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

                                    FORM 10-Q/A

                                   (Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934
For the quarterly period ended September 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 September
30, 2007 was 10,470,654.

<PAGE>

                             TARPON INDUSTRIES, INC.

                          QUARTERLY REPORT ON FORM 10-Q/A

                    FOR THE QUARTER ENDED SEPTEMBER 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


Explanatory Note:

     The  previously  filed 10-Q was not  reviewed by the  Company's  registered
independent public accountants prior to filing. An independent  auditors' review
is required by Rule 10-01(d) of Regulation S-X.  Generally,  no attempt has been
made in this Form 10-Q/A to modify or update other disclosures  presented in the
original  report on Form 10-Q except to address  comments made by our registered
independent  public  accountants.  This Form 10-Q/A  generally  does not reflect
events  occurring after the filing of the original Form 10-Q or modify or update
those disclosures affected by subsequent events.  Accordingly,  this Form 10-Q/A
should  be  read in  conjunction  with  the  Company's  filings  made  with  the
Securities and Exchange Commission subsequent to the filing of the original Form
10-Q, including any amendments to those filings.


                                       1
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                             TARPON INDUSTRIES, INC.

INDEX TO FINANCIAL STATEMENTS

                                                                            Page

Consolidated Balance Sheets --- September 30, 2007 (unaudited) and
     December 31, 2006.........................................................3
Consolidated Statements of Operations (unaudited) --- For the Three and
     Nine Months Ended September 30, 2007 and 2006.............................4
Consolidated Statements of Cash Flows (unaudited) --- For the Nine Months
     Ended September 30, 2007 and 2006.........................................5
Notes to Consolidated Financial Statements.....................................6





                                       2
<PAGE>

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                       September 30,         December 31, 2006
                                                                                           2007
ASSETS:                                                                                 (unaudited)

CURRENT ASSETS:
<S>                                                                                <C>                    <C>
Cash and cash equivalents                                                          $           97,750     $            880,515
Accounts receivable (less allowance for doubtful accounts for 2007 of
$151,423 and for 2006 of $189,247)                                                          4,468,674                6,071,499
Inventories                                                                                 2,168,816                4,123,318
Assets of discontinued operations                                                           4,056,607               10,469,277
Other current assets                                                                          469,619                  792,584
                                                                                      ----------------       ------------------
       Total current assets                                                                11,261,466               22,337,193

Property plant and equipment - net                                                            414,610                  463,446
Deferred financing costs - net                                                              3,649,479                1,315,545
                                                                                      ----------------       ------------------
TOTAL ASSETS                                                                       $       15,325,555     $         24,116,184
                                                                                      ================       ==================

LIABILITIES AND SHAREHOLDERS' DEFICIT:
CURRENT LIABILITIES:
Short-term debt                                                                    $        9,468,705     $          6,718,115
Term debt classified as current                                                             4,914,558                5,287,021
Accounts payable - trade                                                                    5,954,658                8,293,014
Liabilities of discontinued operations                                                      4,082,351                6,474,406
Other current liabilities                                                                   1,276,446                1,089,913
                                                                                      ----------------       ------------------
       Total current liabilities                                                           25,696,718               27,862,469

Long-term debt less term debt classified as current                                                --                    2,643
Other long-term liabilities                                                                     1,680                  108,000
                                                                                      ----------------       ------------------
TOTAL LIABILITIES                                                                          25,698,398               27,973,112
                                                                                      ----------------       ------------------


SHAREHOLDERS' DEFICIT:
Preferred shares; no par value, 2,000,000 shares authorized; no shares issued
at September 30, 2007 and at December 31, 2006                                                     --                       --
Common shares; no par value, 30,000,000 shares authorized at September 30, 2007
and 20,000,000 shares authorized at December 31, 2006; issued and outstanding,
10,470,654 shares at September 30, 2007 and 4,993,712 shares at December 31,
2006                                                                                       22,164,136               16,856,821
Accumulated deficit                                                                       (32,536,979)            (20,713,749)
                                                                                      ----------------       ------------------
          Total shareholders' deficit                                                     (10,372,843)              (3,856,928)
                                                                                      ----------------       ------------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                                        $       15,325,555     $         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 all 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)

                                                      Three Months Ended September 30,        Nine Months Ended September 30,
                                                      --------------------------------        -------------------------------
                                                           2007               2006               2007                2006
                                                      ---------------     --------------    ---------------    -----------------

<S>                                                <C>                 <C>               <C>                <C>
Sales, net of customer discounts                   $       8,726,816   $     14,267,073  $      27,694,795  $        41,344,847

Cost of goods sold                                         8,143,338         12,940,198         25,500,816           38,153,496
                                                      ---------------     --------------    ---------------    -----------------

          Gross Profit                                       583,478          1,326,875          2,193,979            3,191,351


Selling, general and administrative expenses               1,089,421          1,697,283          4,288,339            5,869,722
                                                      ---------------     --------------    ---------------    -----------------

OPERATING LOSS                                             (505,943)          (370,408)        (2,094,360)          (2,678,371)

OTHER INCOME (EXPENSE):
Miscellaneous income (expense)                                97,949           (18,684)             94,257             (44,006)
Loss on extinguishment of debt                                    --                  -          (129,853)                    -
Gain on derivatives                                           57,990            268,874            106,320              961,874
                                                      ---------------     --------------    ---------------    -----------------
          Total other income (expense)                      155,939             250,190             70,724              917,868
                                                      ---------------     --------------    ---------------    -----------------

INTEREST EXPENSE, NET:
Interest                                                   1,986,168          (763,129)          4,139,386            1,567,591
Interest income                                                  (2)              (120)                (4)             (35,155)
                                                      ---------------     --------------    ---------------    -----------------
          Total interest expense, net                      1,986,166          (763,249)          4,139,382            1,532,436
                                                      ---------------     --------------    ---------------    -----------------

(LOSS) INCOME FROM CONTINUING OPERATIONS                 (2,336,170)            643,031        (6,163,018)          (3,292,939)

