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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended April 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
 For the Transition Period from  to
 Commission File Number 001-31756
 Argan, Inc.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
    
    13-1947195(State or Other Jurisdiction of Incorporation
    
    (I.R.S. Employer Identification No.)or Organization)
 One Church Street, Suite 201, Rockville Maryland 20850
 (301) 315-0027  (Registrants Telephone Number, Including Area Code)
 (Former Name, Former Address and Former Fiscal Year,
  þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ




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##### 



ARGAN, INC. AND SUBSIDIARIES
INDEX
 Page No.PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets  April 30, 2009 and January 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended April 30, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    17Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART II. OTHER INFORMATION
    
    
    25Item 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3. Defaults upon Senior Securities
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    26SIGNATURES
    
    
    27Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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ARGAN, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
 April 30,
    
    
    January 31,2009
    
    
    2009(Unaudited)
    
    
    (Note 1)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    57,887,000
    
    
    $
    74,666,000Escrowed cash
    
    
    10,004,000
    
    
    
    10,000,000Accounts receivable, net of allowance for doubtful accounts
    
    
    22,172,000
    
    
    
    12,986,000Costs and estimated earnings in excess of billings
    
    
    4,713,000
    
    
    
    6,325,000Inventories, net of reserve for obsolescence
    
    
    1,669,000
    
    
    
    1,347,000Current deferred tax assets
    
    
    1,073,000
    
    
    
    1,660,000Prepaid expenses and other current assets
    
    
    618,000
    
    
    
    768,000TOTAL CURRENT ASSETS
    
    
    98,136,000
    
    
    
    107,752,000Property and equipment, net of accumulated depreciation
    
    
    1,132,000
    
    
    
    1,214,000Goodwill
    
    
    18,476,000
    
    
    
    18,476,000Intangible assets, net of accumulated amortization
    
    
    3,566,000
    
    
    
    3,655,000Investment in unconsolidated subsidiary
    
    
    2,717,000
    
    
    
    2,107,000Deferred tax assets
    
    
    1,795,000
    
    
    
    1,743,000Other assets
    
    
    178,000
    
    
    
    217,000TOTAL ASSETS
    
    $
    126,000,000
    
    
    $
    135,164,000LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    25,731,000
    
    
    $
    31,808,000Accrued expenses
    
    
    10,688,000
    
    
    
    14,992,000Billings in
excess of costs and estimated earnings
    
    
    3,445,000
    
    
    
    5,102,000Current portion of long-term debt
    
    
    2,170,000
    
    
    
    2,301,000TOTAL CURRENT LIABILITIES
    
    
    42,034,000
    
    
    
    54,203,000Long-term debt
    
    
    1,333,000
    
    
    
    1,833,000Other liabilities
    
    
    25,000
    
    
    
    22,000TOTAL LIABILITIES
    
    
    43,392,000
    
    
    
    56,058,000COMMITMENTS AND CONTINGENCIES(Note 13)STOCKHOLDERS EQUITYPreferred stock, par value $0.10 per share; 500,000 shares authorized;
no shares issued and outstanding
    
    
    
    
    
    
    Common stock, par value $0.15 per share; 30,000,000 shares authorized;
13,468,684 and 13,437,684 shares issued at 4/30/09 and 1/31/09, and
13,465,451 and 13,434,451 shares outstanding at 4/30/09 and 1/31/09, respectively
    
    
    2,020,000
    
    
    
    2,015,000Warrants outstanding
    
    
    683,000
    
    
    
    738,000Additional paid-in capital
    
    
    85,352,000
    
    
    
    84,786,000Accumulated other comprehensive loss
    
    
    (44,000
    )
    
    
    (63,000
    )Accumulated deficit
    
    
    (5,370,000
    )
    
    
    (8,337,000
    )Treasury
stock, at cost; 3,233 shares at 4/30/09 and 1/31/09
    
    
    (33,000
    )
    
    
    (33,000
    )TOTAL STOCKHOLDERS EQUITY
    
    
    82,608,000
    
    
    
    79,106,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    126,000,000
    
    
    $
    135,164,000
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ARGAN, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Operations
 (Unaudited)
 Three Months Ended April 30,2009
    
