10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
	EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2007

OR

[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
	EXCHANGE ACT OF 1934
	For the transition period from _______________ to _______________

Commission file number 001-12127

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

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

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

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

        Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [   ]

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Larger Accelerated Filer [   ] Accelerated Filer [   ] Non-Accelerated Filer [X]

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.

Yes [   ] No [X]

Common Stock, par value $0.01 per share	9,790,184
(Class)	(Outstanding on August 10, 2007)

EMPIRE RESOURCES, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2007
INDEX
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements	Page
	Condensed Consolidated Balance Sheets as of June 30, 2007 (unaudited)
	and December 31, 2006	2
	Unaudited Condensed Consolidated Statements of Income for the Three and Six Months
	Ended June 30, 2007 and 2006	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months
	Ended June 30, 2007 and 2006	4
	Unaudited Notes to Condensed Consolidated Financial Statements	5
Item 2	Management’s Discussion and Analysis of Financial Condition
	and Results of Operations	9
Item 3	Quantitative and Qualitative Disclosures about Market Risk	13
Item 4	Controls and Procedures	13
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	14
Item 1A	Risk Factors	14
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3	Defaults upon Senior Securities	14
Item 4	Submission of Matters to a Vote of Security Holders	14
Item 5	Other Information	15
Item 6	Exhibits	15
	Signatures	16

Introduction

     We have prepared the condensed consolidated interim financial statements included herein, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted pursuant to such rules and regulations. In the opinion of our management, such financial statements reflect all adjustments necessary for a fair presentation of the results for the interim periods presented and to make such financial statements not misleading. Our results of operations for the three and six months ended June 30, 2007 are not necessarily indicative of the results to be expected for the full year. We urge you to read these interim financial statements in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report filed on Form 10-K for the year ended December 31, 2006.

Condensed Consolidated Balance Sheets

In thousands, except share and per share amounts

		June 30,			December 31,
		2007			2006
		(unaudited)
ASSETS
Current assets:
Cash	$	1,525		$	1,243
Restricted cash		327			1,046
Trade accounts receivable (less allowance for doubtful accounts of $191 and $191)		75,160			62,520
Inventories		101,610			124,249
Other current assets, including derivatives in 2007		8,813			2,680
Total current assets		187,435			191,738
Property and equipment, net		7,676			7,739
Deferred financing costs, net of accumulated amortization		341			408
	$	195,452		$	199,885
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - banks	$	126,462		$	114,250
Current maturities of long-term debt		121			117
Trade accounts payable		26,609			32,545
Accrued expenses and derivative liabilities		6,468			18,148
Dividends payable		490			2,055
Total current liabilities		160,150			167,115
Long-term debt, net of current maturities		2,109			2,171
Commitments and contingencies
Stockholders' equity:
Common stock $.01 par value, 20,000,000 shares authorized and
11,749,651 shares issued at June 30, 2007 and December 31, 2006
		117			117
Additional paid-in capital		11,604			11,604
Retained earnings		23,462			20,905
Accumulated other comprehensive income		295			258
Treasury stock (1,959,467 shares)		(2,285	)		(2,285	)
Total stockholders' equity		33,193			30,599
	$	195,452		$	199,885

See Notes to Condensed Consolidated Financial Statements

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Condensed Consolidated Statements of Income (Unaudited)

In thousands, except per share amounts

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006
Net sales	$	116,780	$	110,338	$	256,621	$	209,907
Cost of goods sold		110,259		101,775		241,682		193,417
Gross profit		6,521		8,563		14,939		16,490
Selling, general and administrative expenses		2,708		2,760		5,224		5,385
Operating income		3,813		5,803		9,715		11,105
Interest expense		2,081		1,530		4,107		2,952
Income before income taxes		1,732		4,273		5,608		8,153
Income taxes		607		1,600		2,072		3,060
Net income	$	1,125	$	2,673	$	3,536	$	5,093
Weighted average shares outstanding:
Basic		9,790		9,761		9,790		9,764
Diluted		10,050		10,061		10,051		10,075
Earnings per share:
Basic	$	0.11		0.27	$	0.36		0.52
Diluted	$	0.11		0.27	$	0.35		0.51

See Notes to Condensed Consolidated Financial Statements

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Condensed Consolidated Statements of Cash Flows (Unaudited)

