##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
 þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission
File Number 000-51342
 CHARTWELL INTERNATIONAL, INC.
  Nevada
    
    95-3979080(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification Number)177 Madison Avenue.
    
    07960Morristown, New Jersey
    
    (Zip Code)(Address of Principal Executive Offices)
 (973) 400-7010  (Issuers telephone number)
 
  
 þ o
 o
 o þ
  8,593,000 August 3, 2007
 August 3, 2007 14,041,361
 o þ




---



##### 



TABLE OF CONTENTS
  
 PagePART IITEM 1  DESCRIPTION OF BUSINESS
    
    
    1ITEM 2  DESCRIPTION OF PROPERTY
    
    
    17ITEM 3  LEGAL PROCEEDINGS
    
    
    19ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    20PART IIITEM 5  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
    
    
    20ITEM 6  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    22ITEM 7  FINANCIAL STATEMENTS
    
    
    27ITEM 8  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    27ITEM 8A  CONTROLS AND PROCEDURES
    
    
    27ITEM 8B  OTHER INFORMATION
    
    
    28PART IIIITEM 9  DIRECTORS AND EXECUTIVE OFFICERS
    
    
    28ITEM 10  EXECUTIVE COMPENSATION
    
    
    29ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    31ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    33ITEM 13  EXHIBITS
    
    
    34ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    35EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32




---



##### Table of Contents



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




---



##### Table of Contents



Dividend and Change of Control
    Group Structure and Subsidiaries Activities
 
      - 2 -




---



##### Table of Contents



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 -




---



##### Table of Contents



Railroads, Line-Haul Operating  Regulatory Issues
     Coal Mining
  - 4 -




---



##### Table of Contents



Coal Mining  Competition
  Coal Mining  Regulatory Issues and Environmental Matters
   - 5 -




---



##### Table of Contents



Clean Air Act.
  Mine Health and Safety Laws.
 Surface Mining Control and Reclamation Act.
  Comprehensive Environmental Response, Compensation and Liability Act.
 - 6 -




---



##### Table of Contents



Mining Permits and Approvals.
     Endangered Species.
 Other Environmental Laws.
 Solid Waste Management
  - 7 -




---



##### Table of Contents



Landfills
   Transfer stations
 - 8 -




---



##### Table of Contents



Solid Waste Management  Competition
      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
 - 9 -




---



##### Table of Contents



Our Strategy
         - 10 -




---



##### Table of Contents



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 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.
 - 11 -




---



##### Table of Contents



We face challenges in attracting and retaining a qualified and experienced management team.
 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.
 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.
 - 12 -




---



##### Table of Contents



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 planned 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.
 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.
 - 13 -




---



##### Table of Contents



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.
 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.
 - 14 -




---



##### Table of Contents



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.
 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.
 We may be unable to obtain and renew permits necessary for our operations, which would reduce
our production, cash flow and profitability.
 - 15 -




---



##### Table of Contents



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.
 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.
 - 16 -




---



##### Table of Contents



Various states have enacted, or are considering enacting, laws that restrict the disposal,
within the state, of solid waste generated outside the state.
 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
    Land and Mineral Rights
  - 17 -




---



##### Table of Contents



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.   - 18 -




---



##### Table of Contents



Southern Ohio Mine
     
 ITEM
3  LEGAL PROCEEDINGS
  - 19 -




---



##### Table of Contents



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
   Year Ended June 30, 2007
    
    High
    
    LowFirst Quarter (September 30, 2006)
    
    $
    2.70
    
    
    $
    0.75Second Quarter (December 31, 2006)
    
    $
    1.50
    
    
    $
    0.75Third Quarter (March 31, 2007)
    
    $
    1.40
    
    
    $
    0.85Fourth Quarter (June 30, 2007)
    
    $
    1.00
    
    
    $
    0.75
 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
  Stockholders
  - 20 -




---



##### Table of Contents



Dividends
   Recent Sales of Unregistered Securities
              - 21 -




---



##### Table of Contents



Securities Authorized for Issuance under Equity Compensation Plans
  
 ITEM 6  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
   Background and Corporate History
     - 22 -




---



##### Table of Contents



Critical Accounting Policies
  Revenue Recognition.
 Stock Based Compensation .
  - 23 -




---



##### Table of Contents



Impairment of Long-Term Assets.
 Results of Operations
 Comparison for the year ended June 30, 2007 and the eleven months ended June 30, 2006
  Revenues
  Cost of Revenues
  Gross Profit
  General and Administrative Expenses
  - 24 -




---



##### Table of Contents




    
    salaries and employee expenses of $1,438,000
    
    engineering and other consulting services of $719,000
    
    rents, utilities, telephone and office related expenses of $250,000
    
    repairs and maintenance of $83,000
    
    professional fees of $582,000
    
    investment and management consulting fees of $130,000
    
    travel expenses of $195,000
    
    depreciation and amortization expense of $309,000.
  
