Unassociated Document
As
Filed with the Securities and Exchange Commission on June 21,
2006.
REGISTRATION
NO. 333-________
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
______________________________________
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
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ARGAN,
INC.
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(Exact
Name of Registrant as Specified in Its Charter)
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Delaware
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(State
or Other Jurisdiction of Incorporation or
Organization)
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13-1947195
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(I.R.S.
Employer Identification Number)
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One
Church Street, Suite 302
Rockville,
MD 20850
(301)
315-0027
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(Address,
Including Zip Code, and Telephone Number, Including Area
Code,
of
Registrant’s Principal Executive Offices)
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Rainer
Bosselmann
President
and Chief Executive Officer
Argan,
Inc.
One
Church Street, Suite 302
Rockville,
MD 20850
(301)
315-0027
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(Name,
Address, Including Zip Code, and Telephone Number, Including Area
Code, of
Agent for Service)
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Copies
of
All Communications to:
Richard
A. Krantz, Esq.
Robinson
& Cole LLP
Financial
Centre
695
East Main Street
Stamford,
Connecticut 06904
(203)
462-7500
Approximate
Date of Commencement of Proposed Sale to the Public: From time to time after
the
effective date of this registration statement.
If
the
only securities being registered on this form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box. o
If
any of
the securities being registered on this form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered in connection with dividend or interest reinvestment
plans, check the following box. x
If
this
form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o
If
this
form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If
this
form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. o
If
this
form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. o
CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of Securities
to
Be Registered
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Amount
To
Be
Registered
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Proposed
Maximum
Offering
Price
Per Share
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Proposed
Maximum
Aggregate
Offering
Price
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Amount
of
Registration
Fee
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Common
Stock
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1,751,192(1)
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$
2.65(2)
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$4,640,658.80(2)
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$496.56
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| (1) |
Pursuant
to Rule 416, the shares being registered hereunder include such
indeterminate number of shares of common stock as may be issuable
with
respect to the shares being registered hereunder as a result of stock
splits, stock dividends or similar
transactions.
|
| (2) |
Estimated
solely for the purpose of calculating the registration fee pursuant
to
Rule 457(c) under the Securities Act of 1933, as amended, based upon
the
closing price of the common stock of the Registrant the National
Association of Securities Dealers, Inc., Electronic Bulletin Board
System
on June 19, 2006.
|
The
Registrant hereby amends this Registration Statement on such date or dates
as
may be necessary to delay its effective date until the Registrant shall file
a
further amendment which specifically states that this Registration Statement
shall become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may
determine.
THE
INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT
TO COMPLETION, DATED JUNE 21, 2006
PROSPECTUS
[ARGAN,
INC. LOGO]
1,751,192
Shares of Common Stock
This
prospectus relates to the resale of 1,751,192 shares of our common stock
beneficially held by certain of our shareholders. These shareholders are
referred to as the “selling shareholders” in this prospectus. The shares may be
offered and sold from time to time by selling shareholders, and any pledgees,
donees, transferees or other successors-in-interest of the shares, through
public or private transactions at fixed prices, at prevailing market prices
at
time of sale, at varying prices determined at time of sale or at negotiated
prices. Information regarding the identities of the selling shareholders, the
manner in which they acquired their shares and the manner in which the shares
are being offered and sold is provided in the “Selling Shareholders” and “Plan
of Distribution” sections of this prospectus.
We
will
not receive any of the proceeds from the sale of the shares. We have agreed
to
bear all of the expenses in connection with the registration and sale of the
shares, except for sales commissions.
Our
common stock is listed on the Boston Stock Exchange under the symbol AGX and
traded on the National Association of Securities Dealers, Inc., Electronic
Bulletin Board System under the symbol AGAX.
Our
principal executive offices are located at One Church Street, Suite 302,
Rockville, MD 20850, and our telephone number is (301) 315-0027.
Investing
in our common stock involves risks. See “Risk Factors” beginning on page 4.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date
of this prospectus is June [__], 2006.
You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted.
You
should not assume that the information contained in this prospectus is accurate
as of any date other than the date on the front of this prospectus.
________________
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When
used
in this prospectus, the words “expects”, “anticipates”, “estimates”, “should”,
“will”, “could”, “would”, “may”, and similar expressions are intended to
identify forward-looking statements. Such statements relate to future events
or
our future financial performance, including statements relating to our products,
customers, suppliers, business prospects, financings, investments and effects
of
acquisitions. These and other forward looking statements contained in this
prospectus are subject to risks and uncertainties, known and unknown, that
could
cause actual results to differ materially from those forward-looking statements,
including, without limitation, general risks associated with product development
and introduction, the effects of future acquisitions and/or investments,
business and economic conditions generally, changes in government regulations
and policies, our dependence upon third-party suppliers, continued acceptance
of
our products in the marketplace, technological changes and competition, as
well
as other risks and other risks and uncertainties that could cause actual events
or results to differ materially from any forward-looking statement. The
forward-looking statements contained herein speak only as of the date of this
prospectus. Except for ongoing obligations to disclose material information
under the federal securities laws, we expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any such statement
to reflect any change in our expectations or any change in events, conditions
or
circumstances on which any such statement is based.
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, or SEC, using a continuous offering process. Under
this
continuous offering process, the selling shareholders may, from time to time,
sell the securities described in this prospectus in one or more offerings.
This
prospectus provides you with a general description of the securities that may
be
offered by the selling shareholders. Each time a selling shareholder sells
securities, the selling shareholder is required to provide you with this
prospectus and, in certain cases, a prospectus supplement containing more
specific information about the selling shareholder and the terms of the
securities being offered. That prospectus supplement may also add, update or
change information in this prospectus. If there is any inconsistency between
the
information in this prospectus and any prospectus supplement, you should rely
on
the information in that prospectus supplement. This prospectus, together with
any applicable prospectus supplements, includes all material information
relating to this offering. You should carefully read both this prospectus and
any prospectus supplement together with the additional information described
in
the section entitled “Where You Can Find More Information.”
This
summary highlights information contained elsewhere in this prospectus and in
the
documents incorporated by reference herein and does not contain all of the
information you should consider in making your investment decision. You should
read this summary together with the more detailed information, including our
business information, financial statements and the related notes, incorporated
by reference in this prospectus, as well as the information set forth in any
prospectus supplement. You should carefully consider, among other things, the
matters discussed in the section entitled “Risk Factors.”
Argan,
Inc.
We
conduct our operations through our wholly owned subsidiaries Vitarich
Laboratories, Inc. (Vitarich
or VLI) and Southern Maryland Cable, Inc. (SMC) that we acquired in August
2004
and July 2003, respectively. Through VLI, we develop, manufacture and distribute
premium nutritional supplements, whole-food dietary supplements and personal
care products. Through SMC, we provide telecommunications infrastructure
services including project management, construction and maintenance to the
Federal Government, telecommunications and broadband service providers as well
as electric utilities. We are actively pursuing acquisitions in the
nutraceutical and telecom infrastructure services industries. Our strategy
is to
become a geographically and customer diversified nutraceutical manufacturer
and
distribution company and telecom infrastructure services provider.
Through
VLI, we are dedicated to the research, development, manufacture and distribution
of premium nutritional supplements, whole-food dietary supplements and personal
care products. Several have garnered honors including the National Nutritional
Foods Association’s prestigious People’s Choice Awards for best products of the
year in their respective categories.
We
provide nutrient-dense, super-food concentrates, vitamins and supplements.
Our
target customers include health food store chains, mass merchandisers, network
marketing companies, pharmacies and major retailers.
We
intend
to enhance our position in the fast growing global nutrition industry through
our innovative product development and research. We believe that we will be
able
to expand our distribution channels by providing continuous quality assurance
and by focusing on timely delivery of superior nutraceutical
products.
