UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K


R
              ANNUAL REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended June 30, 2009OR£
              TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For the transition period
      from: to .





Commission
File Number 000-51342





CHARTWELL INTERNATIONAL,
INC.


(Exact
name of registrant as specified in its charter)





Nevada
            95-3979080(State
      or Other Jurisdiction of
            (I.R.S.
      EmployerIncorporation
      or Organization)
            Identification
      Number)7637
      Leesburg PikeFalls
      Church, Virginia
            22043(Address
      of Principal Executive Offices)
            (Zip
      Code)





(703)
635-7980


(Issuer’s
telephone number)





Securities
registered pursuant to Section 12(b) of the Act:


None.





Securities
registered pursuant to Section 12(g) of the Act:





COMMON
STOCK, PAR VALUE $0.001


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes £ No R





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes £ No R





Note:
Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under
those Sections.





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the issuer was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes R No £





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. £





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer £
                            Accelerated
      filer £
                            Non-accelerated
      filer £
                            Smaller
      reporting company R(Do
      not check if a smaller reporting
company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes £ No R





The
aggregate market value of voting stock held by non-affiliates computed by
reference to the price at which the common equity was last sold as of the last
business day of the registrant’s most recently completed second fiscal quarter,
December 31, 2008, was $562,000. For purposes of this computation, it has been
assumed that the shares beneficially held by directors and officers of
registrant were “held by affiliates”; this assumption is not to be deemed to be
an admission by such persons that they are affiliates of
registrant.





The
number of shares of registrant’s common stock outstanding as of October 13,
2009was 11,994,013.





DOCUMENTS
INCORPORATED BY REFERENCE




None









TABLE
OF CONTENTS




PagePART
      IITEM
      1 — DESCRIPTION OF BUSINESS
                    3ITEM
      1A – RISK FACTORS
                    8ITEM
      1B – UNRESOLVED STAFF COMMENTS
                    11ITEM
      2 — DESCRIPTION OF PROPERTY
                    11ITEM
      3 — LEGAL PROCEEDINGS
                    12ITEM
      4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                    13PART
      IIITEM
      5 — MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER
      ;PURCHASES OF EQUITY SECURITIES
                    14ITEM
      6 – SELECTED FINANCIAL DATA
                    15ITEM
      7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS
                    15ITEM
      7a – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
                    20ITEM
      8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                    20ITEM
      9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE
                    20ITEM
      9A(T) — CONTROLS AND PROCEDURES
                    20ITEM
      9B — OTHER INFORMATION
                    21PART
      IIIITEM
      10 — DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE
    GOVERNANCE;
                    22ITEM
      11 — EXECUTIVE COMPENSATION
                    23ITEM
      12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
      RELATED STOCKHOLDER MATTERS
                    24ITEM
      13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                    25ITEM
      14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES
                    26ITEM
      15 - EXHIBITS
                    26EXHIBIT
      23.1EXHIBIT
      31.1EXHIBIT
      31.2EXHIBIT
      32




2




PART
I




ITEM
1 — DESCRIPTION OF BUSINESS




Overview
of Business




Chartwell International, Inc. (the
“Company,” “we,” “us,” “our”) is a development stage holding company that was
formed as a Nevada corporation in 1984. We, through our wholly-owned
subsidiaries, are owners of land and mineral rights. Our primary focus until
January 24, 2008 (see below) was on the transportation and disposal of
non-hazardous solid waste as well as the transportation of other commodities.
Subsequent to January 24, 2008 and until March 31, 2009 (see below) we were
providing limited rail-based transportation of commodities through our MNJ
subsidiary. We had, until January 24, 2008, been pursuing a growth strategy
through acquisitions of assets, properties and access rights that could be
combined, and development of strategic relationships with those companies that
focus on waste by rail services, rail transportation logistics, and disposal
options, including landfill management. We are currently re-evaluating our
strategy and we are focusing on evaluating the best business approach to
monetizing some land, mineral and mineral rights assets that we acquired to
generate liquidity to fund future business activity.




Until early 2005 our principal activity
consisted of the oversight of investments, principally our investment in College
Partnership, Inc. On January 31, 2005, we transferred all assets and
liabilities to our then wholly owned subsidiary, Kingsley Capital, Inc.
(“Kingsley Capital”) and subsequently transferred all of our Kingsley Capital
stock to our then existing shareholders as a dividend effective March 3,
2005 effecting a spin-off of Kingsley Capital. On March 23, 2005, in two
separate but concurrent transactions, we issued 25,838,433 pre-split shares of
our common stock to one of our directors in a private transaction for $200,000,
which proceeds were used to pay off a promissory note issued previously to
Kingsley Capital, and we issued an additional 19,161,567 pre-split shares of our
common stock to the same director in a private transaction for
$250,000.




Since March 3, 2005 and following
the discontinuation of our former operations and business, we changed our focus
and strategic direction and pursued operations as a development stage company in
the natural resources and rail-based transportation industries. Most of our
activities during the period from March 3, 2005 to June 30, 2007 were
dedicated to seeking acquisition targets with viable on-going operations, or
acquisition of assets, properties and access rights that would allow us to begin
operations.




On September 8, 2005, we acquired
E-Rail Logistics, Inc. (“E-Rail”), a development stage company with assets and
minimal operations in the solid waste disposal industry. Because E-Rail was not
deemed a business, the acquisition was treated as an acquisition of assets. The
acquisition included E-Rail’s wholly-owned subsidiary, Belville Mining Company,
Inc. (“Belville”) based in Ohio which has significant interests and rights to
over 9,500 acres of land and minerals in South-Central Ohio, a portion of which
we intend to permit for certain industrial uses. The property principally
contains coal, clay and limestone. We are beginning the permitting process, and
cannot estimate when operational use of the property will begin at this time. In
addition to permits, the site will require significant infrastructure
improvements, which we are evaluating. As part of our strategy we may sell our
mineral reserves or partner with another entity to permit and operate our
properties. Subsequent to the acquisition, E-Rail assigned the Belville shares
to us so that it is functioning as one of our direct subsidiaries.