    
    2008Net revenuesPower industry services
    
    $
    58,035,000
    
    
    $
    44,008,000Nutritional products
    
    
    2,817,000
    
    
    
    2,399,000Telecommunications infrastructure services
    
    
    2,258,000
    
    
    
    1,999,000Net revenues
    
    
    63,110,000
    
    
    
    48,406,000Cost of revenuesPower industry services
    
    
    51,375,000
    
    
    
    38,576,000Nutritional products
    
    
    2,558,000
    
    
    
    2,323,000Telecommunications infrastructure services
    
    
    1,749,000
    
    
    
    1,774,000Cost of revenues
    
    
    55,682,000
    
    
    
    42,673,000Gross profit
    
    
    7,428,000
    
    
    
    5,733,000Selling, general and administrative expenses
    
    
    3,214,000
    
    
    
    4,011,000Income from operations
    
    
    4,214,000
    
    
    
    1,722,000Interest expense
    
    
    (62,000
    )
    
    
    (120,000
    )Investment income
    
    
    51,000
    
    
    
    504,000Equity in the earnings of the unconsolidated subsidiary
    
    
    610,000
    
    
    
    Income from operations before income taxes
    
    
    4,813,000
    
    
    
    2,106,000Income tax expense
    
    
    (1,846,000
    )
    
    
    (551,000
    )Net income
    
    $
    2,967,000
    
    
    $
    1,555,000Earnings per share:Basic net income per share
    
    $
    0.22
    
    
    $
    0.14Diluted net income per share
    
    $
    0.22
    
    
    $
    0.14Weighted average number of shares outstanding:Basic
    
    
    13,445,000
    
    
    
    11,118,000Diluted
    
    
    13,714,000
    
    
    
    11,429,000
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ARGAN, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months Ended April 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    2,967,000
    
    
    $
    1,555,000Adjustments to reconcile net income to net cash (used in ) provided by
operating activities:Deferred
income tax expense (benefit)
    
    
    567,000
    
    
    
    (1,051,000
    )Stock option compensation expense
    
    
    272,000
    
    
    
    397,000Amortization of purchased intangibles
    
    
    89,000
    
    
    
    772,000Depreciation and other amortization
    
    
    147,000
    
    
    
    339,000Equity in the earnings of the unconsolidated subsidiary
    
    
    (610,000
    )
    
    
    Other
    
    
    19,000
    
    
    
    153,000Changes in operating assets and liabilities:Escrowed cash
    
    
    (4,000
    )
    
    
    4,083,000Accounts receivable
    
    
    (9,186,000
    )
    
    
    (899,000
    )Costs and estimated earnings in excess of billings
    
    
    1,612,000
    
    
    
    (87,000
    )Inventories
    
    
    (341,000
    )
    
    
    (181,000
    )Prepaid expenses and other assets
    
    
    151,000
    
    
    
    (95,000
    )Accounts payable and accrued expenses
    
    
    (10,340,000
    )
    
    
    (1,384,000
    )Billings in
excess of costs and estimated earnings
    
    
    (1,657,000
    )
    
    
    (1,096,000
    )Other
    
    
    1,000
    
    
    
    5,000Net cash (used in) provided by operating activities
    
    
    (16,313,000
    )
    
    
    2,511,000CASH FLOWS FROM INVESTING ACTIVITIES:Payment of contingent acquisition price
    
    
    
    
    
    
    (2,000,000
    )Purchases of property and equipment
    
    
    (32,000
    )
    
    
    (117,000
    )Proceeds from sale of property and equipment
    
    
    7,000
    
    
    
    Net cash used in investing activities
    
    
    (25,000
    )
    
    
    (2,117,000
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from the exercise of stock options and warrants
    
    
    190,000
    
    
    
    70,000Principal payments on long-term debt
    
    
    (631,000
    )
    
    
    (646,000
    )Net cash used in financing activities
    
    
    (441,000
    )
    
    
    (576,000
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (16,779,000
    )
    
    
    (182,000
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    74,666,000
    
    
    
    66,827,000CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    57,887,000
    
    
    $
    66,645,000SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid for interest and income taxes:Interest
    