We
intend
to seek acquisitions in the nutrition industry to evolve into a customer and
product diverse nutraceutical products company with a reputation for high
quality and on-time delivery of products.
Through
SMC, we currently provide inside plant, premise wiring services to the Federal
Government and our commercial customers and have plans to expand that work
to
additional commercial customers who regularly need upgrades in their premise
wiring systems to accommodate improvements in security, telecommunications
and
network capabilities.
We
continue to participate in the expansion of the telecommunications industry
by
working with various telecommunications providers. We provide maintenance and
upgrade services for their outside plant systems that increase the capacity
of
existing infrastructure. We also provide outside plant services to the power
industry by providing maintenance and upgrade services to
utilities.
We
intend
to emphasize our high quality reputation, customer base and highly motivated
work force in competing for larger and more diverse contracts. We believe that
our high quality and well maintained fleet of vehicles and construction
machinery and equipment is essential to meet customers’ needs for high quality
and on-time service. We are committed to our repair and maintenance capabilities
to maintain the quality and life of our equipment. Additionally, we invest
annually in new vehicles and equipment.
We
were
organized as a Delaware corporation in May 1961. On October 23, 2003, our
shareholders approved a plan providing for our internal restructuring whereby
we
became a holding company, and our operating assets and liabilities relating
to
our Puroflow Incorporated (“Puroflow”) business were transferred to a
newly-formed, wholly owned subsidiary. The subsidiary then changed its name
to
“Puroflow Incorporated” and we changed our name from Puroflow Incorporated to
“Argan, Inc.”
On
October 31, 2003, pursuant to a Stock Purchase Agreement, we completed the
sale
of Puroflow to Western Filter Corporation (WFC) for approximately $3.5 million
in cash, of which $300,000 is being held in escrow to indemnify WFC from losses
if a breach of the representations and warranties made by us pursuant to that
sale should occur. During the twelve months ended January 31, 2005, WFC asserted
that we breached certain representations and warranties under such Stock
Purchase Agreement.
Holding
Company Structure
We
intend
to make additional acquisitions and/or investments. We intend to have more
than
one industrial focus and to identify those companies that are in industries
with
significant potential to grow profitably both internally and through
acquisitions. We expect that companies acquired in each of these industrial
groups will be held in separate subsidiaries that will be operated in a manner
that best provides cashflow and value for Argan.
We
are a
holding company with no operations other than our investments in VLI and SMC.
At
January 31, 2006, there were no restrictions with respect to dividends or other
payments from VLI and SMC to Argan.
Our
principal executive offices are located at One Church Street, Suite 302,
Rockville, Maryland 20850. Our phone number at that address is (301) 315-0027.
We maintain a website on the Internet at www.arganinc.com. Information on our
website is not incorporated by reference into this prospectus.
Unless
the context otherwise requires, references in this prospectus to “Argan,”, “we,”
“us” or “our” refer to Argan, Inc., a Delaware corporation, and its
subsidiaries. Our fiscal year for financial reporting ends on January 31.
The
Offering
|
Common
Stock offered
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1,751,192
shares.
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Common
Stock outstanding
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4,574,010
shares.(1)
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Risk
factors
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Investment
in our securities involves a high degree of risk. You should carefully
consider the risk factors described under the section entitled “Risk
Factors”, as well as any other information in this prospectus, any
prospectus supplement and any document incorporated herein by reference
before investing in any of our securities. Each of these risk factors
could adversely affect our business, operating results and financial
condition, as well as adversely affect the value of an investment
in our
securities.
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Use
of proceeds
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The
proceeds from the sale of the shares of our common stock being offered
by
the selling shareholders pursuant to this prospectus and any prospectus
supplement, if applicable, net of any broker’s fee or commissions, will
belong to the selling shareholders. We will not receive any of the
proceeds from the sale of these shares. See section entitled “Use of
Proceeds”.
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Plan
of Distribution
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The
shares may be offered and sold from time to time by selling shareholders,
and any pledgees, donees, transferees or other successors-in-interest
of
the shares, through public or private transactions at fixed prices,
at
prevailing market prices at time of sale, at varying prices determined
at
time of sale or at negotiated prices. See section entitled “Plan of
Distribution”.
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| (1) |
The
above outstanding share information is based upon shares of our common
stock outstanding as of June 13, 2006. The above outstanding share
information excludes: (i) 73,000 shares of our common stock issuable
upon
the exercise of options outstanding at June 13, 2006; (ii) 230,000
shares
of our common stock issuable upon the exercise of warrants outstanding
at
June 13, 2006; and (iii) an aggregate of 171,000 shares of our common
stock available for future issuance under our 2001 Stock Option
Plan.
|
Investing
in our common stock involves risks. Before investing in our common stock, you
should carefully consider the following risk factors as well as the other
information included and incorporated by reference in this prospectus. If any
of
the following risks actually occur, our business, financial condition, or
results of operations could be materially and adversely affected. In such cases,
the trading price of our common stock could decline, and you may lose all or
part of your investment.
General
Risks
Our
officers and directors have limited experience in managing our business and,
as
a result, may be unsuccessful in doing so.
In
April
2003, Rainer H. Bosselmann became Chairman and Chief Executive Officer, H.
Haywood Miller, III became Executive Vice President and Arthur F. Trudel became
our Senior Vice President and Chief Financial Officer. On April 7, 2006, Mr.
Miller resigned his position with us. Upon consummation of the private
placement, four of our directors resigned and were replaced by Mr. Bosselmann
and three new directors designated by Mr. Bosselmann (DeSoto S. Jordan, James
W.
Quinn and Daniel A. Levinson). In addition, in June 2003, Peter L. Winslow
was
elected by the Board of Directors to fill a vacancy, and in October, 2003,
W.G.
Champion Mitchell was elected to our Board of Directors at our 2003 Annual
Meeting. Although Messrs. Bosselmann, Trudel, Jordan, Quinn, Levinson, Winslow
and Mitchell have experience as executive officers and directors of other public
companies, they have limited experience in managing our business and, as a
result, may be unsuccessful in doing so.
Purchasers
of our common stock will be unable to evaluate future acquisitions and/or
investments.
We
completed our acquisition of Vitarich in August 2004. Prior to our acquisition
of Vitarich, we acquired SMC in July 2003. Accordingly, purchasers of our common
stock may be unable to evaluate the business, prospects, operating results,
management or other material factors relating to future acquisitions and/or
investments that we make. In addition, there can be no assurance that future
acquisitions will occur, or if they occur, will be beneficial to us and our
stockholders.
We
may be unsuccessful at integrating companies that we acquire.
We
may
not be able to successfully integrate companies that we acquire with our other
operations without substantial costs, delays or other operational or financial
problems. Integrating acquired companies involves a number of special risks
which could materially and adversely affect our business, financial condition
and results of operations, including:
| · |
failure
of acquired companies to achieve the results we
expect;
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| · |
diversion
of management's attention from operational
matters;
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| · |
difficulties
integrating the operations and personnel of acquired
companies;
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| · |
inability
to retain key personnel of acquired
companies;
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| · |
risks
associated with unanticipated events or
liabilities;
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| · |
the
potential disruption of our business;
and
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the
difficulty of maintaining uniform standards, controls, procedures
and
policies.
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If
one of
our acquired companies suffers customer dissatisfaction or performance problems,
the reputation of our entire company could be materially and adversely affected.
In addition, future acquisitions could result in issuances of equity securities
that would reduce our stockholders' ownership interest, the incurrence of debt,
contingent liabilities, deferred stock based compensation or expenses related
to
the valuation of goodwill or other intangible assets and the incurrence of
large, immediate write-offs.
We
may not be able to raise additional capital and, as a result, may not be able
to
successfully execute our business plan.
