<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): June 16, 1998
MERITAGE HOSPITALITY GROUP INC.
(Exact Name of Registrant as Specified in Charter)
MICHIGAN
(State or Other Jurisdiction
of Incorporation)
0-17442 38-2730460
(Commission File Number) (IRS Employer
Identification Number)
40 PEARL STREET, N.W., SUITE 900
GRAND RAPIDS, MICHIGAN 49503
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (616) 776-2600
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<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 16, 1998, the Company's wholly-owned subsidiaries, Grand Harbor
Resort Inc. and Grand Harbor Yacht Club Inc., sold real and personal property
including (i) the hotel and restaurant facility (known as the Grand Harbor
Resort) located at 940 West Savidge Street, Spring Lake, Michigan (the "Hotel"),
(ii) 47 condominium slips of the Grand Harbor Yacht Club marina which is located
adjacent to the Hotel (the "Marina Slips"), (iii) the fixtures, furniture,
furnishings, equipment and supplies used in the operation of the Hotel and the
Marina Slips, and (iv) certain other real and personal property owned by the
subsidiaries and located adjacent to the Hotel and Marina (collectively, the
"Assets"). The Assets were sold to Pacific XXII, Inc. and its affiliate, S.C.
Land Acquisitions, L.L.C., both of whom have no relation to the Company. The
Assets were sold for $4,500,000 pursuant to the terms of purchase and sale
agreements dated May 27, 1998. The purchase price was comprised of $3,125,000 in
cash and a $1,375,000 one-year note bearing interest at 10.8% which is secured
by the Marina Slips.
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> 3
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: August 10, 1998 By: /s/ Christopher B. Hewett
--------------------------------------
Christopher B. Hewett
President and Chief Executive Officer
3
<PAGE> 4
MERITAGE HOSPITALITY GROUP INC. & SUBSIDIARIES
INDEX TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS PAGE NUMBER
- -------------------- -----------
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
- AS OF MAY 31, 1998 F-2
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS - FOR THE YEAR ENDED NOVEMBER 30, 1997 F-3
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS - FOR THE SIX MONTHS ENDED MAY 31, 1998 F-4
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS F-5
F-1
<PAGE> 5
MERITAGE HOSPITALITY GROUP INC. & SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MAY 31, 1998
<TABLE>
<CAPTION>
MERITAGE
HOSPITALITY PRO
GROUP INC. & PRO FORMA FORMA CONSOLIDATED
SUBSIDIARIES ADJUSTMENTS REF. PRO FORMA
----------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,631,741 $ 552,250 (1) $ 2,183,991
Receivables 157,193 157,193
Inventories 159,779 159,779
Prepaid expenses and other current assets 162,150 162,150
Note receivable, current portion ---- 875,000 (1) 875,000
Net assets of discontinued operations 201,758 (1,519,013) (1) (1,317,255)
----------------------------------------------------------
Total Current Assets 2,312,621 (91,763) 2,220,858
PROPERTY, PLANT AND EQUIPMENT, NET 8,734,145 8,734,145
NOTE RECEIVABLE ---- 500,000 (1) 500,000
OTHER ASSETS 1,146,347 (61,559) (1) 1,084,788
GOODWILL, NET 5,207,451 5,207,451
----------------------------------------------------------
Total Assets $ 17,400,564 $ 346,678 $ 17,747,242
==========================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 1,337,021 $ 1,337,021
Current portion of obligations under capital leases 279,066 279,066
Trade accounts payable 1,184,266 1,184,266
Accrued expenses 1,327,007 1,327,007
----------------------------------------------------------
Total Current Liabilities 4,127,360 4,127,360
LONG-TERM DEBT 6,344,256 6,344,256
OBLIGATIONS UNDER CAPITAL LEASES 1,546,321 1,546,321
DEFERRED INCOME TAXES 190,000 190,000
DEFERRED REVENUE 2,090,000 2,090,000
----------------------------------------------------------
Total Liabilities 14,297,937 14,297,937
----------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock 1,384 1,384
Common stock 52,144 52,144
Additional paid in capital 17,538,208 17,538,208
Note receivable from sale of shares (6,007,523) (6,007,523)
Accumulated deficit (8,481,586) $ 346,678 (1) (8,134,908)
----------------------------------------------------------
Total Stockholders' Equity 3,102,627 346,678 3,449,305
----------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 17,400,564 $ 346,678 $ 17,747,242
==========================================================
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE> 6
MERITAGE HOSPITALITY GROUP INC. & SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
MERITAGE
HOSPITALITY PRO
GROUP INC. & PRO FORMA FORMA CONSOLIDATED
SUBSIDIARIES ADJUSTMENTS REF. PRO FORMA
------------------------------------------------------------
(RESTATED)
<S> <C> <C>
FOOD AND BEVERAGE REVENUE $ 26,860,546 $ 26,860,546
COSTS AND EXPENSES
Cost of food and beverages 7,672,613 7,672,613
Operating expenses 15,993,942 15,993,942
General and administrative expenses 2,797,477 2,797,477
Depreciation and amortization 1,150,863 1,150,863
------------------------------------------------------------
Total costs and expenses 27,614,895 27,614,895
------------------------------------------------------------
OPERATING LOSS (754,349) (754,349)
OTHER INCOME (EXPENSE)
Interest expense (1,440,192) (1,440,192)
Interest income 592,850 592,850
Loss on sale of assets (218,602) (218,602)
Minority Interest (195,639) (195,639)
------------------------------------------------------------
(1,261,583) (1,261,583)
------------------------------------------------------------
Loss from continuing operations $ (2,015,932) $ (2,015,932)
=============================================================
BASIC AND DILUTED LOSS FROM CONTINUING
OPERATIONS PER COMMON SHARE $ (.66) $ (.66)
============================================================
WEIGHTED AVERAGE SHARES
OUTSTANDING-BASIC AND DILUTED 3,214,836 3,214,836
============================================================
</TABLE>
Note: The unaudited pro forma consolidated statement of operations for the
year ended November 30, 1997 has been restated to reflect the lodging
business segment as a discontinued operation. There are no pro forma
adjustments to the statement of operations as the disposition
transaction does not effect results from continuing operations.
