<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

(Mark One)
[x]      Annual report under Section 13 or 15(d) of the Securities  Exchange Act
         of 1934 For the fiscal year ended December 31, 2002

[ ]      Transition report under Section 13 or 15(d) of the Exchange Act
         For the transition period from ---- to ----

                        Commission file number 001-12127

                             EMPIRE RESOURCES, INC.
             (Exact Name of Registrant as Specified in Its Charter)

            Delaware                                           22-3136782
--------------------------------------------------------------------------------
  (State or Other Jurisdiction                             (I.R.S. Employer
of Incorporation or Organization)                         Identification No.)

                                One Parker Plaza
                               Fort Lee, NJ 07024
                    (Address of Principal Executive Offices)

                                  201 944-2200
              (Registrant's Telephone Number, Including Area Code)

          Securities  registered  pursuant to Section 12 (b) of the Act:

        Title of each class            Name of each exchange on which registered
        -------------------            -----------------------------------------
Common Stock, par value $0.01 per share          American Stock Exchange

        Securities registered pursuant to Section 12 (g) of the Act: None

     Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

     Check if disclosure of delinquent filers in response to Item 405 of
regulation S-K is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [x]

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

     The aggregate market value of the voting stock of the registrant held by
non-affiliates as of the last business day of the registrant's most recently
completed second fiscal quarter was approximately $4.1 million. Such market
value was calculated based upon the closing price of the stock on the American
Stock Exchange as of such date and excludes shares held by each officer and
director of the registrant and any person that owns 5% or more of the
registrant's outstanding common stock. This determination of affiliate status is
not necessarily a conclusive determination for all other purposes.

     The number of shares of common stock outstanding as of March 14, 2003, was
9,432,251.

                      DOCUMENTS INCORPORATED BY REFERENCE:

     None.




<PAGE>


                             EMPIRE RESOURCES, INC.
              FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                      INDEX

10-K Part and Item No.                                                      Page
----------------------                                                      ----

                                     Part I

    Item 1     Business.                                                      1

    Item 2     Properties.                                                    5

    Item 3     Legal Proceedings.                                             5

    Item 4     Submission of Matters to a Vote of Security Holders.           5


                                     Part II

    Item 5     Market for Common Equity and Related
                        Stockholder Matters.                                  6

    Item 6     Selected Financial Data                                        8

    Item 7     Management's Discussion and Analysis of Financial
                        Condition and Results of Operation                    9

    Item 7A    Quantitative and Qualitative Disclosures
                        About Market Risk                                    14

    Item 8     Financial Statements and Supplementary Data                   15

    Item 9     Changes In and Disagreements With Accountants
                        On Accounting and Financial Disclosure               15

                                    Part III

    Item 10    Directors and Executive Officers                              15

    Item 11    Executive Compensation.                                       17

    Item 12    Security Ownership of Certain Beneficial Owners
                        And Management                                       21

    Item 13    Certain Relationships and Related Transactions                22

    Item 14    Controls and Procedures                                       22

    Item 15    Exhibits and Reports on Form 8K                               23





<PAGE>

                                     PART I

ITEM 1.  BUSINESS

           Important Information Regarding Forward Looking Statements

Certain matters discussed under the captions "Business", "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Quantitative and Qualitative Disclosures About Market Risk" and elsewhere in
this Annual Report on Form 10-K and the information incorporated by reference in
this report may constitute forward-looking statements for purposes of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.

You can identify forward-looking statements by the use of the words "believe,"
"expect," "anticipate," "intend," estimate," "assume," "will," "should," and
other expressions which predict or indicate future events or trends and which do
not relate to historical matters. You should not rely on forward-looking
statements, because they involve known and unknown risks, uncertainties and
other factors, some of which are beyond the control of the Company. These risks,
uncertainties and other factors may cause the actual results, performance or
achievements of the Company to be materially different from the anticipated
future results, performance or achievements expressed or implied by the
forward-looking statements.

Some of the factors that might cause these differences include the following:
changes in general, national or regional economic conditions; an act of war or
terrorism that disrupts international shipping; changes in laws, regulations and
tariffs; changes in the size and nature of the Company's competition; changes in
interest rates, foreign currencies or spot prices of aluminum; loss of one or
more of the Company's principal supplier or key executives; increased credit
risk from customers; failure of the government to renew the generalized system
of preference, which provides preferential tariff treatment for certain of the
Company's imports; failure of the Company to grow internally or by acquisition
and to integrate acquired businesses; failure to improve operating margins and
efficiencies; and changes in the assumptions used in making such forward-looking
statements.

You should carefully review all of these factors, and you should be aware that
there may be other factors that could cause these differences, including, among
others, the factors listed under "Certain Factors Affecting Future Operating
Results," beginning on page [16]. Readers should carefully review the factors
described under "Certain Factors Affecting Future Operating Results" and should
not place undue reliance on our forward-looking statements.

These forward-looking statements were based on information, plans and estimates
at the date of this report, and we do not promise to update any forward-looking
statements to reflect changes in underlying assumptions or factors, new
information, future events or other changes.

Background

         Empire Resources, Inc. (the "Company") was incorporated in the State of
Delaware in 1990 under the name Integrated Technology USA, Inc. ("Integrated").
Until September 17, 1999, the Company was in the business of designing,
developing and marketing products for emerging computer related markets.

         On September 17, 1999, the Company merged with Empire Resources, Inc.
("Empire"), a distributor of value added, semi-finished aluminum products. Since
the merger, the Company has continued the aluminum business of Empire under the
name of Empire Resources, Inc. References to the Company include its'
subsidiaries, consolidated for purposes of the Company's financial statements.

                                       1



<PAGE>


         In conjunction with the merger, Empire Resources Pacific Ltd.
("Empire-Pacific"), then an affiliate of Empire operating in Australia, became a
wholly owned subsidiary of the Company.

         For accounting and other financial reporting purposes, the merger has
been treated as a "reverse acquisition." Under this treatment, the surviving
corporation has been treated as a continuation of Empire, and the merger has
been treated as an issuance of shares by Empire to the stockholders of
Integrated in exchange for Integrated's cash. Accordingly, the accompanying
financial statements are the historical financial statements of Empire and
Empire Resources Pacific Ltd.

         The Company is engaged in the purchase, sale and distribution of
principally nonferrous metals to a diverse customer base located throughout the
United States and in Canada, Australia and New Zealand. The Company sells its
products through its own marketing and sales personnel and through its
independent sales agents located in the U.S. who receive commissions on sales.
Empire-Pacific acts as the Company's sales agent in Australia and New Zealand.
The Company purchases from suppliers located throughout the world; however, one
supplier furnished approximately 58% of the Company's products in 2002. The
Company does not typically purchase inventory for stock; rather, it places
orders with its suppliers based upon orders that it has received from its
customers.

Strategy

         The Company's strategy for growth involves the following key elements:

         Provide Customers with a High Level of Service and Cost Effective,
Quality Products. The Company places great emphasis on providing customers with
a high level of service. In particular, the Company works closely with its
customers to learn the specific requirements of each customer. This enables the
Company to provide each customer with cost-effective, quality materials matching
the customer's particular needs. The Company also provides various ancillary
services to its customers, including (1) arranging for products to be stored in
warehouse facilities for release to the customer on a just-in-time delivery
basis, (2) providing customers with timely information concerning market trends
and product development, and (3) upon request by customers, arranging for
subsequent metal processing or finishing services.

         Expand Volumes and Product Breadth with Existing Suppliers. The Company
strives to lever its existing long-standing relationships with suppliers through
increased volume with existing product lines and by adding new product lines
that are within the suppliers' range of production and that are saleable in the
Company's marketing area. The Company believes that by pursuing this strategy it
will increase its volume to its existing suppliers while at the same time
establishing new markets resulting in increased volume and market presence.

         Expand Sources of Supply and Serve as Effective Marketing Channel for
Suppliers. The Company seeks to increase its supply sources by expanding its
relationships with existing suppliers and by seeking new suppliers. The Company
strives to build its supply relationships by serving as an effective marketing
channel for its suppliers. The Company believes if it is able to increase its
supply sources it will be in a position to offer its customers greater
quantities and a wider range of products.

         Acquire Capability to Provide Additional Value Added Services. The
Company may seek to acquire the capability to provide its customers with
additional value-added services (such as various processing, finishing, and or
distribution services). The Company may accomplish this through establishing
joint venture arrangements with existing service providers or by selectively
making acquisitions.

         Provide Increasingly Efficient and Cost-Competitive Handling and
Delivery Services. The Company's warehouse and distribution facility in
Baltimore serves the dual purpose of: (a) providing depot/warehousing

                                       2



<PAGE>


capacity for just-in-time delivery and (b) providing handling capability and
inventory control at the Baltimore port of entry, the Company's most active
import location. This arrangement reduces freight and handling expenses while
concurrently increasing efficiency, and enables the Company to monitor
deliveries and serve customers more effectively. The Company is currently
reviewing the possibility of adding additional facilities in other locations.

The Industry

         Semi-finished aluminum products are produced by processing primary
aluminum and or aluminum scrap. A product is considered "semi-finished" if it
has not yet been converted into a final end-product. Semi-finished aluminum
products include aluminum sheet, plate and foil, rod, bar and wire, extruded and
cast products, and aluminum powder and paste.

         Although demand for aluminum products in the United States has been
cyclical, over the longer-term demand has continued to increase. The Company
believes that this growth reflects (1) general population and economic growth
and (2) the advantages of aluminum products, including light weight, high degree
of formability, resistance to corrosion and recyclability. According to The
Aluminum Association Inc., demand for mill aluminum products in the United
States in 2002 increased approximately 5% from shipments in 2001.

Products

         During  the last  three  fiscal  years  Empire  Resources  has  derived
substantially  all of its  revenues  from  the  sale of  semi-finished  aluminum
products. Demand for the Company's product is not seasonal.

Sales, Marketing and Services

         The Company endeavors to build its distribution within the aluminum
industry by providing customers with quality products, access to alternative
sources of supply, and comprehensive customer service. The Company offers
customers a full range of services including:

     o    sourcing aluminum products from the appropriate supplier in order to
          meet pricing and delivery requirements;

     o    handling foreign exchange transactions for sales in local currency;

     o    assuming responsibility for the shipment and timely delivery of the
          product to the customer;

     o    assisting customers in identifying materials and matching their
          particular needs;

     o    where necessary, arranging for subsequent metal processing and/or
          finishing services which may be required by the customer;

     o    arranging for materials that have been ordered by a customer (and are
          subject to a firm purchase commitment) be stored at an appropriate
          warehouse for release to the customers on a just-in-time delivery
          basis, and

     o    providing customers with information concerning market trends and
          product development.

         The Company carefully monitors the timing and processing of orders to
meet customers' needs and commits to fill orders within a time-period mutually
agreed with the customer -- generally within a 30 day period. The Company
maintains constant and ongoing communication with its suppliers in order to
ensure that these delivery dates are met and that customers are apprised of the
delivery status of their orders.

         The Company primarily sells its products through its own marketing and
sales personnel. In addition, the Company sells its products through independent
sales agents located in the United States who receive a commission on sales. The
Company's inventory generally represents material that has been ordered by
customers and is in transit or is being held pending delivery to such customers.

                                       3



<PAGE>


Backlog

         At December 31, 2002, the amount of backlog of firm orders was
approximately $52 million, (as compared to $50 million at December 31, 2001)
representing orders received from customers and placed into production with the
Company's suppliers. The Company expects to fill and invoice substantially all
of the orders in the December 31, 2002 backlog by June 30, 2003.

Suppliers

         The Company enjoys exclusive representation arrangements with several
foreign mills; however one supplier furnished approximately 58% of the Company's
product in 2002. The Company provides important services to its suppliers by:

     o    serving as an integrated marketing and distribution channel for export
          volume;

     o    purchasing manufacturing capacity from suppliers in bulk;

     o    assuming responsibility for transporting the products that it
          purchases;

     o    eliminating foreign currency risks for suppliers; and

     o    ensuring prompt payment to suppliers for materials purchased.

         The Company strives to maintain long-term relationships with its
suppliers and to be a significant distributor for them. By being a significant
distributor for its suppliers, the Company is able to obtain competitive pricing
and to influence quality standards and delivery practices.