    
    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 expenses of $118,000
    
    depreciation and amortization expense of $49,000.
  Other Income and Expenses
  Income Tax Provision
  For the five months ended July 31, 2005 (fiscal year 2005)
  
    
    General and administrative expenses of $159,000
    
    Finance placement fees of $836,000
 - 25 -




---



##### Table of Contents



Liquidity and Capital Resources
         - 26 -




---



##### Table of Contents



Capital Expenditures
     Payments Due by PeriodContract Obligations
    
    
    
    
    
    Less than
    
    
    
    
    
    
    
    
    
    
    More thanAt June 30, 2007
    
    Total
    
    
    1 Year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsLong Term Debt
    
    $
    6,851,000
    
    
    $
    773,000
    
    
    $
    1,965,000
    
    
    $
    4,113,000
    
    
    $
    Lease Obligations
    
    
    266,000
    
    
    
    116,000
    
    
    
    150,000
    
    
    
    
    
    
    
    Total Contractual Obligations
    
    $
    7,117,000
    
    
    $
    889,000
    
    
    $
    2,115,000
    
    
    $
    4,113,000
    
    
    $
    
  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
   - 27 -




---



##### Table of Contents



ITEM 8B  OTHER INFORMATION
  
 PART III
 
 ITEM 9  DIRECTORS AND EXECUTIVE OFFICERS
 Directors and Executive Officers
  Person
    
    Age
    
    PositionImre Eszenyi
    
    
    39
    
    
    Chairman of the Board, Acting President and Vice PresidentPaul Biberkraut
    
    
    46
    
    
    Chief Financial and Administrative Officer and SecretaryCharles Srebnik
    
    
    73
    
    
    Director, Chairman of the Audit CommitteeDavid Adams
    
    
    49
    
    
    Director, Assistant Secretary
   - 28 -




---



##### Table of Contents



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
  Summary Compensation Table
 Non-Equity
    
    Non-QualifiedIncentive
    
    DeferredStock
    
    Option
    
    Plan
    
    Compensation
    
    All OtherSalary
    
    Bonus
    
    Awards (4)
    
    Awards (4)
    
    Compensation
    
    Earnings
    
    Compensation
    
    TotalName And
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)Principal Position (a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)
    
    (f)
    
    (g)
    
    (h)
    
    (i)
    
    (j)Imre Eszenyi,
    
    
    2007
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-Chairman of
the Board, Acting
President and Vice
President (1)
    
    
    2006
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    112,500
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    112,500Paul Biberkraut,
    
    
    2007
    
    
    $
    183,462
    
    
    $
    10,000
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    194,074Chief
Financial and
Administrative
Officer and
Secretary(2)
    
    
    2006
    
    
    $
    82,500
    
    
    $
    10,000
    
    
    $
    37,500
    
    
    $
    149,940
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    279,940Thomas Winant,
    
    
    2007
    
    
    $
    120,000
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    76,560
    
    
    $
    196,560Vice President
of Sales and
Operations(3)
    
    
    2006
    
    
    $
    6,846
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    72,590
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    3,423
    
    
    $
    82,859
 - 29 -




---



##### Table of Contents



(1)
    
    Mr. Eszenyi does not have an employment engagement and does not receive compensation for
his duties as acting president. Aggregate number of stock awards outstanding as of June 30,
2007 is 75,000.(2)
    
    Mr. Biberkraut became an officer of Chartwell on January 16, 2006.(3)
    
    Mr. Winant joined Chartwell on June 12, 2006. All other compensation consists of commission.(4)
    
    The assumptions underlying the valuation of stock awards and option awards can be found in
Note 10 of our Notes to Consolidated Financials that begin on page 47 of this document. Employment Agreements
  Outstanding Equity Awards at Fiscal Year-End
 Option Awards
    
    
    
    
    
    Stock AwardsEquityIncentivePlanEquity
    
    Awards:Incentive
    
    Market orEquity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pan Awards:
    
    PayoutIncentive Plan
    
    
    
    
    
    
    
    
    
    Number
    
    Market
    
    Number of
    
    Value ofAwards:
    
    
    
    
    
    
    
    
    
    of
    
    Value of
    
    Unearned
    
    UnearnedNumber of
    
    Number of
    
    Number of
    
    
    
    
    
    
    
