As
filed
pursuant to Rule 424(b)(3)
Registration
No. 333-126569
Argyle
Security, Inc.
4,075,046
Shares of Common Stock
187,500
Common Stock Purchase Warrants
This
prospectus relates to 3,700,046 shares of common stock, par value $0.0001 per
share, of Argyle Security, Inc. (“Argyle” or the “Company” or “we,” “us” or
similar words), which are issuable upon the exercise of outstanding common
stock
purchase warrants issued in our initial public offering pursuant to a prospectus
dated January 24, 2006.
This
prospectus also relates to the issuance of the following securities issuable
upon exercise of the unit purchase option granted to such representative in
our
initial public offering: (i)187,500 shares of common stock, par value $0.0001
per share, (ii) 187,500 common stock purchase warrants and (iii)187,500 shares
of common stock issuable upon the exercise of the representative’s warrants.
In
order
to obtain the shares of common stock, the holders of the warrants must pay
an
exercise price of $5.50 per share. The holders of the unit purchase option
must
pay an exercise price of $8.80 per unit in order to receive the common stock
and
warrants underlying the unit. We will receive the proceeds from the exercise
of
all of the warrants, including the warrants exercised by the representative
and
its designees.
Our
common stock, warrants and units are traded on the Over-the-Counter Bulletin
Board under the symbols “ARGL,” “ARGLW” and “ARGLU,” respectively. On August 21,
2007, the closing sale price of the common stock, warrants and units was $7.75,
$2.09 and $9.44, respectively.
Investing
in our common stock involves a high degree of risk. 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 September 17, 2007
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Table
of Contents
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PROSPECTUS
SUMMARY
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3
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FORWARD-LOOKING
STATEMENTS
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5
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RISK
FACTORS
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5
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USE
OF PROCEEDS
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5
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DETERMINATION
OF OFFERING PRICE
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6
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PLAN
OF DISTRIBUTION
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6
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INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
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6
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WHERE
YOU CAN FIND MORE INFORMATION
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2
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LEGAL
MATTERS
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6
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EXPERTS
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6
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ABOUT
THIS PROSPECTUS
You
should rely only on the information contained or incorporated by reference
in
this prospectus and in an applicable prospectus supplement, if any, or in any
amendment to this prospectus. We have not authorized any other person to provide
you with different information, and if anyone provides, or has provided, you
with different or inconsistent information, you should not rely on it. We will
not make an offer to sell our common stock in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing
in
this prospectus as well as the information we filed previously with the SEC
and
incorporated herein by reference is accurate only as of the date of the document
containing the information.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus is part of a registration statement we filed with the SEC. You should
rely only on the information contained in this prospectus or incorporated by
reference. We have not authorized anyone else 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 in this prospectus is accurate as of any date other than the date
on
the front page of this prospectus, regardless of the time of delivery of this
prospectus or any sale of common stock.
We
file
annual, quarterly and current reports, proxy statements and other information
with the SEC. You may read, without charge, and copy the documents we file
with
the SEC at the SEC’s public reference room at 100 F Street, NE in Washington,
D.C. The
public may obtain information about the operation of the public reference room
by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web
site
at http://www.sec.gov which contains the Form S-1 and other reports, proxy
and
information statements and information regarding issuers that file
electronically with the SEC.
PROSPECTUS
SUMMARY
The
Company
We
were
formed as a blank check company under the name “Argyle Security Acquisition
Corporation” to effect a merger, capital stock exchange, asset acquisition or
other similar business combination with an operating business in the security
industry. On January 24, 2006, we completed an initial public offering of our
securities.
On
December 8, 2006, Argyle, its wholly owned subsidiary ISI Security Group, Inc.
and ISI Detention Contracting Group, Inc., or ISI, entered into a merger
agreement pursuant to which Merger Subsidiary would merge into ISI, and ISI
would then become the wholly owned subsidiary of Argyle. ISI is a provider
of
physical security solutions to commercial, governmental, and correctional
customers. On July 30, 2007, our stockholders voted to approve the merger,
the
merger was consummated and we changed our name from “Argyle Security Acquisition
Corporation” to Argyle Security, Inc. , Holders of 232,565 shares issued in our
initial public offering elected to have their shares redeemed.
On
July
31, 2007, Argyle’s wholly owned subsidiary merged into ISI and ISI became a
wholly owned subsidiary of Argyle. Pursuant to terms of the merger agreement,
the security holders of ISI received an aggregate amount of cash of $18,600,000,
1,180,000 shares of our common stock (valued at approximately $9,180,000, based
on the closing price of the common stock on June 25, 2007) and unsecured
promissory notes in the aggregate amount of $1,925,000 convertible into our
common stock at a conversion price of $10 per share.
