SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 30, 1997
MERITAGE HOSPITALITY GROUP INC.
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(Exact Name of Registrant as Specified in Charter)
Michigan
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(State or Other Jurisdiction of Incorporation)
0-17442 38-2730460
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(Commission File Number) (IRS Employer
Identification Number)
40 Pearl Street, N.W., Suite 900
Grand Rapids, Michigan 49503
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (616) 776-2600
<PAGE>
Item 2. Acquisition or Disposition of Assets
On November 30, 1997, the Company's wholly-owned subsidiary, St. Clair
Inn, Inc., sold real and personal property including (i) the hotel and
restaurant facility (known as the St. Clair Inn) located at 500 North
Riverside, St. Clair, Michigan (the "Hotel"), (ii) the fixtures, furniture,
furnishings, equipment and supplies used in the operation of the Hotel, and
(iii) certain other real and personal property owned by St. Clair Inn, Inc.
located adjacent to the Hotel (collectively, the "Assets"). The Assets were
sold to Waterfront Hotel Ventures, L.L.C. and its affiliate, S.C. Land
Acquisitions, L.L.C., both of whom have no relation to the Company. The
Assets were sold for $3,800,000 in cash pursuant to the terms of purchase
and sale agreements dated October 22, 1997.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(b) Pro Forma Financial Information:
1) Pro Forma financial statements of Meritage Hospitality Group Inc.
and Subsidiaries. See "Index to Unaudited Pro Forma Consolidated
Financial Statements" on page F-1.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
MERITAGE HOSPITALITY GROUP INC.
Dated: February 11, 1998 By: /s/ Christopher B. Hewett
-------------------------------------
Christopher B. Hewett
President and Chief Executive Officer
3
<PAGE>
MERITAGE HOSPITALITY GROUP INC. & SUBSIDIARIES
INDEX TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS PAGE NUMBER
- -------------------- -----------
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
- NOVEMBER 30, 1997 F-2
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS - FOR THE YEAR ENDED NOVEMBER 30, 1997 F-3
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS F-4
F-1
<PAGE>
<TABLE>
Meritage Hospitality Group Inc. & Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet
As of November 30, 1997
<CAPTION>
Meritage
Hospitality Pro
Group Inc. & Pro Form Forma Consolidated
Subsidiaries Adjustments Ref. Pro Forma
---------------- --------------- ------- ---------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,061,475 $ 361,781 (1) $ 1,423,256
Accounts receivable 631,732 631,732
Receivable from sale
of hotel Assets 3,601,063 (3,601,063) (1) -
Inventories 255,750 255,750
Prepaid Expenses 304,243 304,243
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Total Current Assets 5,854,263 (3,239,282) 2,614,981
Property, Plant and Equipment, Net 18,979,313 18,979,313
Deferred Income Taxes 550,000 550,000
Other Assets 2,503,513 2,503,513
Goodwill 3,586,177 3,586,177
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Total Assets $31,473,266 $ (3,239,282) $28,233,984
=================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 4,565,928 $(3,239,282) (1) $ 1,326,646
Current portion of obligations
under capital leases 264,372 264,372
Trade accounts payable 2,035,220 2,035,220
Accrued expenses 1,172,311 1,172,311
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Total Current Liabilities 8,037,831 (3,239,282) 4,798,549
Long-Term Debt 19,374,431 19,374,431
Obligations Under Capital Leases 1,689,628 1,689,628
Deferred Income Taxes 740,000 740,000
Minority Interest 1,601,415 1,601,415
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Total Liabilities 31,443,305 (3,239,282) 28,204,023
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Stockholders' Equity
Preferred stock 1,384 1,384
Common stock 32,188 32,188
Additional paid in capital 12,982,295 12,982,295
Note receivable from
sale of shares (5,700,645) (5,700,645)
Accumulated deficit (7,285,261) (7,285,261)
------------------------------------------------------------------
Total Stockholders'
Equity 29,961 29,961
------------------------------------------------------------------
Total Liabilities and
Stockholder's Equity $ 31,473,266 (3,239,282) $28,233,984
=================================================================
</TABLE>
See notes to unaudited pro forma consolidated financial statements
F-2
<PAGE>
Meritage Hospitality Group Inc. & Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended November 30, 1997
Meritage
Hospitality Pro
