As Filed With the Securities and Exchange Commission on June 27, 1997
Registration Statement No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________________
FLANDERS CORPORATION
(Previously known as Elite Acquisitions, Inc.)
(Exact name of registrant as specified in its charter)
North Carolina 13-3368271
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
531 Flanders Filters Road
Washington, North Carolina 27889
(919) 946-8081
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
____________________________
Robert R. Amerson
President and Chief Executive Officer
Flanders Corporation
531 Flanders Filters Road
Washington, North Carolina 27889
(919) 946-8081
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
____________________________
Copies to:
William C. Gibbs
Snell & Wilmer L.L.P.
111 East Broadway, Suite 900
Salt Lake City, Utah 84111
(801) 237-1900
____________________________
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
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 only in connection with dividend or
interest reinvestment plans, please 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, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to be Offering Price Aggregate Registration
Securities to be Registered(1) Registered(2) Per Unit(3) Offering Price(3) Fee
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<S> <C> <C> <C> <C>
Common Stock, $.001 par value 4,773,519 Shares $ 6.19 $ 29,548,083 $ 8,954
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(1) This Registration Statement covers the resale by certain selling
securityholders ("Selling Securityholders") of 4,773,519 shares of common
stock previously acquired by such Selling Securityholders.
(2) In the event of a stock split, stock dividend, or similar transaction
involving common stock of the Company, to prevent dilution, the number of
shares of common stock of the Company registered shall be automatically
increased to cover the additional shares of common stock in accordance with
Rule 416(a) under the Securities Act of 1933.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the average of the bid and asked prices
of the common stock on June 25, 1997, as reported on the Nasdaq National
Market System.
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 thereafter 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.
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PROSPECTUS
FOR UP TO 4,773,519 SHARES
FLANDERS CORPORATION
COMMON SHARES
To Be Offered by Several Holders of the
Common Shares of Flanders Corporation
This Prospectus relates to the resale by certain securityholders (the
"Selling Securityholders") of up to an aggregate of 4,773,519 shares of common
stock, $.001 par value (the "Common Shares") of Flanders Corporation
("Flanders" or the "Company"), which were previously acquired by such Selling
Securityholders. The distribution of the Common Shares by the Selling
Securityholders currently is not subject to any underwriting agreement.
The Common Shares registered for resale hereby are being registered
pursuant to the Company's obligations contained in written agreements with the
Selling Securityholders. The Selling Securityholders may elect to sell all, a
portion of, or none of the Common Shares offered by them hereunder.
The Common Shares are traded on the Nasdaq National Market System
("Nasdaq") under the symbol "FLDR." On June 25, 1997, the last reported sales
price of the Common Shares, as reported by Nasdaq was $6.19 per share.
The Selling Securityholders may sell the Common Shares from time to time
either in underwritten public offerings, in transactions pursuant to Rule 144
under the Securities Act of 1933, as amended (the "Securities Act"), in
privately negotiated transactions, in ordinary brokers' transactions through
the facilities of Nasdaq or otherwise, at market prices prevailing at the time
of such sale, at prices relating to such prevailing market prices, or at
negotiated prices. The Company will not receive any of the proceeds from the
sale of Common Shares by the Selling Securityholders. The net proceeds to the
Selling Securityholders will be the proceeds received by them upon such sales,
less brokerage commissions. All expenses of registration incurred in
connection with the registration of the Common Shares, other than any
underwriting or brokerage discounts, commissions and selling expenses with
respect to the Common Shares being sold by the Selling Securityholders, will be
borne by the Company. There can be no assurance that the Selling
Securityholders will sell any or all of the Common Shares registered hereunder.
See "Plan of Distribution."
THE PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
PRIOR TO PURCHASE, EACH PROSPECTIVE INVESTOR SHOULD CONSIDER VERY CAREFULLY THE
INFORMATION PRESENTED UNDER THE CAPTION "RISK FACTORS" AS WELL AS THE OTHER
INFORMATION SET FORTH IN THIS PROSPECTUS. SEE "RISK FACTORS" LOCATED ON PAGE
3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Date of this Prospectus is June 27, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at its regional offices located at 7 World Trade
Center, 13th Floor, New York, New York 10048 and at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
may be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a web site (http://www.sec.gov) that contains reports, proxy
statements, and other information regarding registrants, such as the Company,
that file electronically with the Commission. The Company's Common Shares are
listed on Nasdaq and similar information can be inspected and copied at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement (the
"Registration Statement") with respect to the Common Shares offered hereby.
This Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information contained in the Registration Statement and the
exhibits thereto. For further information with respect to the Company and the
Common Shares offered hereby, reference is made to the Registration Statement,
including the exhibits thereto. Statements contained herein concerning the
provisions of any documents filed as an exhibit to the Registration Statement
or otherwise filed with the Commission are not necessarily complete and, in
each instance, reference is made to the copy of such document as so filed.
Each such statement is qualified in its entirety by such reference.
No person is authorized to give any information or make any representation
other than those contained or incorporated by reference in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities offered hereby in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been filed by the Company with the Commission
and are hereby incorporated by reference into this Prospectus: (1) Annual
Report on Form 10-K for the fiscal year ended December 31, 1996; (2) Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997; and (3) Description
of Capital Stock contained in the Company's registration statement on Form 8-A,
including all amendments or reports filed for the purpose of updating such
description. All other documents and reports filed pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be made a part hereof from
the respective dates such documents and reports are filed.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all documents incorporated herein by reference (not including
the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in the document which this Prospectus incorporates).
Requests for such documents should be directed to Steven K. Clark, Chief
Financial Officer, Flanders Corporation, 531 Flanders Filters Road, Washington,
North Carolina 27889; telephone (919) 946-8081.
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RISK FACTORS
Investment in the Common Shares offered hereby involves a high degree of
risk including, but not limited to, the risk factors described below.
Prospective investors should carefully consider, among other things, the
following factors concerning the business of the Company and the offering, and
should consult independent advisors as to the technical, tax, business and
legal considerations regarding an investment in the Common Shares.
Need for Additional Financing for Future Acquisitions
The Company believes that the revenues from current operations along with
the proceeds from prior offerings will provide the Company with sufficient
capital to fund continuing operations for the foreseeable future. However, to
continue its growth through acquisition, substantial additional debt or equity
financing may be needed. There can be no assurance that the Company will be
able to obtain additional debt or equity capital to meet its future
requirements on satisfactory terms, if at all. Failure to obtain sufficient
capital could materially adversely affect the Company's acquisition strategy.
Integration of Acquired Companies
The Company recently acquired Charcoal Services Corporation ("CSC"), Air
Seal Filter Housing, Inc. ("Air Seal") and Precisionaire, Inc.
("Precisionaire"). These companies were managed separately prior to their
acquisition by the Company. Consequently, these companies have operated under
different management philosophies, management teams and marketing strategies.
Integration of these companies may significantly strain the Company's
management, financial and other resources. There can be no assurance that the
Company's systems, procedures and controls will be adequate to accommodate
integration of these companies. Failure to successfully integrate these
companies could materially adversely affect the Company's business and results
of operation. Additionally, an essential component of the Company's
acquisition strategy is improving the operating efficiency, output and capacity
of each acquired company and the facilities they operate. This process may
include the repair or replacement of outdated and inefficient equipment to
improve operations and output. There can be no assurance that the Company can
improve the efficiency of the acquired companies in a cost effective manner.
Failure to do so could materially adversely affect the Company's business and
results of operations.
Need for Technical Employees
The Company's future operating results depend in part upon its ability to
retain and attract qualified engineering, manufacturing, technical, sales and
support personnel for its operations. Competition for such personnel is
intense, and there can be no assurance that the Company will be successful in
attracting or retaining such personnel. The failure to attract or retain such
persons could materially adversely affect the Company's business and results of
operations. The Company's expansion may also significantly strain the
Company's management, financial and other resources. There can be no assurance
that the Company's systems, procedures and controls will be adequate to support
the Company's operations.
Management of Growth
The Company's revenues increased by approximately forty-five percent (45%)
from 1994 to 1995 and with the Company's recent acquisitions, the Company's
revenues increased approximately eighty-nine percent (89%) from 1995 to 1996.
There can be no assurance that the Company will continue to expand at this
rate, or at all. If the Company does continue to grow, the additional growth
will place burdens on management to manage such growth while maintaining the
Company's profitability. Additional growth may require the Company to recruit
and train additional management personnel in the areas of corporate management,
sales, accounting, marketing, research and development and operations. There
can be no assurance that the Company will be able to do so.
Technological Change; Importance of Timely Product Introduction
The high-performance air filtration industry is subject to technological
change and new product introductions and enhancements. As of December 31,
1996, approximately thirty percent (30%) of the Company's revenues resulted
from sales of high-performance filtration products which are especially
vulnerable to new technology development. The Company's ability to remain
competitive will depend in part upon its ability to anticipate such
technological changes, to develop new and enhanced filtration systems and to
introduce these systems at competitive prices in a timely and cost-efficient
manner. There can be no assurance that the Company will successfully
anticipate future technological changes or that the technologies or systems
developed by others will not render the Company's technology obsolete. In
addition, new product introductions or enhancements by the Company's
competitors could cause a decline in sales or loss of market acceptance of the
Company's existing products. Increased competitive pressure could also lead to
intensified price-based competition resulting in lower prices and profit
margins, which could materially adversely affect the Company's business and
results of operations.