On April 1, 2006, in an effort to
better streamline operations, E-Rail assigned all of its assets and liabilities
to Hudson Logistics, Inc. (“Hudson”), one of our wholly owned subsidiaries. We
surrendered the corporate charter of E-Rail on August 2, 2006.




On
April 26, 2006, we completed the acquisition of Cranberry Creek Railroad,
Inc. (“Cranberry Creek”), a New Jersey corporation including its wholly owned
subsidiary, Middletown & New Jersey Railway Company, Inc. (“MNJ”) that owns
and operates a regional short-line railroad in Middletown, New York. MNJ’s
operations were limited and we made some limited capital improvements. We
considered operational infrastructure alternatives to both increase the volume
of activity on the railroad including partnering with other railroads to manage
and operate MNJ on our behalf.




On
May 12, 2006, in an effort to further simplify our corporate structure, we
assigned all the assets and liabilities of Cranberry Creek to MNJ. We
surrendered the corporate charter of Cranberry Creek on November 15,
2006.




Founded
in 1947, MNJ, headquartered in Middletown, New York has historically been an
integral part of the growth of Orange County, New York. MNJ and its predecessors
transported milk, milk products, livestock, feed and coal. As recently as in the
mid 1980s, MNJ serviced a chemical and a fertilizer plant on its short-line. The
business is currently serving Genpak, a national plastic packaging
company.





On
August 29, 2006, our wholly-owned subsidiaries, Hudson and Hudson Logistics
Loading, Inc. (“HLL”), completed the acquisition of certain agreements from
Steel Wheels Transport, LLC and Team G Loading, LLC, that they respectively held
with New York and Greenwood Lake Railway Company, Inc. (“Greenwood”). We
acquired these agreements as part of our strategy to offer rail-based solid
waste transportation and disposal services. We began transload activities on
this site on September 11, 2006. On January 24, 2008, our wholly-owned
subsidiaries Hudson and HLL entered into an Amended and Restated Purchase
Agreement with Perry New Jersey, LLC (“Perry”) for the sale of substantially all
of their assets to Perry New Jersey I, LLC for cash consideration of $1,700,000,
subject to a $803,594 holdback, and assumption by Perry of certain debts and
leases of Hudson and HLL. This transaction closed on January 24,
2008.  As a result of the asset sale, we no longer had rail-based
solid waste transportation operations. We decided to discontinue pursuing any
strategy related to waste by rail, waste management and landfill operations. We
have assigned remaining assets and liabilities of Hudson and HLL to Chartwell
International, Inc. and surrendered the corporate charters of HLL and HLI on May
30, 2008 and September 19, 2008, respectively.


3




On March
31, 2009 we and our wholly-owned subsidiary, MNJ, entered into a definitive
Agreement for Sale and Purchase of Business Assets with Middletown & New
Jersey Railroad, LLC, a Delaware limited liability company
(“Buyer”).  Under the terms of the agreement, we agreed to sell
substantially all of MNJ’s assets used in connection with operating our railroad
freight transportation business serving central Orange County in Middletown, New
York. The purchase price was $386,900 and the assumption by Buyer of certain
liabilities.  On April 6, 2009, we and MNJ consummated the
sale.  The purchase price was deposited into an escrow account subject
to the following release conditions: (a) $356,900 to be released to us upon our
providing Buyer with a title report and title insurance, and (b) $30,000 to be
released to us upon resolution of certain real property matters. Between March
31, 2009 and April 6, 2009 we did not have any operations in MNJ. Based on this
transaction we no longer have any active operations in rail transportation. We
in the process of selling off the remaining MNJ land holdings that were not
connected with MNJ’s rail transportation business. We anticipate that
substantially all of our MNJ land holdings will be sold within the next 6 to 12
months. We incurred a loss of $46,000 on the sale of the MNJ
assets.





Effective
April 1, 2009, in our efforts to reduce operating costs, the limited operations
of our subsidiaries Greater Hudson Resources, Inc. and Greater Ohio Resources,
Inc. were terminated, all the assets and liabilities of both entities were
assigned to Chartwell International, Inc., and their corporate charters were
surrendered on May 12, 2009 and May 19, 2009, respectively.





On June
15, 2009 we assigned all the remaining assets and liabilities of MNJ to
Chartwell International, Inc. We surrendered the corporate charter of MNJ on
October 5, 2009.





Our
executive offices were based in Middletown, New York until March 31, 2009 and
have been relocated to Falls Church, Virginia with an effective date of April 1,
2009.




Dividend
and Change of Control




On March 18, 2005, we issued all
the shares of Kingsley Capital, one of our wholly-owned subsidiaries, to our
stockholders as a dividend, and transferred certain assets and liabilities to
Kingsley Capital prior to the dividend, affecting a spin-off of Kingsley Capital
as a private corporation (the “Spin-Off”). In consideration for assuming our
liabilities, we issued a note payable for $200,000 to Kingsley
Capital.




On March 23, 2005, in two separate
but concurrent transactions, one of our directors acquired 45,000,000 shares of
our common stock in the aggregate pursuant to a Share Purchase Agreement and
Subscription Agreement. Pursuant to the Share Purchase Agreement, our director
purchased from controlling affiliates of Chartwell 19,161,567 shares of our
common stock for $250,000. In addition, pursuant to the Subscription Agreement,
our director purchased from us 25,838,433 shares of our common stock for
$200,000. The $200,000 was used to pay off the note payable granted by us to
Kingsley Capital as a result of the Spin-Off. On June 27, 2005, we affected
a 1 for 10 reverse stock split.




Following the distribution and change
in control, we filed a new Form 10-SB and began reporting with the Securities
and Exchange Commission under a new SEC filer number.




Group
Structure and Subsidiaries’ Activities









The chart
above reflects our corporate structure prior to the closure of most of
subsidiaries that commencement in January 2008. At June 30, 2009 the only
remaining entities were Chartwell with Belville as a wholly-owned
subsidiary.




Hudson
was engaged until January 24, 2008 in rail and truck based logistics for
industrial products including solid waste. This subsidiary has been closed and
its charter surrendered on September 19, 2008.




Until
January 24, 2008, HLL conducted rail transloading services. This subsidiary
has been closed and its charter surrendered on May 30, 2008.




Belville
is engaged in land and mineral rights holdings for natural resources in the Ohio
region.


