100591--4/24/2008--ARGAN

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General Risks Relating to our Company Further economic downturn may lead to less demand for our products and services. We have incurred losses in the past; we may experience additional losses in the future. We may be unsuccessful at generating internal growth which could result in an overall decline in our business. Our results of operations could be adversely affected as a result of impairment adjustments to goodwill and other purchased intangible assets Future acquisitions and/or investments may not occur which could limit the growth of our business. The integration of acquired companies may not be successful. We may not be able to raise additional capital and, as a result, may not be able to successfully execute our business plan. We may not be able to comply with certain of our debt covenants which may interfere with our ability to successfully execute our business plan. Our officers and directors have limited experience in managing our business and may be unsuccessful in doing so. Our business growth could outpace the capability of our corporate management infrastructure which could adversely affect our ability to complete the execution of our business plan. Loss of key personnel could prevent us from effectively managing our business. Specific Risks Relating to Our Power Industry Services Failure to successfully operate our power industry services business will adversely affect our Company. Intense competition in the engineering and construction industry could reduce our market share and profits. The cyclical nature of the markets we serve may adversely affect future operating results. Our inability to attract and retain qualified management and personnel would adversely affect the growth of this business. Our backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of our future earnings. If financing for alternative energy plants is unavailable, construction of such plants may not occur. Failure to negotiate a definitive contract to build the Colusa power plant would adversely affect future results of operations. If the development of renewable energy sources does not occur, the demand for our construction services could decline. If tax credits are repealed, the development of alternative energy power plants may not be economical. Future work delays and cost overruns could adversely affect our completion of construction projects. As we bear the risk of cost overruns in the dollar-value of our contracts, we may experience reduced profits or, in some cases, losses under these contracts if costs increase above our estimates. If we guarantee the timely completion or performance standards of a project, we could incur additional costs to cover our guarantee obligations. Our use of the percentage-of-completion method of accounting could result in a reduction or reversal of previously recorded revenues or profits. Future bonding requirements may adversely affect our ability to compete for new energy plant construction projects. Our dependence upon third parties to complete many of our contracts may adversely affect our performance under future energy plant construction contracts. The nature of our engineering and construction business exposes us to potential liability claims and contract disputes which may reduce our profits. We could be subject to claims and liabilities under environmental, health and safety laws and regulations that would add costs to our business. The failure of our insurance policies to cover all of the risks we face could result in material future losses. Specific Risks Relating to Our Telecommunications Infrastructure Business Deterioration of regional economic conditions in our industry could have a material adverse effect on our future operating results. Rapid technological change and/or customer consolidations could reduce the demand for the telecommunication services we provide. Various factors could cause the operating results of SMC to vary significantly from quarter to quarter. Our financial results are dependent on government programs and spending, the termination of which would have a material adverse effect on our business. Our substantial dependence upon fixed price contracts may expose us to losses in the event that we fail to accurately estimate the costs that we will incur to complete such projects. The failure to replace contracts as they are completed or expire will adversely affect future operating results. Loss of a significant customer could adversely affect our SMC business. 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. Compliance with government regulations may increase the costs of our operations and expose us to substantial civil and criminal penalties in the event that we violate applicable law. If we are unable to obtain surety bonds or letters of credit in sufficient amounts or at acceptable rates, we may be precluded from entering into additional contracts with certain of our customers. Specific Risks Relating To Our Nutritional Products Business The inability to replace lost customer business will continue to adversely affect operating results and financial condition. Negative publicity about us, our products and/or our industry could cause our business to suffer. Our inability to respond to changing consumers demands and preferences could adversely affect our business. Failure to perform effectively in an intensely competitive industry will harm our business. The successful fulfillment of customer orders depends on our ability to obtain the necessary raw materials in a timely manner. Future product liability claims may expose us to unexpected damages and expenses which could adversely affect our results of operation and financial condition. A violation of government regulations or our inability to obtain necessary government approvals for our products could harm our business Risks Relating to Our Securities Our acquisition strategy may result in dilution to our stockholders. Our officers, directors and certain key employees have substantial control over Argan. As our common stock is thinly traded, the stock price may be volatile and you may have difficulty disposing of your investment at prevailing market prices. Availability of significant amounts of our common stock for sale could adversely affect its market price. We may issue preferred stock with rights that are superior to our common stock. Provisions of our certificate of incorporation and Delaware law could deter takeover attempts. We do not expect to pay dividends for the foreseeable future.

Full 10-K form ▸

100591--4/24/2008--ARGAN_INC