        7,289,255     $          9,578,648
Term debt classified as current                                                             6,514,210                6,458,328
Accounts payable - trade                                                                    8,240,878               10,147,486
Customer advance payments                                                                      60,164                    1,693
Other current liabilities                                                                   2,351,621                1,246,602
                                                                                      ----------------       ------------------
       Total current liabilities                                                           24,456,128               27,432,757

Long-term debt less term debt classified as current                                                 -                    2,643
Other long-term liabilities                                                                    59,670                  108,000
                                                                                      ----------------       ------------------
TOTAL LIABILITIES                                                                          24,515,798               27,543,400

SHAREHOLDERS' DEFICIT:
Preferred shares; no par value, authorized; no shares issued at June 30, 2007
and at December 31, 2006                                                                            -                        -
Common shares; no par value, 30,000,000 shares authorized at June 30, 2007 and
20,000,000 share authorized at December 31, 2006; issued and outstanding,
8,730,654 shares  at June 30, 2007 and 4,993,712 shares at December 31, 2006               19,275,288               16,856,821
Accumulated deficit                                                                       (25,529,679)            (20,713,749)
Accumulated other comprehensive income                                                        629,976                  429,712
                                                                                      ----------------       ------------------
          Total shareholders' deficit                                                      (5,624,415)             (3,427,216)
                                                                                      ----------------       ------------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                                        $       18,891,383     $         24,116,184
                                                                                      ================       ==================

</TABLE>

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

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

                                       3
<PAGE>
<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<S>                                                <C>                 <C>               <C>               <C>
                                                         Three Months Ended June 30,          Six Months Ended June 30,
                                                         ---------------------------          -------------------------
                                                           2007               2006              2007              2006
                                                      ---------------     --------------    -------------     -------------
REVENUES:

Sales, net of customer discounts                   $      13,229,822   $     21,484,931  $    27,227,266   $    38,535,192

Cost of goods sold                                        12,608,213         20,022,119       25,906,620        35,770,814
                                                      ---------------     --------------    -------------     -------------

          Gross Profit                                       621,609          1,462,812        1,320,646         2,764,378

OPERATING EXPENSES:
Selling, general and administrative expenses               1,914,951          2,339,263        3,771,779         5,038,848
Impairment                                                         -          4,326,177                -         4,326,177
                                                      ---------------     --------------    -------------     -------------
          Total operating expense                          1,914,951          6,665,440        3,771,779         9,365,025


OPERATING LOSS                                           (1,293,342)        (5,202,628)      (2,451,133)       (6,600,647)

OTHER INCOME (EXPENSE):
Miscellaneous income (expense)                                   577           (75,919)          (3,690)          (31,911)
Financing costs                                             (74,063)           (21,911)        (267,127)          (43,549)
Loss on extinguishment of debt                                     -                  -        (129,853)                 -
Gain on derivatives                                           79,050            794,000           48,330           693,000
Foreign exchange gain                                        135,566             64,837          139,051            51,464
                                                      ---------------     --------------    -------------     -------------
          Total other income (expense)                       141,130            761,007        (213,289)           669,004
                                                      ---------------     --------------    -------------     -------------

INTEREST EXPENSE, NET:
Interest                                                   1,095,135          1,255,697        2,151,588         2,646,916
Interest income                                                  (1)            (9,109)             (80)          (35,035)
                                                      ---------------     --------------    -------------     -------------
          Total interest expense, net                      1,095,134          1,246,588        2,151,508         2,611,881
                                                      ---------------     --------------    -------------     -------------
NET LOSS                                           $     (2,247,346)   $    (5,688,209)  $   (4,815,930)   $   (8,543,524)
                                                      ===============     ==============    =============     =============

NET LOSS PER COMMON SHARE - BASIC AND DILUTED      $          (0.26)   $         (1.22)  $        (0.66)   $        (1.84)
                                                      ===============     ==============    =============     =============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING                                                8,718,409          4,671,384        7,331,327         4,655,843
                                                      ===============     ==============    =============     =============
</TABLE>

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




                                       4
<PAGE>
<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<S>                                                                                 <C>               <C>
                                                                                         Six Months Ended June 30,
                                                                                           2007              2006
                                                                                       -------------     -----------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Loss                                                                            $   (4,815,930)   $   (8,543,524)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
     Depreciation and amortization                                                          386,514           505,312
     Accretion of note discount and other charges                                           818,949         1,142,687
     Stock option expense                                                                   109,936            64,513
     Stock issued as compensation                                                                 -            20,000
     Non-employee stock options                                                              53,976                 -
     Loss on extinguishment of debt                                                         129,853                 -
     Gain on derivative instrument                                                         (48,330)         (693,000)
     Impairment                                                                                   -         4,326,177
     Changes in assets and liabilities:
          Accounts receivable                                                             1,670,920         (676,795)
          Inventory                                                                       2,574,251       (1,264,490)
          Unbilled revenue                                                                        -       (1,578,855)
          Other current assets                                                              520,623         (425,184)
          Customer advance payments                                                          60,164         2,250,701
          Accounts payable and other current liabilities                                (1,000,418)           887,902
                                                                                       -------------     -------------
               Net cash provided by (used in) operating activities                          460,508       (3,984,556)

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition costs                                                                                 -          (30,531)
Payments of FenceMaster obligations                                                               -         (984,733)
Capital expenditures                                                                       (64,670)         (282,245)
                                                                                       -------------     -------------
     Net cash used in investing activities                                                 (64,670)       (1,297,509)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common shares (net of issuance costs of $490,658)               2,124,701                 -
Financing costs                                                                           (151,432)                 -
Net payments on credit facilities                                                       (2,853,529)       (1,030,727)
Proceeds from issuance of short-term obligations                                          1,038,000                 -
Repayment of short-term obligations                                                       (775,000)                 -
Repayment of long-term obligations                                                        (327,541)         (543,266)
                                                                                       -------------     -------------
     Net cash used in financing activities                                                (944,801)       (1,573,993)

IMPACT OF FOREIGN CURRENCY EXCHANGE ON CASH                                               (157,630)          (52,507)
                                                                                       -------------     -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                                 (706,593)       (6,908,565)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                            1,375,711         7,317,364
                                                                                       -------------     -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                            $       669,118   $       408,799
                                                                                       =============     =============

Supplemental disclosure of cash flows information:
     Cash paid during the period for interest                                       $       823,600   $       803,106
Non-cash transactions:
     Stock issued as compensation                                                   $             -            20,000
     Stock issued as payment of debt                                                $       568,109   $       187,500
</TABLE>

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


                                       5
<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 six-month period
ended June 30,  2007 do not  necessarily  indicate  the  results  that should be
expected  for  the  year  ending  December  31,  2007.  The  unaudited   interim
consolidated  financial statements should be read together with the consolidated
financial  statements  and related  notes  included in our Annual Report on Form
10-K/A for the year ended December 31, 2006. The accounting policies followed by
the Company with  respect to the  unaudited  interim  financial  statements  are
consistent with those stated in the Company's Annual Report on Form 10-K/A.

2. New Accounting Pronouncements

     In February 2007, the Financial  Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standard  ("SFAS") No. 159 "The Fair Value
Option for Financial Assets and Financial  Liabilities".  This Statement permits
entities to choose to measure many financial instruments and certain other items
at fair value.  This  Statement is effective as of the  beginning of an entity's
first fiscal year that begins after November 15, 2007.