In
addition, the merger consideration paid by the Company also included (i) payment
of $1.9 million to an entity created by two executive officers of ISI in
connection with the issuance of performance and payment bonds to ISI; and (ii)
approximately $1.0 million in ISI transaction costs. The Company also paid
$.24
million in success fees to certain service providers in connection with the
merger and approximately $.45 million to a service provider, which payment
was
contingent on the business combination being consummated.
The
Company also assumed approximately $6.0 million of long-term debt, approximately
$7.6 million outstanding pursuant to a $9.0 million line of credit, and $2.0
million of capitalized leases as of July 31, 2007.
A
summary
of our business and operations, including the business and operations of ISI,
is
included in our definitive proxy statement filed with the SEC on July 13, 2007
which is incorporated herein by reference, and our Current Report on Form 8-K
filed with the SEC on August 6, 2007, which is also incorporated herein by
reference.
Our
principal executive offices are located at 200 Concord Plaza, Suite 700 San
Antonio, Texas 78216. The telephone number at our executive office is (210)
828-1700. Our operating subsidiary maintains a website at www.isidet.com. The
information contained on our website is not a part of, and is not incorporated
by reference into, this prospectus.
The
Offering
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Securities
offered:
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187,500
warrants underlying a unit purchase option and 4,075,046 shares
of common
stock underlying (i) warrants to purchase 3,700,046 shares with
an
exercise price of $5.50 per share, (ii) 187,500 shares of common
stock
included as part of the units underlying the underwriters’ unit purchase
option, and (iii) 187,500 shares underlying the warrants included
as part
of the units underlying the underwriters’ unit purchase option. The
warrants expire on January 24, 2011.
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Common
Stock:
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Number
outstanding before this offering
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5,961,307
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Number
to be outstanding after this offering
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10,036,353,
assuming the exercise of all of the underwriters’ unit purchase options
and the warrants, including the 187,500 warrants underlying the
unit
purchase option
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Offering
proceeds
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Assuming
the exercise of the underwriters’ unit purchase option and all the
warrants, we will receive gross proceeds of $23,031,503. We intend
to use
the proceeds from the exercise of the warrants for working capital,
operating expenses and other general corporate
purposes.
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OTC
Bulletin Board Symbol
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CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
We
believe that some of the information in this prospectus constitutes
forward-looking statements within the definition of the Private Securities
Litigation Reform Act of 1995. However, the safe-harbor provisions of that
act
do not apply to statements made in this prospectus. You can identify these
statements by forward-looking words such as "may," "expect," "anticipate,"
"contemplate," "believe," "estimate," "intends," and "continue" or similar
words. You should read statements that contain these words carefully because
they discuss future expectations, contain projections of future results of
operations or financial condition or state other "forward-looking" information.
We
believe it is important to communicate our expectations to our security holders.
However, there may be events in the future that we are not able to predict
accurately or over which we have no control. The risk factors and cautionary
language discussed in this prospectus provide examples of risks, uncertainties
and events that may cause actual results to differ materially from the
expectations described by us in such forward-looking statements, including
among
other things:
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outcomes
of government reviews, inquiries, investigations and related litigation;
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continued
compliance with government regulations;
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legislation
or regulatory environments, requirements or changes adversely affecting
the business in which we are engaged;
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fluctuations
in client demand;
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management
of rapid growth;
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general
economic conditions;
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our
business strategy and plans; and
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the
results of future financing
efforts.
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You
are
cautioned not to place undue reliance on these forward-looking statements,
which
speak only as of the date of this prospectus.
All
forward-looking statements included herein attributable to us are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Except to the extent required by applicable laws and
regulations, we do not undertake any obligation to update these forward-looking
statements to reflect events or circumstances after the date of this prospectus
or to reflect the occurrence of unanticipated events.
RISK
FACTORS
A
discussion of the risk factors relating to an investment in us is included
in
our proxy statement filed with the Commission on July 13, 2007, which is
incorporated herein by reference. You should carefully consider the risk factors
discussed in the proxy statement, together with all of the other information
included in this prospectus, before you decide whether to exercise your
warrants.
USE
OF PROCEEDS
Assuming
the exercise of the underwriters’ unit purchase option and all the warrants, we
will receive gross proceeds of $23,031,503. We intend to use the proceeds from
the exercise of the warrants for working capital, operating expenses and other
general corporate purposes. If we have indebtedness at the time the warrants
are
exercised, we may also use proceeds to repay indebtedness. We may also use
the
proceeds to acquire other companies. There is no assurance that the holders
of
the unit purchase option or the warrants will elect to exercise any or all
of
the unit purchase option or the warrants.
DETERMINATION
OF OFFERING PRICE
The
offering price of the shares of common stock offered hereby is determined by
reference to the exercise price of the applicable security. The exercise price
of the 3,887,546 warrants (including the warrants underlying the underwriters’
unit purchase option) is $5.50 per share and the exercise price of the unit
purchase option is $8.80. Each offering price was determined at the time of
the
initial public offering.