    
    
    Shares
    
    Shares
    
    Shares,
    
    Shares,Securities
    
    Securities
    
    Securities
    
    
    
    
    
    
    
    
    
    or Units
    
    or Units
    
    Units or
    
    Units orUnderlying
    
    Underlying
    
    Underlying
    
    
    
    
    
    
    
    
    
    of Stock
    
    of Stock
    
    Other
    
    OtherUnexercised
    
    Unexercised
    
    Unexercised
    
    Option
    
    Option
    
    That
    
    That
    
    Rights That
    
    Rights ThatOptions (#)
    
    Options (#)
    
    Unearned
    
    Exercise
    
    Expiration
    
    Have Not
    
    Have Not
    
    Have Not
    
    Have NotName
    
    Exercisable
    
    Unexerciseable
    
    Options (#)
    
    Price ($)
    
    Date
    
    Vested (#)
    
    Vested ($)
    
    Vested (#)
    
    Vested ($)(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)
    
    (f)
    
    (g)
    
    (h)
    
    (i)
    
    (j)Imre Eszenyi
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Paul Biberkraut (1)
    
    
    75,000
    
    
    
    
    
    
    
    75,000
    
    
    $
    3.00
    
    
    
    02/15/11
    
    
    
    25,000
    
    
    $
    18,750
    
    
    
    
    
    
    
    Thomas Winant (2)
    
    
    50,000
    
    
    
    
    
    
    
    50,000
    
    
    $
    2.70
    
    
    
    06/12/11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    The 150,000 common stock options were granted under our 2006 Equity Incentive Plan with
a vesting schedule of 75,000 options on 02/15/07 and 75,000 options on 02/15/08. If there
is a change in control all unvested options immediately vest. The stock grant of 25,000
common shares vests at earlier of certain liquidity events in our common stock or January
1, 2009.(2)
    
    The 100,000 common stock options were granted under our 2006 Equity Incentive Plan with
a vesting schedule of 50,000 options on 06/12/07 and 50,000 options on 06/12/08. If there
is a change in control all unvested options immediately vest. - 30 -




---



##### Table of Contents



Compensation of Directors
    Change inPension ValueandFees
    
    
    
    
    
    
    
    
    
    Non-Equity
    
    NonqualifiedEarned
    
    
    
    
    
    
    
    
    
    Incentive
    
    Deferredor Paid
    
    Stock
    
    Option
    
    Plan
    
    Compensation
    
    All Otherin Cash
    
    Awards
    
    Awards
    
    Compensation
    
    Earnings
    
    CompensationName
    
    ($)
    
    (1)($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)(a)
    
    (b)
    
    (c)
    
    (d)
    
    
    
    
    
    (f)
    
    (g)David Adams
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Charles Srebnik
    
    $
    6,000
    
    
    $
    29,500
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    The assumptions underlying the valuation of stock awards can be found in Note 10 of our Notes
to Consolidated Financials that begin on page 47 of this document.
The aggregate number of stock awards outstanding at June 30, 2007 for Mr. Adams is 75,000 and for
Mr. Srebnik, 125,000.  
 ITEM
11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  - 31 -




---



##### Table of Contents



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)(7)
    
    Common
    
    
    317,170
    
    
    
    2.26
    %Paul Biberkraut(2)
    
    Common(3)
    
    
    100,000
    
    
    
    *David Adams(2)
    
    Common
    
    
    178,750
    
    
    
    1.27
    %Charles Srebnik(2)
    
    Common(4)
    
    
    225,000
    
    
    
    1.60
    %International Kapitalanagegesellsc haft m.b.H acting on
behalf of 
Fund Merlin Master Funds INKA

Georg-Glock-Strasse 14 
40474 Dusseldorf, Germany
    
    Common (5)
    
    
    2,200,000
    
    
    
    14.82
    %Fonditel Velociraptor, FL 
Pedro Teixeira Street, 8, 3rd
Floor
 28020 Madrid, Spain
    
    Common(6)
    
    
    1,500,000
    
    
    
    10.68
    %Bayern Invest Kapitalanagegesellschaft m.b.H
 c/o Brown Brothers Harriman 
140 Broadway
 New York, NY 10005
    
    Common
    
    
    761,614
    
    
    
    5.42
    %Gerlach & Company 
c/o Citibank 
333 West
34th
Street, 3rd
Floor
 New York, NY 10001
    
    Common
    
    
    700,000
    
    
    
    5.02
    %PICIAS Limited (7) 
Palm Grove House
 Road Town 
Tortola,
British Virgin Islands
    
    Common
    
    
    4,298,831
    
    
    
