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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
 o
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended
 þ
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from August 1, 2005 to June 30, 2006
 Commission File Number 005-59509
 CHARTWELL INTERNATIONAL, INC.
  Nevada
    
    95-3979080(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification Number)177 Madison Avenue. 
Morristown, New Jersey
(Address of Principal Executive Offices)
    
    07960
(Zip Code)
 (973) 400-7010  (Issuers telephone number)
 
  
 þ o
 o
 o þ
  16,491,000 September 25, 2006
 September 25, 2006 13,896,361
 o þ




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TABLE OF CONTENTS
 PagePART IITEM 1  DESCRIPTION OF BUSINESS
    
    1ITEM 2  DESCRIPTION OF PROPERTY
    
    22ITEM 3  LEGAL PROCEEDINGS
    
    25ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    25PART IIITEM 5  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
    
    25ITEM 6  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    27ITEM 7  FINANCIAL STATEMENTS
    
    33ITEM 8  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    33ITEM 8A  CONTROLS AND PROCEDURES
    
    33ITEM 8B  OTHER INFORMATION
    
    33PART IIIITEM 9  DIRECTORS AND EXECUTIVE OFFICERS
    
    34ITEM 10  EXECUTIVE COMPENSATION
    
    35ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    37ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    40ITEM 13  EXHIBITS
    
    40ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    42EXHIBIT 4.1EXHIBIT 10.16EXHIBIT 10.17EXHIBIT 10.18EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32




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PART I
 
 ITEM 1  DESCRIPTION OF BUSINESS
 Overview of Business
       - 1 -




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Dividend and Change of Control
    Group Structure and Subsidiaries Activities
 
 Chartwell
International, Inc.
Hudson Logistics, Inc.
Hudson Logistic
Loading, Inc.
Belville Mining
Company, Inc.
Greater Ohio
Resources, Inc.
Greater Hudson
Resources, Inc.
Middletown and New
Jersey Railway
Company, Inc.   - 2 -




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Our Industries
 Railroads, Line-Haul Operating
    AggregateMilesClassification of Railroads
    
    Number
    
    Operated
    
    Revenues and Track Miles OperatedClass I (1)
    
    
    7
    
    
    
    97,496
    
    
    Over $289.4 millionRegional (2)
    
    
    31
    
    
    
    15,641
    
    
    $
    40.0 to $289.4 million and/or 350 or more miles operatedLocal
    
    
    518
    
    
    
    27,109
    
    
    Less than $40.0 million and less than 350 miles operatedTotal
    
    
    556
    
    
    
    140,246
 
 (1)
    
    Class 1 railroads include Canadian National Railway (CN), CSX, BNSF, Norfolk Southern (NS), Kansas City Southern Railway Company
(KCS), Union Pacific (UP) and Canadian Pacific Railway (CP)(2)
    
    Includes groups of non-contiguous smaller railroads
Source: Association of American Railroads, Railroad Facts, 2005 Edition.   - 3 -




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- 4 -




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Railroads,
Line-Haul Operating  Regulatory Issues
     Coal Mining
   - 5 -




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Coal Mining  Competition
  Coal Mining  Regulatory Issues and Environmental Matters
   - 6 -




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Clean Air Act.
  Mine Health and Safety Laws.
 Surface Mining Control and Reclamation Act.
 - 7 -




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Comprehensive Environmental Response, Compensation and Liability Act.
 Mining Permits and Approvals.
   - 8 -




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Endangered Species.
 Other Environmental Laws.
 Solid Waste Management
     - 9 -




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Landfills
   Transfer stations
 Solid Waste Management  Competition
  - 10 -




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Solid Waste Management  Regulatory Issues and Environmental Matters
  Clean Air Act
 Comprehensive Environmental Response, Compensation, and Liability Act
 Federal Water Pollution Control Act
 Resource Conservation and Recovery Act
 - 11 -




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Our Strategy
         - 12 -




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Subsequent Event
   Customers
  Dividends
  Employees
   Factors, Risks and Uncertainties That May Affect our Business
 With the exception of historical facts stated herein, the matters discussed in this report on
Form 10-KSB are forward looking statements that involve risks and uncertainties that could cause
actual results to differ materially from projected results. Such forward looking statements
include, but are not necessarily limited to statements regarding anticipated levels of future
revenues and earnings from the operations of Chartwell International, Inc. and its subsidiaries,
(the Company, we, us or
 - 13 -




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our), projected costs and expenses related to our operations, liquidity, capital resources,
and availability of future equity capital on commercially reasonable terms. Factors that could
cause actual results to differ materially are discussed below. We disclaim any intent or
obligation to publicly update these forward looking statements, whether as a result of new
information, future events or otherwise.
 Risks Related to Our Acquisition Strategy and Operations
 Recent change of control and discontinued prior operations do not give a historical basis upon
which to evaluate our current efforts, and the change in strategic direction has certain inherent
risks.
  We have changed our business focus and we intend to acquire operations unrelated to past
activities, and there are no assurances that management will be successful in acquiring a business
or integrating the operations successfully, which would impair our value further.
 We may be unable to execute our acquisition growth strategy.
 We face challenges in attracting and retaining a qualified and experienced management team.
 - 14 -




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Integration of proposed acquisitions poses certain risks, and we do not currently have
historical experience upon which to base an evaluation of the future prospects of success.
 Additional factors may negatively impact our acquisition growth strategy.
 We may not be able to attract the required capital, through either debt or equity financings,
in order to complete strategic acquisitions or make required purchases of capital equipment needed
to conduct our operations efficiently, either of which could adversely effect our financial
condition and ability to execute on our business plan.
 There may be undisclosed liabilities in the businesses that we acquire which we fail or are
unable to discover which could have a material adverse effect on our operations and business
conditions.
 - 15 -




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Larger competitors may compete with us for acquisition targets, making it more difficult for
us to acquire businesses that fit within our business strategy, or increasing the cost of making
such acquisitions, either of which could negatively affect our performance.
 The success of our railroad operations is dependant on our continuing relationships with Class
I carriers
 Much of the freight transported by railroads moves on railcars supplied by other independent
providers.
 We may be partially depending on government funding for our existing and future capital
projects and track rehabilitation.
 Our mining operations are inherently subject to conditions that could affect levels of
production and production costs at particular mines for varying lengths of time and could reduce
our profitability.
 - 16 -




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We have reclamation obligations and if we are required to honor reclamation obligations that
have been assumed by previous mine operators, we could be required to expend greater amounts than
we currently anticipate, which could affect our profitability in future periods.
 Defects in title or loss of any leasehold interests in our properties could limit our ability
to mine these properties or result in significant unanticipated costs.
 Estimates of proven and probable reserves are subject to considerable uncertainty.
 We may not be able to raise sufficient capital or generate sufficient cash flow to meet our
debt service requirements.
 - 17 -