    $
    62,000
    
    
    $
    120,000Income taxes
    
    $
    3,604,000
    
    
    $
    1,430,000Non-cash investing and financing activities:Net increase in the fair value of interest rate swaps
    
    $
    19,000
    
    
    $
    24,000
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ARGAN, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2009
(Unaudited)
 NOTE 1  DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
 Description of the Business
   Basis of Presentation
     - 6 -




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NOTE 2  ADOPTED AND OTHER RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Accounting Pronouncements Adopted During the Three Months Ended April 30, 2009
       - 7 -




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Recently Issued Accounting Pronouncements That Have Not Been Adopted
     - 8 -




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NOTE 3  CASH, CASH EQUIVALENTS AND ESCROWED CASH
    NOTE 4  ACCOUNTS RECEIVABLE; COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS
   NOTE 5  INVENTORIES
   April 30,
    
    
    January 31,2009
    
    
    2009Raw materials
    
    $
    3,212,000
    
    
    $
    2,748,000Work-in process
    
    
    43,000
    
    
    
    118,000Finished goods
    
    
    89,000
    
    
    
    171,0003,344,000
    
    
    
    3,037,000Less: reserves
    
    
    (1,675,000
    )
    
    
    (1,690,000
    )Inventories, net
    
    $
    1,669,000
    
    
    $
    1,347,000
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NOTE 6  PROPERTY AND EQUIPMENT
   April 30,
    
    
    January 31,2009
    
    
    2009Leasehold improvements
    
    $
    973,000
    
    
    $
    973,000Machinery and equipment
    
    
    2,609,000
    
    
    
    2,594,000Trucks and other vehicles
    
    
    1,250,000
    
    
    
    1,263,0004,832,000
    
    
    
    4,830,000Less  accumulated depreciation
    
    
    (3,700,000
    )
    
    
    (3,616,000
    )Property and equipment, net
    
    $
    1,132,000
    
    
    $
    1,214,000
 NOTE 7   INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
  NOTE 8  INTANGIBLE ASSETS
  April 30, 2009Estimated
    
    Gross
    
    
    
    
    
    
    
    
    
    
    January 31,Useful
    
    Carrying
    
    
    Accumulated
    
    
    Net
    
    
    2009Life
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Net AmountIntangible assets
being amortized:Non-compete agreements
 GPS and VLI
    
    5 years
    
    $
    1,731,000
    
    
    $
    1,450,000
    
    
    $
    281,000
    
    
    $
    309,000Trade name  GPS
    
    15 years
    
    
    3,643,000
    
    
    
    582,000
    
    
    
    3,061,000
    
    
    
    3,122,000Intangible asset not
being amortized:Trade name  SMC
    
    Indefinite
    
    
    224,000
    
    
    
    
    
    
    
    224,000
    
    
    
    224,000Total intangible assets
    
    
    
    $
    5,598,000
    
    
    $
    2,032,000
    
    
    $
    3,566,000
    
    
    $
    3,655,000Goodwill
    
    Indefinite
    
    $
    18,476,000
    
    
    $
    
    
    
    $
    18,476,000
    
    
    $
    18,476,000
  - 10 -




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NOTE 9  DEBT
      NOTE 10  STOCK-BASED COMPENSATION
   - 11 -




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Weighted-Average
    
    
    Weighted-Weighted-
    
    
    Remaining
    
    
    AverageAverage Exercise
    
    
    Contract
    
    
    FairOptions
    
    Shares
    
    
    Price
    
    
    Term (Years)
    
    
    ValueOutstanding, January 31, 2009
    
    
    512,000
    
    
    $
    8.31
    
    
    
    6.5
    
    
    $
    4.34Granted
    
    
    77,000
    
    
    $
    12.86Exercised
    
    
    (16,000
    )
    
    $
    4.61Outstanding, April 30, 2009
    
    
    573,000
    
    
    $
    9.03
    
    
    
    6.7
    
    
    $
    4.82Exercisable, April 30, 2009
    
    
    371,000
    
    
    $
    7.23
    
    
    
    6.7
    
    
    $
    4.07Exercisable, January 31, 2009
    
    
    277,000
    
    
    $
    5.22
    
    
    