4




Greater
Ohio Resources, Inc. was engaged in mining and land development in the Ohio
region. It was closed in April 2009 and its charter was surrendered on May 19,
2009.




Greater
Hudson Resources, Inc. was inactive. It was closed in April 2009 and its charter
surrendered on May 12, 2009




MNJ was
involved in short-line railroad operations and land development until March 31,
2009. It was closed  in April 2009 and its charter was surrendered on
October 5, 2009.




Our
Industries




Coal
Mining




We currently do not have any active
coal mining operations. Coal is a major contributor to the global energy supply,
representing more than 24% of international primary energy consumption,
according to the World Coal Institute. The United States produces more than
one-fifth of the world’s coal and is the second largest coal producer in the
world, exceeded only by China. According to the United States Geological Survey,
coal in the United States represents approximately 95% of the domestic fossil
energy reserves with over 250 billion tons of recoverable
coal.




Coal is primarily used to fuel electric
power generation in the United States. Based on data from the Energy Information
Administration (EIA), coal-based power plants generated approximately 50% of the
electricity produced in the United States in 2005. Coal also represents the
lowest cost fossil fuel used for electric power generation making it critical to
the United States economy.




Several events occurring in the last
couple of years highlighted coal’s relative importance in the United States.
Compared to other fuels used for electric power generation, coal is
domestically-available, reliable and can be used in an environmentally-friendly
manner. Prices for oil and natural gas in the United States reached record
levels in 2008. High oil prices have resulted in renewed interest, not only in
adding new coal-based electric power generation, but also in “refining coal”
into transportation fuels, such as low-sulfur diesel. According to data from
Platts, over 80,000 megawatts of new coal-based generation is now planned in the
United States. The majority of the new facilities, as well as retrofits of
existing units, are being equipped with emission scrubbing equipment to greatly
reduce undesirable emissions. Additionally, government and private sector
interest in coal-gasification and coal-to-liquids technologies, which provide
environmental improvements, has increased.




The US coal mining industry includes
about 1,000 companies that operate 1,500 mines, with combined annual revenue of
$25 billion. Large producers include Peabody Energy, Arch Coal and Massey
Energy. After strong consolidation during the last decade, the ten largest
companies account for 65 percent of the market. The typical company
operates a single mine. The size of mines varies considerably, but a large
operation produces more than 1 million tons of coal per year.




According to the EIA, coal is expected
to remain the fuel of choice for domestic power generation through 2030. New
technologies intended to lower emissions of sulfur dioxide, nitrous oxides,
mercury and particulates will be introduced into the power generation industry.
These advancements will help coal retain its role as a key fuel for electric
power generation well into the future.




Coal
Mining — Competition





The coal industry is intensely
competitive. We are currently determining the best approach to generate
profitable revenue from our coal and other mineral reserves. Substantially all
of our potential competitors in coal production are larger, have greater
financial resources, have fully developed infrastructures, established customer
bases and larger reserve bases than we do. Among the most important competitive
factors are coal quality, transportation costs from the mines to the customer
and the reliability of supply. The large-scale industry dominators include Alpha
Natural Resources, Inc., Arch Coal, Inc., CONSOL Energy
Inc.,  International Coal Group, Inc., James River Coal Company,
Kennecott Energy Company, Massey Energy Company, Magnum Coal Company and Peabody
Energy Corp. There are also a number of smaller producers in the Central
Appalachian region with whom we would compete. As the price of domestic coal
increases, our competitive landscape may include companies that produce coal
from one or more foreign countries, such as Columbia and Venezuela.
Additionally, coal competes with other fuels such as petroleum, natural gas,
hydropower and nuclear energy for steam and electrical power generation. Over
time, costs and other factors, such as safety and environmental consideration,
relating to these alternative fuels may affect the overall demand for coal as a
fuel.




Coal
Mining — Regulatory Issues and Environmental Matters




Our operations, like operations of
other companies engaged in similar businesses, are subject to regulation by
federal, state and local authorities on matters such as the discharge of
materials into the environment, employee health and safety, mine permits and
other licensing requirements, reclamation and restoration activities involving
our mining properties, management of materials generated by mining operations,
surface subsidence from underground mining, water pollution, air quality
standards, protection of wetlands, endangered plant and wildlife protection,
limitations on land use, storage of petroleum products and substances that are
regarded as hazardous under applicable laws and management of electrical
equipment containing polychlorinated biphenyls.


5




Additionally, the electric generation
industry is subject to extensive regulation regarding the environmental impact
of its power generation activities, which could affect demand for our coal. The
possibility exists that new legislation or regulations may be adopted or that
the enforcement of existing laws could become more stringent, either of which
may have a significant impact on our mining operations or our customers’ ability
to use coal and requiring us or our customers to significantly change operations
or incur substantial costs.




While it is not possible to quantify
the expenditures we incur to maintain compliance with all applicable federal and
state laws, those costs have been and are expected to continue to be
significant. Federal and state mining laws and regulations require us to obtain
surety bonds to guarantee performance or payment of certain long-term
obligations including mine closure and reclamation costs, federal and state
workers’ compensation benefits, coal leases and other miscellaneous obligations.
Compliance with these laws have substantially increased the cost of coal mining
for all domestic coal producers.




The following is a summary of the
various federal and state environmental and similar regulations that may have a
material impact on our operations:




Clean Air Act. The federal
Clean Air Act and similar state and local laws, which regulate emissions into
the air, affect coal mining and processing operations primarily through
permitting and emissions control requirements. The Clean Air Act also indirectly
affects coal mining operations by extensively regulating the emissions from
coal-fired industrial boilers and power plants, which are the largest end-users
of our coal. These regulations take a variety of forms.




Other proposed initiatives may have an
effect upon coal operations. One such proposal is the Bush Administration’s
Clear Skies legislation. As proposed, this legislation is designed to reduce
emissions of sulfur dioxide, nitrogen oxides, and mercury from power plants.
Other so-called multi-pollutant bills, which would regulate additional air
pollutants, have been proposed by various members of Congress. While the details
of all of these proposed initiatives vary, there appears to be a movement
towards increased regulation of emissions, including carbon dioxide and mercury.
If such initiatives were to become law, power plants could choose to shift away
from coal as a fuel source to meet these requirements.