We
will
need to raise additional capital to finance future business acquisitions and/or
investments. Additional financing may not be available on terms that are
acceptable to us or at all. If we raise additional funds through the issuance
of
equity or convertible debt securities, the percentage ownership of our
stockholders would be reduced. Additionally, these securities might have rights,
preferences and privileges senior to those of our current stockholders. If
adequate funds are not available on terms acceptable to us, our ability to
finance future business acquisitions and/or investments and to otherwise pursue
our business plan would be significantly limited.
We
cannot
readily predict the timing, size and success of our acquisition efforts and
therefore the capital we will need for these efforts. Using cash for
acquisitions limits our financial flexibility and makes us more likely to seek
additional capital through future debt or equity financings. When we seek
additional debt or equity financings, we cannot be certain that additional
debt
or equity will be available to us at all or on terms acceptable to us.
We
may not be able to comply with certain of our debt covenants, which as a result,
may interfere with our ability to successfully execute our business
plan.
We
are
borrowing funds from a lender. We must be in compliance with certain debt
covenants in order to draw on these loans. We are currently in compliance with
our debt covenants, but there can be no assurance that we will continue to
be in
compliance. If we are not in compliance, we will not have adequate liquidity
to
successfully execute our business plan.
We
may be unsuccessful at generating internal growth.
Our
ability to generate internal growth will be affected by, among other factors,
our success in:
| · |
expanding
the range of services and products we offer to customers to address
their
evolving needs;
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| · |
attracting
new customers;
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| · |
hiring
and retaining employees; and
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| · |
reducing
operating and overhead expenses.
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Many
of
the factors affecting our ability to generate internal growth may be beyond
our
control. Our strategies may not be successful and we may not be able to generate
cash flow sufficient to fund our operations and to support internal growth.
Our
inability to achieve internal growth could materially and adversely affect
our
business, financial condition and results of operations.
Our
business growth could outpace the capability of our corporate management
infrastructure. Our operations and ability to execute our business plan could
be
adversely effected as a result.
We
cannot
be certain that our infrastructure will be adequate to support our operations
as
they expand. Future growth also could impose significant additional
responsibilities on members of our senior management, including the need to
recruit and integrate new senior level managers and executives. We cannot be
certain that we can recruit and retain such additional managers and executives.
To the extent that we are unable to manage our growth effectively, or are unable
to attract and retain additional qualified management, we may not be able to
expand our operations or execute our business plan. Our financial condition
and
results of operations could be materially and adversely affected as a result.
Loss
of key personnel could prevent us from successfully executing our business
plan
and otherwise adversely affect our business.
Our
ability to maintain productivity and profitability will be limited by our
ability to employ, train and retain skilled personnel necessary to meet our
requirements. We cannot be certain that we will be able to maintain an adequate
skilled labor force necessary to operate efficiently and to support our growth
strategy or that our labor expenses will not increase as a result of a shortage
in the supply of these skilled personnel. Labor shortages or increased labor
costs could impair our ability or maintain our business or grow our
revenues.
We
depend
on the continued efforts of our executive officers and on senior management
of
the businesses we acquire. We cannot be certain that any individual will
continue in such capacity for any particular period of time. The loss of key
personnel, or the inability to hire and retain qualified employees, could
negatively impact our ability to manage our business.
We
have experienced losses in the past and may experience additional losses in
the
future.
As
of
April 30, 2006, we had an accumulated deficit of approximately $15.1 million
resulting primarily from past losses. We may experience additional losses in
the
future.
Any
general increase in interest rate levels will increase our cost of doing
business. Our results of operations, cash flow and financial condition may
suffer as a result.
As
of
April 30, 2006, we have approximately $1.1 million of unhedged variable rate
debt. Any general increase in interest rate levels will increase our cost of
doing business.
Specific
Risks Relating To Our Nutritional Supplement
Business
If
our business or our products are the subject of adverse publicity, our business
could suffer.
Our
business depends, in part, upon the public’s perception of our integrity and the
safety and quality of our products. Any adverse publicity, whether or not
accurate, could negatively affect the public’s perception of us and could result
in a significant decline in our operations. Our business and products could
be
subject to adverse publicity regarding, among other things:
| · |
the
nutritional supplements industry;
|
| · |
the
safety and quality of our products and ingredients;
and
|
| · |
regulatory
investigations of our products or competitors’
products.
|
Our
inability to respond to changing consumers’ demands and preferences could
adversely affect our business.
The
nutritional industry is subject to rapidly changing consumer demands and
preferences. There can be no assurance that customers will continue to favor
the
products provided and manufactured by us. In addition, products that gain wide
acceptance with consumers may result in a greater number of competitors entering
the market which could result in downward price pressure which could adversely
impact our financial condition. We believe that our growth will be materially
dependent upon our ability to develop new techniques and processes necessary
to
meet the needs of our customers and potential customers. Our inability to
anticipate and respond to these rapidly changing demands could have an adverse
effect on our business operations.
There
can be no assurance we will be able to obtain our necessary raw materials in
a
timely manner.
Although
we believe that there are adequate sources of supply for all of our principal
raw materials we require, there can be no assurance that our sources of supply
for our principal raw materials will be adequate in all circumstances. In the
event that such sources are not adequate, we will have to find alternate
sources. As a result we may experience delays in locating and establishing
relationships with alternate sources which could result in product shortages
and
backorders for our products, with a resulting loss of revenue to
us.
There
are limited conclusive clinical studies available on human consumption of our
products.
Although
many of the ingredients in our products are vitamins, minerals, herbs and other
substances for which there is a long history of human consumption, some of
our
products contain innovative ingredients or combinations of ingredients. Although
we believe all of our products to be safe when used as directed, there may
be
little long-term experience with human consumption of certain of these product
ingredients or combinations thereof. Therefore, no assurance can be given that
our products, even when used as directed, will have the effects intended.
Although we test the formulation and production of our products, we have not
sponsored or conducted clinical studies on the effects of human
consumption.
In
the event we are exposed to product liability claims, we may be liable for
damages and expenses, which could adversely affect our financial
condition.
We
could
face financial liability due to product liability claims if the use of our
products results in significant loss or injury. To date, we have not been the
subject of any product liability claims. However, we can make no assurances
that
we will not be exposed to future product liability claims. Such claims may
include that our products contain contaminants, that we provide consumers with
inadequate instructions regarding product use, or that we provide inadequate
warnings concerning side effects or interactions of our products with other
substances. We believe that we maintain adequate product liability insurance
coverage. However, a product liability claim could exceed the amount of our
insurance coverage or a product claim could be excluded under the terms of
our
existing insurance policy, which could adversely affect our financial
condition.
The
nutritional industry is intensely competitive and the strengthening of any
of
our competitors could harm our business.
The
market for nutritional products is highly competitive. Our direct competition
consists primarily of publicly and privately owned companies, which tend to
be
highly fragmented in terms of both geographical market coverage and product
categories. These companies compete with us on different levels in the
development, manufacture and marketing of nutritional supplements. Many of
these
companies have broader product lines and larger sales volume, are significantly
larger than us, have greater name recognition, financial personnel, distribution
and other resources than we do and may be better able to withstand volatile
market conditions. There can be no assurance that our customers and potential
customers will regard our products as sufficiently distinguishable from
competitive products. Our inability to compete successfully would have a
material adverse effect on our business.
Our
violation of government regulations or our inability to obtain necessary
government approvals for our products could harm our
business.
The
formulation, manufacturing, packaging, labeling, advertising, distribution
and
sale of our products are subject to regulation by one or more federal agencies,
including the Food and Drug Administration (FDA), the Federal Trade Commission
(FTC), the Consumer Product Safety Commission, the U.S. Department of
Agriculture, the Environmental Protection Agency, and also by various agencies
of the states, localities and foreign countries in which our products are sold.