In thousands

	Six Months Ended
	June 30,
	2007			2006
Cash flows from operating activities:
Net income	$	3,536		$	5,093
Adjustments to reconcile net income to net cash (used in)
operating activities:
Depreciation and amortization		247			112
Dividend Income					(4	)
Other		22			(58	)
Changes in:
Restricted Cash		719			4,873
Trade accounts receivable		(12,640	)		(8,750	)
Inventories		22,639			4,072
Other current assets		(6,110	)		130
Trade accounts payable		(5,936	)		(2,395	)
Accrued expenses and derivative liabilities		(11,674	)		(8,297	)
Net cash (used in) operating activities		(9,197	)		(5,224	)
Cash flows used in investing activities:
Additions to fixed assets		(117	)		(659	)
Investment in marketable securities and related activities		(14	)		(140	)
Net cash (used in) investing activities	$	(131	)	$	(799	)
Cash flows from financing activities:
Net proceeds from notes payable – banks		12,212			9,250
Principal payment of long term debt		(58	)		(54	)
Deferred financing costs					(399	)
Proceeds - options exercised					68
Dividends paid		(2,544	)		(2,536	)
Net cash provided by financing activities		9,610			6,329
Net increase in cash		282			306
Cash at beginning of period		1,243			1,560
Cash at end of period	$	1,525		$	1,866
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	4,199		$	3,357
Income taxes	$	3,391		$	2,276
Non Cash Financing Activities:
Dividend declared but not yet paid	$	490		$	489

See Notes to Condensed Consolidated Financial Statements

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Empire Resources, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

1. The Company

     We are engaged in the purchase, sale and distribution of principally aluminum semi-finished 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. The majority of our business typically does not involve purchase of inventory for stock. In general, we place orders with our suppliers based upon orders that we have received from our customers.

     The condensed consolidated financial statements include the accounts of Empire Resources, Inc. and its wholly-owned subsidiaries, Empire Resources Pacific Ltd., which acts as a sales agent in Australia, 6900 Quad Avenue LLC (the company which owns our warehouse facility in Baltimore), Imbali Metals Bvba (our European subsidiary) (“Imbali Metals”), and Empire Extrusions LLC (our extrusion business). All significant inter-company transactions and accounts have been eliminated on consolidation.

2. 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.

3.Concentrations

     One major customer accounted for approximately 9% of our consolidated net sales for the six month period ended June 30, 2007 and 14% for the same period ended June 30, 2006.

     We purchase aluminum from a limited number of suppliers located throughout the world. One supplier, Hulamin Ltd., accounted for 54% of total purchases during the six month period ended June 30, 2007, and three other suppliers accounted for 29% of total purchases during that period. The loss of any one of our largest suppliers or a material default by any such supplier in its obligations to us would have a material adverse effect on our business.

4. Stock Options

      We account for stock options using Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R 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, we did not have any outstanding unvested employee stock options, and during the six month period ended June 30, 2007, we did not grant any stock options or any other stock-based awards.

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5. Inventories

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

6. Notes Payable—Banks

     On June 13, 2006 we entered into an amended and restated credit agreement with five commercial banks. JPMorgan Chase Bank, N.A. acted as the agent for the lenders and they were joined by Rabobank International, New York branch, Citicorp USA, Inc., Brown Brothers Harriman & Co., and Fortis Capital Corp. in the credit agreement.

     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 June 30, 2007 and December 31, 2006, the credit utilized under this agreement amounted to respectively, $138,178,000 and $135,486,000 (including $17,678,000 and $21,236,000 of outstanding letters of credit).

     Amounts borrowed under our credit agreement bear interest at LIBOR, Eurodollar, money market or base rates, at our 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 weighted average fixed rate of 5.14% plus a spread to the bank, and in return the bank pays us floating LIBOR rate plus a spread. This floating rate resets monthly.

     On June 29, 2007, we amended our credit agreement to permit Imbali Metals to enter into a credit facility with Fortis Bank S.A./N.V., New York Branch, in which Imbali Metals was provided with a EUR 10 million commitment available for loans and documentary letters of credit. After completion of this amendment Imbali Metals entered into a secured credit arrangement which is unconditionally guaranteed by Empire Resources, Inc. 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 EUROBOR. The loan may be renewed subject to the agreement of the parties. As of June 30, 2007 the credit utilized under this agreement amounted to EUR 4.4 million (US $6.0).