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  $25.6 million from its inception on January
16, 2002 through June 30, 2007 and has negative working capital of $11.9 million
and is in violation of its debt covenants as of June 30, 2007. If the Company is
unable to  significantly  decrease  its losses and obtain  additional  financing
needed for growth and to meet  tightened  vendor  payment  terms,  its financial
resources will not be adequate to satisfy its operating and capital requirements
for the next 12 months and will have a material adverse effect on its operations
and continuance of business operations.

     The Company  began an equity  financing  during the first  quarter of 2007,
with an initial closing occurring in January of 2007,  selling 860,000 shares of
common stock and raising gross proceeds of $602,000 and netting  $565,000 to the
Company.  Another closing ("Raise 1", per agreement with Laurus. See Convertible
Debt) was  completed  on March 23,  2007,  grossing  $1.9  million  and  netting
$582,000 to the Company after the repayment of bridge notes,  dated  December 7,
2006,  and the  scheduled  payment to  Laurus.  On April 4,  2007,  the  Company
received  $120,000 on additional gross proceeds of $156,000 related to the March
23, 2007 closing.  An aggregate of 2,876,942  shares of common stock were issued
in this transaction. "Raise 2" was scheduled to occur in May 2007, but failed to
materialize. The Company is now pursuing a secondary equity offering expected to
be completed by November, 2007.

     Management's plans include continued cost reduction efforts, improved gross
margins,  improved  receivables  and inventory  management  and  continuing  the
development of its customers and markets through its sales initiatives.


                                       6
<PAGE>

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

4. Details of Balance Sheet

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

                                 June 30,              December 31,
    INVENTORIES:                   2007                   2006
                          --------------------    ------------------
Raw material                      $ 1,609,320            $3,643,846
Work-in-process                       468,000               481,858
Finished goods                      2,014,142             2,325,008
Supplies                              282,780               308,850
                          --------------------    ------------------
Total                             $ 4,374,242            $6,759,562
                          ====================    ==================

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

    PROPERTY PLANT AND EQUIPMENT:             June 30,           December 31,
                                                2007                2006
                                          -----------------     ----------------
Machinery and equipment                          $6,609,941       $5,979,418
Leasehold improvements                              180,378          214,454
Computer equipment                                  374,507          343,580
Transportation equipment                             49,569           47,035
Furniture and fixtures                               73,621           67,742
                                           -----------------     ---------------
Total                                             7,288,016        6,652,229
Less accumulated depreciation and                (2,033,449)     (1,506,437)
amortization
                                           -----------------     ---------------
Net property, plant and equipment                $5,254,567       $5,145,792
                                           =================     ===============

5.  Debt

     The following table sets forth the components of the Company's debt at June
30, 2007 and December 31, 2006:

Short Term Debt

                                              June 30,         December 31,
                                                2007                2006
                                       ------------------   --------------------
EWCO Revolving Credit Facility               $ 3,576,452        $5,943,115
Steelbank Revolving Credit Facility            2,674,803         2,860,533
Bridge loan payable                            1,038,000           775,000
                                       ------------------  --------------------
Total                                         $7,289,255        $9,578,648
                                       ==================  ====================


                                       7
<PAGE>

Term Debt, Classified as Current

                                                    June 30,      December 31,
                                                      2007            2006
                                                 -------------   ---------------
EWCO term loan                                      $ 650,533          $789,933
Steelbank term loan                                 1,090,667         1,171,307
Convertible debt (less discount of $859,368
at June 30, 2007 and $1,135,570 at December
31, 2006)                                           4,765,632         4,489,430
Other                                                   7,378            10,301
                                                 -------------   ---------------
Subtotal                                            6,514,210         6,460,971

Less term debt classified as current              (6,514,210)       (6,458,328)

                                                 -------------   ---------------
Long-term debt                                         $   --            $2,643
                                                 =============   ===============

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

               2007                           $6,307,119
               2008                              676,071
               2009                              460,088
                                          ------------------
               Total                          $7,443,278
                                          ==================


EWCO Credit Facility - Terms and Default

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

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

     Both the  revolving  credit  line and term loan are  secured  by all of the
assets of EWCO, approximately $11.2 million as of June 30, 2007, and a guarantee
by Tarpon.

     Outstanding  borrowings  averaged  $4.8  million,  with a weighted  average
interest rate on credit line  borrowings of 11.3% in during the first six months
of 2007.

Steelbank Credit Facility - Terms and Default

     Steelbank Tubular, Inc., a subsidiary of Tarpon, has a credit facility with
LaSalle  Business Credit  ("Lender"),  a division of ABN AMRO Bank N.V.,  Canada
Branch.,  which provides for (1) a revolving  credit line maturing  February 17,
2008 in the maximum  principal  amount of Cdn.  $8,000,000 with borrowings based


                                       8
<PAGE>

upon eligible  inventory and  receivables,  and (2) a term loan in the principal
amount of Cdn. $2,100,000.

     On April 30, 2007, Steelbank and LaSalle executed a "Second Amendment to
Loan Agreement and Reaffirmation of Guarantee". The amendment waives all events
of default which have occurred up to the date of the amendment. It also amends
the following:

     o    Borrowings in Canadian  dollars under the  revolving  credit  facility
          bear interest at a floating rate equal to the Lender's  Canadian prime
          rate plus an  applicable  margin of between  1.75% and 3.00% (11.5% at
          June 30, 2007).  Borrowings in U.S. dollars under the revolving credit
          facility are at the Lender's U.S. prime rate plus an applicable margin
          of between 0.25% and 1.50%.

     o    The term loan matures the earlier of (i) August 31, 2010, and (ii) the
          date that is thirty (30) days prior to the stated maturity date of the
          Laurus Secured Convertible Note (See below).

     o    Establishes new financial  covenants for "Minimum Adjusted Net Worth",
          "Debt Service  Coverage  Ratio",  "Earnings  before  Interest,  Taxes,
          Depreciation  and  Amortization  (EBITDA)"  and  "Capital  Expenditure
          Limitations".

     o    Agreements of  cross-default  with other financing  agreements held by
          Tarpon and it's subsidiaries.

     Outstanding  borrowings  averaged  $2.8  million,  with a weighted  average
interest  rate on credit line  borrowings of 9.9% during the first six months of
2007.

Convertible Debt

     On December  13,  2005,  the Company  entered  into a  Securities  Purchase
Agreement  (the  "Agreement")  with  Laurus  Master  Fund,  Ltd.  ("Laurus")  in
connection  with the private  placement of a convertible  term note (the "Note")
issued by the Company in the  principal  amount of  $6,000,000  due December 13,
2008  and  common  stock  purchase  warrants  (the  "Warrants").   The  Note  is
collateralized  by all present and future assets of Tarpon and its subsidiaries,
including the equity interests of EWCO and Steelbank, subject to a subordination
agreement  between  Tarpon ABN AMRO Bank,  N.V.,  Canadian  Province and LaSalle
Bank,  Midwest,  N.A.  The Note is  payable  in equal  monthly  installments  of
principal  totaling  $187,500  commencing  on April 1, 2006 through the maturity
date and bears  interest at prime plus 2% (10.25% at June 30, 2007).  As part of
the  Agreement,  the monthly  payments of principal and interest,  under certain
conditions,  are  convertible  into shares of the  Company's no par value common
stock at a fixed  conversion  price of $3.27 per share. The Warrants provide for
the  purchase of up to 390,000  shares of common  stock at an exercise  price of
$3.81 until December 13, 2012.