    30.62
    %Faisal A. Alhegelan
 c/o Hogan & hartson L.L.P. 
555 Thirteenth Street, NW
  Washington, DC 20004
    
    Common (8)
    
    
    737,171
    
    
    
    5.02
    %All Executive Officers and Directors
      as a Group (4 persons)
    
    Common(3)(4)
    
    
    820,920
    
    
    
    5.85
    %
 
 *
    
    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 14,041,361 shares of common stock outstanding as of
August x, 2007. We are informed that these persons hold the sole voting and dispository 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 August x, 2007, 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 75,000 shares of common stock issuable upon the exercise of options held by Mr.
Biberkraut which are exercisable within 60 days of this table.(4)
    
    Includes 100,000 shares owned by Mr. Srebniks spouse, of which Mr. Srebnik disclaims
beneficial ownership.(5)
    
    Includes 800,000 shares INKA has the right to acquire within 60 days upon conversion of 1,950
shares of our Series A Preferred Stock.(6)
    
    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.(7)
    
    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.(8)
    
    Includes approximately 637,171 shares Mr. Alhegelan has the right to acquire within 60 days
pursuant to conversion rights that are part of a convertible promissory note issued to Mr.
Alhegelan. Equity Compensation Plan Information
  - 32 -




---



##### Table of Contents



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)
    
    
    950,000
    
    
    $
    2.62
    
    
    
    632,010Equity compensation plans not approved by security holders
    
    
    
    
    
    $
    
    
    
    
    N/ATotal
    
    
    950,000
    
    
    $
    2.62
    
    
    
    632,010
 
 (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.  
 ITEM
12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
       - 33 -




---



##### Table of Contents



ITEM
13  EXHIBITS
 ExhibitNumber
    
    Name3.1
    (1)
    
    Amended and Restated Articles of Incorporation3.2
    (1)
    
    Amended and Restated By-laws4.1
    (16)
    
    Certificate of Designation of Series A Preferred Stock10.2
    (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
    (15)
    
    Lease Agreement with TOA Reinsurance Company of America.10.17
    (15)
    
    Redemption and Stock Purchase Agreement between Thomas J. Belville, Robert E. Belville, E-Rail Logistics, Inc. and Belville Mining Company.10.18
    (15)
    
    Amendment to Redemption and Stock Purchase Agreement between Thomas J. Belville, Robert E. Belville, E-Rail Logistics, Inc. and Belville Mining Company.10.19
    (17)
    
    Consulting Agreement with Entitlement Solutions, Inc.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 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
 - 34 -




---



##### Table of Contents



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 8-K dated November 21, 2006.(15)
    
    Incorporated by reference to Form 10-KSB dated September 27, 2006.(16)
    
    Incorporated by reference to Form 8-K dated March 8, 2007.(17)
    
    Incorporated by reference to Form 8-K dated March 26, 2007. 
 ITEM
14  PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  June 30, 2007
    
    
    June 30, 2006Urish
    
    
    Chadwick
    
    
    Urish
    
    
    ChadwickAudit Fees
    
    $
    140,000
    
    
    $
    
    
    
    $
    92,000
    
    
    $
    10,000Audit  Related Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Tax Fees
    
    
    47,000
    
    
    
    
    
    
    
    1,000
    
    
    
    All Other Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    187,000
    
    
    $
    
    
    
    $
    93,000
    
    
    $
    10,000
    - 35 -




---



##### Table of Contents



SIGNATURES
  CHARTWELL INTERNATIONAL, INC.
 Dated: August 7, 2007
    /s/ Imre EszenyiBy: Imre EszenyiIts: Acting President (Principal Executive Officer)
and Chairman of the BoardDated: August 7, 2007
    /s/ Paul BiberkrautBy: Paul BiberkrautIts: Chief Financial and Administrative Officer
(Principal Financial Officer and Principal Accounting Officer)  Signature
    
    Capacity
    
    Date/s/ Imre Eszenyi

         Imre Eszenyi
    
    Director
    
    August 7, 2007/s/ David C. Adams

         David C. Adams
    
    Director
    
    August 7, 2007/s/ Charles Srebnik

         Charles Srebnik
    
    Director
    
    August 7, 2007
 - 36 -




---



##### Table of Contents



PageIndependent Registered Public Accounting Firms Report
    
    
    F - 1Financial StatementsConsolidated Balance Sheets
    
    
    F - 2Consolidated Statements of Operations
    
    
    F - 3Consolidated Statements of Stockholders Equity
    
    
    F - 4Consolidated Statements of Cash Flows
    
    
    F - 5Notes to Consolidated Financial Statements
    
    
    F - 7




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Pittsburgh, Pennsylvania
    
    /s/ Urish Popeck & Co., LLCJuly 19, 2007
    
    URISH POPECK & CO., LLC
 F - 1




---



##### Table of Contents



Chartwell International, Inc. and Subsidiaries
(A Development Stage Company)
 
