UNITED
STATES
 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,
2007
 OR
 [
]           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 COMMISSION
FILE NUMBER 001-12127
 
 EMPIRE
RESOURCES, INC.
 (EXACT
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
 DELAWARE
              22-3136782(State
      or Other Jurisdiction of Incorporation or Organization)
              (I.R.S.
      Employer Identification No.)One
      Parker Plaza
                Fort Lee, New
      Jersey
                (Address
      of Principal Executive Offices)
              07024
                (Zip
      code)
 
 (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 registeredCommon
      Stock, par value $0.01 per share
              
              American
      Stock Exchange
  Securities
registered pursuant to Section 12 (g) of the Act:  None
  Indicate
      by check mark if the registrant is a well-known seasoned issuer, as
      defined in Rule 405 of the Securities Act.
              Yes
      [  ]
              No
      [X]Indicate
      by check mark if the registrant is not required to file reports pursuant
      to Section 13 or Section 15(d) of the Act.
              Yes
      [  ]
              No
      [X]
  Indicate by check mark whether the
registrant: (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.  Yes [X]  No [  ]
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not 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 a large accelerated filer, an accelerated filer, or a
non-accelerated filer or a smaller reporting company. See definition of “large
accelerated filer” in Rule 12b-2 of the Exchange Act.
  Large
      accelerated filer
              [   ]
              Accelerated
      filer
              [   ]Non-accelerated
      filer
              [   ]
              Smaller
      reporting company
              [X]
  Indicate by
      check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act.
              Yes
      [  ]
              No
      [ X ]
  The
issuer’s revenues for the fiscal year ended December 31, 2007 were
$475,473,000
  The
aggregate market value of the voting and non-voting common stock of the
registrant held by non-affiliates as of June 30, 2007 (the last business day of
the registrant’s most recently completed second fiscal quarter) was $56.2
million, based upon the closing price of the registrant’s common stock on the
American Stock Exchange as of such date.  This calculation 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 21, 2008, was 9,826,184
shares.
  DOCUMENTS
INCORPORATED BY REFERENCE:
  Certain
portions of the registrant’s definitive proxy statement pursuant to Regulation
14A of the Securities Exchange Act of 1934 in connection with the 2008 annual
meeting of shareholders of the registrant are incorporated by reference into
Part III of this Report.
  
 
 
 EMPIRE
RESOURCES, INC.
 FORM
10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
 INDEX
 
 10-K Part and Item
      No.
              PagePART
      IItem
      1
              Description
      of Business
              3Item
      1A
              Risk
      Factors
              6Item
      2
              Properties
              8Item
      3
              Legal
      Proceedings
              8Item
      4
              Submission
      of Matters to a Vote of Security Holders
              8PART
      IIItem
      5
              Market
      for Common Equity, Related Stockholder Matters, and Small Business Issuer
      Purchases of Equity Securities
              8Item
      6
              Selected
      Financial Data
              9Item
      7
              Management’s
      Discussion and Analysis of Financial Condition and
                Results
      of Operation
              9Item
      7A
              Quantitative
      and Qualitative Disclosures about Market Risk
              12Item
      8
              Financial
      Statements
              13Item
      9
              Changes
      in and Disagreements with Accountants on Accounting and
                Financial
      Disclosure
              24Item
      9A (T)
              Controls
      and Procedures
              24Item
      9B
              Other
      Information
              24PART
      IIIItem
      10
              Directors,
      Executive Officers and Corporate Governance
              25Item
      11
              Executive
      Compensation
              25Item
      12
              Security
      Ownership of Certain Beneficial Owners and Management
                and
      Related Stockholder Matters
              25
 Item
      13
              Certain
      Relationships and Related Transactions and Director
      Independence
              25Item
      14
              Principal
      Accountant Fees and Services
              25PART
      IVItem
      15
              Exhibits
      and Financial Statement Schedules
              26Signatures
              27
 
 
  -2-
  
 PART
I
  When used in this report, the terms
“Company,” “we,” “our,” and “us” refers to Empire Resources, Inc. and its
subsidiaries, consolidated for purposes of the Company’s financial
statements.
 
 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,” 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.  These forward-looking statements generally
are identified by the words “believes,” “project,” “expects,” “anticipates,”
“estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,”
“will continue,” “will likely result,” and similar
expressions.  Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties which
may cause actual results to differ materially from the forward-looking
statements.  Our particular risks include those factors listed under
“Risk Factors” (refer to Item 1A).  We are also subject to many other
uncertainties, such as changes in general, national or regional economic
conditions; an act of war or terrorism that disrupts international shipping;
changes in laws, regulations and tariffs; the imposition of anti-dumping duties
on the products imported, including those produced by Hulamin Ltd.; failure to
successfully integrate manufacturing extrusions in the business of the Company;
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
foreign suppliers or key executives; loss of one or more significant customers;
increased credit risk from customers; failure of the Company to grow internally
or by acquisition and to integrate acquired businesses; and failure to improve
operating margins and efficiencies.  We undertake no obligation to
update or revise publicly any forward-looking statements, whether as a result of
new information, future events or otherwise.
 
 ITEM
1.                      BUSINESS
 
 Overview
 
 We are
engaged in the purchase, sale and distribution of principally semi-finished
aluminum products to a diverse customer base located throughout the United
States and Canada, Europe, Australia and New Zealand.  We also
manufacture prime aluminum extruded products in our facility located in
Baltimore, Maryland.  We sell our products through our own marketing and
sales personnel as well as through independent sales agents who are
located in North America and in Europe and who receive commissions on
sales.  We purchase products from suppliers located throughout the
world.  One supplier, Hulamin Ltd., furnished approximately 55% of our
products in 2007. While in general we place orders with our suppliers based upon
orders that we have received from our customers, we also purchase material for
our own stock, which we use for shorter term deliveries to our
customers.
  Growth
Strategy
 
 Our
strategy for growth consists of the following key elements:
 
 Provide Customers with a High Level
of Service and Cost Effective, Quality Products.We work
closely with our customers to understand their specific
requirements.  This enables us to provide each customer with
cost-effective, quality materials matching that customer’s particular
needs.  We also provide various ancillary services to our customers,
such as
 
 ·
              arranging
      for products to be stored in warehouse facilities for release to them on a
      just-in-time delivery basis,
 ·
              providing
      them with timely information about market trends and product
      development,
 ·
              upon
      their request, arranging for subsequent metal processing or finishing
      services, and
 ·
              making
      material available from our own stock to meet our customers’ short term
      requirements.
 
 Expand Volumes and Product Breadth
with Existing Suppliers and Customers.We continually seek to build on
our market knowledge.  We try to maintain a current understanding of
our suppliers’ production capabilities and of our customers’ needs and
markets.  This enables us to recognize opportunities to introduce new
product lines to our customers and to increase volume from our
suppliers.
 
 Strengthen and Expand Our Supplier
Relationships.We endeavor to continue building our supply
sources, both by expanding our relationships with existing suppliers and by
adding new suppliers.  In cultivating supplier relationships, we
emphasize our combination of market knowledge and customer base, which we
believe makes us an effective marketing and distribution channel for our
suppliers.  Conversely, we believe that our supplier relationships
position us to offer our customers a wider range of products and
services.
 
 Provide Increasingly Efficient and
Cost-Competitive Handling and Delivery Services.We utilize our own
warehouse and distribution facility in Baltimore that serves the dual purpose
of: (1) providing depot/warehousing capacity for just-in-time delivery and (2)
providing handling capability and inventory control at the Baltimore port of
entry, our most active import location.  This arrangement reduces
freight and handling expenses while increasing efficiency.  It also
enables us to monitor deliveries and serve customers more
effectively.
 
 Provide Additional Products and
Value Added Services  We believe that many of our current
customers are potential customers for our aluminum extrusions products, which we
manufacture at our Baltimore facility.  In addition, we may add
capability to provide our customers with additional value-added services (such
as processing, manufacturing, finishing, and distribution services) through
establishing joint venture arrangements with existing service providers or by
selectively making acquisitions.
 
 The
Industry
 
 The
industry in which we operate is the sale and distribution of semi-finished
aluminum products.  These products are manufactured worldwide by
rolling and extrusion facilities, many of which are owned by large integrated
companies and others by independent producers.  The products we
purchase are in turn sold to varied metal working industries including
automotive, housing and packaging, as well as to distributors.
  Although
demand for aluminum products in the United States has been cyclical, over the
longer-term demand has continued to increase.  We believe that this
growth reflects (1) general population and
 economic
growth and (2) the advantages of aluminum products, including light weight, high
degree of formability, recyclability and resistance to corrosion. According to
CRU Monitor, an industry publication, apparent consumption of aluminum sheet and
plate in North America during 2007 decreased approximately 6.6% as compared to
2006.
 
 Our
Products
 
 We derive substantially all of our
revenues from the sale of semi-finished aluminum
products.  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.  We offer most of these forms of
semi-finished aluminum products to our customers. Demand for our products is not
seasonal.
  
 -3-
  Sales,
Marketing and Services
 
 We
endeavor to build our distribution within the aluminum industry by providing
customers with quality products, access to alternative sources of supply, and
customer service.  We offer customers a range of services,
including:
 
 ·
              sourcing
      aluminum products from the appropriate supplier in order to meet pricing
      and delivery requirements;
 ·
              handling
      foreign exchange transactions for sales in local
  currency;
 ·
              assuming
      responsibility for the shipment and timely delivery of the product to the
      customer;
 ·
              assisting
      customers in identifying materials and matching their particular
      needs;
 ·
              where
      necessary, arranging for subsequent metal processing and/or finishing
      services which may be required by the
customer;
 ·
              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;
 ·
              providing
      customers with information concerning market trends and product
      development; and
 ·
              making
      available material from our own local stocks to meet customers’ short term
      requirements.
 
 We carefully monitor the timing and
processing of orders to meet customers’ needs and commit to deliver orders
within a time-period mutually agreed with the customer, generally within a
30-day window.  We maintain constant and ongoing communication with
our suppliers in order to ensure that these delivery dates are met and that
customers are apprised of the delivery status of their orders.
 
 We sell our products primarily through
our own marketing and sales personnel.  In addition, we sell our
products through independent sales agents located in North America and in Europe
who receive a commission on sales.  Our inventory generally represents
material that has been ordered by customers and is in transit or is being held
pending delivery to such customers.
 
 Suppliers
 
 We enjoy
exclusive representation arrangements with several foreign mills.  One
supplier, Hulamin Ltd, furnished approximately 55% of our products in
2007.   See Item 7 for information about our relationship with
Hulamin.
 
 We strive
to maintain long-term relationships with our suppliers and to be a significant
distributor for them.  As a result, we are often able to obtain
competitive pricing and to influence quality standards and delivery
practices.
 
 We continuously work with our existing
suppliers and explore other sources to strengthen our position in the
market.  To this end, our services include:
 
 ·
              serving
      as an integrated marketing, distribution, and service channel for export
      volume;
 ·
              purchasing
      manufacturing capacity from suppliers in
bulk;
 ·
              assuming
      responsibility for transporting the products that it
      purchases;
 ·
              eliminating
      foreign currency risks for suppliers;
and
 ·
              ensuring
      prompt payment to suppliers for materials
  purchased.
 