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     In addition, we are a party to a mortgage and related 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 June 30, 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 interest rate swap, which has been designated as a cash flow hedge and remains effective through the maturity of the mortgage loan, we 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 pays us a floating rate, namely, LIBOR, which resets monthly, plus 1.75% on the same notional principal amount.

7. Earnings Per Share (In thousands, except per share amounts)

	Three months		Six months
	ended		ended
	June 30,		June 30,
	2007	2006	2007	2006
Weighted average	9,790	9,761	9,790	9,764
shares outstanding-
basic
Dilutive effect of stock	260	300	261	311
options
Weighted average	10,050	10,061	10,051	10,075
shares outstanding-
diluted
Basic Earnings per	$0.11	$0.27	$0.36	$0.52
Share
Diluted Earnings per	$0.11	$0.27	$0.35	$0.51
Share

     Basic earnings per share are based upon weighted average number of common shares outstanding during each period. Diluted earnings per share are based upon the weighted average number of common shares outstanding during each period, plus dilutive potential common shares from assumed exercise of the outstanding stock options using the treasury stock method.

8. Dividends

     On June 20, 2007, our Board of Directors declared a cash dividend of $0.05 per share to stockholders of record at the close of business on July 6, 2007. The dividend totaling $489,500 is reflected in dividends payable and was paid on July 20, 2007. The Board of Directors intends to review its dividend policy on a quarterly basis, and a determination by the Board of Directors will be made subject to profitability, free cash flow and other requirements of the business.

9. Commitments and Contingencies

     We have outstanding letters of credit to certain of our suppliers, which at June 30, 2007 amounted to approximately $17,678,000.

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10. Derivative Financial Instruments and Risk Management

     Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” issued by the Financial Accounting Standards Board requires us 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. When a hedged item in a fair value hedge is sold, the adjustment in the carrying amount of the hedged item is recognized in earnings. At June 30, 2007 and December 31, 2006, approximately $327,000 and $1,046,000, respectively, was deposited with various brokers for margin in connection with derivative contracts. Such deposits are classified as restricted cash on the accompanying balance sheet.

     At June 30, 2007 and December 31, 2006, net unrealized losses on our open foreign exchange forward contracts amounted to approximately ($938,000) and ($731,000) respectively. Net unrealized gains on aluminum futures contracts at June 30, 2007 were approximately $3,088,000 and net unrealized losses at December 31, 2006 amounted to approximately ($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 which were hedged. On June 30, 2007, open derivative contracts are reflected in the accompanying balance sheet in other current assets $3,088,000 and derivative liabilities ($938,000). In December 2006, open derivative contracts are reflected in the accompanying 2006 balance sheet in derivative liabilities ($4,042,000).

     For the six months ended June 30, 2007 and 2006, hedge ineffectiveness associated with derivatives designated as fair value hedges was insignificant, and no fair value hedges were derecognized.

     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. At June 30, 2007 and December 31, 2006, the fair value of the interest rate swaps amounted to $343,000 and $340,000, respectively, and is included in other current assets with a corresponding credit in accumulated other comprehensive income in the accompanying balance sheet.

11. Comprehensive Income
      (In thousands)

	Three months ended		Six months ended
	June 30,		June 30,
	2007	2006	2007	2006
Net Income	$1,125	$2,673	$3,536	$5,093
Foreign currency translation gain (loss)	8	53	6	(58)
Change in fair value of marketable securities,	7	—	12	—
net of tax
Change in fair value of interest rate swap, net of tax	624	186	19	557
Comprehensive Income	$1,764	$2,912	3,573	$5,592

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12. Income Taxes

     On January 1, 2007 the Company adopted the provisions of “Accounting for Uncertainty in Income Taxes” (“FIN 48”). The adoption of FIN 48 did not have any impact on our consolidated financial statements. We file income tax returns in the U.S. federal jurisdiction, and various state, local, and foreign jurisdictions. Generally, our state, local and foreign jurisdiction income tax returns for 2003 – 2006 remain subject to examination by various tax authorities, depending on the specific tax jurisdiction.

     The Internal Revenue Service (“IRS”) is currently examining the Company’s 2005 federal income tax return. At this time, the IRS has not proposed any adjustments, nor does the Company expect any adjustments that would have a material impact on the results of operations or financial condition.

13. 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. The Company has not yet determined the impact FAS 157 may have on its consolidated financial statements.