 Consolidated Balance Sheets
  June 30,
    
    
    June 30,2007
    
    
    2006AssetsCurrent assetsCash and cash equivalents (Note 1)
    
    $
    704
    
    
    $
    3,018Restricted cash( Note 3)
    
    
    279
    
    
    
    Accounts receivable, net of allowance for uncollectible accounts of $58 (2007) and $0 (2006)
(Notes 1 and 7)
    
    
    507
    
    
    
    25Deposits (Note 4)
    
    
    536
    
    
    
    533Prepaid expense and other
    
    
    47
    
    
    
    38Total current assets
    
    
    2,073
    
    
    
    3,614Long-term assets(Notes 1, 7 and 8)Property and equipment, net (Note 5)
    
    
    5,178
    
    
    
    4,573Land
    
    
    1,681
    
    
    
    1,735Mineral rights
    
    
    5,447
    
    
    
    5,447Capacity and loading rights (Note 6)
    
    
    1,383
    
    
    
    Investment, at cost
    
    
    100
    
    
    
    Other
    
    
    121
    
    
    
    19Total long-term assets
    
    
    13,910
    
    
    
    11,774Total assets
    
    $
    15,983
    
    
    $
    15,388Liabilities and Stockholders EquityCurrent LiabilitiesAccounts payable and accrued liabilities
    
    $
    1,403
    
    
    $
    191Due to related parties
    
    
    14
    
    
    
    21Notes payable (Note 8)
    
    
    773
    
    
    
    310Total current liabilities
    
    
    2,190
    
    
    
    522Long-term liabilitiesNotes payable, net of current portion (Note 8)
    
    
    6,078
    
    
    
    5,557Total long-term liabilities
    
    
    6,078
    
    
    
    5,557Total liabilities
    
    
    8,268
    
    
    
    6,079Commitments and Contingencies(Notes 3,7,8 and 11)Stockholders Equity(Note 10)Preferred stock, $0.001 par value, 25,000 shares authorized
Series A Preferred shares, $0.001 par value, 20 shares designated and 1.95 issued and oustanding
    
    
    2,000
    
    
    
    Common shares, $0.001 par value, 100,000 shares authorized 14,041 and 13,896 issued and
outstanding at June 30, 2007 and 2006, respectively
    
    
    14
    
    
    
    14Additional paid in capital
    
    
    13,972
    
    
    
    13,566Accumulated deficit
    
    
    (8,271
    )
    
    
    (4,271
    )Total stockholders equity
    
    
    7,715
    
    
    
    9,309Total liabilities and stockholders equity
    
    $
    15,983
    
    
    $
    15,388
  F - 2




---



##### Table of Contents



Chartwell International, Inc. and Subsidiaries
(A Development Stage Company)
 
 Consolidated Statements of Operations
  CumulativeFor the
    
    
    For the eleven
    
    
    from March 3,year ended
    
    
    months ended
    
    
    2005, InceptionJune 30,
    
    
    June 30,
    
    
    to June 30,2007
    
    

2006
    
    
    2007Revenue
    
    $
    7,306
    
    
    $
    51
    
    
    $
    7,357Cost of revenue
    
    
    6,824
    
    
    
    
    
    
    
    6,824Gross profit
    
    
    482
    
    
    
    51
    
    
    
    533General and administrative expenses
    
    
    4,062
    
    
    
    3,053
    
    
    
    7,273Loss from operations
    
    
    (3,580
    )
    
    
    (3,002
    )
    
    
    (6,740
    )Other income (expense)Interest, net (Notes 7 and 8)
    
    
    (554
    )
    
    
    (148
    )
    
    
    (681
    )Gain on sale of property and equipment
    
    
    134
    
    
    
    
    
    
    
    134Gains on notes settlements
    
    
    
    
    
    
    74
    
    
    
    74Finance placement fees
    
    
    
    
    
    
    (222
    )
    
    
    (1,058
    )Total other income (expense)
    
    
    (420
    )
    
    
    (296
    )
    
    
    (1,531
    )Loss before income tax provision
    
    
    (4,000
    )
    
    
    (3,298
    )
    
    
    (8,271
    )Income tax provision
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (4,000
    )
    
    $
    (3,298
    )
    