 Customers
 
 We serve
more than 300 customers in diverse industries, such as distribution,
transportation, automobile, housing, appliances and packaging.  In
2007, our top ten customers represented approximately 34% of our total revenues,
with one customer, Ryerson Inc., accounting for 11% of total revenues. 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.  Our customers
are located throughout the United States, Canada, Australia, New Zealand and
Europe.  Our U.S. customer base is not regional.
 
 We insure our 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 our insurance carrier will
underwrite with respect to each customer.  We may decide in particular
instances to exceed the limits granted by the credit insurance
provider.
 
 Transportation
 
 We
arrange for transportation and delivery of the products purchased by each
customer.  When we purchase products from an overseas supplier, we
accept delivery either at the port in the supplier’s home country or at the port
of destination.  If we take delivery at a foreign port, we 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, we use trucking and rail services to
deliver the products to our customers.
 
 Competition
 
 Our
principal competitors are global aluminum producers and rolling mills, including
for example, Alcoa Inc., which dominates the aluminum industry in North
America.  These companies are significantly larger, have significantly
greater financial resources, and are active in significantly more areas of the
aluminum products business than we are, including mining, refining, smelting and
recycling. These companies also have access to material produced and imported
from their own subsidiaries, which compete with us.  We also compete
with other importers and agents that act for or purchase from foreign aluminum
producers.  Our principal means of competition is customer service,
and the ability to offer competitive terms and product quality, including
providing value-added services to our customers and providing a range of product
offerings.  We also believe that agents of foreign mills are generally
less capable of providing the same value-added services to our customers because
these agents are generally captive to a single foreign source and often lack the
flexibility and range of product offerings that we offer our
customers.  We also believe that by offering our customers a full
range of products from independent sources we enable our customers to avoid
dependency in an increasingly concentrated domestic supply chain.
 
 Employees
 
 As of December 31, 2007, we had
approximately 80 employees, all of whom were full-time employees.  We
also had independent sales representatives located in the United States and in
Europe.  None of our employees are represented under a collective
bargaining agreement.
  -4-
  History
 
 The
Company was incorporated in the State of Delaware in 1990 under the name
Integrated Technology USA, Inc.  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.
 
 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.  Empire-Pacific acts as our sales agent in
Australia and New Zealand.
 
 Our
Belgian subsidiary, Imbali Metals BVBA, was incorporated in 2005 and began
operations in that year.
 Our
extrusion manufacturing business, Empire Resources Extrusions LLC, commenced the
manufacturing of aluminum extrusions in the third quarter of 2006.
  Available
Information
 
 We maintain a website at
www.empireresources.com.  We make copies of our Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any
amendments to those reports filed with or furnished to the Securities and
Exchange Commission (“SEC”) available to investors on or through our website
free of charge as soon as reasonably practicable after we have electronically
filed them with or furnished them to the SEC. Our codeof business conduct and
ethics is available on our website.The
contents of our website do not constitute a portion of this report.
 
 The
public may read and copy any materials filed by us with the Securities and
Exchange Commission (the “SEC”) at the SEC’s Public Reference Room, located at
100 F. Street, NE, Washington, DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains a website at which reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC are available. This website may be accessed at http://www.sec.gov.
  -5-
  ITEM
1A.                                RISK
FACTORS
 
 We
are Highly Dependent on a Few Suppliers.
 
 We
purchased approximately 55% of our products from one supplier in 2007 and
approximately 77% from our three largest suppliers.  Accordingly, the
termination or limitation by one or more of our largest suppliers of their
relationship with us could have a material adverse effect on our business and
results of operations.  In addition, our loss of any one of our other
suppliers (or material default by any of them in its obligations to us) due to
bankruptcy, financial difficulties, expropriation, social unrest, destruction,
sabotage, strikes, acquisition by a person or entity unwilling to provide
products to us, or for any other reason, could have a material adverse effect on
our business.
 
 As
discussed in our Overview of Management’s Discussion and Analysis, in August
2007 we amended and restated our supply agreement with Hulamin, our largest
supplier.  Hulamin supplied approximately 55% and 52% of our product
in 2007 and 2006 respectively.  Under the amended agreement, we remain
Hulamin's exclusive distributor in the U.S. and Canada.  In contrast
to the original agreement, which had no term but was terminable by either party
on twelve months' written notice, the amended agreement provides for a fixed
term that expires on August 9, 2008 and may be extended by mutual
agreement.  We do not know whether we and Hulamin will agree to renew
or to further modify the contract upon or prior to its expiration, and it is
unlikely that we will know until that time draws near.  The
non-renewal or substantial modification of the Hulamin agreement may have a
material adverse effect on our business, financial position and results of
operation.
 
 Risk of Default by Our
Suppliers.
 
 We rely
on our suppliers to fulfill contractual obligations.  The failure of
any one of our suppliers to fulfill their obligations to us may expose us to
serious losses by requiring us to purchase material at a loss in the open market
and/or absorb losses for hedges applied to the defaulting supplier’s
transaction.
 
 Consolidation
      of Suppliers May Materially Affect Our
  Operations.
 
 During
the last several years, consolidations have been taking place among aluminum
suppliers. Although we have in the past successfully replaced suppliers lost as
a result of industry consolidations, there can be no assurance that we would be
able to replace the volume of production or the type of products supplied by any
of our current vendors if they were acquired or their operations terminated or
were interrupted.
 
 We
Are Highly Dependent on a Few Significant Customers.
 
 Our sales
are highly concentrated among a few customers.  In 2007, 34% of our
revenues were derived from sales to 10 customers.  One major customer
accounted for approximately 11% of our consolidated net sales for the year ended
December 31, 2007.  Over the last several years, there have been
consolidations in the industry that may increase our sales concentration and the
related risks.  Any material reduction in sales to any of these
customers could have a material adverse effect on our business.  Our
sales contracts tend to be short term in nature.  We typically sell
our products on monthly or quarterly customer commitments.
  Rising
Interest Rates May Increase Our Borrowing Costs.
 
 Our
borrowings are primarily short-term LIBOR or money market based
loans.  If interest rates rise, our cost of borrowing will increase
and lower our profitability.  Higher interest rates may also adversely
affect some of the markets for our products, such as transportation, housing and
commercial construction.
 
 We
Are Dependent on Our Executive Officers and Key Personnel.
 
 We are
highly dependent on our executive officers and other key employees, the loss of
any of one of which could have a significant adverse impact on our
business.  We maintain key man life insurance on certain of our
executives.
 
 Our
      Supply Sources Are Subject to Substantial
Risks.
 
 We generally purchase aluminum products
from foreign suppliers.  Thus, our operations could be materially and
adversely affected by changes in economic, political and social conditions in
the countries where we currently purchase 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 our business.  Although the trend in the
markets in which we operate for our 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.  Additionally, should the economy in our suppliers' countries
strengthen, our suppliers may divert part or a substantial part of their
production to their domestic markets thus negatively affecting quantity
available for shipment to us.
 
 Changing
Aluminum Prices Could Impact Our Profit Margins.
 
 We rely
on long-term relationships with our suppliers but generally have no long-term,
fixed-price purchase contracts.  Instead we purchase at prevailing
market prices at the time orders are placed, typically with discounts for
quantity purchases.  The aluminum industry is highly cyclical and
pricing can be volatile.  The prices that we pay for aluminum and the
prices we charge will be influenced by a variety of factors outside of our
control, including general economic conditions (both domestic and
international), competition, production levels, import duties and other trade
restrictions, and currency fluctuations.
 
 Price
Volatility May Affect Profit Margins.
 
 Extreme
price volatility may cause customers to withdraw from the market due to
uncertainty, which would negatively impact our sales and/or
margins.
 
 Risk
of Counterparty Defaults
 
 In order
to minimize risk associated with fluctuations in foreign currency, and commodity
prices, we use financial instruments to hedge metal pricing and foreign
currency, as we deem appropriate for a portion of our purchase and sales
contracts. The risk of a counterparty default exists in fulfilling the hedge
contract.  Should there be a counterparty default, we could be exposed
to losses on the original hedged contract or be unable to recover anticipated
gains from the transactions.
  If
Suppliers Fail to Provide Products of Sufficient Quality Customer Relationships
and Prices Could be Negatively Affected.
 
 Our
relationships with our customers depend, in part, on our ability to deliver
products of the quality specified by those customers.  We obtain
certifications from our 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 we have ordered, we may be forced to buy
products of the specified quality from another source to fulfill the customer’s
order.  While we would then be left with a claim against the supplier
for any loss sustained by us, we may not be able to bring these claims
successfully, particularly in foreign jurisdictions.
  -6-
  We
Are Exposed to Credit Risk from Our Customers.
 
 We do not
require collateral for customer receivables.  We have significant
balances owing from customers that operate in cyclical industries and under
leveraged conditions, which may impair our collection of these
receivables.  We carry credit insurance with a 10% co-pay provision
covering the majority of our customers, and we have set specific limits on each
customer’s receivables.  However, we sometimes elect to exceed these
specific credit limits.  Our failure to collect a significant portion
of the amount due on our receivables directly from customers or through
insurance claims (or other material default by customers) could have a material
adverse effect on our financial condition and results of
operations.  In selected instances the co-pay may be
increased.
 
 Risk
of Default by Our Customers.
 
 We rely
on our customers to fulfill contractual obligations.  The failure of
any one or of our customers to do so may expose us to serious losses and may
force us to sell material at a loss in the open market and/or absorb losses for
metal hedges applied to the defaulting customer’s transaction.
 
 Unexpected
Equipment Failures or Production Difficulties May Lead To Production
Curtailments or Product Failure.
 
 We are engaged in the production of
prime aluminum extrusions at our plant located in Baltimore,
Maryland.  As a result of the production taking place at this location
we may be exposed to new and potentially serious risks such as equipment
failure, product failure (either prior to or following distribution in the
market).  Defects in the produced products that we manufacture may
result in serious and potentially fatal accidents which may in turn result in
substantial losses to us.
 
 Raw
Material Shortages.
 
 We may experience a substantial
increase in raw material costs, or a sudden lack of supply which could
negatively impact our ability to produce extrusions.
 
 Our
Production Facility Generates Hazardous Materials.
 
 Our plant utilizes and generates
hazardous materials which may expose us to environmental related risk factors
such as spills, clean-ups and poisoning.  Additional risk factors may
include a substantial increase in raw material costs, or a sudden lack of supply
as well as competition with local plants and domestic and overseas suppliers
which may enjoy lower cost bases.
  Increased
Tariffs Could Adversely Affect Our Financial Condition.
 
 During
2007, approximately 73% of our purchases of aluminum products were 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 preferences
(“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 December 31, 2008. 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 our customers, our 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 Us, Our Suppliers and Our
Products.
 
 The
imposition of an antidumping or other increased duty on any products that we
import could have a material adverse effect on our financial
condition.  For example, under United States’ law, an 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.
 
 Our Business Could be Adversely
Affected by Economic Downturns.
 
 Demand for our products is affected by a number of general economic
factors. A decline in economic activity in the U.S. and other markets in which
we operate could materially affect our financial condition and results of
operations.
 
 If
We Fail to Deliver Products on a Timely Basis, We May Suffer
Losses.
 
 Interruption
of shipping schedules upon which we rely for foreign purchases could result in
untimely deliveries to our customers or force us to purchase the products in the
United States at a higher cost in order to meet delivery
schedules.  Consequently, our profit margins could be reduced or we
could suffer losses.  We guarantee our customers that we will deliver
products within the period specified in their purchase orders.  Any
interruption of the means of transportation used by us to transport products
could cause delays in delivery of products, could force us to buy the products
from domestic suppliers at a higher cost in order to fulfill our commitments,
and also could result in the loss of customers.
 