    6.1
    
    
    $
    2.95
  Weighted-AverageShares
    
    
    Fair ValueNonvested, January 31, 2009
    
    
    235,000
    
    
    $
    5.96Granted
    
    
    77,000
    
    
    $
    7.43Vested
    
    
    (110,000
    )
    
    $
    6.60Nonvested, April 30, 2009
    
    
    202,000
    
    
    $
    6.18
  
 Three MonthsEnded April 30,2009Dividend yield
    
    
    Expected volatility
    
    
    63.1
    %Risk-free interest rate
    
    
    3.00
    %Expected life in years
    
    
    5.5
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NOTE 11  INCOME TAXES
  Three Months
    
    
    Three MonthsEnded April 30,
    
    
    Ended April 30,2009
    
    
    2008Computed expected income tax expense
    
    $
    1,636,000
    
    
    $
    716,000State income taxes, net
    
    
    107,000
    
    
    
    (95,000
    )Permanent differences, net
    
    
    103,000
    
    
    
    (70,000
    )$
    1,846,000
    
    
    $
    551,000
    NOTE 12  NET INCOME PER SHARE
  NOTE 13  LEGAL CONTINGENCIES
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Kevin Thomas Litigation
     Tampa Bay Nutraceutical Company
   - 14 -




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NOTE 14  SEGMENT REPORTING AND MAJOR CUSTOMERS
   TelecomPower Industry
    
    
    Nutritional
    
    
    InfrastructureThree Months Ended April 30, 2009
    
    Services
    
    
    Products
    
    
    Services
    
    
    Other
    
    
    ConsolidatedNet revenues
    
    $
    58,035,000
    
    
    $
    2,817,000
    
    
    $
    2,258,000
    
    
    $
    
    
    
    $
    63,110,000Cost of revenues
    
    
    51,375,000
    
    
    
    2,558,000
    
    
    
    1,749,000
    
    
    
    
    
    
    
    55,682,000Gross profit
    
    
    6,660,000
    
    
    
    259,000
    
    
    
    509,000
    
    
    
    
    
    
    
    7,428,000Selling, general and administrative
expenses
    
    
    1,159,000
    
    
    
    556,000
    
    
    
    397,000
    
    
    
    1,102,000
    
    
    
    3,214,000Income (loss) from operations
    
    
    5,501,000
    
    
    
    (297,000
    )
    
    
    112,000
    
    
    
    (1,102,000
    )
    
    
    4,214,000Interest expense
    
    
    (56,000
    )
    
    
    (6,000
    )
    
    
    
    
    
    
    
    
    
    
    (62,000
    )Investment income
    
    
    37,000
    
    
    
    
    
    
    
    
    
    
    
    14,000
    
    
    
    51,000Equity in the earnings of the
unconsolidated subsidiary
    
    
    610,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    610,000Income (loss) before income taxes
    
    $
    6,092,000
    
    
    $
    (303,000
    )
    
    $
    112,000
    
    
    $
    (1,088,000
    )
    
    
    4,813,000Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,846,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,967,000Amortization of purchased intangibles
    
    $
    88,000
    
    
    $
    1,000
    
    
    $
    
    
    
    $
    
    
    
    $
    89,000Depreciation and other amortization
    
    $
    47,000
    
    
    $
    
    
    
    $
    97,000
    
    
    $
    3,000
    
    
    $
    147,000Goodwill
    
    $
    18,476,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,476,000Total assets
    
    $
    87,557,000
    
    
    $
    5,127,000
    
    
    $
    3,030,000
    
    
    $
    30,286,000
    
    
    $
    126,000,000Fixed asset additions
    
    $
    2,000
    
    
    $
    
    
    
    $
    19,000
    
    
    $
    11,000
    
    
    $
    32,000
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TelecomPower Industry
    
    
    Nutritional
    
    
    InfrastructureThree Months Ended April 30, 2008
    
    Services
    
    
    Products
    
    
    Services
    
    
    Other
    
    
    ConsolidatedNet revenues
    
    $
    44,008,000
    
    
    $
    2,399,000
    
    
    $
    1,999,000
    
    
    $
    
    
    
    $
    48,406,000Cost of revenues
    
    
    38,576,000
    
    
    