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Acquiring and Maintaining Equipment
The Company uses technologically advanced equipment, for which
manufacturers may have limited production capability or service experience,
which could result in delays in the acquisition and installation of such
equipment or extended periods of down-time in the event of malfunction or
equipment failure. Any such extended period of down-time or delay in
acquisition or installation for any critical equipment could have a material
adverse impact on the Company, its financial condition and operations.
Fluctuation of Quarterly Operating Results
Historically, the Company's business has been seasonal, with a substantial
percentage of its sales occurring during the first quarter and fourth quarter
of each year. The Company's recent acquisitions appear to be counter cyclical,
with a greater percentage of sales occurring in the summer months. The Company
believes period-to-period comparisons of its quarterly financial results are
not necessarily meaningful and should not be relied upon as an indication of
future performance.
Potential Environmental Risks
The Company's business and products may be significantly influenced by the
constantly changing body of environmental laws and regulations, which require
that certain environmental standards be met and impose liability for the
failure to comply with such standards. While the Company endeavors at each of
its facilities to assure compliance with environmental laws and regulations,
there can be no assurance that the Company's operations or activities, or
historical operations by others at the Company's locations, will not result in
civil or criminal enforcement actions or private actions that could have a
materially adverse affect on the Company.
Additionally, the Company is currently being monitored by the United States
Environmental Protection Agency ("EPA") for possible environmental
contamination at one of its main facilities. The Company has entered into an
agreement with the EPA to conduct monthly monitoring of groundwater. The
Company estimates the monitoring will last from three to five years, and
believes the total cost will not exceed $45,000. The Company has received a
limited indemnification from Thomas Allan, Robert Amerson and Steven Clark
(directors, officers and shareholders of the Company) of approximately $975,000
with respect to the claims by the EPA; however, there can be no assurance that
the amount of this indemnification will be sufficient to cover the aggregate of
liabilities asserted by the EPA.
Product Liability; Development of New Products
The Company is subject to possible liability for damages arising from
filter failure and failure of a new product to perform as specified. Any such
liability could damage the Company's reputation and/or have a material adverse
affect on the Company's business and/or financial condition. The Company also
plans to develop new products as part of its strategy to increase the size and
customer base of the air filtration market. There can be no assurance that the
Company will be successful in developing the new products or that any product
developed will be commercially viable.
Acquisition Strategy
The Company's acquisition strategy exposes the Company to the potential
risks inherent in assessing the value, strengths, weaknesses, contingent or
other liabilities and potential profitability of acquisition candidates and in
integrating the operations of acquired companies. Although the Company
generally has been successful in pursuing these acquisitions, there can be no
assurance that acquisition opportunities will continue to be available, that
the Company will have access to the capital required to finance potential
acquisitions, that the Company will continue to acquire businesses or that any
business acquired will be integrated successfully or prove profitable. The
Company has no specific agreements with respect to future acquisitions, but is
continuing to investigate potential acquisition opportunities.
Competition
The Company currently faces significant competition in its business
activities, and this competition may increase as new competitors enter the
market. Several of these competitors may have longer operating histories and
greater financial, marketing and other resources than the Company. There can
be no assurance that the Company will be able to compete successfully with
existing or new entrant companies.
Dependence on Key Personnel
The Company's success will depend in significant part upon the continued
contributions of its officers and key personnel, many of whom would be
difficult to replace. The Company has entered into employment agreements with
each of Robert Amerson, its President, Steven K. Clark, its Vice President and
Chief Financial Officer and Gustavo Hernandez, its Vice President of
Operations. The loss of any
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key person could materially adversely affect the business, financial condition
and results of operations of the Company. The Company maintains $2,000,000 worth
of "key man" life insurance on each of Robert Amerson and Steven Clark.
Control By Management
The directors and executive officers of the Company own approximately
forty-four percent (44%) of the outstanding common stock of the Company. Such
shareholders effectively control the business and affairs of the Company.
Furthermore, Robert Amerson and Steven Clark have options to purchase seventy-
nine percent (79%) of the shares of common stock of the Company owned by A.
Russell Allan, III and Thomas T. Allan (representing approximately thirty
percent (30%) of the Company's outstanding shares). Additionally, management
currently owns options, which if exercised, will result in management owning an
aggregate of approximately sixty-two percent (62%) of the outstanding common
stock of the Company.
No Dividends
The Company has not declared or paid, and does not plan to declare or pay,
any cash or other dividends in the foreseeable future. It is anticipated that
any earnings will be retained to finance the Company's operations and growth.
Additionally, under the terms of its revolving credit line with NationsBank,
N.A., the Company is prohibited from paying dividends without NationsBank's
prior written consent.
Volatility of Stock Price
The Company has only recently listed its common stock on Nasdaq. The market
price of the Company's common stock is therefore expected to be volatile for
the foreseeable future. The Company believes factors such as quarterly
fluctuations in results of operations, announcements of new orders by the
Company and changes in either earnings estimates of the Company or investment
recommendations by stock market analysts may cause the market price of the
Company's stock to fluctuate, perhaps substantially. In addition, in recent
years the stock market in general has experienced extreme price fluctuations,
and such extreme price fluctuations may continue. These broad market and
industry fluctuations may adversely affect the market price of the Company's
common stock.
Exercise of Options and Warrants; Possible Issuance of Additional Shares
The exercise price of the Company's outstanding options and warrants may be
less than the market price of the Company's common stock at the time such
options and warrants are exercised. Accordingly, for the life of such options
and warrants, the holders are given the opportunity to profit from a rise in
the market price of such underlying stock without assuming the risk of
ownership. So long as such options and warrants remain unexercised, the terms
under which the Company could obtain additional equity financing may be
adversely affected. Moreover, the holders of such options and warrants may be
expected to exercise them at a time when the Company could in all likelihood be
able to obtain any needed capital by a new offering of its securities on terms
more favorable than those provided by such options and warrants. If the
options and warrants are exercised, the interests of the Company's shareholders
may be diluted proportionately.
The Company Board of Directors (the "Board") has the power to issue common
stock and/or preferred stock without shareholder approval, up to the number of
authorized shares set forth in the Company's Articles of Incorporation (the
"Articles"). To date, the Company has outstanding options to employees,
officers and directors of the Company representing 6,824,670 shares in the
aggregate, 6,723,320 of which were exercisable as of June 19, 1997.
Additionally, the holders of the Company's 10% Convertible Notes can convert
such notes into common stock at the lesser of eighty-two percent (82%) of the
average closing bid price for the immediately preceding seven (7) trading days
or $9.00. As of June 19, 1997, such holders have converted $800,000 of the
Convertible Notes, for an aggregate of 102,555 shares of common stock. On the
date of such conversion, the holders received warrants to purchase 10,256
shares of common stock at a weighted average exercise price of $8.13 per share.
Additionally, in connection with certain converted Series A Convertible
Subordinated Debentures, certain unrelated investors acquired warrants to
purchase 25,000 shares of common stock at an exercise price of $9.63 per
share. The Company has also issued options and warrants to purchase 975,000
shares of common stock in aggregate to various underwriters, finders and
consultants. The issuance of additional shares by the Company in the future
may result in a reduction of the book value or market price, if any, of the
then outstanding common stock. Issuance of additional shares of common stock
may reduce the proportionate ownership and voting power of existing
shareholders.
Antitakeover Effect of Certain Charter Provisions and State Law
The Company's Articles and Bylaws may discourage certain types of
transactions that involve an actual or threatened change in control of the
Company, unless approved by the Board. Additionally, the Company is subject to
the Control Shares Acquisition Act of the State of North Carolina, which
provides that any person who acquires "control shares" of a publicly held North
Carolina corporation will not have voting rights with respect to the acquired
shares unless a majority of the disinterested shareholders of the corporation
vote to grant
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such rights. This could deprive shareholders of opportunities to realize
takeover premiums for their shares or other advantages that large accumulations
of stock would provide.
The Board also has the authority to issue 10,000,000 shares of preferred
stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further vote
or action by the Company's shareholders. The rights of the holders of common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The issuance
of preferred stock may have the effect of delaying, deterring or preventing a
change in control of the Company without further action by the shareholders and
may adversely affect the voting and other rights of the holders of common
stock. The Company has no present plans to issue shares of preferred stock.
Furthermore, certain provisions of the Company's charter documents may have the
effect of delaying or preventing changes in control or management of the
Company, which could have an adverse affect on the market price of the common
stock.
Dilution
The assumed public offering price for the Common Shares offered hereby is
substantially higher than the book value per share of the Common Shares. As a
result, purchasers of the Common Shares will incur immediate and substantial
dilution.