 Failure
by our Suppliers to Honor Claims for Defective Material.
 
 From time
to time we lodge claims against our suppliers for defective material. Failure by
any one of our suppliers to honor or remit against such claims may cause us to
suffer substantial losses.
  We
Compete with Global Companies that Have Captive Sources of Supply.
 
 Many of
our competitors are significantly larger than us, and many have captive sources
of supply and significantly greater access to capital and other resources. These
companies may be more aggressive in pricing, which would negatively impact our
sales and our margins.  Additionally, if our sources of supply were
interrupted, our competitors could be in a position to capture our
customers.
 
 We
Are Exposed to Increased Energy Costs.
 
 To the extent that we utilize both
over-the-road and ocean transportation, the imposition of any additional fuel or
bunker surcharges may adversely affect our results.  Should we be
unable to pass along any such charges to our customers, our results would be
adversely affected.
 
 An
Act of War or Terrorism or Natural Catastrophes Could Disrupt Our Supply of
Products.
 
 We purchase our aluminum products
primarily from foreign suppliers.  An act of war or terrorism could
disrupt international shipping schedules, cause additional delays in importing
our Company’s products into the United States or increase the costs required to
do so.  Any natural disaster that disrupts the normal course of
international or domestic shipping could also adversely affect our
business.
 
 -7-
  Our
Business Requires Continuous Working Capital Funding that we may not be able to
Borrow.
 
 We may not always be in a position to
fund our current and/or future subsidiaries in an adequate
fashion.  Our banking arrangements are based on working capital
ratios, leverage ratios and other covenants.  Should business
circumstances force us into a default, or should we need to borrow in excess of
what we have available under our current line of credit we may not be in a
position to fund operations.
  ITEM
2.                      PROPERTIES
 
 Our
corporate headquarters are located in Fort Lee, New Jersey, where we lease
office space pursuant to a lease expiring in March 2015.  The lease
provides for a minimum annual rental payment of $274,000.
 
 We own a
distribution and warehouse facility at 6900 Quad Avenue, Baltimore, Maryland,
which also houses our extrusion press.
 
 We
believe that our facilities are adequate to meet our current and proposed
needs.
  ITEM
3.                      LEGAL
PROCEEDINGS
 
 A. W. Financial Services, S.A., a
French company ("AWF"), has filed a complaint against us, as well as against the
transfer agent for our shares, American Stock Transfer & Trust Company
("AST"), and AST's agent or sub-contractor, Affiliated Computer Services, Inc.
("ACS"), in the U.S. District Court, Southern District of New York, claiming
that 30,426 shares of the Company's common stock owned by AWF, as well as
related dividends, were improperly delivered to the State of Delaware as
unclaimed (escheated) property.  AWF alleges that the escheatment resulted
from, among other things, the negligence of each defendant and a breach of
fiduciary duty by us.  In addition, AWF alleges that through the
escheatment we and the other defendants converted its property.  AWF claims
that it has suffered damages of not less than $870,000, reflecting in general
the difference between the value of the shares when liquidated by the State of
Delaware (or its agent, ACS) and when AWF claims to have first inquired about
selling the shares in the spring of 2006, plus dividends that it would have
received in that period, plus interest.  AWF is also seeking specific
performance, namely that we deliver to it a stock certificate in its name
representing 30,426 shares of the Company's common stock.  Since the
initial complaint, AST has filed cross-claims against us and ACS seeking
indemnity for any losses resulting to it from AWF's claims. We first received
actual notice of this lawsuit on March 5, 2008.  On March 18, 2008, we
filed an answer to the complaint denying its material allegations and asserting
affirmative defenses; our time to respond to the cross-claim asserted by
AST has been extended.  AWF has been given until April 4, 2008 to file an
amended complaint.  We believe that we have meritorious defenses to
the complaint and the cross-claim and intend to defend against these claims
vigorously.
 
 
 ITEM
4.                      SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 No matters were submitted to our
shareholders during the fourth quarter of 2007.
 
 PART
II
 
 ITEM  5.
              MARKET
      FOR COMMON EQUITY,  RELATED STOCKHOLDER MATTERS, AND ISSUER
      PURCHASES OF EQUITY SECURITIES
 
 Market
for Common Stock
 
 Our
common stock is listed and trades on the American Stock Exchange (“AMEX”) under
the symbol “ERS.”
 
 The table
below sets forth the high and low sales per share prices for our common stock as
reported by AMEX for the periods indicated and sets forth our dividend payments
for the periods indicated.
 
 
 Common
      Stock
              Common
      Stock2007
              2006Period
              High
              Low
              Cash
                Dividend
              High
              Low
              Cash
                Dividend1st
      Quarter
              $12.45
              $9.31
              $0.05
              $32.97
              $10.25
              $0.052nd
      Quarter
              $11.97
              $9.30
              $0.05
              $64.20
              $11.50
              $0.053rd
      Quarter
              $10.50
              $5.35
              $0.05
              $18.60
              $8.10
              $0.054th
      Quarter
              $6.94
              $3.40
              $0.05
              $16.90
              $8.20
              $0.21
 
 On March
24, 2008, the closing price of our common stock on the American Stock Exchange
was $3.90, and there were 29 holders of record of our common stock and
approximately 8,300 beneficial holders of our common stock.
 
 Dividends
 
 During
2007, our Board of Directors declared quarterly dividends on our common
stock.  The Board of Directors determined that we were able to return
some of our cash to stockholders without impacting future revenue and earnings
growth or restricting strategic opportunities.  The Board of Directors
declared a regular cash dividend of $0.05 per share on March 14, 2007, June 20,
2007, September 19, 2007 and December 12, 2007. The Board of Directors intends
to review our dividend policy on a quarterly basis and make a determination with
respect to a dividend distribution, subject to profitability, free cash flow and
the other requirements of the business.  There can be no assurance
that dividends will be paid in the future.
 
 Share
Repurchase
 
 We did
not complete any repurchases of equity securities during fiscal
2007.
 
 -8-
  Equity
Compensation Plan Information
 
 The following table provides
information as of December 31, 2007 regarding the only compensation plan, our
2006 Stock Option Plan (the “2006 Plan”), under which our common stock is
authorized for issuance.
 
 Equity
      Compensation Plan InformationPlan
      category
              Number of securities
      to be issued upon exercise of outstanding options
              Weighted Average
      exercise price of outstanding options
              Number of securities
      remaining available for future issuance under equity compensation plans
      (excluding securities reflected in column (a))(a)
              (b)
              (c)Equity
      compensation plans approved by security holders
              258,000
              1.71
              577,000Equity
      compensation plans not approved by security holders
              -
              -
              -Total
              258,000
              1.71
              577,000
  ITEM
6.                                SELECTED
FINANCIAL DATA
 
 No
response required, because of registrant’s filing status as a smaller reporting
company.
 
 ITEM
      7.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
 
 Overview
 
 Introduction
 
 The following discusses our results of
operations and liquidity and capital resources. The discussions set forth below
and elsewhere herein contain certain statements that may be considered
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.  These
forward-looking statements generally are identified by the words “believes,”
“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and
similar expressions.  Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties which
may cause actual results to differ materially from the forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause our actual results, performance,
or achievements to be different from those expressed or implied in the
forward-looking statements.  For additional information on
forward-looking statements, see Part I of this Form 10-K.
 
 Our
Business
 
 We are
engaged principally in the purchase, sale and distribution of semi-finished
aluminum products to a diverse customer base located throughout the United
States, Canada, Europe, Australia and New Zealand.  We also
manufacture prime aluminum extruded products in our facility located in
Baltimore, MD.  We sell our products through our own marketing and
sales personnel and our independent sales agents who are located in North
America and Europe and who receive commissions on sales.  We purchase
our products from suppliers located throughout the world.  One
supplier, Hulamin Ltd., furnished approximately 55% of our products in during
2007.
 
 The
industry in which we operate is the sale and distribution of semi-finished
aluminum products.  These products are manufactured worldwide by
rolling and extrusion facilities, many of which are owned by large integrated
companies and others by independent producers.  The products we
purchase are in turn sold to varied metal working industries including
automotive, housing, packaging, as well as distributors.
 
 We do not
typically purchase inventory for stock.  Instead we place orders with
aluminum suppliers based upon orders that we have received from our customers.
Inherent in our business is the risk of matching the timing of our contracts. We
buy and sell aluminum products which are based on a constantly moving terminal
market price determined by the London Metal Exchange (“LME”).  Were we
not to hedge such exposures we could be exposed to significant losses due to the
continually changing aluminum prices.
 
 We use
aluminum future contracts to manage our exposure to commodity price risk
inherent in our activities.  It is our policy to hedge such risks, to
the extent practicable.  We enter into hedges to limit our exposure to
volatile price fluctuations in metals which would impact our gross margins on
firm purchase and sales commitments.  As an example, we may enter into
fixed price contracts with our suppliers and variable priced sales contracts
with our customers. We will utilize the futures market to match the terms of the
purchase and sale through hedging our fixed purchase commitment by entering into
a futures contract and selling the aluminum for future delivery in the month
where the aluminum is to be priced and delivered to the
customer.   We use hedges for no purpose other than to avoid
exposure to changes in aluminum prices and foreign currency rates between when
we buy a shipment of aluminum from a supplier and when we deliver it to a
customer.
  If the
underlying metal price increases since a sales contract is initiated, we would
suffer a hedging loss and have a derivative liability, but the sales price to
the customer would be based on a higher market price and offset the
loss.  Conversely, if the metal price decreases, we would have a
hedging gain and recognize a derivative asset, but the sales price to the
customer would be based on the lower market price and offset the
gain.
 
 We also
enter into foreign exchange forward contracts to hedge our exposure related to
commitments to sell non-ferrous metals denominated in some international
currencies.  In such cases, we will sell the foreign currency through
a bank for an approximate date when we anticipate receiving payment from the
foreign customer. When payment is received, we will deliver the foreign currency
to the bank and receive U.S. dollar equivalent based upon our hedged
rate.
  In
accordance with Financial Accounting Standards No. 133, we designate these
derivative contracts as fair value hedges and recognize them on our balance
sheet at fair value as well as offsetting changes in the fair value of the
related hedged firm purchase and sales commitment attributable to the hedged
risk. The fair value adjustment related to the hedged commitment is recognized
in earnings upon revenue recognition which occurs at the time of delivery to our
customers.
 
 -9-
  As
disclosed in our Risk Factors, the potential for losses using our hedging
methodology is based on either counterparty defaults with banks for our foreign
exchange hedging, the LME for our aluminum hedges, or customer
defaults.  LME or foreign exchange counterparty default could impact
our results of operations in the event that we had a derivative asset and were
owed monies by these counterparties. In the event of customer defaults we may be
forced to sell the material in the open market and absorb losses for metal or
foreign exchange hedges that were applied to the defaulting customers’
transactions. Results of operations could be materially impacted in these
instances as our hedge would effectively be cancelled due to the
default.
 
 Our derivatives are straightforward
hedging and are held for price protection and not for purposes of trading in the
futures market.  We earn our gross profit margin on the underlying
physical product and not on the movement of aluminum prices. Utilizing this
strategy, we insulate our results to the extent practicable from changes in
market prices.
 