Mine Health and Safety Laws.
Stringent safety and health standards have been imposed by federal legislation
since the adoption of the Mine Safety and Health Act of 1969. The Mine Safety
and Health Act of 1977, which significantly expanded the enforcement of health
and safety standards of the Mine Safety and Health Act of 1969, impose
comprehensive safety and health standards on all mining operations. In addition,
as part of the Mine Safety and Health Acts of 1969 and 1977, the Black Lung Act
requires payments of benefits by all businesses conducting current mining
operations to coal miners with black lung and to some survivors of a miner who
dies from this disease. The states in which we operate also have mine safety and
health laws. In January 2006, the West Virginia legislature amended its
mine safety and health laws to require mine operators to notify emergency
response coordinators promptly after serious accidents and provide miners with
wireless tracking and communications devices and self-contained self-rescue
breathing equipment. Federal legislation has been proposed along the same lines
but has not been yet passed, and other states are considering similar
laws.





Surface Mining Control and
Reclamation Act. The Surface Mining Control and Reclamation Act
(“SMCRA”), establishes operational, reclamation and closure standards for all
aspects of surface mining as well as many aspects of deep mining. SMCRA requires
that comprehensive environmental protection and reclamation standards be met
during the course of and upon completion of mining activities. In conjunction
with mining the property, we are contractually obligated under the terms of our
leases to comply with all laws, including SMCRA and equivalent state and local
laws. These obligations include reclaiming and restoring the mined areas by
grading, shaping, preparing the soil for seeding and by seeding with grasses or
planting trees for use as pasture or timberland, as  specified in the
approved reclamation plan.




We may also lease some of our coal
reserves to third party operators. Under SMCRA, responsibility for unabated
violations, unpaid civil penalties and unpaid reclamation fees of independent
mine lessees and other third parties could potentially be imputed to other
companies that are deemed, according to the regulations, to have “owned” or
“controlled” the mine operator. Sanctions against the “owner” or “controller”
are quite severe and can include civil penalties, reclamation fees and
reclamation costs.




Comprehensive Environmental
Response, Compensation and Liability Act. The Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”), and similar state laws
affect coal mining operations by, among other things, imposing cleanup
requirements for threatened or actual releases of hazardous substances that may
endanger public health or welfare or the environment. Under CERCLA and similar
state laws, joint and several liabilities may be imposed on waste generators,
site owners and lessees and others regardless of fault or the legality of the
original disposal activity. Although the EPA excludes most wastes generated by
coal mining and processing operations from the hazardous waste laws, such wastes
can, in certain circumstances, constitute hazardous substances for the purposes
of CERCLA. In addition, the disposal, release or spilling of some products used
by coal companies in operations, such as chemicals, could implicate the
liability provisions of the statute. Thus, coal mines that we had previously
owned or operated, and sites to which we had sent waste materials, may be
subject to liability under CERCLA and similar state laws. In particular, we may
be liable under CERCLA or similar state laws for the cleanup of hazardous
substance contamination at sites where we own surface rights.


6




Mining Permits and Approvals.
Mining companies must obtain numerous permits that strictly regulate
environmental and health and safety matters in connection with coal mining, some
of which have significant bonding requirements. In connection with obtaining
these permits and approvals, we may be required to prepare and present to
federal, state or local authorities data pertaining to the effect or impact that
any proposed production of coal may have upon the environment. The requirements
imposed by any of these authorities may be costly and time consuming and may
delay commencement or continuation of mining operations. Regulations also
provide that a mining permit can be refused or revoked if an officer, director
or a shareholder with a 10% or greater interest in the entity is affiliated with
another entity that has outstanding permit violations. Thus, past or ongoing
violations of federal and state mining laws could provide a basis to revoke
existing permits and to deny the issuance of additional permits. We have applied
for an industrial mining permit through our subsidiary, Greater Ohio Resources,
Inc. The State of Ohio initially indicated that they would not begin the review
process for the approval of such permit until legacy reclamation issues related
to Belville were satisfactorily resolved. However, we have had additional
discussions with the State and they have indicated that they may begin the
review process if we transferred Belville’s mining rights to another entity,
which we have done with Greater Ohio Resources. Despite that, there are no
assurances that the State will actually begin the review process or, if they do
begin, approve our permit.




Regulatory authorities exercise
considerable discretion in the timing of permit issuance. Also, private
individuals and the public at large possess rights to comment on and otherwise
engage in the permitting process, including through intervention in the courts.
Accordingly, the permits we need for our mining operations may not be issued,
or, if issued, may not be issued in a timely fashion, or may involve
requirements that may be changed or interpreted in a manner which restricts our
ability to conduct our mining operations or to do so profitably.




In
order to obtain mining permits and approvals from state regulatory authorities,
mine operators, including us, must submit a reclamation plan for restoring, upon
the completion of mining operations, the mined property to its prior condition,
productive use or other permitted condition. We intend to submit the necessary
permit applications several months before we plan to mine in a new
area.




Future legislation and administrative
regulations may emphasize the protection of the environment and, as a
consequence, the activities of mine operators, including us, may be more closely
regulated. Legislation and regulations, as well as future interpretations of
existing laws, may also require substantial increases in equipment expenditures
and operating costs, as well as delays, interruptions or the termination of
operations. We cannot predict the possible effect of such regulatory
changes.




Under
some circumstances, substantial fines and penalties, including revocation or
suspension of mining permits, may be imposed under the laws described above.
Monetary sanctions and, in severe circumstances, criminal sanctions may be
imposed for failure to comply with these laws.




Endangered Species. The
federal Endangered Species Act and counterpart state legislation protect species
threatened with possible extinction. Protection of endangered species may have
the effect of prohibiting or delaying us from obtaining mining permits and may
include restrictions on timber harvesting, road building and other mining or
agricultural activities in areas containing the affected species. We do not
believe there are any species protected under the Endangered Species Act that
would materially and adversely affect our ability to mine coal from our
properties in accordance with current mining plans.