(LOSS) INCOME FROM DISCONTINUED OPERATIONS               (4,671,130)             73,669        (5,660,212)          (4,533,885)
                                                      ---------------     --------------    ---------------    -----------------
NET (LOSS) INCOME                                  $     (7,007,300)   $        716,700  $    (11,823,230)  $       (7,826,824)
                                                      ===============     ==============    ===============    =================

NET (LOSS) INCOME PER COMMON SHARE - BASIC AND
DILUTED
Continuing operations                              $          (0.22)   $           0.08  $          (0.74)  $            (0.69)
Discontinued operations                                       (0.45)               0.01             (0.67)               (0.96)
                                                      ---------------     --------------    ---------------    -----------------
Total                                              $          (0.67)   $           0.09  $          (1.41)  $            (1.65)
                                                      ===============     ==============    ===============    =================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                  10,395,002          4,929,973          8,363,774            4,750,930
OUTSTANDING                                           ===============     ==============    ===============    =================
</TABLE>


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



                                       4

<PAGE>

<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                                                 Nine Months Ended September 30,
                                                                            ---------------------------------------
                                                                                 2007                   2006
                                                                            ---------------       -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                                      <C>                 <C>
Net Loss                                                                 $    (11,823,230)   $            (7,826,824)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
     Loss from discontinued operations                                           5,660,212                  4,533,885
     Amounts provided by (used in) discontinued operations                       3,203,295                (2,573,171)
     Depreciation and amortization                                                  69,178                     85,893
     Amortization of deferred finance costs                                      1,618,319                    442,179
     Accretion of note discount and other charges                                  419,319                    354,793
     Stock option expense                                                          168,145                     99,689
     Stock issued as compensation                                                       --                     76,922
     Non-employee stock options                                                  1,701,205                         --
     Loss on extinguishment of debt                                                129,853                         --
     Gain on derivative instrument                                               (106,320)                  (961,874)
     Changes in assets and liabilities:
          Accounts receivable                                                    1,602,825                (2,516,236)
          Inventories                                                            1,960,044                    (2,622)
          Other current assets                                                     322,965                  (421,932)
          Customer advance payments                                                     --                    146,778
          Accounts payable and other current liabilities                       (2,151,821)                  1,151,645
                                                                            ---------------     ----------------------
               Net cash provided by (used in) operating activities               2,773,989                (7,410,875)

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition costs                                                                       --                   (35,861)
Payments of FenceMaster obligations                                                     --                  (984,733)
Capital expenditures                                                              (20,342)                         --
Amounts used in discontinued operations                                                 --                  (283,258)
                                                                            ---------------     ----------------------
     Net cash used in investing activities                                        (20,342)                (1,303,852)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common shares (net of issuance costs of
$490,658)                                                                        2,124,701                         --
Financing costs                                                                (2,723,840)                         --
Net (payments) borrowings on credit facilities                                 (1,584,753)                  1,253,965
Proceeds from issuance of short-term obligations                                 3,400,000                         --
Repayment of short-term obligations                                              (775,000)                  (187,500)
Repayment of long-term obligations                                               (794,425)                  (217,858)
Amounts (used in) provided by discontinued operations                          (3,183,095)                    653,758
                                                                            ---------------     ----------------------
     Net cash (used in) provided by financing activities                       (3,536,412)                  1,502,365

                                                                            ---------------     ----------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                        (782,765)                (7,212,362)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                     880,515                  7,311,922
                                                                            ---------------     ----------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                 $          97,750   $                 99,560
                                                                            ===============     ======================

Supplemental disclosures of cash flows information:
     Cash paid during the period for interest                            $       2,231,632   $                770,618
Non-cash transactions:
     Stock issued as compensation                                        $               -                     20,000
     Stock issued in settlement 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,   except  for  those  adjustments  related  to
discontinued  operations.  Our operating results for the nine-month period ended
September  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  $31.9 million from its inception on January
16, 2002 through  September 30, 2007 and has negative  working  capital of $14.4
million and is in violation of its debt  covenants as of September  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.

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

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

     Closing of Steelbank
     --------------------
     On September 20, 2007, the Company's Steelbank subsidiary filed a Notice of
     Intention to make a Proposal  pursuant to the Bankruptcy & Insolvency  Act.
     A. Farber & Partners  Inc. was  appointed  Interim  Receiver by the Ontario
     superior  Court  of  Justice  for  the  purpose  of  conducting  a sale  or
     liquidation of Steelbank,  which has recorded  losses totaling in excess of
     $14 million since its inception.


                                       6
<PAGE>

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

     There can be no  assurance  that the  Company  will be able to achieve  its
business plan objectives or that it will be able to generate cash flows from its
operations.  If the  Company  is  unable to  generate  adequate  funds  from its
operations or raise  additional  funds, it may not be able to repay its existing
debt or fund  its  operations.  The  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:

                            September 30,        December 31,
          INVENTORIES:          2007                 2006
                             (unaudited)
                           -------------         -----------
    Raw material              $ 896,431          $1,814,808
    Work-in-process             178,505             481,858
    Finished goods            1,027,724           1,703,988
    Supplies                     66,156             122,664
                           -------------        -----------
    Total                   $ 2,168,816          $4,123,318
                           =============        ===========

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

                 PROPERTY PLANT AND EQUIPMENT:                 September 30,           December 31,
                                                                   2007                   2006
                                                                (unaudited)
                                                          -----------------     --------------------
<S>                                                               <C>                      <C>
Machinery and equipment                                           $450,132                 $395,714
Leasehold improvements                                             180,378                  214,454
Computer equipment                                                 127,069                  127,069
Transportation equipment                                            21,815                   21,815
Furniture and fixtures                                               9,217                    9,217
                                                          -----------------     --------------------
Total                                                              788,611                  768,269
Less accumulated depreciation and
amortization                                                      (374,001)                (304,823)
                                                          -----------------     --------------------
Net property, plant and equipment                                 $414,610                 $463,446
                                                          =================     ====================
</TABLE>

5.  Debt

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


                                       7
<PAGE>

Short Term Debt

                                       September 30,            December 31,
                                           2007                     2006
                                        (unaudited)
                                       ----------------     -----------------
          Revolving Credit Facility        $ 4,403,362            $5,943,115
          Bridge loan payable                1,700,000               775,000
          Laurus term note "A"               1,700,000                    --
          Laurus term note "B"               1,665,343                    --
                                       ----------------     -----------------
          Total                             $9,468,705            $6,718,115
                                       ================     =================