 Our
long-term growth will continue to depend upon understanding our customers’
particular requirements and delivering a high-level of service and quality
products that meet those requirements consistently.  Our growth and
profitability will also depend upon our ability to continue building our market
knowledge and in particular our understanding of the production capabilities of
our suppliers.  We will also need to maintain, strengthen and expand
our supplier relationships in light of continued pricing
pressures.  Finally, we will need to succeed in identifying and
executing opportunities to provide our customers additional value added
offerings, in both our existing markets and product offerings as well as in
broader or new product groups and geographic areas.
 
 On August
13, 2007, we amended and restated our supply agreement with Hulamin, our largest
supplier.  Under the amended agreement, we will remain Hulamin's
exclusive distributor in the U.S. and Canada.  In contrast to the
original agreement, which had no term but was terminable by either party on
twelve months' written notice, the amended agreement provides for a fixed term
that expires on August 9, 2008 and may be extended by mutual
agreement.  In requesting this amendment, Hulamin expressed a desire
to improve their profitability and have stated their intention to review their
route to market during the coming year which may result in our agreement being
renewed or modified, or it may lapse.  We do not know whether we and
Hulamin will agree to renew or to further modify the contract upon or prior to
its expiration, and it is unlikely that we will know until that time draws
near.  Accordingly, we plan in the meantime to continue working
closely with Hulamin as well as seeking to expand and diversify our sources of
supply, including with some of our long-term existing suppliers, and with others
that we have developed more recently, as well as with others with whom we may
not have dealt previously.  We will also continue to work to diversify
our business through the growth of our extrusion production and distribution as
well as by seeking opportunities to consider acquisitions both in our
traditional and in other lines of business.  We believe that doing so
remains strategically critical to the maintenance and growth of our business,
whether or not the Hulamin agreement is renewed in August 2008.
  -10-
  Critical
Accounting Policies and Estimates
 
 Our
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles 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 our financial
statements.  Except for the adoption of   Financial
Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” (“FIN 48”), we have not adopted any significant new accounting
policies during 2007.
 
 We report
accounts receivable, net of an allowance for doubtful accounts, to represent our
estimate of the amount that ultimately will be realized in cash.  We
review the adequacy of our allowance for doubtful accounts on an ongoing basis,
using historical collection trends, aging of receivables, as well as review of
specific accounts, and we make adjustments in the allowance as we believe to be
necessary.  We maintain a credit insurance policy on the majority of
our customers.  This policy has a co-insurance provision and specific
limits on each customer’s receivables. The co-pay may be increased in selected
instances, and we sometimes elect to exceed these specific credit limits.
Changes in economic conditions could have an impact on our collection of
existing receivable balances or future allowance considerations.
 
 The
following discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which 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 our financial statements.  A
summary of those significant accounting policies can be found in Note B to our
financial statements.
 
 Among the significant judgments made by
management in the preparation of our financial statements are the determination
of the allowance for doubtful accounts and accruals for inventory
claims.
 
 Allowance
for Doubtful Account
 
 As of
December 31, 2007, we had $63,188,000 in trade receivables including an
allowance for doubtful accounts of $191,000.  We report accounts
receivable, net of an allowance for doubtful accounts, to represent our estimate
of the amount that ultimately will be realized in cash.  We review the
adequacy of our allowance for doubtful accounts on an ongoing basis, using
historical collection trends, aging of receivables, as well as review of
specific accounts, and make adjustments in the allowance as we believe
necessary.  We maintain a credit insurance policy on the majority of
our customers.  In general, this policy has a 10% co-insurance;
however there are some instances where the co-insurance may vary and instances
where we may exceed the insured values. Changes in economic conditions could
have an impact on the collection of existing receivable balances or future
allowance considerations.  In addition, changes in the credit
insurance environment could affect the availability of credit insurance and our
ability to secure the same.
 
 Accruals
for Inventory Claims
 
 Generally, our exposure on claims for
defective material is small as we refer all claims on defects back to the mill
supplying the material.  If we do not believe the mill will honor a
claim, we will record an allowance for inventory adjustments.
 
 Results
of Operations
 
 Comparison of Fiscal Years Ended
December 31, 2007 and 2006 (in thousands)
 
 Our
business in 2007 was characterized by strong revenues but lower gross
margins.  Our business was negatively impacted by various factors
including increased competition from local mills and the decline in the value of
the US dollar against certain other world currencies.  This decline
weakened our negotiating position with several of our suppliers.  Our
extrusion press did not operate at full capacity, and this had a negative impact
on our earnings as well.  We did, however, experience strong
performance from both our European distribution business and our Australian
sales.
 
 Our
ability to manage the competitive economic environment through the expansion and
upgrading of our service to our suppliers and customers is essential in the
strong competitive environment in which we operate.  This includes our
ability to ship material on a just-in-time basis from both our private and
public warehouses, the expansion and upgrading of our service to our suppliers
and customers, and our use of proprietary on-line service modules for customers
to track their shipments. By carefully deploying our warehoused inventory, we
are able to ship material to our customers with a good on time rate even when
shipments from our suppliers are late.  We continue to use our
customer relationships to leverage sales per employee by developing long term
relationships with our customers and understanding their needs.
 
 During
2007 our sales increased by $49,493 from $425,980 to $475,473, or 12% above
sales in 2006. Our sales growth during 2007 was driven by increases in our
volume in Europe and Australia. Our domestic and foreign sales during 2007 were
$329,105 and $146,368 respectively, as compared to $348,046 and $77,934
respectively, during 2006. Our top ten customers represented 34% of our sales in
2007, compared to 39% in 2006.  Our sales volume has been, and will
continue to be, a function of our ongoing ability to secure quality aluminum
products from our suppliers.  While we have long term supply
relationships with several foreign mills, one supplier accounted for
approximately 55% of our purchases for the year ended December 31, 2007, and our
three largest suppliers accounted for 77% of 2007 purchases as compared to 69%
in 2006. As a result, the termination or limitation by one or more of our
largest suppliers could have a material adverse affect on our business and
results of operations.
 
 Our gross
profit margin decreased from 7.3% in 2006 to 5.4% in 2007. Gross margin declined
by $5,431 from $31,714 to $25,743, or 17%.  Our gross margin was
adversely affected by ongoing pressure on pricing premiums from domestic and
overseas mills.  Additionally, we experienced a negative impact on our
gross profit margin as a result of our extrusions operations.
 
 Our
selling, general and administrative expenses declined by 2.4%, primarily due to
reduced compensation expense of senior management.
 
 Our
interest expense increased by $1,676 to $7,873, or 27% above interest expense in
2006. This increase is a result of continued interest rate increases and loan
balances that were generally larger throughout 2007 as compared to
2006.
 
 Net
income for 2007 was $4,544 as compared to $8,739 for 2006, a decline in our net
income of 48% for the year. Net income for 2007 from foreign operations was
$2,014 as compared to $389 in 2006.  The largest component of the
decline in net income is attributable to the decline in gross profit margin as
discussed above.
 
 -11-
  Liquidity and Capital Resources(in thousands)
 
 Unrestricted
cash increased from $1,243 in 2006 to $2,228 in 2007, or by a net of
$985 for the year ended December 31, 2007.  Net cash of $12,244
was provided by operating activities, while $10,876 of net cash was used in
financing activities, primarily repayments of bank loans.  Decreases
in inventory for the year ended December 31, 2007 was the most significant
contributor to cash flows from operating activities.
 
 As most
recently amended on January 30, 2008, our amended and restated credit
agreement  with JPMorgan Chase Bank, N.A. for itself and as the agent
for Rabobank International, New York branch, Citicorp USA, Inc., Brown Brothers
Harriman & Co., and Fortis Capital Corp. provides for a $175 million revolving line of
credit, including a commitment to issue letters of credit and a swing-line loan
sub facility.  The credit agreement provides that amounts under the
facility may be borrowed and repaid, and re-borrowed, subject to a borrowing
base test, until the maturity date of June 30, 2011.  As of December
31, 2007 the credit utilized under this agreement amounted to $112,735
(including $19,485 of outstanding letters of credit).
 
 Amounts
borrowed by the Company bear interest of Eurodollar, money market, or base
rates, at the Company’s option, plus an applicable margin.  The
applicable margin is determined by our leverage ratios.  Borrowings
under the credit agreement are collateralized by security interests in
substantially all of our assets. The credit agreement contains financial and
other covenants including but not limited to, covenants requiring maintenance of
minimum tangible net worth and compliance with leverage ratios, as well as an
ownership minimum and limitations on other indebtedness, liens, and investments
and dispositions of assets.
 
 In
connection with the revolving line of credit, we are a party to interest rate
swaps with a total notional amount of $70 million terminating in
2010.  These swaps are designated as a cash flow hedge of the variable
interest on that portion of the credit agreement up to the notional
amount.  We will pay a fixed rate of 5.14% plus a spread to the bank,
and in return the bank will pay us floating LIBOR rate plus a
spread.  This floating rate will reset monthly.
 
 In
addition, our wholly owned Belgian subsidiary, Imbali Metals BVBA ("Imbali"), is
party to a credit facility with Fortis Bank S.A./N.V., New York Branch, which
provides a EUR 10 million commitment for loans and documentary letters of
credit.  This secured credit arrangement is unconditionally guaranteed
by us.  The one year line of credit provides that amounts under the
facility may be borrowed, repaid and re-borrowed, subject to a borrowing base
test. The loans under the facility bear interest at a rate equal to 1.75% per
annum in excess of EURIBOR.  The facility may be renewed subject to
the agreement of both parties.  As of December 31, 2007 the credit
utilized under this agreement amounted to EUR 9.9 million (US
$14,617).
 
 In
addition, we are a party to a mortgage and an interest rate swap that we entered
into in 2004 in connection with the purchase of our Baltimore
warehouse.  The mortgage loan, which had an outstanding balance of
$2.2 million at December 31, 2007 and $2.3 million at December 31, 2006,
requires monthly payments of approximately $21,600, including interest at LIBOR
+ 1.75%, and matures in December 2014.  Under the related interest
rate swap, which has been designated as a cash flow hedge and remains effective
through the maturity of the mortgage loan, we will pay a monthly fixed interest
rate of 6.37% to the counterparty bank on a notional principal equal to the
outstanding principal balance of the mortgage.  In return, the bank
will pay us a floating rate, namely, LIBOR, to reset monthly, plus 1.75% on the
same notional principal amount.
 
 Management
believes that cash from operations, together with funds available under our
credit facility, will be sufficient for the next twelve months, to fund the cash
requirements relating to our existing operations.  We may require
additional debt or equity financing in connection with the future expansion of
our operations.
 
 We have
commitments in the form of letters of credit to some of our
suppliers.
 
 Off-Balance
Sheet Arrangements
 
 We do not have any off-balance sheet
arrangements as of December 31, 2007.
 
 ITEM
7A.                                           QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
 No
response required, because of registrant’s filing status as a smaller reporting
company
  -12-
 ITEM
8.                                FINANCIAL
STATEMENTS
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Board of
Directors and Stockholders
 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, 2007 and 2006, and the related
consolidated statements of income, changes in stockholders’ equity and cash
flows for each of the years in the two year period ended December 31, 2007.
These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Company’s internal control over financial reporting.  Our
audits include consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.  Accordingly, we
express no such opinion.  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 financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Empire Resources, Inc.
and subsidiaries as of December 31, 2007 and 2006, and the consolidated
results of their operations and their cash flows for each of the years in the
two year period ended December 31, 2007, in conformity with accounting
principles generally accepted in the United States of America.
 