Other Environmental Laws. We
may be required to comply with numerous other federal, state and local
environmental laws in addition to those previously discussed. These additional
laws may include, for example, the Resource Conservation and Recovery Act, the
Safe Drinking Water Act, the Toxic Substance Control Act and the Emergency
Planning and Community Right-to-Know Act. We believe that we are in substantial
compliance with all applicable environmental laws.





Our
Strategy




Our strategy is to evaluate the best
business approach to monetize the land, mineral and mineral rights assets that
we acquired in the Ohio area.




We will continue to focus on
identifying other acquisition, partnership, strategic alliances or site
development opportunities that are revenue and cash flow-based.




Our ability to execute our strategy is
dependent on several factors, including but not limited to: (i) our success
in developing revenue, profitability and cash flow from our existing assets;
(ii) additional financing for capital expenditures, acquisitions and
working capital either in the form of equity or debt with terms and conditions
that would be acceptable to us; (iii) identifying potential acquisitions of
either assets or operational companies with prices, terms and conditions
acceptable to us; (iv) the development of successful strategic alliances or
partnerships; and (v) the extent and associated efforts and costs of federal,
state and local regulations in each of the industries in which we currently or
plan to operate in. There are no assurances that we will be successful in
implementing our strategy and any negative result of one of the factors alone or
in combination could have a material adverse effect on our
business.  If we are unable to raise additional funds through debt or
equity over and above current debt obligations, we will not be able to execute
on our businsss strategy, and may not be able to sustain the filing of our SEC
reports.




Customers




As of June 30, 2009, we did not
have any customers as we had no active operations. As of June 30, 2008, we had
one customer.




Dividends




We do not intend to pay dividends. Any
change in this intention is at the discretion of the Board of
Directors.


7




Employees




As of June 30, 2009 and 2008, we
had 3 part time employees and 4 full time employees, respectively. We also
utilize outsourced labor, consultants and temporary contract labor throughout
the year to address business and administrative needs.




None of our employees are represented
by a collective bargaining agreement, nor have we experienced any work stoppage.
We do not expect any significant disruption in our business in our fiscal year
ending June 30, 2010 as a result of labor negotiations, employee strikes or
organizational efforts.




ITEM
1A – RISK FACTORS




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-K 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





We may be unable to afford ongoing
administrative and reporting.  Our ability to continue
administrative functions and preparation of SEC reports, including payment of
our auditors and advisors, will be limited if we do not generate sufficient
working capital through financing activities or the sale of
assets.  If we are unable to pay the expenses associated with such
reporting activities, we will be at risk of losing our OTCBB listing, and will
be delinquent in our filings with the SEC.  Either or both of the
forgoing adverse outcomes will have an impact on the market for our shares, and
potentially on our long term survivial.





We may be unable to execute our
acquisition growth strategy. Our ability to execute our growth strategy
depends in part on our ability to identify and acquire desirable acquisition
candidates. The consolidation of our operations with the operations of acquired
companies, including the consolidation of systems, procedures, personnel and
facilities, the relocation of staff, and the achievement of anticipated cost
savings, economies of scale and other business efficiencies, may present
significant challenges to our management, particularly if several acquisitions
occur at the same time. In short, we cannot be assured that: desirable
acquisition candidates exist or will be identified, we will be able to acquire
any of the candidates identified, we will effectively consolidate companies
which are acquired and fully or timely realize the expected cost savings,
economies of scale or business efficiencies, or any acquisitions will be
profitable or accretive to our earnings.




We face challenges in attracting and
retaining a qualified and experienced management team. Our success will
depend largely on our ability to hire and retain qualified individuals to
operate our business including, our directors, senior management and other key
personnel as wells as board of director members. The loss of the services of any
of these key personnel could have a material adverse effect on our business and
financial results. Our failure to attract and retain qualified personnel could
have a material adverse effect on our business and financial
condition.




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.  We have only a limited operating history upon which
to base an evaluation of our business and our prospects. There can be no
assurance that our senior management team will be able to manage the business
successfully and implement our operating and growth strategies effectively. Our
effective integration of acquired businesses into our organization and
operations is and will continue to be important to our growth and future
financial performance. A part of our strategy is to achieve economies of scale
and operating efficiencies by increasing our size through acquisitions. These
goals may not be achieved even if we effectively combine the operations of
acquired businesses with our existing operations due to factors beyond our
control, such as market position or customer base. Because of our limited
operating history, there can be no assurance that our senior management team
will succeed in integrating our future acquisitions. Any difficulties we
encounter in the integration process could have a material adverse effect on our
business, financial condition and results of operations.




Additional factors may negatively
impact our acquisition growth strategy. Our acquisition strategy may
require spending significant amounts of capital. If we are unable to obtain
needed financing on acceptable terms, we may need to reduce the scope of our
acquisition growth strategy, which could have a material adverse effect on our
growth prospects. The intense competition among our potential competitors
pursuing the same acquisition candidates may increase purchase prices for
acquisitions and increase our capital requirements and/or prevent us from
acquiring certain acquisition candidates. If any of the aforementioned factors
force us to alter our growth strategy, our financial condition, results of
operations and growth prospects could be adversely affected.


8




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.  We anticipate that any future business acquisitions will
be financed through cash from potential operations, borrowings, the issuance of
shares of our common stock and/or seller financing. If acquisition candidates
are unwilling to accept, or we are unwilling to issue, shares of our common
stock as part of the consideration for such acquisitions, we may be required to
use more of our available cash resources or debt, to the extent it is available,
to fund such acquisitions. To the extent that cash from potential operations and
debt are insufficient to fund acquisitions, we will require additional equity
and/or debt financing, the terms of which may be unfavorable or unavailable.
There can be no assurance that we will have sufficient existing capital
resources or be able to raise sufficient additional capital resources on terms
satisfactory to us to meet any or all of the foregoing capital
requirements.




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.  As a successor owner to entities we acquire, we
often assume prior liabilities incurred and there can be no assurances that
these liabilities are properly disclosed to us. Even if we obtain legally
enforceable representations, warranties, covenants and indemnities from the
sellers of such businesses, we may not be successful in fully covering the
liabilities. Certain environmental liabilities, even if we do not expressly
assume them, may be imposed upon us under various regulatory schemes and legal
theories, and as such may materially affect our ability to operate and grow our
business.




