<PAGE>   1
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  ---------------------------------------------

For the First Quarter Ended April 18, 1999       Commission File No. 0-19840

                  ---------------------------------------------

                                 SHOLODGE, INC.
             (Exact name of registrant as specified in its charter)

                  ---------------------------------------------

         TENNESSEE                                             62-1015641
(State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                        Identification Number)

130 MAPLE DRIVE NORTH, HENDERSONVILLE, TENNESSEE                  37075
(address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code            (615) 264-8000

                  ---------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period as the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

Yes   X       No
    -----        -----

Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.

As of May 31, 1999, there were 7,273,378 shares of ShoLodge, Inc. common stock
outstanding.
<PAGE>   2
                         SHOLODGE, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     APRIL 18,        DECEMBER 27,
                                                                       1999             1998(1)
                                                                    (UNAUDITED)
<S>                                                                <C>               <C>
                                 ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                       $ 12,412,891      $  2,480,984
   Restricted Cash                                                      773,026           701,484
   Accounts receivable-net                                            3,942,940         3,251,104
   Construction contracts                                               319,065            27,799
   Income taxes receivable                                            4,775,686         4,775,686
   Prepaid expenses                                                   1,053,147           519,534
   Notes Receivable-Net                                                 162,500         3,363,394
   Other current assets                                                 414,294           443,967
                                                                   -------------------------------
                Total current assets                                 23,853,549        15,563,952

NOTES RECEIVABLE, NET                                                53,971,533        58,390,170

PROPERTY AND EQUIPMENT                                              195,333,653       187,360,706
   Less accumulated depreciation and amortization                   (22,686,500)      (20,335,047)
                                                                   -------------------------------
                                                                    172,647,153       167,025,659

LAND UNDER DEVELOPMENT OR HELD FOR SALE                               9,631,999         9,556,720

DEFERRED CHARGES, NET                                                 9,041,469         9,201,837

DEPOSITS ON SALE/LEASEBACK                                           28,000,000        28,000,000

DEFERRED TAX ASSET                                                      127,035           127,035

INTANGIBLE ASSETS                                                     3,236,880         3,290,162

OTHER ASSETS                                                          2,665,895         3,845,824
                                                                   -------------------------------
   TOTAL ASSETS                                                    $303,175,513      $295,001,359
                                                                   ===============================
</TABLE>






(1)   Derived from fiscal year ended December 27, 1998 audited financial
      statements. See notes to condensed consolidated financial statements.




<PAGE>   3


                         SHOLODGE, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

<TABLE>
<CAPTION>
                                                                               APRIL 18,        DECEMBER 27,
                                                                                 1999             1998(1)
                                                                              (UNAUDITED)
<S>                                                                           <C>               <C>
               LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable and accrued expenses                                      $ 13,726,620      $ 11,438,292
   Taxes other than on income                                                    1,850,697         1,636,220
   Current portion of long-term debt
      and capitalized lease obligations                                         26,999,202        21,597,951
                                                                             --------------------------------
                Total current liabilities                                       42,576,519        34,672,463

OTHER LONG-TERM DEBT AND CAPITALIZED LEASE
    OBLIGATIONS, LESS CURRENT PORTION                                          131,552,794       128,945,784

DEFERRED GAIN ON SALE/LEASEBACK                                                 28,977,608        30,158,244

DEFERRED CREDITS                                                                 1,935,262         2,368,523

MINORITY INTERESTS IN EQUITY OF
   CONSOLIDATED SUBSIDIARIES AND PARTNERSHIPS                                    1,005,706           757,311

                                                                             -------------------------------
   TOTAL LIABILITIES                                                           206,047,889       196,902,325
                                                                             --------------------------------

SHAREHOLDERS' EQUITY:
   Series A redeemable nonparticipating stock
      (no par value; 1,000 shares authorized, no
      shares outstanding)                                                       -                  -
   Common stock (no par value; 20,000,000 shares
      authorized, 7,262,910 shares issued and outstanding
      as of April 18, 1999 and 7,472,310 shares issued
      and outstanding as of December 27, 1998)                                       1,000             1,000
  Additional paid-in capital                                                    42,435,645        42,433,395
  Retained earnings                                                             61,349,472        60,973,496
  Unrealized gain on securities available for sale (net of tax)                     87,331            67,704
  Treasury Stock                                                                (6,745,824)       (5,376,561)
                                                                             --------------------------------
      TOTAL SHAREHOLDERS' EQUITY                                                97,127,624        98,099,034
                                                                             --------------------------------

         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           $303,175,513      $295,001,359
                                                                             ================================
</TABLE>




(1)   Derived from fiscal year ended December 27, 1998 audited financial
      statements. See notes to condensed consolidated financial statements.