Shares Eligible for Future Sale
The Company has 18,016,103 shares of common stock outstanding. Of these
shares, 2,898,244 shares are freely tradable without restriction under the
Securities Act as of June 19, 1997. Upon completion of this transaction,
7,671,763 shares will be freely tradable without restriction under the
Securities Act. Also, certain non-affiliate holders of 2,499,538 shares of
common stock outstanding either currently are entitled or will be entitled
within one year to sell their stock in transactions pursuant to Rule 144 under
the Securities Act.
As of June 19, 1997, there were stock options and warrants outstanding to
purchase an aggregate of 7,834,926 shares of common stock, all of which are
currently exercisable.
Additionally, the holders of the Company's 10% Convertible Notes can
convert such notes into common stock at the lesser of eighty-two percent (82%)
of the average closing bid price for the immediately preceding seven (7)
trading days or $9.00. As of June 19, 1997, such holders have converted
$800,000 of the Convertible Notes, for an aggregate of 102,555 shares of common
stock. On the date of such conversion, the holders received warrants to
purchase 10,256 shares of common stock.
Furthermore, certain minority shareholders of Airseal West, Inc., a
majority owned subsidiary of the Company ("Airseal West"), have the right to
exchange their Airseal West common stock for shares of Company common stock
based on an exchange rate to be determined by Airseal West's pre-tax earnings.
Holders of approximately 4,906,779 shares of common stock, 4,773,519 shares
of which are being registered herein, and holders of 7,510,256 options or
warrants to purchase common stock, or their transferees, are entitled to
certain rights with respect to the registration of such shares under the
Securities Act. Under the terms of an agreement between the Company and such
holders, if the Company proposes to register any of its securities under the
Securities Act, either for its own account or the account of other security
holders exercising registration rights, the holders are entitled to notice of
such registration and are entitled to include shares of such common stock
therein; the registration rights provide, however, among other conditions, that
the underwriters of any offering have the right to limit the number of such
shares included in such registration. In addition, the shareholders benefiting
from these rights may require the Company, on not more than one occasion, to
file a registration statement under the Securities Act with respect to such
shares, on Form S-3, if such Form is available to the Company, subject to
certain conditions and limitations. Certain minority shareholders of Airseal
West and various other individuals who were sellers in Flanders' acquisition of
Precisionaire and Air Seal, will receive registration rights if and when they
acquire Flanders common stock pursuant to the terms of their agreements with
Flanders.
The Company makes no prediction as to the effect, if any, that future sales
of shares or the availability of shares for future sale will have on the
prevailing market price of the common stock. Sales of substantial amounts of
the Company's common stock in the public market or the perception that such
sales could occur could have an adverse affect on the prevailing market price
of the common stock.
Sale of Shares Upon Registration
Upon the effective date of this Registration Statement, 4,773,519 shares of
common stock may be sold without restriction by the Selling Securityholders.
The Selling Securityholders are not restricted as to the price or prices at
which they may sell the Common Shares. Sales of the Common Shares at less than
market prices may depress the market price of the Company's common stock.
Moreover, the Selling Securityholders are not restricted as to the number of
shares which may be sold at any one time, and it is possible that a significant
number of shares could be sold at the same time.
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Dependence on Manufacturer's Representatives
The majority of the Company's sales are to manufacturer's representatives
and regional filtration distributors who offer their customers a complete line
of air filtration products. Many of the Company's representatives and
distributors have indicated a willingness to offer the Company's products
exclusively now that the Company offers a broader range of products, however,
the Company does not have any written agreements with such distributors that
require exclusivity for the Company's entire product line. These
representatives and distributors may decide to work exclusively with some other
company for various reasons, thus, the current distribution channels would be
unavailable. A lack of adequate distribution channels would adversely affect
the Company's financial condition and operations.
Forward-Looking Statements and Associated Risks
This Prospectus, including all documents incorporated by reference,
includes "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements other than statements
of historical facts included in this Prospectus (and in documents incorporated
by reference), regarding the Company's financial position, business strategy
and plans and objectives of management of the Company for future operations,
are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to be correct.
Important factors that could cause actual results to differ materially from the
Company's expectations are disclosed elsewhere in this Prospectus. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by this section.
THE COMPANY
The Company designs, manufactures and markets a broad range of air
filtration products ranging from high performance laminar flow High Efficiency
Particulate Air ("HEPA") filters and charcoal filters for semiconductor
manufacturing facilities, to residential furnace filters. The Company's air
filtration products are utilized by many industries, including those associated
with commercial and residential heating, ventilation and air conditioning
systems (commonly known as "HVAC" systems), semiconductor manufacturing, ultra-
pure materials, biotechnology, pharmaceuticals, synthetics, nuclear power and
nuclear materials processing. The Company's customers include Abbot
Pharmaceuticals, E.I. Dupont, Home Depot, Inc., Lucent Technologies, Inc.,
Merck & Co., Inc., Upjohn Co., Walmart Stores, Inc., Westinghouse Electric
Corp., and several large computer chip manufacturers.
Although, the Company historically has specialized in HEPA and medium
efficiency filters and equipment, the Company implemented a strategy of growth
by acquisition in December 1995. Consequently, in 1996, the Company expanded
its product line through the purchase of three other companies: CSC, which
specializes in charcoal filtration systems for the removal of gaseous
contaminants, Air Seal, which specializes in filter housings and customized
industrial HVAC equipment, and Precisionaire which specializes in the
manufacture and sale of filter products ranging from mid-range ASHRAE grade
filters through residential furnace filters. The Company's current business
strategy is to: (i) increase the Company's market share; (ii) introduce new
products and (iii) increase operating efficiencies.
Frost & Sullivan, a leading industry analyst, estimates that the total
domestic industrial air filtration market was approximately $1.15 billion in
1995 and $1.2 billion in 1996. Management believes the domestic market for
retail and wholesale off-the-shelf air filters and related products exceeded
$500 million in 1996. The forces driving the air filtration market have evolved
over the past decade from concerns related to the preservation of machinery and
equipment to present day requirements for air quality and production
efficiency. Because of these requirements, air filtration products are
essential to many industries, including those associated with semiconductor
manufacturing, commercial and residential HVAC systems, ultra-pure materials
manufacturing, biotechnology, pharmaceuticals, synthetics, nuclear power and
nuclear materials processing. Increasingly, companies are devoting resources
to air filtration products to enhance efficiency and productivity.
Management believes the world market for its products currently is more
than five times the total domestic market, and that as public awareness of the
benefits of living and working in clean environments increases, this market
will expand. The world air filtration market is extremely fragmented, with
over 100 companies ranging in size from large companies with over $200 million
in revenues per year, to privately held niche manufacturing firms on which no
revenue data is available.
Elite Acquisitions, Inc. ("Elite"), the predecessor of the Company, was
incorporated on July 2, 1986 in the State of Nevada. Effective December 29,
1995, Elite acquired Flanders Filters, Inc. ("FFI") in a stock for stock
exchange. Prior to the acquisition of FFI, Elite was a "public shell" company,
with no significant operations or assets. The acquisition of FFI was accounted
for as a reverse acquisition meaning that for accounting purposes FFI is
treated as having acquired Elite and the historical financial statements of FFI
became the historical financial statements of Elite. Therefore, all references
to the historical activities of the Company refer to the historical activities
of FFI.
7
<PAGE>
In January 1996, Elite formed a new subsidiary, the Company, under the laws
of North Carolina, and changed its domicile to North Carolina through a
reincorporation merger with and into the Company. As part of the
reincorporation merger, Elite changed its name to Flanders Corporation. The
reincorporation merger did not result in any material change in the Company's
business, management, assets, liabilities or net worth.
The Company also operates the following subsidiaries to help implement its
business strategies. In February, 1994, the Company organized Flanders Airpure
Products Company, LLC ("Airpure"), as a sixty-three percent (63%) owned
subsidiary of FFI. Airpure manufactures and markets industrial and commercial
bags, pleats and industrial grade HEPA filters. In March 1996, the Company
formed a wholly owned subsidiary of FFI, Airpure Products West, Inc. ("Airpure
West"), to manufacture Airpure's products for the western United States. In
June 1996, the Company formed a wholly owned subsidiary in Singapore, Flanders
International Pte, Ltd. ("FIL"), to market and eventually manufacture the
Company's products in the Pacific Rim. In February 1997, the Company organized
Airseal West, a sixty percent (60%) owned subsidiary of Flanders, to
manufacture specialty and standard housings for air filtration and HVAC
systems, as well as integrated custom industrial-grade HVAC systems and other
specialty products.
The Company's headquarters are located at 531 Flanders Filters Road,
Washington, North Carolina 27889, (919) 946-8081.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Common Shares offered hereby. The Company will pay the costs of this offering,
which are estimated to be $107,154.
8
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth certain information as of June 19, 1997,
with respect to the Selling Securityholders. The shares to be sold by the
Selling Securityholders represent shares of common stock currently owned by the
Selling Securityholders. Beneficial ownership after this offering will depend
on the number of shares of common stock actually sold by the Selling
Securityholders. Except as otherwise indicated, to the knowledge of the
Company, all persons listed below have sole voting and investment power with
respect to their securities, except to the extent that authority is shared by
spouses under applicable law or as otherwise noted below. Except for the
purchase of the Common Shares and except as noted below, none of the Selling
Securityholders has had any position, office or other material relationship
with the Company within the past three years.
