##### Table of Contents



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, 2010
 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.)
 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, 2010 and January 31, 2010
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended April 30,
2010 and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30,
2010 and 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II. OTHER INFORMATION
    
    
    24Item 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults in Senior Securities
    
    
    24Item 4. [Removed and Reserved]
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    25Exhibit 10.1Exhibit 10.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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ARGAN, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
 April 30,
    
    
    January 31,2010
    
    
    2010(Unaudited)
    
    
    (Note 1)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    63,249,000
    
    
    $
    66,009,000Escrowed cash
    
    
    5,002,000
    
    
    
    5,002,000Accounts receivable, net of allowance for doubtful accounts
    
    
    13,016,000
    
    
    
    4,979,000Costs and estimated earnings in excess of billings
    
    
    12,164,000
    
    
    
    12,931,000Inventories, net of reserve for obsolescence
    
    
    1,770,000
    
    
    
    2,010,000Current deferred tax assets
    
    
    1,195,000
    
    
    
    1,603,000Prepaid expenses and other current assets
    
    
    2,025,000
    
    
    
    2,697,000TOTAL CURRENT ASSETS
    
    
    98,421,000
    
    
    
    95,231,000Property and equipment, net of accumulated depreciation
    
    
    1,558,000
    
    
    
    1,540,000Goodwill
    
    
    18,476,000
    
    
    
    18,476,000Intangible assets, net of accumulated amortization
    
    
    3,171,000
    
    
    
    3,258,000Deferred tax assets
    
    
    1,652,000
    
    
    
    1,628,000Other assets
    
    
    117,000
    
    
    
    140,000TOTAL ASSETS
    
    $
    123,395,000
    
    
    $
    120,273,000LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    20,577,000
    
    
    $
    17,906,000Accrued expenses
    
    
    6,269,000
    
    
    
    10,254,000Billings in excess of costs and estimated earnings
    
    
    4,430,000
    
    
    
    1,874,000Current portion of long-term debt
    
    
    1,333,000
    
    
    
    1,833,000TOTAL CURRENT LIABILITIES
    
    
    32,609,000
    
    
    
    31,867,000Other liabilities
    
    
    37,000
    
    
    
    38,000TOTAL LIABILITIES
    
    
    32,646,000
    
    
    
    31,905,000COMMITMENTS AND CONTINGENCIES(Note 12)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;
13,590,727 and 13,585,727 shares issued at 4/30/10 and 1/31/10, and
13,587,494 and 13,582,494 shares outstanding at 4/30/10 and
1/31/10, respectively
    
    
    2,039,000
    
    
    
    2,038,000Warrants outstanding
    
    
    601,000
    
    
    
    613,000Additional paid-in capital
    
    
    87,417,000
    
    
    
    87,048,000Retained earnings (deficit)
    
    
    725,000
    
    
    
    (1,298,000
    )Treasury stock, at cost; 3,233 shares at 4/30/10 and 1/31/10
    
    
    (33,000
    )
    
    
    (33,000
    )TOTAL STOCKHOLDERS EQUITY
    
    
    90,749,000
    
    
    
    88,368,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    123,395,000
    
    
    $
    120,273,000
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ARGAN, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months Ended April 30,2010
    
    
    2009Net revenuesPower industry services
    
    $
    51,396,000
    
    
    $
    58,035,000Nutritional products
    
    
    2,697,000
    
    
    
    2,817,000Telecommunications infrastructure services
    
    
    1,838,000
    
    
    
    2,258,000Net revenues
    
    
    55,931,000
    
    
    
    63,110,000Cost of revenuesPower industry services
    
    
    44,667,000
    
    
    
    51,375,000Nutritional products
    
    
    2,683,000
    
    
    
    2,558,000Telecommunications infrastructure services
    
    
    1,793,000
    
    
    
    1,749,000Cost of revenues
    
    
    49,143,000
    
    
    
    55,682,000Gross profit
    
    
    6,788,000
    
    
    
    7,428,000Selling, general and administrative expenses
    
    
    3,574,000
    
    
    
    3,214,000Income from operations
    
    
    3,214,000
    
    
    
    4,214,000Interest expense
    
    
    (14,000
    )
    
    
    (62,000
    )Investment income
    
    
    12,000
    
    
    