<PAGE>   4
                         SHOLODGE, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
          FOR THE SIXTEEN WEEKS ENDED APRIL 18, 1998 AND APRIL 19, 1988


<TABLE>
<CAPTION>
                                                                            16 WEEKS ENDED
                                                                     APRIL 18,       APRIL 19,
                                                                      1999             1998
                                                                                   (AS ADJUSTED)
                                                                  ------------------------------
<S>                                                                <C>              <C>
REVENUES:
   Hotel                                                           $18,258,701      $22,615,511
   Franchising and management                                          922,422          998,345
   Construction and development                                        291,265                0

                                                                  ------------------------------
             Total revenues                                         19,472,388       23,613,856

COSTS AND EXPENSES:
   Operating expenses:
      Hotel                                                         12,044,052       13,507,001
      Franchising and management                                       637,158          748,256
      Construction and development                                     245,938                0

                                                                  ------------------------------
             Total operating expenses                               12,927,148       14,255,257

   General and administrative                                        1,714,529        1,569,778
   Rent expense, net                                                 3,013,532        3,067,780
   Depreciation and amortization                                     2,464,030        2,572,478

                                                                  ------------------------------
             (Loss) Income from operations                            (646,851)       2,148,563

OTHER INCOME AND (EXPENSES):
   Interest expense                                                 (3,674,653)      (3,507,771)
   Interest income                                                   1,880,360        1,346,271
   Gain on sale of property                                          4,609,256           49,866
   Other income                                                        320,366          194,029

                                                                  ------------------------------
INCOME BEFORE INCOME TAXES AND MINORITY
  INTERESTS                                                          2,488,478          230,958

INCOME TAXES                                                          (230,000)         (81,000)

MINORITY INTERESTS IN EARNINGS OF CONSOLIDATED
   SUBSIDIARIES & PARTNERSHIPS                                      (1,882,502)         (19,221)

                                                                  ------------------------------
NET INCOME                                                         $   375,976      $   130,737
                                                                  ==============================


EARNINGS PER COMMON SHARE
        Basic                                                            $0.05            $0.02
                                                                  ==============================
        Diluted                                                          $0.05            $0.02
                                                                  ==============================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
        Basic                                                        7,304,456        8,255,810
        Diluted                                                      7,556,835        8,353,228
                                                                  ------------------------------
</TABLE>



See notes to condensed consolidated financial statements.
<PAGE>   5
                        SHOLODGE, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
         FOR THE SIXTEEN WEEKS ENDED APRIL 18, 1999 AND APRIL 19, 1998

<TABLE>
<CAPTION>
                                                                                       16 WEEKS ENDED
                                                                               APRIL 18,          APRIL 19,
                                                                                 1999               1998
                                                                                                (AS ADJUSTED)
                                                                             --------------------------------
<S>                                                                           <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   NET INCOME                                                                 $   375,976        $   130,737
   ADJUSTMENTS TO RECONCILE NET INCOME TO NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
               DEPRECIATION AND AMORTIZATION                                    2,464,030          2,572,478
               ACCRETION OF DISCOUNT  ON SECURITIES
                 HELD TO MATURITY                                                       0           (230,473)
               RECOGNITION OF PREVIOUSLY DEFERRED PROFIT                       (6,224,534)        (1,195,253)
               GAIN ON CASUALTY LOSS                                              (93,071)                 0
               GAIN ON SALE OF PROPERTY AND OTHER ASSETS                                0            (47,906)
               INCREASE IN MINORITY INTEREST IN EQUITY
                    OF CONSOLIDATED SUBSIDIARIES AND PARTNERSHIPS               1,882,502             19,221
   CHANGES IN ASSETS AND LIABILITIES:
               (INCREASE) IN RESTRICTED CASH                                      (71,542)          (197,298)
               (INCREASE) DECREASE IN ACCOUNTS RECEIVABLE                        (983,102)           639,706
               (INCREASE) IN PREPAID EXPENSES                                    (533,613)          (252,568)
               (INCREASE) IN OTHER ASSETS                                        (381,470)           (18,343)
               INCREASE IN ACCOUNTS PAYABLE
                  AND ACCRUED EXPENSES                                          2,288,328          2,819,135
               INCREASE IN INCOME AND OTHER TAXES                                 214,477            256,587
                                                                             --------------------------------
      NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                      (1,062,019)         4,496,023

CASH FLOWS FROM INVESTING ACTIVITIES:
   PAYMENTS RECEIVED ON NOTES RECEIVABLE                                       12,230,168             49,693
   CAPITAL EXPENDITURES                                                        (7,912,180)       (23,228,340)
   PROCEEDS FROM SALE OF PROPERTY AND OTHER ASSETS                                      0            463,513
                                                                             --------------------------------
      NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                       4,317,988        (22,715,134)

CASH FLOWS FROM FINANCING ACTIVITIES:
   DECREASE IN DEFERRED CHARGES                                                    34,690            137,413
   PROCEEDS FROM LONG-TERM DEBT                                                12,390,755                  0
   PAYMENTS ON LONG-TERM DEBT                                                  (4,332,144)          (448,624)
   PAYMENTS ON CAPITALIZED LEASE OBLIGATIONS                                      (50,350)          (206,146)
   DISTRIBUTIONS TO MINORITY INTERESTS                                                  0           (109,580)
   EXERCISE OF STOCK OPTIONS                                                        2,250                  0
   PURCHASE OF TREASURY STOCK                                                  (1,369,263)                 0
                                                                             --------------------------------
      NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                       6,675,938           (626,937)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            9,931,907        (18,846,048)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                 2,480,984         58,103,004
                                                                             --------------------------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                     $12,412,891        $39,256,956
                                                                             ================================
</TABLE>






      See notes to condensed consolidated financial statements.
<PAGE>   6
                         SHOLODGE, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


A.   BASIS OF PRESENTATION
     The accompanying unaudited condensed consolidated financial statements have
     been prepared in accordance with generally accepted accounting principles
     for interim financial information and with the instructions to Form 10-Q
     and Article 10 of Regulation S-X. Accordingly, they do not include all of
     the information and footnotes required by generally accepted accounting
     principles for complete financial statements.