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Regulatory approval to develop or expand our landfills and transfer stations may be delayed or
denied.
 Seasonal changes may adversely affect our businesses and operations.
 Risks Related to our Industry
 Strategic growth through acquisitions is dependent on our ability to internally grow our
logistics infrastructure, and there is no historical perspective to validate our belief that we can
attain certain gross margins competitively, the failure of which would adversely affect our
financial condition.
 Rapid growth could create risks of over leverage or undercapitalization to meet our
obligations, which could materially impact our financial condition and strategy.
 The rail-based transportation, transloading and intermodal logistics businesses are highly
competitive, and we will face competition from companies that may be better financed than we are,
which could impact our ability to compete for customers and employees.
 - 18 -




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We compete directly with other modes of transportation, including motor carriers, ships and
barges.
 Our railroad and real estate ownership are subject to significant governmental regulation and
our failure to comply with such regulations could have a material adverse effect on our operating
results, financial condition and liquidity.
 Rising fuel costs could adversely affect our business
 As part of our railroad operations, we may transport hazardous materials.
 Increased consolidation and competition within the coal industry may adversely affect our
ability to sell coal, and excess production capacity in the industry could put downward pressure on
coal prices.
 - 19 -




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We may be unable to obtain and renew permits necessary for our operations, which would
reduce our production, cash flow and profitability.
 Our operations may impact the environment or cause exposure to hazardous substances, and our
properties may have environmental contamination, which could result in material liabilities to us.
 Our inability to maintain landfill permits and licenses could adversely affect financial
resources or require significant expenditures to comply with the regulations, either of which could
materially affect gross margins and cash flow from operations.
 Judicial and administrative proceedings related to our business are routine, and penalties,
fines, or remediation orders could materially impact our cash flow or working capital from
time-to-time, which could impair our business plan objectives.
 - 20 -




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We may be subject to liability for any environmental damage that our solid waste facilities
may cause, including damage to neighboring landowners or residents, particularly as a result of the
contamination of soil, groundwater or surface water, and especially drinking water, which could
materially impact our cash flow in any given period.
 Various states have enacted, or are considering enacting, laws that restrict the disposal,
within the state, of solid waste generated outside the state.
 - 21 -




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Downturns in the U.S. economy have had and may have an adverse impact on our industries and
hence our operating results.
 
 ITEM 2  DESCRIPTION OF PROPERTY
 Land and Leaseholds
 nd
   Mineral Land Rights
  - 22 -




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Our Reserves
    Total
    
    
    
    
    
    
    
    
    
    
    Sulfur
    
    
    AsUnassigned
    
    
    
    
    
    
    
    
    
    
    Content
    
    
    ReceivedRecoverable
    
    
    Mining
    
    
    (lbs/million
    
    
    BTU/lbReserves (2)
    
    
    Method

    
    BTUs)
    
    
    (1)Mineral
    
    Proven
    
    Probable
    
    Total
    
    
    Surface
    
    Underground
    
    
    < 1.2
    
    
    
    1.2 - 2.5
    
    
    
    >2.5Coal
    
    
    4.095
    
    
    
    2.165
    
    
    
    6.26
    
    
    
    6.26
    
    
    
    
    
    
    
    
    
    
    
    0.835
    
    
    
    5.425
    
    
    
    11,000Clay
    
    
    3.05
    
    
    
    0.68
    
    
    
    3.73
    
    
    
    3.73
    
    
    
    
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aLimestone
    
    
    5.89
    
    
    
    2.76
    
    
    
    8.65
    
    
    
    8.65
    
    
    
    
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
 
 (1)
    
    As received BTU/lb. includes the weight of moisture in the coal on an as sold basis.These were calculated by averaging the values obtained from the drill holes.(2)
    
    Unassigned reserves will require significant capital expenditure to mine the
reserves. - 23 -




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Southern Ohio Mine
   - 24 -




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ITEM 3  LEGAL PROCEEDINGS
  
 ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 Market Information
   Eleven Months Ended June 30, 2006

    
    High
    
    LowFirst Quarter (October 31, 2005)
    
    $
    3.60
    
    
    $
    5.00Second Quarter (January 31, 2006)
    
    $
    4.50
    
    
    $
    3.45Third Quarter (April 30, 2006)
    
    $
    4.00
    
    
    $
    3.00Last Two Months (June 30, 2006)
    
    $
    3.00
    
    
    $
    2.00
 Fiscal 2005*
    
    High
    
    LowFirst Quarter (October 31, 2004)
    
    
    $.05
    
    
    
    $.03Second Quarter (January 31)
    
    
    $.05
    
    
    
    $.03Third Quarter (April 30)
    
    
    $.38
    
    
    
    $.03Fourth Quarter (July 31)
    
    $
    4.50
    
    
    $
    1.90
 
 * Reflects 10 for 1 reverse stock split effective June 27, 2005.  - 25 -




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Stockholders
  Dividends
   Recent Sales of Unregistered Securities
         - 26 -




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Securities Authorized for Issuance under Equity Compensation Plans
  
 ITEM 6  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
   - 27 -




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Financial Condition as of June 30, 2006.
       Plan of Operation
 Background
   - 28 -




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Cash and Cash Equivalents
   - 29 -




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Critical Accounting Policies
  Stock Based Compensation .
  Impairment of Long-Term Assets.
 Results of Operations
 For the eleven months ended June 30, 2006 (fiscal year 2006)
   - 30 -




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
    
    salaries and employee expenses of $560,000
    
    engineering and other consulting services of $229,000
    
    equipment freight, storage and maintenance of $168,000
    
    rents, utilities and office related expenses of $149,000
    
    repairs and maintenance of $56,000
    
    professional fees of $1,198,000
    
    investment and management consulting fees of $376,000
    
    travel and entertainment expenses of $118,000
    
    depreciation and amortization expense of $49,000.
   For the five months ended July 31, 2005 (fiscal year 2005)
  
    
    General and administrative expenses of $159,000
    
    Finance placement fees of $836,000
  Period from Inception on March 3, 2005 to June 30, 2006
  Liquidity and Capital Resources
    - 31 -




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Capital Expenditures
     Payments Due by PeriodContract Obligations
    
    
    
    
    
    Less than
    
    
    
    
    
    
    
    
    
    
    More thanAt June 30, 2006
    
    Total
    
    
    1 Year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsLong Term Debt
    
    $
    5,869,000
    
    
    $
    311,000
    
    
    $
    2,267,000
    
    
    $
    3,325,000
    
    
    $
    Lease Obligations
    
    
    372,000
    
    
    
    106,000
    
    
    
    232,000
    
    
    
    34,000
    
    
    
    Total Contractual
Obligations
    
    $
    6,241,000
    
    
    $
    417,000
    
    
    $
    2,499,000
    
    
    $
    3,325,000
    
    
    $
    
  - 32 -




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Off-Balance Sheet Transactions
  
 ITEM 7  FINANCIAL STATEMENTS
  
 ITEM 8  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 8A  CONTROLS AND PROCEDURES
    