<TABLE>
<CAPTION>
Shares of Common
Shares of Common Stock Stock Being Shares of Common Stock
Name of Selling Beneficially Owned Prior Registered Beneficially Owned After
Securityholder to the Offering for Resale the Offering<F2>
------------------------- ---------------- ------------------------
Number % of Class<F1> Number Number Percent
---------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Patricia A. Alberto 1,000 * 1,000 0 *
Thomas T. Allan<F3,F4> 5,870,950 32.32% 435,000 5,435,950 29.92%
A. Russell Allan, III<F4> 997,844 5.54% 87,212 910,632 5.05%
Craig G. Allen 1,000 * 1,000 0 *
David R. Appert 4,934 * 4,934 0 *
Abraham J. Auerbach 6,000 * 6,000 0 *
Charles R. Baerson 1,000 * 1,000 0 *
Angela Baumann-Estate 4,000 * 4,000 0 *
Michael R. Belmaster 1,000 * 1,000 0 *
Carolyn M. Belongia 1,000 * 1,000 0 *
Robert J. Bergeron 1,000 * 1,000 0 *
Timothy & Elaine Bergeron 2,754 * 2,754 0 *
Theodore & Phyllis Bergeron 1,000 * 1,000 0 *
Seymour Berman-Trust 4,000 * 4,000 0 *
Harry W. Bestow 1,000 * 1,000 0 *
James G. Blackburn 7,866 * 7,866 0 *
Waldemar & Malgorzata
Bladek 1,200 * 1,200 0 *
Michael & Revy Bledsoe 9,834 * 9,834 0 *
Mark R. Blemaster 1,000 * 1,000 0 *
Michael Blumenfeld 1,000 * 1,000 0 *
Donald Borghoff 63,268 * 63,268 0 *
Eugene Borghoff 2,550 * 2,550 0 *
- -----------------------------
*Less than one percent (1%)
<FN>
<F1>
Includes all Common Shares beneficially owned by Selling Securityholders as
a percentage of the 18,016,103 shares of common stock outstanding on June
19, 1997, together with all applicable options and warrants for such Selling
Securityholders exercisable within sixty (60) days. Shares of common stock
subject to options or warrants exercisable within sixty (60) days are deemed
outstanding for computing the percentage ownership of the person holding
such options and warrants, but are not deemed outstanding for computing the
percentage of any other person.
<F2>
Assumes that the Selling Securityholder disposes of all of the Common Shares
covered by this Prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants or conversion rights or
additional securities.
<F3>
Thomas T. Allan has served as the Company's Chairman of the Board for over
ten years. The total for Mr. Allan includes 150,000 shares which are subject
to an option to purchase such shares from the Company at $1.00 per share.
<F4>
Includes shares subject to an option in favor of Steven K. Clark, Vice
President of Finance and CFO, and Robert R. Amerson, President and CEO
(3,321,021 shares and 2,214,014, shares respectively), from Thomas T. Allan
and A. Russell Allan, III (4,713,000 shares and 822,035 shares,
respectively). Steven K. Clark and Robert R. Amerson have exercised 100,000
options each; collectively 170,300 from Thomas T. Allan and 29,700 from A.
Russell Allan, III.
</FN>
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Shares of Common Stock Stock Being Shares of Common Stock
Name of Selling Beneficially Owned Prior Registered Beneficially Owned After
Securityholder to the Offering for Resale the Offering<F2>
- ----------------------------- ------------------------- ---------------- ------------------------
Number % of Class<F1> Number Number Percent
---------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Jeff Boyko 18,000 * 18,000 0 *
H.D. Brous & Co., Inc. 14,000 * 14,000 0 *
Leon Budginas 16,000 * 16,000 0 *
Max L. Burdick 4,000 * 4,000 0 *
C E Cord Joint Venture 9,000 * 9,000 0 *
Cameron P. Case 3,650 * 3,650 0 *
Chiropractic Med & Assoc. 3,934 * 3,934 0 *
Dean Clark 10,400 * 10,400 0 *
Clark Fork Med Assoc PC 4,000 * 4,000 0 *
Stephen P. Clark 10,000 * 10,000 0 *
Roger & Sandra Collins 4,400 * 4,400 0 *
Tim Connolly 10,000 * 10,000 0 *
Marcus & Diana Cook 3,968 * 3,968 0 *
Coralline Revocable Trust 4,933 * 4,933 0 *
Edward J. Coralline Jr. 3,933 * 3,933 0 *
Cranshire Capital, L.P. 12,000 * 12,000 0 *
Pauline I. Crespo 3,934 * 3,934 0 *
Pauline I. Crespo-Living Trust 1,200 * 1,200 0 *
Cudd & Co. 138,000 * 138,000 0 *
Joseph A. D'Alessandro 1,968 * 1,968 0 *
Mike P. Darraugh 4,000 * 4,000 0 *
Dale Davis 10,000 * 10,000 0 *
Scott Davis 7,866 * 7,866 0 *
Gerard & Darlene DeBouvre 5,000 * 5,000 0 *
Paul A. Devlin 2,000 * 2,000 0 *
David Dorton 8,000 * 8,000 0 *
John P. Doyle-Trust 4,000 * 4,000 0 *
Gerald and Carol Draga 4,000 * 4,000 0 *
Eagle Growth Ltd Partnership 100,000 * 100,000 0 *
Charles A. Ehredt 1,200 * 1,200 0 *
Robert & Patricia Ellis 2,000 * 2,000 0 *
Terrence H. Ellis 2,000 * 2,000 0 *
Lisa M. Erwin 34,000 * 34,000 0 *
Executive Benefit-Partnership 8,260 * 8,260 0 *
Executive Pension Design, Inc 3,000 * 3,000 0 *
F&S Partnership 6,000 * 6,000 0 *
C. Richard Farmer-Trust 1,800 * 1,800 0 *
Stan Feeley 5,000 * 5,000 0 *
Joseph and Carol Felger 24,000 * 24,000 0 *
Kirk Ferguson 189,280 1.05% 189,280 0 *
Kirk Ferguson - Trust 17,000 * 17,000 0 *
- -----------------------------
*Less than one percent (1%)
<FN>
<F1>
Includes all Common Shares beneficially owned by Selling Securityholders as
a percentage of the 18,016,103 shares of common stock outstanding on June
19, 1997, together with all applicable options and warrants for such Selling
Securityholders exercisable within sixty (60) days. Shares of common stock
subject to options or warrants exercisable within sixty (60) days are deemed
outstanding for computing the percentage ownership of the person holding
such options and warrants, but are not deemed outstanding for computing the
percentage of any other person.
<F2>
Assumes that the Selling Securityholder disposes of all of the Common Shares
covered by this Prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants or conversion rights or
additional securities.
</FN>
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Shares of Common Stock Stock Being Shares of Common Stock
Name of Selling Beneficially Owned Prior Registered Beneficially Owned After
Securityholder to the Offering for Resale the Offering<F2>
- ----------------------------- ------------------------- ---------------- ------------------------
Number % of Class<F1> Number Number Percent
---------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Suzanne Ferguson - Trust 3,000 * 3,000 0 *
John and Anne Ferrone 3,934 * 3,934 0 *
Michael M. Fieseler 2,840 * 2,840 0 *
Rodney J. Finn, Jr. 1,000 * 1,000 0 *
Roy L. Fiorelli 3,000 * 3,000 0 *
Paul and Annette Fischer 5,000 * 5,000 0 *
Jay Fisher 1,000 * 1,000 0 *
Flybridge & Co. 100,000 * 100,000 0 *
Charles & Suzanne Fondell 2,000 * 2,000 0 *
Joseph D. Foreman 4,000 * 4,000 0 *
Joseph D. Foreman-IRA 5,000 * 5,000 0 *
Joan M. Forman 11,892 * 11,892 0 *
James G. Forret 3,600 * 3,600 0 *
Richard and Mary Forte 6,900 * 6,900 0 *
Freedman Family Trust 6,000 * 6,000 0 *
Jack R. Funcik 1,000 * 1,000 0 *
Mary Kay Gabrielsen 5,800 * 5,800 0 *
Stockton Gaines 5,000 * 5,000 0 *
Emmanuel B. Garcia, Jr. 3,934 * 3,934 0 *
Robert J. Gats 4,000 * 4,000 0 *
Gary Gladstein<F3> 23,000 * 20,000 3,000 *
Judith L. Glasner 1,000 * 1,000 0 *
David Goldenberg 1,000 * 1,000 0 *
Goldsmith Gallery Trust 7,866 * 7,866 0 *
Roxanne Googan 5,000 * 5,000 0 *
Colton Gramm 4,000 * 4,000 0 *
Roger M. Grevengoed-IRA 2,910 * 2,910 0 *
Kenneth J. Guenther 1,000 * 1,000 0 *
Jeffrey D. Guenther IRA 1,840 * 1,840 0 *
H&M Capital Inv., Inc.<F4> 400,000 2.18% 65,000 335,000 1.83%
Steven Habisohn 6,000 * 6,000 0 *
Patrick Hanley 6,500 * 6,500 0 *
Haussman Holdings, MV<F5> 112,000 * 100,000 12,000 *
- -----------------------------
*Less than one percent (1%)
<FN>
<F1>
Includes all Common Shares beneficially owned by Selling Securityholders as
a percentage of the 18,016,103 shares of common stock outstanding on June
19, 1997, together with all applicable options and warrants for such Selling
Securityholders exercisable within sixty (60) days. Shares of common stock
subject to options or warrants exercisable within sixty (60) days are deemed
outstanding for computing the percentage ownership of the person holding
such options and warrants, but are not deemed outstanding for computing the
percentage of any other person.