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

     In  connection  with  this  financing,   the  Company  recorded   discounts
aggregating   approximately   $1,681,000,   of  which   approximately   $608,000


                                       9
<PAGE>

represented the value of 390,000 warrants using the Black-Scholes  model with an
interest rate of 4.4%,  volatility  of 60%, zero  dividends and expected term of
seven years; and  approximately  $1,073,000  represented the conversion  feature
inherent  in the  instrument.  Such  discounts  are  being  amortized  using the
effective  interest  method over the term of the related  debt.  The  conversion
feature  itself was deemed to be a derivative  under FASB Statement No. 133. The
Company  estimated the fair value of the conversion  feature to be $13,000 as of
June 30, 2007 and at December 31, 2006. In addition,  the Company  incurred fees
in  connection  with  this  financing  aggregating   approximately   $1,472,000,
including  warrants to purchase up to 300,000  shares of common  stock to Joseph
Gunnar and Company,  a related party,  recorded as deferred  financing costs and
amortized  over the life of the  note.  The  300,000  warrants  were  valued  at
approximately  $432,000 using the Black-Scholes model using the same assumptions
described above, except for a term of five years. The warrants were deemed to be
a derivative  instrument as they can be put back to the Company,  and, therefore
the corresponding liability was marked to market and recorded at a fair value of
$138,720 as of June 30, 2007 and $108,000 as of December  31, 2006.  The $30,720
increase  in fair value  during the first  quarter  of 2007 is  included  in the
overall  "Loss from  derivatives"  within the  Statement  of  Operations.  These
warrants are exercisable through December 13, 2010 at $3.27 per share.  Although
the  stated  interest  rate of the  convertible  note is the prime  rate plus 2%
(10.25% on June 30, 2007), as a result of the aforementioned discounts and fees,
the effective interest rate of the Note was estimated to be approximately  41.8%
per annum at its inception on December 13, 2005.

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

     On August 17,  2006,  Tarpon  reached  an  agreement  with the Laurus  fund
whereby  Tarpon  would issue  100,000  shares of Tarpon  common  stock valued at
$190,000  ($1.90 per share) to Laurus in exchange  for Laurus  amending  certain
provisions of its loan agreement. In addition,  Tarpon agreed to award Laurus an
additional  100,000 shares  contingent on Tarpon  completing a successful equity
raise (in process as of June 30,  2007).  The  agreement  provided that the loan
agreement  would be amended  such that an event of  default  with  LaSalle  Bank
Midwest (LaSalle) and/or LaSalle Business Credit (LaSalle) which is not declared
as a default by LaSalle,  would not give rise to default interest due to Laurus.
Because  LaSalle did not declare the Company in default  until  October 2, 2006,
default  interest was therefore not due Laurus until the fourth quarter of 2006.
The results of operations  for the first six months of 2007 include  $761,275 of
default interest due to Laurus.

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

Bridge Notes

     On December 7, 2006 Tarpon closed a private  placement Bridge Loan offering
aggregating  $775,000 and netting the Company $562,000 after payment of fees and
commissions.  The Bridge Loan Notes carry interest at 12% and are repayable from
proceeds  of a  secondary  stock  offering  initiated  in  January  of 2007.  In


                                       10
<PAGE>

connection with this private placement, 775,000 warrants were issued to the note
holders and 96,875  warrants were issued to designees of the placement  agent to
purchase  common stock of Tarpon at an exercise price of $0.80.  The Company has
estimated  the  fair  value  of  these   warrants  to  be  $333,000   using  the
Black-Scholes  Option  Pricing  Model  with an  estimated  term  of 4.94  years,
risk-free interest rate of 4.64%, dividend yield of 0% and volatility of 70%.

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

     On June 18, 2007 Tarpon  closed a private  placement  Bridge Loan  offering
aggregating  $1,038,000  and netting the Company  $867,000 after payment of fees
and  commissions.  The Bridge Loan Notes carry interest at 12% and are repayable
from  proceeds of a secondary  stock  offering  anticipated  to occur in the 4th
quarter of 2007. In connection  with this private  placement,  103,800  warrants
were issued to  designees  of the  placement  agent to purchase  common stock of
Tarpon at an exercise  price of $0.52.  The Company has estimated the fair value
of these  warrants to be $54,000 using the  Black-Scholes  Option  Pricing Model
with an estimated term of 5 years,  risk-free  interest rate of 4.72%,  dividend
yield of 0% and volatility of 70%.

For more  information  about  the  Company's  debt  restructuring  see Note 12 -
Subsequent Events.

6.  Leases

     Facilities and equipment are leased under  arrangements  that are accounted
for as operating leases.  Total rental expense was $171,063 and $341,672 for the
three and six months ended June 30, 2007, respectively.

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

                 Year                               Amount
                 ----                               ------
                 2007                              $369,905
                 2008                               727,049
                 2009                               722,799
                 2010                               706,040
                 2011                               707,299
                 Thereafter                       2,650,035
                                            -------------------
                 Total                           $5,883,127
                                            ===================

7. Comprehensive Loss

   Our comprehensive losses are as follows:
<TABLE>
<CAPTION>

<S>                                           <C>                  <C>                <C>                 <C>
                                                   Three Months Ended June 30,              Six Months Ended June 30,
                                                   ----------------------------             --------------------------
                                                      2007                 2006               2007                2006
                                                      ----                 ----               ----                ----
Net Loss                                      $      (2,247,346)   $     (5,688,209)  $    (4,815,930)    $    (8,543,524)
Other comprehensive income (loss):
     Foreign currency translation                        183,454            329,194           200,264             312,521
adjustments
                                                 ----------------     ---------------    ----------------    ----------------
Comprehensive Loss                            $      (2,063,892)   $     (5,359,015)  $    (4,615,666)    $    (8,231,003)
                                                 ================     ===============    ================    ================
</TABLE>


                                       11
<PAGE>

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.:

<TABLE>
<CAPTION>

<S>                                 <C>              <C>                 <C>             <C>
                                      Three Months Ended June 30,          Six Months Ended June 30,

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

Advisory Services and Expenses      $            -   $          67,250   $       44,515  $        136,192
                                       ------------     ---------------     ------------    --------------
     TOTAL                          $            -   $          67,250   $       44,515  $        136,192
                                       ============     ===============     ============    ==============
</TABLE>

     During the six month period ending June 30, 2007,  the Company made no cash
payments to the former  Chairman  of the Board,  President  and Chief  Executive
Officer and his son,  individually and through  Bainbridge  Advisors,  Inc. Cash
payments in 2006 totaled  $142,901.  As of June 30, 2007,  liabilities  included
$150,000 of advisory fees and expenses due to  Bainbridge,  included in accounts
payable.