 ITEM 8B  OTHER INFORMATION
  - 33 -




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PART III
 
 ITEM 9  DIRECTORS AND EXECUTIVE OFFICERS
 Directors and Executive Officers
  Person
    
    Age
    
    PositionImre Eszenyi
    
    
    38
    
    
    Chairman of the Board; Acting President and Vice
PresidentPaul Biberkraut
    
    
    45
    
    
    Chief Financial and Administrative Officer and
Assistant SecretaryCharles Srebnik
    
    
    72
    
    
    Director, Chairman of the Audit CommitteeDavid Adams
    
    
    48
    
    
    Director, Secretary
    - 34 -




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Audit Committee Financial Expert
  Compliance with Section 16(a) of the Securities Exchange Act of 1934
   Code of Ethics
  
 ITEM 10  EXECUTIVE COMPENSATION
 Summary Compensation
  - 35 -




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Summary Compensation Table
 Annual Compensation
    

Long Term CompensationAwards
    
    PayoutsSecuritiesOther
    
    Restricted
    
    Underlying
    
    LTIPAnnual
    
    Stock
    
    Options/
    
    Payo
    
    All OtherName and
    
    
    
    
    
    Salary
    
    Bonus
    
    Compensation
    
    Awards
    
    SARs
    
    uts
    
    CompensationPrincipal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    (#)
    
    ($)
    
    ($)Imre Eszenyi,
    
    
    2006
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    112,500
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    -0-Chairman of the
    
    
    2005
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    -0-Board, Acting
President and Vice
PresidentDr. Janice A. Jones
    
    
    2006
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    112,500
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    -0-Former Chief
    
    
    2005
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    -0-Executive Officer,
Chief Financial
Officer and
Director(2)Paul Biberkraut,
    
    
    2006
    
    
    $
    82,500
    
    
    $
    10,000
    
    
    $
    -0-
    
    
    $
    37,500
    
    
    
    150,000
    
    
    
    -0-
    
    
    $
    -0-Chief Financial and
    
    
    2005
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    $
    -0-Administrative
Officer and
Assistant Secretary(3)
 
 (1)
    
    Mr. Eszenyi does not have an employment engagement and does not receive compensation for
his duties as acting president(2)
    
    Dr Jones resigned all her positions with Chartwell on October 25, 2005(3)
    
    Mr. Biberkraut became an officer of Chartwell on January 16, 2006. Option/SAR Grants in Last Fiscal Year  (Individual Grants)
  Percent ofNumber of
    
    TotalSecurities
    
    Options/SARsUnderlying
    
    Granted to
    
    Exercise or baseOptions/SARs
    
    Employees in
    
    price
    
    ExpirationName
    
    Granted (#)
    
    Fiscal Year
    
    ($/Sh)
    
    DatePaul Biberkraut
    
    
    150,000
    
    
    
    42.86
    %
    
    $
    3.00
    
    
    January 2011
 - 36 -




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Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
  Value of unexercisedNumber of
    
    in-the-moneyShares
    
    Value
    
    unexercised options/SARs
    
    options/SARsacquired
    
    realized
    
    at FY-End (#)
    
    at FY-endName
    
    on exercise (#)
    
    ($)
    
    exercisable/unexercisable
    
    exercisable/unexercisablePaul Biberkraut
    
    
    0
    
    
    
    0
    
    
    
    0/150,000
    
    
    
    0/0
 Long-Term Incentive Plans-Awards in Last Fiscal Year
  Compensation of Directors
   Employment Agreements
  
 ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  - 37 -




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Amount and Natureof Beneficial
    
    Percentage ofName and Address
    
    
    
    Ownership of
    
    Common Stockof Beneficial Owner
    
    Title of Class
    
    Common Stock(1)
    
    Outstanding(1)Imre Eszenyi(2) (5)
    
    Common
    
    
    300,000
    
    
    
    2.16
    %Paul Biberkraut(2)
    
    Common
    
    
    25,000
    
    
    
    *David Adams(2)
    
    Common
    
    
    178,750
    
    
    
    1.29
    %Charles Srebnik(2)
    
    Common(3)
    
    
    200,000
    
    
    
    1.44
    %International
Kapitalanagegesellschaft m.b.H
acting on behalf of
Fund Merlin Master Funds INKA
Georg-Glock-Strasse 14
40474 Dusseldorf, Germany
    
    Common
    
    
    1,800,000
    
    
    
    12.95
    %Fonditel Velociraptor, FL
Pedro Teixeira Street, 8, 3rd Floor 
28020 Madrid, Spain
    
    Common(4)
    
    
    1,500,000
    
    
    
    10.79
    %Bayern Invest Kapitalanagegesellschaft m.b.H
c/o Brown Brothers Harriman
140 Broadway
New York, NY 10005
    
    Common
    
    
    761,614
    
    
    
    5.48
    %Gerlach & Company
c/o Citibank
333 West 34th Street, 3rd Floor 
New York, NY 10001
    
    Common
    
    
    700,000
    
    
    
    5.04
    %PICIAS Limited(5)
Palm Grove House
Road Town
Tortola, British Virgin Islands
    
    Common
    
    
    4,298,831
    
    
    
    30.93
    %Faisal A. Alhegelan
c/o Hogan & hartson L.L.P.
555 Thirteenth Street, NW
Washington, DC 20004
    
    Common (6)
    
    
    1,404,348
    
    
    
    9.24
    %All Executive Officers and Directors
     as a Group (4 persons)
    
    Common(3) (5)
    
    
    703,750
    
    
    
    5.06
    %
 
 *
    
    Less than one percent(1)
    
    Based upon information furnished to us by the directors and executive officers or
obtained from our stock transfer books showing 13,896,361 shares of common stock outstanding as
of September 25, 2006. We are informed that these persons hold the sole voting and dispositiv
power with respect to the common stock except as noted herein. For purposes of computing
beneficial ownership and the percentage of outstanding common stock held by each person or
group of persons named above as of September 25, 2006, any security which such person or group of
persons has the right to acquire within 60 days after such date is deemed to be outstanding for
the purpose of computing beneficial ownership and the percentage ownership of such person or
persons, but is not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.(2)
    
    The address for Messrs. Eszenyi, Biberkraut, Adams, and Srebnik is 177 Madison Avenue,
2nd Floor, Morristown, NJ 07960(3)
    
    Includes 100,000 shares owned by Mr. Srebniks spouse, of which Mr. Srebnik disclaims
beneficial ownership. - 38 -




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(4)
    
    Includes 500,000 shares held in the name of Eurovalor Estados Unidos, FI based on our
knowledge that the two entities are controlled or are under the common direction of the same
principals.(5)
    
