TPO Tarpon Industries

Tarpon Industries, Inc. (AMEX:TPO), a manufacturer and distributor of structural and mechanical steel tubing and engineered steel storage rack systems, today announced results for the quarter and year ended December 31, 2006, which were included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 17, 2007. The report contained a going concern qualification. This announcement is being made to comply with AMEX Company Guide Section 610(b) requiring a public announcement of the receipt of an audit report that contains a going concern qualification. Further information regarding the going concern qualification is contained in Tarpon�s Annual Report on Form 10-K for the year ended December 31, 2006, which is available free of charge on the Securities and Exchange Commission's web site at www.sec.gov. For the fourth quarter ended December 31, 2006, revenue was $16.8 million, compared to $16.4 million for the quarter ended December 31, 2005. The company reported a net loss of $2.17 million, or $0.448 per fully diluted share, compared to a loss of $2.82 million or $.0.61 per fully diluted share in the comparable 2005 quarter. Gross profit for the fourth quarter ended December 31, 2006 was $1.21 million, compared to the $1.67 million in the fourth quarter of 2005. Revenue for the year ended December 31, 2006 was $75.3 million, an increase of 23.8 % compared to the $60.9 million reported in the year ended December 31, 2005 (which included the operations of Steelbank only from mid-February 2005). The net loss for the 2006 twelve month period was $9.99 million, or $2.08 per fully diluted share, compared to the $7.31 million, or $1.74 per fully diluted share reported in the comparable 2005 period. Gross profit increased to $5.8 million for the twelve months ended December 31, 2006 compared to $4.3 million in the year ended December 31, 2005. The loss for the year-end period reflects impairment of Steelbank goodwill and intangibles of $3,576, 000 and impairment of the Haines Road real estate of $750,000. Interest expense for the fourth quarter and year-end periods ending December 31, 2006 was $1,113,868 and $3,087,393 respectively. Tarpon Industries, Inc. Tarpon Industries, Inc., through its wholly owned subsidiaries within the United States and Canada, manufactures and sells structural and mechanical steel tubing and engineered steel storage rack systems. The company's mission is to become a larger and more significant manufacturer and distributor of structural and mechanical steel tubing, engineered steel storage rack systems and related products. For more information, please visit Tarpon's website at http://www.tarponind.com. Forward-Looking Statements Certain statements made by Tarpon in this presentation and other periodic oral and written statements, including filings with the Securities and Exchange Commission, are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, as well as statements which address operating performance, events or developments that we believe or expect to occur in the future, including those that discuss strategies, goals, outlook or other non-historical matters, or which relate to future sales or earnings expectations, cost savings, awarded sales, volume growth, earnings or a general belief in our expectations of future operating results, are forward-looking statements. The forward-looking statements are made on the basis of management's assumptions and estimations. As a result, there can be no guarantee or assurance that these assumptions and expectations will in fact occur. The forward-looking statements are subject to risks and uncertainties that may cause actual results to materially differ from those contained in the statements. Some, but not all of the risks, include our ability to obtain future sales, our ability to successfully integrate acquisitions, changes in worldwide economic and political conditions, including adverse effects from terrorism or related hostilities including increased costs, reduced production or other factors, costs related to legal and administrative matters, our ability to realize cost savings expected, inefficiencies related to production that are greater than anticipated, changes in technology and technological risks, foreign currency fluctuations, increased fuel costs, increased steel costs as it relates to our selling price, work stoppages and strikes at our facilities and those of our customers, the presence of downturns in customer markets where the company's goods and services are sold, financial and business downturns of our customers or vendors, and other factors, uncertainties, challenges, and risks detailed in Tarpon's public filings with the Securities and Exchange Commission. Tarpon does not intend or undertake any obligation to update any forward-looking statements. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) � 2006� 2005� REVENUES: Sales, net of customer discounts $ 75,330,908� $ 60,850,620� � Cost of goods sold 69,530,073� 56,530,833� � Gross Profit 5,800,835� 4,319,787� � OPERATING EXPENSES: Selling, general and administrative expenses 9,290,829� 9,692,698� Impairment 4,326,177� 1,894,000� Loss on disposal of property and equipment 183,982� -� Total operating expense 13,800,988� 11,586,698� � � OPERATING LOSS (8,000,153) (7,266,911) � OTHER INCOME (EXPENSE): Miscellaneous (income) expense 157,156� (55,248) Financing costs (157,869) -� Gain on derivatives 1,059,874� 322,000� Foreign exchange (gain) loss 35,505� 630,077� Total other (income) expense 1,094,466� 896,829� � INTEREST EXPENSE, NET: Interest 3,122,720� 1,074,938� Interest income (35,328) (34,442) Total interest expense, net 3,087,392� 1,040,496� � LOSS BEFORE INCOME TAXES (9,992,879) (7,410,578) INCOME TAX PROVISION (BENEFIT) -� (101,088) � NET LOSS $ (9,992,879) $ (7,309,490) � NET LOSS PER COMMON SHARE � BASIC AND DILUTED $ (2.08) $ (1.74) � WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,813,505� 4,193,955