Delaware
|
13-1947195
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S.
Employer Identification No.)
|
One
Church Street, Suite 401, Rockville, Maryland
|
20850
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Title
of each Class
|
Name
of Each Exchange
|
on
Which Registered
|
|
Common
Stock, $0.15 par value
|
Boston
Stock Exchange
|
Page
|
|||
PART
I
|
|||
ITEM
1.
|
Description
of Business
|
1
|
|
ITEM
2.
|
Description
of Property
|
17
|
|
ITEM
3.
|
Legal
Proceedings
|
17
|
|
ITEM
4.
|
Submission
of Matters to a Vote of Security Holders
|
18
|
|
PART
II
|
|||
ITEM
5.
|
Market
for Common Equity, Related Stockholder Matters and Small
Business
|
||
Issuer
Purchases of Equity Securities
|
18
|
||
ITEM
6.
|
Management’s
Discussion and Analysis or Plan of Operation
|
19
|
|
ITEM
7.
|
Financial
Statements
|
29
|
|
ITEM
8.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
57
|
|
ITEM
8A.
|
Controls
and Procedures.
|
57
|
|
ITEM
8B.
|
Other
Information
|
57
|
|
PART
III
|
|||
ITEM
9.
|
Directors,
Executive Officers, Promoters and Control Persons; Compliance with
Section
16(a)
|
||
of
The Exchange Act
|
57
|
||
ITEM
10.
|
Executive
Compensation
|
57
|
|
ITEM
11.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder
Matters
|
57
|
|
ITEM
12.
|
Certain
Relationships and Related Transactions
|
57
|
|
ITEM
13.
|
Exhibits
|
57
|
|
ITEM
14.
|
Principal
Accountant Fees and Services
|
61
|
· |
failure
of acquired companies to achieve the results we
expect;
|
· |
diversion
of management's attention from operational
matters;
|
· |
difficulties
integrating the operations and personnel of acquired
companies;
|
· |
inability
to retain key personnel of acquired
companies;
|
· |
risks
associated with unanticipated events or
liabilities;
|
· |
the
potential disruption of our business;
and
|
· |
the
difficulty of maintaining uniform standards, controls, procedures
and
policies.
|
· |
expanding
the range of services and products we offer to customers to address
their
evolving needs;
|
· |
attracting
new customers;
|
· |
hiring
and retaining employees; and
|
· |
reducing
operating and overhead expenses.
|
· |
shortages
of equipment, materials or skilled labor;
|
· |
unscheduled
delays in the delivery of ordered materials and equipment;
|
· |
engineering
problems, including those relating to the commissioning of newly
designed
equipment;
|
· |
work
stoppages;
|
· |
weather
interference;
|
· |
cost
increases, such as increases in the price of commodities such as
corn or
soybean or increases in or the availability of land at reasonable
prices
to grow corn and soybean;
|
· |
price
decreases for a barrel of oil;
|
· |
inability
to develop or non-acceptance of new technologies to produce alternative
fuel sources; and
|
· |
difficulty
in obtaining necessary permits or approvals.
|
·
|
variations
in the margins or products performed during any particular
quarter;
|
·
|
regional
or general economic conditions;
|
·
|
the
budgetary spending patterns of customers, including government
agencies;
|
·
|
the
timing and volume of work under new
agreements;
|
·
|
the
timing of our significant promotional
activities;
|
·
|
costs
that we incur to support growth internally or through acquisitions
or
otherwise;
|
·
|
losses
experienced in our operations not otherwise covered by
insurance;
|
·
|
the
change in mix of our customers, contracts and
business;
|
·
|
the
timing of acquisitions;
|
·
|
the
timing and magnitude of acquisition assimilation costs;
and
|
·
|
increases
in construction and design costs.
|
·
|
our
customers cancel a significant number of
contracts;
|
·
|
we
fail to win a significant number of our existing contracts upon re-bid;
or
|
·
|
we
complete the required work under a significant number of non-recurring
projects and cannot replace them with similar projects.
|
·
|
the
nutritional supplements industry;
|
·
|
competitors;
|
·
|
the
safety and quality of our products and ingredients;
and
|
·
|
regulatory
investigations of our products or competitors’
products.
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY
|
|
High
Bid
|
Low
Bid
|
|||||
Fiscal
year Ended January 31, 2007
|
|||||||
1st
Quarter
|
$
|
2.35
|
$
|
1.90
|
|||
2nd
Quarter
|
2.70
|
1.80
|
|||||
3rd
Quarter
|
6.40
|
2.00
|
|||||
4th
Quarter
|
7.00
|
2.95
|
|||||
|
|||||||
Fiscal
year Ended January 31, 2006
|
|||||||
1st
Quarter
|
$
|
6.12
|
$
|
5.70
|
|||
2nd
Quarter
|
6.15
|
5.05
|
|||||
3rd
Quarter
|
5.05
|
1.01
|
|||||
4th
Quarter
|
2.65
|
1.90
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted
average exercise price of outstanding options,warrants and
rights
|
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
|
474,000
|
(1)
|
$
|
5.93
|
—
|
|||||
Equity
compensation plans not approved by security holders
|
—
|
—
|
—
|
|||||||
Total
|
474,000
|
$
|
5.93
|
—
|
(1)
|
Represents
approximately 244,000 shares issuable upon exercise of options granted
under the 2001 Stock Option Plan as of January 31, 2007 and 230,000
shares
issuable upon exercise of warrants,
as
discussed further in the Note 11 of the accompanying financial
statements
.