    51,000Equity in the earnings of the unconsolidated subsidiary
    
    
    
    
    
    
    610,000Income from operations before income taxes
    
    
    3,212,000
    
    
    
    4,813,000Income tax expense
    
    
    1,189,000
    
    
    
    1,846,000Net income
    
    $
    2,023,000
    
    
    $
    2,967,000Earnings per share:Basic net income per share
    
    $
    0.15
    
    
    $
    0.22Diluted net income per share
    
    $
    0.15
    
    
    $
    0.22Weighted average number of shares outstanding:Basic
    
    
    13,584,000
    
    
    
    13,445,000Diluted
    
    
    13,790,000
    
    
    
    13,714,000
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ARGAN, INC. AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended April 30,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    2,023,000
    
    
    $
    2,967,000Adjustments to reconcile net income to net cash used in
operating activities:Deferred income tax expense
    
    
    384,000
    
    
    
    567,000Stock option compensation expense
    
    
    320,000
    
    
    
    272,000Amortization of purchased intangibles
    
    
    87,000
    
    
    
    89,000Depreciation and other amortization
    
    
    168,000
    
    
    
    147,000Equity in the earnings of the unconsolidated subsidiary
    
    
    
    
    
    
    (610,000
    )Other
    
    
    37,000
    
    
    
    19,000Changes in operating assets and liabilities:Escrowed cash
    
    
    
    
    
    
    (4,000
    )Accounts receivable
    
    
    (8,069,000
    )
    
    
    (9,186,000
    )Costs and estimated earnings in excess of billings
    
    
    767,000
    
    
    
    1,612,000Inventories
    
    
    232,000
    
    
    
    (341,000
    )Prepaid expenses and other assets
    
    
    672,000
    
    
    
    151,000Accounts payable and accrued expenses
    
    
    (1,311,000
    )
    
    
    (10,340,000
    )Billings in excess of costs and estimated earnings
    
    
    2,556,000
    
    
    
    (1,657,000
    )Other
    
    
    (1,000
    )
    
    
    1,000Net cash used in operating activities
    
    
    (2,135,000
    )
    
    
    (16,313,000
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (163,000
    )
    
    
    (32,000
    )Proceeds from sale of property and equipment
    
    
    3,000
    
    
    
    7,000Net cash used in investing activities
    
    
    (160,000
    )
    
    
    (25,000
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from the exercise of stock options and warrants
    
    
    35,000
    
    
    
    190,000Principal payments on long-term debt
    
    
    (500,000
    )
    
    
    (631,000
    )Net cash used in financing activities
    
    
    (465,000
    )
    
    
    (441,000
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (2,760,000
    )
    
    
    (16,779,000
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    66,009,000
    
    
    
    74,666,000CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    63,249,000
    
    
    $
    57,887,000SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid for interest and income taxes:Interest
    
    $
    14,000
    
    
    $
    62,000Income taxes
    
    $
    62,000
    
    
    $
    3,604,000
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ARGAN, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2010
(Unaudited)
 NOTE 1  DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
 Description of the Business
   Basis of Presentation
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Codification of Generally Accepted Accounting Principles in the United States (US GAAP)
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles FASB Accounting Standards Codification Generally Accepted Accounting Standards The Hierarchy of Generally Accepted
Accounting Principles
 New Accounting Standards
 Fair Value Measurements
and Disclosures Fair Value Measurements and Disclosures 
Overall Subtopic
 Multiple-Deliverable Revenue Arrangements  a consensus of the FASB Emerging Issues Task Force
 NOTE 2  CASH, CASH EQUIVALENTS AND ESCROWED CASH
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NOTE 3  ACCOUNTS RECEIVABLE; COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS
   NOTE 4  INVENTORIES
   April 30,
    
    
    January 31,2010
    
    
    2010Raw materials
    
    $
    3,435,000
    
    
    $
    3,586,000Work-in process
    
    
    42,000
    
    
    
    54,000Finished goods
    
    
    173,000
    
    
    
    270,0003,650,000
    
    
    
    3,910,000Less: reserves
    
    
    (1,880,000
    )
    
    
    (1,900,000
    )Inventories, net
    
    $
    1,770,000
    
    
    $
    2,010,000
 NOTE 5  PROPERTY AND EQUIPMENT
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April 30,
    
    
    January 31,2010
    
    
    2010Leasehold improvements
    
    $
    806,000
    
    
    $
    806,000Machinery and equipment
    
    
    3,153,000
    
    
    
    2,990,000Trucks and other vehicles
    
    
    1,763,000
    
    
    
    1,769,0005,722,000
    
    
    
    5,565,000Less  accumulated depreciation
    
    
    (4,164,000
    )
    
    
    (4,025,000
    )Property and equipment, net
    
    $
    1,558,000
    
    
    $
    1,540,000
 NOTE 6  ACQUISITION OF GEMMA RENEWABLE POWER, LLC
   1.
    