In particular, the FDA, pursuant to the Federal Food, Drug, and Cosmetic Act
(FDCA), regulates the formulation, manufacturing, packaging, labeling,
distribution and sale of dietary supplements, including vitamins, minerals
and
herbs, and of over-the-counter (OTC) drugs, while the FTC has jurisdiction
to
regulate advertising of these products, and the Postal Service regulates
advertising claims with respect to such products sold by mail order. The FDCA
has been amended several times with respect to dietary supplements, most
recently by the Nutrition Labeling and Education Act of 1990 and the Dietary
Supplement Health and Education Act of 1994. Our inability to comply with these
federal regulations may result in, among other things, injunctions, product
withdrawals, recalls, product seizures, fines and criminal
prosecutions.
In
addition, our products are also subject to regulations under various state
and
local laws that include provisions governing, among other things, the
formulation, manufacturing, packaging, labeling, advertising and distribution
of
dietary supplements and OTC drugs.
In
the
future, we may become subject to additional laws or regulations administered
by
the FDA or by other federal, state, local or foreign regulatory authorities,
to
the repeal of laws or regulations that we consider favorable, or to more
stringent interpretations of current laws or regulations. We can neither predict
the nature of such future laws, regulations, repeals or interpretations, nor
can
we predict what effect additional governmental regulation, when and if it
occurs, would have on our business. These regulations could, however, require
reformation of certain products to meet new standards, recalls or discontinuance
of certain products not able to be reformulated, additional record-keeping
requirements, increased documentation of the properties of certain products,
additional or different labeling, additional scientific substantiation or other
new requirements. Any of these developments could have a material adverse effect
on our business.
Our
inability to adequately protect our products from replication by competitors
could have a material adverse effect on our business.
We
own
proprietary formulas for certain of our nutritional products. We regard our
proprietary formulas as valuable assets and believe they have significant value
in the marketing of our products. Because we do not have patents or trademarks
on our products, there can be no assurance that another company will not
replicate one or more of our products.
Loss
of significant customers could adversely affect our
business.
Sales
to
our four largest nutritional supplement customers, TriVita Corporation (TVC),
Rob Reiss Companies (RRC), CyberWize.com, Inc. (C) and Orange Peel Enterprises
(OPE) currently account for most of our nutritional supplement business. TVC,
RRC, C and OPE accounted for approximately 21%, 12%, 6% and 6% of consolidated
net sales, respectively during the year ended January 31, 2006. The loss of
any
of these customers could have a material adverse effect on our business, unless
the loss is offset by increases to other customers.
Specific
Risks Relating to Our Telecommunications Infrastructure
Business
We
are substantially dependent on economic conditions in the telecommunications
infrastructure industry. Adverse economic conditions in the industry could
have
a material adverse effect on our future operating results.
We
are
involved in the telecom and utility infrastructure services industries, which
can be negatively affected by rises in interest rates, downsizings in the
economy and general economic conditions. In addition, our activities may be
hampered by weather conditions and an inability to plan and forecast activity
levels. Adverse economic conditions in the telecommunications infrastructure
and
construction industries may have a material adverse effect on our future
operating results.
The
industry served by our business is subject to rapid technological and structural
changes that could reduce the demand for the services we
provide.
The
utility, telecommunications and computer networking industries are undergoing
rapid change as a result of technological advances that could in certain cases
reduce the demand for our services or otherwise negatively impact our business.
New or developing technologies could displace the wireline systems used for
voice, video and data transmissions, and improvements in existing technology
may
allow telecommunications companies to significantly improve their networks
without physically upgrading them. In addition, consolidation, competition
or
capital constraints in the utility, telecommunications or computer networking
industries may result in reduced spending or the loss of one or more of our
customers. Additionally, our work in the telecommunications infrastructure
services industry could be negatively affected by rises in interest rates,
downsizings in the economy and general economic conditions.
Our
telecommunications infrastructure services business is seasonal and our
operating results may vary significantly from quarter to
quarter.
Our
quarterly results are affected by seasonal fluctuations in our business. Our
quarterly results may also be materially affected by:
| · |
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.
|
Accordingly,
our operating results in any particular quarter may not be indicative of the
results that you can expect for any other quarter or for the entire
year.
Our
operations with regard to our telecommunications business are expected to have
seasonally weaker results in the first and fourth quarters of the year, and
may
produce stronger results in the second and third quarters. This seasonality
is
primarily due to the effect of winter weather on outside plant activities,
as
well as reduced daylight hours and customer budgetary constraints. Certain
customers tend to complete budgeted capital expenditures before the end of
the
year, and postpone additional expenditures until the subsequent fiscal period.
We intend to actively pursue larger infrastructure projects with our customers.
The positive impact of major contracts requires that we undertake extensive
up
front preparations with respect to staffing, training and relocation of
equipment. Consequently, we may incur significant period costs in one fiscal
period and realize the benefit of contractual revenues in subsequent
periods.
Our
financial results are dependent on government programs and spending, the
termination of which would have a material adverse effect on our business.
A
significant portion of our business relates to structured cabling work for
military and other government agencies. As such, our business is reliant upon
military and other government programs. Reliance on government programs has
certain inherent risks. Among others, contracts, direct or indirect, with United
States government agencies are subject to unilateral termination at the
convenience of the government, subject only to the reimbursement of certain
costs plus a termination fee.
We
are substantially dependent upon fixed price contracts and are exposed to losses
that may occur on such contracts in the event that we fail to accurately
estimate, when bidding on a contract, the costs that we will be required to
incur to complete the project.
We
currently generate, and expect to continue to generate, a significant portion
of
our revenues under fixed price contracts. We must estimate the costs of
completing a particular project to bid for these fixed price contracts. Although
historically we have been able to estimate costs, the cost of labor and
materials may, from time to time, vary from costs originally estimated. These
variations, along with other risks inherent in performing fixed price contracts,
may cause actual revenue and gross profits for a project to differ from those
we
originally estimated and could result in reduced profitability or losses on
projects. Depending upon the size of a particular project, variations from
the
estimated contract costs can have a significant impact on our operating results
for any fiscal quarter or year.
Many
of our customer contracts may be canceled on short notice and we may be
unsuccessful in replacing contracts as they are completed or expire. As a
result, our business, financial condition and results of operations may be
adversely affected.
Any
of
the following contingencies may have a material adverse effect on our business:
| · |
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.
|
Many
of
our customers may cancel their contracts on short notice, typically 30 to 90
days, even if we are not in default under the contract. Certain of our customers
assign work to us on a project-by-project basis under master service agreements.
Under these agreements, the customers often have no obligation to assign work
to
us. Our operations could be materially and adversely affected if the volume
of
work we anticipate receiving from these customers is not assigned to us. Many
of
our contracts, including our master service agreements, are opened to public
bid
at the expiration of their terms. We may not be the successful bidder on
existing contracts that come up for bid.
Loss
of significant customers could adversely affect our business.
Sales
to
our three largest telecom infrastructure services customers, Southern Maryland
Electric Cooperative (SMECO), General Dynamics Corp. (GD) and Verizon
Communications (VZ) currently account for most of our telecommunications
business. SMECO, GD and VZ accounted for approximately 12%, 7% and 6% of
consolidated net sales during the year ended January 31, 2006. The loss of
any
of these customers could have a material adverse effect on our business, unless
the loss is offset by increases in sales to other customers.
We
operate in highly competitive markets. If we fail to compete successfully
against current or future competitors, our business, financial condition and
results of operations will be materially and adversely affected.
We
operate in highly competitive markets. We compete with service providers ranging
from small regional companies which service a single market, to larger firms
servicing multiple regions, as well as large national and multi-national
entities. In addition, there are few barriers to entry in the telecommunications
infrastructure industry. As a result, any organization that has adequate
financial resources and access to technical expertise may become one of our
competitors.