|
Year
Ended
January
31,
|
|||||||
2007
|
2006
|
||||||
Net
sales
|
|||||||
Power
industry services
|
$
|
33,698,000
|
$
|
—
|
|||
Nutraceutical
products
|
20,842,000
|
17,702,000
|
|||||
Telecom
infrastructure services
|
14,327,000
|
10,750,000
|
|||||
Net
sales
|
68,867,000
|
28,452,000
|
|||||
Cost
of sales
|
|||||||
Power
industry services
|
30,589,000
|
—
|
|||||
Nutraceutical
products
|
16,549,000
|
13,842,000
|
|||||
Telecom
infrastructure services
|
11,479,000
|
8,543,000
|
|||||
Gross
profit
|
10,250,000
|
6,067,000
|
|||||
Selling
and general and administrative expenses
|
9,863,000
|
7,469,000
|
|||||
Impairment
loss
|
—
|
6,497,000
|
|||||
Income
(loss) from operations
|
387,000
|
(7,899,000
|
)
|
||||
Interest
expense
|
760,000
|
606,000
|
|||||
Other
(income) expense, net
|
(349,000
|
)
|
1,925,000
|
||||
Loss
before income taxes
|
(24,000
|
)
|
(10,430,000
|
)
|
|||
Income
tax (expense) benefit
|
(89,000
|
)
|
922,000
|
||||
Net
loss
|
$
|
(113,000
|
)
|
$
|
(9,508,000
|
)
|
|
Basic
and diluted loss per share
|
$
|
(0.02
|
)
|
$
|
(2.76
|
)
|
|
Weighted
average shares outstanding - basic
and
diluted
|
5,338,000
|
3,439,000
|
Year
Ended
January
31
|
|||||||
2007
|
2006
|
||||||
unaudited
|
|
unaudited
|
|
||||
Net
sales
|
|
|
(Pro
forma
)
|
|
|
(Pro
forma
)
|
|
Power
industry services
|
$
|
134,410,000
|
$
|
48,622,000
|
|||
Nutraceutical
products
|
20,842,000
|
17,702,000
|
|||||
Telecom
infrastructure services
|
14,327,000
|
10,750,000
|
|||||
Net
sales
|
169,579,000
|
77,074,000
|
|||||
Cost
of sales
|
|||||||
General
Power Services
|
124,005,000
|
42,744,000
|
|||||
Nutraceutical
products
|
16,549,000
|
13,842,000
|
|||||
Telecom
infrastructure services
|
11,479,000
|
8,543,000
|
|||||
Gross
profit
|
17,546,000
|
11,945,000
|
|||||
Selling
and general and administrative expenses
|
13,042,000
|
9,901,000
|
|||||
Impairment
loss
|
—
|
6,497,000
|
|||||
Income
(loss) from operations
|
$
|
4,504,000
|
($4,453,000
|
)
|
Years
ended January 31,
|
|||||||
2007
|
2006
|
||||||
Net
loss
|
$
|
(113,000
|
)
|
$
|
(9,508,000
|
)
|
|
Interest
expense and amortization of
Subordinated
debt issuance costs
|
760,000
|
606,000
|
|||||
Taxes
|
89,000
|
(922,000
|
)
|
||||
Depreciation
and amortization
|
1,108,000
|
832,000
|
|||||
Amortization
of intangible assets
|
2,328,000
|
1,603,000
|
|||||
EBITDA
|
$
|
4,398,000
|
$
|
(7,389,000
|
)
|
|
Payment
Due by Period
|
|
More
than
|
|
||||||||||||
Contractual
Obligations
|
|
Total
|
|
One
Year
|
|
1-3
Years
|
|
4-5
Years
|
|
5
Years
|
||||||
Long-term
debt
|
$
|
9,125,000
|
$
|
2,500,000
|
$
|
4,792,000
|
$
|
1,833,000
|
$
|
|||||||
Operating
Leases
|
176,000
|
86,000
|
90,000
|
—
|
—
|
|||||||||||
Total
|
$
|
9,301,000
|
$
|
2,586,000
|
$
|
4,882,000
|
$
|
1,833,000
|
$
|
—
|
ITEM 7 . |
ARGAN,
INC.
|
|||
Consolidated
Balance Sheets
|
ARGAN,
INC.
|
||||
Consolidated
Statements of Operations
|
Years
ended January 31,
|
|||||||
2007
|
2006
|
||||||
Net
sales
|
|||||||
Power
industry services
|
$
|
33,698,000
|
$
|
-
|
|||
Nutraceutical
products
|
20,842,000
|
17,702,000
|
|||||
Telecom
infrastructure services
|
14,327,000
|
10,750,000
|
|||||
Net
Sales
|
68,867,000
|
28,452,000
|
|||||
Cost
of sales
|
|||||||
Power
industry services
|
30,589,000
|
-
|
|||||
Nutraceutical
products
|
16,549,000
|
13,842,000
|
|||||
Telecom
infrastructure services
|
11,479,000
|
8,543,000
|
|||||
Gross
profit
|
10,250,000
|
6,067,000
|
|||||
Selling,
general and administrative expenses
|
9,863,000
|
7,469,000
|
|||||
Impairment
loss
|
-
|
6,497,000
|
|||||
Income
(loss) from operations
|
387,000
|
(7,899,000
|
)
|
||||
Interest
expense and amortization of
|
|||||||
subordinated
debt issuance costs
|
760,000
|
606,000
|
|||||
Other
(income) expense, net
|
(349,000
|
)
|
1,925,000
|
||||
Loss
from operations before
|
|||||||
income
taxes
|
(24,000
|
)
|
(10,430,000
|
)
|
|||
Income
tax (expense) benefit
|
(89,000
|
)
|
922,000
|
||||
Net
loss
|
$
|
(113,000
|
)
|
$
|
(9,508,000
|
)
|
|
Basic
and diluted loss per share
|
$
|
(0.02
|
)
|
$
|
(2.76
|
)
|
|
|
|||||||
Weighted
average number of shares outstanding – basic and diluted
|
5,338,000
|
3,439,000
|
ARGAN,
INC.
|
|||||||||||||||
Consolidated
Statements of Stockholders' Equity
|
|||||||||||||||
For
the Years Ended January 31, 2007 and
2006
|
|
|
|
Other
|
Additional
|
|
|
|
||||||||||||||||||
|
Common
Stock
|
Warrants
|
Comprehensive
|
Paid
in
|
Accumulated
|
Treasury
|
|
||||||||||||||||||
|
Shares
|
Par
Value
|
Outstanding
|
Loss
|
Capital
|
Deficit
|
Stock
|
Total
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance
as of January 31, 2005
|
2,758,845
|
$
|
414,000
|
$
|
849,000
|
$
|
-
|
$
|
19,800,000
|
$
|
(5,530,000
|
)
|
$
|
(33,000
|
)
|
$
|
15,500,000
|
||||||||
|
|||||||||||||||||||||||||
Issuance
of common stock
|
|||||||||||||||||||||||||
to
MSR
|
95,321
|
14,000
|
-
|
-
|
468,000
|
-
|
482,000
|
||||||||||||||||||
|
|||||||||||||||||||||||||
Issuance
of Common stock
|
|||||||||||||||||||||||||
to
Kevin Thomas
|
959,844
|
144,000
|
-
|
-
|
5,068,000
|
-
|
5,212,000
|
||||||||||||||||||
|
|||||||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(9,508,000
|
)
|
-
|
(9,508,000
|
)
|
|||||||||||||||
|
|||||||||||||||||||||||||
Balance
as of January 31, 2006
|
3,814,010
|
$
|
572,000
|
$
|
849,000
|
$
|
-
|
$
|
25,336,000
|
$
|
(15,038,000
|
)
|
$
|
(33,000
|
)
|
$
|
11,686,000
|
||||||||
|
|||||||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(113,000
|
)
|
-
|
(113,000
|
)
|
|||||||||||||||
|
|||||||||||||||||||||||||
Other
comprehensive loss
|
|||||||||||||||||||||||||
Net
loss on derivative instrument
|
(2,000
|
)
|
(2,000
|
)
|
|||||||||||||||||||||
Net
unrealized investment loss
|
(6,000
|
)
|
(6,000
|
)
|
|||||||||||||||||||||
Total
comprehensive loss
|
(121,000
|
)
|
|||||||||||||||||||||||
|
|||||||||||||||||||||||||
Issuance
of Common Stock in private offerings,
|
|||||||||||||||||||||||||
net
of offering costs of $58,000
|
3,613,335
|
542,000
|
12,000,000
|
12,542,000
|
|||||||||||||||||||||
|
|||||||||||||||||||||||||
Issuance
of Common Stock
|
|||||||||||||||||||||||||
in
connection with the GPS combination
|
3,666,667
|
550,000
|
19,617,000
|
20,167,000
|
|||||||||||||||||||||
|
|||||||||||||||||||||||||
Stock
option vesting
|
-
|
-
|
-
|
-
|
237,000
|
-
|
-
|
237,000
|
|||||||||||||||||
|
|||||||||||||||||||||||||
Balance
as of January 31, 2007
|
11,094,012
|
$
|
1,664,000
|
$
|
849,000
|
$
|
(8,000
|
)
|
$
|
57,190,000
|
$
|
(15,151,000
|
)
|
$
|
(33,000
|
)
|
$
|
44,511,000
|
ARGAN,
INC.