    2,323,000
    
    
    
    1,774,000
    
    
    
    
    
    
    
    42,673,000Gross profit
    
    
    5,432,000
    
    
    
    76,000
    
    
    
    225,000
    
    
    
    
    
    
    
    5,733,000Selling, general and administrative
expenses
    
    
    1,842,000
    
    
    
    715,000
    
    
    
    343,000
    
    
    
    1,111,000
    
    
    
    4,011,000Income (loss) from operations
    
    
    3,590,000
    
    
    
    (639,000
    )
    
    
    (118,000
    )
    
    
    (1,111,000
    )
    
    
    1,722,000Interest expense
    
    
    (102,000
    )
    
    
    (18,000
    )
    
    
    
    
    
    
    
    
    
    
    (120,000
    )Investment income
    
    
    504,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    504,000Income (loss) before income taxes
    
    $
    3,992,000
    
    
    $
    (657,000
    )
    
    $
    (118,000
    )
    
    $
    (1,111,000
    )
    
    
    2,106,000Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (551,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,555,000Amortization of purchased intangibles
    
    $
    724,000
    
    
    $
    22,000
    
    
    $
    26,000
    
    
    $
    
    
    
    $
    772,000Depreciation and other amortization
    
    $
    48,000
    
    
    $
    148,000
    
    
    $
    142,000
    
    
    $
    1,000
    
    
    $
    339,000Goodwill
    
    $
    18,476,000
    
    
    $
    921,000
    
    
    $
    940,000
    
    
    $
    
    
    
    $
    20,337,000Total assets
    
    $
    116,926,000
    
    
    $
    7,378,000
    
    
    $
    4,249,000
    
    
    $
    14,211,000
    
    
    $
    142,764,000Fixed asset additions
    
    $
    49,000
    
    
    $
    56,000
    
    
    $
    12,000
    
    
    $
    
    
    
    $
    117,000
 
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Cautionary Statement Regarding Forward Looking Statements
  Business Summary
  Overview and Outlook
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Comparison of the Results of Operations for the Three Months Ended April 30, 2009 and 2008
  Three Months Ended April 30,2009
    
    
    2008Net revenuesPower industry services
    
    $
    58,035,000
    
    
    
    91.9
    %
    
    $
    44,008,000
    
    
    
    90.9
    %Nutritional products
    
    
    2,817,000
    
    
    
    4.5
    %
    
    
    2,399,000
    
    
    
    5.0
    %Telecommunications infrastructure services
    
    
    2,258,000
    
    
    
    3.6
    %
    
    
    1,999,000
    
    
    
    4.1
    %Net revenues
    
    
    63,110,000
    
    
    
    100.0
    %
    
    
    48,406,000
    
    
    
    100.0
    %Cost of revenues **Power industry services
    
    
    51,375,000
    
    
    
    88.5
    %
    
    
    38,576,000
    
    
    
    87.7
    %Nutritional products
    
    
    2,558,000
    
    
    
    90.8
    %
    
    
    2,323,000
    
    
    
    96.8
    %Telecommunications infrastructure services
    
    
    1,749,000
    
    
    
    77.5
    %
    
    
    1,774,000
    
    
    
    88.7
    %Cost of revenues
    
    
    55,682,000
    
    
    
    88.2
    %
    
    
    42,673,000
    
    
    
    88.2
    %Gross profit
    
    
    7,428,000
    
    
    
    11.8
    %
    
    
    5,733,000
    
    
    
    11.8
    %Selling, general and administrative expenses
    
    
    3,214,000
    
    
    
    5.1
    %
    
    
    4,011,000
    
    
    
    8.3
    %Income from operations
    
    
    4,214,000
    
    
    
    6.7
    %
    
    
    1,722,000
    
    
    
    3.5
    %Interest expense
    
    
    (62,000
    )
    
    
    
    *
    
    
    (120,000
    )
    
    
    
    *Investment income
    
    
    51,000
    
    
    
    
    *
    
    
    504,000
    
    
    
    1.0
    %Equity in the earnings of the unconsolidated subsidiary
    
    
    610,000
    
    
    
    1.0
    %
    
    
    
    
    
    
    Income from operations before income taxes
    
    
    4,813,000
    
    
    