         During 2002 the Company continued to work with existing suppliers and
continued to seek new long-term sources to underpin its position in the market.

Customers

         The Company serves over 180 customers in diverse industries, including
transportation, automobile, housing, appliances and packaging. In 2002, the top
ten customers of the Company represented approximately 35% of its sales, with
one customer accounting for 11% of total sales. These customers included seven
full-service distribution centers (i.e., distributors that have the capacity to
provide additional processing services), as well as producers of various
consumer and industrial products.

         The Company's customers are located throughout the United States and
Canada and, to a lesser extent, Australia and New Zealand. The Company's U.S.
customer base is not regional.

         The following table summarizes the Company's revenues for the past
three years by geographic region.
<TABLE>
<CAPTION>

                                            Net Sales (In thousands)
                                      2002             2001             2000
                                      ----             ----             ----
<S>                                 <C>              <C>              <C>
United States                       127,327          113,915          128,174
Canada & Pacific Rim                 31,411           29,320           37,154

Total                               158,738          143,235          165,328
</TABLE>

         The Company insures its accounts receivable against credit risk by
purchasing credit insurance. This insurance is generally subject to a 10%
co-insurance provision with respect to each claim and there are limits on the
amount of credit that the Company's insurance carrier will underwrite with
respect to each customer.

                                       4



<PAGE>


Transportation

         The Company arranges for the transportation to customers of the
products that they purchase. When the Company purchases products from an
overseas supplier, it accepts delivery either at the port in the supplier's home
country or at the port of destination. If the Company takes delivery at a
foreign port, it will generally arrange for transportation to the port of
destination on regularly scheduled port-to-port sea-going transportation. Upon
delivery of the products at the destination port, the Company uses rail and
trucking services to deliver the products to its customers.

Competition

         The Company's principal competitors are North American aluminum
producers, including Alcoa Inc. and Alcan Aluminum Limited, which dominate the
aluminum industry in North America. These companies are significantly larger and
have significantly greater financial resources than the Company. The Company
also competes with other importers and agents that act for foreign aluminum
producers. The Company's principal means of competition is customer service,
including the provision of value-added services to its customer. The Company
believes that agents of foreign mills are generally less capable of serving the
needs of North American customers because these agents are generally captive to
a single foreign source and often lack the flexibility and range of product
offerings that the Company offers its customers.

Employees

         As of December 31, 2002, the Company had 21 employees, all of whom were
full-time employees. The Company also has independent sales representatives
located in the United States. None of these employees are represented under a
collective bargaining agreement.

         Empire-Pacific, a wholly-owned subsidiary of the Company, has six
employees in Australia.

ITEM 2.  DESCRIPTION OF PROPERTIES

         The Company's corporate headquarters are located in Fort Lee, New
Jersey, where the Company leases office space pursuant to a lease expiring in
March 2005. The lease provides for a minimum annual rental payment of $225,000.

         The Company leases a warehouse and distribution facility in Baltimore,
Maryland pursuant to a lease expiring in October 2005. The lease provides for
minimum annual rental payments of $205,000 over the term of the lease.
Management believes that the Company's facilities are adequate to meet its
current needs.

ITEM 3.  LEGAL PROCEEDINGS

         One of the Company's suppliers asserted a claim against the Company
alleging non-payment of various invoices. Kangartec Aluminum Products Sdn Bhd
filed suit on August 20, 2002 in the Superior Court of New Jersey, Union County:
Law Division alleging total damages of approximately $500,000. The Company
counter sued for an amount in excess of the claim, alleging shipment of
defective merchandise. The case has been settled and the costs associated with
the suit have been charged to operations during 2002.

         The Company is also party from time to time to ordinary litigation
incidental to its business. The Company does not presently believe that any such
litigation would have a material adverse effect on its results of operation or
financial position.

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

         No matters were submitted to shareholders during the fourth quarter for
their approval.

                                       5



<PAGE>


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market for Common Stock

         The Company's common stock trades on the American Stock Exchange
("AMEX") under the symbol ERS.

         The table below sets forth the high and low sales prices for the common
stock as reported by AMEX for the periods indicated.
<TABLE>
<CAPTION>

                                                 Common Stock
                               -------------------------------------------------
                                       2002                        2001
                                       ----                        ----
    Period                       High          Low          High          Low
    ------                       ----          ---          ----          ---
<S>                             <C>          <C>           <C>          <C>
    1st Quarter   ...........   $1.000       $0.800        $1.188       $0.875
    2nd Quarter   ...........   $1.450       $0.800        $1.180       $0.900
    3rd Quarter   ...........   $1.300       $0.950        $1.100       $0.900
    4th Quarter   ...........   $1.700       $0.950        $1.070       $0.850
</TABLE>

         On March 14, 2003, the closing price of the common stock on AMEX was
$1.15 and there were 47 holders of record of the Common Stock, and approximately
500 beneficial holders of common stock.

         The Company did not sell any unregistered equity securities in 2002.

Dividends

         The Company has never paid any dividends on its common stock and
expects for the foreseeable future to retain all of its earnings from operations
for use in expanding and developing its business. Any future decision as to the
payment of dividends will be at the discretion of the board of directors and
will depend upon earnings, receipt of dividends from subsidiaries, financial
position, capital requirements, plans for expansion and such other factors as
the board of directors deems relevant. In addition, covenants contained in
agreements with commercial banks require the Company to maintain working capital
and net worth ratios that restrict the Company's ability to declare or pay
dividends.

Share Repurchase

         In November 1999, the Board of Directors authorized the Company to
repurchase up to one million shares of its common stock at prices not to exceed
$1.50 per share. In December 2000, the Board of Directors authorized an increase
in the share repurchase program from 1 million shares to 1.5 million shares. On
June 18, 2002 the Board of Directors authorized an additional increase in the
share repurchase program of 1 million shares. This brought the total authorized
number of shares available under the repurchase program to 2.5 million. As of
December 31, 2002, the Company had repurchased a total of 2,257,400 shares for
an aggregate cost of $2,716,749. The Company also had acquired 50,000 shares for
a cost of $50,000 in connection with the reverse merger in September 1999.

                                       6



<PAGE>


Equity Compensation Plan Information

         The following table provides information as of December 31, 2002
regarding shares of common stock of the Company that may be issued under our
existing equity compensation plans, including the Company's 1996 Stock Option
Plan (the "1996 Plan").

<TABLE>
<CAPTION>

                                      ------------------------------------------------------------------------------
                                                            Equity Compensation Plan Information
                                      ------------------------------------------------------------------------------
                                      Number of securities to be
                                      issued upon exercise of        Weighted Average        Number of securities
                                      outstanding options as of      exercise price of       remaining available for
Plan category                         December 31, 2002              outstanding options     future issuance
----------------------------------    ---------------------------    -------------------     -----------------------
                                                (a)                          (b)                      (c)

<S>                                           <C>                           <C>                     <C>
Equity compensation plans approved            683,933                       1.33                    545,000
by security holders

Equity compensation plans not
approved by security holders                     -                            -                        -


         Total                                683,933                       1.33                    545,000


</TABLE>



                                       7




<PAGE>


ITEM 6  SELECTED FINANCIAL DATA

         The following table sets forth for the periods indicated selected
consolidated financial and operating data for the Company. As a result of the
reverse merger completed on September 17, 1999, the Company has been treated as
a continuation of the business of Empire, and accordingly, the accompanying
financial data are the financial data of Empire and Empire Resources Pacific
Ltd., and include the results of operations of Integrated and its subsidiaries
(which have been minimal) only from September 17, 1999. Pro forma net income and
pro forma earnings per share reflect provisions for income taxes as if Empire,
which was taxed as an S corporation until September 17, 1999, had been treated
as a C corporation for all of 1999 and 1998. The consolidated balance sheet data
and consolidated statement of operations data as of and for the years ended
December 31, 2002, 2001, 2000, 1999, and 1998 have been derived from our
Consolidated Financial Statements. The following selected consolidated financial
and operating data are qualified by and should be read in conjunction with our
more detailed Consolidated Financial Statements and notes thereto and the
discussion under "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in Part II, Items 7 and 8 of this Form 10-K.

<TABLE>
<CAPTION>

                                                                           Years Ended December 31,
                                                                  In thousands, except per share information
                                               ---------------------------------------------------------------------------
                                                 2002            2001             2000            1999             1998
                                                 ----            ----             ----            ----             ----
Operating Data:
---------------
<S>                                            <C>             <C>              <C>             <C>              <C>
Net Sales                                      $158,738        $143,235         $165,328        $107,112         $101,163
Operating Income                                 $4,992          $4,083           $5,041          $4,273           $3,859
Net Income                                       $2,370          $1,296           $1,041
Pro Forma Net Income                                                                              $1,309           $1,572

                             Share Data:
                             -----------
     Weighted average shares outstanding
                                   Basic         10,049          10,956           11,346           7,328*           5,560*
                                 Diluted         10,189          11,091           11,445           7,356*           5,560*

                     Earnings Per Share:
                     -------------------
                                   Basic           $.24            $.12             $.09
                                 Diluted           $.23            $.12             $.09

           Pro Forma earnings per share:
           -----------------------------
                                   Basic                                                            $.18*            $.28*
                                 Diluted                                                            $.18*            $.28*

Balance Sheet Data:                                                       As of December 31,
-------------------                                                       ------------------
                                                 2002            2001             2000            1999             1998
                                                 ----            ----             ----            ----             ----
Total Assets                                    $54,469         $52,762          $69,110         $46,398          $34,739
Working Capital                                 $12,871         $11,823          $10,946         $10,065          $10,476
Stockholders' Equity                            $12,922         $11,944          $11,101         $10,176          $10,735
* pro forma

</TABLE>

                                       8



<PAGE>


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

General

         The Company is a distributor of value added, semi-finished aluminum
products. Consequently, the Company's sales volume has been, and will continue
to be, a function of its ongoing ability to secure quality aluminum products
from its suppliers. While the Company maintains long-term supply relationships
with several foreign mills, one supplier accounted for approximately 58% of the
Company's purchases for the year ended December 31, 2002, and three suppliers
accounted for 75% of 2002 purchases.

Critical Accounting Policies

         The Company's consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America. Certain accounting policies have a significant impact on amounts
reported in the financial statements. A summary of those significant accounting
policies can be found in Note B to the Company's financial statements. The
Company has not adopted any significant new accounting policies during the
period ended December 31, 2002.

         Among the significant judgments made by management in the preparation
of the Company's financial statements are the determination of the allowance for
doubtful accounts and accruals for inventory claims.

       Allowance for Doubtful Accounts

         As of December 31, 2002, the Company had $24,446,000 in trade
receivables. Additionally, the Company had recorded an allowance for doubtful
accounts of $191,000. The Company reports accounts receivable, net of an
allowance for doubtful accounts, to represent its estimate of the amount that
ultimately will be realized in cash. The Company reviews the adequacy of its
allowance for doubtful accounts on an ongoing basis, using historical collection
trends, aging of receivables, as well as review of specific accounts, and makes
adjustments in the allowance as it believes necessary. The Company maintains a
credit insurance policy on the majority of its customers. This policy has a 10%
co-insurance. Changes in economic conditions could have an impact on the
collection of existing receivable balances or future allowance considerations.

Accruals for Inventory Claims

         Generally, the Company's exposure on claims for defective material is
small as the company refers all claims on defects back to the Mill supplying the
material. In the event, that the Company does not believe the Mill will honor a
claim, the Company will record an allowance for inventory adjustments.


Comparison of Fiscal Years Ended December 31, 2002 and 2001 (in thousands)

         Net sales increased by $15,503 or 10.8% from $143,235 in 2001 to
$158,738 in 2002. The Company has pursued additional volumes from its principal
suppliers which resulted in the higher sales volume for the year. The Company's
product line since inception has consisted primarily of semi-finished aluminum
products. Gross profit increased by 18% from $9,373 to $11,024. The Company
expanded its value added sales program, which has contributed to the overall
increase in gross margin. In addition, the Company has operated more efficiently
in purchasing and managing freight costs. The gross profit margin was increased
from 6.5% to 6.9%.

                                       9



<PAGE>


         Selling, general and administrative expenses increased by $742 or
approximately 14% as the result of increases in payroll, sales commissions,
severance costs, professional fees and insurance costs.