|
|||
Consolidated
Statements of Cash Flows
|
Years
Ended January 31,
|
|
||||||
|
|
2007
|
|
2006
|
|||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
loss
|
$
|
(113,000
|
)
|
$
|
(9,508,000
|
)
|
|
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
|||||||
Depreciation
and other amortization
|
1,108,000
|
832,000
|
|||||
Amortization
of debt issuance costs
|
257,000
|
244,000
|
|||||
Amortization
of purchase intangibles
|
2,328,000
|
1,603,000
|
|||||
Impairment
loss on goodwill and intangibles
|
-
|
6,497,000
|
|||||
Deferred
income taxes
|
(1,029,000
|
)
|
(997,000
|
)
|
|||
Non-cash
loss on liabililty for derivative financial instruments
|
-
|
1,930,000
|
|||||
Non-cash
stock option compensation expense
|
237,000
|
-
|
|||||
Loss
(gain) on sale of property and equipment
|
13,000
|
(25,000
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable, net
|
(10,724,000
|
)
|
(400,000
|
)
|
|||
Restricted
cash for surety bond
|
(10,039,000
|
)
|
-
|
||||
Estimated
earnings in excess of billings
|
(10,210,000
|
)
|
(352,000
|
)
|
|||
Inventories,
net
|
1,023,000
|
319,000
|
|||||
Prepaid
expenses and other current assets
|
(375,000
|
)
|
135,000
|
||||
Accounts
payable and accrued expenses
|
13,890,000
|
2,016,000
|
|||||
Billings
in excess of estimated earnings
|
446,000
|
-
|
|||||
Due
(from) to affiliates
|
(112,000
|
)
|
29,000
|
||||
Other
|
2,000
|
(1,000
|
)
|
||||
Net
cash (used in) provided by operating activities
|
(13,298,000
|
)
|
2,322,000
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Net
cash provided in connection with the acquisition of Gemma Power
|
|||||||
Systems,
Inc. (GPS)
|
24,895,000
|
-
|
|||||
Cash
escrowed to fund the GPS purchase price contingencies
|
(2,000,000
|
)
|
-
|
||||
Purchase
of Vitarich Laboratories, Inc. (VLI), net of cash acquired
|
-
|
(426,000
|
)
|
||||
Purchases
of property and equipment
|
(935,000
|
)
|
(1,480,000
|
)
|
|||
Proceeds
from sale of property and equipment
|
15,000
|
80,000
|
|||||
Net
cash provided by (used in) investing activities
|
21,975,000
|
(1,826,000
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Net
proceeds from sale of stock
|
12,542,000
|
-
|
|||||
Proceeds
from line of credit
|
8,511,000
|
4,825,000
|
|||||
Proceeds
from long-term debt
|
9,500,000
|
9,000
|
|||||
Proceeds
from short-term debt
|
-
|
140,000
|
|||||
Proceeds
from escrow
|
-
|
304,000
|
|||||
Principal
payments on short-term debt
|
-
|
(156,000
|
)
|
||||
Principal
payments on line of credit
|
(9,754,000
|
)
|
(5,241,000
|
)
|
|||
Principal
payments on long-term debt
|
(796,000
|
)
|
(539,000
|
)
|
|||
Principal
payments on subordinated note due former owner of VLI
|
(3,292,000
|
)
|
-
|
||||
Net
cash provided by (used in) financing activities
|
16,711,000
|
(658,000
|
)
|
||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
25,388,000
|
(162,000
|
)
|
||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
5,000
|
167,000
|
|||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
25,393,000
|
$
|
5,000
|
2007
|
2006
|
||||||
GPS
|
$
|
-
|
$
|
-
|
|||
SMC
|
-
|
5,000
|
|||||
VLI
|
137,000
|
45,000
|
|||||
Allowance
for
doubtful
accounts
|
$
|
137,000
|
$
|
50,000
|
|
2007
|
2006
|
|||||
|
|||||||
Raw
materials
|
$
|
2,264,000
|
$
|
3,190,000
|
|||
Work-in-process
|
100,000
|
70,000
|
|||||
Finished
goods
|
127,000
|
245,000
|
|||||
|
2,491,000
|
3,505,000
|
|||||
Less:
Reserves
|
(104,000
|
)
|
(95,000
|
)
|
|||
Inventories,
net
|
$
|
2,387,000
|
$ |
3,410,000
|
Net
loss, as reported
|
($9,508,000
|
)
|
||
Add:
Stock-based compensation recorded in the financial
statements
|
—
|
|||
Deduct:
Total stock-based employee compensation expense
determined
under fair value based methods
|
(44,000
|
)
|
||
Pro
forma net loss
|
($9,552,000
|
)
|
||
Basic
and diluted loss per share:
|
||||
Basic
and diluted - as reported
|
($2.76
|
)
|
||
Basic
and diluted - pro forma
|
($2.78
|
)
|
Risk-free
interest rate
|
3.65
|
%
|
||
Expected
volatility
|
56
|
%
|
||
Expected
life
|
5
years
|
|||
Dividend
yield
|
0
|
%
|
·
|
GPS
has a broad range of experience in engineering and construction
of boiler
plants, cogeneration facilities, wood fired power plants, wind
plants and
other alternative fuel powered facilities. GPS has a very experienced
and
committed management team and exposure to state-of-the-art biofuel
and
ethanol refining technology in the rapidly growing alternative
fuels
sources industry. GPS has managed the engineering, procurement
and
construction of power plants for over 70
facilities.
|
·
|
GPS
had a backlog of gross revenue in the amount of $181.3 million
as of the
closing date for work to be performed on signed contracts within
the next
18 months.