 
 
 
 Eisner
LLP
 
 New York,
New York
 March 25,
2008
  -13-
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
 
 Consolidated
Balance Sheets
 (In
thousands except share amounts)
 
 December
      31,2007
              
              
              2006ASSETSCurrent
      assets:Cash
              
              $
              2,228
              
              
              $
              1,243Restricted
      cash
              
              
              0
              
              
              
              1,046Trade
      accounts receivable (less allowance for doubtful accounts of
                $191
      and $191)
              
              
              63,188
              
              
              
              62,520Inventories
              
              
              105,129
              
              
              
              124,249Other
      current assets, including derivatives of $2,865 and $340
              
              
              9,078
              
              
              
              2,680Total
      current assets
              
              
              179,623
              
              
              
              191,738Property
      and equipment, net
              
              
              7,751
              
              
              
              7,739Deferred
      financing costs, net of accumulated amortization of $106 and
      $64
              
              
              357
              
              
              
              408Total
      Assets
              
              $
              187,731
              
              
              $
              199,885LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Notes
      payable - banks
              
              $
              107,867
              
              
              $
              114,250Current
      maturities of long-term debt
              
              
              125
              
              
              
              117Trade
      accounts payable
              
              
              35,495
              
              
              
              42,915Accrued
      expenses and derivative liabilities
              
              
              9,940
              
              
              
              7,778Dividends
      payable
              
              
              491
              
              
              
              2,055Total
      current liabilities
              
              
              153,918
              
              
              
              167,115Long-term
      debt, net of current maturities
              
              
              2,056
              
              
              
              2,171Commitments
      and contingenciesStockholders'
      equity:Common
      stock $.01 par value, 20,000,000 shares authorized and
                11,749,651
      shares issued at December 31, 2007 and 2006
              
              
              117
              
              
              
              117Additional
      paid-in capital
              
              
              11,709
              
              
              
              11,604Retained
      earnings
              
              
              23,490
              
              
              
              20,905Accumulated
      other comprehensive (loss) income
              
              
              (1,320
              )
              
              
              258Treasury
      stock (1,923,467 and 1,959,467 shares)
              
              
              (2,239
              )
              
              
              (2,285
              )Total
      stockholders' equity
              
              
              31,757
              
              
              
              30,599Total
      Liabilities and Stockholders' equity
              
              $
              187,731
              
              
              $
              199,885
  -14-
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
 
 Consolidated
Statements of Income
 (In
thousands except per share amounts
 
 Year
      Ended December 31,2007
              
              
              2006Net
      sales
              
              $
              475,473
              
              
              $
              425,980Cost
      of goods sold
              
              
              449,730
              
              
              
              394,806Gross
      profit
              
              
              25,743
              
              
              
              31,174Selling,
      general and administrative expenses
              
              
              10,756
              
              
              
              11,017Operating
      income
              
              
              14,987
              
              
              
              20,157Interest
      expense
              
              
              7,873
              
              
              
              6,197Income
      before income taxes
              
              
              7,114
              
              
              
              13,960Income
      taxes
              
              
              2,570
              
              
              
              5,221Net
      income
              
              $
              4,544
              
              
              $
              8,739Weighted
      average shares outstanding:Basic
              
              
              9,796
              
              
              
              9,775Diluted
              
              
              10,035
              
              
              
              10,061Earnings
      per share:Basic
              
              $
              0.46
              
              
              $
              0.89Diluted
              
              $
              0.45
              
              
              $
              0.87
 
  -15-
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Changes in
Stockholders’ Equity
 (In
thousands)
 
 Common
      StockNumber
      of Shares
              
              
              Amount
              
              
              Additional
      Paid-in Capital
              
              
              Retained
      Earnings
              
              
              Acumulated
      Other Comprehensive Income (Loss)
              
              
              Treasury
      Stock
              
              
              Total
      Stockholders' Equity
              
              
              Total
      Comprehensive IncomeBalance
      at December 31, 2005
              
              
              11,750
              
              
              $
              117
              
              
              $
              10,690
              
              
              $
              15,687
              
              
              $
              92
              
              
              $
              (2,353
              )
              
              $
              24,233Stock
      options exercised
              
              
              
              
              
              
              
              
              
              
              5
              
              
              
              
              
              
              
              
              
              
              
              68
              
              
              
              73Tax
      benefit applicable to exercise of stock options
              
              
              
              
              
              
              
              
              
              
              909
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              909Net
      change in cumulative translation adjustment
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              58
              
              
              
              
              
              
              
              58
              
              
              
              58Increase
      in value of interest rate swap derivative contract, net of deferred tax of
      $68
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              96
              
              
              
              
              
              
              
              96
              
              
              
              96Increase
      in value of investment in marketable securities, net of deferred tax of
      $7
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              12
              
              
              
              
              
              
              
              12
              
              
              
              12Dividends
      ($.36 per share)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (3,521
              )
              
              
              
              
              
              
              
              
              
              
              (3,521
              )Net
      income for 2006
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              8,739
              
              
              
              
              
              
              
              
              
              
              
              8,739
              
              
              
              8,739$
              8,905Balance
      at December 31, 2006
              
              
              11,750
              
              
              $
              117
              
              
              $
              11,604
              
              
              $
              20,905
              
              
              $
              258
              
              
              $
              (2,285
              )
              
              $
              30,599Stock
      options exercised
              
              
              
              
              
              
              
              
              
              
              4
              
              
              
              
              
              
              
              
              
              
              
              46
              
              
              
              50Tax
      Benefit applicable to exercise of stock options
              
              
              
              
              
              
              
              
              
              
              101
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              101Net
      change in cumulative translation adjustment
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              174
              
              
              
              
              
              
              
              174
              
              
              
              174Decrease
      in value of interest rate swap derivative contract, net of deferred tax
      ($1,055)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,736
              )
              
              
              
              
              
              
              (1,736
              )
              
              
              (1,736
              )Decrease
      in value of investment in marketable securities, net of deferred tax
      ($10)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (16
              )
              
              
              
              
              
              
              (16
              )
              
              
              (16
              )Dividends
      ($.20 per share)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,959
              )
              
              
              
              
              
              
              
              
              
              
              (1,959
              )Net
      income for 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              4,544
              
              
              
              
              
              
              
              
              
              
              
              4,544
              
              
              
              4,544$
              2,966Balance
      at December 31, 2007
              
              
              11,750
              
              
              $
              117
              
              
              $
              11,709
              
              
              $
              23,490
              
              
              $
              (1,320
              )
              
              $
              (2,239
              )
              
              $
              31,757
 
  -16-
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
 
 Consolidated
Statements of Cash Flows (In Thousands)
 
 Year
      Ended December 31,2007
              
              
              2006Cash
      flows from operating activities:Net
      income
              
              $
              4,544
              
              
              $
              8,739Adjustments
      to reconcile net income to net cash provided by
                (used
      in) operating activities:Depreciation
      and amortization
              
              
              429
              
              
              
              354Deferred
      income taxes
              
              
              294
              
              
              
              (305
              )Foreign
      exchange loss
              
              
              (309
              )Gain
      on sale of marketable securities
              
              
              (26
              )Changes
      in:Restricted
      cash
              
              
              1,046
              
              
              
              4,004Trade
      accounts receivable
              
              
              (552
              )
              
              
              (11,034
              )Inventories
              
              
              20,091
              
              
              
              (33,868
              )Other
      current assets
              
              
              (6,818
              )
              
              
              (798
              )Trade
      accounts payable
              
              
              (7,030
              )
              
              
              12,402Accrued
      expenses
              
              
              575
              
              
              
              (5,044
              )Net
      cash provided by (used in) operating activities
              
              
              12,244
              
              
              
              (25,550
              )Cash
      flows used in investing activities:Proceeds
      from sale of  marketable securities
              
              
              130Investment
      in marketable securities
              
              
              
              
              
              
              (140
              )Purchases
      of property and equipment
              
              
              (390
              )
              
              
              (1,266
              )Net
      cash used in investing activities
              
              
              (260
              )
              
              
              (1,406
              )Cash
      flows from financing activities:(Repayments)
      proceeds from notes payable – banks
              
              
              (7,397
              )
              
              
              29,750Repayments
      - mortgage payable
              
              
              (107
              )
              
              
              (109
              )Dividends
      paid
              
              
              (3,523
              )
              
              
              (3,512
              )Deferred
      financing costs
              
              
              
              
              
              
              (472
              )Excess
      tax benefit from stock options exercised
              
              
              101
              
              
              
              909Stock
      options exercised
              
              
              50
              
              
              
              73Net
      cash (used in) provided by financing activities
              
              
              (10,876
              )
              
              
              26,639Net
      increase (decrease) in cash
              
              
              1,108
              
              
              
              (317
              )Effect
      of exchange rate
              
              
              (123
              )Cash
      at beginning of period
              
              
              1,243
              
              
              
              1,560Cash
      at end of period
              
              $
              2,228
              
              
              $
              1,243Supplemental
      disclosures of cash flow information:Cash
      paid during the period for:Interest
              
              $
              8,151
              
              
              $
              6,400Income
      taxes
              
              $
              4,079
              
              
              $
              4,275Non
      Cash Financing Activities:Dividend
      declared but not yet paid
              
              $
              491
              
              
              $
              2,055
 
  -17-
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
 
 Note
A - BUSINESS
 
 Empire
Resources, Inc (“the Company”) is engaged principally in the purchase, sale and
distribution of value added semi finished aluminum products to a diverse
customer base located throughout North America, Australia, Europe and New
Zealand.  The Company also manufactures prime aluminum extruded
products in its own facility located in Baltimore, Maryland. The Company sells
its products through its own marketing and sales personnel and through its
independent sales agents located in the U.S. and Europe who receive commissions
on sales.  The Company purchases from several suppliers located
throughout the world.  See B [12].
 
 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 and transactions
have been eliminated on consolidation.
 
 [2]
              Revenue
      recognition:
 
 Revenue
on product sales is recognized at the point in time when the product has been
shipped, title and risk of loss has been transferred to the customer, and the
following conditions are met: persuasive evidence of an arrangement exists, the
price is fixed and determinable, and collectibility of the resulting receivable
is reasonably assured.
 
 [3]
              Inventories:
 
 Inventories
which consist of purchased semi-finished aluminum products are stated at the
lower of cost or market.  Cost is determined by the
specific-identification method. Inventory has generally been purchased for
specific customer orders.  The carrying amount of inventory which is
hedged by futures contracts designated as fair value hedges is adjusted to fair
value.
 
 [4]
              Property
      and equipment:
 
 Property
and equipment are stated at cost and depreciated by the straight-line method
over their estimated useful lives.
 
 [5]
              Commodity
      futures and foreign currency hedging
activities:
 
 The
Company uses derivative 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 sell non-ferrous metals denominated in
international currencies.  The Company recognizes in the balance sheet
derivative contracts at fair value, as well as changes in the fair value of the
related hedged firm purchase and sales commitments of inventory attributable to
the hedged risk and reflects any net gains and losses currently in earnings (See
Note E).
  [6]
              Foreign
      currency translation:
 
 The
functional currency of Empire Resources Pacific Ltd., a wholly-owned subsidiary
which acts as a sales agent in Australia and New Zealand, is the Australian
dollar.  The Company also has a wholly owned subsidiary in Belgium
which sells semi finished aluminum products in Europe.  The functional
currency of this subsidiary is the Euro. Cumulative translation adjustments,
which are charged or credited to accumulated other comprehensive income, arise
from translation of functional currency amounts into U.S. dollars.
 