         Interest expense declined $986 or 49% from $2,032 to $1,046. The
decrease in interest expense is due to continued decreases in the variable rate
of interest on the Company's revolving line of credit. The decline is also due,
in part, to the reduction in the outstanding balance on the Company's line of
credit.

         The effective income tax rate increased from 36.8% to 39.9% as a result
of changes in state income tax allocation factors.

         Net income was $2,370 for 2002 as compared to $1,296 for 2001. The
primary reason for the increase in net income was due to the significant
reduction in interest expense.

         Comparison of Fiscal Years Ended December 31, 2001 and 2000 (in
thousands)

         Net sales decreased by $22,093 or 13.4% from $165,328 in 2000 to
$143,235 in 2001. The weaker economy and weaker demand for industrial products
coupled with declining prices resulted in this reduction in sales. This decline
in sales was also reflected in lower gross profit for the year 2001. Gross
profit declined by 12.8% from $10,749 to $9,373. Gross profit as a percentage of
sales was relatively constant at approximately 6.5%.

         Selling, general and administrative expenses declined by $418 or
approximately 7% as the result of cost saving measures instituted during the
year, including legal fees, travel and entertainment. Non cash compensation was
also lower as a result of a reduced number of shares vesting.

         Interest expense declined $1,091 or 35% from $3,123 to $2,032 as a
result of reduced interest rates and reductions in loan balances from a high of
$40 million in 2000 to $26.7 million at the end of 2001.

         Income taxes in 2000 included $189 of state taxes, net of federal tax
benefits, pertaining to periods prior to the merger. Results of operations for
2000 include a provision for an adjustment to state income taxes relating to the
Company's earnings prior to the merger. Pursuant to the merger agreement, the
former stockholders of Empire had contributed capital to the Company in an
amount sufficient to indemnify it for these taxes. As a result of this event,
total stockholders' equity as of December 31, 2000 was increased by $97.
Adjusting for this prior period tax, taxes for the period 2001 increased by
approximately $122 as a result of the increase in income before taxes for the
year 2001.

         Net Income was $1,296 for 2001 compared to $1,041 for 2000.

Accounting Treatment of Restricted Stock Agreement

         The Company and Nathan and Sandra Kahn entered into a restricted stock
agreement with Mr. Wrubel on September 15, 1999. Mr. Wrubel is currently Vice
President of Sales of the Company. Pursuant to the restricted stock agreement,
the Kahns transferred to Mr. Wrubel 469,238 shares ("Restricted Shares") of
common stock of the Company which represents a portion of the shares that were
received by the Kahns in the Merger. The Restricted Shares were comprised of (i)
358,327 shares (the "Non-Contingent Restricted Shares") that vested on September
17th of 2000, 2001, and 2002 subject only to the condition that Mr. Wrubel
continue to be employed by the Company as of the vesting date, and (ii) 110,911
shares (the "Contingent Restricted Shares") that were subject to the same
vesting criteria as the Non-Contingent Restricted Shares and, in addition, were
subject to the condition that the number of shares (if any) that will vest will
be a function of the after-tax net income of the Company over a specified
period.

                                       10



<PAGE>


         Under applicable accounting rules, the share transfer is being treated
as if the Company had issued the shares to Mr. Wrubel as compensation for
services and, accordingly, the Company is required to recognize an expense
relating thereto. The expense relating to the Non-Contingent Restricted Shares
is based on the fair market value of the stock as of the grant date and has been
recognized over the vesting period. The Company recognized $536,000 of such
expense through December 31, 2001, and recognized $46,000 of expense in 2002.
The earnings targets required for issuance of the Contingent Restricted Shares
were not achieved and these shares were retired in 2001.

Liquidity and Capital Resources (in thousands)

         The Company's cash balance decreased by $75 from $1,147 to $1,072 in
the year ended December 31, 2002. Net cash of $2,473 was provided by operating
activities, while $2,529 of net cash was used in financing activities.

         The $2,529 of net cash used in financing activities was primarily the
result of repayment of borrowings of $1,100 under the Company's line of credit,
and the purchase of $1,429 of treasury stock under the Company's previously
announced stock buy-back program.

         The $2,473 of net cash provided by operating activities was primarily
the result of a decrease in accounts receivable of $1,466, increase in accrued
expenses of $1,792 and net income of $2,370.

         Empire currently operates under a revolving line of credit, including a
commitment to issue letters of credit, with three commercial banks. The maximum
availability of this facility is $60 million. Borrowings under these lines of
credit are collateralized by security interests in substantially all of Empire's
assets. Under these credit agreements, Empire is required to maintain working
capital and net worth ratios. These facilities expire on June 30, 2003. As of
December 31, 2002, the amount outstanding under the Company's revolving lines of
credit was $31.6 million (including letters of credit of approximately $6.0
million).

         Management believes that cash from operations, together with funds
available under its credit facility, will be sufficient to fund the cash
requirements relating to the Company's existing operations. The Company is
currently negotiating a renewal of its line of credit. While there can be no
assurances that the Company will be successful in renewing its line of credit,
the Company currently expects that the line of credit will be renewed prior to
June 30, 2003. Empire may require additional debt or equity financing in
connection with the future expansion of its operations.

<TABLE>
<CAPTION>

Commitments and Contingencies (in thousands)

                      Less than 1 Year      1-3 Years        4-5 Years        After 5 years
<S>                        <C>                <C>              <C>                <C>
Bank Debt                  25,600                -                -                  -

Operating leases              430               657               -                  -

Letters of credit           6,000                -                -                  -
</TABLE>

         Empire has contingent liabilities in the form of letters of credit to
some of its suppliers.

Capital Contribution by Stockholders

         Results of operations for 2000 include a provision for an adjustment to
state income taxes relating to Empire's earnings before the Merger. Pursuant to
the Agreement and Plan of Merger, the former stockholders

                                       11



<PAGE>


         of Empire have contributed capital to the Company in an amount
sufficient to indemnify it for these taxes. As a result of this event, total
stockholders' equity as of December 31, 2000 has been increased by $97,000.

               CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS

The Company is Highly Dependent on a Few Suppliers.

         The Company purchased approximately 58% of its products from one
supplier in 2002 and approximately 75% from its three largest suppliers. As a
result, the termination or limitation by one or more of the Company's largest
suppliers of their relationship with the Company could have a material adverse
effect on the Company's business and results of operations. In addition, the
Company's loss of any one of its other suppliers (or material default by any
such supplier in its obligations to the Company) due to bankruptcy, financial
difficulties, expropriation, social unrest, destruction, sabotage, strikes,
acquisition by a person or entity unwilling to provide products to the Company,
or for any other reason, could have a material adverse effect on the Company's
business.

The Company is Highly Dependent on a Few Significant Customers.

         The Company's sales are highly concentrated to a few customers. In
2002, 35% of the Company's revenues were derived from sales to ten customers.
One major customer accounted for approximately 11% of the Company's consolidated
net sales for the year ended December 31, 2002. As a result, any material
reduction in sales to any of these customers could have a material adverse
effect on the Company's business.

An Act of War or Terrorism Could Disrupt the Company's Supply of Products.

         The Company purchases its aluminum products exclusively from foreign
suppliers. An act of war or terrorism could disrupt international shipping
schedules, cause additional delays in importing the Company's products into the
United States or increase the costs required to do so.

The Company's Supply Sources are Subject to Substantial Risks.

         The Company generally purchases aluminum products from foreign
suppliers. Thus, its operations could be materially and adversely affected by
changes in economic, political and social conditions in the countries where the
Company currently purchases or may in the future purchase such products. Among
other things, changes in laws, regulations, or the interpretation thereof, or
restrictions on currency conversions and exports, could negatively affect the
Company's business. Although the trend in the markets in which the Company
operates for its sourcing has been towards open markets and trade policies and
the fostering of private economic activity, no assurance can be given that the
governments will continue to pursue these policies or that such policies may not
be significantly altered, especially in the event of a change in the leadership,
or as a result of social or political upheaval or unforeseen circumstances
affecting economic, political or social life.

Consolidation of Suppliers May Materially Affect the Company's Operations.

         During the last several years, consolidations have been taking place
among aluminum suppliers. Although the Company has in the past successfully
replaced any suppliers lost as a result of industry consolidations, there can be
no assurance that the Company would be able to replace the volume of production
or the type of products supplied by any of its current vendors, if they were
acquired or their operations terminated or were interrupted.

                                       12



<PAGE>


Changing Aluminum Prices Could Impact the Company's Profit Margins.

         The Company relies on long-term relationships with its suppliers, but
generally has no long-term, fixed-price purchase contracts; it purchases at
prevailing market prices at the time orders are placed, with discounts for
quantity purchases. The aluminum industry is highly cyclical, and the prices
that the Company pays for aluminum and the prices it charges will be influenced
by a variety of factors outside of its control, including general economic
conditions (both domestic and international), competition, production levels,
import duties and other trade restrictions, and currency fluctuations. While the
Company hedges metal pricing and foreign currency as it deems appropriate for a
portion of its purchase and sales contracts, there exists the risk of a
counterparty default in fulfilling the hedge contract. Should there be a
counterparty default, the Company could be exposed to losses on the original
hedged contract.

If Suppliers Fail to Provide Products of Sufficient Quality Customer
Relationships and Prices Could be Negatively Affected.

         The Company's relationships with its customers depend, in part, on its
ability to deliver products of the quality specified by those customers. The
Company obtains certifications from its suppliers as to the quality of the
products being supplied. However, if the product is not of the quality certified
or if a supplier fails to deliver products ordered by the Company, the Company
may be forced to buy product of the specified quality from another source to
fulfill the customer's order. While the Company would then be left with a claim
against the supplier for any loss sustained by the Company, the Company may not
be able to successfully prosecute these claims, particularly in foreign
jurisdictions.

The Company is Exposed to Credit Risk from its Customers.

         The Company does not require collateral for customer receivables. The
Company has significant balances owing from customers that operate in cyclical
industries and under leveraged conditions, which may impair the collectability
of these receivables. The Company carries credit insurance with a 10% co-pay
provision and specific limits on each customer's receivables. The Company's
failure to collect a significant portion of the amount due on its receivables
directly from customers or through insurance claims (or other material default
by customers) could have a material adverse effect on the Company's financial
condition and results of operations. In selected instances the co-pay may be
increased to 15%.

Increased Tariffs Could Adversely Affect the Company's Financial Condition.

         During 2002, in excess of 60% of sales of the Company represented sales
of aluminum products from countries that were considered developing countries
whose exports were eligible for preferential tariff treatment upon import into
the United States under the generalized system of preference(GSP). There can be
no assurance that any of our suppliers will continue to be eligible for such
preferential tariff treatment or that the generalized system of preference will
be renewed after it expires on December 31, 2006. If the preferential tariff
treatment of any of our suppliers that are currently eligible for such treatment
becomes unavailable, then imports from such supplier may be subjected to a
tariff, instead of the duty-free treatment those imports now enjoy. To the
extent these increased costs could not be passed on to its customers, the
Company's profit margins could be negatively affected. This could result in
higher costs to us and have a material adverse effect on our business, financial
condition and results of operations.

Antidumping and Other Duties Could be Imposed on the Company, its Suppliers and
their Products.

         The imposition of an antidumping or other increased duty on any
products imported by the Company could have a material adverse effect on the
Company's financial condition. Under United States' law, an

                                       13



<PAGE>


         antidumping duty may be imposed on any imports if two conditions are
met. First, the Department of Commerce must decide that the imports are being
sold in the United States at less than fair value. Second, the International
Trade Commission (the "ITC") must determine that the United States' industry is
materially injured or threatened with material injury by reason of the imports.
The ITC's determination of injury involves a two-prong inquiry: first, whether
the industry is materially injured, and second, whether the dumping, not other
factors, caused the injury. The ITC is required to analyze the volume of
imports, the effect of imports on United States prices for like merchandise, and
the effects the imports have on United States producers of like products, taking
into account many factors, including lost sales, market share, profits,
productivity, return on investment, and utilization of production capacity.

If the Company Fails to Deliver Products on a Timely Basis, it May Suffer
Losses.