|
|
|
Weighted
|
|
||||
|
|
Estimated
|
|
Average
|
|
||
|
|
Fair
Value
|
|
Useful
Life
|
|||
Cash
and cash equivalents
|
$
|
35,830,000
|
|||||
Cash
in escrow
|
2,692,000
|
||||||
Contract
receivable
|
8,955,000
|
||||||
Investments
available for sale
|
2,293,000
|
||||||
Cost
in excess of billings
|
1,118,000
|
||||||
Other
assets
|
200,000
|
||||||
Intangibles:
|
|||||||
Customer
relationships
|
6,678,000
|
7
- 18 months
|
|||||
Trade
name
|
3,643,000
|
15
years
|
|||||
Non-compete
agreement
|
534,000
|
5
years
|
|||||
Goodwill
|
16,476,000
|
||||||
Total
assets acquired
|
78,419,000
|
||||||
Liabilities
|
46,484,000
|
||||||
Deferred
income taxes
|
833,000
|
||||||
Total
liabilities assumed
|
47,317,000
|
||||||
Net
assets acquired
|
$
|
31,102,000
|
Cash
payments
|
$
|
10,735,000
|
|||||
Direct
costs of the acquisition
|
200,000
|
||||||
Issuance
of AI common stock
|
20,167,000
|
||||||
Total
purchase price
|
$
|
31,102,000
|
|||||
Cash
payments
|
$
|
10,735,000
|
|||||
Direct
costs of the acquisition
|
200,000
|
||||||
Unrestricted
cash acquired from GPS
|
(35,830,000
|
)
|
|||||
Net
cash/cash equivalents acquired
|
$
|
24,895,000
|
For
the year ended January 31,
|
|
||||||
|
|
2007
|
|
2006
|
|||
Revenues
|
$
|
169,579,000
|
$
|
77,074,000
|
|||
Net
Income (loss)
|
2,226,000
|
(7,737,000
|
)
|
||||
Basic
and diluted earnings (loss) per common share
|
$
|
0.20
|
$
|
(0.78
|
)
|
Due
in one year or less
|
$
|
1,331,000
|
||
Due
after one year through three years
|
952,000
|
|||
Due
after three years
|
—
|
|||
Total
|
$
|
2,283,000
|
SMC
|
VLI
|
GPS
|
Total
|
||||||||||
Balance
as of February 1, 2005
|
$
|
940,000
|
$
|
6,410,000
|
$
|
—
|
$
|
7,350,000
|
|||||
Additional
Consideration and Earn
back
Agreement related to the
acquisition
of VLI
|
—
|
5,965,000
|
—
|
5,965,000
|
|||||||||
Impairment
charge (Note 6)
|
(5,810,000
|
)
|
—
|
(5,810,000
|
)
|
||||||||
Balance
as of January 31, 2006
|
940,000
|
6,565,000
|
—
|
7,505,000
|
|||||||||
Goodwill
acquired in the acquisition
of
GPS
|
—
|
—
|
16,476,000
|
16,476,000
|
|||||||||
Balance
as of January 31, 2007
|
$
|
940,000
|
$
|
6,656,000
|
$
|
16,476,000
|
$
|
23,981,000
|
Estimated
Useful Life
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
||||||||||
Amortized
intangible assets:
|
|||||||||||||
Contractual
Customer
Relationships
|
5-7
years
|
$
|
2,854,000
|
$
|
1,463,000
|
$
|
1,391,000
|
||||||
Customer
Relationships - GPS
|
1-2
years
|
6,678,000
|
956,000
|
5,722,000
|
|||||||||
Proprietary
Formulas
|
3
years
|
1,813,000
|
1,545,000
|
268,000
|
|||||||||
Non-Compete
Agreement
|
5
years
|
2,334,000
|
886,000
|
1,448,000
|
|||||||||
Trade
Name - GPS
|
15
years
|
3,643,000
|
35,000
|
3,608,000
|
|||||||||
Unamortized
intangible assets:
|
|||||||||||||
Trade
Name - SMC
|
Indefinite
|
224,000
|
—
|
224,000
|
|||||||||
Total
intangible assets
|
$
|
17,546,000
|
$
|
4,885,000
|
$
|
12,661,000
|
|||||||
Years
ended January 31,
|
|||||||
2007
|
2006
|
||||||
Amortized
intangible assets:
|
|||||||
Contractual
Customer
Relationships
|
$
|
503,000
|
$
|
503,000
|
|||
Customer
Relationships - GPS
|
956,000
|
—
|
|||||
Proprietary
Formulas
|
458,000
|
740,000
|
|||||
Non-Compete
Agreement
|
376,000
|
360,000
|
|||||
Trade
Name - GPS
|
35,000
|
—
|
|||||
Total
amortization expense excluding impairment loss
|
$
|
2,328,000
|
$
|
1,603,000
|
2008
|
$
|
6,298,000
|
||
2009
|
2,117,000
|
|||
2010
|
897,000
|
|||
2011
|
399,000
|
|||
2012
|
334,000
|
2008
|
$
|
181,000
|
||
2009
|
181,000
|
|||
2010
|
181,000
|
|||
2011
|
15,000
|
|||
2012
|
—
|
|||
Thereafter
|
—
|
|||
$
|
558,000
|
2007
|
2006
|
||||||
Leasehold
improvements
|
$
|
964,000
|
$
|
905,000
|
|||
Machinery
and equipment
|
3,021,000
|
2,451,000
|
|||||
Trucks
|
1,144,000
|
913,000
|
|||||
Machinery
and equipment under capital leases
|
403,000
|
386,000
|
|||||
Trucks
under capital lease
|
97,000
|
87,000
|
|||||
5,629,000
|
4,742,000
|
||||||
Less
accumulated depreciation
|
(2,151,000
|
)
|
(1,255,000
|
)
|
|||
Less
accumulated depreciation on assets held
under
capital leases
|
(228,000
|
)
|
(163,000
|
)
|
|||
Property
and equipment, net
|
$
|
3,250,000
|
$
|
3,324,000
|
2007
|
|||||||||||||||||||
Stated
|
Notional
Amount
of
|
Effective
|
|||||||||||||||||
2007
|
2006
|
Interest
rate
(1)
|
Interest
rate
Swap
|
Interest
rate
(2)
|
Swap
Maturity
|
||||||||||||||
Bank
term loan - due 2010
|
$
|
7,833,000
|
$
|
—
|
8.59
|
%
|
$
|
3,916,000
|
8.19
|
%
|
2009
|
||||||||
Bank
term loan - due 2009
|
1,292,000
|
—
|
8.73
|
%
|
969,000
|
8.83
|
%
|
2009
|
|||||||||||
Bank
term loan - due 2006
|
—
|
200,000
|
—
|
—
|
—
|
—
|
|||||||||||||
Capital
leases
|
176,000
|
287,000
|
—
|
—
|
—
|
—
|
|||||||||||||
Other
financing
|
—
|
110,000
|
—
|
—
|
—
|
—
|
|||||||||||||
9,301,000
|
597,000
|
4,885,000
|
|||||||||||||||||
Less:
current portion
|
2,586,000
|
421,000
|
1,375,000
|
||||||||||||||||
$
|
6,715,000
|
$
|
176,000
|
$
|
3,510,000
|
||||||||||||||
Revolving
credit facility
|
$
|
—
|
$
|
1,243,000
|
8.73
|
%
|
—
|
—
|
—
|
||||||||||
Subordinated
debt due former owner
of
Vitarich Laboratories, Inc. (Note 7)
|
$
|
—
|
$
|
3,292,000
|
—
|
—
|
—
|
—
|
(1)
|
The
stated interest rate is the floating interest rate as of January
31, 2007.
This is not necessarily an indication of future interest rates.
The
floating interest rate for the revolving line of credit as of January
31,
2006 was 7.74%.
|
(2)
|
The
effective interest rate includes the impact of the fixed interest
rate
swaps on the stated rate of
interest.