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

     Joseph Gunnar and Company,  LLC ("Gunnar") was the lead  underwriter in the
Company's  2005 initial  public  offering,  and since such time has assisted the
Company in various financing transactions. Gunnar customers hold collectively, a
significant amount of its common stock.  Gunnar is entitled to participate as an
outside  observer on the Company's board of directors from which it can exercise
significant  influence over the activities of the Company.  For its services for
bridge  financing  in 2004,  Gunnar  received a cash fee of $200,000 and 100,000
warrants  subsequently,  increased  to 120,890  warrants  as a result of certain
anti-dilution  privileges  contained within the Company's warrant agreement.  It
also  received cash  payments of $83,500 in 2004.  The original  warrants had an
exercise price of $ 6.25 with a term of 5 years.  The revised exercise price was
reset to $5.17 as a result of the  issuance  of  additional  warrants.  The 2004
warrants  when  issued had a fair market  value of  $101,966.  In  exchange  for
serving as the  underwriter  for the Company's  Initial Public offering (IPO) in
2005,  Gunnar received a cash fee of $1,638,750.  For its assistance in securing
the convertible  note financing (Note 5), Gunnar received a cash fee of $600,000
and 300,000 warrants with an exercise price of $3.27 with a fair market value of
$432,000. The Gunnar warrants can be put back to the Company, and were deemed to
be a derivative  instrument  and  classified  as a liability.  At June 30, 2007,
these  warrants  were marked to market with a value of $59,670  with the gain on
the instrument  recorded to gain on  derivatives.  In connection with the bridge
financing  in December of 2006,  Gunnar  received  96,875  warrants  with a fair
market value of $33,906 and earned  additional  fees of $78,000.  In  connection
with the equity raise  closings in the first  quarter of 2007,  Gunnar  received


                                       12
<PAGE>

439,261 warrants with a fair market value of $252,000 and earned additional fees
of $312,598.  Gunnar also receives a retainer  payable  monthly in the amount of
$7,500 which expires in December 2007.

     In April, 2007, Gunnar received 27,857 warrants with a fair market value of
$14,252 in  connection  with the private  placement  completed on April 4, 2007.
Additionally,  in June of 2007  Gunnar  received  103,800  warrants  with a fair
market value of $53,976 in  connection  with the bridge  financing  completed on
June 26, 2007.

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

        The following table summarizes the compensation earned by Gunnar:

<TABLE>
<CAPTION>

<S>                                     <C>              <C>               <C>             <C>
                                          Three Months Ended June 30,        Six Months Ended June 30,
                                          ----------------------------       --------------------------
                                              2007              2006             2007             2006
                                              ----              ----             ----             ----
Warrants Expense - Gunnar & Designees   $       53,996   $              -  $      77,496   $             -
Private Placement                               14,252                  -        266,771                 -
Fees and Expenses                              145,020             22,500        480,118            46,000
                                           ------------     --------------    -----------     -------------
     TOTAL                              $      213,268   $         22,500  $     824,385   $        46,000
                                           ============     ==============    ===========     =============
</TABLE>

9. Stock Options and Warrants

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

     During 2006, the Company granted options for 550,000 shares, 250,000 issued
to James Bradshaw,  Chairman and Chief Executive Officer,  50,000 exercisable at
$2.45 per share and 200,000  exercisable  at $0.88 per share,  110,000 issued to
Patrick Hook,  President and Chief Operating  Officer,  exercisable at $0.88 per
share, 150,000 issued to J. Stanley Baumgartner, former Chief Financial Officer,
40,000 exercisable at $1.75 and 110,000  exercisable at $0.88 per share,  20,000
issued to Jeffrey Greenberg,  a former employee,  exercisable at $0.88 per share
and 10,000 each issued to new  directors  Tracy  Shellaberger  and Gerald Stein,
exercisable  at $2.60 and $0.88 per share  respectively.  All options  that have
been  granted  under the plan to officers  and  employees of the Company vest in
cumulative annual  installments over three years.  Options issued to consultants
and directors vest immediately upon issuance. No options were granted during the
three months ended June 30, 2007 and 2006, respectively.


                                       13
<PAGE>

     Activity under these Plans is shown in the following tables:

<TABLE>
<CAPTION>

<S>                                   <C>       <C>                             <C>       <C>
                                        Six Months Ended June 30, 2007            Six Months Ended June 30, 2006
                                        ------------------------------            ------------------------------
                                                   Weighted                                   Weighted
     Shares Subject to Option        Shares        Average      Aggregate      Shares          Average     Aggregate
                                                   Exercise     Intrinsic                     Exercise     Intrinsic
                                                     Price      (1) Value                       Price      (1) Value
----------------------------------- ---------- --- ----------- ------------- ----------- --- ------------ ------------
Outstanding at beginning of period    673,190   $        2.88       -           415,085   $         5.50      --
New Grants (based on fair value
of common stock at dates of  grant          -   $           -       -            50,000   $         2.45      --
Exercised                                   -   $           -       -                --   $           --      --
Expired                                     -   $           -       -                --   $           --      --
Forfeited                            (67,190)   $        4.12       -         (151,895)   $         5.50      --
                                    ----------                               -----------
Outstanding at end of period          606,000   $        2.76       -           313,190   $         5.01      --
Exercisable at end of period          205,667   $        5.13       -           161.063   $         5.50      --
</TABLE>


               (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 vested  shares at June 30,  2007 was  $116,387.  At
June 30, 2007, the total  remaining  unrecognized  compensation  cost related to
non-vested  stock options  amounted to $161,000  which will be amortized  over a
weighted average period of 9.1 years.

     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:

                                                         Six Months Ended
                                                    6/30/2007        6/30/2006
                                                    -----------     ------------
Weighted Average Estimated Fair Value Per
     Share of Options Granted During the        $       -        $     1.08
     Period
Assumptions:
     Amortized dividend yield                           -              0.00%
     Common Stock price volatility                      -             60.00%
     Risk free rate of return                           -              5.00%
     Expected option term (in years)                    -                3

     The following table summarizes  information about stock options at June 30,
2007:

<TABLE>
<CAPTION>

<C>      <C>     <C>              <C>           <C>                 <C>              <C>           <C>
                               OPTIONS OUTSTANDING                                 OPTIONS EXERCISABLE
                            Weighted Average          Weighted                 Weighted Average           Weighted
                                Remaining              Average                     Remaining              Average
   Range of      Shares     Contractual Life       Exercise Price    Shares    Contractual Life        Exercise Price
   Exercise
    Prices
--------------- ---------- -------------------- -- ---------------- --------- -------------------- --- ---------------

$2.45 to $5.50   606,000          8.67          $       2.76        205,667          7.81          $        5.13
</TABLE>


     At June 30, 2007, options covering 394,000 shares were available for future
grants under the 2004 Plan.


                                       14
<PAGE>


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


                                      Warrants      Expiration        Exercise
Party                               Outstanding       Date            Price
--------------------------------    -----------    -----------      -----------
2004 Gunnar - Bridge Financing         126,386     12/31/2010    $       1.22
2004 Private Placement               1,074,667     12/13/2012            1.94
2005 Gunner - IPO                      244,341     04/05/2009            0.98
2005 Gunnar - Laurus
Convertible Note                       300,000     04/05/2009            0.91
2005 Laurus Warrants Associated
with Convertible Note                  390,000     02/17/2010            3.08
2006 Bridge Note Holders               775,000     12/07/2011            0.91
2006 Gunnar - Bridge Financing         116,852     12/07/2011            0.66
2007 Gunnar - Private Placement        124,114     01/24/2012             0.79
2007 Gunnar - Private Placement        345,151     03/23/2012             0.90
2007 Gunnar - Private Placement         28,736      4/4/2012              0.83
2007 Gunnar - Bridge Financing         103,800      6/26/2012             0.52
                                    -----------
Total                                3,629,047
                                    ===========

9.   Contingencies

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

10.   Income Taxes

     Tarpon has not recognized  potential U.S. or Canadian  federal tax benefits
from its net losses because of the uncertainty  regarding its ability to realize
future tax benefits of its net operating loss carryforwards.  The potential loss
carryforward  at June 30, 2007 is  approximately  $21.8 million.  If the Company
achieves profitability, the net operating loss carryforwards may be available to
offset future income taxes.

