Meritage Hospitality Group Inc – ‘8-K/A’ for 6/16/98

As of:  Monday, 8/10/98   ·   For:  6/16/98   ·   Accession #:  950152-98-6476   ·   File #:  1-12319

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Amendment to Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K/A       Meritage Hospitality Group, Inc. 8-K/A                 9     34K 

Document Table of Contents

8-K/A
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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):               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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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.                                      

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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

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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 

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MERITAGE HOSPITALITY GROUP INC. & SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MAY 31, 1998

                                                        [Enlarge/Download Table]

                                                          MERITAGE                                                  
                                                         HOSPITALITY                          PRO                   
                                                         GROUP INC. &     PRO FORMA          FORMA     CONSOLIDATED 
                                                         SUBSIDIARIES    ADJUSTMENTS          REF.      PRO FORMA   
                                                         ---------------------------------------------------------- 
                                                                                                                    
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 
                                                         ========================================================== 

SEE NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.             

F-2 

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MERITAGE HOSPITALITY GROUP INC. & SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1997

                                                        [Enlarge/Download Table]

                                            MERITAGE                                                   
                                            HOSPITALITY                          PRO                   
                                           GROUP INC. &      PRO FORMA          FORMA     CONSOLIDATED 
                                           SUBSIDIARIES     ADJUSTMENTS         REF.        PRO FORMA  
                                          ------------------------------------------------------------ 

                                            (RESTATED)                                                 

                                                                                                       
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 
                                          ============================================================ 

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 

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MERITAGE HOSPITALITY GROUP INC. & SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
 FOR THE SIX MONTHS ENDED MAY 31, 1998

                                                        [Enlarge/Download Table]

                                             MERITAGE                                                  
                                            HOSPITALITY                         PRO                    
                                           GROUP INC. &      PRO FORMA         FORMA     CONSOLIDATED  
                                           SUBSIDIARIES     ADJUSTMENTS         REF.       PRO FORMA   
                                          ------------------------------------------------------------ 

                                                                                                       
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 
                                          ============================================================ 

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 

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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: 

                                                                [Download Table]
                                                            
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)
                                               ============ 

F-5 

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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 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K/A’ Filing		Date		First		Last			Other Filings
Filed on:		8/10/98		3
For Period End:		6/16/98		1		8			8-K
		5/31/98		4		9			10-Q
		5/27/98		2		8
		11/30/97		4		9			10-K,  8-K,  8-K/A,  DEF 14A
		12/1/96		8
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