|
2008
|
$
|
2,586,000
|
||
2009
|
2,581,000
|
|||
2010
|
2,301,000
|
|||
2011
|
1,833,000
|
|||
Total
|
$
|
9,301,000
|
|
Year
Ended January 31,
|
||||||
|
2007
|
2006
|
|||||
Dividend
yield
|
—
|
—
|
|||||
Expected
volatility
|
57
|
%
|
56
|
%
|
|||
Risk-free
interest rate
|
5.03
|
%
|
3.65
|
%
|
|||
Expected
life in years
|
5
|
5
|
|||||
|
Options
|
Shares
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contract
Term
|
Aggregate
Intrinsic
Value
|
|||||||||
Outstanding
at January 31, 2006
|
73,000
|
$
|
7.84
|
||||||||||
Granted
|
176,000
|
$
|
2.81
|
||||||||||
Exercised
|
—
|
||||||||||||
Forfeited
or expired
|
(5,000
|
)
|
$
|
7.79
|
|||||||||
Outstanding
at January 31, 2007
|
244,000
|
$
|
4.20
|
8.2
|
$
|
476,000
|
|||||||
Vested
or expected to vest January 31, 2007
|
228,000
|
$
|
4.08
|
8.1
|
$
|
416,000
|
|||||||
Exercisable
at January 31, 2007
|
228,000
|
$
|
4.08
|
8.1
|
$
|
416,000
|
Shares
|
Aggregate
Intrinsic
Value
|
||||||
Nonvested
at January 31, 2006
|
16,000
|
||||||
Granted
|
176,000
|
||||||
Vested
|
(176,000
|
)
|
|||||
Forfeited
|
—
|
||||||
Nonvested
at January 31, 2007
|
16,000
|
$
|
3.63
|
2007
|
2006
|
||||||
Current:
|
|||||||
Federal
|
$
|
866,000
|
$
|
8,000
|
|||
State
|
226,000
|
67,000
|
|||||
1,092,000
|
75,000
|
||||||
Deferred:
|
|||||||
Federal
|
(846,000
|
)
|
(844,000
|
)
|
|||
State
|
(157,000
|
)
|
(153,000
|
)
|
|||
|
(1,003,000
|
)
|
(997,000
|
)
|
|||
Total
tax expense (benefit)
|
$
|
89,000
|
($922,000
|
)
|
2007
|
2006
|
||||||
Computed
“expected” tax benefit
|
$
|
(8,000
|
)
|
$
|
(3,546,000
|
)
|
|
Increase
(decrease) resulting from:
|
|||||||
State
income taxes, net
|
27,000
|
(333,000
|
)
|
||||
Permanent
differences
|
70,000
|
2,957,000
|
|||||
$
|
89,000
|
$
|
(922,000
|
)
|
2007
|
2006
|
||||||
Assets:
|
|||||||
Inventory
and receivable reserves
|
$
|
91,000
|
$
|
77,000
|
|||
Accrued
vacation
|
87,000
|
53,000
|
|||||
Accrued
legal fees
|
221,000
|
147,000
|
|||||
Net
operating loss
|
—
|
143,000
|
|||||
Other
|
113,000
|
23,000
|
|||||
|
512,000
|
443,000
|
|||||
Liabilities:
|
|||||||
SMC
cash to accrual adjustment
|
—
|
86,000
|
|||||
Property
and equipment
|
308,000
|
462,000
|
|||||
Purchased
intangibles
|
1,584,000
|
1,562,000
|
|||||
Other
|
91,000
|
—
|
|||||
1,983,000
|
2,110,000
|
||||||
Net
deferred tax liabilities
|
$
|
1,471,000
|
$
|
1,667,000
|
Power
Industry Services
|
Nutraceutical
Products
|
Telecom
Infrastructure
Services
|
Other
|
Consolidated
|
||||||||||||
Net
sales
|
$
|
33,698,000
|
$
|
20,842,000
|
$
|
14,327,000
|
$
|
—
|
$
|
68,867,000
|
||||||
Cost
of sales
|
30,589,000
|
16,549,000
|
11,479,000
|
—
|
58,617,000
|
|||||||||||
Gross
profit
|
3,109,000
|
4,293,000
|
2,848,000
|
—
|
10,250,000
|
|||||||||||
Selling,
general and
administrative
expenses
|
1,288,000
|
4,542,000
|
1,636,000
|
2,397,000
|
9,863,000
|
|||||||||||
Income
(loss) from
operations
|
1,821,000
|
(249,000
|
)
|
1,212,000
|
(2,397,000
|
)
|
387,000
|
|||||||||
Interest
expense
|
101,000
|
360,000
|
42,000
|
257,000
|
760,000
|
|||||||||||
Interest
income
|
(287,000
|
)
|
—
|
(10,000
|
)
|
(52,000
|
)
|
(349,000
|
)
|
|||||||
Income
(loss) before
income
taxes
|
$
|
2,007,000
|
($609,000
|
)
|
$
|
1,180,000
|
($2,602,000
|
)
|
(24,000
|
)
|
||||||
Income
tax expense
|
(89,000
|
)
|
||||||||||||||
Net
loss
|
$
|
(113,000
|
)
|
|||||||||||||
Depreciation
and
amortization
|
$
|
31,000
|
$
|
566,000
|
$
|
474,000
|
$
|
294,000
|
$
|
1,365,000
|
||||||
Amortization
of
intangibles
|
$
|
1,007,000
|
$
|
1,218,000
|
$
|
103,000
|
—
|
$
|
2,328,000
|
|||||||
Goodwill
|
$
|
16,476,000
|
$
|
6,565,000
|
$
|
940,000
|
—
|
$
|
23,981,000
|
|||||||
Total
Assets
|
$
|
97,454,000
|
$
|
15,851,000
|
$
|
5,347,000
|
$
|
2,478,000
|
$
|
121,130,000
|
||||||
Fixed
asset
additions
|
—
|
$
|
387,000
|
$
|
540,000
|
$
|
8,000
|
$
|
935,000
|
Nutraceutical
Products
|
Telecom
Infrastructure
Services
|
Other
|
Consolidated
|
||||||||||
Net
sales
|
$
|
17,702,000
|
$
|
10,750,000
|
$
|
—
|
$
|
28,452,000
|
|||||
Cost
of sales
|
13,842,000
|
8,543,000
|
—
|
22,385,000
|
|||||||||
Gross
profit
|
3,860,000
|
2,207,000
|
—
|
6,067,000
|
|||||||||
Selling,
general and administrative
expenses
|
4,162,000
|
1,549,000
|
1,758,000
|
7,469,000
|
|||||||||
Impairment
loss
(1)
|
6,497,000
|
—
|
—
|
6,497,000
|
|||||||||
(Loss)
income from operations
|
(6,799,000
|
)
|
658,000
|
(1,758,000
|
)
|
(7,899,000
|
)
|
||||||
Interest
expense
|
364,000
|
56,000
|
186,000
|
606,000
|
|||||||||
Other
income (loss), net
|
— |
5,000
|
(1,930,000
|
)
(2
)
|
(1,925,000
|
)
|
|||||||
(Loss)
income before
income
taxes
|
($7,163,000
|
)
|
$
|
607,000
|
($3,874,000
|
)
|
(10,430,000
|
)
|
|||||
Income
tax benefit
|
922,000
|
||||||||||||
Net
loss
|
($9,508,000
|
)
|
|||||||||||
Depreciation
and amortization
|
$
|
399,000
|
$
|
404,000
|
$
|
273,000
|
$
|
1,076,000
|
|||||
Amortization
of intangibles
|
$
|
1,500,000
|
$
|
103,000
|
—
|
$
|
1,603,000
|
||||||
Goodwill
|
$
|
6,565,000
|
$
|
940,000
|
—
|
$
|
7,505,000
|
||||||
Total
Assets
|
$
|
17,768,000
|
$
|
5,245,000
|
$
|
609,000
|
$
|
23,622,000
|
|||||
Fixed
asset additions
|
$
|
1,173,000
|
$
|
307,000
|
—
|
$
|
1,480,000
|
(1)
|
Impairment
loss for VLI includes an impairment charge to goodwill of $5,810,000
and
to proprietary formulas of $687,000.
|
(2)
|
Includes
$1,930,000 for non-cash loss on liability for derivative financial
instruments.