     In April,  2007 the Internal  Revenue Service notified the Company of a tax
audit for the year ended  December 31, 2004.  Such audit is currently in process
and the Company does not anticipate any material assessments.

     The Company did not  complete its  assessment  of the impact of FIN 48 and,
therefore,  did not  adjust  opening  accumulated  deficit  for  the  cumulative
effects, if any, of applying this  interpretation.  Such adjustment,  if any, is
expected by the Company to be  immaterial,  and will be reflected in the results
of operations for 2007 when determined.

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


                                       15
<PAGE>

galvanized tube. The products and services, customer base, distribution channel,
manufacturing  process,  procurement  and economic  characteristics  are similar
throughout all of the Company's  operations.  The following table sets forth the
Company's segment data.

<TABLE>
<CAPTION>

<S>                                   <C>                <C>               <C>               <C>
                                                  As of and for the Three Months Ended June 30, 2007
                                             EWCO             Steelbank         Other (1)            TOTAL

External Revenues                     $      8,861,550   $      4,368,272  $              -  $        13,229,822
Inter-Segment Sales                            291,285             62,209         (353,494)                    -
Depreciation and Amortization                    3,155             27,487                 -               30,642
Operating Profit (Loss)                        235,047          (491,220)       (1,037,169)          (1,293,342)
Total Assets                                11,180,311         10,040,170       (2,329,099)           18,891,383
Capital Expenditures                                 -              5,558                 -                5,558

                                                  As of and for the Three Months Ended June 30, 2006
                                             EWCO            Steelbank         Other (1)             TOTAL

External Revenues                     $     15,369,381  $       6,115,550  $             -  $          21,484,931
Inter-Segment Sales                             21,390            211,357        (232,747)                     -
Depreciation and Amortization                   28,460            229,609                -                258,069
Operating Profit (Loss)                       (62,155)        (4,159,138)        (981,335)             (5,202,628)
Total Assets                                15,170,420         17,229,285        (811,904)             31,587,801
Capital Expenditures                                 -            282,245                -                282,245

                                                   As of and for the Six Months Ended June 30, 2007
                                             EWCO             Steelbank         Other (1)            TOTAL

External Revenues                     $     19,226,533   $      8,000,733  $              -  $        27,227,266
Inter-Segment Sales                            390,164            181,052         (571,216)                    -
Depreciation and Amortization                    6,310             53,132                 -               59,442
Operating Profit (Loss)                        223,855          (862,241)       (1,812,747)          (2,451,133)
Total Assets                                11,180,311         10,040,170       (2,329,099)           18,891,383
Capital Expenditures                            20,342             44,328                 -               64,670

                                                   As of and for the Six Months Ended June 30, 2006
                                             EWCO            Steelbank         Other (1)             TOTAL

External Revenues                     $     27,289,131  $      11,246,061  $             -  $         38,535,192
Inter-Segment Sales                            208,795            211,357        (420,152)                     -
Depreciation and Amortization                   57,432            447,880                -               505,312
Operating Profit (Loss)                         20,306        (4,292,687)      (2,328,266)            (6,600,647)
Total Assets                                15,170,420         17,229,285        (811,904)            31,587,801
Capital Expenditures                                 -            282,245                -               282,245
</TABLE>


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

     Revenues  by country  for the three and six months  ended June 30, 2007 and
2006 are as follows:

<TABLE>
<CAPTION>

<S>                     <C>                <C>               <C>                <C>
                           Three Months Ended June 30,            Six Months Ended June 30,
                               2007               2006               2007               2006

United States           $      8,799,341   $     16,969,460  $      19,045,481  $      30,846,549
Canada                         4,430,481          4,515,471          8,181,785          7,688,643
                           --------------     --------------    ---------------    ---------------
     TOTAL              $     13,229,822   $     21,484,931  $      27,227,266  $      38,535,192
                           ==============     ==============    ===============    ===============
</TABLE>


                                       16
<PAGE>

12.  Subsequent Events

Bridge Financing

     In  connection  with the Bridge  Loan  financing  closed on June 18,  2007,
during July, 2007, Tarpon received  additional funding of $550,800,  net of fees
and expenses of $111,200. Additionally, 66,200 warrants were issued to designees
of the placement  agent to purchase  common stock of Tarpon at an exercise price
of $0.52.  The  Company  has  estimated  the fair value of these  warrants to be
$18,000 using the Black-Scholes Option Pricing Model with an estimated term of 5
years,  risk-free interest rate of 4.72%, dividend yield of 0% and volatility of
70%.

Consulting Agreement

     On  August  3,  2007,   Tarpon  entered  into   agreements  (the  "Fuselier
Agreements") with Dr. Jean Fuselier and Fuselier Holding LLC ("FHLLC")  relating
to the Company's  accounts  payable.  In  accordance  with such  agreements  and
following  approval by the Company's  shareholders at a meeting to be called for
such purpose, among others, the Company would issue a total of 12,000,000 shares
of common stock to Dr. Fuselier and FHLLC. Such entities,  through  consultation
and payments,  have agreed to satisfy an amount (the "Assumption Amount") of the
Company's accounts payable, over a period of two years, determined in accordance
with the following formula: (i) 0.47 multiplied by (ii) 12,000,000 multiplied by
(iii) the closing  market  price of the Common Stock of the Company on the stock
exchange on which the same is traded on the trading day immediately prior to the
day  (the  "Fee  Delivery  Date")  on  which  (A) the  shares  of  Common  Stock
representing  the  Assumption  Fee (as defined in the Fuselier  Agreements)  are
delivered to FHLLC  hereunder,  and (B) the shares of Common Stock  representing
the  Consulting  Fee under an agreement  with Dr. Jean Fuselier are delivered to
Dr. Fuselier under such agreement.  For example,  if the closing market price is
$0.50 per share  immediately  prior to the Fee  Delivery  Date,  the  Assumption
Amount would be  $2,820,000.  The accounts  payable  comprising  the  Assumption
Amount shall be  designated  by the Company from among the accounts  payable set
forth in the agreement with FHLLC. Dr. Fuselier and FHLLC will, upon issuance of
the 12,000,000  shares referred to above, hold the Company harmless with respect
to the accounts payable included in the Assumption Amount.

Debt Restructuring

     Tarpon entered into a Master Credit  Agreement ("The  Agreement") on August
9, 2007, with Laurus Master Fund, Ltd. ("Laurus"),  including a revolving credit
agreement  (Revolver) up to  $10,000,000,  subject to borrowing based on capital
availability, inventory and reserves, a $1,700,000 term loan (Term Loan A) and a
$1,700,000 term loan (Term Loan B).