<F2>
Assumes that the Selling Securityholder disposes of all of the Common Shares
covered by this Prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants or conversion rights or
additional securities.
<F3>
Shares beneficially owned include 3,000 shares which are subject to a
warrant to purchase such shares from the Company at $9-5/8 per share.
<F4>
Shares beneficially owned include 335,000 shares which are subject to an
option to purchase such shares from the Company; 135,000 at $2.50 per share,
200,000 at $3.50 per share.
<F5>
Shares beneficially owned include 12,000 shares which are subject to a
warrant to purchase such shares from the Company at $9-5/8 per share.
</FN>
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Shares of Common Stock Stock Being Shares of Common Stock
Name of Selling Beneficially Owned Prior Registered Beneficially Owned After
Securityholder to the Offering for Resale the Offering<F2>
- ----------------------------- ------------------------- ---------------- ------------------------
Number % of Class<F1> Number Number Percent
---------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Karl N. Haws 4,000 * 4,000 0 *
Karl N. Haws, Jr. PDS, Inc. 6,800 * 6,800 0 *
Darlene L. Heath 1,000 * 1,000 0 *
James and Kimberly
Hendrickson 3,000 * 3,000 0 *
James P. Heraty 4,000 * 4,000 0 *
Rex J. Hess, Jr. 3,000 * 3,000 0 *
Jeff Hoblitzell 2,000 * 2,000 0 *
Stephen D. Holthal-IRA 1,000 * 1,000 0 *
Lee A. Hoover 1,200 * 1,200 0 *
Robert J. Horn 1,000 * 1,000 0 *
Shaio Lin Huang 2,500 * 2,500 0 *
Howard & Cheryl L. Huebner 4,933 * 4,933 0 *
James R. Hurckes 1,000 * 1,000 0 *
Lawrence A. Jachec 5,934 * 5,934 0 *
Chris P. Janson 1,000 * 1,000 0 *
Craig Johnson-IRA 3,350 * 3,350 0 *
Kim H. Johnson 2,000 * 2,000 0 *
Melinda Peters Jones 1,968 * 1,968 0 *
Rick Jones 8,000 * 8,000 0 *
Gary Joyner 5,200 * 5,200 0 *
Patrick J. Kaack 1,000 * 1,000 0 *
Thomas L. Kastner, Jr. 1,000 * 1,000 0 *
Christopher F. Keller 40,000 * 40,000 0 *
Peter Kenyeres 7,866 * 7,866 0 *
Fred Ketcher 8,000 * 8,000 0 *
Ketchum & Walton Co.
Profit Sharing Plan 9,833 * 9,833 0 *
Keyway Investments<F3> 47,558 * 45,000 2,558 *
Timothy J. Kilty 10,000 * 10,000 0 *
Richard G. Kleine 5,968 * 5,968 0 *
Clifford F. Klose & Marjorie
J. Klose - Trust 27,000 * 27,000 0 *
Michelle M. Kluesner 3,100 * 3,100 0 *
John and Michelle Kluesner 2,750 * 2,750 0 *
Lewis Knudson 20,000 * 20,000 0 *
Kenneth & Darlene Kogut 2,000 * 2,000 0 *
Alvin Konner 4,000 * 4,000 0 *
Roger Scott Koontz 10,000 * 10,000 0 *
- -----------------------------
*Less than one percent (1%)
<FN>
<F1>
Includes all Common Shares beneficially owned by Selling Securityholders as
a percentage of the 18,016,103 shares of common stock outstanding on June
19, 1997, together with all applicable options and warrants for such Selling
Securityholders exercisable within sixty (60) days. Shares of common stock
subject to options or warrants exercisable within sixty (60) days are deemed
outstanding for computing the percentage ownership of the person holding
such options and warrants, but are not deemed outstanding for computing the
percentage of any other person.
<F2>
Assumes that the Selling Securityholder disposes of all of the Common Shares
covered by this Prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants or conversion rights or
additional securities.
<F3>
Shares beneficially owned include 2,558 shares which are subject to a
warrant to purchase such shares from the Company at $8.16 per share.
</FN>
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Shares of Common Stock Stock Being Shares of Common Stock
Name of Selling Beneficially Owned Prior Registered Beneficially Owned After
Securityholder to the Offering for Resale the Offering<F2>
- ----------------------------- ------------------------- ---------------- ------------------------
Number % of Class<F1> Number Number Percent
---------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
David P. Kouwe 1,000 * 1,000 0 *
Gary Kukla 1,000 * 1,000 0 *
Kenneth A. Lackner 3,933 * 3,933 0 *
Lake Shore Consulting 6,000 * 6,000 0 *
Andre and Mary Lareau 6,000 * 6,000 0 *
Andre G. Lareau-Trust 1,968 * 1,968 0 *
H. Kitchener Layland, Jr.
Living Trust 20,000 * 20,000 0 *
James H. Lee-C/F-Vivian B.
Lee 4,000 * 4,000 0 *
Maryfran & Carl Leno 1,000 * 1,000 0 *
David W. Lentz 1,000 * 1,000 0 *
Thomas Lerch 7,866 * 7,866 0 *
Seymour & Penny Leventhal 1,000 * 1,000 0 *
Frank A. Lucchese 1,968 * 1,968 0 *
Carl & Marsha L. Luna 5,000 * 5,000 0 *
James and Rebecca Manning 1,000 * 1,000 0 *
Ed Marucci 30,000 * 30,000 0 *
Joseph J. Mausser 10,000 * 10,000 0 *
James F. McMahon 8,000 * 8,000 0 *
Mike McMahon 2,400 * 2,400 0 *
Terry Ann McMahon-Trust 1,000 * 1,000 0 *
Mike McMahon-Trust 600 * 600 0 *
Mike McMurray 1,000 * 1,000 0 *
Terry Meek 4,800 * 4,800 0 *
Kenneth L. Merckx 8,000 * 8,000 0 *
Mark Metts-IRA 5,000 * 5,000 0 *
Fred M. Meyer 7,278 * 7,278 0 *
Midgley Huber, Inc. 14,834 * 14,834 0 *
Ryan D. Miller 3,500 * 3,500 0 *
David Mock<F3> 581,300 3.14% 81,300 500,000 2.70%
Keith Morris 2,000 * 2,000 0 *
Raymond E. Munoz-IRA 3,000 * 3,000 0 *
Orlando Nickerson 9,000 * 9,000 0 *
Glenn W. Nitzsche 6,000 * 6,000 0 *
Richard F. Nolan 4,000 * 4,000 0 *
Noel Nosseck 6,000 * 6,000 0 *
Stephen J. Notaro 2,000 * 2,000 0 *
Ryan K. O'Conner 1,000 * 1,000 0 *
- -----------------------------
*Less than one percent (1%)
<FN>
<F1>
Includes all Common Shares beneficially owned by Selling Securityholders as
a percentage of the 18,016,103 shares of common stock outstanding on June
19, 1997, together with all applicable options and warrants for such Selling
Securityholders exercisable within sixty (60) days. Shares of common stock
subject to options or warrants exercisable within sixty (60) days are deemed
outstanding for computing the percentage ownership of the person holding
such options and warrants, but are not deemed outstanding for computing the
percentage of any other person.
<F2>
Assumes that the Selling Securityholder disposes of all of the Common Shares
covered by this Prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants or conversion rights or
additional securities.
<F3>
Shares beneficially owned include 500,000 shares which are subject to an
option to purchase such shares from the Company at $2.50 per share.