    PICIAS Limited is a British Virgin Islands company owned by a trust established for the
benefits of Mr. Imre Eszenyis children. The trust is irrevocable, has independent trustees and
administrators. Mr. Eszenyi disclaims beneficial ownership and based on Section 16(a) filings
with the SEC and to our knowledge, has no direct or indirect control or direction over any of the
shares.(6)
    
    Includes approximately 1,304,348 shares Mr. Alhegelan has the right to acquire with 60 days
pursuant to conversion rights that are part of a convertible promissory note issued to Mr.
Alhegelan. Equity Compensation Plan Information
  Equity Compensation Plan Information
 Number ofsecuritiesremainingavailable forfuture issuanceNumber of securities
    
    
    
    
    
    under equityto be issued upon
    
    Weighted-average
    
    compensationexercise of
    
    exercise price of
    
    plans (excludingoutstanding options,
    
    outstanding
    
    securitieswarrants
    
    options, warrants
    
    reflected inPlan Category
    
    and rights(1)
    
    and rights
    
    column (a))Equity compensation
plans approved by
security
holders(2)
    
    
    350,000
    
    
    $
    2.83
    
    
    
    1,078,075Equity compensation
plans not approved
by security holders
    
    
    
    
    
    $
    
    
    
    
    N/ATotal
    
    
    350,000
    
    
    $
    2.83
    
    
    
    1,078,075
 
 (1)
    
    Number of shares is subject to adjustment in the future for changes in capitalization
resulting from stock splits, stock dividends and similar events.(2)
    
    Consists of our 2006 Equity Incentive Plan. This Plan authorizes us to grant options to
purchase up to 9% of the sum of the number of outstanding shares of our common stock and the
number shares attributed to convertible securities during the term of our Plan.  - 39 -




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##### Table of Contents



ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
         
 ITEM 13  EXHIBITS
 Exhibit Number
    
    Name3.1(1)
    
    Amended and Restated Articles of Incorporation3.2(1)
    
    Amended and Restated By-laws4.1
    
    2006 Equity Incentive Plan10.2(2)
    
    Purchase and Sale Agreement with Railway & Industrial Services, Inc.10.3(3)
    
    Securities Purchase Agreement10.4(4)
    
    Letter of Understanding with Rail Waste Holdings, LLC
 - 40 -




---



##### Table of Contents



Exhibit Number
    
    Name10.5(5)
    
    Share Purchase Agreement10.6(6)
    
    Agreement and Plan of Merger with E-Rail Logistics, Inc.10.7(7)
    
    Settlement Agreement with Minerva Enterprises, Inc. et al.10.8(8)
    
    Contract of Sale of Stock with the Estate of Pierre T. Rasmussen for
Acquisition of Cranberry Creek Railroad, Inc.10.9(9)
    
    Asset Purchase Agreement with the Estate of Emily Lucy C. Burch.10.10(10)
    
    Settlement Agreement with Starbank Group LLC et al.10.11(10)
    
    Settlement Agreement with RWH and Christopher Davino.10.12(10)
    
    Management Advisory Agreement with Orchestra Finance LLP.10.13(11)
    
    Note Purchase Agreement with Chris Gordon.10.14(12)
    
    Note Purchase Agreement with Faisal A. Alhegelan.10.15(13)
    
    Assignment, Assumption and Novation Agreement.10.16
    
    Lease Agreement with TOA Reinsurance Company of America.10.17
    
    Redemption and Stock Purchase Agreement between Thomas J. Belville, Robert E.
Belville, E-Rail Logistics, Inc. and Belville Mining Company.10.18
    
    Amendment to Redemption and Stock Purchase Agreement between Thomas J. Belville,
Robert E. Belville, E-Rail Logistics, Inc. and Belville Mining Company.14.1(14)
    
    Codes of Ethics.21
    
    Middletown and New Jersey Railway Company, Inc., a New York corporation; Hudson
Logistics, Inc., a Delaware corporation; Hudson Logistics Loading, Inc., a Delaware
corporation; Greater Hudson Resources, Inc., a Delaware corporation; Belville Mining
Company, Inc., an Ohio corporation; Greater Ohio Resources, Inc., an Ohio corporation.23.1
    
    Consent of Ronald R. Chadwick, P.C.23.2
    
    Consent of Urish Popeck & Co., LLC31.1
    
    Rule 13(a)  14(a)/15(d)  14(a) Certification (Principal Executive Officer)31.2
    
    Rule 13(a)  14(a)/15(d)  14(a) Certification (Principal Financial Officer)32
    
    Section 1350 Certifications
 Footnotes to Exhibits Index(1)
    
    Incorporated by reference to Form 8-K dated June 27, 2005.(2)
    
    Incorporated by reference to Form 8-K dated July 11, 2005.(3)
    
    Incorporated by reference to Form 8-K dated July 8, 2005.(4)
    
    Incorporated by reference to Form 8-K dated April 20, 2005.(5)
    
    Incorporated by reference to Form 8-K dated March 23, 2005.(6)
    
    Incorporated by reference to Form 8-K dated September 8, 2005.(7)
    
    Incorporated by reference to Form 8-K dated November 16, 2005.(8)
    
    Incorporated by reference to Form 8-K dated December 30, 2005.(9)
    
    Incorporated by reference to Form 8-K dated December 30, 2005.(10)
    
    Incorporated by reference to Form 8-K dated March 15, 2006.(11)
    
    Incorporated by reference to Form 8-K dated March 15, 2006.(12)
    
    Incorporated by reference to Form 8-K dated April 26, 2006.(13)
    
    Incorporated by reference to Form 8-K dated August 24, 2006.(14)
    
    Incorporated by reference to Form 10-KSB previously filed on October 4, 2005. - 41 -




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##### Table of Contents



ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  June 30, 2006
    
    
    July 31, 2005Urish
    
    
    Chadwick
    
    
    Urish
    
    
    ChadwickAudit Fees
    
    $
    92,000
    
    
    $
    10,000
    
    
    
    
    
    
    $
    13,000Audit  Related Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Tax Fees
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    All Other Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    93,000
    
    
    $
    10,000
    
    
    $
    0
    
    
    $
    13,000
    - 42 -




---



##### Table of Contents



SIGNATURES
  CHARTWELL INTERNATIONAL, INC.Dated: September 26, 2006
    
    /s/ Imre EszenyiBy: Imre EszenyiIts: Acting President (Principal Executive Officer)
and Chairman of the BoardDated: September 26, 2006
    
    /s/ Paul BiberkrautBy: Paul BiberkrautIts: Chief Financial and Administrative
Officer (Principal Financial Officer and
Principal Accounting Officer)
  Signature
    