     In Management's opinion, the information and amounts furnished in this
     report reflect all adjustments which are necessary for the fair
     presentation of the financial position and results of operations for the
     periods presented. All adjustments are of a normal and recurring nature.
     The condensed consolidated balance sheet at December 27, 1998 has been
     derived from the audited consolidated financial statements at that date.
     These financial statements should be read in conjunction with the Company's
     Annual Report or Form 10-K for the fiscal year ended December 27, 1998.

     The fiscal year consists of a 52/53 week year ending the last Sunday of the
     year. The four quarters have 16, 12, 12, and 12 weeks in first, second,
     third and fourth quarters, respectively, in each fiscal year. When the 53rd
     week occurs in a fiscal year, it is added to the fourth fiscal quarter,
     making it 13 weeks in length.

     The Company has historically reported lower earnings in the first and
     fourth quarters of the year due to the seasonality of the Company's
     business. The results of operations for the quarters ended April 18, 1999
     and April 19, 1998 are not necessarily indicative of the operating results
     for the entire year.

B.   COMPREHENSIVE INCOME
     On December 29, 1997, the Company adopted Statement of Financial Accounting
     Standards ("SFAS") No. 130, "Reporting Comprehensive Income". Comprehensive
     income includes net income and other comprehensive income which is defined
     as non-owner transactions in equity. The following table sets forth (in
     thousands) the amounts of other comprehensive income included in equity for
     the quarters ended April 18, 1999 and April 19, 1998.

<TABLE>
<CAPTION>
                                                                  4/18/99       4/19/98
                                                                  -------       -------
<S>                                                               <C>           <C>
                 Net unrealized gain on securities available
                 for sale for the quarter                           $20           $7
</TABLE>



<PAGE>   7




C.   EARNINGS PER SHARE
     Earnings per share was computed by dividing net income by the weighted
     average number of common shares outstanding. The following table reconciles
     earnings and weighted average shares used in the earnings per share
     calculations for the fiscal quarters ended April 18, 1999, and April 19,
     1998:

<TABLE>
<CAPTION>

                                                                    16 WEEKS ENDED
                                                                    --------------
                                                                 APRIL 18,     APRIL 19,
                                                                    1999           1998
<S>                                                              <C>           <C>
     BASIC:

       NET INCOME APPLICABLE TO COMMON STOCK                      $ 375,976     $ 130,737
                                                                  =========     =========
       SHARES:
          WEIGHTED AVERAGE COMMON SHARES OUTSTANDING              7,304,456     8,255,810
                                                                  =========     =========
       BASIC EARNINGS PER SHARE                                   $    0.05     $    0.02
                                                                  =========     =========

     DILUTED:

       NET INCOME APPLICABLE TO COMMON STOCK                      $ 375,976     $ 130,737
                                                                  =========     =========
       SHARES:
          WEIGHTED AVERAGE COMMON SHARES OUTSTANDING              7,304,456     8,255,810
          EFFECT OF DILUTIVE SECURITIES (OPTIONS)                   252,379        97,418
                                                                  ---------     ---------
          WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
               SHARES OUTSTANDING                                 7,556,835     8,353,228
                                                                  =========     =========
       DILUTED EARNINGS PER SHARE                                 $    0.05     $    0.02
                                                                  =========     =========
</TABLE>



<PAGE>   8





D.   OPERATING SEGMENT INFORMATION
     The Company's significant operating segments are hotel operations,
     franchising and other. The hotel operating segment has exceeded 90% of
     total revenues for each of the last three fiscal years. None of the
     Company's segments conduct foreign operations. Operating profit includes
     the operating revenues and expenses directly identifiable with the
     operating segment. Identifiable assets are those used directly in the
     operations of each segment. A summary of the Company's operations by
     segment follows (in thousands of dollars):

<TABLE>
<CAPTION>
                                                                       16 Weeks Ended
                                                            ------------------------------------
                                                             April 18, 1999       April 19, 1998
                                                                                   (As adjusted)
<S>                                                         <C>                  <C>
     Revenues:
       Hotel revenues form external customers                   $ 18,259             $ 22,616
       Franchising and other                                       8,987               19,691
       Elimination of intersegment revenue franchising
           and other                                              (7,774)             (18,693)
                                                                -----------------------------
                    Total revenues                              $ 19,472             $ 23,614
                                                                =============================

     Operating profit (loss):
         Hotel                                                  $  1,042             $  3,526
         Franchising and other                                    (1,689)              (1,377)
                                                                -----------------------------
                    Total operating profit (loss)               $   (647)            $  2,149
                                                                =============================

     Total assets:
       Hotel                                                    $251,307             $172,903
       Franchising and other                                      51,869              128,251
                                                                -----------------------------
                    Total assets                                $303,176             $301,154
                                                                =============================