|
2008
|
$
|
656,000
|
||
2009
|
491,000
|
|||
2010
|
378,000
|
|||
2011
|
98,000
|
|||
2012
|
74,000
|
|||
Thereafter
|
587,000
|
|||
$
|
2,284,000
|
2007
|
2006
|
||||||
Long-term
debt
|
$
|
176,000
|
$
|
287,000
|
|||
Less:
Current portion
|
86,000
|
111,000
|
|||||
Long-term
debt excluding
current
portion
|
$
|
90,000
|
$
|
176,000
|
2008
|
$
|
86,000
|
||
2009
|
81,000
|
|||
2010
|
9,000
|
|||
176,000
|
||||
Less:
Amount representing interest
|
(17,000
|
)
|
||
$
|
159,000
|
Years
Ended January 31
|
|||||||
2007
|
2006
|
||||||
Interest
|
$
|
526,000
|
$
|
350,000
|
|||
Income
taxes
|
$
|
147,000
|
$
|
151,000
|
Years
Ended January 31
|
|||||||
2007
|
|
2006
|
|||||
Fair
value of common stock issued in connection with the GPS
combination
|
$
|
20,167,000
|
$
|
—
|
|||
Fair
value of common stock issued to MSR
|
-
|
482,000
|
|||||
Fair
value of common stock issued to Kevin Thomas
|
-
|
5,212,000
|
|||||
Net
decrease in unrealized investment loss
|
(6,000
|
)
|
—
|
||||
Net
decrease in fair value of interest rate swaps
|
(2,000
|
)
|
—
|
ITEM 8 . |
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
ITEM 8A. |
ITEM 8B. |
ITEM 9 . |
ITEM 11 . |
ITEM 13. |
Exhibit
No.
|
Description
|
3.1
|
Certificate
of Incorporation, as amended. Incorporated by reference to Company’s Form
10-KSB filed with the Securities and Exchange Commission on April
27,
2004.
|
3.2
|
Bylaws.
Incorporated by reference to the Company’s Registration Statement on Form
S-1, filed with the Securities and Exchange Commission on October
15,
1991, (Registration No. 33-43228).
|
4.1
|
Stock
Purchase Agreement dated as of May 4, 2006 between Argan, Inc.
and the
purchasers identified on Schedule A attached thereto.
(b)
|
4.2.1
|
Escrow
Agreement dated as of May 4, 2006 between Argan, Inc. and the purchasers
identified on Schedule A attached thereto.
(b)
|
4.3
|
Stock
Purchase Agreement dated as of December 8, 2006 by and among Argan,
Inc.
and the purchasers identified on Schedule A attached thereto.
(a)
|
4.4
|
Stock
Purchase Agreement dated as of December 8, 2006 by and between
Argan, Inc.
and Argan Investments LLC.
|
4.5 |
Registration
Rights Agreement dated as of December 8, 2006 by and between
Argan, Inc.
and Argan Investments
LLC.
|
4.6 |
Escrow
Agreement dated as of December 8, 2006 by and among Argan,
Inc., the
purchasers identified on Schedule A attached thereto and Robinson
&
Cole LLP.
|
4.7 |
Registration
Rights Agreement dated as of December 8, 2006 by and among
Argan, Inc.,
William F. Griffin, Jr. and Joel M.
Canino.
|
4.8 |
Escrow
Agreement, dated as of December 8, 2006 by and among the Argan,
Inc.,
William F. Griffin, Jr., Joel M. Canino, Michael Price and
Curtin Law
Roberson Dunigan & Salans,
P.C
|
10.1
|
2001
Incentive Stock Option Plan. Incorporated by reference to the Company’s
Proxy Statement filed on Schedule 14A with the Securities and Exchange
Commission on August 6, 2001.
|
10.2
|
Form
of Common Stock Purchase Warrant dated April 29, 2003. Incorporated
by
reference to Company’s Form 10-KSB filed with the Securities and Exchange
Commission on April 27, 2004.
|
10.3
|
Employment
Agreement dated as of August 31, 2004 by and between AGAX/VLI Acquisition
Corporation and Kevin J. Thomas. Incorporated by reference to the
Company’s Form 8-K filed with the Securities and Exchange Commission on
September 7, 2004.
|
10.4
|
Employment
Agreement dated as of January 3, 2005 by and between Argan, Inc.
and
Rainer H. Bosselmann. Incorporated by reference to the Company’s Form 8-K
dated January 3, 2005, filed with the Securities and Exchange Commission
on January 5, 2005.
|
10.5
|
Employment
Agreement dated as of January 3, 2005 by and between Argan, Inc.
and
Arthur F. Trudel, Jr. Incorporated by reference to the Company’s Form 8-K
dated January 3, 2005, filed with the Securities and Exchange Commission
on January 5, 2005.
|
10.6
|
Debt
Subordination Agreement dated as of January 31, 2005 by and among
Argan,
Inc.,Kevin J. Thomas, Southern Maryland Cable, Inc., and Bank of
America,
N.A. (included as Exhibit A, a Form of Subordinated Term Note).
Incorporated by reference to the Company’s Form 8-K dated January 31,
2005, filed with the Securities and Exchange Commission on February
4,
2005.
|
10.7
|
Subscription
Agreement dated as of January 28, 2005 between Argan, Inc. and
MSR I SBIC,
L.P. Incorporated by reference to the Company’s Form 8-K, dated January
28, 2005, filed with the Securities and Exchange Commission on
February 2,
2005.
|
10.8
|
Registration
Rights Agreement dated as of January 28, 2005 between Argan, Inc.
and MSR
I SBIC, L.P. Incorporated by reference to the Company’s Form 8-K, dated
January 28, 2005, filed with the Securities and Exchange Commission
on
February 2, 2005.
|
10.9
|
Debt
Subordination Agreement dated as of January 31, 2005 by and among
Argan,
Inc., Kevin J. Thomas, Southern Maryland Cable, Inc. and Bank of
America,
N.A. Incorporated by reference to the Company’s Form 8-K, dated January
31, 2005, filed with the Securities and Exchange Commission on
February 4,
2005.
|
10.10 |
Letter
Agreement dated July 5, 2005 by and among Argan, Inc., Vitarich
Laboratories, Inc. and Kevin J. Thomas. Incorporated by reference
to the
Company’s Form 8-K, dated July 5, 2005, filed with the Securities and
Exchange Commission on July 7,
2005.
|
10.11 |
Subordinated
Term Note, effective as of June 30, 2005, issued by Argan, Inc.
to Kevin
J. Thomas. Incorporated by reference to the Company’s Form 8-K, dated July
5, 2005, filed with the Securities and Exchange Commission on July
7,
2005.
|
10.12 |
Amended
and Restated Debt Subordination Agreement, effective as of June
30, 2005,
by and among Argan, Inc., Kevin J. Thomas, Southern Maryland Cable,
Inc.
and Bank of America, N.A. Incorporated by reference to the Company’s Form
8-K, dated July 5, 2005, filed with the Securities and Exchange
Commission
on July 7, 2005.
|
10.13
|
Letter
Agreement dated January 28, 2005 by and among Argan, Inc., Vitarich
Laboratories, Inc. and Kevin J. Thomas. Incorporated by reference
to the
Company’s Form 8-K, dated August 19, 2005, filed with the Securities and
Exchange Commission on August 22,
2005.
|
10.14 |
Fifth
Amendment to Financing and Security Agreement, dated as of November
7,
2005, by and among Argan, Inc., Southern Maryland Cable, Inc.,
Vitarich
Laboratories, Inc. and Bank of America, N.A. Incorporated by reference
to
the Company’s Form 8-K, dated November 7, 2005, filed with the Securities
and Exchange Commission on November 10,
2005.
|
10.15
|
Lease
Agreement between Kevin J. Thomas and Vitarich Lavoratories, Inc.,
dated
March 1, 2006.
(a)
|
10.16
|
Lease
Agreement between Kevin J. Thomas and Vitarich Lavoratories, Inc.,
dated
March 1, 2006.
(a)
|
10.17
|
Amended
and Restated Financing and Security Agreement dated as of May 5,
2006 by
and among Argan, Inc., Southern Maryland Cable, Inc., Vitarich
Laboratories, Inc. and Bank of America, N.A.