     In February, 2007, the FASB issued FASB 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. The Company has not yet determined the impact FAS 159 may have on its consolidated financial statements.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Forward Looking Statements

     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. Our particular risks include those factors listed under “Risk Factors,” beginning on page 8 of our Annual Report on Form 10-K for the

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year ended December 31, 2006 as supplemented by Item 1A. of Part II of this report. 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 and the sales of 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.

Overview

     The following MD&A is intended to help you understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes to them.

     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 and 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 54% of our products in the first six months of 2007. We do not typically purchase inventory for stock. In general, we place orders with our suppliers based upon orders that we have received from our customers.

     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.

     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 supplier 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. 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 next August.

Application of Critical Accounting Policies

     Our condensed 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 included in our 2006

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Annual Report on Form 10-K. 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 the six month period ended June 30, 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.

Results of Operations for the Six Months Ended June 30, 2007 (in thousands)

     During the first six months of 2007, net sales increased by $46,714 to $256,621 from $209,907, or a 22% increase from the first six months of 2006. This increase is due to increased volumes shipped as well as continued strong underlying aluminum ingot pricing. Gross profit declined by $1,551 to $14,939 from $16,490 for the period, or a 9% decrease, in the first six months of 2007 as compared to the first six months of 2006. Our gross profit margin has been impacted by continued price pressures from increased competition in North America from both domestic and overseas mills. This strong competition has depressed the fabrication premiums in the marketplace, which affects the pricing spreads we can charge to our customers. Additionally, we have not yet achieved full production at our extrusion manufacturing facility, and this has had a negative impact on our extrusion conversion costs.

     Interest expense during first six months of 2007 grew by $1,155 to $4,107 from $2,952 over the same period in 2006. This 39% increase in interest expense resulted primarily from the increase in overall borrowings from June 2006 to June 2007 and secondarily from small increases in interest rates during the same period.

     Net income decreased from $5,093 in the first six months of 2006 to $3,536 in the first six months of 2007 due to the overall decline in our gross profit and increased interest expense.

Results of Operations for the Three Months Ended June 30, 2007 (in thousands)

      Net sales increased $6,442 or 6% during the second quarter of 2007 from $110,338 in 2006 to $116,780 in 2007. This increase is primarily due to continued strong pricing in the underlying aluminum ingot. Gross profit decreased in the current three month period by $2,042 to $6,521 from $8,563 as compared to the same period in 2006, as a result of factors described above with respect to the six month periods.

     Interest expense increased during the three month period by $551 from $1,530 to $2,081. This 36% increase in interest expense is due to the growth in loans outstanding during the period and to a lesser extent to the continued upward trend in interest rates.

     Net income decreased by $1,548 from $2,673 to $1,125 for the three months ended June 30, 2007, a decrease of 58% due to the decline in our gross profit as well as the increase in interest costs.

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Liquidity and Capital Resources (in thousands, except per share data)

     Our cash flow used in operations during the first six months of 2007 was $9,197 as compared to $5,224 in the first six months of 2006. Net cash used in operations was primarily the result of increases in trade accounts receivable of $12,640 and decreases in inventories of $22,639, accrued expenses and derivative liabilities of $11,674 and trade accounts payable of $5,936. During the first six months of 2007 restricted cash decreased by $719 from $1,046 in December 2006 to $327 in June 2007. This represents reductions in margin deposits at our LME brokers that are related to our unrealized losses on derivative contracts.

     Cash flows from financing activities during the first six months of 2007 amounted to $9,610 composed of a net increase in borrowings of $12,154 under our lines of credit and mortgage, less dividends paid during the period of $2,544.

     We currently operate under a $150 million revolving line of credit, including a commitment to issue letters of credit, with five commercial banks. Amounts borrowed bear interest of Eurodollar, money market or base rates, at our option, plus an applicable margin. The applicable margin is determined by our leverage ratios. Our borrowings under this line of credit are secured by 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. This facility will expire on June 30, 2011.

     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 June 30, 2007 and December 31, 2006, the credit utilized amounted to, respectively, $138,178 and $135,486 (including approximately $17,678 and $21,236 of outstanding letters of credit).

     In addition, our European subsidiary, Imbali Metals has entered into a separate credit facility for EUR 10 million, which includes a commitment to issues letters of credit with a commercial bank. Amounts borrowed bear interest at EUROBOR plus an applicable margin. The borrowings under this line of credit are secured by all of the assets of Imbali Metals and is unconditionally guaranteed by Empire Resources, Inc. This agreement contains financial and other covenants. The agreement has a one year term and may be renewed by mutual agreement of both Imbali Metals and the bank. As of June 30, 2007, the credit utilized under this agreement amounted to EUR 4.4 million (US $6.0).