     Capital expenditures:
       Hotel                                                    $  7,576             $ 21,515
       Franchising and other                                         336                1,713
                                                                -----------------------------
                    Total capital expenditures                  $  7,912             $ 23,228
                                                                =============================

     Depreciation and amortization:
       Hotel                                                    $  2,074             $  2,250
       Franchising and other                                         390                  322
                                                                -----------------------------
                    Total depreciation and amortization         $  2,464             $  2,572
                                                                =============================
</TABLE>




<PAGE>   9




E.   ADJUSTED PRIOR YEAR'S EARNINGS
     As reported in the Company's Form 10-K for the fiscal year ended December
     27, 1998, the following is a summary of the unaudited financial information
     for the first fiscal quarter ended April 19, 1998 (in thousands, except per
     share data):

<TABLE>
<CAPTION>
                                                    As Originally          As
                                                       Reported         Adjusted
                                                    ----------------------------
<S>                                                 <C>                 <C>
                    Total Revenue                      $23,614           $23,614
                    Gross Operating Profit               9,359             9,359
                    Net Income(a)                          391               131
                    Net Income Per Share                   .05               .02
</TABLE>

     (a)  Decrease in net income relates to interest expense and general and
          administrative expense, most of which had previously been capitalized
          as hotel properties under development.


F.   CONTINGENCIES

     The Company is a party to legal proceedings incidental to its business. In
     the opinion of management, any ultimate liability with respect to these
     actions will not materially affect the consolidated financial position or
     results of operations of the Company. However, legal action pending against
     the Company include the following:

     In 1997, Tri-State Inns, Inc. and Motels of America, Inc. filed a suit
     against ShoLodge Franchise Systems, Inc., a subsidiary of the Company,
     seeking to be discharged, relieved and excused of any future performance
     under the License Agreement relating to 14 Shoney's Inns, or in the
     alternative, compensatory damages, based on theories of alleged breach of
     contractual obligations and implied warranties of good faith and fair
     dealing, alleged fraudulent inducement based on alleged misrepresentations
     and alleged failure to make material disclosures of fact, alleged
     promissory estoppel and alleged breach of fiduciary duty. In addition, the
     plaintiffs originally sought a declaratory judgment concerning the
     provision of the License Agreement which specifies the damages due upon
     termination of the License Agreement. On March 18, 1998, the plaintiffs
     filed a motion for summary judgment seeking to invalidate the
     non-competition and stipulated damages provisions set forth in the License
     Agreements. On August 6, 1998, the court denied the plaintiff's motion. The
     Company also has filed counter claims against the plaintiffs. The case has
     been set for trial on September 7, 1999. The Company intends to continue to
     defend the suit vigorously. Neither management or legal counsel can predict
     the outcome at this time.


<PAGE>   10



     In 1998, two purported class action lawsuits were filed against the Company
     and certain officers of the Company, by plaintiffs who claim to be
     shareholders and debt security holders of the Company, respectively, both
     alleging that the Company violated certain anti-fraud provisions of the
     Tennessee Securities Act of 1980, as amended, by issuing allegedly false
     and misleading statements and financial information to the investing
     public. The complaints seek an unspecified amount of damages and
     unspecified injunctive relief. The Company filed motions to dismiss both
     suits on the basis that the plaintiff's allegations failed to state a cause
     of action under the applicable state statute. The trial court denied both
     motions. The court's denial of the Company's motions on these suits are
     currently before the Court of Appeals. One case was argued before the Court
     of Appeals on May 7, 1999, but the court has not rendered an opinion. Both
     cases have been set for trial on September 13, 1999. The Company believes
     both suits are without merit and will defend itself vigorously. Neither
     management or legal counsel can predict the outcome at this time.

     In 1998, the former chief financial officer of the Company, filed a lawsuit
     against the Company and its chief executive officer alleging that his
     employment by the Company was wrongfully terminated, claiming breach of
     contract, fraud, retaliatory discharge and related claims. The plaintiff
     seeks $3 million in compensatory damages and punitive and treble damages.
     On December 31, 1998 the Company filed a motion to dismiss this lawsuit on
     the basis that the plaintiff has intentionally destroyed relevant evidence
     during the pendency of the case. The court granted this motion on January
     28, 1999 and dismissed the case with prejudice. On March 8, 1999 the
     plaintiff filed a Motion to Alter or Amend the Judgment dismissing the
     case. The court denied the motion on April 23, 1999. The plaintiff may file
     an appeal. The Company believes the suit is without merit and will defend
     itself vigorously. Neither management or legal counsel can predict the
     outcome at this time.


<PAGE>   11
                         ShoLodge, Inc. and Subsidiaries
                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations

OVERVIEW

         The following discussion should be read in conjunction with the
Company's condensed consolidated financial statements and notes thereto
appearing elsewhere in this quarterly report.

         The Company develops, owns and operates all-suites hotels under the
Sumner Suites brand name and is an operator and the exclusive franchisor of
Shoney's Inns. The Company's 26 Sumner Suites owned and operated as of April 18,
1999 are mid-scale, all-suites hotels located in Arizona, Colorado, Florida,
Georgia, Indiana, Kansas, New Mexico, North Carolina, Ohio, Tennessee, Texas and
Virginia. As of April 18, 1999, the Shoney's Inn lodging system consists of 73
Shoney's Inns containing approximately 7,100 rooms of which 17 containing
approximately 1,900 rooms are owned or managed by the Company. Shoney's Inns are
currently located in 21 states with a concentration in the Southeast.