Term Debt, Classified as Current
<TABLE>
<CAPTION>

                                                                  September 30,         December 31,
                                                                      2007                  2006
                                                                  (unaudited)
                                                                 ----------------     ---------------
<S>                                                             <C>                  <C>
       EWCO term loan                                                   $     --            $789,933
       Convertible debt (less discount of $716,251 at
       September 30, 2007 and $1,135,570 at December 31, 2006)         4,908,749           4,489,430
       Other                                                               5,809              10,301
                                                                 ----------------     ---------------
       Subtotal                                                        4,914,558           5,289,664

       Less term debt classified as current                          (4,914,558)         (5,287,021)
                                                                 ----------------     ---------------
       Long-term debt                                                   $     --              $2,643
                                                                 ================     ===============
</TABLE>

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

2007                                         $5,630,144
2008                                                665
2009                                                 --
                                            ------------
Total                                        $5,630,809
                                            ============


Laurus Master Credit Agreement

     Tarpon entered into a Master Credit  Agreement ("The  Agreement") on August
9, 2007,  including a revolving credit  agreement  (Revolver) up to $10,000,000,
subject to a borrowing based on capital availability,  inventory and reserves, a
$1,700,000  term loan (Term Loan A) and a $1,700,000 term loan (Term Loan B). As
of September  30, 2007,  the Company had no excess  availability  for  borrowing
under its revolving credit agreement.

     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.

                                       8
<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,  its  subsidiaries,   to,  among  other  things,  guarantee  additional
indebtedness,  incur  indebtedness,  create liens,  pay dividends,  make certain
types of investments,  enter into transactions with affiliates or enter into any
transaction  outside the  ordinary  course of  business.  The Company was not in
violation of any such covenants as of September 30, 2007.

     The Company  granted Laurus Master Fund Ltd. a security  interest in all of
their  respective  assets  including,  but not limited to, accounts  receivable,
inventory,   machinery,   equipment,  general  intangibles,  stock  and  deposit
accounts. In addition, the Company issued warrants to Laurus Master Fund Ltd. to
purchase  2,300,000  shares of the common  stock of the  Company for an exercise
price of $.01 a share and a warrant to purchase  2,300,000  shares of the common
stock of Tarpon  Industries,  Inc.  for an exercise  price of $.25 a share.  The
warrants have been valued at $1,629,000  using the  Black-Scholes  model with an
interst rate of 4%,  volatility of 70%, zero  dividends and expected term of ten
years. The total value has been recorded as a deferred finance cost and is being
amortized using the effective interest method over the term of the related debt.

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

     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",  as well as "Note 6 - Debt" of the "Notes to Consolidated Financial
Statements" as reported in the Company's December 31, 2006 Form 10-K/A.


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.  The Note is payable in equal  monthly
installments of principal totaling $187,500  commencing on April 1, 2006 through
the maturity  date and bears  interest at prime plus 2% (9.75% at September  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.

                                       9
<PAGE>

     In  connection  with  this  financing,   the  Company  recorded   discounts
aggregating   approximately   $1,681,000,   of  which   approximately   $608,000
represented the value of 390,000 warrants using the Black-Scholes  model with an
interest rate of 4.4%,  volatility  of 60%, zero  dividends and expected term of
seven years; and  approximately  $1,073,000  represented the conversion  feature
inherent  in the  instrument.  Such  discounts  are  being  amortized  using the
effective  interest  method over the term of the related  debt.  The  conversion
feature  itself was deemed to be a derivative  under FASB Statement No. 133. The
Company  estimated the fair value of the conversion  feature to be $13,000 as of
September 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
$1,680 as of  September  30,  2007 and  $108,000 as of December  31,  2006.  The
$106,320  decrease in fair value during the nine months ended September 30, 2007
is included in the  overall  "Gain 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%  (9.75%  on  September  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 September  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.
LaSalle  declared the Company in default on October 2, 2006,  thus triggering an
event of default with Laurus,  for which the Company has been  accruing  default
interest on a monthly basis. At the closing of the Master Credit  Agreement with
Laurus on August 9, 2007,  default  interest  accrued to that date of $1,231,000
was paid with the  proceeds  of Term Note B. The results of  operations  for the
first nine months of 2007 include  $1,101,000 of default interest expense,  with
$194,000 due to Laurus as of September 30, 2007.

Bridge Notes

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

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


                                       10
<PAGE>

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

6.  Leases

     Facilities and equipment are leased under  arrangements  that are accounted
for as operating  leases.  Total rental expense was $66,866 and $206,194 for the
three and nine months ended September 30, 2007, respectively.  Steelbank's lease
with Agellan Capital,  which extends to October, 2016 at the rate of $39,000 per
month,  has been  guaranteed  by the Company.  By  agreement,  Agellan must seek
another tenant or sell the  facilities,  at which time the Company's  obligation
will cease.


     The 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 September 30, 2007, including the lease with Agellan Capital:

Year                                  Amount
----                             ------------
2007                                 $249,375
2008                                  719,010
2009                                  715,431
2010                                  706,040
2011                                  707,299
Thereafter                          2,650,035
                                 -------------
Total                              $5,747,190
                                 =============

7.   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


                                       11
<PAGE>

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>

                                                Three Months Ended September 30,     Nine Months Ended September 30,
                                                      2007               2006              2007              2006
                                                      ----               ----              ----              ----

<S>                                             <C>              <C>                 <C>             <C>
Advisory Services and Expenses                  $            -   $          64,133   $       44,515  $          200,325
                                                   ------------     ---------------     ------------    ----------------
     TOTAL                                      $            -   $          64,133   $       44,515  $          200,325
                                                   ============     ===============     ============    ================
</TABLE>


     During the nine month period ended  September 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  $295,640.  As of  September  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 September 30, 2007,
these warrants were marked to market with a value of $1,680 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
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 July of 2007  Gunnar  received  170,000  warrants  with a fair
market value of $72,000 in  connection  with the bridge  financing  completed on
July 5, 2007.