     On June 20, 2007, our Board of Directors declared a cash dividend of $0.05 per share to stockholders of record at the close of business on July 6, 2007. The dividend totaling $490 is reflected in dividends payable and was paid on July 20, 2007. The Board of Directors will review its dividend policy on a quarterly basis, and a determination by the Board of Directors will be made subject to the profitability and free cash flow and the other requirements of our business.

     Management believes that cash from operations, together with funds available under our credit facility, will be sufficient to fund theanticipated cash requirements relating to our existing operations through the expiration of our current credit facility. We may require additional debt financing in connection with any future expansion of our operations.

12

Commitments and Contingencies

     We had outstanding letters of credit totaling $17,678 to certain of our suppliers and as of June 30, 2007, the credit utilized under our credit facility amounted to $138,178.

     On June 29, 2007, we amended our credit agreement to permit Imbali Metals to enter into a credit facility with Fortis Bank S.A./N.V., New York Branch, in which Imbali Metals was provided with a EUR 10 million commitment available for loans and documentary letters of credit. After completion of this amendment Imbali Metals entered into a secured credit arrangement which is unconditionally guaranteed by Empire Resources, Inc. 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 EUROBOR. The loan may be renewed subject to the agreement of the parties.

     Except as noted, there have been no material changes to our commitments and contingencies from that disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006.

     We hedge metal pricing and foreign currency as we deem appropriate for a portion of our purchase and sales contracts. There is a risk of a counterparty default in fulfilling the hedge contract. Should there be a counterparty default, we could be exposed to losses on the original hedged contract.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     We use financial instruments designated as fair value hedges to manage our exposure to commodity price risk and foreign currency exchange risk inherent in our operations. It is our policy to hedge such risks, to the extent practicable. We enter into high-grade aluminum futures contracts to limit our gross margin exposure by hedging the metals content element of firmly committed purchase and sales commitments. We also enter into foreign exchange forward contracts to hedge our exposure related to commitments to purchase or sell aluminum denominated in international currencies. We record “mark-to-market” adjustments on these futures and forward positions, and on the underlying firm purchase and sales commitments which they hedge, and reflect the net gains and losses currently in earnings.

     Please refer to our Annual Report on Form 10-K for the year ended December 31, 2006 for more detailed disclosure about quantitative and qualitative disclosure of market risk. Quantitative and qualitative disclosure about market risk has not materially changed since December 31, 2006.

ITEM 4. Controls and Procedures

     As required by 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 defined in Rule 13a-15(e) of the Exchange Act), as of the end of the fiscal quarter covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in 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

13

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.

     There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

     We are a party from time to time to certain legal proceedings and claims that arise in the ordinary course of our business. We do not believe that the disposition of any claims that are pending or have been asserted would have a material adverse effect on our results of operation or financial position.

Item 1A. Risk Factors

     As discussed in our MD&A overview under Part I and in Item 5 of this Part II, we have recently amended and restated our supply agreement with Hulamin, our largest supplier. Hulamin supplied approximately 52%, 54% and 54% of our product in 2006, 2005 and 2004, respectively, and approximately 54% during the six-month period ended June 30, 2007. Under the amended agreement, we will remain Hulamin's exclusive supplier 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. 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

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

(a) We held our annual meeting of stockholders on June 20, 2007.

(b) Our current directors, being William Spier, Nathan Kahn, Sandra Kahn, Harvey Wrubel, Jack Bendheim, Peter J. Howard, Nathan Mazurek, L. Rick Milner and Morris J. Smith, were reelected as directors at the annual meeting.

(c) At the annual meeting, two matters were voted upon by shareholders. The results were as follows:

     Proposal 1 -- Election of Directors. By the vote reflected below, the stockholders elected the following individuals to serve as directors until the 2008 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified. There were no broker non-votes in the election of directors.

	FOR	WITHHELD
WILLIAM SPIER	9,215,211	179,569
NATHAN KAHN	9,217,529	177,251
SANDRA KAHN	9,217,449	177,331
HARVEY WRUBEL	9,218,894	175,886
JACK BENDHEIM	9,240,772	154,008
PETER G. HOWARD	9,217,551	177,229
NATHAN MAZUREK	9,241,742	153,038
MORRIS J. SMITH	9,240,195	154,585
L. RICK MILNER	9,240,065	154,715

14

Proposal 2 – Ratification of Eisner, LLP as independent accountants for the current fiscal year. The shareholders voted to ratify the selection of Eisner, LLP as our independent public accounting firm for the current fiscal year.