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.  We compete for acquisition candidates with other
entities, some of which have greater financial resources than us. Increased
competition for acquisition candidates may result in fewer acquisition
opportunities being available to us, as well as less attractive acquisition
terms, including increased purchase prices. These circumstances may increase
acquisition costs to levels that are beyond our financial capability or pricing
parameters or that may have an adverse effect on our results of operations and
financial condition. The ability to utilize our securities as consideration for
potential acquisitions may depend in large part on the relative market price and
capital appreciation prospects of the common stock compared to the equity
securities of our competitors. If the market price of our common stock were to
decline materially over a prolonged period of time, our acquisition program
could be materially adversely affected.




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.  Although we have no currently
planned coal mining operations, planning those operations are subject to
conditions or events beyond our control that could disrupt operations, affect
production and increase the cost of mining for varying lengths of time and
negatively affect our profitability. These conditions or events include,
(i) unplanned equipment failures, which could interrupt production and
require us to expend significant sums to repair our capital equipment that we
would use to remove the soil that overlies coal deposits; (ii) geological
conditions, such as variations in the quality of the coal produced from a
particular seam, variations in the thickness of coal seams and variations in the
amounts of rock and other natural materials that overlie the coal that we are
mining; (iii) unexpected delays and difficulties in acquiring, maintaining
or renewing necessary permits or mining or surface rights;
(iv) unavailability of mining equipment and supplies and increases in the
price of mining equipment and supplies; (v) shortage of qualified labor and a
significant rise in labor costs; (vi) fluctuations in the cost of
industrial supplies, including steel-based supplies, natural gas, diesel fuel
and oil; (vii) unexpected or accidental surface subsidence from underground
mining; (viii) accidental mine water discharges, fires, explosions or
similar mining accidents; (ix) regulatory issues involving the plugging of
and mining through oil and gas wells that penetrate the coal seams we mine; and
(x) adverse weather conditions and natural disasters, such as heavy rains and
flooding. If any of these conditions or events occur in the future at any of our
mining complexes, our cost of mining and any delay or halt of production either
permanently or for varying lengths of time could adversely affect our operating
results.




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.  We are responsible under federal and state
regulations for the ultimate reclamation of the mines we operate. In some cases,
the previous mine operators have assumed these liabilities by contract and have
posted bonds or have funded escrows to secure their obligations. We estimate our
future liabilities for reclamation and other mine-closing costs from time to
time based on a variety of assumptions. If our assumptions are incorrect, we
could be required in future periods to spend more on reclamation and
mine-closing activities than we currently estimate, which could harm our
profitability. Likewise, if previous mine operators default on the unfunded
portion of their contractual obligations to pay for reclamation, we could be
forced to make these expenditures ourselves and the cost of reclamation could
exceed any amount we might recover in litigation, which would also increase our
costs and reduce our profitability.




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.  We
conduct some of our mining operations on properties that we lease. A title
defect or the loss of any lease could adversely affect our ability to mine the
associated reserves. Because title to most of our leased properties and mineral
rights is not usually verified until we make a commitment to develop a property,
which may not occur until after we have obtained necessary permits and completed
exploration of the property, our right to mine some of our reserves may, in the
future, be adversely affected if defects in title or boundaries exist. In order
to obtain leases or mining contracts to conduct our mining operations on
property where these defects exist, we may in the future have to incur
unanticipated costs. In addition, we may not be able to successfully negotiate
new leases or mining contracts for properties containing additional reserves or
maintain our leasehold interests in properties where we have not commenced
mining operations during the term of the lease.


9




Estimates of proven and probable
reserves are subject to considerable uncertainty. Such estimates are, to
a large extent, based on interpretations of geologic data obtained from drill
holes and other sampling techniques. We use feasibility studies to derive
estimates of capital and operating costs based upon anticipated tonnage and
grades of minerals to be mined and processed, the costs of comparable
facilities, the costs of operating and processing equipment and other factors.
Actual operating costs and economic returns on projects may differ significantly
from original estimates. Further, it may take many years from the initial phase
of exploration before production is possible and, during that time, the economic
feasibility of exploiting a discovery may change.




We may not be able to raise
sufficient capital or generate sufficient cash flow to meet our debt service
requirements. As of June 30, 2009, we had indebtedness of $4,946,000
of which $2,137,000 is due in less than one year. We cannot be assured that our
future working capital or cash flows will be sufficient to meet our debt
obligations and commitments. Any insufficiency would have a negative impact on
our business. Our ability to generate cash flow from operations sufficient to
make scheduled payments on our debt as they become due will depend on our future
performance and our ability to implement our business strategy successfully.
Failure to pay our interest expense or make our principal payments would result
in a default. A default, if not waived, could result in acceleration of our
indebtedness, in which case the debt would become immediately due and payable.
If this occurs, we may be forced to reduce or delay capital expenditures and
implementation of our business strategy, sell assets, obtain additional equity
capital or refinance or restructure all or a portion of our outstanding debt on
terms that may be less favorable to us. In the event that we are unable to do
so, we may be left without sufficient liquidity and we may not be able to repay
our debt and the lenders will be able to foreclose on our assets.




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.  Our growth strategy includes
(i) expanding through acquisitions and (ii) generating internal growth of
its infrastructure and logistics capabilities. Our ability to execute our growth
strategy will depend on a number of factors, including the success of existing
and emerging competition, the availability of acquisition targets, the ability
to maintain profit margins in the face of competitive pressures, the ability to
continue to recruit, train and retain qualified employees, the strength of
demand for our services and the availability of capital to support our
growth.




Rapid growth could create risks of
over leverage or undercapitalization to meet our obligations which could
materially impact our financial condition and strategy.  If we
are able to execute our growth strategy, we may experience periods of rapid
growth. Such growth, if it occurs, could place a significant strain on our
management, operational, financial and other resources. Our ability to maintain
and manage our growth effectively will require us to expand our management
information systems capabilities and our operational and financial systems and
controls. Moreover, we will need to attract, train, motivate, retain and manage
additional senior managers, technical professionals and other employees, as well
as integrate accounting and reporting for disclosure controls and compliance
with Section 404 of the Sarbanes-Oxley Act. Any failure to expand our
operational and financial systems and controls or to recruit and integrate
appropriate personnel at a pace consistent with our revenue growth could have a
material adverse effect on our business, financial condition and results of
operations.