Group Inc. & Pro Form Forma Consolidated
Subsidiaries Adjustments Ref. Pro Forma
------------ ----------- ---- -----------
Revenue
Room rents $ 6,095,723 $(1,550,269) (2) $ 4,545,454
Food and beverages 33,882,012 (2,150,039) (2) 31,731,973
Telephone 940,920 (60,853) (2) 880,067
Sundry 250,983 (92,702) (2) 158,281
---------- ---------- ----- ----------
Total Revenue 41,169,638 (3,853,863) 37,315,775
---------- ---------- ----- ----------
Cost and Expenses
Cost of Food
and beverages 10,129,824 (785,860) (2) 9,343,964
Operating expenses 24,725,785 (2,514,887) (2) 22,210,898
General and
administrative
expenses 4,326,123 (382,066) (2) 3,944,057
Depreciation and
amortization 2,183,256 (325,872) (2) 1,857,384
---------- ---------- ----- ----------
Total Costs and
expenses 41,364,988 (4,008,685) 37,356,303
---------- ---------- ----- ----------
Gain (loss) from
Operations (195,350) 154,822 (40,528)
Other income (expense)
Interest expense (2,931,122) 349,740 (4) (2,581,382)
Interest income 592,850 592,850
Gain (loss) on
disposal of Assets 1,200,702 (1,479,095) (3) (278,393)
Minority Interest (195,639) (195,639)
---------- ---------- ----- ----------
Loss before federal
income tax and
extraordinary item (1,528,559) (974,533) (2,503,092)
Federal Income Tax Benefit (15,000) (15,000)
---------- ---------- ----- ----------
Loss before
extraordinary item (1,513,559) (974,533) (2,488,092)
Extraordinary item -
loss on early
extinguishment
of debt (no
applicable federal
income tax) 177,291 (177,291) (3) -
---------- ---------- ----- ----------
Net Loss (1,690,850) (797,242) (2,488,092)
Preferred stock dividends 101,714 101,714
---------- ---------- ----- ----------
Net loss on common
shares $(1,792,564) $ (797,242) $(2,589,806)
=========== ========== ======== ===========
Loss per common share
Before extraordinary
item $ (0.50) $ (0.81)
Extraordinary item 0.06 0.00
------------ -----------
Net loss $ (0.56) $ (0.81)
============ ============
Weighted average
shares outstanding $ 3,214,836 $3,214,836
============ ============
See notes to unaudited pro forma consolidated financial statements
F-3
<PAGE>
MERITAGE HOSPITALITY GROUP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On November 30, 1997, the Company's wholly-owned subsidiary, St. Clair Inn,
Inc., sold real and personal property including (i) the hotel and restaurant
facility (known as the St. Clair Inn) located at 500 North Riverside, St. Clair,
Michigan (the "Hotel"), (ii) the fixtures, furniture, furnishings, equipment and
supplies used in the operation of the Hotel, and (iii) certain other real and
personal property owned by St. Clair Inn, Inc. located adjacent to the Hotel
(collectively, the "Assets"). The Assets were sold to Waterfront Hotel Ventures,
L.L.C. and its affiliate, S.C. Land Acquisitions, L.L.C., both of whom have no
relation to the Company. The Assets were sold for $3,800,000 in cash pursuant to
the terms of purchase and sale agreements dated October 22, 1997.
The unaudited pro forma consolidated balance sheet as of November 30, 1997
reflects this disposition as if it occurred and the escrowed funds had been
released on that date.
The unaudited pro forma consolidated statement of operations for the year ended
November 30, 1997 presents the historical results of the Company and the pro
forma adjustments as if the Assets had been sold on December 1, 1996.
In management's opinion, all material adjustments necessary to reflect the
transaction are presented in the pro forma adjustments. The pro forma statements
do not purport to project the Company's financial position or results of
operations at any future date or for any future period, and should be read in
conjunction with the Company's consolidated historical financial statements, and
notes thereto contained in the Company's Form 10-K for the year ended November
30, 1996 and the quarterly report on Form 10-Q for the nine months ended August
31, 1997.
The pro forma adjustments are as follows:
1. To reflect the receipt of the escrowed sale proceeds and the
coincident paydown of long-term debt, which occurred on December 2,
1997. The audited November 30, 1997 balance sheet reflects the sale of
the Assets and the related receivable of sale proceeds.
2. To remove the operations of the St. Clair Inn for the year ended
November 30, 1997, thereby, reflecting the consolidated operating
results had the sale been consummated on December 1, 1996.
3. To remove the gain on the sale of the Assets and the extraordinary
item (non-recurring charge) associated with the early retirement of
long-term debt.
4. To remove the interest expense related to the reduction of long-term
debt described in adjustment number 1 above.
F-4