    Capacity
    
    Date/s/ Imre Eszenyi
    
    Director
    
    September 26, 2006Imre Eszenyi/s/ David
C. Adams 
David
C. Adams
    
        Director
    
    September 26, 2006/s/ Charles
Srebnik 
Charles
Srebnik
    
    Director
    
    September 26, 2006
 - 43 -




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##### Table of Contents



PageIndependent Registered Public Accounting Firms Reports
    
    
    F - 1Financial StatementsConsolidated Balance Sheets
    
    
    F - 3Consolidated Statements of Operations
    
    
    F - 4Consolidated Statements of Stockholders Equity
    
    
    F - 5Consolidated Statements of Cash Flows
    
    
    F - 6Notes to Consolidated Financial Statements
    
    
    F - 8




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Pittsburgh, Pennsylvania
    
    /s/ Urish Popeck & Co., LLCAugust 3, 2006 except for Note 10 as to which the date is August 29, 2006
    
    URISH POPECK & CO., LLC
 F - 1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Aurora, Colorado
    
    /s/ Ronald R. Chadwick, P.C.December 14, 2005
    
    RONALD R. CHADWICK, P.C.
 F - 2




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##### Table of Contents



Chartwell International, Inc. and Subsidiaries
(A Development Stage Company)
 
 Consolidated Balance Sheets
  June 30,
    
    
    July 31,2006
    
    
    2005AssetsCurrent assetsCash and cash equivalents (Note 1)
    
    $
    3,018
    
    
    $
    7,686Accounts receivable
    
    
    25
    
    
    
    Deposits (Note 3)
    
    
    533
    
    
    
    1,425Prepaid expense and other
    
    
    38
    
    
    
    9Total current assets
    
    
    3,614
    
    
    
    9,120Long-term assets(Note 1 and 5)Property and equipment, net (Note 4)
    
    
    4,573
    
    
    
    Land
    
    
    1,735
    
    
    
    Mineral rights
    
    
    5,447
    
    
    
    Other
    
    
    19
    
    
    
    Total long-term assets
    
    
    11,774
    
    
    
    Total assets
    
    $
    15,388
    
    
    $
    9,120Liabilities and Stockholders EquityCurrent LiabilitiesAccounts payable and accrued liabilities
    
    $
    191
    
    
    $
    19Due to related parties
    
    
    21
    
    
    
    42Notes payable (Note 5)
    
    
    310
    
    
    
    Total current liabilities
    
    
    522
    
    
    
    61Long-term liabilitiesNotes payable, net of current portion (Note 5)
    
    
    5,557
    
    
    
    Total long-term liabilities
    
    
    5,557
    
    
    
    Total liabilities
    
    
    6,079
    
    
    
    61Commitments and Contingencies(Notes 5 and 8)Stockholders Equity(Note 7)Preferred stock, $0.001 par value, 25,000 shares authorizedCommon shares, $0.001 par value, 100,000 shares authorized
13,896 and 11,688 issued and outstanding at June 30, 2006
and July 31, 2005, respectively
    
    
    14
    
    
    
    12Additional paid in capital
    
    
    13,566
    
    
    
    10,020Accumulated deficit
    
    
    (4,271
    )
    
    
    (973
    )Total stockholders equity
    
    
    9,309
    
    
    
    9,059Total liabilities and stockholders equity
    
    $
    15,388
    
    
    $
    9,120
  F - 3




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##### Table of Contents



Chartwell International, Inc. and Subsidiaries
(A Development Stage Company)
 
 Consolidated Statements of Operations
  CumulativeFor the eleven
    
    
    From March 3,
    
    
    from March 3,months ended
    
    
    2005, Inception
    
    
    2005, InceptionJune 30,
    
    
    to July 31,
    
    
    to June 30,2006
    
    
    2005
    
    
    2006Revenue
    
    $
    51
    
    
    $
    
    
    
    $
    51General and administrative expenses
    
    
    3,053
    
    
    
    159
    
    
    
    3,212Loss from operations
    
    
    (3,002
    )
    
    
    (159
    )
    
    
    (3,161
    )Other income (expense)Interest, net (Note 5)
    
    
    (148
    )
    
    
    22
    
    
    
    (126
    )Gains on notes settlements
    
    
    74
    
    
    
    
    
    
    
    74Finance placement fees
    
    
    (222
    )
    
    
    (836
    )
    
    
    (1,058
    )Total other income (expense)
    
    
    (296
    )
    
    
    (814
    )
    
    
    (1,110
    )Net loss
    
    $
    (3,298
    )
    
    $
    (973
    )
    
    $
    (4,271
    )Net loss per common share,basic and diluted
    
    $
    (0.23
    )
    
    $
    (0.16
    )
    
    $
    (0.36
    )Weighted average number of common shares outstanding,
basic and diluted
    
    
    14,639
    
    
    
    5,937
    
    
    
    11,942
  F - 4




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##### Table of Contents



Chartwell International, Inc and Subsidiaries
(A Development Stage Company)
 
 Consolidated Statements of Stockholders Equity
  Common
    
    
    Common
    
    
    Additional
    
    
    
    
    
    
    TotalStock
    
    
    Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    $
    
    
    Capital
    
    
    Deficit
    
    
    EquityBalance, March 3, 2005
    
    
    2,416
    
    
    $
    2
    
    
    $
    (202
    )
    
    $
    
    
    
    $
    (200
    )Common stock issued for cash
    
    
    8,978
    
    
    
    9
    
    
    
    9,782
    
    
    
    
    
    
    
    9,791Common stock issued for services
    
    
    294
    
    
    
    1
    
    
    
    440
    
    
    
    
    
    
    
    441Net loss from March 5, 2005, Inception to July 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (973
    )
    
    
    (973
    )Balance, July 31, 2005
    
    
    11,688
    
    
    
    12
    
    
    
    10,020
    
    
    
    (973
    )
    
    
    9,059Common stock issued for cash
    
    
    464
    
    
    
    
    
    
    
    850
    
    
    
    
    
    
    
    850Common stock issued in partial payment of notes
receivable
    
    
    300
    
    
    
    
    
    
    
    325
    
    
    
    
    
    
    
    325Common stock issued in partial payment of acquisition
    
    
    1,202
    
    
    
    1
    
    
    
    1,802
    
    
    
    
    
    
    
    1,803Common stock issued for services
    
    
    542
    
    
    
    1
    
    
    
    812
    
    
    
    
    
    
    
    813Fair value of stock options granted
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    32Common stock redeemed for cash
    
    
    (300
    )
    
    
    
    
    
    
    (275
    )
    
    
    
    
    
    
    (275
    )Net loss for the eleven months end June 30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,298
    )
    
    
    (3,298
    )Balance, June 30, 2006
    
    
    13,896
    
    
    $
    14
    
    
    $
    13,566
    
    
    $
    (4,271
    )
    
    $
    9,309
  F - 5




---



##### Table of Contents



Chartwell International, Inc. and Subsidiaries
(A Development Stage Company)
 
 Consolidated Statements of Cash Flows
  CumulativeFor the eleven
    
    
    From March 3,
    
    
    from March 3,months ended
    
    
    2005, Inception
    
    
    2005, InceptionJune 30,
    
    
    to July 31,
    
    
    to June 30,2006
    
    
    2005
    
    
    2006Cash flows from operating activitiesNet loss
    
    $
    (3,298
    )
    