         Sumner Suites hotels are marketed primarily to business travelers and,
to a lesser extent, leisure travelers by offering an all-suite setting in a
convenient location at an attractive price/value relationship. Sumner Suites
offer mid-scale accommodations at rates between $75 and $100 per night and are
usually located in or near business or leisure travel destinations in mid-sized
and larger metropolitan markets. A typical Sumner Suites contains from 110 to
135 rooms, lounge facilities, meeting rooms, swimming pool and a fitness room,
and offers a deluxe continental breakfast.

         The Sumner Suites concept was launched in 1995 with three hotels. From
1990 until 1995, the Company developed and managed 12 mid-scale, all-suites
hotels under another brand name before selling its interests in those hotels in
March 1995. The Company believes that its experience in developing, constructing
and managing mid-scale, all-suites hotels has enabled it to expand effectively
its development and ownership of the Sumner Suites system. In addition, as
Sumner Suites has a limited presence in the marketplace, the Company is
utilizing its proprietary reservation system, INNLINK, to further expand
awareness of Sumner Suites.

         Shoney's Inns operate in the upper economy limited-service segment and
are designed to appeal to both business and leisure travelers, with rooms
usually priced between $40 and $65 per night. The typical Shoney's Inn includes
60 to 120 rooms and, in most cases, meeting rooms. Although Shoney's Inns do not
offer full food service, most offer continental breakfast and most of the
Shoney's Inns are located adjacent or in close proximity to Shoney's
restaurants. Management believes that its strategy of locating most of its
Shoney's Inns in close proximity to free-standing Shoney's restaurants has given
it a competitive advantage over many other limited-service lodging




<PAGE>   12


chains by offering guest services approximating those of full-service facilities
without the additional capital expenditures, operating costs or higher room
rates.


RESULTS OF OPERATIONS

For the Quarters Ended April 18, 1999 and April 19, 1998

         Total operating  revenues for the quarters ended April 18, 1999, were
$19.5 million, or 17.5% less than the total operating revenues of $23.6 million
reported for the first quarter of 1998.

         Revenues from hotel operations decreased by $4.4 million, or 19.3%,
from the $22.6 million reported for the same period last year. For the 32 same
hotels opened for all of both quarterly periods, an increase of 2.5% in average
daily room rates, from $65.26 in first quarter 1998 to $66.90 in first quarter
1999, offset by a decrease in average occupancy rates on these hotels from 55.5%
to 54.1% this year, resulted in an increase in same hotel revenues of 0.4% from
$15.4 million in first quarter 1998 to $15.5 million in first quarter 1999. The
nine hotels opened since the end of 1997 contributed $2.8 million to hotel
operating revenues in first quarter this year, compared to only $14,000 in first
quarter last year from the one hotel which opened near the end of the first
quarter of 1998. Sixteen hotels were sold in third quarter 1998; these hotels
contributed $7.2 million to hotel operating revenues in first quarter 1998
versus none in first quarter this year.

         The Company owns and operates two hotel brands - Shoney's Inns and
Sumner Suites hotels. RevPAR (revenue per available room) for all Company-owned
Shoney's Inns decreased from $28.07 in first quarter 1998 (including the 16
hotels sold in third quarter 1998) to $23.13 in first quarter 1999. The 15
Shoney's Inns same-hotels, which are also the only ones currently owned by the
Company, reflected a decrease in RevPAR from $24.73 in first quarter 1998 to
$23.13 in first quarter 1999, due primarily to decreases at two hotels affected
by increased competition from new hotels and the loss of a nearby large
corporate customer. The 26 Sumner Suites hotels' RevPAR decreased by 9.7%, from
$45.91 in first quarter 1998 to $41.45 in first quarter 1999, due primarily to
the lower occupancies at the nine hotels opened since January, 1998, which had
not reached stabilization. However, the 17 Sumner Suites same-hotels' RevPAR
increased by 2.8%, from $46.24 in first quarter 1998 to $47.54 in first quarter
this year. All future Company-owned hotels currently planned will be of the
Sumner Suites brand.

         Franchising and management revenues declined by $76,000, or 7.6%, in
first quarter 1999 from first quarter 1998. Initial franchise fees decreased by
$220,000 from first quarter of last year, most of which was offset by a 20.5%
increase in royalty and reservation fees from $737,000 in first quarter 1998 to
$888,000 in first quarter 1999, due primarily to the franchise revenues earned
on the 16 Shoney's Inns sold to a new franchisee in third quarter 1998. Initial
franchise fee revenue can vary materially from




<PAGE>   13

quarter to quarter depending on the level of franchise sales activities.
Revenues from construction and development activities were $291,000 in first
quarter 1999 on one outside construction contract in progress versus none in
first quarter 1998 when no outside construction contracts existed.