Competition
in the telecommunications infrastructure industry depends on a number of
factors, including price. Certain of our competitors may have lower overhead
cost structures than we do and may, therefore, be able to provide their services
at lower rates than we can provide the same services. In addition, some of
our
competitors are larger and have significantly greater financial resources than
we do. Our competitors may develop the expertise, experience and resources
to
provide services that are superior in both price and quality to our services.
Similarly, we may not be able to maintain or enhance our competitive position
within our industry. We may also face competition from the in-house service
organizations of our existing or prospective customers.
A
significant portion of our business involves providing services, directly or
indirectly as a subcontractor, to the United States government under government
contracts. The United States government may limit the competitive bidding on
any
contract under a small business or minority set-aside, in which bidding in
limited to companies meeting the criteria for a small business or minority
business, respectively. We are currently qualified as a small business concern,
but not a minority business.
We
may
not be able to compete successfully against our competitors in the future.
If we
fail to compete successfully against our current or future competitors, our
business, financial condition, and results of operations would be materially
and
adversely affected.
We
are subject to significant government regulation. This may increase the costs
of
our operations and expose us to substantial civil and criminal penalties in
the
event that we violate applicable law.
We
provide, either directly as a contractor or indirectly as a sub-contractor,
products and services to the United States government under government
contracts. United States government contracts and related customer orders
subject us to various laws and regulations governing United States government
contractors and subcontractors, generally which are more restrictive than for
non-government contractors. These include subjecting us to examinations by
government auditors and investigators, from time to time, to ensure compliance
and to review costs. Violations may result in costs disallowed, and substantial
civil or criminal liabilities (including, in severe cases, denial of future
contracts).
If
we are unable to obtain surety bonds or letters of credit in sufficient amounts
or at acceptable rates, we might be precluded from entering into additional
contracts with certain of our customers. This may adversely affect our business.
Contracts
in the industries we serve may require performance bonds or other means of
financial assurance to secure contractual performance. The market for
performance bonds has tightened significantly. If we are unable to obtain surety
bonds or letters of credit in sufficient amounts or at acceptable rates, we
might be precluded from entering into additional contracts with certain of
our
customers.
Risks
Relating to our Securities
Our
Board of Directors may issue preferred stock with rights that are superior
to
our common stock.
Our
Certificate of Incorporation, as amended, permits our Board of Directors to
issue shares of preferred stock and to designate the terms of the preferred
stock. The issuance of shares of preferred stock by the Board of Directors
could
adversely affect the rights of holders of common stock by, among other matters,
establishing dividend rights, liquidation rights and voting rights that are
superior to the rights of the holders of the common stock.
Our
common stock is thinly traded. As a result, our stock price may be volatile
and
you may have difficulty disposing of your investment at prevailing market
prices.
Since
August 4, 2003, our common stock has been listed on the Boston Stock Exchange
under the symbol "AGX." Our common stock is traded on the National Association
of Securities Dealers, Inc., Electronic Bulletin Board System under the symbol
AGAX. Our common stock is thinly and sporadically traded and no assurances
can
be given that a larger market will ever develop, or if developed, that it will
be maintained.
Our
acquisition strategy may result in dilution to our
stockholders.
Our
business strategy calls for strategic acquisition of other businesses. In
connection with our acquisition of VLI, among other consideration, we issued
approximately 1,785,000 shares of our common stock. We anticipate that future
acquisitions will require cash and issuances of our capital stock, including
our
common stock. To the extent we are required to pay cash for any acquisition,
we
anticipate that we would be required to obtain additional equity and/or debt
financing. Equity financing would result in dilution for our then current
stockholders. Stock issuances and financing, if obtained, may not be on terms
favorable to us and could result in substantial dilution to our stockholders
at
the time(s) of these stock issuances and financings.
Availability
of significant amounts of our common stock for sale could adversely affect
its
market price.
As
of
January 31, 2006, there were approximately 3,814,000 shares of our common stock
outstanding. In March 2004, we registered with the Securities and Exchange
Commission on Form S-3, for resale, from time to time, by the investors in
the
April 2003 private placement of 1,533,974 shares of our common stock (including
230,000 shares of our common stock that are issuable upon exercise of warrants
that were issued in connection with the private placement). In March, 2005,
we
registered 954,032 shares of our common stock on Form S-3 for resale, by the
selling stockholders named therein consisting of shares issued in connection
with (i) the private sale of our common stock and (ii) our acquisition of VLI.
In addition, in connection with our acquisition of VLI, we issued an additional
approximately 960,000 shares of our common stock. In the future, these shares
will be registered for resale. If our stockholders sell substantial amounts
of
our common stock in the public market, including shares registered under any
registration statement on Form S-3, the market price of our common stock could
fall.
We
do not expect to pay dividends for the foreseeable future.
We
have
not paid cash dividends on our common stock since our inception and intend
to
retain earnings, if any, to finance the development and expansion of our
business. As a result, we do not anticipate paying dividends on our common
stock
in the foreseeable future. Payment of dividends, if any, will depend on our
future earnings, capital requirements and financial position, plans for
expansion, general economic conditions and other pertinent factors.
Our
officers, directors and a certain key employee have substantial control over
Argan.
As
of
June 13, 2006, our executive officers and directors as a group own approximately
33% of our voting shares (giving effect to an aggregate of 200,000 shares of
common stock that may be purchased upon exercise of warrants and stock options
held by our executive officers and directors and 790,000 shares beneficially
held in the name of MSR Advisors, Inc. and affiliates for which one of our
directors is President) and therefore, may have the power to influence corporate
actions such as an amendment to our certificate of incorporation, the
consummation of any merger, or the sale of all or substantially all of our
assets, and may influence the election of directors and other actions requiring
stockholder approval.
In
addition, as of June 13, 2006, Kevin J. Thomas, the Senior Operating Executive
of VLI, owns approximately 37% of our outstanding voting shares. Therefore,
Mr.
Thomas individually may have the power to influence corporate actions.
Our
executive officers and directors, together with Kevin J. Thomas, currently
own
approximately 62% of our outstanding voting shares which will allow our
executive officers and directors, together with Kevin J. Thomas, to approve
almost any corporate action requiring a minimum majority vote without a meeting
or prior notice to our other stockholders.
Provisions
of our certificate of incorporation and Delaware law could deter takeover
attempts.
Provisions
of our certificate of incorporation and Delaware law could delay, prevent,
or
make more difficult a merger, tender offer or proxy contest involving us. Among
other things, under our certificate of incorporation, our board of directors
may
issue up to 500,000 shares of our preferred stock and may determine the price,
rights, preferences, privileges and restrictions, including voting and
conversion rights, of these shares of preferred stock. In addition, Delaware
law
limits transactions between us and persons that acquire significant amounts
of
our stock without approval of our board of directors.
The
proceeds from the sale of the shares of our common stock being offered by the
selling shareholders pursuant to this prospectus and any prospectus supplement,
if applicable, net of any broker’s fee or commissions, will belong to the
selling shareholders. Accordingly, we will not receive any of the proceeds
from
the sale of these shares.
The
shares of our common stock that may be offered with this prospectus will be
offered by the selling shareholders, which include their transferees, pledgees
or donees or their successors. The following table sets forth certain
information concerning the shares of our common stock beneficially owned by
each
selling shareholder that may be offered from time to time with this prospectus.
We
have
prepared the table below to the best of our knowledge based upon information
given to us by the selling shareholders prior to the date of this prospectus
and
prior filings with the Securities and Exchange Commission. Any or all of the
shares of our common stock listed below may be offered for sale with this
prospectus by the selling shareholders from time to time. Accordingly, no
estimate can be given as to the amount of shares of our common stock that will
be held by the selling shareholders upon consummation of any sales.