For:	9,299,172
Against:	37,411
Abstain:	58,195

Item 5. Other Information.

(a) On August 13, 2007, we amended and restated our supply agreement with Hulamin, our largest supplier. Hulamin supplied approximately 52%, 54% and 54% of our product in 2006, 2005 and 2004, respectively, and approximately 54% during the six-month period ended June 30, 2007.

     Under the amended agreement, we will remain Hulamin's exclusive supplier 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. The agreement otherwise remains substantially unchanged and continues to provide, among other things, that our transactions with Hulamin will be negotiated on a transaction by transaction basis and that we will continue to provide customer support services, including market research and planning.

     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 next August. 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.

(b)  None.

Item 6. Exhibits.

The following are included as exhibits to this report:

Exhibit No.	Description
10.24	Agreement, dated August 13, 2007, between Empire Resources, Inc. and Hulamin Rolled Products.*
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 and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

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

15

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	EMPIRE RESOURCES, INC.
Dated: August 14, 2007	By:	/s/ Sandra Kahn
		Sandra Kahn Chief Financial Officer
	(signing both on behalf of the registrant and in her
	capacity as Principal Financial and Principal
	Accounting Officer)

16

EX-10.24

Exhibit 10.24

10 August 2007

Empire Resources Inc

One Parker Plaza

Fort Lee

NJ07024

Dear Nathan

LETTER OF CONFIRMATION OF TRADING RELATIONSHIP

This letter outlines the mutual agreement between Empire Resources Incorporated (Empire) and Hulamin Rolled Products (Hulamin) as at 10 August 2007. This agreement remains valid until 9 August 2008 and replaces the agreement as captured in the letter dated 6^th September 2000, and signed by Empire Resources Incorporated and Hulett Aluminium Rolled Products (Pty) Ltd.

Hulamin confirms that Empire is the exclusive distributor of Hulamin’s products in the United States of America and Canada. As is currently the case, Empire may order from and be invoiced by Hulamin. Each transaction between Empire and Hulamin will be negotiated on a transaction by transaction basis. Empire will continue to provide support to service the customers in the above mentioned territory as if they are customers of Hulamin.

Empire shall not incur any liability on behalf of Hulamin or in any way pledge or purport to pledge Hulamin’s credit, or accept any order or make any contract binding upon Hulamin without the prior consent of Hulamin.

Empire warrants that upon expiry of the agreement that it will have no claim for compensation of any type against Hulamin.

This agreement shall be governed by and interpreted in accordance with the laws of the Republic of South Africa.

Neither party has made any representation to the other or given any warranty or commitment to extend the agreement. At the same time this agreement can be amended or extended by mutual agreement subject to any such amendment or extension being recorded in writing and signed by the authorized representatives of Empire and Hulamin.

Kind regards

/s/ Frank Bradford	/s/ Nathan Kahn, August 13, 2007
Frank Bradford.	Nathan Kahn
For Hulamin Rolled Products	For Empire Resources Inc.

EX-31.1

Exhibit 31.1

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

I, Nathan Kahn, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Empire Resources, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2007	By:	/s/ Nathan Kahn
		Nathan Kahn
		Chief Executive Officer

EX-31.2

Exhibit 31.2

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

I, Sandra Kahn, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Empire Resources, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2007	By:	/s/ Sandra Kahn
		Sandra Kahn
		Chief Financial Officer

EX-32.1

Exhibit 32.1

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

     The undersigned officer of Empire Resources, Inc. (the “Company”) hereby certifies that the Company’s quarterly report on Form 10-Q for the period ended June 30, 2007 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed to be a part of the Report or “filed” for any purpose whatsoever.

Date: August 14, 2007

/s/  Nathan Kahn

      Nathan Kahn,

      Chief Executive Officer and President

EX-32.2

Exhibit 32.2

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

     The undersigned officer of Empire Resources, Inc. (the “Company”) hereby certifies that the Company’s quarterly report on Form 10-Q for the period ended June 30, 2007 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed to be a part of the Report or “filed” for any purpose whatsoever.

Date: August 14, 2007

/s/  Sandra Kahn

      Sandra Kahn,

      Chief Financial Officer