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


                                       17
<PAGE>

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

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

     Upon entering this  agreement the Company  retired all debt owed to LaSalle
Bank Midwest N.A. and LaSalle Business Credit.  For more information  concerning
these  facilities,   see  the  "Financing  Arrangements"  as  discussed  in  the
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations",  and  "Note 5 -  Debt"  of the  "Notes  to  Consolidated  Financial
Statements".

Communication with the American Stock Exchange

     On July 23, 2007, the American Stock Exchange  (AMEX) granted  continuation
of  Tarpon's  listing on the  exchange.  The AMEX staff will  continue  periodic
review of Tarpon's  compliance with the listing  standards.  If by September 30,
2007, Tarpon is not compliant or does not show continued progress in its plan to
do so, then the AMEX may initiate immediate delisting proceedings.

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/A for the year ended
December 31, 2006.  All forward  looking  statements in this report are based on
information  available to us on the date of this report.  We do not undertake to
update any forward looking statements that may be made by us or on our behalf in
this report otherwise.


                                       18
<PAGE>

     As of  June  30,  2007,  the  Company's  Steelbank  subsidiary  was  not in
compliance  with  covenants  relating  to its  revolving  credit  line  and  was
therefore  technically  in default  with its  agreement  with  LaSalle  Business
Credit,  a division  of ABN AMRO Bank N.V.,  Canada  Branch.  As a result of the
cross default  provisions in the loan  agreements  with LaSalle Bank Midwest and
the Laurus  Master  Trust  ("Laurus"),  the Company is therefore in default with
respect to these  agreements as well, and is subject to default interest expense
at the rate of two  percent  (2%) per annum on the  LaSalle  agreements  and two
percent (2%) per month on the Laurus agreement.

     Because formal waivers were not obtained as of the filing date, the Company
has accrued such default interest  expense  totaling  $761,275 in this form 10-Q
and in management's discussion and analysis that follows.

Overview of Recent Operations

     On a  consolidated  basis,  we generated  revenues of  approximately  $27.2
million for the six months ended June 30, 2007,  as compared  with $38.5 million
for the six months ended June 30, 2006, a decrease of  approximately  29.4%. The
decrease in revenue of $11.3 million was primarily attributable to the continued
weakness in the tubing market and the loss of a significant customer.

     Our operations for the first six months of 2007 reflected a net loss before
taxes of approximately  $4.8 million as compared with a net loss before taxes of
approximately $8.5 million in 2006. The 2006 loss includes a non-cash write-down
of $4.3 million in the carrying value of our Steelbank acquisition.

     The financial results for 2007 compared to 2006 were disappointing, in that
our  emphasis  on reduced  manufacturing  costs and  improved  pricing  controls
resulted in a profit at EWCO's SpaceRak  division,  while our tubing business at
EWCO and Steelbank failed to show such improvements, due primarily to market and
competitive factors.

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

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

Comparison  of  Operating  Results for the Three  Months Ended June 30, 2007 and
2006



                                       19
<PAGE>

Net Revenues

     Listed in the table below are the net revenues and tonnage shipped for the
three-months ended June 30, 2007 and 2006:

<TABLE>
<CAPTION>

<S>                                                      <C>               <C>            <C>               <C>
                                                       2007              2006                     Change
                                                         $                 $              $                   %
                                                   --------------    --------------    -------------     -----------
                                                                        (dollars in thousands)
EWCO Tubular..................................           $ 2,201           $ 5,934        $ (3,733)         (62.9%)
EWCO SpaceRak(R)..............................             6,661             9,224          (2,563)         (27.8%)
Steelbank.....................................             4,368             6,327          (1,959)         (31.0%)
                                                   --------------    --------------    -------------     -----------
Total.........................................           $13,230           $21,485        $ (8,255)         (38.4%)
                                                   ==============    ==============    =============     ===========

                                                       2007              2006                     Change
                                                       Tons              Tons              Tons              %
                                                   --------------    --------------    -------------    ------------
EWCO Tubular..................................             3,010             7,592          (4,582)         (60.4%)
EWCO SpaceRak(R)..............................             4,457             6,752          (2,295)         (34.0%)
Steelbank ....................................             4,205             5,844          (1,639)         (28.1%)
                                                   --------------    --------------    -------------    ------------
Total.........................................            11,672            20,188          (8,516)         (42.2%)
                                                   ==============    ==============    =============    ============
</TABLE>

     Net revenue for the second  quarter of 2007 decreased  approximately  38.4%
over the same period in 2006 from $21.5 million to $13.2 million,  a result from
lower volume on tonnage shipped, which decreased 42.2%.

     EWCO Tubular volume on a tonnage basis decreased by approximately  60.4% in
the three months ended June 30, 2007 compared to the three months ended June 30,
2006.  Net  revenues  of $2.2  million in the second  quarter of 2007 were 62.9%
lower than in 2006. The decline resulted from continued  softening of the tubing
market during the period. Revenue on a per ton basis decreased by 6.5% from $782
in the three  months  ended June 30, 2006 to $731 in the three months ended June
30, 2007.

     EWCO's SpaceRak  engineered racking tonnage volumes declined  approximately
34.0% in the three months ended June 30, 2007 compared to the three months ended
June 30,  2006.  Revenue on a per ton basis  increased  by 9.4% to $1,495 in the
three  months ended June 30, 2007 from $1,366 in the three months ended June 30,
2006, due primarily to tighter pricing controls. Net revenues of $6.7 million in
the three months ended June 30, 2007  represented  a 27.8%  decrease  over three
months ended June 30, 2006 sales of $9.2 million primarily due to a reduction in
major project business.

     Steelbank  Tubular had net  revenues of $4.4  million for the three  months
ended June 30,  2007.  Net  revenues  decreased  31.0% from 2006  levels of $6.3
million as a result of continued  softening of the tubing market and the loss of
FENCEMaster business.

 Cost of Goods Sold and Gross Profit

     Gross  profit for the three  months  ended June 30, 2007 was  approximately
$622,000 or 4.7% of sales compared with $1,463,000 or 6.8% of sales for the same
period  ended 2006.  The main driver was the  reduction  in volume  reducing the
ability to cover fixed manufacturing costs.

     SpaceRak,  although  experiencing a reduction in volume, showed a much more
promising gross profit on sales of 10.3%.

Selling, General and Administrative Expense

     Selling,  general and  administrative  expense  including  depreciation and
amortization  was $1.9 million or 14.1% of sales in Q2 2007  compared  with $2.3
million or 10.9% of sales in Q2 2006. The $424,000  decrease in cost in 2007 was
driven  primarily by  decreases  in bad debt  expense of $112,000,  salaries and
wages of $548,000,  reflecting  the  reduction in office  staff,  and other cost
cutting efforts, offset by increased professional fees of $241,000.


                                       20
<PAGE>

Impairment

     The Company  incurred  two types of  impairment  in Q2 2006.  Goodwill  and
intangibles   related  to  the  Steelbank  and  Haines  Road  acquisitions  were
determined to be impaired based upon an evaluation of these assets  conducted in
Q2 2006  in  accordance  with  provisions  of  SFAS  144.  This  resulted  in an
impairment charge of $3.6 million.