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.  During the last several years, the U.S. coal
industry has experienced increased consolidation, which has contributed to the
industry becoming more competitive. According to the NMA, the top ten coal
producers in 1994 accounted for approximately 45% of total domestic coal
production. By 2004, however, the top ten coal producers’ share had increased to
approximately 69% of total domestic coal production. Consequently, some of our
competitors in the domestic coal industry are major coal producers who have
greater financial resources than we do. The intense competition among coal
producers may impact our ability to retain or attract customers and may,
therefore, adversely affect our future revenue and profitability. Recent
increases in coal prices could encourage the development of expanded coal
producing capacity in the United States. Any resulting overcapacity from
existing or new competitors could reduce coal prices and, therefore, our
revenue.




We may be unable to obtain and renew
permits necessary for our operations, which would reduce our production, cash
flow and profitability.  Mining companies must obtain numerous
permits that strictly regulate environmental and health and safety matters in
connection with mining, including permits issued by various federal and state
agencies and regulatory bodies. We believe that we are in the process of
obtaining the necessary permits to mine our developed reserves at our mining
complexes. However, as we commence mining our undeveloped reserves, we will need
to apply for and obtain the required permits. The permitting rules are complex
and change frequently, making our ability to comply with the applicable
requirements more difficult or even impossible, thereby precluding continuing or
future mining operations. Private individuals and the public at large have
certain rights to comment on and otherwise engage in the permitting process,
including through intervention in the courts. Accordingly, the permits we need
for our mining operations may not be issued, or, if issued, may not be issued in
a timely fashion, or may involve requirements that may be changed or interpreted
in a manner which restricts our ability to conduct our mining operations or to
do so profitably. An inability to conduct our mining operations pursuant to
applicable permits would reduce our production, cash flow and
profitability.


10




ITEM
1B – UNRESOLVED STAFF COMMENTS




None.




ITEM
2 — DESCRIPTION OF PROPERTY




Land
and Leaseholds




We current occupy approximately 200
square feet of leased office space at 7637 Leesburg Pike, Falls Church, Virginia
22043 and it serves as our executive and administrative headquarters. Our lease
expires on April 30, 2010 and the monthly rent amount is $250. Until
September 2007, we occupied approximately 2,187 square feet of leased
office space located at 177 Madison Avenue, 2nd Floor, Morristown, New Jersey
07960 that served as our executive and administrative headquarters. The lease
expired on August 26, 2009. The monthly rental rate was $4,647. We had
assigned the lease to a third party in September 2007, but retained
financial responsibility for the lease in the event of the default of the
assignee through the end of the lease term.




As
part of our acquisition of MNJ and subsequent recent sale of assets , we have
approximately 65 remaining acres of mostly undeveloped industrial zoned land
along or adjacent to the corridor of abandoned railroad track bedding and we are
in the processing of selling this land and the associated abandoned right-of-way
corridor to a number of purchasers.




Mineral
Land Rights




As of June 30, 2009, we owned or
controlled primarily through long-term leases approximately 9,320 acres of coal,
limestone and clay mineral rights on land in southern Ohio. 1,320 acres of those
properties are encumbered by mortgage liens held by certain creditors of
Belville associated with promissory notes issued by Belville to such creditors.
The following map illustrates the location of mineral rights we own or
control.









Our
Reserves




As of June 30, 2009, our proven
and probable mineral reserves are located in Jackson, Scioto and Lawrence
counties in the south east corner of the state of Ohio on approximately 1,320
acres of land that we own. We have additional mining rights to approximately
8,000 acres of land mostly relating to underground mining rights in the Wayne
National Forest. We estimate that we own approximately 25.760 million tons
of non-permitted proven and probable recoverable reserves of coal, approximately
2.737 million tons of non-permitted proven and probable recoverable
reserves of limestone, and approximately 2.379 million tons of
non-permitted proven and probable recoverable reserves of clay. Recoverable
reserves include only saleable minerals and do not include minerals which would
remain unextracted, such as support pillars and processing losses. Reserve
estimates are prepared by contracted engineers and geologists and are reviewed
and updated periodically.




11




The following table reflects our
estimated unassigned recoverable mineral reserves as of June 30, 2009 and
2008:




Total
Unassigned Reserves (tonnage in millions)





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
                    
                    
                    
                    21.665
                    
                    
                    
                    25.760
                    
                    
                    
                    6.260
                    
                    
                    
                    19.500
                    
                    
                    
                    0.167
                    
                    
                    
                    8.468
                    
                    
                    
                    17.125
                    
                    
                    
                    10,500-11,200Clay
                    
                    
                    2.238
                    
                    
                    
                    0.499
                    
                    
                    
                    2.737
                    
                    
                    
                    2.737
                    
                    
                    
                    
                    
                    
                    
                    n/a
                    
                    
                    
                    n/a
                    
                    
                    
                    n/a
                    
                    
                    
                    n/aLimestone
                    
                    
                    1.620
                    
                    
                    
                    0.759
                    
                    
                    
                    2.379
                    
                    
                    
                    2.379
                    
                    
                    
                    
                    
                    
                    
                    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.




As of
June 30, 2009, approximately 100% of our estimated proven and probable
mineral reserves were held in fee simple.




Title to mineral properties held by
lessors or grantors to us and our subsidiaries and the boundaries of properties
are normally verified at the time of leasing or acquisition. However, consistent
with industry practices, title and boundaries are not completely verified until
such time as our independent operating subsidiaries prepare to mine such
reserves. If defects in title or boundaries of undeveloped reserves are
discovered in the future, control of and the right to mine such reserves could
be adversely affected.




We must obtain permits from applicable
state regulatory authorities before we begin to mine particular reserves.
Applications for permits require extensive engineering, data analysis and
presentation. Applications must address a variety of environmental, health and
safety matters associated with a proposed mining operation. These matters
include the manner and sequencing of mineral extraction, the storage, use and
disposal of waste and other substances and other impacts on the environment, the
construction of overburden fills and water containment areas and reclamation of
the area after coal extraction. We are required to post bonds to secure
performance under our permits. Regulatory authorities have considerable
discretion in the timing of permit issuance and the public has rights to comment
on and otherwise engage in the permitting process, including intervention in the
courts.