    7.6
    %
    
    
    2,106,000
    
    
    
    4.3
    %Income tax expense
    
    
    (1,846,000
    )
    
    
    (2.9
    )%
    
    
    (551,000
    )
    
    
    (1.1
    )%Net income
    
    $
    2,967,000
    
    
    
    4.7
    %
    
    $
    1,555,000
    
    
    
    3.2
    %
 *
    
    Less than 1%.**
    
    The cost of revenues percentage amounts represent the percentage of net revenues of
the applicable segment. Net Revenues
 Power Industry Services
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Nutritional Products
   Telecommunications Infrastructure Services
   Cost of Revenues
    - 20 -




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Selling, General and Administrative Expenses
  Other Income and Expense
   Income Tax Expense
   Liquidity and Capital Resources as of April 30, 2009
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Off-Balance Sheet Arrangements
      - 22 -




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Earnings before Interest, Taxes, Depreciation and Amortization (Non-GAAP Measurement)
   Three Months Ended April 30,2009
    
    
    2008Net income, as reported
    
    $
    2,967,000
    
    
    $
    1,555,000Interest expense
    
    
    62,000
    
    
    
    120,000Income tax expense
    
    
    1,846,000
    
    
    
    551,000Amortization of purchased intangible assets
    
    
    89,000
    
    
    
    772,000Depreciation and other amortization
    
    
    147,000
    
    
    
    339,000EBITDA
    
    $
    5,111,000
    
    
    $
    3,337,000
   Reconciliations of EBITDAThree Months Ended April 30,2009
    
    
    2008EBITDA
    
    $
    5,111,000
    
    
    $
    3,337,000Current income tax expense
    
    
    (1,279,000
    )
    
    
    (1,602,000
    )Interest expense
    
    
    (62,000
    )
    
    
    (120,000
    )Non-cash stock option compensation expense
    
    
    272,000
    
    
    
    397,000Provision for inventory obsolescence
    
    
    19,000
    
    
    
    68,000Equity in earnings of the unconsolidated subsidiary
    
    
    (610,000
    )
    
    
    (Increase)/decrease in escrowed cash
    
    
    (4,000
    )
    
    
    4,083,000Increase in accounts receivable, net
    
    
    (9,186,000
    )
    
    
    (899,000
    )Decrease in accounts payable and accrued expenses
    
    
    (10,340,000
    )
    
    
    (1,384,000
    )Change related to the timing of scheduled billings
    
    
    (45,000
    )
    
    
    (1,183,000
    )Other, net
    
    
    (189,000
    )
    
    
    (186,000
    )Net cash (used in) provided by operations
    
    $
    (16,313,000
    )
    
    $
    2,511,000
 Critical Accounting Policies
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Adopted and Other Recently Issued Accounting Pronouncements
  Seasonality
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of disclosure controls and procedures.
 Changes in internal controls over financial reporting.
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PART II
 OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Kevin Thomas Litigation
     Tampa Bay Nutraceutical Company
  Other Legal Proceedings
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ITEM 1A. RISK FACTORS
  www.arganinc.com
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 Exhibit No.
    
    TitleExhibit: 31.1
    
    Certification of Chief Executive Officer, pursuant to Rule 13a-14(c) under
the Securities Exchange Act of 1934Exhibit: 31.2
    
    Certification of Chief Financial Officer, pursuant to Rule 13a-14(c) under
the Securities Exchange Act of 1934Exhibit: 32.1
    
    Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350Exhibit: 32.2
    
    Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350
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SIGNATURES
  ARGAN, INC.June 8, 2009
    By:
    /s/ Rainer H. BosselmannRainer H. BosselmannChairman of the Board and Chief Executive OfficerJune 8, 2009
    By:
    /s/ Arthur F. TrudelArthur F. TrudelSenior Vice President, Chief Financial Officer
and Secretary  - 27 -




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EXHIBIT INDEX
 Exhibit No.
    
    DescriptionExhibit: 31.1
    
    Certification of Chief Executive Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934Exhibit: 31.2
    
    Certification of Chief Financial Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934Exhibit: 32.1
    
    Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350Exhibit: 32.2
    
    Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350
  - 28 -