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


                                       12
<PAGE>

     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>

                                        Three Months Ended September 30,    Nine Months Ended September 30,
                                              2007              2006             2007             2006
                                              ----              ----             ----             ----

<S>                                     <C>                                <C>             <C>
Bridge Loan Warrants                    $                $              -  $      72,115   $             -
                                                18,139
Private Placement Warrants                      14,252                  -        266,771                 -
Fees and Expenses                               88,700             22,500        568,818            68,500
                                           ------------     --------------    -----------     -------------
     TOTAL                              $      121,091   $         22,500  $     907,704   $        68,500
                                           ============     ==============    ===========     =============
</TABLE>


8. 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.  During the three months
ended  September  30,  2007,  the Company  granted  options  for 10,000  shares,
exercisable at $0.70 per share, to new director Frank Gesuale.  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.

     Activity under these Plans is shown in the following tables:

                                       13
<PAGE>
<TABLE>
<CAPTION>

                                     Nine Months Ended September 30, 2007      Nine Months Ended September 30, 2006
                                     ------------------------------------      ------------------------------------
                                                    Weighted                                  Weighted
    Shares Subject to Option         Shares          Average     Aggregate     Shares          Average     Aggregate
                                                    Exercise     Intrinsic                    Exercise     Intrinsic
                                                      Price      (1) Value                      Price      (1) Value
---------------------------------- ----------- --- ------------ ------------ ----------- --- ------------ ------------
<S>                                   <C>       <C>                             <C>       <C>
Outstanding at beginning of           673,190   $         2.88       -          415,085   $         5.50      --
period
New Grants (based on fair value
of common stock at dates of            10,000   $         0.70       -          100,000   $         2.18      --
grant
Exercised                                   -   $            -       -               --   $           --      --
Expired                                     -   $            -       -               --   $           --      --
Forfeited                           (108,690)   $         4.22       -        (141,895)   $         5.50      --
                                   -----------                               -----------
Outstanding at end of period          574,500   $         2.60       -          373,190   $         4.61      --
Exercisable at end of period          179,667   $         5.07       -          181.063   $         5.34      --
</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 September  30, 2007 was $119,390.
At September  30,  2007,  the total  remaining  unrecognized  compensation  cost
related to non-vested stock options amounted to $159,020 which will be amortized
over a weighted average period of 8.9 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:

                                                         Nine Months Ended
                                                     9/30/2007        9/30/2006
                                                     -----------     -----------
   Weighted Average Estimated Fair Value Per
        Share of Options Granted During the        $    0.70      $     1.08
        Period
   Assumptions:
        Amortized dividend yield                        0.00%           0.00%
        Common Stock price volatility                  70.00%          60.00%
        Risk free rate of return                        4.00%           5.00%
        Expected option term (in years)                    3               3

     The following table summarizes information about stock options at September
30, 2007:
<TABLE>
<CAPTION>

                           OPTIONS OUTSTANDING                                OPTIONS EXERCISABLE
                           -------------------                                -------------------
                            Weighted                Weighted                  Weighted                   Weighted
   Range of      Shares     Averager                Average                   Average                    Average
   Exercise                 Remaining               Exercise                  Remaining                  Exercise
    Prices       Shares     Contractual Life        Price           Shares    Contractual Life           Price
--------------- ---------- --------------------    ---------------- --------- --------------------     -----------

<C>              <C>              <C>              <C>              <C>          <C>                   <C>
$0.70 to         574,500          8.31             $    2.60        179,667      7.20                  $  5.07
$5.50
</TABLE>

     At September 30, 2007,  options  covering 425,500 shares were available for
future grants under the 2004 Plan.

     The following  table  provides  additional  information  about  outstanding
warrants at September 30, 2007  categorized  by exercise  price at date of grant
using the Black-Scholes model:

                                       14
<PAGE>
<TABLE>
<CAPTION>

                                                                                                 Weighted
                                                                                                 Average
                                                        Warrants            Expiration            Exercise
       Party                                           Outstanding             Date                Price
       ------------------------------------------    ----------------     ----------------       -----------
       <S>                                             <C>                <C>                 <C>
       2004 Gunnar - Bridge Financing                       146,521*        12/31/2010        $       1.05**
       2004 Private Placement                             2,681,165*        12/13/2012                0.78**
       2005 Gunner - IPO                                    251,565*        04/05/2009                0.95**
       2005 Gunnar - Laurus
       Convertible Note                                     300,000         04/05/2009                0.91
       2005 Laurus Warrants Associated
       with Convertible Note                                390,000         02/17/2010                3.08
       2006 Bridge Note Holders                             775,000         12/07/2011                0.91
       2006 Gunnar - Bridge Financing                       260,755*        12/07/2011                0.30**
       2007 Gunnar - Private Placement                      276,960*        01/24/2012                0.35**
       2007 Gunnar - Private Placement                      770,204*        03/23/2012                0.40**
       2007 Gunnar - Private Placement                       64,124*          4/4/2012                0.36**
       2007 Gunnar - Bridge Financing                       376,796*         6/26/2012                0.22**
       2007 Laurus Warrants Associated
            with LaSalle refinance                        2,300,000         08/09/2014                0.25
       2007 Laurus Warrants Associated
            with LaSalle refinance                        2,300,000         No expiration             0.01
                                                     ----------------
       Total                                             10,893,090
                                                     ================
</TABLE>

   *  Increased from original amount due to antidilutive provisions.
  **  Decreased from original amount due to antidilutive provisions.

9.   Discontinued Operations

     On September 20, 2007, the Company's Steelbank subsidiary filed a Notice of
Intention to make a Proposal  pursuant to the  Bankruptcy  & Insolvency  Act. A.
Farber & Partners Inc. was appointed  Interim  Receiver by the Ontario  superior
Court  of  Justice  for the  purpose  of  conducting  a sale or  liquidation  of
Steelbank, which has recorded losses totaling in excess of $14 million since its
inception.  The Company recorded an impairment charge of $4.2 million,  which is
included in loss from  discontinued  operations in the third quarter of 2007, in
order  to  adjust  its  inventory  and  property,  plant  and  equipment  to net
realizable value.