</FN>
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Shares of Common Stock Stock Being Shares of Common Stock
Name of Selling Beneficially Owned Prior Registered Beneficially Owned After
Securityholder to the Offering for Resale the Offering<F2>
- ----------------------------- ------------------------- ---------------- ------------------------
Number % of Class<F1> Number Number Percent
---------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Jerry O'Connor 3,080 * 3,080 0 *
Henry William Obartuch-II 21,004 * 21,004 0 *
Roslyn Orlin 10,000 * 10,000 0 *
OSL Orthopedic Surgery,
LTD Profit Sharing Plan 6,900 * 6,900 0 *
John P. Patrou 5,000 * 5,000 0 *
Ellis L. Patterson 1,000 * 1,000 0 *
Mark Pflanz 8,000 * 8,000 0 *
Jerry A. Phillips-Trust 5,000 * 5,000 0 *
William F. Pragalz 15,000 * 15,000 0 *
Steven and Monica Prior 1,000 * 1,000 0 *
William J. Reczek 8,000 * 8,000 0 *
Richard & Diana Redmond 4,000 * 4,000 0 *
Lerman V. Reece Sr. 6,000 * 6,000 0 *
Reunitz Associates, Inc. 4,000 * 4,000 0 *
Greg Richards 1,000 * 1,000 0 *
Bill Robbins 2,000 * 2,000 0 *
Charles & Linda Rogers 11,000 * 11,000 0 *
Patrick J. Rodgers-Trust 2,000 * 2,000 0 *
Gary & Michelle Rohrer 1,000 * 1,000 0 *
Harvey Rosen 55,000 * 55,000 0 *
Jerrold S. Rosenwasser 1,000 * 1,000 0 *
Amy P. Roxas 1,000 * 1,000 0 *
Robert W. Roy 6,862 * 6,862 0 *
Donelda D. Royal 2,000 * 2,000 0 *
Leo W. Royal-IRA 3,000 * 3,000 0 *
Leo W. Royal-Trust 1,968 * 1,968 0 *
Karen J. Royal-Trust 1,968 * 1,968 0 *
Barbara Ann Rutkowski 3,933 * 3,933 0 *
SADR LLP 1,968 * 1,968 0 *
Sean F. Ryan 5,134 * 5,134 0 *
Walter Schenker 20,000 * 20,000 0 *
Dan L. Schlapkohl 10,000 * 10,000 0 *
Daryl E. Schloz 5,234 * 5,234 0 *
Gary & Rose Marie
Schmedding 9,866 * 9,866 0 *
Schmidt Family Trust 5,000 * 5,000 0 *
Percy J. Schramek
Living Trust 3,000 * 3,000 0 *
John P. Schweda 2,000 * 2,000 0 *
Jeffery Senglaub 23,440 * 23,440 0 *
- -----------------------------
*Less than one percent (1%)
<FN>
<F1>
Includes all Common Shares beneficially owned by Selling Securityholders as
a percentage of the 18,016,103 shares of common stock outstanding on June
19, 1997, together with all applicable options and warrants for such Selling
Securityholders exercisable within sixty (60) days. Shares of common stock
subject to options or warrants exercisable within sixty (60) days are deemed
outstanding for computing the percentage ownership of the person holding
such options and warrants, but are not deemed outstanding for computing the
percentage of any other person.
<F2>
Assumes that the Selling Securityholder disposes of all of the Common Shares
covered by this Prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants or conversion rights or
additional securities.
</FN>
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Shares of Common Stock Stock Being Shares of Common Stock
Name of Selling Beneficially Owned Prior Registered Beneficially Owned After
Securityholder to the Offering for Resale the Offering<F2>
- ----------------------------- ------------------------- ---------------- ------------------------
Number % of Class<F1> Number Number Percent
---------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Julie A. Senglaub 2,000 * 2,000 0 *
James Senglaub 2,000 * 2,000 0 *
Harry F. Serrano 10,000 * 10,000 0 *
Gerald & Sue Shook 2,375 * 2,375 0 *
Stephen G. Simpson 2,000 * 2,000 0 *
Steven Slawson 20,000 * 20,000 0 *
Ruben E. Smith 10,000 * 10,000 0 *
Audrey Snell 5,000 * 5,000 0 *
Richard W. Snyder 1,235 * 1,235 0 *
Debra L. Solis 2,300 * 2,300 0 *
John T. Solis 2,000 * 2,000 0 *
John Spiezia 4,000 * 4,000 0 *
Norman W. Spindel 4,000 * 4,000 0 *
Allan and Carolyn Stahl 1,000 * 1,000 0 *
Andrew Stallman<F3> 255,000 1.42% 250,000 5,000 *
Larry J. Steffen 2,100 * 2,100 0 *
Karle J. Steffen 2,475 * 2,475 0 *
Stephen Swindle 6,000 * 6,000 0 *
Joseph and Linda Taylor 3,000 * 3,000 0 *
Town Carpet Service, Inc. 1,000 * 1,000 0 *
Alan L. Train 1,968 * 1,968 0 *
Dwayne D. Trautman 2,000 * 2,000 0 *
Barry G. Trine 1,968 * 1,968 0 *
Loren and Katherine Troyer 9,000 * 9,000 0 *
Mark Tucker 1,000 * 1,000 0 *
Michael Tucker 1,000 * 1,000 0 *
Gary C. Turner 2,460 * 2,460 0 *
Russell E. Utterback 2,600 * 2,600 0 *
Randolph J. Valenta 5,000 * 5,000 0 *
Peter J. Verzani 2,000 * 2,000 0 *
Kenneth and Mona Volkening 3,500 * 3,500 0 *
Mona L. Volkening 1,000 * 1,000 0 *
John D. Vreugdenhil 6,000 * 6,000 0 *
Dennis J. Wagner 2,000 * 2,000 0 *
Michael W. Wagner, III 2,000 * 2,000 0 *
James A. Walton 9,833 * 9,833 0 *
Jerrold Wanek 4,000 * 4,000 0 *
John Watson 7,500 * 7,500 0 *
Christine Wellhausen 1,400 * 1,400 0 *
- -----------------------------
*Less than one percent (1%)
<FN>
<F1>
Includes all Common Shares beneficially owned by Selling Securityholders as
a percentage of the 18,016,103 shares of common stock outstanding on June
19, 1997, together with all applicable options and warrants for such Selling
Securityholders exercisable within sixty (60) days. Shares of common stock
subject to options or warrants exercisable within sixty (60) days are deemed
outstanding for computing the percentage ownership of the person holding
such options and warrants, but are not deemed outstanding for computing the
percentage of any other person.
<F2>
Assumes that the Selling Securityholder disposes of all of the Common Shares
covered by this Prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants or conversion rights or
additional securities.
<F3>
Shares beneficially owned include 5,000 shares which are subject to a
warrant to purchase such shares from the Company at $9-5/8 per share.
</FN>
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Shares of Common Stock Stock Being Shares of Common Stock
Name of Selling Beneficially Owned Prior Registered Beneficially Owned After
Securityholder to the Offering for Resale the Offering<F2>
- ----------------------------- ------------------------- ---------------- ------------------------
Number % of Class<F1> Number Number Percent
---------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Westpointe Partners, LP 10,000 * 10,000 0 *
Chad M. & Scott D. Wahlen 1,000 * 1,000 0 *
Chalmer C. Wilkins 1,000 * 1,000 0 *
Daniel & Shirley Witonski 1,000 * 1,000 0 *
Wayne W. Woodworth 7,350 * 7,350 0 *
Wayne W. Woodworth-IRA 3,000 * 3,000 0 *
David G. Yacullo 3,000 * 3,000 0 *
Delisted/Re-Registered<F3>
- -----------------------------
Victor D. Alhadeff<F4> 23,500 * 23,500 0 *
Bert R. Cohen<F5> 26,000 * 26,000 0 *
Ellen M. Dougan 6,000 * 6,000 0 *
J. Lynn Dougan 17,000 * 17,000 0 *
G&N Associates, Ltd. 11,000 * 11,000 0 *
The Galena Group 11,000 * 11,000 0 *
President-Fellows of Harvard 444,444 2.47% 444,444 0 *
LZ Investments, LLC 27,778 * 27,778 0 *
Stuart M. Sloan 14,000 * 14,000 0 *
Fleetfooted & Co.<F6> 500,000 2.78% 500,000 0 *
TRAL & Company 222,222 1.23% 222,222 0 *
TTEES of G E Pension Trust 444,445 2.47% 444,445 0 *
Kenneth D. Tuchman 11,000 * 11,000 0 *
Ronald Weinstein<F7> 23,500 * 23,500 0 *
- -----------------------------
*Less than one percent (1%)
<FN>
<F1>
Includes all Common Shares beneficially owned by Selling Securityholders as
a percentage of the 18,016,103 shares of common stock outstanding on June
19, 1997, together with all applicable options and warrants for such Selling
Securityholders exercisable within sixty (60) days. Shares of common stock
subject to options or warrants exercisable within sixty (60) days are deemed
outstanding for computing the percentage ownership of the person holding
such options and warrants, but are not deemed outstanding for computing the
percentage of any other person.
<F2>
Assumes that the Selling Securityholder disposes of all of the Common Shares
covered by this Prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants or conversion rights or
additional securities.
<F3>
These Selling Securityholders' shares were originally listed on Flanders'
Form S-1 Registration Statement ("Form S-1"); such shares have been
delisted.
<F4>
The Form S-1 registered 5,500 shares.
<F5>
The Form S-1 registered 14,000 shares.
<F6>
The Form S-1 registered 100,000 shares.
<F7>
The Form S-1 registered 5,500 shares.
</FN>
</TABLE>
16
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following statements are subject to the detailed provisions of the
Company's Articles and Bylaws, and are qualified in their entirety by reference
thereto.