(d)
|
10.18
|
Third
Amended and Restated Revolving Credit Note dated as of May 5, 2006
issued
by Argan, Inc., Southern Maryland Cable, Inc. and Vitarich Laboratories,
Inc. in favor of Bank of America, N.A.
(d)
|
10.19
|
Second
Amended and Restated Debt Subordination Agreement dated as of May
5, 2006
by and among Kevin J. Thomas, Argan, Inc., Southern Maryland Cable,
Inc.,
Vitarich Laboratories, Inc. and Bank of America, N.A.
(d)
|
10.20
|
[Form
of] 2006 Term Note to be issued by Argan, Inc., Southern Maryland
Cable,
Inc. and Vitarich Laboratories, Inc. in favor of Bank of America,
N.A.
upon satisfaction of certain conditions.
(d)
|
10.21
|
Amended
and Restated Subordinated Term Note dated May 5, 2006 issued by
Argan,
Inc. in favor of Kevin J. Thomas.
(d)
|
10.22
|
Membership
Interest Purchase Agreement, dated as of December 6, 2006, by and
among,
Argan, Inc., Gemma Power Systems, LLC, Gemma Power, Inc., Gemma
Power
Systems California, William F. Griffin, Jr. and Joel M.
Canino.
(e)
|
10.23
|
Stock
Purchase Agreement, dated as of December 8, 2006, by and among
Argan,
Inc., Gemma Power Systems, LLC, Gemma Power, Inc., Gemma Power
Systems
California, William F. Griffin, Jr. and Joel M. Canino.
(e)
|
10.24
|
Employment
Agreement dated as of December 8, 2006 by and between Gemma Power
Systems,
LLC and Joel M. Canino.
(e)
|
10.25
|
Employment
Agreement dated as of December 8, 2006 by and between Gemma Power
Systems,
LLC and William M. Griffin, Jr.
(e)
|
10.26
|
Second
Amended and Restated Financing and Security Agreement dated December
11,
2006 by and among Argan, Inc., Southern Maryland Cable, Inc., Vitarich
Laboratories, Inc., Gemma Power Systems, LLC, Gemma Power, Inc.,
Gemma
Power Systems California, Gemma Power Hartford, LLC and Bank of
America,
N.A.
(e)
|
10.27
|
Fourth
Amended and Restated Revolving Credit Note dated December 11, 2006,
issued
by Argan, Inc., Southern Maryland Cable, Inc., Vitarich Laboratories,
Inc., Gemma Power Systems, LLC, Gemma Power, Inc., Gemma Power
Systems
California and Gemma Power Hartford, LLC in favor of Bank of America,
N.A.
(e)
|
10.28
|
Amended
and Restated 2006 Term Note dated December 11, 2006, issued by
Argan,
Inc., Southern Maryland Cable, Inc., Vitarich Laboratories, Inc.,
Gemma
Power Systems, LLC, Gemma Power, Inc., Gemma Power Systems California
and
Gemma Power Hartford, LLC in favor of Bank of America, N.A.
(e)
|
10.29
|
Acquisition
Term Note dated December 11, 2006, issued by Argan, Inc., Southern
Maryland Cable, Inc., Vitarich Laboratories, Inc., Gemma Power
Systems,
LLC, Gemma Power, Inc., Gemma Power Systems California and Gemma
Power
Hartford, LLC in favor of Bank of America, N.A.
(e)
|
10.30 |
Pledge,
Assignment and Security Agreement dated as of December 8, 006 by
Argan,
Inc. (on behalf of Southern Maryland Cable, Inc.) in favor of Bank
of
America, N.A.
(e)
|
10.31 |
Pledge,
Assignment and Security Agreement dated as of December 8, 2006
by Argan,
Inc. (on behalf of Vitarich Laboratories, Inc.) in favor of Bank
of
America, N.A.
(e)
|
10.32 |
Pledge,
Assignment and Security Agreement dated as of December 8, 2006
by Argan,
Inc. (on behalf of Gemma Power Systems, LLC) in favor of Bank of
America,
N.A.
(e)
|
10.33
|
Pledge,
Assignment and Security Agreement dated as of December 8, 2006
by Argan,
Inc. (on behalf of Gemma Power, Inc.) in favor of Bank of America,
N.A.
(e)
|
10.34
|
Pledge,
Assignment and Security Agreement dated as of December 8, 2006
by Argan,
Inc. (on behalf of Gemma Power Systems California) in favor of
Bank of
America, N.A.
(e)
|
10.35
|
Pledge,
Assignment and Security Agreement dated as of December 8, 2006
by Gemma
Power Systems, LLC (on behalf of Gemma Power Hartford, LLC) in
favor of
Bank of America, N.A.
(e)
|
10.36
|
Pledge
and Assignment Agreement dated as of December 8, 2006 by Argan,
Inc. in
favor of Bank of America, N.A. for the benefit of Travelers Casualty
and
Surety Company of America.
(e)
|
14.1
|
Code
of Ethics. Incorporated by reference to Company’s Form 10-KSB filed with
the Securities and Exchange Commission on April 27,
2004.
|
14.2
|
Argan,
Inc. Code of Conduct (Amended January 2007).
(f)
|
16
|
Letter
from Ernst & Young, LLP to U.S. Securities and Exchange Commission
dated May 23, 2006.
(c)
|
21
|
Subsidiaries
of the Company.
(f)
|
23.1 |
Consent
of Grant Thornton LLP, Independent Registered Public Accounting
Firm.
(f)
|
23.2 |
Consent
of Ernst & Young LLP, Independent Registered Public Accounting
Firm.
(f)
|
31.1 |
Certification
of CEO required by Section 302 of the Sarbanes-Oxley Act of
2002.
(f)
|
31.2 |
Certification
of CFO required by Section 302 of the Sarbanes-Oxley Act of
2002.
(f)
|
32.1 |
Certification
of CEO required by Section 906 of the Sarbanes-Oxley Act of
2002.
(f)
|
32.2 |
Certification
of CFO required by Section 906 of the Sarbanes-Oxley Act of
2002.
(f)
|
(a)
|
Incorporated
by reference to the Company’s Form 8-K, dated March 1, 2006, filed with
the Securities and Exchange Commission on March 6,
2006.
|
(b)
|
Incorporated
by reference to the Company’s Form 8-K, dated May 4, 2006, filed with the
Securities and Exchange Commission on May 9,
2006.
|
(c)
|
Incorporated
by reference to the Company’s Form 8-K, dated May 18, 2006, filed with the
Securities and Exchange Commission on May 23,
2006.
|
(d)
|
Incorporated
by reference to the Company’s Form 8-K, dated May 5, 2006, filed with the
Securities and Exchange Commission on May 11,
2006.
|
(e)
|
Incorporated
by reference to the Company’s Form 8-K, dated December 8, 2006, filed with
the Securities and Exchange Commission on December 14,
2006.
|
(f)
|
Filed
herewith
|
2007
|
2006
|
||||||
Audit
Fees
|
$
|
305,000
|
$
|
573,000
|
|||
Audit-Related
Fees
|
28,000
|
5,000
|
|||||
Tax
Fees
|
56,000
|
38,500
|
|||||
All
Other Fees
|
5,000
|
—
|
|||||
Total
|
$
|
394,000
|
$
|
616,500
|
ARGAN, INC. | ||
|
|
|
By: | /s/ Rainer H. Bosselmann | |
Rainer
H. Bosselmann
Chairman
of the Board and Chief Executive Officer
Dated:
April 23, 2007
|
Name
|
Title
|
Date
|
||
/s/
Rainer H. Bosselmann
|
Chairman
of the Board
|
April
23, 2007
|
||
Rainer
H. Bosselmann
|
and
Chief Executive Officer
|
|||
(Principal
Executive Officer)
|
||||
/s/
Arthur F. Trudel
|
Senior
Vice President
|
April
23, 2007
|
||
Arthur
F. Trudel
|
and
Chief Financial Officer and Secretary
|
|||
(Principal
Accounting and Financial Officer)
|
||||
/s/
DeSoto S. Jordan
|
Director
|
April
23, 2007
|
||
DeSoto
S. Jordan
|
||||
/s/
Daniel A. Levinson
|
Director
|
April
23, 2007
|
||
Daniel
A. Levinson
|
||||
/s/
T. Kent Pugmire
|
Director
|
April
23, 2007
|
||
T.