         Operating expenses from hotel operations for the first quarter of 1999
decreased by $1.5 million, or 10.8%, from $13.5 million in first quarter 1998,
due partially to the $4.4 million decrease in hotel operating revenues. The sale
of the 16 Shoney's Inns in third quarter 1998 accounted for a decrease of $4.2
million in hotel operating expenses from first quarter 1998 to first quarter
1999. The nine Sumner Suites hotels opened in 1998 and first quarter 1999 caused
hotel operating expenses to increase by $2.5 million over first quarter last
year. Hotel operating expenses on the 32 same-hotels increased by 1.9%, or
$178,000, in first quarter 1999 over first quarter 1998. The operating expenses
as a percentage of operating revenues for this activity increased from 59.7% in
first quarter 1998 to 66.0% in first quarter 1999; however, operating expenses
as a percentage of operating revenues on the 32 same-hotels only increased from
59.8% in first quarter 1998 to 60.7% in first quarter 1999. The nine hotels
which opened in 1998 and first quarter 1999 impacted hotel operating expenses
significantly due to pre-opening and startup expenses during their first year or
two after opening before the hotels reach stabilization. Increases in hotel
operating expenses on same-hotels were primarily in the areas of real estate
taxes, repairs and maintenance, credit card discounts, and payroll related
costs.

         Franchising and management operating expenses decreased by $111,000, or
14.8%, from first quarter 1998. The decreases were primarily in the central
reservation center operating costs in the areas of payroll and related benefits,
telephone expense, postage and freight, and equipment maintenance costs.
Construction and development expenses in first quarter 1999 were $246,000 on the
one outside construction contract in progress versus none in first quarter 1998
when no outside construction contracts existed. General and administrative
expenses increased by $145,000, or 9.2%, from first quarter 1998. This increase
was due primarily to increased state franchise taxes, professional fees, and
travel expenses.

         Rent expense decreased by $54,000 in first quarter this year from last
year's first quarter, due primarily to a reduction in rent by $65,000 associated
with the 16 Shoney's Inns sold in third quarter 1998.

         Depreciation and amortization expense decreased by $108,000, or 4.2%,
from first quarter 1998. The sale of the 16 Shoney's Inns in 1998 reduced
depreciation expense in first quarter 1999 by $1.1 million from first quarter
1998. However, depreciation and amortization increased in first quarter 1999
over first quarter 1998 by $1.0 million due to the nine new hotels opened in
1998 and 1999 and various other depreciable assets acquired since first quarter
1998.


<PAGE>   14



         Interest expense increased by $167,000, while interest income increased
by $534,000 from first quarter 1998, for a net decrease of $367,000 in net
interest expense. The increase in interest expense resulted from additional
borrowings incurred in 1998 and first quarter 1999 for capital expenditures for
new hotels, partially offset by interest expense reductions from the
extinguishment of debt in third quarter 1998 associated with the hotels sold.
The increase in interest income was due primarily to interest earned on mortgage
notes receivable in the principal amount of $67.5 million from the sale of
hotels in 1998, which exceeded interest earned in first quarter 1998 from cash
temporarily invested from the proceeds of the sale-leaseback transaction which
occurred in the fourth quarter of 1997.

         The gain recognized on sale of property in first quarter 1999 totaled
$4.6 million and relates to three of the 16 hotels sold in third quarter 1998,
the recognition of which was originally deferred and recognized on the
installment method. Only $50,000 in gains on sale of property was reported for
first quarter 1998, which related to land held for sale. Other income increased
by $126,000 from first quarter 1998 to first quarter 1999. Other income can vary
widely from quarter to quarter due to the nature of this income and its varied
sources. Minority interests in earnings of consolidated subsidiaries and
partnerships increased from $19,000 in first quarter 1998 to $1.9 million in
first quarter 1999, due primarily to the 40% minority interest in $4.6 million
of the gain on sale of property recognized in first quarter 1999, described
above.


LIQUIDITY AND CAPITAL RESOURCES

         The Company's cash flows used in operating activities were $1.1 million
in first quarter 1999, compared with $4.5 million provided by operating
activities in the first quarter 1998. Accounts receivable increased by $1.0
million in first quarter 1999, compared with a decrease of $640,000, in first
quarter 1998, due primarily to the opening of three new hotels in first quarter
1999 and to substantially increased construction contracts receivable in the
first quarter of 1999. The increase in accounts payable in first quarter 1999 of
$2.3 million, compared with a $2.8 million increase in first quarter 1998.

         The Company's cash flows provided by investing activities were $4.3
million in first quarter 1999, compared with cash flows used in investing
activities of $22.7 million for the comparable period in 1998. The Company
collected $12.2 million from notes receivable in first quarter 1999, which
related to two hotel properties sold in 1997 and 1998. Only $50,000 was received
in first quarter 1998 from the collection of notes receivable. The Company
requires capital principally for the construction and acquisition of new lodging
facilities and the purchase of equipment and leasehold improvements. Capital
expenditures for such purposes were $7.9 million in first quarter 1999 and $23.2
million in first quarter 1998. One parcel of land held for sale was sold in
first quarter 1998, providing $464,000 in funds.


<PAGE>   15

         Net cash provided by financing activities was $6.7 million in first
quarter 1999 compared with net cash used in financing activities of $627,000 in
first quarter 1998. Borrowings, net of repayments, on the bank revolving credit
facility were $4.9 million in first quarter 1999 versus none in first quarter
1998. Payments on long-term debt, other than on the bank revolving credit
facility, were $432,000 in first quarter 1999 compared with $449,000 in first
quarter 1998. Additionally, $3.6 million was borrowed in first quarter 1999 to
finance the purchase of hotel furniture, fixtures, and equipment, versus none in
first quarter 1998. In the first quarter of 1999, the Company repurchased
210,000 shares of its common stock for $1.4 million pursuant to a plan to
repurchase up to $12.5 million of the Company's outstanding common stock. In
1998, 784,000 shares were repurchased for $5.4 million.