    $800,000 of the Consideration shall be paid upon the award to GRP by Invenergy of a
second wind farm construction project as set forth in the Purchase Agreement; and2.
    
    $800,000 of the Consideration shall be paid on or before the four-month anniversary of
the award of the second project provided that the construction of such project has not
been delayed as fully described in the Purchase Agreement.
   Three MonthsEnded April 30,2009Pro forma net revenues
    
    $
    73,529,000Pro forma net income
    
    $
    3,369,000Pro forma net income per share:Basic
    
    $
    0.25Diluted
    
    $
    0.25
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NOTE 7  INTANGIBLE ASSETS
  April 30, 2010Estimated
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    January 31,Useful
    
    
    Carrying
    
    
    Accumulated
    
    
    Net
    
    
    2010Life
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Net AmountIntangible assets
being amortized:Non-compete agreements
 GPS
    
    5 years
    
    $
    534,000
    
    
    $
    363,000
    
    
    $
    171,000
    
    
    $
    198,000Trade name  GPS
    
    15 years
    
    
    3,643,000
    
    
    
    824,000
    
    
    
    2,819,000
    
    
    
    2,879,000Intangible asset not
being amortized:Trade name  SMC
    
    Indefinite
    
    
    181,000
    
    
    
    
    
    
    
    181,000
    
    
    
    181,000Total intangible assets
    
    
    
    
    
    $
    4,358,000
    
    
    $
    1,187,000
    
    
    $
    3,171,000
    
    
    $
    3,258,000Goodwill
    
    Indefinite
    
    $
    18,476,000
    
    
    $
    
    
    
    $
    18,476,000
    
    
    $
    18,476,000
  NOTE 8  DEBT
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NOTE 9  STOCK-BASED COMPENSATION
   WeightedWeighted
    
    
    Average
    
    
    WeightedAverage
    
    
    Remaining
    
    
    AverageExercise
    
    
    Contract
    
    
    FairOptions
    
    Shares
    
    
    Price
    
    
    Term (Years)
    
    
    ValueOutstanding, January 31, 2010
    
    
    497,000
    
    
    $
    10.27
    
    
    
    6.47
    
    
    $
    5.45Granted
    
    
    177,000
    
    
    $
    15.04Exercised
    
    
    (2,000
    )
    
    $
    5.90Outstanding, April 30, 2010
    
    
    672,000
    
    
    $
    11.54
    
    
    
    6.07
    
    
    $
    5.85Exercisable, April 30, 2010
    
    
    449,000
    
    
    $
    10.05
    
    
    
    6.02
    
    
    $
    5.32Exercisable, January 31, 2010
    
    
    374,000
    
    
    $
    9.44
    
    
    
    5.65
    
    
    $
    4.87
  WeightedAverageShares
    
    
    Fair ValueNonvested, January 31, 2010
    
    
    123,000
    
    
    $
    7.21Granted
    
    
    177,000
    
    
    $
    6.92Vested
    
    
    (77,000
    )
    
    $
    7.43Nonvested, April 30, 2010
    
    
    223,000
    
    
    $
    6.91
   Three MonthsEnded April 30,2010Dividend yield
    
    Expected volatility
    
    62.38
    %Risk-free interest rate
    
    3.50
    %Expected life in years
    
    3.38
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NOTE 10  INCOME TAXES
  2010
    
    
    2009Computed expected income tax expense
    
    $
    1,092,000
    
    
    $
    1,636,000State income taxes, net
    
    
    166,000
    
    
    
    107,000Permanent differences, net
    
    
    (69,000
    )
    