     The components of assets of discontinued operations were as follows:


 --------------------------------------------  ----------------  ---------------
                                               September 30,     December 31,
                                               2007              2006
 --------------------------------------------  ----------------  ---------------
 Cash                                          $       103,670   $      495,196
 --------------------------------------------  ----------------  ---------------
 Accounts receivable                                 1,867,807        2,536,776
 --------------------------------------------  ----------------  ---------------
 Inventory                                             625,765        2,636,244
 --------------------------------------------  ----------------  ---------------
 Other current assets                                  119,036           48,675
 --------------------------------------------  ----------------  ---------------
 Property, plant and equipment,net                   1,340,329        4,682,346
 --------------------------------------------  ----------------  ---------------
 Other assets                                               --           70,040
 --------------------------------------------  ----------------  ---------------
                                               $     4,056,607   $   10,469,277
 --------------------------------------------  ================  ===============


                                       15
<PAGE>

The components of liabilities of discontinued operations were as follows:


--------------------------------------------  --------------  ---------------
                                              September       December 31,
                                              30, 2007        2006
--------------------------------------------  --------------  ---------------
Note payable - bank                           $   1,232,737   $    2,860,533
--------------------------------------------  --------------  ---------------
Notes payable - other                                    --          751,307
--------------------------------------------  --------------  ---------------
Accounts payable                                  1,950,708        1,854,472
--------------------------------------------  --------------  ---------------
Accrued expenses                                    165,540          158,382
--------------------------------------------  --------------  ---------------
Accumulated other comprehensive income*             733,366          429,712
--------------------------------------------  --------------  ---------------
Current maturities of long-term debt                                 420,000
--------------------------------------------  --------------  ---------------
                                              $   4,082,351   $    6,474,406
--------------------------------------------  ==============  ===============

*  Reclassified from shareholders' deficit.

Discontinued  operations  had  revenues  of $2.6  million  and $5.7 and net loss
(income) of $4.7 million and $(74,000) for the three months ended  September 30,
2007 and 2006, respectively, and revenues of $10.8 million and $17.2 million and
net loss of $5.7 million and $4.5  million for the nine months  ended  September
30, 2007 and 2006, respectively.

10.   Contingencies

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

11.   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 September  30, 2007 is  approximately  $19 million  under rules
established by the Internal Revenue Code, changes in the Company's ownership may
adversely effect how the Company is able to utilize these net operating  losses.
If the Company achieves profitability,  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.


                                       16
<PAGE>

12.  Subsequent Events

Communication with the American Stock Exchange

     On October 31, 2007, the Company  received a letter from the American Stock
Exchange  ("AMEX")  indicating  that the AMEX listing  qualifications  staff had
determined  to  initiate  delisting  proceedings  against the Company due to the
Company's  inability to maintain  compliance with certain AMEX continued listing
requirements pursuant to the AMEX Company Guide Section 1009.

     Specifically,  the  AMEX  staff  determined  that  the  Company  was not in
compliance  with Section  1003(a)(iv)  of the AMEX Company  Guide in that it has
sustained  substantial  losses in  relation  to its  overall  operations  or its
existing financial resources,  or its financial condition has become so impaired
that it appears  questionable,  in the  opinion of the AMEX,  as to whether  the
company will be able to continue  operations  and meet its  obligations  as they
mature.

     Notwithstanding  the  (i)  Company's  recent  shut  down  of  its  Canadian
subsidiary,  which has been  responsible  for more  than  half of the  Company's
operating  losses,  the (ii) recent  restructuring of the Company's senior debt,
and the (iii) recent 100% payoff of the Company's  secured  Steelbank  debt, the
AMEX  determination  was made after the Company had failed to regain  compliance
with the continued  listing  standards by the September 30, 2007  deadline,  and
following  the staff's  review of the  Company's  previously  submitted  plan of
compliance  and subsequent  public  filings.  The Company had  previously  shown
progress and had been granted extensions since the first due date in 2006.

     The  Company's  Board of Directors  decided not to exercise  the  Company's
right to appeal the staff's determination and, consequently, did not contest the
delisting  of its  securities  from AMEX which  became  effective on November 7,
2007.  The Company was able to continue  trading on AMEX under its "TPO"  symbol
until  November  14,  2007,  at which time it began  trading on the OTC Bulletin
Board ("OTC-BB") under the symbol "TPOS".

Authorized Shares Increased

     On November 14, 2007,  the Company held a meeting of the  Shareholders  for
the purpose of  approving  an  amendment  to its  Articles of  Incorporation  to
increase the number of authorized  shares of Common Stock from 30 million to 100
million  shares.  Shareholders  holding  7,384,970 of the shares of Common Stock
voted in favor of approving the amendments to the Articles of  Incorporation  to
increase the number of authorized shares,  which was sufficient for the approval
of the proposal.

Sale of Steelbank Assets

     On October 12,  2007,  the  Company,  through its wholly  owned  subsidiary
Steelbank  Tubular,  Inc.,  through its  interim  receiver A. Farber & Partners,
Inc., entered into an agreement with Asset Engineering  Corporation  ("AEC") for
AEC to purchase certain assets of Steelbank,  including all furniture, fixtures,
machinery,   equipment,  computers,  warehouse  racking  and  material  handling
equipment.  The sale yielded gross  proceeds of Cdn  $1,405,800 and net proceeds


                                       17
<PAGE>

after  liquidation and receiver fees of Cdn  $1,340,329,  which were remitted to
the  Registrant's  senior  lender,  Laurus  Master Fund,  Ltd.  ("Laurus"),  and
received on October 23,  2007.  The net  proceeds  were used to (i) pay past due
accrued interest through October 31, 2007 on subordinated debt with Laurus; (ii)
prepay  November 2007 and December 2007 interest on the  subordinated  debt; and
(iii) pay down nearly $800,000 of existing principal on the Laurus  subordinated
note. Ongoing receipts from accounts  receivable and inventory will be deposited
into the  Receiver's  account and remitted  daily to Laurus to pay down existing
debt.  AEC remains  responsible  for any taxes due in connection  with the sale,
transfer and conveyance of the Subject Assets.