Information
about the selling shareholders may change over time. Any changed information
will be set forth in prospectus supplements or post-effective amendments. From
time to time, however, the shares of our common stock may be owned by persons
not named in the table below and of whom we are unaware.
|
Name
and Address
|
Number
of Common Shares Beneficially Owned
Before
this Offering
|
Number
of Common Shares
Being
Offered
For
Sale in this Offering
|
Number
of Common Shares Beneficially Owned
After
this Offering
|
Percentage
Beneficially
Owned
After this Offering
|
|
Kevin
J. Thomas (1)
6620
Daniels Road
Naples,
FL 34104
|
1,675,829
|
895,871
|
779,958
|
16.2%
|
|
MSR
I SBIC, L.P. (2)
8
Wright Street
Westport,
CT 06880
|
844,937
|
335,321
|
509,616(3)
|
10.6%
|
|
Matthew
Rebold
c/o
Osprey Partners
50
Riverside Avenue
Westport,
CT 06880
|
40,000
|
40,000
|
-0-
|
—
|
|
Michael
Stone
1250
Prospect Street, #200
La
Jolla, CA 92037
|
139,355
|
120,000
|
19,355
|
*
|
|
Prairie
Fire Capital LLC
177
Broad Street, 15th
Floor
Stamford,
CT 06901
|
139,355
|
120,000
|
19,355
|
*
|
|
Name
and Address
|
Number
of Common Shares Beneficially Owned
Before
this Offering
|
Number
of Common Shares
Being
Offered
For
Sale in this Offering
|
Number
of Common Shares Beneficially Owned
After
this Offering
|
Percentage
Beneficially
Owned
After this Offering
|
|
Allen
SBH Investments
LLC
(5)
711
Fifth Avenue
New
York, NY 10022
|
120,000
|
120,000
|
-0-
|
—
|
|
John
Simon
Allen
& Company, LLC
711
Fifth Avenue
New
York, NY 10022
|
92,903
|
80,000
|
12,903
|
*
|
|
James
W. Quinn (4)
Allen
& Company, LLC
711
Fifth Avenue
New
York, NY 10022
|
57,903
|
40,000
|
17,903(5)
|
*
|
| (1) |
Kevin
J. Thomas is Senior Operating Executive of Vitarich
Laboratories, Inc., one of our wholly-owned
subsidiaries.
|
| (2) |
Daniel
A. Levinson, a director of Argan, is the President of MSRA (defined
below)
and the Managing Member of MSRI Partners (defined below). MSRI Partners
is
the General Partner of the selling shareholder, MSR I SBIC, L.P.
|
| (3) |
Based
upon a Schedule 13D filed with the Securities and Exchange Commission
by
MSR I SBIC, L.P. , a Delaware limited partnership (“MSRI”) and certain of
its affiliates on May 24, 2006, and assuming the resale of 335,321
shares,
includes 454,616 shares of common stock beneficially owned (in the
aggregate) by MSRI, MSR Advisors, Inc., a Delaware corporation (“MSRA”),
MSR I SBIC Partners, LLC, a Delaware limited liability company (“MSRI
Partners”), and Tri-Lev LLC, a Connecticut limited liability company
(“Tri-Lev”). Of such 454,616 shares: (i) MSRI has sole voting and
dispositive power with respect to 451,616 shares and shares voting
and
dispositive power with respect to 0 shares; (ii) MSRA has sole voting
and
dispositive power with respect to 0 shares and shares voting and
dispositive power with respect to 451,616 shares (does not include
warrants to purchase 50,000 shares of common stock beneficially owned
by
MSRA for which MSRA has sole voting and dispositive power); (iii)
MSRI
Partners has sole voting and dispositive power with respect to 0
shares
and shares voting and dispositive power with respect to 451,616 shares;
and (iv) Tri-Lev has sole voting and dispositive power with respect
to
3,000 shares and shares voting and dispositive power with respect
to 0
shares. See
footnote (2) above.
Also, MSRA is the Manager of Tri-Lev. Each of MSRI, MSRA, MSRI Partners,
Tri-Lev and Daniel Levinson (each an “MSRA Person”) disclaims beneficial
ownership of all shares and warrants of Argan beneficially owned
by the
other MSRA Persons, except to the extent such person has sole voting
and
dispositive power with respect to such securities. Mr. Levinson (A)
directly owns 5,000 shares underlying stock options held by Mr. Levinson
(not included herein) and (B) may be deemed indirectly beneficially
own
(x) 451,616 shares held directly by MSRI, (y) 50,000 shares underlying
warrants held directly by MSRA (not included herein), and (z) 3,000
shares
held directly by Tri-Lev.
|
| (4) |
James
W. Quinn is a director of Argan.
|
| (5) |
Includes
options to purchase 5,000 shares of common stock held by James W.
Quinn,
all of which are fully vested. Does not include (i) 64,516 shares
of
common stock held by Allen & Company, Incorporated or (ii) 120,000
shares held by Allen SBH Investments, LLC. Mr. Quinn disclaims beneficial
ownership of the shares held by Allen & Company, Incorporated and
Allen SBH Investments, LLC. Mr. Quinn is currently a Managing Director
of
Allen & Company LLC. Allen & Company, Incorporated and Allen SBH
Investments, LLC may be deemed to be affiliates of Allen & Company,
LLC.
|
Except
as
otherwise provided in the footnotes above, none of the other selling
shareholders has, or within the past three years has had, any position, office
or other material relationship with us or any of our predecessors or affiliates.
Only
selling shareholders identified above who beneficially own the securities set
forth opposite each such selling shareholder’s name in the foregoing table, on
the effective date of the registration statement of which this prospectus forms
a part, may sell such securities under this prospectus. Prior to any use of
this
prospectus in connection with an offering of the common stock by any holder
not
identified above, this prospectus will be supplemented or amended to set forth
the name and other information about the selling shareholder intending to sell
such common stock. The prospectus supplement or post-effective amendment will
also disclose whether any selling shareholder selling in connection with such
prospectus supplement or post-effective amendment has held any position or
office with, been employed by or otherwise has had a material relationship
with,
us or any of our affiliates during the three years prior to the date of the
prospectus supplement or post-effective amendment if such information has not
been disclosed in this prospectus.
Background
On
May 4,
2006, we completed a private offering of 760,000 shares of common stock at
a
price of $2.50 per share for aggregate proceeds of $1.9 million pursuant to
a
certain Stock Purchase Agreement. We used $1.8 million of the proceeds to pay
down an equal notional amount of the subordinated note due Kevin Thomas. The
remainder of the proceeds will be used for general corporate purposes. One
of
the investors, MSR I SBIC, L.P. (“MSRI”), which acquired 240,000 shares in the
offering, is controlled by Daniel Levinson, a director of Argan. In addition,
James Quinn, a director of Argan acquired 40,000 shares for his own account.
Pursuant to the offering, we agreed to register for resale the 760,000 shares
of
our common stock pursuant to this prospectus.
In
addition, on January 28, 2005, we sold and issued to MSRI 129,032 shares of
our
common stock of the Company pursuant to a certain Subscription Agreement between
the Company and MSRI (the “Subscription Agreement”). These shares were issued at
a purchase price of $7.75 per share, yielding aggregate proceeds of $999,998.
These shares were registered under the Securities Act on Form S-3 filed with
the
SEC on February 25, 2005. MSRI is an entity controlled by Daniel Levinson,
a
director of Argan. Pursuant to the Subscription Agreement, we agreed to issue
additional shares of our common stock to MSRI in the event certain conditions
did not occur. The conditions did not occur and accordingly, on or about August
16, 2005, we issued to MSRI an additional 95,321 shares of our common stock
pursuant to the Subscription Agreement. We are registering for resale pursuant
to this prospectus the additional 95,321 shares of common stock issued to
MSRI.