    
    103,000$
    1,189,000
    
    
    $
    1,846,000
   NOTE 11  NET INCOME PER SHARE
  NOTE 12  LEGAL CONTINGENCIES
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Delta-T Matters
     Tampa Bay Nutraceutical Company
  NOTE 13  SEGMENT REPORTING AND MAJOR CUSTOMERS
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TelecomPower Industry
    
    
    Nutritional
    
    
    InfrastructureThree Months Ended April 30, 2010
    
    Services
    
    
    Products
    
    
    Services
    
    
    Other
    
    
    ConsolidatedNet revenues
    
    $
    51,396,000
    
    
    $
    2,697,000
    
    
    $
    1,838,000
    
    
    $
    
    
    
    $
    55,931,000Cost of revenues
    
    
    44,667,000
    
    
    
    2,683,000
    
    
    
    1,793,000
    
    
    
    
    
    
    
    49,143,000Gross profit
    
    
    6,729,000
    
    
    
    14,000
    
    
    
    45,000
    
    
    
    
    
    
    
    6,788,000Selling, general and administrative
expenses
    
    
    1,445,000
    
    
    
    540,000
    
    
    
    501,000
    
    
    
    1,088,000
    
    
    
    3,574,000Income (loss) from operations
    
    
    5,284,000
    
    
    
    (526,000
    )
    
    
    (456,000
    )
    
    
    (1,088,000
    )
    
    
    3,214,000Interest expense
    
    
    (14,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,000
    )Investment income
    
    
    9,000
    
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    12,000Income (loss) before income taxes
    
    $
    5,279,000
    
    
    $
    (526,000
    )
    
    $
    (456,000
    )
    
    $
    (1,085,000
    )
    
    
    3,212,000Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,189,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,023,000Amortization of purchased intangibles
    
    $
    87,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    87,000Depreciation and other amortization
    
    $
    67,000
    
    
    $
    
    
    
    $
    100,000
    
    
    $
    1,000
    
    
    $
    168,000Fixed asset additions
    
    $
    141,000
    
    
    $
    
    
    
    $
    22,000
    
    
    $
    
    
    
    $
    163,000Goodwill
    
    $
    18,476,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,476,000Total assets
    
    $
    84,883,000
    
    
    $
    4,771,000
    
    
    $
    2,388,000
    
    
    $
    31,353,000
    
    
    $
    123,395,000
  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
    
    
    $
    147,000Fixed asset additions
    
    $
    2,000
    
    
    $
    
    
    
    $
    19,000
    
    
    $
    11,000
    
    
    $
    32,000Goodwill
    
    $
    18,476,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,476,000Total assets
    
    $
    87,557,000
    
    
    $
    5,127,000
    
    
    $
    3,030,000
    
    
    $
    30,286,000
    
    
    $
    126,000,000
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NOTE 14  SUPPLEMENTAL FINANCIAL INFORMATION
   NOTE 15  SUBSEQUENT EVENT
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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, 2010 and 2009
  Three Months Ended April 30,2010
    
    
    2009Net revenuesPower industry services
    
    $
    51,396,000
    
    
    
    91.9
    %
    
    $
    58,035,000
    
    
    
    91.9
    %Nutritional products
    
    
    2,697,000
    
    
    
    4.8
    %
    
    
    2,817,000
    
    
    
    4.5
    %Telecommunications infrastructure services
    
    
    1,838,000
    
    
    
    3.3
    %
    
    
    2,258,000
    
    
    
    3.6
    %Net revenues
    
    
    55,931,000
    
    
    
    100.0
    %
    
    
    63,110,000
    
    
    
    100.0
    %Cost of revenues **Power industry services
    
    
    44,667,000
    
    
    
    86.9
    %
    
    
    51,375,000
    
    
    
    88.5
    %Nutritional products
    
    
    2,683,000
    
    
    
    99.5
    %
    
    
    2,558,000
    
    
    
    90.8
    %Telecommunications infrastructure services
    
    
    1,793,000
    
    
    
    97.6
    %
    
    
    1,749,000
    
    
    
    77.5
    %Cost of revenues
    
    
    49,143,000
    
    
    
    87.9
    %
    
    
    55,682,000
    
    
    
    88.2
    %Gross profit
    
    
    6,788,000
    
    
    
    12.1
    %
    
    
    7,428,000
    
    
    
    11.8
    %Selling, general and administrative expenses
    
    
    3,574,000
    
    
    