         Interruption of shipping schedules upon which the Company relies for
foreign purchases could result in untimely deliveries to the Company's customers
or cause the Company to purchase the products in the United States at a higher
cost in order to meet delivery schedules. Consequently, the Company's profit
margins could be reduced or it could suffer losses. The Company guarantees its
customers that it will deliver products within the period specified in their
purchase orders. Any interruption of the means of transportation used by the
Company to transport products could cause delays in delivery of products, could
force the Company to buy the products from domestic suppliers at a higher cost
in order to fulfill its commitments, and also could result in the loss of
customers.

The Company Competes with Companies with Captive Sources of Supply.

         Many of the Company's competitors are significantly larger than the
Company and many have captive sources of supply and significantly greater access
to capital and other resources. Thus, if the Company's sources of supply are
interrupted, its competitors could be in a position to capture the Company's
customers.

The Company is Dependent on its Executive Officers.

         The Company is highly dependent on its executive officers, the loss of
any of one of which could have a significant adverse impact on the Company's
business.

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

         The Company uses financial instruments designated as fair value hedges
to manage its exposure to commodity price risk and foreign currency exchange
risk inherent in its trading activities. It is the Company's policy to hedge
such risks, to the extent practicable. The Company enters into high-grade
aluminum futures contracts to limit its gross margin exposure by hedging the
metals content element of firmly committed purchase and sales commitments. In
cases where the Company enters into fixed price contracts with its supplier and
variable priced sales with its customers the Company will utilize the futures
market to match the terms of the purchase and sale. The Company also enters into
foreign exchange forward contracts to hedge its exposure related to commitments
to purchase or sell non-ferrous metals denominated in international currencies.
In situations where the Company enters into purchase or sales denominated in
foreign currency the foreign exchange market will be utilized to hedge foreign
exchange risk exposure. The Company records "mark-to-market" adjustments on
these futures and forward positions, and on the underlying firm purchase and
sales commitments which they hedge, and reflects the net gains and losses
currently in earnings.

         At December 31, 2002, net unrealized gains on the Company's foreign
exchange forward contracts amounted to approximately $1,067,000 as compared to
$27,000 at December 31, 2001 and net unrealized losses on aluminum futures
contracts amounted to approximately $133,000 as compared to $300,000 in 2001.

                                       14



<PAGE>


         These unrealized amounts were offset by like amounts on the underlying
commitments which were hedged, and are reflected in the accompanying 2002 and
2001 balance sheet in other current assets ($1,067,000), inventory ($133,000)
and accrued expenses ($1,200,000). Unrealized amounts are reflected on the 2001
balance sheet in inventory ($273,000) and accrued expenses ($273,000).

ITEM 8.  FINANCIAL STATEMENTS

         Furnished at end of report commencing on page F-1.

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

         During the past two years, the Company has not made changes in, and has
not had disagreements with, its independent accountants on accounting and
financial disclosures.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Officers and Directors

         The officers and directors of the Company are as follows:
<TABLE>
<CAPTION>

    Name                                   Age      Position
    ----                                   ---      --------
<S>                                         <C>     <C>
    William Spier.....................      68      Non-Executive Chairman of the Board and
                                                    Director
    Nathan Kahn.......................      48      Chief Executive Officer, President and
                                                    Director
    Sandra Kahn.......................      45      Vice President, CFO and Director
    Harvey Wrubel.....................      49      Vice President of Sales and Director
    Jack Bendheim.....................      56      Director
    Barry L. Eisenberg................      56      Director
    Peter G. Howard...................      67      Director
    Nathan Mazurek....................      40      Director
    Morris J. Smith...................      45      Director
</TABLE>


         William Spier. Mr. Spier has been a director of the Company since
October 1996 and was Acting Chief Executive Officer from November 1997 until
September 1999. Mr. Spier presently serves as non-executive Chairman of the
Board of the Company. Mr. Spier has been a private investor since 1982. He also
served as Chairman of DeSoto, Inc., a manufacturer and distributor of cleaning
products, from May 1991 through September 1996, and as Chief Executive Officer
of DeSoto, Inc., from May 1991 to January 1994 and from September 1995 through
September 1996. From 1980 to 1981, Mr. Spier was Vice Chairman of Phibro-Salomon
Inc. Mr. Spier also serves as a Director of Keystone Consolidated Industries,
Inc.

         Nathan Kahn. Mr. Kahn has been the Chief Executive Officer, President
and a director of the Company since September 1999. Prior to the Merger, Mr.
Kahn was the President and a director of Empire

                                       15



<PAGE>


         from the time of its formation in 1984. Mr. Kahn has also been the
President and a director of Empire-Pacific since its formation in 1996.

         Sandra Kahn. Ms. Kahn has been a Vice President, the Chief Financial
Officer and a director of the Company since September 1999. Prior to the Merger,
Ms. Kahn was the Secretary and Treasurer and a director of Empire from the time
of its formation in 1984. Ms. Kahn has also been the Secretary and Treasurer and
a director of Empire-Pacific since its formation in 1996.

         Harvey Wrubel. Mr. Wrubel has been the Vice President of Sales/Director
of Marketing of the Company since September 1999. Prior to the Merger, Mr.
Wrubel was the Vice President of Sales/ Director of Marketing of Empire for more
than the prior five years. Mr. Wrubel has been a director of the Company since
September 2000.

         Jack Bendheim. Mr. Bendheim has been a director of the Company since
September 1999. He has also been the President, Chief Executive Officer,
Chairman of the Board and a director of Philipp Brothers Chemicals, Inc. for
more than the prior five years. Mr. Bendheim is also a director of The Berkshire
Bank, CDG Technologies, and Penick Corporation.

         Barry L. Eisenberg. Mr. Eisenberg has been a director of the Company
since 1990 and was Secretary and Treasurer of the Company from 1993 until
September 1999. Since 1995, Mr. Eisenberg has been an active investor and
director of private companies in Israel. Prior thereto, Mr. Eisenberg was, for a
period of more than five years, a partner in the Roseland, New Jersey law firm
of Lasser, Hochman, Marcus, Guryan & Kuskin.

         Peter G. Howard. Mr. Howard has been a director of the Company since
September 1999. He has also been the Managing Director of Empire-Pacific since
1996. From 1961 to 1995, Mr. Howard held various positions within the aluminum
industry, the most recent of which was Divisional General Manager of Comalco
Rolled Products, a unit of Comalco Aluminum Ltd., an aluminum producer.

         Nathan Mazurek. Mr. Mazurek has been the President of Provident
Industries, a diversified manufacturer of electrical systems and components for
more than the prior five years. Mr. Mazurek has been a director of the Company
since September 1999.

         Morris J. Smith. Mr. Smith has been a director of the Company since
January 1994. Since 1993, Mr. Smith has been a private investor and investment
consultant. Prior thereto, Mr. Smith was employed for a period of more than five
years by Fidelity Investments as a portfolio manager.

Family Relationships

         Nathan Kahn and Sandra Kahn are husband and wife. Barry L. Eisenberg
and Jack Bendheim are brothers-in-law.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) reports
that they file.

         Based solely upon review of the copies of such reports furnished to the
Company and written representations from certain of the Company's executive
officers and directors that no other such reports were

                                       16



<PAGE>


required, the Company believes that during the period from January 1, 2002
through December 31, 2002 all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten-percent beneficial owners were
complied with on a timely basis.

ITEM 11.  EXECUTIVE COMPENSATION

Executive Compensation

         The following table sets forth for the periods indicated information
concerning the compensation earned by the Company's Chief Executive Officer and
each of the Company's most highly compensated executive officers.
<TABLE>
<CAPTION>

                                       Summary Compensation Table
                                           Annual Compensation                                Long-Term
                                                                                         Compensation Awards

                                                                                    Securities         All Other
                                                                                    Underlying     Compensation ($)
                                                                                     Options
                                                                                       (#)
Name and Principal Position            Year       Salary($)       Bonus($)

<S>                                    <C>        <C>             <C>                 <C>              <C>
Nathan Kahn                            2002       $450,000           --               2,000            $1,000(1)
     Chief Executive Officer and       2001       $350,000         $75,000            2,000            $2,000(1)
     President                         2000       $300,000         $50,000            2,000            $2,000(1)

Sandra Kahn                            2002       $175,000           --               2,000            $1,000(1)
     Vice President,                   2001       $150,000         $25,000            2,000            $2,000(1)
     Chief Financial Officer,
     Treasurer and Secretary           2000       $100,000           --               2,000            $2,000(1)

Harvey Wrubel                          2002       $219,890        $298,000            2,000           $125,173(2)
     Vice President of Sales           2001       $214,316        $300,000            2,000           $117,218(3)
                                       2000       $207,872        $277,000            2,000           $139,142(4)
</TABLE>

(1) Represents directors' fees.

(2) Of this amount $1,000 represents director fees and $124,173 represents
non-cash taxable compensation charged to Mr. Wrubel upon the vesting of
non-contingent restricted shares as discussed in Item 7, Management Discussion
and Analysis of Financial Condition and Results of Operations - Accounting
Treatment of Restricted Stock Agreement.

(3) Of this amount, $2,000 represents director fees and $115,218 represents
non-cash taxable compensation charged to Mr. Wrubel upon the vesting of
non-contingent restricted shares, as discussed in Item 7, Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Accounting Treatment of Restricted Stock Agreement.

(4) Of this amount, $1,000 represents director fees and $138,142 represents
non-cash taxable compensation charged to Mr. Wrubel upon the vesting of
non-contingent restricted shares, as discussed in Item 7, Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Accounting Treatment of Restricted Stock Agreement.

                                       17



<PAGE>


Option Grants in Last Fiscal Year

         The following table contains information concerning the stock option
grants made to each of the officers and employees named in the Summary
Compensation Table during 2002. No stock appreciation rights were granted to
these individuals during such year.
<TABLE>
<CAPTION>

                                                    (Individual Grants) (1)
                                     Number of        Percent of     Exercise     Expiration        Potential
                                     securities     total options      price         date        realizable value
                                     underlying       granted to      ($/Sh)                    at assumed annual
                                  options granted    employees in       (2)                       rates of stock
                                        (#)          fiscal year                                    price
                 Name                                                                            appreciation for
                                                                                                   option term
                                                                                                   5%       10%
                                                                                                   ($)      ($)
                                                                                                    $        $
<S>                                    <C>               <C>           <C>          <C>           <C>        <C>
Nathan Kahn                            2,000             11.1%         $1.13        06/18/12      1,421      3,602
Sandra Kahn                            2,000             11.1%         $1.13        06/18/12      1,421      3,602
Harvey Wrubel                          2,000             11.1%         $1.13        06/18/12      1,421      3,602
---------------------------
</TABLE>

         (1) All options granted to the named officers and employees are
non-statutory under federal tax laws and were granted on June 18, 2002. Pursuant
to the option agreement underlying these options, the options became exercisable
immediately upon grant.

         (2) The exercise price may be paid in cash or, under certain
circumstances, in shares of the Company's common stock.

Year-End Option Values

         The following table provides certain information concerning the options
held by the officers and employees named in the Summary Compensation Table,
above, as of December 31, 2002.

<TABLE>
<CAPTION>

                         Options as of December 31, 2002

                                          Number of Securities Underlying      Value of Unexercised In-the-Money
                                          Unexercised Options at Year End             Options at Year End
   Name                                    Exercisable      Unexercisable       Exercisable       Unexercisable

<S>                                            <C>          <C>                   <C>             <C>
   Nathan Kahn                                 8,000        ............          $1,804          ............
   Sandra Kahn                                 8,000        ............          $1,804          ............
   Harvey Wrubel                             206,000        ............          $1,804          ............
---------------------------
</TABLE>

         The closing price of the Company's common stock on December 31, 2002,
the last day of trading in 2002, was $1.40.

                                       18



<PAGE>


Compensation of Directors

         The non-executive Chairman of the Board is paid $25,000 per annum as
consideration for his services. Each other director is paid $500 for attendance
(in person or by telephone) at meetings of the Board, and all directors are
reimbursed for out-of-pocket expenses incurred in connection with attendance at
Board meetings during the year ended December 31, 2002. In addition, pursuant to
the Company's 1996 stock option plan, the Company granted the following options
to its directors.
<TABLE>
<CAPTION>

                                Number of
Name                     Shares Underlying Option       Exercise Price Per Share
----                     ------------------------       ------------------------
<S>                               <C>                            <C>
Jack Bendheim                     2,000                          $1.13
Barry Eisenberg                   2,000                          $1.13
Peter Howard                      2,000                          $1.13
Nathan Kahn                       2,000                          $1.13
Sandra Kahn                       2,000                          $1.13
Nathan Mazurek                    2,000                          $1.13
Morris Smith                      2,000                          $1.13
William Spier                     2,000                          $1.13
Harvey Wrubel                     2,000                          $1.13
</TABLE>

Certain Agreements with Officers of the Company

     Employment Agreements with Officers

         On September 17, 1999, the Company entered into employment agreements
with each of Nathan Kahn and Sandra Kahn. Certain information regarding these
agreements is set forth below. The forms of these agreements are incorporated by
reference to this report as exhibits.