    $
    (8,271
    )Net loss per common share,basic and diluted
    
    $
    (0.29
    )
    
    $
    (0.23
    )
    
    $
    (0.65
    )Weighted average number of common shares outstanding,basic and diluted
    
    
    13,986
    
    
    
    14,639
    
    
    
    12,821
  F - 3




---



##### Table of Contents



Chartwell International, Inc and Subsidiaries
(A Development Stage Company)
 
 Consolidated Statements of Stockholders Equity
  Preferrred
    
    
    Preferred
    
    
    Common
    
    
    Common
    
    
    Additional
    
    
    
    
    
    
    TotalStock
    
    
    Stock
    
    
    Stock
    
    
    Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    $
    
    
    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 3, 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
    )
    
    
    9,309Common stock issued for cash
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    283Series A Preferred stock issued for cash and common
stock redemption
    
    
    2
    
    
    
    2,000
    
    
    
    (400
    )
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    1,500Common stock issued for services
    
    
    
    
    
    
    
    
    
    
    425
    
    
    
    
    
    
    
    429
    
    
    
    
    
    
    
    429Fair value of stock options granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194
    
    
    
    
    
    
    
    194Net loss for the year end June 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,000
    )
    
    
    (4,000
    )Balance, June 30, 2007
    
    
    2
    
    
    $
    2,000
    
    
    
    14,041
    
    
    $
    14
    
    
    $
    13,972
    
    
    $
    (8,271
    )
    
    $
    7,715
  F - 4




---



##### Table of Contents



Chartwell International, Inc. and Subsidiaries
(A Development Stage Company)
 
 Consolidated Statements of Cash Flows
  CumulativeFor the
    
    
    For the eleven
    
    
    from March 3,year ended
    
    
    months ended
    
    
    2005, InceptionJune 30,
    
    
    June 30,
    
    
    to June 30,2007
    
    
    2006
    
    
    2007Cash flows from operating activitiesNet loss
    
    $
    (4,000
    )
    
    $
    (3,298
    )
    
    $
    (8,271
    )Adjustments to reconcile net loss to net cash provided by (used
in) operating activitiesDepreciation and amortization
    
    
    309
    
    
    
    49
    
    
    
    358Gain on sales of property and equipment
    
    
    (134
    )
    
    
    
    
    
    
    (134
    )Gain on settlement of note receivable
    
    
    
    
    
    
    (35
    )
    
    
    (35
    )Gain on settlement of note payable
    
    
    
    
    
    
    (39
    )
    
    
    (39
    )Fair value of stock options granted
    
    
    194
    
    
    
    32
    
    
    
    226Fair value of common stock issued for services
    
    
    430
    
    
    
    813
    
    
    
    1,683Increase (decrease) in cash from changes in assets and liabilitiesAccounts receivable
    
    
    (482
    )
    
    
    (23
    )
    
    
    (505
    )Deposits
    
    
    (2
    )
    
    
    892
    
    
    
    (536
    )Prepaid and other
    
    
    (9
    )
    
    
    (29
    )
    
    
    (47
    )Accounts payable and accrued liabilities
    
    
    1,385
    
    
    
    (30
    )
    
    
    1,375Due to related parties
    
    
    (7
    )
    
    
    (21
    )
    
    
    14Net cash used in operating activities
    
    
    (2,316
    )
    
    
    (1,689
    )
    
    
    (5,911
    )Cash flows from investing activitiesPurchase of property and equipment
    
    
    (831
    )
    
    
    (2,963
    )
    
    
    (3,794
    )Purchase of capacity and loading rights
    
    
    (1,509
    )
    
    
    
    
    
    
    (1,509
    )Proceeds on sales of property and equipment
    
    
    229
    
    
    
    
    
    
    
    229Exercise of mining rights options
    
    
    
    
    
    
    (102
    )
    
    
    (102
    )Deposits
    
    
    (101
    )
    
    
    (14
    )
    
    
    (115
    )Investment in affiliate
    
    
    (100
    )
    
    
    
    
    
    
    (100
    )Restricted cash
    
    
    (279
    )
    
    
    
    
    
    
    (279
    )Cash paid in acquisitions
    
    
    
    
    
    
    (4,597
    )
    
    
    (4,597
    )Cash received in acquisitions
    
    
    
    
    
    
    82
    
    
    
    82Net cash used in investing activities
    
    
    (2,591
    )
    
    
    (7,594
    )
    
    
    (10,185
    )Cash flows from financing activitiesProceeds from notes receivable
    
    
    
    
    
    
    635
    
    
    
    635Payment for notes receivable
    
    
    
    
    
    
    (275
    )
    