    6.4
    %
    
    
    3,214,000
    
    
    
    5.1
    %Income from operations
    
    
    3,214,000
    
    
    
    5.7
    %
    
    
    4,214,000
    
    
    
    6.7
    %Interest expense
    
    
    (14,000
    )
    
    
    *
    
    
    
    (62,000
    )
    
    
    *Investment income
    
    
    12,000
    
    
    
    *
    
    
    
    51,000
    
    
    
    *Equity in the earnings of the unconsolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    610,000
    
    
    
    1.0
    %Income from operations before income taxes
    
    
    3,212,000
    
    
    
    5.7
    %
    
    
    4,813,000
    
    
    
    7.6
    %Income tax expense
    
    
    (1,189,000
    )
    
    
    (2.1
    )%
    
    
    (1,846,000
    )
    
    
    (2.9
    )%Net income
    
    $
    2,023,000
    
    
    
    3.6
    %
    
    $
    2,967,000
    
    
    
    4.7
    %
 *
    
    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
   - 19 -




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Selling, General and Administrative Expenses
  Other Income and Expense
  Income Tax Expense
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Liquidity and Capital Resources as of April 30, 2010
         - 21 -




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Contractual Obligations
  Off-Balance Sheet Arrangements
    Earnings before Interest, Taxes, Depreciation and Amortization (Non-GAAP Measurement)
   Three Months Ended April 30,2010
    
    
    2009Net income, as reported
    
    $
    2,023,000
    
    
    $
    2,967,000Interest expense
    
    
    14,000
    
    
    
    62,000Income tax expense
    
    
    1,189,000
    
    
    
    1,846,000Amortization of purchased intangible assets
    
    
    87,000
    
    
    
    89,000Depreciation and other amortization
    
    
    168,000
    
    
    
    147,000EBITDA
    
    $
    3,481,000
    
    
    $
    5,111,000
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Reconciliations of EBITDAThree Months Ended April 30,2010
    
    
    2009EBITDA
    
    $
    3,481,000
    
    
    $
    5,111,000Current income tax expense
    
    
    (805,000
    )
    
    
    (1,279,000
    )Interest expense
    
    
    (14,000
    )
    
    
    (62,000
    )Non-cash stock option compensation expense
    
    
    320,000
    
    
    
    272,000Equity in earnings of the unconsolidated subsidiary
    
    
    
    
    
    
    (610,000
    )Increase in accounts receivable, net
    
    
    (8,069,000
    )
    
    
    (9,186,000
    )Decrease in accounts payable and accrued expenses
    
    
    (1,311,000
    )
    
    
    (10,340,000
    )Changes related to the timing of scheduled billings
    
    
    3,323,000
    
    
    
    (45,000
    )Other, net
    
    
    940,000
    
    
    
    (174,000
    )Net cash (used in) provided by operations
    
    $
    (2,135,000
    )
    
    $
    (16,313,000
    )
 Critical Accounting Policies
  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.
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Changes in internal controls over financial reporting.
 
 PART II
 OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   
 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. [REMOVED AND RESERVED]
 
 ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
 Exhibit No.
    
    TitleExhibit: 10.1
    
    Third Amendment to Second Amended and Restated Financing and Security
Agreement, dated April 26, 2010, by and among Argan, Inc.; Southern
Maryland Cable, Inc.; Vitarich Laboratories, Inc.; Gemma Power Systems,
LLC; Gemma Power, Inc.; Gemma Power Systems California, Inc.; Gemma Power
Hartford, LLC; and Bank of America, N.A.Exhibit: 10.2
    
    Fifth Amended and Restated Revolving Credit Note, dated April 26, 2010,
issued by Argan, Inc.; Southern Maryland Cable, Inc.; Vitarich
Laboratories, Inc.; Gemma Power Systems, LLC; Gemma Power, Inc.; Gemma
Power Systems California, Inc.; and Gemma Power Hartford, LLC in favor of
Bank of America, N.A.Exhibit: 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
 
 SIGNATURES
  ARGAN, INC.June 8, 2010
    By:
    /s/ Rainer H. BosselmannRainer H. BosselmannChairman of the Board and Chief Executive OfficerJune 8, 2010
    By:
    /s/ Arthur F. TrudelArthur F. TrudelSenior Vice President, Chief Financial Officer
and Secretary  - 25 -