         Term. The initial term of each agreement was three years. Each
agreement provided that the term will be extended automatically for successive
two-year periods unless either party gives written notice of termination at
least 180 days prior to the end of the initial term or the then additional term,
as the case may be. Each agreement provides that the Company may terminate the
agreement upon the Disability of the executive or for Cause (as such terms are
defined the agreement). Nathan Kahn's contract was extended for an additional
two years by an amendment in July 2002, and a copy of which has been filed as an
exhibit to this report. Sandra Kahn's contract was extended automatically for an
additional two year period pursuant to the terms of her agreement.

         Base Salary. The Company has agreed to pay Nathan Kahn a base salary of
$450,000 per annum and Sandra Kahn a base salary of $175,000 per annum. These
amounts may be increased, but not decreased, by the Board of Directors. The base
salary provided for by each agreement is subject to possible upward annual
adjustments based upon changes in a designated cost of living index.

         Non-Compete. Each agreement provides that during the Specified Period
(as defined below) the employee will not, among other things, directly or
indirectly, be engaged as a principal in any other business activity or conduct
which competes with the business of the Company or be an employee, consultant,
director, principal, stockholder, advisor of, or otherwise be affiliated with,
any such business, activity or conduct. The "Specified Period" means the
employee's period of employment and the four year period thereafter, provided
that if the employee's employment is terminated for Disability or without Cause
(or the employee voluntarily terminates his employment following a breach by the
Company), the Specified Period will terminate two years after the employee's
employment terminates.

                                       19



<PAGE>


     Employment Agreement with Harvey Wrubel

         On September 17, 1999, the Company entered into an employment agreement
with Harvey Wrubel. Certain information regarding this agreement is set forth
below. The form of this agreement is incorporated by reference as an exhibit to
this report.

         Term. The initial term of this agreement was until December 31, 2002.
The agreement provides that the term will be extended automatically for
successive two-year periods unless either party gives written notice of
termination at least 90 days prior to the end of the original term or the then
additional term, as the case may be. The agreement provides that the Company may
terminate the agreement any time with or without Cause (as such term is defined
in the agreement). However, if the Company terminates the agreement without
Cause, the employee is entitled to continue receiving his base salary until the
scheduled end of the term. Mr. Wrubel's contract extended automatically for an
additional two year period pursuant to the terms of his agreement.

         Base Salary. The agreement provided for an initial base salary to be
paid at a rate of $203,000 per annum. This amount may be increased, but not
decreased, by the Board of Directors. The base salary is subject to possible
upward annual adjustments based upon changes in a designated cost of living
index. Mr. Wrubel's current base salary is $219,890.

         Performance-Based Compensation. In addition to base salary, the
agreement provides that the Company shall pay the employee performance-based
compensation in accordance with a formula provided for in the agreement.

         Non-Compete. The agreement provides that, during the employment term
and for 12 months thereafter, the employee will not, among other things, be
engaged in, or be, an employee, director, partner, principal, stockholder or
advisor of any business, activity or conduct which competes with the business of
the Company. During any period following termination of the employee's
employment the foregoing will only apply to competition with regard to aluminum
and such other commodities as were being sold by the Company within six months
prior to such termination.

Compensation Committee Interlocks and Insider Participation

         During 2002, the Compensation Committee consisted of William Spier,
Nathan Kahn and Jack Bendheim. In addition to being a member of the Compensation
Committee, Mr. Kahn is also our Chief Executive Officer and President. Mr. Spier
previously served as our Acting Chief Executive Officer from November 1997 until
September 1999. Other than described above, none of the other members of the
Compensation Committee serve, or previously served as officers or employees of
the Company. In addition, there were no interlocks with other companies within
the meaning of the Securities and Exchange Commission's proxy rules during 2002.

                                       20




<PAGE>


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth as of March 14, 2003, certain
information with respect to beneficial ownership (as defined in Rule 13d-3 of
the Securities and Exchange Act of 1934) of the common stock of the Company by
(i) each person that is a director of the Company, (ii) each person named in the
Summary Compensation Table under Item 10 "Executive Compensation," (iii) all
such persons as a group and (iv) each person known to the Company to be the
owner of more than 5% of the common stock of the Company.
<TABLE>
<CAPTION>

                                                       Number of Shares         Percent of Common
Name and Address(1)                                 Beneficially Owned (2)         Stock Owned
---------------------------------------             ----------------------      -----------------
Directors and Officers:
<S>                                                       <C>                           <C>
William Spier                                             257,669(3)                    2.7%
Nathan Kahn and Sandra Kahn                             5,217,923(4)                   55.3%
Harvey Wrubel                                             584,327(5)                    6.2%
Jack Bendheim                                              28,000(6)                      *
Barry L. Eisenberg                                        371,706(7)                    3.9%
Peter G. Howard                                             8,000(8)                      *
Nathan Mazurek                                              8,000(9)                      *
Morris J. Smith                                           81,467(10)                      *
All officers and directors as a group
(9 persons)                                            6,557,092(11)                     66%
</TABLE>

* Less than 1%

(1)  The address of all listed persons is c/o the Company.

(2)  Unless otherwise indicated, each person has sole investment and voting
     power with respect to the shares indicated. For purposes of this table, a
     person or group of persons is deemed to have "beneficial ownership" of any
     shares as of a given date which such person has the right to acquire within
     60 days after such date. For purposes of computing the percentage of
     outstanding shares held by each person or group of persons named above on a
     given date, any security which such person or persons has the right to
     acquire within 60 days after such date is deemed to be outstanding for the
     purpose of computing the percentage ownership of such person or persons,
     but is not deemed to be outstanding for the purpose of computing the
     percentage ownership of any other person.

     The information in this table was prepared by the Company in reliance on
     filings made with the Securities and Exchange Commission on Schedule 13D
     and Forms 4 or 5.

(3)  Consists of (i) 104,669 currently outstanding shares held by Mr. Spier and
     (ii) 153,000 shares underlying currently exercisable options held by Mr.
     Spier.

(4)  Consists (i) of 5,201,923 currently outstanding (9,384,761 shares received
     in the merger less 3,824,511 contingent shares which have been retired and
     less 358,327 non-contingent shares transferred to Mr. Wrubel, as described
     under "Compensation Arrangements") and (ii) 16,000 shares underlying
     currently exercisable options held by Nathan and Sandra Kahn.

(5)  Consists of (i) 358,327 shares transferred from Nathan and Sandra Kahn to
     Mr. Wrubel, (ii) 20,000 currently outstanding shares held by Mr. Wrubel,
     and (iii) 206,000 shares underlying currently exercisable options held by
     Mr. Wrubel.

(6)  Consists of (i) 20,000 outstanding shares held by the Bendheim Foundation,
     an affiliate of Mr. Bendheim, and (ii) 8,000 shares underlying currently
     exercisable options held by Mr. Bendheim.

                                       21



<PAGE>


(7)  Consists of (i) 700 currently outstanding shares held by Mr. Eisenberg,
     (ii) 84,667 shares underlying currently exercisable options held by Mr.
     Eisenberg, (iii) 500 shares owned by Mr. Eisenberg's wife and (iv) 284,839
     currently outstanding shares held by 241 Associates LLC, a limited
     liability company. Miriam Mark is the sole manager of 241 Associates LLC
     and as such has voting and investment power with respect to the shares held
     by 241 Associates LLC. Miriam Mark is the daughter of Barry L. Eisenberg. A
     majority of the ownership interest of 241 Associates LLC is owned by Mr.
     Eisenberg and his wife and, as a result of such ownership interests, Mr.
     Eisenberg may influence the voting and disposition of the shares of common
     stock held by 241 Associates LLC. Mr. Eisenberg disclaims beneficial
     ownership of such shares and of the shares owned by his wife.

(8)  Consists of 8,000 shares underlying currently exercisable options held by
     Mr. Howard.

(9)  Consists of 8,000 shares underlying currently exercisable options held by
     Mr. Mazurek.

(10) Consists of (i) 15,800 currently outstanding shares held by Mr. Smith and
     (ii) 65,667 shares underlying currently exercisable options held by Mr.
     Smith. The Brook Road Nominee Trust, nominee for the Morris Smith Family
     Trust, is the owner of 163,653 outstanding shares of Common Stock. Esther
     Smith, the mother of Morris J. Smith, is the sole trustee of the Morris
     Smith Family Trust and as such has voting and investment power with respect
     to such shares. The Morris Smith Family Trust is a discretionary trust, the
     potential beneficiaries of which are Mr. Smith and members of his family.
     Mr. Smith disclaims any beneficial ownership of any and all shares owned by
     the Brook Road Nominee Trust.

(11) Consists of 6,006,758 currently outstanding shares and 531,334 shares
     underlying currently exercisable options and warrants. Does not include
     163,653 shares that Mr. Smith disclaims beneficial ownership of as
     described in footnote 10 above.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.

ITEM 14.  CONTROLS AND PROCEDURES

         As required by new Rule 13a-15 under the Securities Exchange Act of
1934, within the 90 days prior to the date of this report, the Company carried
out an evaluation under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in the reports it files or submits 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. In connection with the new rules, the Company is further reviewing and
documenting disclosure controls and procedures, including internal controls and
procedures for financial reporting, and may from time to time make changes aimed
at enhancing their effectiveness and to ensure that systems evolve with the
business.

                                       22




<PAGE>


ITEM 15.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

     2.1  Agreement and Plan of Merger among the Registrant, Empire Resources
          Inc., Empire Resource Pacific, Ltd., Nathan Kahn and Sandra Kahn,
          dated as of February 22, 1999 (incorporated by reference to Exhibit
          2.1 to the Registrant's Report on Form 8-K dated March 9, 1999)

     3.1  Certificate of Merger of Empire Resources, Inc. into Integrated
          Technology USA, Inc. (incorporated by reference from the
          correspondingly numbered exhibit in the Company's Annual Report on
          Form 10-KSB for the year ended December 31, 1999).

     3.2  Amended and Restated Certificate of Incorporation of the Registrant
          (incorporated by reference from the correspondingly numbered exhibit
          in the Company's Registration Statement on Form SB-2 (No. 333-9697).

     3.3  Amendment No. 1 to the Amended and Restated Certificate of
          Incorporation (incorporated by reference from the correspondingly
          numbered exhibit in the Company's Annual Report on Form 10-K for the
          year ended December 31, 2001).

     3.4  Amended and Restated By-Laws of the Registrant (incorporated by
          reference from the correspondingly numbered exhibit in the Company's
          Registration Statement on Form SB-2 (No. 333-9697).

     3.5  Amendment No. 1 to Amended and Restated By-Laws of the Registrant*

     3.6  Amendment No. 2 to Amended and Restated By-Laws of the Registrant
          (incorporated by reference to Exhibit 3.1 to the Registrant's Current
          Report on Form 8-K dated May 11, 1997).

     10.1 Employment Agreement dated September 15, 1999 entered into by
          Registrant with Nathan Kahn (incorporated by reference from the
          correspondingly numbered exhibit in the Company's Annual Report on
          Form 10-KSB for the year ended December 31, 1999).

     10.2 Employment Agreement dated September 15, 1999 entered into by
          Registrant with Sandra Kahn (incorporated by reference from the
          correspondingly numbered exhibit in the Company's Annual Report on
          Form 10-KSB for the year ended December 31, 1999).

     10.3 Employment Agreement dated September 15, 1999 entered into by
          Registrant with Harvey Wrubel (incorporated by reference from the
          correspondingly numbered exhibit in the Company's Annual Report on
          Form 10-KSB for the year ended December 31, 1999).