         The Company maintains a $22.5 million revolving credit facility with a
group of five banks, secured by a pledge of certain promissory notes payable to
the Company, received in connection with the sale of 16 of the Company's lodging
facilities in the third quarter of 1998. Effective October 21, 1998, the Company
and its lenders amended the terms of its revolving credit agreement. The amended
credit facility terminates June 30, 1999. Other terms and conditions of the
amended credit agreement, including interest rates and covenant requirements,
are similar to the previous credit agreement. On April 9, 1999, the Company and
its lenders further amended the agreement to eliminate any future LIBOR
borrowings, to amend the base interest rate to prime plus 1.25% and to require a
monthly maintenance fee. As of April 18, 1999, the Company had $25.2 million
borrowed under this credit facility. The Company intends to repay such borrowing
with monies obtained from various sources including hotel equipment financing,
the sale-leaseback of all or some hotels, land sales, and other debt sources
which the Company is currently negotiating.

         The Company also maintains a $1 million unsecured line of credit with
another bank, bearing interest at the lender's prime rate, maturing May 31,
2000. As of April 18, 1999, the Company had no borrowings outstanding under this
credit facility.

         The Company opened six new Sumner Suites hotels in 1998 (including one
in first quarter 1998) and three in first quarter 1999. As of the end of the
first fiscal quarter of 1999, one Sumner Suites hotel was under construction
which is expected to open in the third quarter of 1999. The Company estimates
that approximately $6.0 million in capital funds will be necessary to complete
the construction of the hotel under construction. Additionally, the Company has
acquired four sites for future development and estimates that approximately
$29.0 million in capital funds will be required to complete their development,
some or all of which may be complete by the end of 1999. In 1998 the Company
decided to slow its aggressive development schedule of new Sumner Suites hotels
in the near term. This decision was based on current market conditions, rooms
supply in certain areas, and capital availability.


<PAGE>   16



         On September 23, 1998, the Company's Board of Directors authorized the
use of up to $12.5 million for the repurchase of shares of the Company's common
stock. The purchases, including block purchases, are to be made from time to
time in the open market at prevailing market prices, or in privately negotiated
transactions at the Company's discretion. No time limit has been placed on the
duration of the stock repurchase plan, and the Company may discontinue the plan
at any time. By the end of the first fiscal quarter of 1999, 994,000 shares had
been repurchased at a cost of $6.7 million.

         The Company is investigating various alternatives to maximize
shareholder value. These alternatives could include, without limitation, a
continuation of the development and operation of Sumner Suites and the
franchising and operation of Shoney's Inns, a sale of the remaining Shoney's
Inns, the sale-leaseback of some or all of the Company's Sumner Suites hotels,
negotiating new credit arrangements, developing hotels for other owners, the
repurchase of additional shares of the Company's common stock or outstanding
debt securities, or any combination of these or other strategies. The Company
believes that a combination of net proceeds from possible future sale-leaseback
transactions, the collection of notes receivable, net cash provided by
operations, borrowings under existing and new revolving credit facilities or
mortgage debt, and available furniture, fixture and equipment financing packages
will be sufficient to fund its scheduled hotel development, stock repurchase
plan, debt repayments and operations for the next twelve months, including the
repayment of amounts maturing June 30, 1999, under the Company's revolving line
of credit.

YEAR 2000 ISSUE

         The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs or hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing a
possible disruption of operations, including, among other things, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities.

         Based on recent assessments, the Company determined that if will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Company presently believes that with modifications or replacements of
existing software and certain hardware, the Year 2000 Issue can be mitigated.
However, if such modifications or replacements are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Company.


<PAGE>   17

         The Company has divided the Year 2000 Issue into what it considers
being critical and non-critical issues. The Company believes that in its line of
business the critical issues involve the ability to process hotel sales
transactions beginning with hotel reservations through settlement and
collection. Additionally, critical importance has been placed on the Company's
ability to process and maintain accurate accounting, financial and corporate
records.

         The systems that the Company has identified as being critical are the
core business software applications including, but not limited to, the
following: the IBM AS400 operating system, the accounting and financial
reporting system, the front desk and credit card payment system, the room door
key system, the central reservations system, and the cash management software.
In addition, the computer systems maintained by the Company's banks and the
telecommunications systems maintained by the Company's telecommunications vendor
have been identified as critical systems.

         The Company has also identified non-critical issues relating to
peripheral business software including, but not limited to: stand alone personal
computers, in-house development applications, Windows NT and the 98 operating
system, spreadsheet software, word processing software, network server back-up
software, development tools software and computer systems maintained by other
third party vendors.