Authorized Shares
Under the Company's Articles, the authorized capital stock of the Company
consists of 50,000,000 shares of common stock, par value $.001 per share, and
10,000,000 shares of preferred stock, par value $.001 per share. As of June
19, 1997 there are 18,016,103 shares of common stock issued and outstanding.
No shares of preferred stock have been issued.
Common Stock
Holders of common stock are entitled to one vote for each share on all
matters voted upon by shareholders and have no preemptive or other rights to
subscribe for additional securities of the Company. The shares of common stock
when issued, are fully paid and non-assessable, and no shareholder will be
personally liable for any obligations of the Company solely by reason of being
a shareholder of the Company.
Each share of common stock has an equal and ratable right to receive
dividends when, as and if declared by the Board out of assets legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, the holders of common stock will be entitled to share equally and
ratably in the assets available for distribution after the payment of
liabilities, subject only to any preferential distributions to holders of
preferred stock, if applicable.
Preferred Stock
The Company's Articles authorize the Board, without any vote or action by
the holders of common stock, to issue preferred stock from time to time in one
or more series. The Board is authorized to determine the number of shares and
designation of any series of preferred stock and the dividend rights, dividend
rate, conversion rights and terms, voting rights, redemption rights and terms,
liquidation preferences and sinking fund terms of any series of preferred
stock. Depending upon the terms of preferred stock established by the Board,
any or all series of preferred stock could have preference over the common
stock with respect to dividends and other distributions and upon liquidation of
the Company. Issuance of any such shares with voting powers, or issuance of
additional shares of common stock, would dilute the voting power of the
outstanding common stock. The potential issuance of preferred stock may have
the effect of delaying, deterring or preventing a change in control of the
Company, may discourage bids for the common stock at a premium over the market
price of the common stock and may adversely affect the market price of, and the
voting and other rights of the holders of, the common stock.
10% Convertible Notes
In September 1996, the Company sold $4,000,000 principal amount of 10%
Convertible Notes pursuant to Regulation S to certain unrelated offshore
investors. The 10% Convertible Notes are due and payable on September 20, 1999
and are convertible at any time commencing forty-one (41) days after issuance
into shares of the Company's common stock at a conversation price equal to the
lower of (i) eighty-two percent (82%) of the average closing bid price for the
seven (7) trading days immediately preceding the conversion date, or (ii)
$9.00; provided, however, that in no event shall the conversion price be less
than $5.00; provided further, that in no event shall the holder of the 10%
Convertible Notes be entitled to convert any portion of such notes if such
action would result in beneficial ownership by a holder and its affiliates of
more than 4.9% of the outstanding shares of common stock of the Company. If
the average closing bid price of the Company's common stock over any continuous
seven (7) day trading period is less than $7.38 per share, the Company may
redeem the notes at a price equal to 115% of the outstanding principal amount
of the notes. As of June 19, 1997, such holders have converted $800,000 of the
Convertible Notes, for an aggregate of 102,555 shares of common stock.
In connection with the 10% Convertible Notes, the holders thereof were
given a contractual right to receive, on the date of the conversion of the
notes into common stock, warrants to purchase such number of shares of common
stock equal to ten percent (10%) of the number of common shares issued upon any
such conversion. The exercise price of the warrants is equal to the amount per
share at which the 10% Convertible Notes were converted into common stock. As
of June 19, 1997, the Company has issued warrants to purchase 10,256 shares of
common stock.
Other Warrants
In September 1996, the Company sold $2,500,000 principal amount of Series
A Subordinated Convertible Debentures to certain unrelated investors. Such
debentures were paid in January 1997. In connection with the debentures, the
holders thereof acquired warrants to purchase 25,000 shares of common stock at
an exercise price of $9.63 per share.
17
<PAGE>
In January 1997, the Company issued certain warrants pursuant to the
underwriting agreement relating to the Company's Form S-1 Registration
Statement which was effective January 1997. Such warrants enable the holders
thereof to purchase an aggregate of 140,000 shares of common stock at the
initial exercise price of $ 14.725 per share at any time commencing January 6,
1998 until their expiration on January 6, 2002. The exercise price and number
of shares purchasable upon exercise of the warrants are subject to adjustment
upon the occurrence of certain events.
Stock Options
The Company has reserved (i) 2,000,000 shares of common stock under its
LTI Plan, and (ii) 500,000 shares of common stock under its 1996 Director
Option Plan, for issuance in respect of stock options granted under such plans.
As of June 19, 1997, there were 324,670 outstanding options under the above-
mentioned plans.
The Company has reserved a total of 6,500,000 shares of common stock for
issuance upon the exercise of stock options granted to various officers and
directors. The Company has reserved 3,150,000 of the 6,500,000 shares for
Robert R. Amerson's exercise of the following stock options: 1,150,000 shares
at an exercise price of $1.00; 1,000,000 shares at an exercise price of $2.50;
1,000,000 shares at an exercise price of $7.50. The Company has reserved
3,150,000 of the 6,500,000 shares for Steven K. Clark's exercise of the
following stock options: 1,150,000 shares at an exercise price of $1.00;
1,000,000 shares at an exercise price of $2.50; 1,000,000 shares at an exercise
price of $7.50. The Company has reserved 150,000 of the 6,500,000 shares for
Thomas T. Allan's exercise of 150,000 stock options at an exercise price of
$1.00. The Company has reserved 50,000 of the 6,500,000 shares for William M.
Claytor's exercise of 50,000 stock options at an exercise price of $1.00.
Registration Rights
Holders of 4,906,779 shares of common stock, 4,773,519 of which are
registered hereunder, and holders of 7,510,256 options or warrants to purchase
common stock, or their transferees, are entitled to certain rights with respect
to registration of such shares under the Securities Act. Under the terms of an
agreement between the Company and such holders, if the Company proposes to
register any of its securities under the Securities Act, either for its own
account or the account of other security holders exercising registration
rights, the holders are entitled to notice of such registration and are
entitled to include shares of such common stock therein; the registration
rights provide, however, among other conditions, that the underwriters of any
offering have the right to limit the number of such shares included in such
registration. In addition, the shareholders benefiting from these rights may
require the Company, on not more than one occasion, to file a registration
statement under the Securities Act with respect to such shares, on Form S-3, if
such Form is available to the Company, subject to certain conditions and
limitations. Certain minority shareholders of Airseal West and various other
individuals who were sellers in Flanders' acquisition of Precisionaire and Air
Seal will receive registration rights if and when they acquire Flanders common
stock pursuant to the terms of their agreements with Flanders.
Transfer Agent and Registrar
OTC Stock Transfer, Inc. is the transfer agent and registrar for the
common stock.
PLAN OF DISTRIBUTION
The Common Shares offered hereby are being sold by the Selling
Securityholders acting as principals for their own accounts. The Company will
not receive any of the proceeds from such offering.
The distribution of the Common Shares by the Selling Securityholders is
not subject to any underwriting agreement. The Company expects that the
Selling Securityholders will sell the Common Shares covered by this Prospectus
through customary brokerage channels, either through broker-dealers acting as
principals, who may then resell the shares in the over-the-counter market, or
in private sales, or in transactions pursuant to Rule 144 under the Securities
Act, or otherwise, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling shares through broker-
dealers, and such broker-dealers will receive compensation in the form of
commissions from the Selling Securityholders and/or the purchasers of the
Common Shares for whom they may act as agent (which compensation may be in
excess of customary commissions). The Selling Securityholders and any broker-
dealers that participate with such Selling Securityholders in the distribution
of the Common Shares may be deemed to be underwriters and any commission
received by such broker-dealers and any profit on resale of the Common Shares
sold by them might be deemed to be underwriting discounts or commissions under
the Securities Act. All expenses of registration incurred in connection with
this offering are being borne by the Company, but all brokerage commissions and
other similar expenses incurred by any Selling Securityholder will be borne by
such Selling Securityholder.
18
<PAGE>
At the time a particular offer of the Common Shares is made, to the extent
required, a supplemental to this Prospectus will be distributed which will
identify and set forth the aggregate amount of Common Shares being offered and
the terms of the offering.
The Selling Securityholders are not restricted as to the price or prices
at which they may sell the Common Shares. Sales of the Common Shares at less
than market prices may depress the market price of the Company's common stock.
Moreover, the Selling Securityholders are not restricted as to the number of
shares which may be sold at any one time, and it is possible that a significant
number of shares could be sold at the same time.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Common Shares may not simultaneously engage in
market making activities with respect to the Common Shares for a period of nine
(9) business days prior to the commencement of such distribution. In addition
and without limiting the foregoing, the Selling Securityholders will be subject
to applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation, Rules 10b-6 and 10b-7, which
provisions may limit the timing of purchases and sales of the shares by the
Selling Securityholders.
To comply with certain states' securities laws, if applicable, the Common
Shares may be sold in any such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Common Shares may not be
sold unless the seller meets the notice and filing requirements.