In
connection with our acquisition of Vitarich Laboratories, Inc. (VLI), we issued
to Kevin Thomas additional consideration which included 348,146 shares of our
common stock. Mr. Thomas is Senior Operating Executive of VLI,
one
of our wholly-owned subsidiaries. Also, in connection with our acquisition
of
VLI, we issued to Mr. Thomas 535,052 and 76,645, shares of our common stock
pursuant to a certain Letter Agreement dated January 28, 2005 and Earn Back
Agreement dated July 5, 2005 (together, the “Thomas Agreements”), respectively,
relating to our acquisition of VLI. As of the date of this prospectus, Mr.
Thomas beneficially owns 547,725 of the aggregate 611,697 shares issued pursuant
to the Thomas Agreements. We are registering for resale pursuant to this
prospectus the 348,146 shares issued as additional considertaion and the
aggregate 547,725 shares of common stock issued pursuant to the Thomas
Agreements.
General
The
shares of our common stock being offered for sale pursuant to this prospectus
may be sold by the selling shareholders or by pledgees, donees, transferees
or
other successors in interest of the selling shareholders for their respective
own accounts.
We
will
receive none of the proceeds from the sale of the shares being offered by this
prospectus. We have agreed to bear all of the expenses in connection with the
registration and sale of the shares, except for brokerage commissions or other
charges and expenses incurred in the sale of the shares.
The
distribution of the shares by the selling shareholders is not subject to any
underwriting agreement. The shares offered by the selling shareholders may
be
sold from time to time at fixed prices, at market prices prevailing at the
time
of sale, at varying prices determined at the time of sale or at negotiated
prices. In addition, the selling shareholders may sell their shares covered
by
this prospectus through customary brokerage channels, either through
broker-dealers acting as agents or brokers, or through broker-dealers acting
as
principals, who may then resell the shares, or at private sale or otherwise,
at
fixed prices, at market prices prevailing at the time of sale, at varying prices
determined at the time of sale or at negotiated prices. Such sales may be
affected in one or more transactions (which may involve block
transactions):
| |
•
|
on
any national securities exchange or quotation service on which the
shares
of our common stock may be listed or quoted at the time of
sale;
|
|
|
• |
in
the over-the-counter market;
|
| |
•
|
in
transactions otherwise than on exchanges or services or in the
over-the-counter market; or
|
|
|
• |
through
the writing of options.
|
The
selling shareholders may effect such transactions by selling the shares to
or
through broker-dealers, and such broker-dealers may receive compensation in
the
form of underwriting discounts, concessions, commissions, or fees from the
selling shareholders and/or purchasers of the shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions).
The
selling shareholders may enter into hedging transactions with broker-dealers
in
connection with distributions of the shares or otherwise. In these transactions,
broker-dealers may engage in short sales of the shares in the course of hedging
the positions they assume with selling shareholders. The selling shareholders
may also sell shares short and redeliver the shares to close out such short
positions. The selling shareholders may enter into options or other transactions
with broker-dealers that require the delivery to the broker-dealer of the
shares. The broker-dealer may then resell or otherwise transfer such shares
pursuant to this prospectus. The selling shareholders also may loan or pledge
the shares to a broker-dealer. The broker-dealer may sell the shares so loaned,
or upon default, the broker-dealer may sell the pledged shares pursuant to
this
prospectus.
Any
broker-dealers that participate with the selling shareholders in the
distribution of the shares being offered pursuant to this prospectus may be
deemed to be underwriters and any commissions received by them and any profit
on
the resale of shares positioned by them might be deemed to be underwriting
discounts and commissions within the meaning of the Securities Act, in
connection with such sales.
Our
common stock is listed on the Boston Stock Exchange under the symbol AGX and
traded on the National Association of Securities Dealers, Inc., Electronic
Bulletin Board System under the symbol AGAX.
Any
shares covered by this prospectus that qualify for sale pursuant to Rule 144
under the Securities Act of 1933, as amended, may be sold under Rule 144 rather
than pursuant to this prospectus.
To
our
knowledge, none of the selling shareholders has entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their shares of our common stock, nor is there an underwriter or
coordinating broker acting in connection with a proposed sale of shares by
any
of the selling shareholders. If we are notified by any selling shareholder
that
any material arrangement has been entered into with a broker-dealer for the
sale
of shares offered pursuant to this prospectus, we will, if required, file a
supplement to this prospectus. If the selling shareholders use this prospectus
for any sale of the shares, they will be subject to the prospectus delivery
requirements of the Securities Act.
Each
selling shareholder will be subject to applicable provisions of the Securities
Exchange Act of 1934 and the associated rules and regulations under this
Exchange Act, including Regulation M, which provisions may limit the timing
of
purchases and sales of shares of our common stock by the selling
shareholders.
The
validity of the securities offered hereby has been passed upon for us by
Robinson & Cole LLP, Stamford, Connecticut.
Our
consolidated financial statements appearing in our Annual Report on Form 10-KSB
for the year ended January 31, 2006, have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in their report
thereon, included therein, and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
We
have
filed with the Securities and Exchange Commission (SEC) a registration statement
on Form S-3 under the Securities Act with respect to the shares of our common
stock offered hereby. This prospectus, which constitutes a part of the
registration statement, does not contain all of the information set forth in
the
registration statement or the exhibits and schedules filed therewith. For
further information about us and the common stock offered hereby, reference
is
made to the registration statement and the exhibits and schedules filed
therewith. Statements contained in this prospectus regarding the contents of
any
contract or any other document that is filed as an exhibit to the registration
statement are not necessarily complete, and each such statement is qualified
in
all respects by reference to the full text of such contract or other document
filed as an exhibit to the registration statement. A copy of the registration
statement and the exhibits and schedules filed therewith may be inspected
without charge at the public reference room maintained by the SEC, located
at
100 F Street, N.E., Washington, D.C. 20549, and copies of all or any part of
the
registration statement may be obtained from such offices upon the payment of
the
fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference room. The SEC also maintains an Internet
web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov.
We
are
subject to the informational requirements of the Securities Exchange Act of
1934
and, therefore, we file annual, quarterly and current reports, proxy statements
and other information with the SEC. Such periodic reports, proxy
statements and other information are available for inspection and copying at
the
public reference room and web site of the SEC referred to above.
You
should rely only on the information provided in this prospectus and the
registration statement. We have not authorized anyone else to provide you with
different information. These securities are not being offered in any state
where the offer is not permitted. You should assume that the information
in this prospectus is accurate only as of the dates of those documents.
Our business, financial condition, results of operations and prospects may
have
changed since those dates.
The
Securities
and Exchange Commission
(SEC)
allows us to “incorporate by reference” information that we file with it, which
means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is an important
part
of this prospectus. Information in this prospectus supersedes information
incorporated by reference that we filed with the SEC prior to the date of this
prospectus, while information that we file later with the SEC will automatically
update and supersede this information. We incorporate by reference into this
registration statement and prospectus the documents listed below, and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities
Exchange Act of 1934:
| 1. |
Our
Annual Report on Form 10-KSB for the fiscal year ended January 31,
2006;
|
| 2. |
Our
Quarterly Report on Form 10-QSB for the quarter ended April 30,
2006; Our
Current Reports on Form 8-K filed March 6, 2006, April 11, 2006,
May 9,
2006 (as amended on May 12, 2006), May 11, 2006 and May 23, 2006;
and
|
| 3. |
Our
Current Reports on Form 8-K filed March 6, 2006, April 11, 2006,
May 9,
2006 (as amended on May 12, 2006), May 11, 2006 and May 23, 2006;
and
|
| 4. |
The
description of our common stock set forth in our registration statement
on
Form 8-A, filed with the SEC on August 1, 2003, including any amendments
or reports filed for the purposes of updating this
description.
|
We
will
furnish without charge to you, on written or oral request, a copy of any or
all
of the documents incorporated by reference, including exhibits to these
documents. You should direct any requests for documents to Argan, Inc.,
Attention: Corporate Secretary, One Church Street, Suite 302, Rockville, MD
20850, and our telephone number is (301) 315-0027.