     Additionally,  the Company  incurred an  impairment  charge  related to the
Haines Road location in Mississauga,  Ontario. The Company learned that the site
contained environmental contaminants,  which according to Canadian law would not
require remediation as long as Tarpon (Steelbank) continued to own the property.
However, if the property were sold, remediation would be required. At the end of
Q2 2006, the property was under contract for sale. The prospective  buyer, which
initiated an environmental  survey as part of its due diligence,  discovered the
presence of  contaminants.  The  prospective  buyer is still in  negotiations to
purchase the site,  albeit at a reduced value. By comparing the reduced value to
the  carrying  value,  the  Company  determined  the Haines Road real estate was
impaired by approximately $750,000.

     The Company  did not  recognize  any  impairment  charges  during the three
months ended June 30, 2007.

Other Income and Expense

     Other  income and  expense in Q2 2007 was income in the amount of  $141,000
compared with income of $761,000 in Q2 2006.  In Q2 2006 the Company  realized a
gain on  derivatives  in the amount of $794,000  associated  with the  decreased
value of the conversion  feature of the Laurus Senior  Convertible Term Note. In
Q2 2007 our gain on derivatives was $79,000.

Interest Expense

     Net interest  expense  declined to $1,095,000 in Q2 2007 from $1,247,000 in
Q2 2006.  The change is  attributed to decreases in total debt  outstanding  and
increases  in interest  rates,  as well as penalty  interest  totaling  $372,000
recorded in Q2 of 2006.

Income Taxes

     We have not recognized a potential tax benefit from our net losses, because
of the  uncertainty  regarding our ability to realize  future tax benefit of our
net operating loss carry forwards. This potential loss carry forward if utilized
would be approximately $21.9 million.

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

Net Loss

     Net loss decreased to $2.2 million for the three months ended June 30, 2007
compared with a loss of $5.7 million for the three months ended June 30, 2006 as
a result of the factors cited above.


                                       21
<PAGE>

Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

Net Revenues

     Listed in the tables below are the net revenues and tonnage shipped for the
six-months ended June 30, 2007 and 2006:

<TABLE>
<CAPTION>

<S>                                 <C>              <C>             <C>              <C>
                                 2007              2006                     Change
                            $                 $                $                %
                            --------------    --------------    -------------     -----------
                                                    (dollars in thousands)

EWCO Tubular............            $4,840           $11,933         $(7,093)         (59.4%)
EWCO SpaceRak(R)........            14,386            15,356            (970)          (6.3%)
Steelbank...............             8,001            11,246          (3,245)         (28.9%)
                             --------------    --------------    -------------     -----------
Total...................           $27,227           $38,535       $ (11,308)         (29.3%)
                             ==============    ==============    =============     ===========

                                 2007              2006                     Change
                                 Tons              Tons              Tons              %
                             --------------    --------------    -------------    ------------
EWCO Tubular............             6,189            15,318          (9,129)         (59.6%)
EWCO SpaceRak(R)........             9,881            11,281          (1,400)         (12.4%)
Steelbank ..............             7,864            10,605          (2,741)         (25.9%)
                             --------------    --------------    -------------    ------------
Total...................            23,934            37,204         (13,270)         (35.7%)
                             ==============    ==============    =============    ============
</TABLE>

     Net revenue for the first six-months of 2007 decreased  approximately 29.3%
over the same period in 2006 from $38.5 million to $27.2  million,  while volume
on a tonnage basis decreased 35.7%.

     EWCO Tubular volume on a tonnage basis decreased by approximately  59.6% in
the first six-months of 2007 compared to the first six-months 2006. Net revenues
of $4.8 million in the first  six-months  of 2007 were 59.4% lower than in 2006.
The decline  resulted from  continued  softening of the tubing market during the
six month period.  Revenue on a per ton basis increased by 0.4% from $779 in the
first six-months of 2006 to $782 in the first six-months of 2007.

     EWCO's SpaceRak  engineered racking tonnage volumes declined  approximately
12.4% in the first  six-months of 2007 compared to the first six-months of 2006.
Revenue on a per ton basis  increased  by 7.0% to $1,456 in the first six months
of 2007 from $1,361 in the first six months of 2006,  due  primarily  to tighter
pricing controls.  Net revenues of $14.4 million in the first six-months of 2007
represented  a 6.3%  increase  over first six months 2006 sales of $15.4 million
primarily due to a reduction in major project business.

     Steelbank Tubular had net revenues of $8.0 million for the first six months
of 2007. Net revenues decreased  significantly from 2006 levels of $11.2 million
as a  result  of  continued  softening  of the  tubing  market  and the  loss of
FENCEMaster business.

Cost of Goods Sold and Gross Profit

     Gross  profit  for the  six-months  ended  June  30,  2007 of $1.3  million
decreased by $1.4 million,  or 52.2%,  compared to the six-months ended June 30,
2006. Gross margins  decreased to 4.9% from 7.2% for the  corresponding  periods
due to the  declining  market for  tubing,  which  resulted  in lower  sales and
unabsorbed  manufacturing overhead. Steel prices were fairly stable in the first
six-months of 2007 and thus did not impact margins.


                                       22
<PAGE>

Selling, General and Administrative Expense

     Selling, general and administrative costs, excluding impairment,  decreased
from $5.0 million, or 13.1% of net revenue,  during the first six months of 2006
to $3.8  million,  or 13.9% of net revenue  during the first six months of 2007.
The decrease was  primarily  attributable  to a $228,000  reduction in audit and
other  professional  fees,  a  $905,000  reduction  in  salaries  and  benefits,
reflecting  the  reduction  in office  staff,  a $87,000  reduction  in bad debt
expense,  a $62,000  reduction  in  depreciation,  as well as other cost cutting
efforts begun in 2006.

Impairment

     In the first six months of 2006,  the  Company  recognized  a $4.3  million
impairment charge, as previously  discussed.  There was no impairment charge for
the first six months of 2007.

Other Income and Expense

     Other  income and  expense  changed  from  income of $669,000 to expense of
$213,000 for the six-months ended June 30, 2006 and June 30, 2007, respectively.
The increased  expense is primarily  attributable to increased  finance costs of
$223,000  associated  with the bridge  loan  financing  that was paid off at the
closing of equity financing,  completed in March 2007, loss on extinguishment of
debt of $130,000 and a $645,000  change from a gain from  derivatives to a loss,
offset by a reduction in  miscellaneous  expense of $28,000 and foreign exchange
gains of $88,000.

Income Taxes

     Tarpon has not recognized  potential U.S. or Canadian  federal tax benefits
from its net losses because of the uncertainty  regarding its ability to realize
future tax benefits of its net operating loss carryforwards.  The potential loss
carryforward  at June 30, 2007 is  approximately  $21.9 million.  If the Company
achieves profitability, the net operating loss carryforwards may be available to
offset future income taxes.

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

Net Loss

     Net loss  decreased  $3.7  million to $4.8 million for the six months ended
June 30, 2007,  versus $8.5 million for the  six-months  ended June 30, 2006 for
the reasons described above.

Liquidity and Capital Resources

     As of June 30, 2007, we had a net working  capital  deficit of $11,861,000,
including  cash  and  cash  equivalents  of  $669,000,  accounts  receivable  of
$7,226,000, inventories of $4,374,000 and total current operating liabilities of
$24,456,000, including accounts payable of $8,241,000 and other accrued expenses
of $2,352,000.  Other current  liabilities  at June 30, 2007 include  $6,251,000
outstanding on revolving credit  facilities,  convertible note payable to Laurus
of  $4,766,000,  and  reclassified  term loans of  Steelbank  and EWCO  totaling
$1,749,000,  due to the Company not being in compliance  with certain  financial


                                       23
<PAGE>

covenants, and a bridge loan payable of $1,038,000.