    $
    (973
    )
    
    $
    (4,271
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activitiesDepreciation and amortization
    
    
    49
    
    
    
    
    
    
    
    49Gain on settlement of note receivable
    
    
    (35
    )
    
    
    
    
    
    
    (35
    )Gain on settlement of note payable
    
    
    (40
    )
    
    
    
    
    
    
    (40
    )Fair value of stock options granted
    
    
    32
    
    
    
    
    
    
    
    32Fair value of common stock issued for services
    
    
    813
    
    
    
    441
    
    
    
    1,254Increase (decrease) in cash from changes in assets and
liabilitiesAccounts receivable
    
    
    (23
    )
    
    
    
    
    
    
    (23
    )Deposits
    
    
    892
    
    
    
    (1,425
    )
    
    
    (533
    )Prepaid and other
    
    
    (29
    )
    
    
    (9
    )
    
    
    (38
    )Accounts payable and accrued liabilities
    
    
    (29
    )
    
    
    19
    
    
    
    (10
    )Due to related parties
    
    
    (21
    )
    
    
    42
    
    
    
    21Net cash used in operating activities
    
    
    (1,689
    )
    
    
    (1,905
    )
    
    
    (3,594
    )Cash flows from investing activitiesPurchase of property and equipment
    
    
    (2,963
    )
    
    
    
    
    
    
    (2,963
    )Exercise of mining rights options
    
    
    (102
    )
    
    
    
    
    
    
    (102
    )Deposits
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )Cash paid in acquisitions
    
    
    (4,597
    )
    
    
    
    
    
    
    (4,597
    )Cash received in acquisitions
    
    
    82
    
    
    
    
    
    
    
    82Net cash used in investing activities
    
    
    (7,594
    )
    
    
    
    
    
    
    (7,594
    )Cash flows from financing activitiesProceeds from notes receivable
    
    
    635
    
    
    
    
    
    
    
    635Payment for notes receivable
    
    
    (275
    )
    
    
    
    
    
    
    (275
    )Borrowings under notes payable
    
    
    4,000
    
    
    
    
    
    
    
    4,000Repayments under notes payable
    
    
    (320
    )
    
    
    (200
    )
    
    
    (520
    )Issuance of common stock
    
    
    850
    
    
    
    9,791
    
    
    
    10,641Redemption of common stock
    
    
    (275
    )
    
    
    
    
    
    
    (275
    )Net cash provided by financing activities
    
    
    4,615
    
    
    
    9,591
    
    
    
    14,206Net increase (decrease) in cash
    
    
    (4,668
    )
    
    
    7,686
    
    
    
    3,018Cash and cash equivalents, beginning of period
    
    
    7,686
    
    
    
    
    
    
    
    Cash and cash equivalents, end of period
    
    $
    3,018
    
    
    $
    7,686
    
    
    $
    3,018
  F - 6




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##### Table of Contents



Chartwell International, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Cash Flows
 Cumulative
    
    
    CumulativeFor the eleven
    
    
    from March 3,
    
    
    from March 3,months ended
    
    
    2005, Inception
    
    
    2005, InceptionJune 30,
    
    
    to April 30,
    
    
    to April 30,2006
    
    
    2006
    
    
    2006Supplemental disclosure of cash flow informationCash paid during the period for:Interest
    
    $
    126
    
    
    $
    418
    
    
    $
    544Income Taxes
    
    $
    8
    
    
    $
    
    
    
    $
    8Non-Cash Investing and Financing ActivitiesCommon stock issued in partial payment of note receivable
    
    $
    (325
    )
    
    $
    
    
    
    $
    (325
    )Software acquired under capital lease
    
    $
    (27
    )
    
    $
    
    
    
    $
    (27
    )Common stock issued in partial payment of acquisition of
E-Rail Logistics, Inc.
    
    $
    (1,803
    )
    
    $
    
    
    
    $
    (1,803
    )Note payable issued in partial payment of acquisition of
Cranberry Creek Railroad, Inc.
    
    $
    (500
    )
    
    $
    
    
    
    $
    (500
    )Interest accrued to notes payable
    
    $
    (76
    )
    
    $
    
    
    
    $
    (76
    )
  F - 7




---



##### Table of Contents



Note 1  Summary of Significant Accounting Policies
 Organization and Business
        F - 8




---



##### Table of Contents



Note 1  Summary of Significant Accounting Policies (continued)  Organization and Business (continued)
   F - 9




---



##### Table of Contents



Note 1  Summary of Significant Accounting Policies (continued)
 Principles of Consolidation and Basis of Presentation
   Reclassifications
  Cash and Cash Equivalents
  Property and Equipment
  Mineral Mining Rights
  F - 10




---



##### Table of Contents



Note 1  Summary of Significant Accounting Policies (continued)
 Impairment of Long-Term Assets
  Use of Estimates
  Revenue Recognition
  Income Taxes
  Stock Based Compensation
 Share-Based Payments
  F - 11




---



##### Table of Contents



Note 1  Summary of Significant Accounting Policies (continued)
 Earnings (Loss) Per Share
  Segment Reporting
  Comprehensive Income
  Customer and Vendor Concentrations
  Fair Value of Financial Instruments
  F - 12




---



##### Table of Contents



Note 1  Summary of Significant Accounting Policies (continued)
 Recently Issued Accounting Pronouncements
   Note 2  Acquisitions
 E-Rail Logistics, Inc.
  Determining Whether a
Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business
  Cash
    
    $
    2,867,0001,201,981 shares of common stock @$1.50 per share
    
    
    1,803,000Assumption of debt
    
    
    1,822,000Total purchase price:
    
    $
    6,492,000
  Cash
    
    $
    26,000Other Assets
    
    
    5,000Property and Equipment
    
    
    108,000Land
    
    
    1,008,000Mineral Rights
    
    
    1,606,000Option for Mineral Rights
    
    
    3,739,000Total Assets Acquired
    
    $
    6,492,000
 F - 13




---



##### Table of Contents



Note 2  Acquisitions (continued)
 E-Rail Logistics, Inc. (continued)
         F - 14




---



##### Table of Contents



Note 2  Acquisitions (continued)
 Cranberry Creek Railroad, Inc.
     February 10, 2006Cash
    
    $
    56,000Accounts receivable
    
    
    2,000Land
    
    
    726,000Property and equipment
    
    
    1,524,000Accounts payable and accrued liabilities
    
    
    (78,000
    )Purchase price
    
    $
    2,230,000
  F - 15




---



##### Table of Contents



Note 2  Acquisitions (continued)
 Cranberry Creek Railroad, Inc. (continued)
 Chartwell International, Inc.
(A Development Stage Company)
Pro-forma Consolidated Balance Sheets
June 30, 2006
 AcquisitionChartwell (1)
    
    Cranberry (2)
    
    Adjustments(3)
    