Tarpon,  as  guarantor,  remains  liable to Agellan  Capital for the rent on the
former  Steelbank  facilities  through the lease  expiration  on November  2016,
unless the facilities are leased to a new tenant or sold by Agellan Capital.

Amendment to Secured Convertible Term Note

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

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

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

Amendment to Bridge Loan Agreement

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


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.

Overview of Recent Continuing Operations

     On a  consolidated  basis,  we generated  revenues of  approximately  $27.7
million for the nine months ended  September  30, 2007,  as compared  with $41.3
million  for  the  nine  months  ended   September   30,  2006,  a  decrease  of
approximately  32.9%.  The decrease in revenue of $13.6 million was attributable
to the continued  weakness in the tubing  market,  coupled with the inability to
fully fund our production  requirements  during the  transition  from LaSalle to
Laurus.

     Our  operations  for the first nine months of 2007  reflected a net loss of
approximately  $6.2 million as compared  with a net loss of  approximately  $3.3
million from continuing operations in 2006.


                                       18
<PAGE>

     Our  efforts  continue to focus on growing  our  racking  business  through
SpaceRak,  EWCO's racking subsidiary,  with sales volumes and backlog on a track
to be restored to planned levels since the Laurus  refinance of the LaSalle debt
on August 9, 2007.  We will  continue to pursue  opportunities  to increase  our
sales of tubing at margins  and terms  agreeable  to us, but our  allocation  of
resources will favor supporting the growth of our racking business.

     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  September 30, 2007
and 2006

Net Revenues

     Listed in the table below are the net revenues and tonnage  shipped for the
three months ended September 30, 2007 and 2006:
<TABLE>
<CAPTION>

                                                       2007              2006                     Change
                                                         $                 $                $                %
                                                   --------------    --------------    -------------     -----------
                                                                        (dollars in thousands)
<S>                                                      <C>               <C>            <C>               <C>
EWCO Tubular..................................           $ 1,457           $ 5,120        $ (3,663)         (71.5%)
EWCO SpaceRak(R)..............................             7,270             9,147          (1,877)         (20.5%)
                                                   --------------    --------------    -------------     -----------
Total.........................................            $8,727           $14,267        $ (5,540)         (38.8%)
                                                   ==============    ==============    =============     ===========

                                                       2007              2006                     Change
                                                       Tons              Tons              Tons              %
                                                   --------------    --------------    -------------    ------------
EWCO Tubular..................................             1,851             5,853          (4,002)         (68.4%)
EWCO SpaceRak(R)..............................             4,890             6,229          (1,339)         (21.5%)
                                                   --------------    --------------    -------------    ------------
Total.........................................             6,741            12,082          (5,341)         (44.2%)
                                                   ==============    ==============    =============    ============
</TABLE>

     Net revenue for the third  quarter of 2007  decreased  approximately  38.8%
over the same period in 2006 from $14.3 million to $8.7  million,  a result from
lower volume on tonnage shipped, which decreased 44.2%.

     EWCO Tubular volume on a tonnage basis decreased by approximately  68.4% in
the three months  ended  September  30, 2007  compared to the three months ended
September  30, 2006.  Net revenues of $1.5 million in the third  quarter of 2007
were 71.5% lower than in 2006. The decline resulted from continued  softening of
the tubing  market  during the period,  coupled with the inability to fully fund
our  production  requirements  during  the  transition  from  LaSalle to Laurus.
Revenue  on a per ton basis  decreased  by 10.1%  from $875 in the three  months
ended September 30, 2006 to $787 in the three months ended September 30, 2007.

     EWCO's SpaceRak  engineered racking tonnage volumes declined  approximately
21.5% in the three months ended  September 30, 2007 compared to the three months
ended September 30, 2006. Revenue on a per ton basis increased by 1.3% to $1,487
in the three  months  ended  September  30, 2007 from $1,468 in the three months
ended September 30, 2006. Net revenues of $7.3 million in the three months ended
September  30, 2007  represented  a 20.5%  decrease  from the three months ended
September  30, 2006 sales of $9.1 million  primarily due to a reduction in major
project business.

                                       19
<PAGE>

Cost of Goods Sold and Gross Profit

     Gross  profit  for  the  three  months   ended   September   30,  2007  was
approximately  $583,000 or 6.7% of sales  compared  with  $1,327,000  or 9.3% of
sales for the same period in 2006.  The main driver was the  reduction in volume
reducing the ability to cover fixed manufacturing costs.

Selling, General and Administrative Expense

     Selling,  general and  administrative  expense  including  depreciation and
amortization  was $1.1  million  or 12.5% of  sales in the  three  months  ended
September  30, 2007  compared  with $1.7  million or 11.9% of sales for the same
period in 2006.  The $608,000  decrease in cost in 2007 was driven  primarily by
reductions of salaries and wages of $254,000 and professional fees of $126,000.

Other Income and Expense

     Other income and expense in the three months ended  September  30, 2007 was
income in the amount of $156,000  compared  with income of $250,000 for the same
period in 2006.  The  Company  realized a gain on  derivatives  in the amount of
$58,000  associated  with the decreased  value of the conversion  feature of the
Laurus Senior  Convertible  Term Note in 2007 compared with the gain recorded in
2006 of $269,000.  Additionally,  miscellaneous  income increased by $117,000 in
2007.

Interest Expense

     Net interest  expense  increased by  $2,749,000  to $1,986,000 in the three
months ended  September 30, 2007 compared with net interest  income for the same
period in 2006 of $763,000.  The change results  primarily from the recording of
default interest expense in 2007 of $326,000 and the reversal in September, 2006
of default interest accrued during 2006 of  approximately  $840,000,  as well as
the  reduction  in  September  2006 of finance  cost  amortization,  recorded as
interest,  of  $849,000,  as well as an  increase  in  amortization  of deferred
finance  costs of  $1,250,000,  due primarily to the costs  associated  with the
bridge financing that was concluded in July, 2007.

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 $32 million.

     The Company has not 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

     The Company recorded a net loss of $2.3 million from continuing  operations
for the three  months  ended  September  30,  2007  compared  with net income of
$643,000 from  continuing  operations  for the three months ended  September 30,


                                       20
<PAGE>

2006 as a result of the factors cited above.

Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30,
2006

Net Revenues

     Listed in the tables below are the net revenues and tonnage shipped for the
nine months ended September 30, 2007 and 2006:
<TABLE>
<CAPTION>

                                                       2007              2006                     Change
                                                         $                 $                $                %
                                                   --------------    --------------    -------------     -----------
                                                                        (dollars in thousands)
<S>                                                       <C>              <C>             <C>              <C>
EWCO Tubular..................................            $6,039           $16,824         $(10,785)        (64.1%)
EWCO SpaceRak(R)..............................            21,656            24,520           (2,864)        (11.7%)
                                                   --------------    --------------    --------------    -----------
Total.........................................           $27,695           $41,344        $ (13,649)        (33.0%)
                                                   ==============    ==============    ==============    ===========

                                                       2007              2006                     Change
                                                       Tons              Tons              Tons              %
                                                   --------------    --------------    -------------    ------------
EWCO Tubular..................................             8,040            21,172         (13,132)         (62.0%)
EWCO SpaceRak(R)..............................            14,771            17,510          (2,739)         (15.6%)
                                                   --------------    --------------    -------------    ------------
Total.........................................            22,811            38,682         (15,871)         (41.0%)
                                                   ==============    ==============    =============    ============
</TABLE>

     Net revenue for the first nine months of 2007 decreased approximately 33.0%
over the same period in 2006 from $41.3 million to $27.7  million,  while volume
on a tonnage basis decreased 41.0%.

     EWCO Tubular volume on a tonnage basis decreased by approximately  62.0% in
the first nine months of 2007  compared  to the first nine  months of 2006.  Net
revenues of $6.0  million in the first nine months of 2007 were 64.1% lower than
in 2006.  The decline  resulted  from  continued  softening of the tubing market
during the nine month period coupled with the inability to fully fund production
requirements during the transition from LaSalle to Laurus.  Revenue on a per ton
basis  decreased  by 5.6% from $795 in the first nine  months of 2006 to $751 in
the first nine months of 2007.

     EWCO's SpaceRak  engineered racking tonnage volumes declined  approximately
15.6% in the first nine  months of 2007  compared  to the first  nine  months of
2006.  Revenue on a per ton basis  increased by 4.7% to $1,466 in the first nine
months of 2007 from $1,400 in the first nine months of 2006,  due  primarily  to
continued  tight  pricing  controls.  Net revenues of $21.7 million in the first
nine months of 2007 represented a 11.7% decrease from the first nine months 2006
sales of $24.5 million primarily due to a reduction in major project business.

Cost of Goods Sold and Gross Profit

     Gross profit for the nine months ended  September  30, 2007 of $2.2 million
decreased by $1.0 million, or 31.3%, compared to the nine months ended September
30, 2006. Gross margins increased to 7.9% from 7.7% for the corresponding period
despite  significantly  reduced sales volumes as a result of tight management of
manufacturing overhead.  Steel prices were fairly stable in the first six-months
of 2007 and thus did not materially impact margins.

                                       21
<PAGE>

Selling, General and Administrative Expense

     Selling,  general and administrative  costs decreased from $5.9 million, or
14.2% of net revenue,  during the first nine months of 2006 to $4.3 million,  or
15.5% of net revenue  during the first nine  months of 2007.  The  decrease  was
primarily  attributable to a $270,000  reduction in audit and other professional
fees, a $972,000  reduction in salaries and benefits and a $119,000 reduction in
bad debt expense.

Other Income and Expense

     Other  income and expense in the nine months ended  September  30, 2007 was
income in the amount of $71,000  compared  with income of $918,000  for the same
period in 2006.  The  Company  realized a gain on  derivatives  in the amount of
$106,000  associated with the decreased  value of the conversion  feature of the
Laurus Senior  Convertible  Term Note in 2007 compared with the gain recorded in
2006  of  $962,000.  Additionally,  the  Company  recorded  a loss  of  $130,000
resulting from the retirement of a portion of the December 2006 bridge debt with
common shares.

Interest Expense

     Net interest  expense  increased by  $2,607,000  to $4,139,000 in the first
nine months of 2007 compared to $1,532,000 in the first nine months of 2006. The
increase  is  primarily   attributable  to  increases  in  default  interest  of
$1,101,000  and  amortization  of  deferred  finance  costs of  $1,176,000,  due
primarily to the costs  associated with the bridge  financing that was concluded
in July, 2007.

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 September 30, 2007 is approximately $32 million.  If the Company
achieves profitability, the net operating loss carryforwards may be available to
offset future income taxes.

     The Company has not 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 from  continuing  operations  increased  from $3.3 million to $5.6
million for the nine months ended September 30, 2007 and 2006, respectively, for
the reasons described above.

Liquidity and Capital Resources

     As of  September  30,  2007,  we  had  a net  working  capital  deficit  of
$14,435,000, including cash and cash equivalents of $98,000, accounts receivable
of $4,469,000, inventories of $2,169,000 and total current operating liabilities
of  $21,614,000,  including  accounts  payable of  $5,955,000  and other accrued
expenses of $1,276,000.  Other current liabilities at September 30, 2007 include
$4,403,000  outstanding  on  revolving  credit  facilities,  secured  term notes
payable  to  Laurus  of  $3,365,000,  convertible  note  payable  to  Laurus  of
$4,909,000 and bridge notes payable of $1,700,000.

     The Company has $10,696,000 of debt maturing within the next twelve months.
The Company is in the process of seeking  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.


                                       22
<PAGE>

Cash Flows From Operating Activities

     Net cash provided by the Company's  operations during the first nine months
of 2007 was $2,774,000 compared to cash used in the first nine months of 2006 of
$7,411,000.

     In the nine months ended September 30,  2007,cash was used primarily by (1)
$6,163,000 of losses from continuing operations and (2) a $2,152,000 decrease in
accounts  payable and accrued  expenses.  Cash was  provided by (3) a $1,603,000
decrease in accounts receivable, (4) a $1,960,000 decrease in inventories, (5) a
$323,000 decrease in other assets, (6) $69,000 in depreciation and amortization,
and (7) $3,931,000 in other non-cash expenses.