Kent Pugmire
|
||||
/s/
James W. Quinn
|
Director
|
April
23, 2007
|
||
James
W. Quinn
|
||||
/s/
Peter L. Winslow
|
Director
|
April
23, 2007
|
||
Peter
L. Winslow
|
||||
/s/
W. G. Champion Mitchell
|
Director
|
April
23, 2007
|
||
W.
G. Champion Mitchell
|
Exhibit
No.
|
Description
|
|
14.2
|
Argan,
Inc. Code of Conduct (Amended January 2007)
|
|
21
|
Subsidiaries
of the Company.
|
|
23.1
|
Consent
of Grant Thornton LLP, Independent Registered Public Accounting
Firm.
|
|
23.2
|
Consent
of Ernst & Young LLP, Independent Registered Public Accounting
Firm.
|
|
31.1
|
Certification
of CEO required by Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
of CFO required by Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
of CEO required by Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2
|
Certification
of CFO required by Section 906 of the Sarbanes-Oxley Act of
2002.
|
·
|
Learn
the details of all policies that affect your job. While you are
not
expected to know all policies of the Company, you should have a
basic
understanding of company policy and a detailed understanding of
policies
that apply to your job.
|
·
|
Seek
assistance from appropriate management when you have a question
about the
application of a policy.
|
·
|
Raise
issues and concerns with your supervisor or manager. If the issue
is not
resolved, raise it with the Vice President of Finance. If it is
still not
resolved call the anonymous Hot line number listed at the end of
this Code
of Conduct.
|
·
|
You
may raise your concerns verbally or in writing and it may be
anonymous.
|
·
|
Leading
by example, using their own behavior as a model for all
employees.
|
·
|
Making
sure that employees understand that business results are never
more
important than compliance.
|
·
|
Encouraging
employees to raise ethical questions and
concerns.
|
·
|
Providing
access to education, training, and legal counseling to ensure that
employees, affiliates, and where appropriate, third parties understand
the
requirements of Argan policies and applicable
laws.
|
·
|
Implementing
appropriate control measures in business process, to detect heightened
compliance risks and/or violations.
|
·
|
Taking
prompt corrective action to fix any identified weaknesses in
compliance
measures.
|
·
|
Agree
on or even discuss with competitors any matter involved in competition
between Argan and the competitor (such as sales price, credit terms,
marketing strategies, market shares or sales policies) except in
those
instances where there is a bona fide purchase from or sale to a
competitor
or bona fide credit checks for commercially reasonable purposes.
|
·
|
Agree
with a competitor to restrict competition by fixing prices, allocating
customers or territories or any other means.
|
·
|
Agree
with a supplier or customer on the minimum price at which a product
will
be resold.
|
·
|
Sell
a product below cost with the intent to harm a
competitor.
|
State
of Incorporation
|
|
Southern
Maryland Cable, Inc.
|
Delaware
|
Vitarich
Laboratories, Inc.
|
Delaware
|
Gemma
Power Systems, LLC
|
Connecticut
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Gemma
Power, Inc.
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Connecticut
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Gemma
Power Systems California, Inc.
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California
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Gemma
Power Hartford, LLC
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Connecticut
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(1) |
Registration
Statement (Form S-3 No. 333-140782) dated February 20,
2007,
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(2) |
Registration
Statement (Form S-3 No. 333-140755) dated February 16,
2007,
|
(3) |
Registration
Statement (Form S-3 No. 333-135192) dated June 21,
2006,
|
(4) |
Registration
Statement (Form S-3 No. 333-122991) dated February 25,
2005,
|
(5) |
Registration
Statement (Form S-3 No. 333-109528) dated March 15, 2004,
and
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(6) |
Registration
Statement (Form S-8 No. 333-107627) dated August 4,
2003;
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1.
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I
have reviewed this annual report on Form 10-KSB of Argan, Inc, formerly
Puroflow, Incorporated, for the annual period ended January 31,
2007;
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2.
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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;
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3.
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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
small
business issuer as of, and for, the periods presented in this report;
|
4.
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The
small business issuer’s other certifying officer 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 small
business issuer and have:
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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 small business issuer, including
its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is
being prepared;
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b)
|
Evaluated
the effectiveness of the small business issuer’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
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c)
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Disclosed
in this report any change in the small business issuer’s internal control
over financial reporting that occurred during the small business
issuer’s
most recent fiscal quarter (the small business issuer’s fourth fiscal
quarter in the case of an annual report) that has materially affected,
or
is reasonably likely to materially affect, the small business issuer’s
internal control over financial reporting;
and
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5.
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The
small business issuer’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer’s auditors and the audit committee
of the small business issuer’s board of directors (or persons performing
the equivalent functions):
|
a)
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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 small business issuer’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 small business issuer’s
internal control over financial
reporting.
|
/s/ Rainer H. Bosselmann | ||
Rainer H. Bosselmann
Chairman of the Board and Chief Executive
Officer
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||
1.
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I
have reviewed this annual report on Form 10-KSB of Argan, Inc, formerly
Puroflow, Incorporated, for the annual period ended January 31,
2007;
|
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
small
business issuer as of, and for, the periods presented in this report;
|
4.
|
The
small business issuer’s other certifying officer 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 small
business issuer 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 small business issuer, including
its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is
being prepared;
|
b)
|
Evaluated
the effectiveness of the small business issuer’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 small business issuer’s internal control
over financial reporting that occurred during the small business
issuer’s
most recent fiscal quarter (the small business issuer’s fourth fiscal
quarter in the case of an annual report) that has materially affected,
or
is reasonably likely to materially affect, the small business issuer’s
internal control over financial reporting;
and
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5.
|
The
small business issuer’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer’s auditors and the audit committee
of the small business issuer’s board of directors (or persons performing
the equivalent functions):
|
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 small business issuer’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 small business issuer’s
internal control over financial
reporting.
|
Date: April 23, 2007 | ||
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|
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/s/ Arthur F. Trudel | ||
Arthur F. Trudel
Chief Financial
Officer
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1.
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The
Report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934; and
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2.
|
Information
contained in the Report fairly presents, in all material respects,
the
financial condition and results of operations of the Company.
|
/s/ Rainer H. Bosselmann | |||
Rainer H. Bosselmann
Chairman of the Board and Chief Executive
Officer
|
1.
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The
Report fully complies with the requirements of Section 13(a) or 15(d)
of
the Securities Exchange Act of 1934; and
|
2.
|
Information
contained in the Report fairly presents, in all material respects,
the
financial condition and results of operations of the Company.
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/s/ Arthur F. Trudel | |||
Arthur F. Trudel
Senior Vice President and Chief Financial
Officer
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