         The Company is currently in the process of making the required
modifications to its existing software systems and scheduling the required
replacements of software and hardware. The Company will utilize both internal
and external resources to program, replace, implement and test these changes.
The Company has not determined the total cost of the Year 2000 project; however,
these costs are not expected to exceed $100,000 nor have a material effect on
its financial statements. The Company has spent less than $50,000 on external
costs on the Year 2000 project through the end of the first fiscal quarter of
1999; however, the Company's internal staff has spent substantial time on the
issue. These costs have been expensed as incurred. The Company plans to complete
the Year 2000 project not later than September, 1999 and is currently on
schedule to meet this target.

         The Company believes it has an effective program in place to resolve
the Year 2000 Issue in a timely manner. As noted above, the Company has not yet
completed all necessary phases of the Year 2000 project. In the event that the
Company does not timely complete the project, the Company could be unable to
take reservations, invoice customers or collect payments. In addition,
disruptions in the economy generally resulting from Year 2000 issues could also
materially adversely affect the Company's operations. The amount of potential
liability or lost revenue cannot be reasonably estimated at this time.

         The Company currently has no contingency plans in place in the event it
does not complete the Year 2000 project. The Company plans to evaluate the
status of completion in July 1999 and determine whether a contingency plan may
be necessary.


<PAGE>   18

FORWARD-LOOKING STATEMENT DISCLAIMER

         The statements appearing in this report which are not historical facts
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, and are subject to risks and uncertainties that could
cause actual results to differ materially from those set forth in the
forward-looking statements, including delays in concluding or the inability to
conclude transactions, the establishment of competing facilities and services,
cancellation of leases or contracts, changes in applicable laws and regulation,
in margins, demand fluctuations, access to debt or equity financing, adverse
uninsured determinations in existing or future litigation or regulatory
proceedings and other risks.


MARKET RISK

         There have been no material changes in the Company's exposure to market
risk in the first fiscal quarter ended April 18, 1999.



<PAGE>   19
                           PART II - OTHER INFORMATION


Item 1.   Paul Senior v. ShoLodge,  Inc., Leon Moore and Bob Marlowe, Case
          No. 98C-136, Chancery Court for Sumner County, Tennessee at Gallatin,
          filed April 29, 1998 (the "Senior Case"). This case names the Company
          and two of its officers, Leon Moore and Bob Marlowe, as defendants in
          a class action lawsuit by plaintiffs who claim to be shareholders of
          the Company. The case originally named Michael A. Corbett, former
          chief financial officer of the Company, as a defendant, but the
          plaintiffs subsequently deleted Mr. Corbett as a named defendant. The
          Senior Case alleges that the Company violated certain anti-fraud
          provisions of the Tennessee Securities Act of 1980, as amended, by
          issuing allegedly false and misleading statements and financial
          information to the investing public during the first three quarters of
          1997. The Company moved to dismiss the complaint on the basis that the
          plaintiff's allegations failed to state a cause of action under the
          Tennessee Securities Act of 1980. The court denied the motion but
          granted the Company's request that the Tennessee Court of Appeals
          review the court's decision on an interlocutory basis. The court's
          denial of the Company's motion is now before the Court of Appeals. On
          January 29, 1999, the Company filed its appellate brief. The case was
          argued before the Court of Appeals on May 7, 1999, but the court has
          not rendered an opinion as of the date of this filing. The case is
          scheduled for trial on September 13, 1999.

          Michael A. Corbett v. ShoLodge, Inc. and Leon Moore, Case No. 98C-184,
          Chancery Court for Sumner County, Tennessee at Gallatin, filed June
          12, 1998. This case was filed by Michael A. Corbett, the former chief
          financial officer of the Company, and alleges that his employment by
          the Company was wrongfully terminated. The plaintiff alleges breach of
          contract, fraud, retaliatory discharge and related claims. The
          plaintiff seeks $3 million in compensatory damages and punitive and
          treble damages. On December 31, 1998 the Company filed a motion to
          dismiss this lawsuit on the basis that the plaintiff has intentionally
          destroyed relevant evidence during the pendency of the case. The court
          granted this motion on January 28, 1999 and dismissed the case with
          prejudice. On March 8, 1999 the plaintiff filed a Motion to Alter or
          Amend the Judgment dismissing the case. The court denied the motion on
          April 23, 1999. The plaintiff may file an appeal.

          No material developments occurred during the first fiscal quarter
          ended April 18, 1999, with respect to any other pending litigation.

Item 4.   Submission of Matters to a vote of Security Holders

          Not applicable

Item 6.   Exhibits and Reports on Form 8-K

          6 (a)  Exhibits -

                   10.1    Letter Agreement dated April 9, 1999, between First
                           Union National Bank (f/k/a First Union National
                           Bank of Tennessee) as Administrative Agent, ShoLodge,
                           Inc., et. al.

                   27      Financial Data Schedule for quarter ended April 18,
                           1999

                   27.1    Financial Data Schedule (Restated) for quarter ended
                           April 19, 1998



<PAGE>   20




                                   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 thereunto duly authorized.


                                ShoLodge, Inc.



Date:  June 1, 1999             /s/ Leon Moore
                                ----------------------------------------------
                                Leon Moore
                                President, Chief Executive Officer, Principal
                                Executive Officer, Director



Date:  June 1, 1999             /s/ Bob Marlowe
                                -----------------------------------------------
                                Bob Marlowe
                                Secretary, Treasurer, Chief Accounting Officer,
                                Principal Accounting Officer,  Chief Financial
                                Officer, Director