     10.4 Restricted Stock Agreement dated September 15, 1999 entered into by
          Registrant with Harvey Wrubel (incorporated by reference from the
          correspondingly numbered exhibit in the Company's Annual Report on
          Form 10-KSB for the year ended December 31, 1999).

     10.8 Third Modification and Extension of Lease for office space, dated as
          of the 17th of February, 2000, to the Lease between 400 Kelby
          Associates, as Landlord, and Registrant as Tenant (incorporated by
          reference from the correspondingly numbered exhibit in the Company's
          Annual Report on Form 10-KSB for the year ended December 31, 1999).

                                       23



<PAGE>


    10.9    Registrant's 1996 Stock Option Plan (incorporated by reference from
            the correspondingly numbered exhibit in the Company's Registration
            Statement on Form SB-2 (No. 333-9697).

    10.10   Form of Indemnification Agreement entered into by the Registrant
            with executive officers and directors (incorporated by reference
            from the Company's Annual Report on Form 10-KSB for the year ended
            December 31, 2000).

    10.11   Credit Facility dated December 21, 2000 between the Registrant and
            The Chase Manhattan Bank, as Lead Arranger and Administrative Agent
            (incorporated by reference from the Company's Annual Report on Form
            10-KSB for the year ended December 31, 2000).

    10.12   Agreement of Lease for warehouse facility dated September 27, 2000
            between Townsend Properties, Inc. and Registrant (incorporated by
            reference from the Company's Annual Report on Form 10-KSB for the
            year ended December 31, 2000).

    11.1    Statement regarding computation of per share earnings.*

    21.1    List of subsidiaries of the Registrant.*


--------------------------------------
*        Filed herewith

         (b)  Reports on Form 8-K

         None




                                                                   24



<PAGE>


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant  caused  this  report to be signed on its  behalf by the  undersigned
thereunto duly authorized.

Empire Resources, Inc.


By:      /s/ Nathan Kahn
         ---------------------------
         Nathan Kahn
         Chief Executive Officer
         March 31, 2003


/s/ Nathan Kahn
---------------------------
Nathan Kahn
Chief Executive Officer and Director (Principal Executive Officer)
March 31, 2003


/s/ Sandra Kahn
---------------------------
Sandra Kahn, Chief Financial Officer and Director
(Principal Financial and Principal Accounting Officer)
March 31, 2003


/s/ William Spier
---------------------------
William Spier, Director
March 31, 2003


/s/ Jack Bendheim
---------------------------
Jack Bendheim, Director
March 31, 2003


                                       25



<PAGE>


/s/ Barry L. Eisenberg
---------------------------
Barry L. Eisenberg, Director
March 31, 2003


/s/ Peter G. Howard
---------------------------
Peter G. Howard, Director
March 31, 2003


/s/ Nathan Mazurek
---------------------------
Nathan Mazurek, Director
March 31, 2003


/s/ Morris J. Smith
---------------------------
Morris J. Smith, Director
March 31, 2003


/s/ Harvey Wrubel
---------------------------
Harvey Wrubel, Director
March 31, 2003



                                       26



<PAGE>


         CERTIFICATION PURSUANT TO SECTION 302(a)
         OF THE SARBANES-OXLEY ACT OF 2002

I, Nathan Kahn, certify that:

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

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

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

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

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

      b)  evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

      c)  presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):

      a)  all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

      b)  any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

The registrant's other certifying officers and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 31, 2003
                                            By:   /s/ Nathan Kahn
                                               -----------------------------
                                                      Nathan Kahn
                                                      Chief Executive Officer

                                       27



<PAGE>


         CERTIFICATION PURSUANT TO SECTION 302(a)
         OF THE SARBANES-OXLEY ACT OF 2002

I, Sandra Kahn, certify that:

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

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

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

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: March 31, 2003
                                            By:   /s/ Sandra Kahn
                                               -----------------------------
                                                      Sandra Kahn
                                                      Chief Financial Officer


                                       28



<PAGE>


INDEPENDENT AUDITORS' REPORT

Board of Directors
Empire Resources, Inc.
Fort Lee, New Jersey


We have audited the accompanying consolidated balance sheets of Empire
Resources, Inc. and subsidiaries as of December 31, 2002 and 2001, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for each of the years in the three-year period ended December 31,
2002. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements enumerated above present
fairly, in all material respects, the consolidated financial position of Empire
Resources, Inc. and subsidiaries as of December 31, 2002 and 2001, and the
consolidated results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.




Eisner LLP (formerly Richard A. Eisner & Company, LLP)

New York, New York
March 7, 2003


                                                                             F-1



<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands except share amounts)
<TABLE>
<CAPTION>

                                                                                   December 31,
                                                                        --------------------------------
                                                                               2002             2001
                                                                        --------------------------------
<S>                                                                      <C>             <C>
ASSETS
Current assets:
     Cash                                                                $    1,072      $     1,147
     Trade accounts receivable (less allowance for
      doubtful accounts of $191 and $189 at December 31,
      2002 and 2001)                                                         24,255           22,789
     Inventories                                                             27,832           27,782
     Other current assets                                                     1,259              923
                                                                         ----------      -----------
          Total current assets                                               54,418           52,641

Furniture and equipment (less accumulated depreciation of $347 and $313)         24               39
Deferred financing costs, net                                                    27               82
                                                                         ----------      -----------


                                                                         $   54,469      $    52,762
                                                                         ==========      ===========


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Notes payable - banks                                               $   25,600      $    26,700
     Trade accounts payable                                                  13,036           13,000
     Accrued expenses                                                         2,911            1,118
                                                                         ----------      -----------

          Total current liabilities                                          41,547           40,818
                                                                         ----------      -----------

Commitments and contingencies

Stockholders' equity:
     Common stock $.01 par value, 20,000,000 shares authorized and
          11,749,651 shares issued at December 31, 2002 and 2001                117              117
     Additional paid-in capital                                              10,727           10,681
     Retained earnings                                                        4,824            2,454
     Accumulated other comprehensive income--
     cumulative translation adjustment                                           21               30
     Treasury stock (2,307,400 shares and 1,180,600 shares)                  (2,767)          (1,338)
                                                                         ----------      -----------

            Total stockholders' equity                                       12,922           11,944
                                                                         ----------      -----------

                                                                         $   54,469      $    52,762
                                                                         ==========      ===========
</TABLE>

See notes to consolidated financial statements                               F-2




<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

Consolidated Statements of Income
(In thousands except per share amounts)
<TABLE>
<CAPTION>

                                                    Year Ended December 31,
                                            ---------------------------------------
                                                 2002          2001           2000
                                            ---------------------------------------
<S>                                         <C>           <C>           <C>
Net sales                                   $  158,738    $  143,235    $   165,328
Cost of goods sold                             147,714       133,862        154,579
                                             ---------     ---------      ---------

Gross profit                                    11,024         9,373         10,749
Selling, general and administrative
expenses                                         6,032         5,290          5,708
                                             ---------     ---------      ---------

Operating income                                 4,992         4,083          5,041
Interest expense                                 1,046         2,032          3,123
                                             ---------     ---------      ---------

Income before income taxes                       3,946         2,051          1,918
Income taxes                                     1,576           755            877
                                             ---------     ---------      ---------

Net income                                  $    2,370    $    1,296    $     1,041
                                             =========     =========      =========

Weighted average shares outstanding:
     Basic                                      10,049        10,956         11,346
                                             =========     =========      =========

     Diluted                                    10,189        11,091         11,445
                                             =========     =========      =========

Earnings per share:
     Basic                                        $.24          $.12           $.09
                                             =========     =========      =========

     Diluted                                      $.23          $.12           $.09
                                             =========     =========      =========

</TABLE>


See notes to consolidated financial statements                               F-3





<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

Consolidated Statements of Changes in Stockholders' Equity
(In thousands)
<TABLE>
<CAPTION>

                               Common Stock
                                                                           Acumulated
                                                                              Other
                                                                          Comprehensive
                                                                             Income-
                                                   Additional              Cumulative                 Total          Total
                             Number of               Paid-in    Retained   Translation  Treasury   Stockholders' Comprehensive
                               Shares     Amount     Capital    Earnings   Adjustment     Stock      Equity         Income
                            --------------------------------------------------------------------------------------------------
<S>                            <C>       <C>        <C>         <C>         <C>         <C>         <C>           <C>
Balance at December 31, 1999   15,575    $   155    $  9,925    $   117     $   36      $   (59)    $ 10,174
Transfer of restricted                                   299                                             299
shares to key employee
Capital contribution by                                  286                                             286
stockholders
Purchase of treasury stock                                                                 (732)        (732)
(590 shares)
Net change in cumulative                                                        32                        32          32
translation adjustment
Net income for 2000                                               1,041                                1,041       1,041
                                                                                                                --------
                                                                                                                  $1,073
                             --------   --------   ---------   --------   --------     --------    ---------    --------
Balance at December 31, 2000   15,575    $   155    $ 10,510    $ 1,158     $   68      $  (791)    $ 11,100
Transfer of restricted                                   133                                             133
shares to key employee
Purchase of treasury stock                                                                 (547)        (547)
(534 shares)
Net change in cumulative                                                       (38)                      (38)        (38)
translation adjustment
Retirement of common stock     (3,825)       (38)         38
Net income for 2001                                               1,296                                1,296       1,296
                             --------   --------   ---------   --------   --------     --------    ---------    --------
Balance at December 31, 2001   11,750    $   117    $ 10,681    $ 2,454     $   30      $(1,338)    $ 11,944    $  1,258
                                                                                                                --------
Transfer of restricted                                    46                                              46
shares to key employee
Purchase of treasury stock                                                               (1,429)      (1,429)
(1,127 shares)
Net change in cumulative                                                        (9)                       (9)         (9)
translation adjustment
Net income for 2002                                               2,370                                2,370       2,370
                                                                                                                --------
                                                                                                                  $2,361
                             --------   --------   ---------   --------   --------     --------    ---------    --------
Balance at December 31, 2002   11,750    $   117    $ 10,727    $ 4,824     $   21      $(2,767)    $ 12,922
                             --------   --------   ---------   --------   --------     --------    ---------
</TABLE>


See notes to consolidated financial statements                               F-4



<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>

                                                                    Year Ended December 31,
                                                             -------------------------------------
                                                               2002          2001          2000
                                                             -------------------------------------
<S>                                                        <C>          <C>           <C>
Cash flows from operating activities:
     Net income                                            $   2,370    $    1,296    $    1,041
     Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
           Depreciation and amortization                          89            84            78
           Deferred income taxes                                  34            63          (114)
           Translation adjustment                                 (9)          (38)           32
           Transfer of restricted shares to key employee          46           133           299
           Changes in:
              Trade accounts receivable                       (1,466)       14,616       (11,450)
              Inventories                                        (50)        1,139        (9,559)
              Due  from stockholders                                           286          (286)
              Other current assets                              (370)          148          (251)
              Deferred financing costs                                                       (99)
              Trade accounts payable                              37        (5,939)       10,835
              Accrued expenses                                 1,792            49          (702)
                                                            --------     ---------      --------

           Net cash provided by (used in)
             operating activities                              2,473        11,837       (10,176)
                                                           ---------     ---------     ---------

Cash flows used in investing activities:
     Additions to furniture and equipment                        (19)          (21)          (23)
                                                           ---------     ---------     ---------

Cash flows from financing activities:
     (Repayments of) proceeds from notes payable - banks      (1,100)      (11,300)       11,700
     Capital contribution by stockholders                                                    286
     Distribution payable to former stockholders                                             (47)
     Cost related to financing                                                 (30)
     Purchase of treasury stock                               (1,429)         (547)         (732)
                                                           ---------     ---------     ---------

           Net cash (used in) provided by
            financing activities                              (2,529)      (11,877)       11,207
                                                           ---------     ---------     ---------

Net (decrease) increase in cash                                  (75)          (61)        1,008
Cash at beginning of period                                    1,147         1,208           200
                                                           ---------     ---------     ---------

Cash at end of period                                      $   1,072    $    1,147     $   1,208
                                                           =========    ==========     =========

Supplemental disclosures of cash flow information:
   Cash paid during the period for:
          Interest                                         $     998    $    2,087     $   3,317
          Income taxes                                     $   1,396    $    1,033     $   1,065
</TABLE>



See notes to consolidated financial statements                               F-5




<PAGE>


NOTE A - BUSINESS

Empire Resources, Inc ("the Company") is engaged principally in the purchase,
sale and distribution of nonferrous metals to a diverse customer base located
throughout North America and Australia. The Company sells its products through
its own marketing and sales personnel and through its independent sales agents
located in the U.S. who receive commissions on sales. Empire Resources-Pacific
LTD.("Empire-Pacific"),a wholly-owned subsidiary of the Company acts as its
sales agent in Australia. The Company purchases from an array of suppliers
located throughout the world.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1]  Principles of consolidation:

     The consolidated financial statements include the accounts of the Company
     and its wholly owned subsidiaries. All intercompany balances have been
     eliminated in consolidation.