    
    (275
    )Borrowings under notes payable
    
    
    1,375
    
    
    
    4,000
    
    
    
    5,375Repayments under notes payable
    
    
    (565
    )
    
    
    (320
    )
    
    
    (1,084
    )Issuance of common stock
    
    
    283
    
    
    
    850
    
    
    
    10,924Issuance of preferred stock
    
    
    1,500
    
    
    
    
    
    
    
    1,500Redemption of common stock
    
    
    
    
    
    
    (275
    )
    
    
    (275
    )Net cash provided by financing activities
    
    
    2,593
    
    
    
    4,615
    
    
    
    16,800Net increase (decrease) in cash
    
    
    (2,314
    )
    
    
    (4,668
    )
    
    
    704Cash and cash equivalents, beginning of period
    
    
    3,018
    
    
    
    7,686
    
    
    
    Cash and cash equivalents, end of period
    
    $
    704
    
    
    $
    3,018
    
    
    $
    704
  F - 5




---



##### Table of Contents



Chartwell International, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Cash Flows
 CumulativeFor the
    
    
    For the eleven
    
    
    from March 3,year ended
    
    
    months ended
    
    
    2005, InceptionJune 30,
    
    
    June 30,
    
    
    to June 30,2007
    
    
    2006
    
    

2007Supplemental disclosure of cash flow informationCash paid during the period for:Interest
    
    $
    416
    
    
    $
    126
    
    
    $
    960Income Taxes
    
    $
    30
    
    
    $
    7
    
    
    $
    38Non-Cash Investing and Financing ActivitiesPreferred stock issued in exchange for redemption of common stock
    
    $
    (500
    )
    
    $
    
    
    
    $
    (500
    )Common 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
    
    $
    (173
    )
    
    $
    (76
    )
    
    $
    (250
    )
  F - 6




---



##### Table of Contents



Note 1  Summary of Significant Accounting Policies
 Organization and Business
         F - 7




---



##### Table of Contents



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




---



##### 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 - 9




---



##### 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 - 10




---



##### 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 - 11




---



##### 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 - 12




---



##### Table of Contents



Note 2  Acquisitions (continued)
 E-Rail Logistics, Inc. (continued)
         F - 13




---



##### 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 - 14




---



##### 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 - 15




---



##### 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 outstanding
basic and diluted
    
    
    14,639
    
    
    
    1
    
    
    
    (1
    )
    
    
    14,639
 Notes:(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 - 16




---



##### Table of Contents



Note 3  Restricted Cash
  Note 4  Deposit on Railcar Purchase
  Note 5  Property and Equipment
  June 30,
    
    
    June 30,2007
    
    
    2006(in thousands)Buildings
    
    $
    138
    
    
    $
    126Railroad structures and improvements
    
    
    1,348
    
    
    
    1,348Leasehold improvements
    
    
    147
    
    
    
    5Office furniture & equipment
    
    
    90
    
    
    
    61Computer hardware and software
    
    
    91
    
    
    
    61Railway locomotives and cars
    
    
    2,762
    
    
    
    2,662Railway equipment
    
    
    312
    
    
    
    354Waste disposal equipment
    
    
    517
    
    
    
    5,405
    
    
    
    4,617Accumulated depreciation and amortization
    
    
    (227
    )
    
    
    (44
    )$
    5,178
    
    
    $
    4,573
  Note 6  Capacity and Loading Rights
  F - 17




---



##### Table of Contents



Note 6  Capacity and Loading Rights (continued)
  Note 7  Line of Credit
  Note 8  Notes Payable
       F - 18




---



##### Table of Contents



Note 8  Notes Payable (continued)
      June 30, 2007
    
    
    June 30, 2006(In thousands)Total
    
    $
    6,851
    
    
    $
    5,867Less current portion
    
    
    (773
    )
    
    
    (310
    )Long-term
    
    $
    6,078
    
    
    $
    5,557
  Year Ending
    
    
    
    AmountJune 30,
    
    
    
    (In thousands)2008
    
    
    
    $
    7732009
    
    
    
    $
    4632010
    
    
    
    $
    1,5022011
    
    
    
    $
    2002012 and beyond
    
    
    
    $
    3,913$
    6,851
 Note 9  Income Taxes
  F - 19




---



##### Table of Contents



Note 10  Equity
 Authorized Capital
      Common Stock Transactions
        F - 20




---



##### Table of Contents



Common Stock Transactions (continued)
             Preferred Stock Transactions
  F - 21




---



##### Table of Contents



Note 10  Equity (continued)
 Stock Options
     F - 22




---



##### Table of Contents



Note 10  Equity (continued)
 Stock Options (continued)
  Risk free interest rates
    