 [7]
              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.
 
 [8]
              Earnings
      per share:
 
 Basic
earnings 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 outstanding stock options, using the
treasury stock method.
 
 [9]
              Stock
      - based compensation:
 
 Statement
of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment”
(“SFAS 123R”), which was adopted by the Company effective January 1, 2006 using
modified prospective transition method, requires recognition of stock-based
compensation expense for an award of equity instruments, including stock
options, over the vesting period based on the fair value of the award at the
grant date. As of January 1, 2007, the Company did not have any unvested
employee stock options, and  did not grant any stock options or any
other stock-based awards during the years ended December 31, 2007 and
2006.
 
 [10]
              Recent
      accounting pronouncements
 
 In
September 2006, the FASB issued FASB Statement No. 157, "Fair Value
Measurements" (“FAS 157”) which defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. FAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. Management expects the adoption of FAS 157
will not have a material effect on the Company’s consolidated financial
statements.
 
 In
February, 2007, the FASB issued Statement No. 159 "The Fair Value Option for
Financial Assets and Financial Liabilities (“FAS 159”), which permits entities
to choose to measure many financial assets and financial liabilities at fair
value. Unrealized gains and losses on items for which the fair value option has
been elected are reported in earnings. FAS 159 is effective for fiscal years
beginning after November 15, 2007.  Management expects the adoption of
FAS 159 will not have a material effect on the Company’s consolidated financial
statements.
  [11]
              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 amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period.    Actual results could differ from
these estimates.
 
 -18-
  EMPIRE RESOURCES, INC. AND
SUBSIDIARIES
  [12]
              Significant
      customers and concentration of
suppliers:
 
 One major
customer accounted for approximately 11% and 14% of the Company’s consolidated
net sales for the years ended December 31, 2007 and 2006,
respectively.
 
 The
Company’s purchase of nonferrous metal is from a limited number of suppliers
located throughout the world. One supplier, Hulamin Ltd., accounted for 55% and
52%, of total purchases during the years ended December 31, 2007, and 2006,
respectively. The top three suppliers accounted for 77% and 69%, respectively,
of total purchases during such years. 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. In August 2007 the Company amended and restated its
supply agreement with Hulamin.  Under the amended agreement, the
Company remains Hulamin's exclusive distributor in the U.S. and
Canada.  In contrast to the original agreement, which had no term but
was terminable by either party on 12 months' written notice, the amended
agreement provides for a fixed term that expires on August 9, 2008 and may be
extended by mutual agreement.  We do not know whether we and Hulamin
will agree to renew or to further modify the contract upon or prior to its
expiration, and it is unlikely that we will know until that time draws
near.
 
 Note
C – Fair Value of Financial Instruments
 
 The carrying amounts of variable rate
notes payable to the banks and variable rate mortgage payable approximate fair
value as of December 31, 2007 and 2006 because such financial instruments
reflect market changes to interest rates.  Derivative financial
instruments are carried at fair value. (See Note E)
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
 
 Note
D – Property and Equipment
 
 Property
and equipment are summarized as follows: (in thousands)
 
 December 31,
      2007
              
              December 31,
      2006
              
              Estimated Useful
      LifeCost:Land
              $1,180
              
              $1,180Buildings
      and improvements
              3,165
              
              3,095
              
              40
      and 10 yearsExtrusion
      equipment
              3,482
              
              3,356
              
              15
      yearsOther
      equipment
              1,168
              
              974
              
              3
      to 5 years8,995
              
              8,605Less:
      Accumulated depreciation
              1,244
              
              866Net
      Book Value
              $7,751
              
              $7,739
 
 Depreciation
expense was $378 and $290 for the years ended December 31, 2007 and 2006,
respectively.
 
 
 Note
E – Derivative Financial Instruments and Risk Management
 
 Statement
of Financial Accounting Standards (SFAS) No. 133, “Accounting For Derivative
Instruments and Hedging Activities”, issued by the FASB 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 (fair value hedge), or recognized in other
comprehensive income until the hedged item is recognized in earnings (cash flow
hedge).  The ineffective portion of a derivative’s change in fair
value, if any, is immediately recognized in earnings.  At December 31,
2007 there were no deposits with brokers for margin calls.  As of
December 31, 2006 approximately $1,046,000 was deposited with various brokers
for margin calls.  Such deposits are classified as restricted cash on
the accompanying 2006 balance sheet.
 
 At
December 31, 2007 and 2006 net unrealized loss on the Company’s foreign exchange
forward contracts amounted to approximately $890,000 and $731,000
respectively.   Net unrealized gains on aluminum futures
contracts at December 31, 2007 were $2,865,000.  Net unrealized losses
on aluminum futures contracts at December 31, 2006 were $3,311,000.
 
 These
amounts, which represent the fair value of the open derivative contracts, were
offset through earnings by like amounts for the changes in the fair value of
inventories and commitments and the dollar equivalent of foreign currency
denominated accounts receivable which were hedged.  In 2007 open
derivative contracts valued at $2,865,000 and $890,000 are reflected in the
accompanying 2007 balance sheet in other current assets and derivative
liabilities, respectively.  In 2006, open derivative contracts valued
at $4,042,000 are reflected in the accompanying 2006 balance sheet in accrued
expenses and derivative liabilities.
 
 For the
years ended December 31, 2007, and 2006, hedge ineffectiveness associated with
derivatives designated as fair value hedges was insignificant, and no fair value
hedges were derecognized.
 
 As
discussed in Note G, the Company has entered into interest rate swaps to convert
a mortgage and a portion of the revolving credit facility from a variable rate
to a fixed rate obligation.  These swaps have been designated
as cash flow hedges.  At December 31, 2007, the fair value of the
interest rate swaps amounted to $2,463,000 and is included in accrued expenses
and derivative liabilities with a corresponding debit, net of deferred taxes, in
accumulated other comprehensive loss in the accompanying balance sheet. At
December 31, 2006, the fair value of the interest rate swaps amounted to
$340,000 and is included in other current assets with a  corresponding
credit, net of deferred taxes,  in accumulated other comprehensive
income net of deferred taxes in the accompanying 2006 balance
sheet.
 
 Note
F – Accrued expenses and derivative liabilities
 
 Accrued
expenses and derivative liabilities consist of the following:
 
 December
      31,2007
              
              2006Derivative
      liabilities
              
              $3,353,000
              
              $4,042,000Other
      accrued expenses
              
              6,587,000
              
              3,736,000$9,940,000
              
              $7,778,000
 
 Amounts
previously reflected in accrued expenses in our 2006 balance sheet for payables
for receipt of inventory for which invoices had not been recorded aggregating
$10,370,000 have been reclassified.
 
 -19-
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
  Note
G – Mortgage Payable
 
 In
December 2004, the Company entered into a mortgage in connection with the
purchase of a warehouse.  The mortgage, which requires monthly
payments of approximately $21,600 including interest, bears interest at LIBOR +
1.75% and matures in December 2014.
 
 In
connection with the mortgage, the Company entered into an interest rate swap
with a bank which has been designated as a cash flow hedge.  Effective
2004 through December 29, 2014 each month the Company will pay a fixed interest
rate of 6.37% to the bank on a notional principal equal to the outstanding
principal balance of the mortgage.  In return, the bank will pay to
the Company a floating rate, namely, LIBOR, to reset monthly plus 1.75% on the
same notional principal amount.
 
 The
following are the future maturities of the mortgage at December 31, 2007 (in
thousands):
 
 Year
      ending December 31,2008
              1352009
              1332010
              1412011
              1512012
              161Thereafter
              1,460$2,181
 
 Note
H - Notes Payable - Banks
 
 On June
13, 2006 the Company entered into an amended and restated credit agreement with
five commercial banks.   JPMorgan Chase Bank, N.A. acted as the
agent for the lenders.
 
 The
credit agreement provides for a $150 million revolving line of credit, including
a commitment to issue letters of credit and a swing-line loan sub
facility.  The credit agreement provides that amounts under the
facility may be borrowed, repaid and re-borrowed, subject to a borrowing base
test, until the maturity date of June 30, 2011.  As of December 31,
2007, the credit utilized under this credit agreement amounted to $112,735,000
(including $19,485,000 of outstanding letters of credit).
 
 Amounts
borrowed by the Company bear interest at LIBOR, Eurodollar, money market or base
rates, at the Company’s option, plus an applicable margin.  The
applicable margin is determined by the Company’s leverage
ratios.  Borrowings under the credit agreement are collateralized by
security interests in substantially all of the Company’s assets. The credit
agreement contains financial and other covenants including, but not limited to,
covenants requiring maintenance of minimum tangible net worth and compliance
with leverage ratios, as well as an ownership minimum and limitations on other
indebtedness, liens, and investments and dispositions of assets.
 
 In
connection with the revolving line of credit, the Company entered into interest
rate swaps with a total notional amount of $70 million terminating in
2010.  These swaps are designated as a cash flow hedge of the variable
interest on that portion of the credit agreement up to the notional
amount.  The Company will pay a weighted average fixed rate of 5.14%
plus a spread to the bank, and in return the bank will pay us floating LIBOR
rate plus a spread.  This floating rate will reset
monthly.
 
 On June
29, 2007, we amended our credit agreement to permit Imbali Metals BVBA,
(“Imbali”) a Belgian entity and wholly owned subsidiary to enter into a credit
facility with Fortis Bank S.A./N.V., New York Branch, in which Imbali was
provided with a EUR 10 million commitment available for loans and documentary
letters of credit.  After completion of this amendment, Imbali entered
into a secured credit arrangement which is unconditionally guaranteed by the
Company.  The one year line of credit provides that amounts under the
facility may be borrowed, repaid and re-borrowed, subject to a borrowing base
test. The loans under the facility bear interest at a rate equal to 1.75% per
annum in excess of EURIBOR.  The loan may be renewed subject to the
agreement of both parties.  As of December 31, 2007 the credit
utilized under this agreement amounted to EUR 9.9 million (US
$14,617,000).
 
 On
January 30, 2008 we further amended our credit agreement to increase the overall
facility to $175 million subject to the all the standard terms and provisions of
our June 2006 agreement.
 
 Note
I - Stock Options
 
 The
Company’s 2006 Stock Option Plan (the “2006 Plan”), as amended, which was
approved by the Company’s shareholders on June 26, 2006 provides for the
granting of options to purchase not more than an aggregate of 559,000 shares of
common stock. Under the 2006 Plan, all canceled or terminated options are
available for grants. All officers, directors and employees of the Company and
other persons who perform services for the Company are eligible to participate
in the 2006 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 2006 Plan replaces the Company’s 1996 Stock Option Plan as no options could
be granted under such Plan after July 29, 2006.
  The 2006
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 2006 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 2006 Plan after June 26,
2016.  The Company did not grant any options during 2007 or
2006.
 