Cash Flows From Investing Activities

     The  Company's  investing  activities in the first nine months of 2007 used
$20,000 in cash for capital  expenditures  compared to  $1,304,000  for the same
period in 2006. The 2006 activities were increased by the payments made relating
to FENCEMaster, a former customer, which the Company unsuccessfully attempted to
acquire out of bankruptcy in the fourth quarter of 2005.  The Company  supported
FENCEMaster's  operations in the fourth quarter of 2005, principally through its
trade  credit,   and  maintained  a  secured   position  behind  Wachovia  Bank,
FENCEMaster's lender, until the sale of FENCEMaster in December,  2005. Proceeds
of the sale  returned to the  Company in  December of 2005,  used to pay off the
trade indebtedness incurred on behalf of FENCEMaster, totaled $985,000.

Cash Flows From Financing Activities

     The Company's  financing  activities  used  $3,536,000 of cash in the first
nine months of 2007 compared to $1,502,000  provided in 2006.  Cash was provided
by (1) $2,125,000  from issuance of equity  securities and (2) $3,400,000 of net
proceeds from short term obligations,  and used for (3) net repayments on credit
facilities of $1,585,000,  (4) repayment of short-term  obligations of $775,000,
(5) repayment of long-term  obligations of $794,000 and (6) payment of financing
costs of $2,724,000.

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/A.


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

Laurus Master Credit Agreement

     Tarpon entered into a Master Credit  Agreement ("The  Agreement") on August
9, 2007,  including a revolving credit  agreement  (Revolver) up to $10,000,000,
subject to a 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


                                       23
<PAGE>

August 9, 2008,  at which time,  the remaining  unpaid  balance and all accrued,
unpaid  interest  will be due.  The  Revolver  will be paid,  or drawn upon,  as
necessary  throughout  the normal  course of business.  Interest on the Revolver
will be paid monthly based on the daily drawn  balance at the contract  interest
rate, defined below.

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

     The Agreement contains  customary  covenants that will limit the ability of
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.  The Company was not in
violation of any such covenants as of September 30, 2007.

     The Company  granted Laurus Master Fund Ltd. a security  interest in all of
their  respective  assets  including,  but not limited to, accounts  receivable,
inventory,   machinery,   equipment,  general  intangibles,  stock  and  deposit
accounts. In addition, the Company issued warrants to Laurus Master Fund Ltd. to
purchase  2,300,000  shares of the common  stock of the  Company for an exercise
price of $.01 a share and a warrant to purchase  2,300,000  shares of the common
stock of Tarpon  Industries,  Inc.  for an exercise  price of $.25 a share.  The
warrants have been valued at $1,629,000  using the  Black-Scholes  model with an
interest rate of 4%,  volatility of 70%, zero dividends and expected term of ten
years. The total value has been recorded as a deferred finance cost and is being
amortized using the effective interest method over the term of the related debt.

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

     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",  as well as "Note 6 - Debt" of the "Notes to Consolidated Financial
Statements" as reported in the Company's December 31, 2006 Form 10-K/A.

Bridge Notes

     During the period  June 18,  2007 to July 5, 2007  Tarpon  closed a private
placement  Bridge Loan offering  aggregating  $1,700,000 and netting the Company
$1,418,000  after payment of fees and  commissions.  The Bridge Loan Notes carry
interest at 12% and are repayable  from proceeds of a secondary  stock  offering
anticipated to occur in the 4th quarter of 2007. In connection with this private
placement,  170,000  warrants were issued to designees of the placement agent to
purchase  common  stock of Tarpon at an exercise  price of $0.52 and shares were
issued to Bridge  noteholders  at the rate of 1.5 shares of Tarpon  common stock
for each $1 of loan, for a total of 2,550,000 shares.  The Company has estimated
the fair value of these  warrants to be $72,000 using the  Black-Scholes  Option
Pricing  Model with an estimated  term of 5 years,  risk-free  interest  rate of
4.72%, dividend yield of 0% and volatility of 70%.

     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".

                                       24
<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are  exposed to risks  associated  with  changes in  interest  rates and
commodity  prices.  We have not used  derivative  financial  instruments for any
purpose during the periods shown,  except for the convertible  debt with Laurus,
dated December 13, 2005,  including certain warrants issued to Joseph Gunnar and
Company (see Note 5. Debt and Note 7. Related Party Transactions).

     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 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 nine months ended  September  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.

     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.

                                       25
<PAGE>
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------
                                                     September 30, 2007
                                                     Expected Maturity Dates
                                                     -----------------------
                                                (U.S.$ equivalent in thousands)
-----------------------------------------------------------------------------------------------------------------------------
                                                                                            There                  Fair
<S>                                    <C>        <C>        <C>        <C>        <C>
                                       2007       2008       2009       2010       2011     after        Total     Value
                                       ----       ----       ----       ----       ----     -----        -----     -----
Short Term Debt:
Variable Rate (U.S.$)                   $7,769                                                            $7,769      $7,769
Average Interest rate                    10.3%                                                             10.3%
------------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Fixed Rate (U.S.$)                      $1,700                                                            $1,700      $1,700
Average Interest rate                    12.0%                                                             12.0%
------------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Long-Term Debt
Variable Rate (U.S. $)                 $ 5,625                                                            $5,625      $5,625
Average interest rate                    10.3%                                                             10.3%
------------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Fixed Rate (U.S. $)                         $6                                                                $6          $6
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:

                                               September 30, 2007
                                        (U.S.$ equivalent in thousands)
                                   Carrying Amount             Fair Value
                                   ---------------             ----------
Steel Inventories..........            $2,169                    $2,169


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 September 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 third fiscal  quarter ended  September  30, 2007 that has  materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting, except that we hired additional staff, which will help
improve our internal controls over financial reporting.

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


                                       26
<PAGE>

     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  and use of
          spreadsheets to perform consolidations, which resulted in errors.

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

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

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

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

     G.   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.

     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.


                                       27
<PAGE>

     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/A.

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.


                                       29

<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:  March 24, 2008                          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.