     The Company has $12,892,000 of debt maturing within the next twelve months.
The Company is in the process of obtaining  equity financing for working capital
needs and  refinancing  its short term debts, on terms favorable to the Company.
There can be no assurance that adequate  financing will be obtained,  failing to
meet the Company's  financing  needs will have a material  adverse effect on its
operations and continuance of business operations.

Cash Flows From Operating Activities

     Net cash provided by the Company's  operations  during the first six months
of 2007 was  $461,000  compared  to cash used in the first six months of 2006 of
$3,985,000.  The  improvement is primarily due to improved timing in billing and
reduction in inventories.

     In the six  months  ended  June 30,  2007,cash  was used  primarily  by (1)
$4,816,000 of losses, (2) a $1,000,000  decrease in accounts payable and accrued
expenses,  offset by (3) a  $1,671,000  decrease in accounts  receivable,  (4) a
$2,574,000 decrease in inventories, (5) a $521,000 decrease in other assets, (6)
a $60,000 increase in advance payments from customers,  a (7) $819,000 reduction
in finance  costs,  (8)  $387,000  in  depreciation  and  amortization,  and (9)
$245,000 in other non-cash expenses.

Cash Flows From Investing Activities

     The  Company's  investing  activities  in the first six months of 2007 used
$65,000 in cash for capital  expenditures  compared to  $1,298,000  for the same
period in 2006. The 2006 activities were increased by the payments made relating
to FENCEMaster.

Cash Flows From Financing Activities

     The Company's  financing  activities used $945,000 of cash in the first six
months of 2007  compared to  $1,574,000  used in 2006.  Cash was provided by (1)
$2,125,000  from issuance of equity  securities and (2) $263,000 of net proceeds
from  short  term  obligations,  and  used  for (3)  net  repayments  on  credit
facilities of $2,854,000, (4) repayment of long-term obligations of $328,000 and
(4) payment of financing costs of $151,000.

Existing Financing Arrangements

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


Critical Accounting Policies and Use of Estimates

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

Contractual Obligations

     As of March 31,  2007,  Steelbank  was in  violation  of certain  financial
covenants of its Loan Agreement,  resulting primarily from the losses sustained.


                                       24
<PAGE>

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

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


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

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

     We are subject to commodity price risk, primarily with respect to purchases
of steel.  Purchased steel represents the most significant portion of EWCO's and
Haines  Road's  cost of goods  sold.  As a result,  fluctuations  in the cost of
purchased  steel,  which  can  be  volatile  and  cyclical  in  nature,  have  a
significant impact on our margins both positively and negatively.

     Significant  changes in the cost of steel products can cause changes in the
buying  patterns of customers.  In a declining  market,  many  customers  become
conservative,  reduce steel purchases and drive down  inventories.  The opposite
tends to occur in a rising market.  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.  For the first six months  ended June 30,  2007,  steel prices
have remained relatively stable.

     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.


                                       25
<PAGE>

     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>

--------------------------------------------------------------------------------
                                                        June 30, 2007
                             Expected Maturity Dates
                         (U.S.$ equivalent in thousands)
--------------------------------------------------------------------------------
<S>                        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
                                                                                  There-                   Fair
                             2007       2008       2009       2010       2011     after        Total       Value
                             ----       ----       ----       ----       ----     -----        -----       -----
Short Term Debt:
Variable Rate (U.S.$)         $3,576                                                            $3,576      $3,576
Average Interest rate          10.3%                                                             10.3%
-------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Variable Rate (Cdn.$)         $2,675                                                            $2,675      $2,675
Average interest rate           9.5%                                                              9.5%
-------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Fixed Rate (U.S.$)            $1,038                                                            $1,038      $1,038
Average Interest rate          12.0%                                                             12.0%
-------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Long-Term Debt
Variable Rate (U.S. $)        $5,904       $140       $232                                      $6,276      $6,276
Average interest rate          10.3%      10.3%      10.3%                                       10.3%
-------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Variable Rate (Cdn. $)          $397       $347       $347                                      $1,091      $1,091
Average interest rate           9.5%       9.5%       9.5%                                        9.5%
-------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Fixed Rate (U.S. $)               $7                                                                $7          $7
Average interest rate           5.2%                                                              5.2%
-------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
</TABLE>

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

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

                                                   June 30, 2007
                                           (U.S.$ equivalent in thousands)
                                   Carrying Amount                 Fair Value
Steel Inventories.....                 $4,380                        $4,380


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 June 30,  2007.  Based on their  evaluation  and
review, our principal  executive and principal financial officers have concluded
that these  controls  and  procedures,  as  designed  and  implemented,  are not
operating  effectively.  There  was no  change  in  our  internal  control  over
financial reporting  identified in connection with such evaluation that occurred
during  our  second  fiscal  quarter  ended  June 30,  2007 that has  materially
affected,  or is reasonably  likely to materially  affect,  our internal control


                                       26
<PAGE>

over financial reporting, except that we hired additional staff, which will help
improve our internal controls over financial reporting.

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

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

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

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

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

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

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

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

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

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

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


                                       27
<PAGE>

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

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

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

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

     M.   A lack of periodic reviews over account reconciliations.

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

     O.   An  inability to implement  the  provisions  of FIN 48 by the required
          effective date.

     The Company is required to comply with the  provisions of Sections 302, 906
and 404 of the Sarbanes-Oxley Act. Section 404 requires the Company to document,
test, and evaluate its internal  controls over financial  reporting and have its
independent  auditor  conduct  an  evaluation  of  and  report  on  management's
evaluation process in the near future. In addition,  we will also be required to
audit  and  report on the  effectiveness  of  internal  controls.  All  material
weaknesses  identified  in this  process  are  required to be  disclosed  in the
Company's  reporting  with the  Securities and Exchange  Commission  (SEC).  Our
experience with is documentation,  testing and audit process has identified that
significant  resources are required to complete  this exercise and  considerable
costs  are  incurred.  We do not  believe  that the  Company  currently  has the
resources or knowledge to adequately complete this process which could result in
a failure to file the appropriate reports with the SEC.

     As  a  public  Company,  we  have  significant  requirements  for  enhanced
financial  reporting and internal controls.  We are taking steps to mitigate the
material  weaknesses  listed above by December 31, 2007, but it is possible that
they might not be completed by then.

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


                                       28

<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

     Please  refer to,  and  carefully  consider,  the "Risk  Factors  and Risks
Related to Our Business"  section listed in our Annual Report on Form 10-K/A for
the year ended December 31, 2006,  together with the cautionary  statement under
the caption "Cautionary  Statement Regarding Forward Looking Statements" and the
other information  included in this report. For information on significant risks
affecting  our  business,  including,  but not  limited  to,  our losses and the
financing  requirements  we are  experiencing.  If any of these  risks  actually
occur,  our  business,  financial  condition or results of  operations  could be
materially adversely affected.

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

ITEM 6.   EXHIBITS

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



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<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:  August 17, 2007                     By:   /s/ James W. Bradshaw
                                              ------------------------------
                                              James W. Bradshaw
                                              Its:  Chief Executive Officer and
                                              Chief Financial Officer


                                       30
<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 Financial 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 Financial Officer
          Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002.



                                       1