SEE NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE> 7
MERITAGE HOSPITALITY GROUP INC. & SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1998
<TABLE>
<CAPTION>
MERITAGE
HOSPITALITY PRO
GROUP INC. & PRO FORMA FORMA CONSOLIDATED
SUBSIDIARIES ADJUSTMENTS REF. PRO FORMA
------------------------------------------------------------
<S> <C> <C>
FOOD AND BEVERAGE REVENUE $ 12,713,910 $ 12,713,910
COST AND EXPENSES
Cost of food and beverages 3,668,318 3,668,318
Operating expenses 7,629,492 7,629,492
General and administrative expenses 1,569,966 1,569,966
Depreciation and amortization 619,629 619,629
------------------------------------------------------------
Total costs and expenses 13,487,405 13,487,405
------------------------------------------------------------
OPERATING LOSS (773,495) (773,495)
OTHER INCOME (EXPENSE)
Interest expense (740,757) (740,757)
Interest income 315,444 315,444
Gain on sale of assets 518,312 518,312
Minority Interest 25,677 25,677
------------------------------------------------------------
118,676 118,676
------------------------------------------------------------
Loss from continuing operations $ (654,819) $ (654,819)
=============================================================
BASIC AND DILUTED LOSS FROM CONTINUING
OPERATIONS PER COMMON SHARE $ (.16) $ (.16)
============================================================
WEIGHTED AVERAGE SHARES
OUTSTANDING-BASIC AND DILUTED 4,414,859 4,414,859
============================================================
</TABLE>
Note: The unaudited pro forma consolidated statement of operations for the
six months ended May 31, 1998 reflects the lodging business segment as
a discontinued operation. There are no pro forma adjustments to the
statement of operations as the disposition transaction does not effect
results from continuing operations.
SEE NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE> 8
MERITAGE HOSPITALITY GROUP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On June 16, 1998, the Company's wholly-owned subsidiaries, Grand Harbor Resort
Inc. and Grand Harbor Yacht Club Inc., sold real and personal property including
(i) the hotel and restaurant facility (known as the Grand Harbor Resort) located
at 940 West Savidge Street, Spring Lake, Michigan (the "Hotel"), (ii) 47
condominium slips of the Grand Harbor Yacht Club marina which is located
adjacent to the Hotel (the "Marina Slips"), (iii) the fixtures, furniture,
furnishings, equipment and supplies used in the operation of the Hotel and the
Marina Slips, and (iv) certain other real and personal property owned by the
subsidiaries and located adjacent to the Hotel and Marina (collectively, the
"Assets"). The Assets were sold to Pacific XXII, Inc. and its affiliate, S.C.
Land Acquisitions, L.L.C., both of whom have no relation to the Company. The
Assets were sold for $4,500,000 pursuant to the terms of purchase and sale
agreements dated May 27, 1998. The purchase price was comprised of $3,125,000 in
cash and a $1,375,000 one-year note bearing interest at 10.8% which is secured
by the Marina Slips.
The unaudited pro forma consolidated balance sheet as of May 31, 1998 reflects
this transaction as if it occurred on that date. The unaudited pro forma
statements of operations for the year ended November 30, 1997 and for the six
months ended May 31, 1998 reflect this transaction as if it occurred 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, 1997 and the quarterly report on Form 10-Q for the quarterly period ended
May 31, 1998.
The pro forma adjustments are as follows:
Balance Sheet:
(1) To reflect the sale of the Assets and the debt reduction from the use
of the cash proceeds of the sale of the Assets as of June 16, 1998,
thereby reflecting the consolidated balance sheet as if the sale had
been consummated on May 31, 1998. The pro forma adjustment to "net
assets of discontinued operations" consists of the following:
<TABLE>
<S> <C>
Current assets $ (16,098)
Property, plant and equipment (2,775,696)
Marina development costs (1,062,431)
Current liabilities (71,088)
Long-term debt 2,406,300
------------
Net assets of discontinued operations $ (1,519,013)
============
</TABLE>
F-5
<PAGE> 9
MERITAGE HOSPITALITY GROUP INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Statements of Operations:
The unaudited pro forma consolidated statements of operations for the year ended
November 30, 1997 (as restated) and for the six months ended May 31, 1998
reflect the lodging business segment as a discontinued operation. There are no
pro forma adjustments to the statements of operations as the above described
transaction does not effect results from continuing operations.
F-6