 The
following is a summary of stock option activity under the above Plan for the
years ended December 31, 2007 and 2006:
 Number
                of
      shares
              Weighted
      Average Exercise
                Price
              Weighted
      Average Remaining contractual term (years)
              Aggregate
      Intrinsic ValueOptions
      outstanding at December 31, 2005
              359,000
              $1.65
              4.00
              $3,316,230Options
      granted
              -
              -Options
      exercised
              (47,000)
              $1.56Options
      canceled
              (2,000)
              $3.64Options
      outstanding at December 31, 2006
              310,000
              $1.65
              2.89
              $2,878,698Options
      granted
              -
              -Options
      exercised
              (36,000)
              $1.38Options
      canceled
              (16,000)
              $1.40625Options
      outstanding and exercisable  at December 31,
2007
              258,000
              $1.71
              2.02
              $738,530Options
      available for grant under 2006 Plan at December 31, 2007
              577,000
 
 Options
exercised during 2006 and 2007 had an intrinsic value of $1,492,000 and $127,000
respectively.  Excess tax benefits related to options excesses of
$909,000 and $101,000, respectively were credited to additional paid in
capital.
 
 -20-
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
  Note
J - Common Stock
 
 The Board
of Directors has authorized the Company to repurchase up to 2,500,000 shares of
its common stock at prices not to exceed $1.50 per share.  The Company
has repurchased a total of 2,267,400 shares under the repurchase program for an
aggregate cost of $2,731,050.
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
 
 Note
K – accumulated other  comprehensive (loss) income
 
 Components
of accumulated other comprehensive (loss) income included in the accompanying
consolidated balance sheets are as follows (in thousands):
 
 December
      31,2007
              
              2006Foreign
      currency translation adjustment
              $
              224
              
              $
              50Unrealized
      (loss)/gain on interest-rate swap derivative contract, net of tax $(924)
      and $131, respectively
              $
              (1,540)
              
              $
              196Unrealized
      (loss)/gain on investment in marketable securities, net of tax $(3) and
      $7, respectively
              (a)
              (4)
              
              (a)
              12$
              (1,320)
              
              $
              258
 
 (a)Relates
to marketable securities classified as available for sale, carried at market
value of $30 and $159 at December 31, 2007 and 2006 respectively and is included
in other current assets.
  Note
L - Income Taxes
  The
components of income before taxes on income were as follows (in
thousands):
  Year
      Ended December 31,2007
              
              2006U.S.
              $
              4,024
              
              $
              13,344Foreign
              
              3,090
              
              
              616$
              7,114
              
              $
              13,960
  Income
tax expense (benefit) consists of the following (in thousands):
  Year
      Ended December 31,2007
              
              2006CurrentU.S.
      Federal
              $
              925
              
              $
              4,736State
      and local
              
              261
              
              
              563Foreign
              
              1,090
              
              
              227$
              2,276
              
              $
              5,526DeferredU.S.
      Federal
              
              260
              
              
              (271)State
      and local
              
              34
              
              
              (34)Foreign
              
              0
              
              
              0$
              294
              
              $
              (305)$
              2,570
              
              $
              5,221
 The U.S.
statutory rate of 34% in 2007 and 35% in 2006 can be reconciled to the effective
tax rate as follows (In Thousands):
  Year
      Ended December 31,2007
              
              2006Provision
      for taxes at statutory rate
              
              2,419
              
              
              4,859State
      and local taxes, net of federal tax benefit
              
              172
              
              
              351Permanent
      differences and other adjustments to prior year accruals
              
              (21)
              
              
              11$
              2,570
              
              $
              5,221
  Deferred
tax assets and liabilities are composed of the following:
  Year
      Ended December 31,2007
              
              2006Deferred
      tax assetsAllowance for
      doubtful accounts
              
              74
              
              
              74Accrued
      expenses
              
              102
              
              
              266Inventories
              
              1,072
              
              
              1,033Marketable
      Securities
              
              3
              
              
              0Derivative
      contracts
              
              924
              
              
              0$
              2,175
              
              $
              1,373Deferred
      tax liabilitiesMarketable
      Securities
              
              0
              
              
              (7)Property and
      Equipment
              
              (355)
              
              
              (186)Derivative
      contracts
              
              0
              
              
              (131)$
              (355)
              
              $
              (324)Net deferred tax assets (included
      in other current assets)
              $
              1,820
              
              $
              1,049
  -21-
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
 
 Income
from foreign subsidiaries and related foreign income taxes primarily relate to
Imbali, the Company’s Belgian subsidiary.  For US income tax purposes,
the Company has elected to treat Imbali as a disregarded entity and include its
taxable income in the Company’s consolidated federal income tax return and
separate state income tax returns.  Federal income taxes attributable
to Imbali’s taxable income are offset by tax credits for foreign taxes paid by
Imbali.  Undistributed earnings of Imbali amounted to approximately
$2,455 at December 31, 2007.  Upon distribution of the earnings in the
form of dividends, Imbali would be required to pay Belgian withholding tax at
the rate of 5%.  As the Company intends to indefinitely reinvest such
earnings, no provision for such withholding tax has been
provided.  For federal income tax purposes, foreign tax credits will
be available to the Company for the withholding tax, subject to
limitations.   Undistributed earnings of the Company’s Australian
subsidiary, which are also intended to be indefinitely reinvested, are not
material.
 
 Effective
January 1, 2007, the Company adopted Financial Accounting Standards Board,
(“FASB”) Interpretation No. 48 “Accounting for Uncertainty in Income Taxes (an
interpretation of FASB Statement No. 109)” (“FIN 48”).  This
interpretation was issued in July 2006 to clarify the accounting for uncertainty
in income taxes recognized in the financial statements by prescribing a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return As required by FIN 48, the Company applied the “more-likely-than-not”
recognition threshold to all tax positions, commencing at the adoption date,
which resulted in no unrecognized tax benefits as of such date or December 31,
2007.  Accordingly, the adoption of FIN 48 had no effect on the
Company’s 2007 financial statements.  Pursuant to FIN 48, the Company
has opted to classify interest and penalties that would accrue according to the
provisions of relevant tax law as interest and other expense, respectively, on
the consolidated statement of operations.  The Company files Federal,
State, local and foreign income tax returns.  The Company’s tax years
2003 through 2007 remain subject to examination for most taxing
authorities.
 
 Note
M - Employee Retirement Benefits
 
 The
Company has implemented a salary reduction employee benefit plan, under Section
401 (k) of the Internal Revenue Code.  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 most of the 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:
 
 Years of
      service
              
              Vested
      %1
              
              25%2
              
              50%3
              
              75%4
              
              100%
 
 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 $61,000 in 2007 and $54,000 in 2006.
  Note
N – Earnings Per Share
 
 The
following is the reconciliation of the numerators and denominators of the basic
and diluted earnings per share:
 
 Year
      Ended December 31,2007
              
              2006Numerator:Net
      Income
              $4,544
              
              $8,739Denominator:Computation
      of basic earnings per share:Weighted
      average shares outstanding – basic
              9,796
              
              9,775Basic
      earnings per share
              $0.46
              
              $0.89Computation
      of diluted earnings per share:Weighted
      average shares outstanding – basic
              9,796
              
              9,775Potentially
      dilutive shares:Shares
      issuable upon exercise ofdilutive
      options
              239
              
              286Weighted
      average shares outstanding – diluted
              10,035
              
              10,061Diluted
      earnings per share
              $0.45
              
              $0.87
 
  -22-
  EMPIRE RESOURCES, INC. AND
SUBSIDIARIES
 Note
O – Business Segment and Geographic Area Information
 
 The
Company sells and distributes non-ferrous metals. Sales are attributed to
countries based on location of customer. Sales to domestic and foreign customers
were as follows:
 
 2007
              
              2006United
      States
              $329,082
              
              $348,046Australia
              $50,517
              
              $26,117Europe,
      Canada & New Zealand
              $95,824
              
              $51,817$475,423
              
              $425,980
 
 No other
country other than the United States and Australia represented more than 10% of
the Company’s sales.
  Note
P – Summary of Quarterly Results (unaudited)
 
 
 
 2007March
      31
              June
      30
              September
      30
              December
      31(In
      thousands except per share amounts)Net
      sales
              $139,841
              $116,780
              $109,907
              $108,945Gross
      profit
              8,418
              6,521
              5,124
              5,680Operating
      income
              5,902
              3,813
              2,811
              2,461Net
      income
              $2,411
              $1,125
              $537
              $471Income
      per common share-Basic and dilutedBasic
              $0.25
              $0.11
              $0.05
              $0.05Diluted
              $0.24
              $0.11
              $0.05
              $0.05Weighted
      average shares outstandingBasic
              9,790
              9,790
              9,790
              9,812Diluted
              10,052
              10,050
              10,035
              10,001
 
 
 2006March
      31
              June
      30
              September
      30
              December
      31(In
      thousands except per share amounts)Net
      sales
              $99,569
              $110,338
              $106,261
              $109,812Gross
      profit
              7,927
              8,563
              7,422
              7,262Operating
      income
              5,302
              5,803
              4,705
              4,347Net
      income
              $2,420
              $2,673
              $1,968
              $1,678Income
      per common share-Basic and dilutedBasic
              $0.25
              $0.27
              $0.20
              $0.17Diluted
              $0.24
              $0.27
              $0.20
              $0.16Weighted
      average shares outstandingBasic
              9,752
              9,761
              9,785
              9,785Diluted
              10,073
              10,061
              10,058
              10,053
  EMPIRE
RESOURCES, INC. AND SUBSIDIARIES
 
 Note
Q - Commitments and Contingencies
 
 [1]
              Lease:
 
 The
Company leases office facilities under a lease expiring in 2015.  The
minimum non-cancelable scheduled rentals under such lease are as follows (in
thousands):
 
 Year Ending December
      31,2008
              
              $2742009
              
              2742010
                2011
              
              274
                2842012
              
              284Thereafter
              
              643$2,033
 
 Rent
expense for the years ended December 31, 2007 and 2006, was $280,000 and
$276,000, respectively.
 
 [2]
              Letters
      of credit:
 
 Outstanding
letters of credit at December 31, 2007 amounted to approximately $19.5
million all of which expire prior to April 30, 2008.
 
 [3]
              Employment
      agreements:
 
 The Company has an employment agreement
with one of its executive officers expiring in December
2008.   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
$500,000 per annum. The amount may be
increased, but not decreased, by the Board of Directors.
  The
Company has an employment agreement with another officer, expiring in December
2008.  The minimum base salary is $322,600 and is subject to possible
upward annual adjustments based upon changes in a designated cost of living
index.
 
  -23-
  ITEM
9.                      CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
 
 None.
 
 ITEM
9A(T).                                CONTROLS
AND PROCEDURES
 
 Disclosure
Controls and Procedures.  As required by Rule 13a-15 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management
conducted an evaluation with the participation of our Chief Executive Officer
and Chief Financial Officer, regarding the effectiveness of our disclosure
controls and procedures, as of December 31, 2007 (the “Evaluation Date”). In
designing and evaluating our disclosure controls and procedures, we and our
management recognize that any controls and procedures, no matter how well
designed and operated, can provide only a reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating and implementing possible controls and procedures. Based
upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as of the Evaluation Date, our disclosure controls and
procedures are effective to ensure that material information required to be
disclosed by us in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission’s rules and forms. We intend to
continue to review and document our disclosure controls and procedures,
including our internal controls and procedures for financial reporting, and we
may from time to time make changes to the disclosure controls and procedures to
enhance their effectiveness and to ensure that our systems evolve with our
business.
 