PLAN
OF DISTRIBUTION
Pursuant
to the terms of the warrants, shares of common stock will be distributed to
those warrant holders who surrender the certificates representing the warrants
and provide payment of the exercise price through their brokers to our warrant
agent, American Stock Transfer & Trust Company, 59 Maiden Lane, New York,
New York 10038. We do not know if or when the warrants will be exercised. We
also do not know whether any of the shares acquired upon exercise will be
sold.
LEGAL
MATTERS
The
validity of the securities offered
in
this prospectus were passed upon for us by Loeb & Loeb LLP, New York, New
York.
EXPERTS
The
consolidated financial statements of ISI Detention Contacting Group, Inc. at
December 31, 2006 and December 31, 2005 and for each of the three years in
the
period ended December 31, 2006 have been audited by Padgett, Stratemann &
Co., L.L.P., independent registered public accounting firm, as set forth in
their report incorporated by reference herein, and are included in reliance
upon
such report given on the authority of such firm as experts in accounting and
auditing.
The
consolidated financial statements of Argyle Security Acquisition Corporation
appearing in Argyle Security Acquisition Corporation’s Annual Report (Form 10-K)
for the year ended December 31, 2006, and for the period June 22, 2005
(inception) through December 31, 2006 have been audited by Ernst & Young
LLP, independent registered public accounting firm, as set forth in their report
thereon (which includes an explanatory paragraph describing conditions that
raise substantial doubt about Argyle Security Acquisition Corporation’s ability
to continue as a going concern as described in Note 1 to the consolidated
financial statements) and incorporated by reference herein. Such consolidated
financial statements are incorporated by reference herein in reliance upon
such
report given on the authority of such firm as experts in accounting and
auditing. Ernst & Young LLP’s opinion on the statements of operation,
stockholders’ equity, and cash flows for the period June 22, 2005 (inception)
through December 31, 2006, insofar as it relates to amounts for prior periods
through December 31, 2005, is based solely on the report of Goldstein Golub
Kessler LLP, independent registered public accounting firm.
The
consolidated financial statements of Argyle Security Acquisition Corporation
at
December 31, 2005 and for the period from June 22, 2005 (inception) to December
31, 2005 have been audited by Goldstein Golub Kessler LLP, independent
registered public accounting firm, as set forth in their report incorporated
by
reference herein, and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
We
incorporate by reference the filed documents listed below, except as superseded,
supplemented or modified by this prospectus, 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 (the “Exchange Act”):
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our
Annual Report on Form 10-K for the fiscal period ended December 31,
2006;
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our
Quarterly Reports on Form 10-Q for the fiscal periods ended March
31,
2007, and June 30, 2007;
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our
Current Reports on Form 8-K dated March 1, 2007, March 14, 2007,
April 20,
2007, May 2, 2007, July 6, 2007, July 13, 2007, August 3, 2007, August
6,
2007 and August 7, 2007;
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the
description of our common stock contained in our Form 8-A filed November
30, 2005;
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our
Definitive Proxy Statement filed July 13, 2007;
and
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all
documents filed by us with the SEC pursuant to Sections 13(a), 13(c),
14
or 15(d) of the Exchange Act after the date of this prospectus and
prior
to the termination of this offering of
securities
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Potential
investors may obtain a copy of any of the agreements summarized herein (subject
to certain restrictions because of the confidential nature of the subject
matter) or any of our SEC filings without charge by written or oral request
directed to Bob Marbut, Co-Chief Executive Officer, Argyle Security, Inc.,
200
Concord Plaza, Suite 700, San Antonio, TX 78216.
You
should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. We have not authorized anyone
else
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 in this prospectus or any prospectus supplement is accurate
as of any date other than the date on the front of those documents.
INDEMNIFICATION
Our
certificate of incorporation provides that the Company, to the full extent
permitted by Section 145 of the Delaware General Corporation Law, as amended
from time to time, shall indemnify all persons whom it may indemnify pursuant
thereto. It further provides that expenses (including attorneys’ fees) incurred
by an officer or director in defending any civil, criminal, administrative,
or
investigative action, suit or proceeding for which such officer or director
may
be entitled to indemnification hereunder shall be paid by the Company in advance
of the final disposition of such action, suit or proceeding upon receipt of
an
undertaking by or on behalf of such director or officer to repay such amount
if
it shall ultimately be determined that he is not entitled to be indemnified
by
the Company as authorized thereby.
Our
bylaws provide the Company with the power to indemnify its officers, directors,
employees and agents or any person serving at the Company’s request as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise to the fullest extent permitted by Delaware
law.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, the registrant has been informed that
in
the opinion of the Securities and Exchange Commission such indemnification
is
against public policy as expressed in the Act and is therefore
unenforceable.