[ARGAN,
INC. LOGO]
1,751,192
Shares of Common Stock
PROSPECTUS
June
[__], 2006
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution.
The
following table sets forth all expenses payable by us in connection with the
offering of the common stock being registered. All such expenses are being
borne
by us.
| |
|
|
|
|
|
SEC
Registration Fee
|
|
$
|
496.56
|
|
|
Accounting
Fees and Expenses*
|
|
$
|
25,000.00
|
|
|
Legal
Fees and Expenses*
|
|
$
|
|
|
|
Miscellaneous
Expenses*
|
|
$
|
|
|
|
Total*
|
|
$
|
|
|
|
|
|
|
|
|
Item
15. Indemnification of Directors and Officers
Section
145 of the Delaware General Corporation Law (the “DGCL”) provides that a
corporation may indemnify its directors and officers, as well as other employees
and individuals, against expenses(including attorneys' fees), judgments, fines
and amounts paid in settlement in connection with specified actions,
suits or proceedings, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation - a “derivative
action”), if they acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
their conduct was unlawful. A similar standard is applicable in the case of
derivative actions, except that indemnification only extends to expenses
(including attorneys' fees) incurred in connection with the defense or
settlement of such actions, and the statute requires court approval before
there
can be any indemnification in which the person seeking indemnification has
been
found liable to the corporation. The statute provides that it is not exclusive
of other indemnification that may be granted by a corporation's charter, bylaws,
disinterested director vote, stockholder vote, agreement or
otherwise.
Section
102(b)(7) of the DGCL permits a corporation to provide in its certificate of
incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability for (i) any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) acts
or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) payments of unlawful dividends or unlawful stock
repurchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit.
Our
Bylaws provides that we shall indemnify our officers and directors and may
indemnify our employees and other agents to the fullest extent permitted by
Delaware law.
Our
Certificate of Incorporation limits, to the maximum extent permitted by Delaware
law, the personal liability of directors for monetary damages for breach of
their fiduciary duties as a director. We have entered into indemnification
agreements with our directors containing provisions which provide for the
indemnification of such directors to the fullest extent permitted by Delaware
law.
Item
16. Exhibits
The
following exhibits are included or incorporated herein by
reference:
|
Exhibit
No.
|
|
Description |
|
|
5.1
|
|
Opinion
of Robinson & Cole LLP
|
|
|
23.1
|
|
Consent
of Independent Registered Public Accounting Firm
|
|
|
23.2
|
|
Consent
of Robinson & Cole LLP (included in Exhibit 5.1)
|
|
|
24.1
|
|
Power
of Attorney (included on the signature page hereof)
|
|
Item
17. Undertakings
The
undersigned Registrant hereby undertakes:
1. To
file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, as amended (the “Securities Act”);
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding
the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission (the “Commission”) pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
provided,
however,
that
paragraphs (1)(i), (1)(ii) and (1)(iii) above do not apply if the registration
statement is on Form
S-3
and the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission
by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 (“Exchange Act”) that are incorporated by reference in the
registration statement, or is contained in a form of prospectus filed pursuant
to
Rule
424(b)
that is
part of the registration statement.
2. That,
for
the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. To
remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
4. That,
for
the purpose of determining liability under the Securities Act to any
purchaser:
|
|
(i) |
If
the registrant is relying on Rule
430B:
|
| |
A.
|
each
prospectus filed by the registrant pursuant to
Rule 424(b)(3)shall
be deemed to be part of the registration statement as of the date
the
filed prospectus was deemed part of and included in the registration
statement; and
|
| |
B.
|
each
prospectus required to be filed pursuant to Rule
424(b)(2),
(b)(5),
or (b)(7)
as
part of a registration statement in reliance on Rule 430B relating
to an
offering made pursuant to Rule
415(a)(1)(i),
(vii),
or (x)
for the purpose of providing the information required by section
10(a) of
the Securities Act shall be deemed to be part of and included in
the
registration statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the
issuer
and any person that is at that date an underwriter, such date shall
be
deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be
deemed
to be the initial bona fide offering thereof; provided,
however,
that no statement made in a registration statement or prospectus
that is
part of the registration statement or made in a document incorporated
or
deemed incorporated by reference into the registration statement
or
prospectus that is part of the registration statement will, as to
a
purchaser with a time of contract of sale prior to such effective
date,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement
or
made in any such document immediately prior to such effective date;
or
|
|
|
(ii) |
If
the registrant is subject to Rule 430C, each prospectus filed pursuant
to
Rule 424(b) as part of a registration statement relating to an offering,
other than registration statements relying on Rule 430B or other
than
prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of
and included in the registration statement as of the date it is first
used
after effectiveness; provided,
however,
that no statement made in a registration statement or prospectus
that is
part of the registration statement or made in a document incorporated
or
deemed incorporated by reference into the registration statement
or
prospectus that is part of the registration statement will, as to
a
purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement
or
made in any such document immediately prior to such date of first
use.
|
5. The
undersigned registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
6. Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
for
filing on Form S-3 and has duly caused this registration statement on Form
S-3
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the
City of Rockville, State of Maryland, on June 21, 2006.
| |
|
|
| |
ARGAN,
INC. |
|
|
|
| |
By: |
/s/ RAINER
H.
BOSSELMANN |
| |
|
| |
Name:
Rainer H. Bosselmann
Title:
President and Chief Executive
Officer
|
Each
such person whose signature appears below hereby appoints Rainer
H. Bosselmann and Arthur F. Trudel, and each of them, each of whom may act
without joinder of the other, as his or her true and lawful attorney-in-fact
and
agent, with full power and substitution and resubstitution, for him or her
and
in his or her name, place and stead, in any and all capacities, to execute
in
the name and on behalf of such person any amendment or any post-effective
amendment to this Registration Statement, and any registration statement
relating to any offering made in connection with the offering covered by this
Registration Statement that is to be effective on filing pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
appropriate or necessary to be done, as full and for all intents and purposes
and he or she might or could do in person, hereby ratifying and confirming
all
that said attorneys-in-fact and agents or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
|
|
/s/
Rainer H. Bosselmann
|
|
President,
Chief Executive Officer
|
|
June
21, 2006
|
|
Rainer
H. Bosselmann
|
|
(Principal
Executive Officer) and Chairman of the Board
|
|
|
|
|
|
|
|
|
|
/s/
Arthur F. Trudel
|
|
Senior
Vice President and Chief
Financial Officer
|
|
June
21, 2006
|
|
|
|
(Principal
Accounting and Financial Officer)
|
|
|
|
|
|
|
|
|
|
/s/
DeSoto S. Jordan
|
|
Director
|
|
June
21, 2006
|
|
DeSoto
S. Jordan
|
|
|
|
|
| |
|
|
|
|
|
/s/
Daniel A. Levinson
|
|
Director
|
|
June
21, 2006
|
|
Daniel
A. Levinson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
__________
|
|
W.G.
Champion Mitchell
|
|
|
|
|
|
|
|
|
|
|
|
/s/
T. Kent Pugmire
|
|
Director
|
|
June
21, 2006
|
|
T.
Kent Pugmire
|
|
|
|
|
|
|
|
|
|
|
|
/s/
James W. Quinn
|
|
Director
|
|
June
21, 2006
|
|
James
W. Quinn
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Peter L. Winslow
|
|
Director
|
|
June
21, 2006
|
|
Peter
L. Winslow
|
|
|
|
|
INDEX
OF
EXHIBITS
|
Exhibit
No.
|
|
Description |
|
|
|
|
Opinion
of Robinson & Cole LLP
|
|
|
|
|
Consent
of Independent Registered Public Accounting Firm
|
|
|
|
|
Consent
of Robinson & Cole LLP (included in Exhibit 5.1)
|
|
|
|
|
Power
of Attorney (included on the signature page hereof)
|
|