 Management’s
Annual Report on Internal Control over Financial Reporting.  This
report is furnished with this Annual Report on Form 10-K pursuant to Item 308T
of Regulation S−K and shall not be deemed filed by the Company for purposes of
Section 18 of the Exchange Act, as amended, or otherwise subject to the
liabilities of that section, unless the Company specifically states that the
report is to be considered “filed” under the Exchange Act or incorporates it by
reference into a filing under the Securities Act of 1933, as amended, or the
Exchange Act, as amended.
 
 Management
established and maintains adequate internal control over financial reporting, as
such term is defined in Exchange Act Rules 13a−15(f).  As of December
31, 2007, our management had evaluated, with the participation of the Chief
Executive Officer (principal executive officer) and Chief Financial Officer
(principal financial and accounting officer), the effectiveness of the Company’s
internal control over financial reporting based on the framework in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission.  Based on that evaluation, the Company’s
management concluded that the Company’s internal control over financial
reporting as of December 31, 2007 was effective.
 
 This
Annual Report on Form 10-K does not include an attestation report of our
registered public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management’s report in this Annual
Report.
 
 There was
no change in our internal control over financial reporting that occurred during
the quarter ended December 31, 2007 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
 
 ITEM
9B.                                OTHER
INFORMATION
 
 None.
  -24-
  PART
III
 
 ITEM
10.                                Directors,
Executive Officers, and Corporate Governance.
 
 The
information required by this Item is incorporated by reference from the material
responsive to such item in our definitive proxy statement relating to the 2008
Annual Meeting of Shareholders to be filed within 120 days after the end of the
last fiscal year.
 
 ITEM
11.                                EXECUTIVE
COMPENSATION
 
 The
information required by this item is incorporated by reference from the material
responsive to such item in our definitive proxy statement relating to the 2008
Annual Meeting of Shareholders.
 
 ITEM
12.                                SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 
 The
information required by this item is incorporated by reference from the material
responsive to such item in our definitive proxy statement relating to the 2008
Annual Meeting of Shareholders.
 
 ITEM
13.                                CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 
 The
information required by this item is incorporated by reference from the material
responsive to such item in our definitive proxy statement relating to the 2008
Annual Meeting of Shareholders.
 
 ITEM
14.                                PRINCIPAL
ACCOUNTANT FEES AND SERVICES
 
 The
information required by this item is incorporated by reference from the material
responsive to such item in our definitive proxy statement relating to the 2008
Annual Meeting of Shareholders.
  -25-
  PART
IV
 
 ITEM
      15.
              EXHIBITS
 
 (a)
      The following documents are filed as part of this Annual Report on Form
      10-K
 
 (1)
      Financial
      Statements:
              PageReport
      of Independent Certified Public Accountants
              23Consolidated
      Balance Sheets
              24Consolidated
      Statements of Income
              25Consolidated
      Statements of Changes in Stockholders’ Equity
              26Consolidated
      Statements of Cash Flows
              27Notes
      to Consolidated Financial Statements
              28
 
 (2) Financial
Statement Schedules:
 
 A
statement regarding the computation of per share earnings is attached as Exhibit
11.1  Other schedules have been omitted because they are not
applicable or are not required under the instructions contained in Regulation
S-X or because the information required to be set forth therein is included in
the consolidated financial statements or notes thereto.
 
 (3) 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 filed 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-K 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 (incorporated by
      reference to the correspondingly numbered exhibit in the Company’s Annual
      Report on Form 10-K for the year ended December 31,
  2002).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
      filed May 12, 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
              Amendment
      No. 1 to Employment Agreement and Noncompetition Agreement entered into by
      Registrant with Nathan Kahn (incorporated by reference from Exhibit 10.1
      to the Company’s Quarterly Report on Form 10-Q for the quarter ended
      September 30, 2002).*10.3
              Employment
      Agreement dated September 15, 1999 entered into by Registrant with Sandra
      Kahn (incorporated by reference from the Company’s Annual Report on Form
      10-KSB for the year ended December 31, 1999).*10.4
              Employment
      Agreement dated September 15, 1999 entered into by Registrant with Harvey
      Wrubel (incorporated by reference from the Company’s Annual Report on Form
      10-KSB for the year ended December 31, 1999).*10.5
              Restricted
      Stock Agreement dated September 15, 1999 entered into by Registrant with
      Harvey Wrubel (incorporated by reference from the Company’s Annual Report
      on Form 10-KSB for the year ended December 31, 1999).*10.6
              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 Company’s
      Annual Report on Form 10-KSB for the year ended December 31,
      1999).10.7
              Registrant’s
      1996 Stock Option Plan (incorporated by reference from the Company’s
      Registration Statement on Form SB-2 (No. 333-9697).*10.8
              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).*10.9
              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).10.10
              Amendment
      No. 1 to Credit Facility, dated July 16, 2002 between the Registrant and
      The Chase Manhattan Bank, as Lead Arranger and Administrative Agent
      (incorporated by reference to Exhibit 10.1 from the Company’s Quarterly
      Report on Form 10-Q for the quarter ended June 30,
  2002).10.11
              Amendment
      No. 2 to Credit Facility, dated May 8, 2003 between the Registrant and The
      Chase Manhattan Bank, as Lead Arranger and Administrative Agent
      (incorporated by reference from the Company’s Quarterly Report on Form
      10-Q for the quarter ended March 31, 2003).10.12
              Amendment
      No. 3 to Credit Facility, dated June 19, 2003 between the Registrant and
      The Chase Manhattan Bank, as Lead Arranger and Administrative Agent
      (incorporated by reference from the Company’s Quarterly Report on Form
      10-Q for the quarter ended June 30, 2003).10.13
              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).10.14
              Amendment
      No. 4 to Credit Facility, dated December 13, 2004 between the Registrant
      and JP Morgan Chase Bank, N.A. as Lead Arranger and Administrative Agent.
      (incorporated by reference from the Company’s Annual Report on Form 10-K
      for the year ended December 31, 2004).10.15
              Agreement
      of purchase and sale of 6900 Quad Avenue dated May 31, 2004 between Dale
      W. Brougher, Trustee and Registrant. (incorporated by reference from the
      Company’s Annual Report on Form 10-K for the year ended December 31,
      2004).10.16
              Loan
      Agreement dated December 27, 2004 between 6900 Quad Avenue a subsidiary of
      the Registrant and JP MORGAN CHASE BANK, N.A. (incorporated by
      reference from the Company’s Annual Report on Form 10-K for the year ended
      December 31, 2004).10.17
              Agreement
      of purchase and sale of extrusion equipment dated November 4, 2004 between
      Werner Co., and Registrant. (incorporated by reference from the Company’s
      Annual Report on Form 10-K for the year ended December 31,
      2004).10.18
              Fourth
      Modification and Extension of Lease for office space, dated as of the 17th
      of November 2004, to the Lease between 400 Kelby Associates, as Landlord,
      and Registrant as Tenant. (incorporated by reference from the Company’s
      Annual Report on Form 10-K for the year ended December 31,
      2004).10.19
              Amendment
      No. 5 to Credit Facility, dated February 23, 2005 between the Registrant
      and JP Morgan Chase Bank, N.A. as Lead Arranger and Administrative Agent.
      (incorporated by reference from the Company’s Quarterly Report ended March
      31, 2005).10.20
              Amendment
      No. 6 to Credit Facility, dated April 22, 2005 between the Registrant and
      JP Morgan Chase Bank, N.A. as Lead Arranger and Administrative Agent.
      (incorporated by reference from the Company’s Quarterly Report ended June
      30, 2005).10.21
              Amendment
      No. 7 to Credit Facility, dated October 3, 2005 between the Registrant and
      JP Morgan Chase Bank, N.A. as Lead Arranger and Administrative
      Agent.  (incorporated by reference from the Company’s Annual
      Report on Form 10-K for the year ended December 31,
  2005).10.22
              Amendment
      No. 8 to Credit Facility, dated February 9, 2006 between the Registrant
      and JP Morgan Chase Bank, N.A. as Lead Arranger and Administrative Agent.
      (incorporated by reference from the Company’s Quarterly Report ended March
      31, 2006).10.23
              Amended
      and Restated Credit Agreement dated June 13, 2006 between the Registrant
      and JP Morgan Chase Bank, N.A. as Lead Arranger and Administrative Agent.
      (incorporated by reference to Exhibit 10.23 to the Registrant’s Report on
      Form 8-K filed June 19, 2006).10.24
              Agreement
      dated August 13, 2007, between Empire Resources, Inc. and Hulamin Rolled
      Products. (incorporated by reference from the Company’s Quarterly Report
      ended June 30, 2007).10.25
              Amendment
      No. 1 to Amended and Restated Credit Agreement, dated as of June 29, 2007
      between the Registrant and JPMorgan Chase Bank, N.A., as Lead Arranger and
      Administrative Agent. (incorporated by reference to Exhibit 10.1 to
      Registrant’s Report on Form 8-K filed July 6, 2007).10.26
              Amendment
      No. 2 to Amended and Restated Credit Agreement, dated as of September 28,
      2007 between the Registrant and JPMorgan Chase Bank, N.A., as Lead
      Arranger and Administrative Agent. **10.27
              Amendment
      No. 3 to Amended and Restated Credit Agreement, dated as of December 14,
      2007 between the Registrant and JPMorgan Chase Bank, N.A., as Lead
      Arranger and Administrative Agent. **10.28
              Amendment
      No. 4 to Amended and Restated Credit Agreement, dated as of January 30,
      2008 between the Registrant and JPMorgan Chase Bank, N.A., as Lead
      Arranger and Administrative Agent.**10.29
              Registrant’s
      2006 Stock Option Plan (incorporated by reference from the Company’s Proxy
      Statement filed April 28, 2006).11.1
              Statement
      regarding computation of per share earnings.**14.1
              Code
      of Business Conduct and Ethics of the Registrant, adopted June 20,
      2007.  (incorporated by reference to Exhibit 14.1 to the
      Registrant’s Report on Form 8-K filed July 18, 2007).21.1
              List
      of subsidiaries of the Registrant as of December 31,
    2007.**23.1
              Consent
      of Independent Registered Public Accounting Firm. **31.1
              Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities
      Exchange Act of 1934.**31.2
              Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities
      Exchange Act of 1934.**32.1
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002.**32.2
              Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
 
 *   Management
contracts and compensatory plans or arrangements.
 ** Filed
Herewith.
  -26-
  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, 2008
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the persons on behalf of the Registrant and in the capacities
and on the dates indicated.
 
 By:           /s/ Nathan
Kahn
 Nathan Kahn
 Chief Executive Officer and
Director
 (Principal Executive
Officer)
 March 31, 2008
 
 By:           /s/ Sandra
Kahn
 Sandra Kahn
 Chief Financial Officer and
Director
 (Principal Financial and
PrincipalAccounting Officer)
 March 31, 2008
 
 By:           /s/William
Spier
 William Spier, Director
 March 31, 2008
 
 By:           /s/Jack
Bendheim
 Jack Bendheim, Director
 March 31, 2008
 
 By:           /s/ Peter G.
Howard
 Peter G. Howard, Director
 March 31, 2008
 
 By:           /s/ Nathan
Mazurek
 Nathan Mazurek, Director
 March 31, 2008
 
 By:           /s/ L. Richard
Milner
 L. Richard Milner,
Director
 March 31, 2008
  By:           /s/ Morris J.
Smith
 Morris J. Smith, Director
 March 31, 2008
  By:           /s/ Harvey
Wrubel
 Harvey Wrubel, Director
 March 31, 2008
  -27-