EXPERTS
The consolidated financial statements and schedules of the Company,
incorporated by reference in this Prospectus and Registration Statement from
the Company's Annual Report on Form 10-K for the year ended December 31, 1996,
have been audited by McGladrey & Pullen, LLP, independent auditors, for the
periods indicated in their reports with respect thereto, and are included and
incorporated by reference herein in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to this Prospectus have been passed upon
for the Company by Snell & Wilmer L.L.P., Salt Lake City, Utah, counsel to the
Company
SECURITIES AND EXCHANGE COMMISSION'S
POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification by the Company for liabilities arising under
the Securities Act may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions or otherwise, the
Company 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 Company of expenses
incurred or paid by a director, officer, or controlling person of the Company
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 Company 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 of 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.
19
<PAGE>
No dealer, sales representative,
or other person has been
authorized to give any information
or to make any representation not
contained in this Prospectus and,
if given or made, such information
or representation must not be
relied upon as having been
authorized by the Company, the
Selling Securityholder, or any
other person. This Prospectus
does not constitute an offer of
any securities other than those to 4,773,519 Common Shares
which it relates or an offer to
sell, or a solicitation of an FLANDERS CORPORATION
offer to buy, to any person in any
jurisdiction where such an offer
or solicitation would be unlawful.
Neither the delivery of this
Prospectus nor any sale made
hereunder shall, under any
circumstances, create any
implication that the information
contained herein is correct as of
any time subsequent to the date
hereof.
------------
TABLE OF CONTENTS --------------
PROSPECTUS
Page --------------
----
AVAILABLE INFORMATION 2
INFORMATION INCORPORATED BY
REFERENCE 2
RISK FACTORS 3
THE COMPANY 7
USE OF PROCEEDS 8
SELLING SECURITYHOLDERS 9
DESCRIPTION OF CAPITAL STOCK 17
PLAN OF DISTRIBUTION 18
EXPERTS 19
LEGAL MATTERS 19
SECURITIES AND EXCHANGE
COMMISSION'S
POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES 19
June 27, 1997
20
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS.
ITEM 14. Other Expenses of Issuance and Distribution.
The Company estimates that expenses in connection with the transactions
described in this Registration Statement will be as follows. All expenses
incurred with respect to the transactions will be paid by the Company.
SEC Registration Fee $ 8,954
Printing Expenses 10,000
Accounting Fees and Expenses 25,000
Legal Fees and Expenses 60,000
Transfer Agent Fees and Expenses 3,200
Total $ 107,154
ITEM 15. Indemnification of Directors and Officers
The law of North Carolina permits extensive indemnification of present and
former directors, officers, employees or agents of a North Carolina company,
whether or not authority for such indemnification is contained in the
indemnifying company's articles of incorporation or bylaws. Specific authority
for indemnification of present and former directors and officers, under certain
circumstances, is contained in the Company's Bylaws. Under North Carolina law,
before a company can provide indemnification, the company must find that the
director, officer, employee or agent conducted himself in good faith and in a
manner he reasonably believed, in the case of conduct in his official capacity
with the company, was in the best interest of the company and, in all other
cases, was at least not opposed to the company's best interest, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. Statutory indemnification is permissive,
except in the event of a successful defense, in which case, unless limited by
the articles of incorporation, when a director, officer, employee or agent must
be indemnified against reasonable expenses incurred by him in connection
therewith. Indemnification is permitted with respect to expenses, judgments,
fines, and amounts paid in settlement by such persons.
The Company's Bylaws provide that the Company may indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of
the Company), by reason of the fact that he is or was a director, officer,
employee, fiduciary or agent of the Company or is or was serving at the request
of the Company as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interest of the Company and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
The Company's Bylaws also provide that a corporation may indemnify any
director or officer of the Company who was or is a party or is threatened to be
made a party to any proceeding by or in the right of the Company to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee, fiduciary or agent of another
corporation or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Company. No
indemnification shall be made in respect of any claim or matter as to which
such person has been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Company unless and only to the extent that the
court in which the action is brought determines that in view of all
circumstances such person is fairly and reasonably entitled to indemnification
for expenses which the court deems proper.
The Company's Bylaws also provide that an authorized representative of the
Company who neither was or is a director or officer of the Company may, to the
extent that he is successful on the merits and defense of any action, be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred in connection therewith. A determination of whether
indemnification is proper shall be made by the Board by a majority vote of a
quorum consisting of disinterested directors or, if such a quorum is not
obtainable or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or by the
shareholders. The
21
<PAGE>
Company may advance expenses (including attorneys' fees) upon receipt of an
undertaking by or on behalf of an authorized representative to repay such
amount unless it is determined that he is entitled to be indemnified.
ITEM 16. Exhibits
Exhibit Number Exhibit
- -------------- -------
5.1 Opinion of Snell & Wilmer, LLP
23.1 Consent of McGladrey & Pullen, LLP
23.2 Consent of Snell & Wilmer, LLP (included in Exhibit 5.1).
24 Power of Attorney (included on signature page of
Registration Statement)
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;
(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 Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a twenty percent
(20%) 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) and (1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8, or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in 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 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 herein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) To deliver or cause to be delivered with the Prospectus, to
each person to whom the Prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in the
Prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Exchange Act; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is not
set forth in prospectus, to deliver, or cause to be delivered to each
person
22
<PAGE>
to whom the Prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the Prospectus to
provide such interim financial information.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Washington, State of North Carolina on the 27th day
of June, 1997.
FLANDERS CORPORATION
By: ______________________________________
Robert R. Amerson
President, Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Steven K. Clark, his attorney-in-fact,
to sign any and amendments to this Registration Statement (including post-
effective amendments), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, hereby ratifying
and confirming all the said attorney-in-fact may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacity and on
the dates indicated.
Signature Title Date
/s/ Robert R. Amerson
________________________ President, Chief Executive Officer June 27, 1997
Robert R. Amerson
/s/ Steven K. Clark
________________________ Chief Financial Officer and Chief June 27, 1997
Steven K. Clark Accounting Officer
/s/ Thomas T. Allan
________________________ Chairman of the Board June 27, 1997
Thomas T. Allan
/s/ Gustavo Hernandez
________________________ Director, Vice President of June 27, 1997
Gustavo Hernandez Operations
/s/ William M. Claytor
________________________ Director June 27, 1997
William M. Claytor
/s/ William H. Clark
________________________ Director June 27, 1997
William H. Clark
/s/ Steven K. Clark
________________________ June 27, 1997
Steven K. Clark
Attorney-in-fact
24
EXHIBIT 5.1
OPINION OF SNELL & WILMER, LLP
<PAGE>
[Snell & Wilmer Letterhead]
June 26, 1997
Flanders Corporation
531 Flanders Filters Road
Washington, North Carolina 27889
Re: Registration Statement on Form S-3
Ladies/Gentlemen:
We have acted as counsel for Flanders Corporation, a North Carolina
corporation (the "Company"), and in such capacity have examined the Company's
Registration Statement on Form S-3 (referred to herein as the "Registration
Statement"), to be filed by the Company with the Securities and Exchange
Commission ("Commission") on June 26, 1997 under the Securities Act of 1933, as
amended ("Act"), relating to the proposed registration for resale by the Company
of up to 4,773,519 shares of common stock, $.001 par value per share, of certain
selling shareholders ("Selling Shareholders").
As counsel for the Company and for purposes of this opinion, we have made
those examinations and investigations of legal and factual matters we deemed
advisable and have examined original or copies, certified or otherwise
identified to our satisfaction as true copies of the originals, of those
corporate records, certificates, documents and other instruments which, in our
judgment, we considered necessary or apropriate to enable us to render the
opinion expressed below, including the Company's Articles of Incorporation, as
amended to date, the Company's Bylaws, as amended to date, and the minutes of
meetings of the Company's Board of Directors and other corporate proceedings
relating to the authorization and issuance of the Selling Shareholder's shares.
We have assumed the genuineness and authorization of all signatures and the
conformity to the originals of all copies submited to us or inspected by us as
certified, confirmed or photostatic copies. Further, we have assumed the due
execution and delivery of certificates representing the Selling Shareholder's
shares.
Based upon the foregoing, and relying solely thereon, we are of the opinion
that the Selling Shareholders' shares have been duly authorized and when issued,
were legally and validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the Prospectus included in
<PAGE>
Flanders Corporation
June 26, 1997
Page 2
the Registration Statement. In giving this consent we do not hereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Commission thereunder.
Very truly yours,
SNELL & WILMER L.L.P.
/s/ Snell & Wilmer LLP
EXHIBIT 23.1
CONSENT OF McGLADREY & PULLEN, LLP
<PAGE>
[McGladrey & Pullen, LLP Letterhead]
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors
Flanders Corporation
Washington, North Carolina
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 and in the related Prospectus of our report, dated
February 7, 1997, except for the second paragraph of Note 8 and the first
paragraph of Note 23 as to which the date is March 10, 1997, relating to the
consolidated financial statements of Flanders Corporation and subsidiaries and
to our report dated February 7, 1997, relating to the financial statement
schedules. We also consent to the reference to our Firm under the caption
"Experts" in the Prospectus
/s/ McGladrey & Pullen LLP
New Bern, North Carolina
June 26, 1997