    Pro-FormaASSETSCurrent assetsCash
    
    $
    3,018
    
    
    $
    
    
    
    $
    
    
    
    $
    3,018Accounts receivable
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    25Deposit
    
    
    533
    
    
    
    
    
    
    
    
    
    
    
    533Other
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    38Total current assets
    
    
    3,614
    
    
    
    
    
    
    
    
    
    
    
    3,614Long-term assets (Note 1)Property and equipment, net
    
    
    4,573
    
    
    
    
    
    
    
    
    
    
    
    4,573Land
    
    
    1,735
    
    
    
    
    
    
    
    
    
    
    
    1,735Mineral rights
    
    
    5,447
    
    
    
    
    
    
    
    
    
    
    
    1,606Other
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    19Total long-term assets
    
    
    11,774
    
    
    
    
    
    
    
    
    
    
    
    11,774Total Assets
    
    $
    15,388
    
    
    $
    
    
    
    $
    
    
    
    $
    15,388LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable and accrued expenses
    
    $
    191
    
    
    $
    8
    
    
    $
    22
    
    
    $
    221Due to related parties
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21Notes payable
    
    
    310
    
    
    
    
    
    
    
    
    
    
    
    310Total current liabilities
    
    
    522
    
    
    
    8
    
    
    
    22
    
    
    
    552Long-term liabilitiesNotes payable, net of current portion
    
    
    5,557
    
    
    
    
    
    
    
    
    
    
    
    5,557Total long-term liabilities
    
    
    5,557
    
    
    
    
    
    
    
    
    
    
    
    5,557Total liabilities
    
    
    6,079
    
    
    
    8
    
    
    
    22
    
    
    
    6,109Stockholders equityPreferred stock, $0.001 par value,
25,000 shares authorized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, $0.001 par value
100,000 authorized, 13,896 shares
issued and outstanding
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    14Additional paid in capital
    
    
    13,566
    
    
    
    
    
    
    
    
    
    
    
    13,566Accumulated deficit
    
    
    (4,271
    )
    
    
    (8
    )
    
    
    (22
    )
    
    
    (4,301
    )Total stockholders equity
    
    
    9,309
    
    
    
    (8
    )
    
    
    (22
    )
    
    
    9,279Total liabilities and stockholders equity
    
    $
    15,388
    
    
    $
    
    
    
    $
    
    
    
    $
    15,388
 F - 16




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##### Table of Contents



Note 2  Acquisitions (continued)
 Cranberry Creek Railroad, Inc. (continued)
 Chartwell International, Inc.
(A Development Stage Company)
Pro-forma Consolidated Statement of Operations
For the Eleven Months Ended June 30, 2006
 AcquisitionChartwell (1)
    
    Cranberry (4)
    
    Adjustments (3)
    
    Pro-FormaRevenue
    
    $
    51
    
    
    $
    66
    
    
    $
    
    
    
    $
    117General and administrative expenses
    
    
    3,053
    
    
    
    85
    
    
    
    
    
    
    
    3,138Loss from operations
    
    
    (3,002
    )
    
    
    (18
    )
    
    
    
    
    
    
    (3,020
    )Other income (expense)Interest, net
    
    
    (148
    )
    
    
    
    
    
    
    (22
    )
    
    
    (170
    )Gain on note settlement
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    74Finance placement fee
    
    
    (222
    )
    
    
    
    
    
    
    
    
    
    
    (222
    )Total other income (expense)
    
    
    (296
    )
    
    
    
    
    
    
    (22
    )
    
    
    (318
    )Loss before income taxes
    
    
    (3,298
    )
    
    
    (18
    )
    
    
    (22
    )
    
    
    (3,338
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (3,298
    )
    
    $
    (18
    )
    
    $
    (22
    )
    
    $
    (3,338
    )Net loss per share, basic and diluted
    
    $
    (0.23
    )
    
    $
    (18.08
    )
    
    
    n/a
    
    
    $
    (0.23
    )Weighted average number of common shares outstandingbasic and diluted
    
    
    14,639
    
    
    
    1
    
    
    
    (1
    )
    
    
    14,639
  
 (1)
    
    Chartwell International, Inc.s (Chartwell) consolidated balance sheet reflects balances as
of June 30, 2006 and consolidated statements of operations from eleven months ended June 30, 2006(2)
    
    Cranberry Creek Railroad, Inc.s (Cranberry) balance sheet reflects accumulated deficit upon
its acquisition by Chartwell on February 10, 2006(3)
    
    On February 10, 2006 Chartwells acquisition of Cranberry included an 8% convertible promissory
note of $500,000. The interest on the convertible promissory note has been reflected as if it
existed for the three the eleven months ended June 30, 2006(4)
    
    Cranberrys statement of operations reflect an estimate of the five months ended December 31,
2005 based on 5/12th of the statement of operations for the year ended December 31, 2005 adjusted
for non-recurring Expenses and the statement of operations from January 1, 2006 to February 9,
2006. Financial statements For the five months ended December 31, 2005 were neither available nor
feasible to create. In the opinion of Management the adjustments are necessary to a fair statement
to the result of the interim period presented herein. F - 17




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##### Table of Contents



Note 3
 Deposit on Railcar Purchase
  Note 4
 Property and Equipment
  June 30,
    
    
    July 31,2006
    
    
    2005(in thousands)Buildings
    
    $
    126
    
    
    $
    Railroad structures and improvements
    
    
    1,348
    
    
    
    Leasehold improvements
    
    
    5
    
    
    
    Office furniture & equipment
    
    
    61
    
    
    
    Computer hardware and software
    
    
    61
    
    
    
    Railway locomotives and cars
    
    
    2,662
    
    
    
    Railway equipment
    
    
    354
    
    
    
    4,617
    
    
    
    Accumulated depreciation and amortization
    
    
    (44
    )
    
    
    $
    4,573
    
    
    $
    
  Note 5
 Notes Payable
  F - 18




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##### Table of Contents



Note 5
 Notes Payable (continued)
      June 30, 2006
    
    
    July 31, 2005(In thousands)Total
    
    $
    5,867
    
    
    $
    Less current portion
    
    
    (310
    )
    
    
    Long-term
    
    $
    5,557
    
    
    $
    
  Year Ending
    
    AmountJune 30,
    
    (In thousands)2007
    
    $
    3102008
    
    $
    8992009
    
    $
    1,3682010
    
    $
    1252011 and beyond
    
    $
    3,165$
    5,867
 F - 19




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##### Table of Contents



Note 6
 Income Taxes
  F - 20




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##### Table of Contents



Note 7  Equity
 Authorized Capital
   Common Stock Transactions
          F - 21




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##### Table of Contents



Note 7
 Equity (continued)
 Common Stock Transactions (continued)
       Stock Options
    F - 22