    
    4.60
    %Dividends
    
    
    Volatility factors
    
    
    118
    %Expected life
    
    2  yearsAnnual forfeiture rate
    
    
    30
    %
  Year EndedJune 30, 2007Weighted AverageAll Options
    
    Exercise PriceOutstanding at beginning of period
    
    
    350,000
    
    
    $
    2.83Options granted
    
    
    600,000
    
    
    
    2.50Options forfeited
    
    
    
    
    
    
    Options expired
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    Outstanding at end of period
    
    
    950,000
    
    
    
    2.62Exercisable at end of period
    
    
    558,334
    
    
    $
    2.60
 Year EndedJune 30, 2007Weighted AverageExercise PriceNon-vested OptionsNon-vested at beginning of period
    
    
    350,000
    
    
    $
    2.83Options granted
    
    
    600,000
    
    
    
    2.50Options forfeited
    
    
    
    
    
    
    Options expired
    
    
    
    
    
    
    Options vested
    
    
    558,334
    
    
    
    2.60Non-vested at end of period
    
    
    391,666
    
    
    $
    2.66
 F - 23




---



##### Table of Contents



Note 10  Equity (continued)
 Stock Options (continued)
  Risk free interest rates
    
    
    4.60% - 5.00%Dividends
    
    
    Volatility factors
    
    
    85% - 104%Expected lives
    
    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
    
    
    
    
    
    $
    
 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
 F - 24




---



##### Table of Contents



Note 10  Equity (continued)
 Stock Options (continued)
     WeightedAverage
    
    
    WeightedExercise
    
    
    AverageNumber
    
    
    Price
    
    
    Fair ValueOptions exercise price equal to stock price
    
    
    
    
    
    $
    
    
    
    $
    Options exercise price exceeds the stock price
    
    
    600,000
    
    
    $
    2.50
    
    
    $
    0.29
  Outstanding
    
    ExercisableWeighted
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    Average
    
    
    
    
    
    AverageRange
    
    
    
    Exercise
    
    Contractual
    
    
    
    
    
    ExerciseFrom
    
    To
    
    Number
    
    Price
    
    Life
    
    Number
    
    Price$2.50
    
    $
    2.50
    
    
    
    600,000
    
    
    $
    2.50
    
    
    
    4.7
    
    
    
    400,000
    
    
    $
    2.50$2.70
    
    $
    2.70
    
    
    
    200,000
    
    
    $
    2.70
    
    
    
    4.9
    
    
    
    83,334
    
    
    $
    2.70$3.00
    
    $
    3.00
    
    
    
    150,000
    
    
    $
    3.00
    
    
    
    3.6
    
    
    
    75,000
    
    
    $
    3.00950,000
    
    
    
    
    
    
    
    
    
    
    
    558,334
  June 30,
    
    
    June 30,2007
    
    
    2006Options
    
    
    950,000
    
    
    
    350,000Convertible preferred stock
    
    
    800,000
    
    
    
    Convertible notes payable
    
    
    1,625,422
    
    
    
    1,971,143Total
    
    
    3,375,422
    
    
    
    2,321,143
 F - 25




---



##### Table of Contents



Note 11  Commitments and Contingencies
 Letter of Credit
  Leases
  Years ending June 302008
    
    $
    116,0002009
    
    
    116,0002010
    
    
    34,000$
    266,000
  Legal Proceedings
    F - 26




---



##### Table of Contents



Note 11  Commitments and Contingencies (continued)
 Legal Proceedings (continued)
    Note 12  Related Party Transactions
      F - 27




---



##### 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(16)
    
    Certificate of Designation of Series A Preferred Stock10.2(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(15)
    
    Lease Agreement with TOA Reinsurance Company of America.10.17(15)
    
    Redemption and Stock Purchase Agreement between Thomas J. Belville, Robert E.
Belville, E-Rail Logistics, Inc. and Belville Mining Company.10.18(15)
    
    Amendment to Redemption and Stock Purchase Agreement between Thomas J. Belville,
Robert E. Belville, E-Rail Logistics, Inc. and Belville Mining Company.10.19(17)
    
    Consulting Agreement with Entitlement Solutions, Inc.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 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
 F - 28




---



##### Table of Contents



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 8-K dated November 21, 2006.(15)
    
    Incorporated by reference to Form 10-KSB dated September 27, 2006.(16)
    
    Incorporated by reference to Form 8-K dated March 8, 2007.(17)
    
    Incorporated by reference to Form 8-K dated March 26, 2007.
 F - 29