[2]  Revenue recognition:

     Revenue is recognized when title to the goods passes to the customers.

[3]  Inventories:

     Inventories are stated at the lower of cost or market. Cost is determined
     by the specific-identification method. Inventory consists of purchased
     semi-finished aluminum products.

[4]  Furniture and equipment:

     Furniture and equipment are stated at cost. Depreciation of furniture and
     equipment is calculated on the straight-line method over their estimated
     useful lives of three to five years.

[5]  Deferred financing costs:

     Deferred financing costs include fees and costs incurred to obtain long
     term financing and are being amortized over the terms of the respective
     loans. Unamortized deferred financing costs are charged to expense when
     debt is retired before the maturity date.

[6]  Commodity futures and foreign currency hedging activities:

     The Company uses financial instruments designated as fair value hedges to
     manage its exposure to commodity price risk and foreign currency exchange
     risk inherent in its operations. It is the Company's policy to hedge such
     risks, to the extent practicable. The Company enters into high-grade
     aluminum futures contracts to limit its gross margin exposure by hedging
     the metals content element of firmly committed purchase and sales
     commitments. The Company also enters into foreign exchange forward
     contracts to hedge its exposure related to commitments to purchase or sell
     non-ferrous metals denominated in international currencies. The Company
     records "mark-to-market" adjustments on these futures and forward
     positions, and on the underlying firm purchase and sales commitments which
     they hedge, and reflects the net gains and losses currently in earnings
     (See Note E).

[7]  Foreign currency translation:

     Empire-Pacific's functional currency is the Australian dollar. Cumulative
     translation adjustments represent translation of Australian dollar amounts
     into U.S. dollars.

[8]  Income taxes:

     The Company follows the asset and liability approach for deferred income
     taxes. This method provides that deferred tax assets and liabilities are
     recorded, using currently enacted tax rates, based upon the difference
     between the tax bases of assets and liabilities and their carrying amounts
     for financial statement purposes. Deferred tax asset valuation allowances
     are recorded when management does not believe that it is more likely than
     not that the related deferred tax assets will be realized.

                                                                             F-6



<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[9]  Earnings per share:

     Basic earning per share is computed by dividing net income by the weighted
     average number of common shares outstanding during the year. Diluted
     earnings per share gives effect to all dilutive potential common shares
     outstanding during the year. The dilutive effect of the outstanding stock
     warrants and options was computed using the treasury stock method. For the
     years ended December 31, 2002, 2001 and 2000, diluted earnings per share
     did not include the effect of approximately 544,000, 616,000 and 1,209,000
     options outstanding at such dates as this effect would be anti-dilutive.

[10] Stock-based compensation:

     At December 31, 2002, the Company had a stock option plan which is
     described more fully in Note G. The Company accounts for stock-based
     employee compensation under the recognitions and measurement principles of
     Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
     Issued to Employees", and related interpretations. No stock-based employee
     compensation cost is reflected in net income as all options granted under
     the Plan had an exercise price equal to the market value of the underlying
     common stock on the date of grant. The Company has adopted the
     disclosure-only provisions of Statement of Financial Accounting Standards
     ("SFAS") No. 123, "Accounting for Stock-Based Compensation." The following
     table illustrates the effect on net income and earnings per share if the
     fair value based method had been applied to all awards.
<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                                                (In thousands)
                                                 --------------------------------------------
                                                     2002             2001             2000
                                                     ----             ----             ----
<S>                                              <C>              <C>              <C>
Reported net income                              $   2,370        $   1,296        $   1,041
Stock-based employee compensation determined
under the fair value based method                       (5)              (5)             (21)
                                                 ---------        ---------        ---------
Pro forma net income                             $   2,365        $   1,291        $   1,020
                                                 =========        =========        =========

Earnings per share (basic and diluted):
    As reported
        Basic                                    $     .24        $     .12        $     .09
        Diluted                                  $     .23        $     .12        $     .09

    Pro-forma
        Basic                                    $     .24        $     .12        $     .09
        Diluted                                  $     .23        $     .12        $     .09
</TABLE>

The fair value of each option grant on the date of grant is estimated using the
Black-Scholes option-pricing model which included the following assumptions
stated on a weighted average basis:

<TABLE>
<CAPTION>

                                                2002              2001             2000
                                                ----              ----             ----
<S>                                              <C>               <C>              <C>
      Dividend yield                             0%                0%               0%
      Volatility                                0.40              0.40             0.40
      Risk free interest rate                   4.23%            3.87%          5.96%-6.20%
      Expected life in years                      5                5                 5
</TABLE>

The weighted average fair values of options granted during the years ended
December 31, 2002, 2001 and 2000 were $0.47, $0.40 and $0.47, respectively.

                                                                             F-7




<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[11] Deferred stock based compensation:

     The expense relating to deferred stock based compensation is based on the
     fair market value of the stock as of the grant date and is amortized over
     the vesting period of three years. This resulted in amortization expense of
     $46,000, $133,000 and $299,000 for the years ended December 31, 2002, 2001
     and 2000, respectively. The amount has been fully amortized as of December
     31, 2002.

[12] Use of estimates:

     The preparation of financial statements in accordance with accounting
     principles generally accepted in the United States of America requires
     management to make estimates and assumptions that affect the reported
     amount of assets and liabilities and disclosure of contingent assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenues and expenses during the reporting period. Actual
     results could differ from these estimates.

[13] Significant customers and concentration of suppliers:

     One major customer accounted for approximately 11% of the Company's
     consolidated net sales for the year ended December 31, 2002. No customers
     accounted for more than 10% of the Company's consolidated net sales for the
     years ended December 31, 2001 and 2000.

     The Company's purchase of nonferrous metal is from a limited number of
     suppliers located throughout the world. Three suppliers accounted for 75%,
     74%, and 62% of total purchases during the years ended December 31,2002,
     2001 and 2000, respectively. One such supplier accounted for 58% of these
     purchases in 2002. The Company's loss of any of its three largest suppliers
     or a material default by any such supplier in its obligations to the
     Company would have at least a short-term material adverse effect on the
     Company's business.

NOTE C - INVENTORIES

Inventories consist of the following semi finished aluminum products:
<TABLE>
<CAPTION>

                                                        December 31,
                                                   2002              2001
                                                   ----              ----
<S>                                            <C>               <C>
     Stored in warehouses                      $13,879,000       $13,190,000
     In transit                                 13,953,000        14,592,000
                                               -----------       -----------
                                               $27,832,000       $27,782,000
                                               ===========       ===========
</TABLE>

Substantially all of the Company's inventories have been purchased for specific
customer orders.

NOTE D - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of notes payable to the banks approximate fair value as of
December 31, 2002 and 2001 because the interest rates on such debt approximate
the market rate for the Company given the appropriate risk factors. Derivative
financial instruments are carried at fair value. (See Note E)

NOTE E - DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

As of January 1, 2001, the Company has adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting For Derivative Instruments and Hedging
Activities", issued by the Financial Accounting Standards Board. SFAS No. 133
requires the Company to recognize all derivatives in the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value through
earnings. If the derivative is a hedge, depending upon the nature of the hedge,
changes in the fair value of the derivative are either offset against the change
in fair value of the hedged assets, liabilities or firm commitments through
earnings, or recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in fair
value, if any, is immediately recognized in earnings.

The Company uses financial instruments designated as fair value hedges to manage
its exposure to commodity price risk and foreign currency exchange risk inherent
in its trading activities. It is the Company's policy to hedge such risks,

                                                                             F-8



<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

NOTE E - DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

to the extent practicable. The Company enters into high-grade aluminum futures
contracts to limit its gross margin exposure by hedging the metals content
element of firmly committed purchase and sales commitments. The Company also
enters into foreign exchange forward contracts to hedge its exposure related to
commitments to purchase or sell non-ferrous metals denominated in international
currencies. The Company records "mark-to-market" adjustments on these futures
and forward positions, and on the underlying firm purchase and sales commitments
which they hedge, and reflects the net gains and losses currently in earnings.

The gains and losses on futures and forward positions as of January 1, 2001
offset the losses and gains at that date on the underlying firm purchase and
sales commitments which they hedged, and accordingly the Company did not record
a transition adjustment as of January 1, 2001, upon the adoption of SFAS No.
133. For periods prior to to January 1, 2001, gains and losses on aluminum
futures contracts and on foreign exchange forward contracts were deferred and
recognized in earnings as the aluminum products were sold. Accordingly, the
adoption of SFAS No. 133 did not have a material effect on the Company's results
of operations for the year ended December 31, 2001.

At December 31, 2002, net unrealized gains on the Company's foreign exchange
forward contracts amounted to approximately $1,067,000 as compared to $27,000 at
December 31, 2001 and net unrealized losses on aluminum futures contracts
amounted to approximately $133,000 as compared to $300,000 in 2001. These
unrealized amounts were offset by like amounts on the underlying commitments
which were hedged, and are reflected in the accompanying 2002 balance sheet in
other current assets ($1,067,000), inventory ($133,000) and accrued expenses
($1,200,000). Unrealized amounts are reflected on the 2001 balance sheet in
inventory ($273,000) and accrued expenses ($273,000).

For the years ended December 31, 2002, and 2001, hedge ineffectiveness
associated with derivatives designated as fair value hedges was insignificant,
and no fair value hedges were derecognized.

NOTE F - NOTES PAYABLE - BANKS

On December 21, 2000, the Company entered into a revolving credit agreement with
two commercial banks which provided for a line of credit of $50,000,000. In
January 2001 a third commercial bank joined the facility and the credit line was
increased to $60,000,000. Borrowings by the Company under this line of credit
are collateralized by security interests in substantially all its assets. Under
the agreement, the Company is required to maintain working capital and net worth
ratios, as defined by the loan agreement. The facility expires on June 30, 2003.
As of December 31, 2002 and 2001 respectively, the credit utilized under this
facility amounted to $31.6 million and $31.1 million (including approximately $6
million and $4.4 million of outstanding letters of credit). Interest on
borrowings is the higher of (i) the federal funds rate plus 1/2% and (ii) the
prime rate of Chase Bank, plus the applicable margin defined in the loan
agreement. At December 31, 2002 and 2001 respectively, the interest rate charged
approximated 3.4% and 4%, respectively.

NOTE G - STOCK OPTIONS

The Company's 1996 Stock Option Plan (the "1996 Plan"), as amended, provides for
the granting of options to purchase not more than an aggregate of 1,129,000
shares of common stock. All officers, directors and employees of the Company and
other persons who perform services for the Company are eligible to participate
in the 1996 Plan. Some or all of the options may be "incentive stock options"
within the meaning of the Internal Revenue Code of 1986, as amended.

The 1996 Plan provides that it is to be administered by the Board of Directors,
or by a committee appointed by the Board, which will be responsible for
determining, subject to the provisions of the 1996 Plan, to whom the options are
granted, the number of shares of common stock subject to an option, whether an
option shall be incentive or non-qualified, the exercise price of each option
(which, other than in the case of incentive stock options, may be less than the
fair market value of the shares on the date of grant), the period during which
each option may be exercised and the other terms and conditions of each option.
No options may be granted under the 1996 Plan after July 29, 2006.