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##### Table of Contents



Note 7
 Equity (continued)
 Stock Options (continued)
  Risk free interest rates
    
    
    4.60% - 5.00%Dividends
    
    
    Volatility factors
    
    
    85% - 104%Expected lifes
    
    
    2  3 yearsAnnual forfeiture rate
    
    
    30%
  Eleven Month Period EndedJune 30, 2006Weighted AverageAll Options
    
    Exercise PriceOutstanding at beginning of period
    
    
    
    
    
    $
    Options granted
    
    
    350,000
    
    
    $
    2.83Options forfeited
    
    
    
    
    
    
    Options expired
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    Outstanding at end of period
    
    
    350,000
    
    
    $
    2.83Exercisable at end of period
    
    
    
    
    
    $
    
 F - 23




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##### Table of Contents



Note 7
 Equity (continued)
 Stock Options (continued)
 Eleven Month Period EndedJune 30, 2006Weighted AverageExercise PriceNon-vested OptionsNon-vested at beginning of period
    
    
    
    
    
    $
    Options granted
    
    
    350,000
    
    
    $
    2.83Options forfeited
    
    
    
    
    
    
    Options expired
    
    
    
    
    
    
    Options vested
    
    
    
    
    
    
    Non-vested at end of period
    
    
    350,000
    
    
    $
    2.83
     WeightedAverage
    
    
    WeightedExercise
    
    
    AverageNumber
    
    
    Price
    
    
    Fair ValueOptions exercise price equal to stock price
    
    
    150,000
    
    
    $
    3.00
    
    
    $
    1.00Options exercise price exceeds the stock price
    
    
    200,000
    
    
    $
    2.70
    
    
    $
    0.72
  Outstanding
    
    ExercisableWeighted
    
    Weighted
    
    
    
    WeightedAverage
    
    Average
    
    
    
    AverageRange
    
    
    
    
    
    Exercise
    
    Contractual
    
    
    
    ExerciseFrom
    
    To
    
    Number
    
    Price
    
    Life
    
    Number
    
    Price$2.70
    
    $2.70
    
    
    200,000
    
    
    $
    2.70
    
    
    
    4.9
    
    
    
    
    $
    0.00$3.00
    
    $3.00
    
    
    150,000
    
    
    $
    3.00
    
    
    
    4.6
    
    
    
    
    $
    0.00350,000
    
    
    
    
    
    
    
    
    
    
    
 F - 24




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##### Table of Contents



Note 7
 Equity (continued)
 Stock Options (continued)
  June 30,
    
    
    July 31,2006
    
    
    2005Options
    
    
    350,000
    
    
    
    Convertible notes payable
    
    
    1,971,143
    
    
    
    Total
    
    
    2,321,143
    
    
    
    
 Note 8
 Commitments and Contingencies
 Leases
  Years ending June 302007
    
    $
    106,0002008
    
    
    116,0002009
    
    
    116,0002010
    
    
    35,000$
    373,000
  F - 25




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##### Table of Contents



Legal Proceedings
  Note 9
 Related Party Transactions
      Note
10  Subsequent Event
  F - 26




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##### Table of Contents



Note
10  Subsequent Event (continued)
  F - 27




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##### Table of Contents



INDEX
TO EXHIBITS
 Exhibit Number
    
    Name3.1(1)
    
    Amended and Restated Articles of Incorporation3.2(1)
    
    Amended and Restated By-laws4.1
    
    2006 Equity Incentive Plan10.2(2)
    
    Purchase and Sale Agreement with Railway & Industrial Services, Inc.10.3(3)
    
    Securities Purchase Agreement10.4(4)
    
    Letter of Understanding with Rail Waste Holdings, LLC10.5(5)
    
    Share Purchase Agreement10.6(6)
    
    Agreement and Plan of Merger with E-Rail Logistics, Inc.10.7(7)
    
    Settlement Agreement with Minerva Enterprises, Inc. et al.10.8(8)
    
    Contract of Sale of Stock with the Estate of Pierre T. Rasmussen for
Acquisition of Cranberry Creek Railroad, Inc.10.9(9)
    
    Asset Purchase Agreement with the Estate of Emily Lucy C. Burch.10.10(10)
    
    Settlement Agreement with Starbank Group LLC et al.10.11(10)
    
    Settlement Agreement with RWH and Christopher Davino.10.12(10)
    
    Management Advisory Agreement with Orchestra Finance LLP.10.13(11)
    
    Note Purchase Agreement with Chris Gordon.10.14(12)
    
    Note Purchase Agreement with Faisal A. Alhegelan.10.15(13)
    
    Assignment, Assumption and Novation Agreement.10.16
    
    Lease Agreement with TOA Reinsurance Company of America.10.17
    
    Redemption and Stock Purchase Agreement between Thomas J. Belville, Robert E.
Belville, E-Rail Logistics, Inc. and Belville Mining Company.10.18
    
    Amendment to Redemption and Stock Purchase Agreement between Thomas J. Belville,
Robert E. Belville, E-Rail Logistics, Inc. and Belville Mining Company.14.1(14)
    
    Codes of Ethics.21
    
    Middletown and New Jersey Railway Company, Inc., a New York corporation; Hudson
Logistics, Inc., a Delaware corporation; Hudson Logistics Loading, Inc., a Delaware
corporation; Greater Hudson Resources, Inc., a Delaware corporation; Belville Mining
Company, Inc., an Ohio corporation; Greater Ohio Resources, Inc., an Ohio corporation.23.1
    
    Consent of Ronald R. Chadwick, P.C.23.2
    
    Consent of Urish Popeck & Co., LLC31.1
    
    Rule 13(a)  14(a)/15(d)  14(a) Certification (Principal Executive Officer)31.2
    
    Rule 13(a)  14(a)/15(d)  14(a) Certification (Principal Financial Officer)32
    
    Section 1350 Certifications
 Footnotes to Exhibits Index
 
 (1)
    
    Incorporated by reference to Form 8-K dated June 27, 2005.(2)
    
    Incorporated by reference to Form 8-K dated July 11, 2005.(3)
    
    Incorporated by reference to Form 8-K dated July 8, 2005.(4)
    
    Incorporated by reference to Form 8-K dated April 20, 2005.(5)
    
    Incorporated by reference to Form 8-K dated March 23, 2005.(6)
    
    Incorporated by reference to Form 8-K dated September 8, 2005.(7)
    
    Incorporated by reference to Form 8-K dated November 16, 2005.(8)
    
    Incorporated by reference to Form 8-K dated December 30, 2005.(9)
    
    Incorporated by reference to Form 8-K dated December 30, 2005.(10)
    
    Incorporated by reference to Form 8-K dated March 15, 2006.(11)
    
    Incorporated by reference to Form 8-K dated March 15, 2006.(12)
    
    Incorporated by reference to Form 8-K dated April 26, 2006.(13)
    
    Incorporated by reference to Form 8-K dated August 24, 2006.(14)
    
    Incorporated by reference to Form 10-KSB previously filed on October 4, 2005.