                                                                             F-9



<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

NOTE G - STOCK OPTIONS (CONTINUED)

The following is a summary of stock option activity for the years ended December
31, 2002, 2001 and 2000:
<TABLE>
<CAPTION>

                                                                 Number        Exercise price         Weighted Average
                                                               of shares          per share             Exercise Price
                                                               ---------          ---------             --------------
<S>                                                            <C>               <C>                        <C>
   Options outstanding at December 31, 1999                    1,239,712         $0.01-$6.00                $3.04

   Options granted                                                72,000         $1.19-$1.63                $1.50

   Options forfeited                                              (4,000)        $1.19-$1.63                $1.41
                                                                 -------

   Options outstanding at December 31, 2000                    1,307,712         $0.01-$6.00                $2.96

   Options granted                                                18,000            $0.98                   $0.98

   Options forfeited                                           ( 574,779)        $1.64-$6.00                $4.99
                                                               ---------

   Options outstanding at December 31, 2001                      750,933         $0.01-$2.00                $1.36

   Options granted                                                18,000            $1.13                   $1.13

   Options forfeited                                             (85,000)      $1.37 - $1.50                $1.49
                                                                --------

   Options outstanding at December 31, 2002                      683,933        $.01 - $2.00                $1.33
                                                                 =======

   Options exercisable at December 31, 2002                      683,933        $.01 - $2.00                $1.33
                                                                 =======

   Options available for grant under 1996 Plan
      at December 31, 2002                                       545,000
                                                                 =======
</TABLE>

NOTE H - COMMON STOCK

[1]  Stock repurchase plan:

     In November 1999, the Board of Directors authorized the Company to
     repurchase up to one million shares of its common stock at prices not to
     exceed $1.50 per share. In December 2000, the number of shares authorized
     for repurchase was increased to 1.5 million. In June 2002, the Board of
     Directors increased the number of shares authorized to a total of
     2,500,000. As of December 31, 2002, the Company had repurchased a total of
     2,257,400 shares under the repurchase program for an aggregate cost of
     $2,717,000. The Company had also acquired 50,000 shares for a cost of
     $50,000 in September 1999.

[2]  Capital contribution by stockholders:

     Results of operations for 2000 include a provision for an adjustment to
     state income taxes of $286,000 relating to the years 1996 through 1998.
     This tax assessment was subject to indemnification by the former
     stockholders of the Company which was received in 2001. Net income for 2000
     was reduced by $189,000, net of the related federal income tax benefit. As
     a result of this event, total stockholders' equity as of December 31, 2000
     was increased by $97,000.

[3]  Retirement of Contingent Shares Issued to Empire Stockholders:

     In connection with a merger of the Company in 1999, 3,824,511 of the
     Company's shares were deposited into escrow subject to an earn-out formula
     dependant on the Company achieving a minimum cumulative after-tax net
     income (subject to certain adjustments) of $4.4 million during the two-year
     period commencing April 1, 1999 and ending March 31, 2001. No shares were
     released from escrow in accordance with this formula and all of the
     3,824,511 shares placed in escrow were retired on June 13, 2001.

                                                                            F-10



<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

NOTE I - INCOME TAXES

Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>

                                          Year Ended December 31,
                               ------------------------------------------
                                    2002         2001             2000
                                    ----         ----             ----
<S>                             <C>            <C>           <C>
       Current                  $1,542,000     $692,000      $   991,000
       Deferred                     34,000       63,000         (114,000)
                                    ------     --------      -----------

                                $1,576,000     $755,000      $   877,000
                                ==========     ========      ===========
</TABLE>

The U.S. statutory rate of 34% can be reconciled to the effective tax rate as
follows:

<TABLE>
<CAPTION>

                                                               Year Ended December 31,
                                                     ------------------------------------------
                                                          2002           2001           2000
                                                          ----           ----           ----
<S>                                                    <C>              <C>            <C>
    Provision for taxes at statutory rate              $1,342,000       $697,000       $652,000
    State and local taxes, net of federal tax benefit     154,000         58,000         71,000
    State taxes pertaining to prior years,
    net of federal tax benefit                                                          189,000
    Permanent differences and other                        80,000                       (35,000)
                                                       ----------       --------       --------
                                                       $1,576,000       $755,000       $877,000
                                                       ==========       ========       ========
</TABLE>

No valuation allowance has been provided for U.S. deferred tax assets of $16,000
and $51,000 at December 31, 2002 and December 31, 2001 respectively, since
management is of the opinion that it is more likely than not that such assets
will be realized. The major temporary difference that gives rise to the deferred
tax asset at December 31, 2002 is the allowance for doubtful accounts. The major
temporary differences that give rise to the deferred tax asset at December 31,
2001 is the allowance for doubtful accounts and the stock based compensation.
In addition, deferred tax assets and liabilities of equal amounts of
approximately $355,000 and $104,000 at December 31, 2002 and 2001, respectively
related to derivative contracts and related hedged commitments.

NOTE J - EMPLOYEE RETIREMENT BENEFITS

Effective November 1, 1999, the Company implemented a salary reduction employee
benefit plan, a qualified plan adopted to conform to Internal Revenue Code
Section 401(k). Employees may contribute up to 15% of their eligible
compensation, and the Company will provide a matching contribution of 50% of
employee contributions limited to 2% of employee compensation. The plan covers
all employees who have attained age 18, and substantially all eligible employees
have elected to participate.

Each employee's pre-tax contributions are immediately vested upon participation
in the plan. The employees' vesting of the Company's matching contribution is
based upon length of service as follows:

<TABLE>
<CAPTION>

       Years of service                             Vested %
       ----------------                             --------
<S>                                                    <C>
               1                                       25%
               2                                       50%
               3                                       75%
               4                                      100%
</TABLE>

                                                                            F-11




<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

NOTE J - EMPLOYEE RETIREMENT BENEFITS (CONTINUED)

Employees who terminate prior to 100% vesting forfeit their non-vested portion
of the Company's matching contribution, and those funds are used to reduce
future matching contributions. Employees in active service on the effective date
of the plan were granted retroactive service credit for the purpose of
determining their vested percentage. Company matching contributions amounted to
$25,000 in 2002, $30,000 in 2001, and $24,000 in 2000.

NOTE K - EARNINGS PER SHARE

The following is the reconciliation of the numerators and denominators of the
basic and diluted earnings per share:
<TABLE>
<CAPTION>

                                                              Year Ended December 31,
                                                      (In thousands except per share amounts)
                                                    -------------------------------------------
                                                           2002         2001         2000
                                                           ----         ----         ----
<S>                                                      <C>          <C>          <C>
Numerator:
   Net Income                                            $ 2,370      $ 1,296      $ 1,041
Denominator:
   Computation of basic earnings per share:
      Weighted average shares outstanding - basic         10,049       10,956       11,346
   Basic earnings per share                              $  0.24      $  0.12      $  0.09

   Computation of diluted earnings per share:
      Weighted average shares outstanding - basic         10,049       10,956       11,346
   Potentially dilutive shares:
      Shares issuable upon exercise of
        dilutive options and warrants                        140          135           99
      Weighted average shares outstanding - diluted       10,189       11,091       11,445
   Diluted earnings per share                            $  0.23      $  0.12      $  0.09
</TABLE>

NOTE L - BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION

The Company operates in one business segment-the purchase, sale and distribution
of non-ferrous metals. Sales to domestic and foreign customers were as follows:

<TABLE>
<CAPTION>

                                     ----------------------------------------------
                                                Year Ended December 31,
                                                     (In thousands)
                                     ----------------------------------------------
                                            2002           2001            2000
                                     --------------- -------------- ---------------
<S>                                      <C>            <C>             <C>
United States                            $ 127,327      $ 113,915       $ 128,174
Canada and Pacific Rim                      31,411         29,320          37,154
                                         ---------      ---------       ---------
                                         $ 158,738      $ 143,235       $ 165,328
                                         =========      =========       =========
</TABLE>


                                                                            F-12



<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

NOTE M - SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                       2002
                                              ------------------------------------------------------
                                                  March        June        September       December
                                                    31          30             30             31
                                              ----------- ----------- ---------------- -------------
                                                     (In thousands except per share amounts)
                                              ------------------------------------------------------
<S>                                             <C>         <C>             <C>           <C>
Net sales                                       $ 40,417    $ 37,838        $ 40,567      $ 39,916
Gross profit                                       2,838       2,678           2,804         2,704
Operating income                                   1,460       1,289           1,343           836
Net income                                           734         637             658           341
Income per common share-
  Basic and diluted
    Basic                                           $.07        $.06            $.07          $.04
    Diluted                                         $.07        $.06            $.07          $.04
Weighted average shares outstanding
    Basic                                         10,569      10,564           9,676         9,442
    Diluted                                       10,699      10,699           9,819         9,588


                                                                       2001
                                              ------------------------------------------------------
                                                  March        June        September       December
                                                    31          30             30             31
                                              ----------- ----------- ---------------- -------------
                                                     (In thousands except per share amounts)
                                              ------------------------------------------------------
Net sales                                       $ 44,283    $ 41,191        $ 31,041      $ 26,720
Gross profit                                       2,766       2,516           2,228         1,862
Operating income                                   1,396       1,266             949           472
Net income                                           412         417             352           115
Income per common share-
  Basic and diluted
    Basic                                           $.04        $.04            $.03          $.01
    Diluted                                         $.04        $.04            $.03          $.01
Weighted average shares outstanding
    Basic                                         11,037      11,025          11,024        10,741
    Diluted                                       11,136      11,159          11,160        10,876
</TABLE>

NOTE N - COMMITMENTS AND CONTINGENCIES

[1]  Lease:

          The Company leases its office facilities under a lease expiring on
     March 31, 2005, and leases warehouse and distribution facilities under a
     lease expiring on October 31, 2005. The Company also leases equipment and
     vehicles under leases which run through November 2005. The minimum
     noncancelable scheduled rentals under these leases are as follows:

<TABLE>
<CAPTION>

          Year Ending
          December 31,
          ------------
<S>                                              <C>
             2003                                430,000
             2004                                430,000
             2005                                227,000
                                            ------------
                                              $1,087,000
                                            ============
</TABLE>

     Rent expense for the years ended December 31, 2002, 2001, and 2000 was
     $437,000, $376,000 and $255,000 respectively.

                                                                            F-13




<PAGE>


EMPIRE RESOURCES, INC. AND SUBSIDIARES

NOTE N - COMMITMENTS AND CONTINGENCIES (CONTINUED)

[2]  Letters of credit:

     Outstanding letters of credit at December 31, 2002 amounting to $6.0
     million expire from January through March of 2003.

[3]  Employment agreements:

     In September 1999, the Company entered into three year employment
     agreements with two of its executive officers. The scheduled term of each
     agreement was three years. Each agreement provided that the term will be
     extended automatically for successive two year periods unless either party
     gives written notice of termination at least 180 days prior to the end of
     the original term or the then additional term, as the case may be. Each
     agreement provides that the Company may terminate the agreement upon the
     Disability of the executive or for Cause (as such terms are defined in the
     agreement). In July 2002, the Company entered into a two year employment
     agreement with one of its executive officers. The agreement provides that
     the Company may terminate the agreement upon the disability of the
     executive or for cause (as such terms are defined in the agreement).Base
     salary under this agreement is being paid at a rate of $450,000 per annum.
     The amount may be increased, but not decreased, by the Board of Directors.
     The base salary provided for by this agreement is subject to possible
     upward annual adjustments based upon changes in a designated cost of living
     index.

     The Company also entered into an employment agreement with another officer.
     The scheduled term of the agreement was until December 31, 2002 and was
     extended for a two year period. The base salary is $220,000 and is subject
     to possible upward annual adjustments based upon changes in a designated
     cost of living index.

[4]  Purchase commitments:

     Under the terms of some of its supply contracts, the Company may be
     required to purchase certain minimum tonnages over the term of the
     contracts.

NOTE O - VALUATION AND  QUALIFYING  ACCOUNTS  FOR YEARS ENDED DECEMBER 31, 2002,
         2001, AND 2000 RESERVES AND ALLOWANCES FOR DOUBTFUL ACCOUNTS
<TABLE>
<CAPTION>

                                                                In thousands
------------------------------------------------------------------------------------------------------------------------
                                                     Additions
                                      ------------------------------------
                    Balance at         Charged to Costs        Charged to
                   Beginning of              And                 Other           Deductions from       Balance at End of
                      Period               Expenses             Accounts            Reserves                Period
                      ------               --------             --------            --------                ------
<C>                    <C>                    <C>              <C>                  <C>                      <C>
2002                   $189                   $2                                                             $191
2001                   $202                                                            $13                   $189
2000                   $125                  $77                                                             $202
</TABLE>


                                                                            F-14