Our reported mineral reserves are those
that could be economically and legally extracted or produced at the time of
their determination. Proven reserves are those reserves for which quantity is
computed from dimensions revealed in outcrops, trenches, workings or drill
holes. Grade and/or quality are computed from the results of detailed sampling
and the sites for inspection, sampling and measurement are spaced so closely and
the geologic character is so well defined that size, shape, depth and mineral
content of reserves are well-established. Probable reserves are those for which
quantity and grade and/or quality are computed from information similar to that
used for proven reserves, but the sites for inspection, sampling, and
measurement are farther apart or are otherwise less adequately spaced. The
degree of assurance, although lower than that for proven reserves, is high
enough to assume continuity between points of observation. Except as described
elsewhere in this document with respect to permits to conduct mining operations,
we are not currently aware of matters which would significantly hinder our
ability to obtain future mining permits or governmental approvals with respect
to our reserves.




Southern
Ohio Mine





Belville Mining Company, Inc.
(“Belville”), owned by the Belville family, began development of the Southern
Ohio Mine in 1960 in Aid and Symmes Townships in Lawrence County, Jackson County
and Washington Township in Lawrence County, Ohio. The Southern Ohio Mine had
been in continuous operation since 1960 consisting of mining coal, limestone and
clay up until 1998. We estimate that approximately 3.77 million tons of
coal, 25,000 tons of clay, and 433,000 tons of limestone were extracted from the
Southern Ohio Mine. We acquired the stock of Belville in September 2005 and
leased all the rights to mine coal, clay and limestone to our wholly owned
subsidiary, Greater Ohio Resources, Inc. The leasing rights were assumed by us,
as the parent company, on April 1, 2009.




After the cessation of active mining
operations in 1998, Belville either sold or disposed of most of its mining
equipment. During the year ended June 30, 2007, we sold and/or disposed of
any remaining mining equipment.




We believe that all the coal, limestone
and clay reserves shown in the table above are recoverable if we develop the
appropriate facilities with technology and infrastructure. As we have no mining
activities and we do not have any mining permits other than for land that has
been mined and is currently under going reclamation activities, our mining
operations are in the development stage.




Belville’s prior owners are
contractually responsible for the cost of reclaiming portions of the Southern
Ohio Mine, however, we are ultimately responsible to ensure that reclamation
activities are performed as legally required. Belville is in the process
of  the completion of reclamation efforts on approximately 20 acres of
land under the direction of the Ohio Department of Natural
Resources.




ITEM
3 — LEGAL PROCEEDINGS




On June 14, 2007, U.S. Rail
Corporation filed a lawsuit against us in the U.S. District Court for the
Southern District of Ohio, alleging that we failed to pay for railcar storage
services totaling $88,200 from October 2005 through March 2006. We did
not contract for these services and we have legally disputed this claim, however
we had recorded the total disputed amount of the lawsuit as a current liability
on our balance sheets until such time as this matter was resolved. On April 29,
2009, this lawsuit was settled in exchange for a payment of $22,500 to us to
offset our legal fees and transfer of certain railway equipment assets to the
plaintiff that were of de minimis value to us. We had previously accrued the
railcar storage service fees and the settlement resulted in a reduction of our
general and administrative expenses of $88,000 for the year ended June 30,
2009.


12




On August
20, 2009, Lucy Rasmussen filed a lawsuit against the Company for non-payment of
a $500,000 note payable that was due on February 15, 2008. The Company had been
and will continue to attempt to negotiate a reasonable settlement, including an
extension to this note.  This note plus accrued interest is included
in current liabilities in the accompanying consolidated balance
sheet.




In the normal course of operations, we
may have disagreements or disputes with employees, vendors or customers. These
disputes are seen by our management as a normal part of business, and except as
set forth above, there are no pending actions currently or no threatened actions
that management believes would have a significant material impact on our
financial position, results of operations or cash flows.




ITEM
4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




None.


13




PART
II




ITEM
5 — MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES




Market
Information




Our
common stock is traded on the Over the Counter Bulletin Board under the symbol
CWLT.  Until April 7, 2009 our symbol was CHWN; It was changed due to
2 for 1 reverse split of our common stock that became effective on April 8,
2009.




The following is the range of high and
low bid prices for our common stock for the periods indicated. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commissions
and may not represent actual transactions. The prices shown have been
retroactively adjusted to reflect the impact of our 2 for 1 reverse split of our
common stock that became effective on April 8, 2009:




Year
      Ended June 30, 2009
                    
                    High
                    
                    
                    LowFirst
      Quarter (September 30, 2008)
                    
                    $
                    0.50
                    
                    
                    $
                    0.10Second
      Quarter (December 31, 2008)
                    
                    $
                    0.10
                    
                    
                    $
                    0.08Third
      Quarter (March 31, 2009)
                    
                    $
                    0.10
                    
                    
                    $
                    0.10Fourth
      Quarter (June 30, 2009)
                    
                    $
                    0.10
                    
                    
                    $
                    0.00





Year
      Ended June 30, 2008
                    
                    High
                    
                    
                    LowFirst
      Quarter (September 30, 2007)
                    
                    $
                    1.50
                    
                    
                    $
                    0.60Second
      Quarter (December 31, 2007)
                    
                    $
                    0.74
                    
                    
                    $
                    0.06Third
      Quarter (March 31, 2008)
                    
                    $
                    0.50
                    
                    
                    $
                    0.10Fourth
      Quarter (June 30, 2008)
                    
                    $
                    0.60
                    
                    
                    $
                    0.26




The
closing price for our common stock on June 30, 2009 was $0.01.




Stockholders




As of June 30, 2009, there were
9,494,013 shares of common stock issued and outstanding held by 526 stockholders
of record (not including street name holders).




Dividends




We do not anticipate paying any
dividends in the foreseeable future. Our Board of Directors intends to follow a
policy of retaining earnings, if any, to finance our growth. The declaration and
payment of dividends in the future will be determined by our Board of Directors
in light of conditions then existing, including our earnings, financial
condition, capital requirements and other factors.




Recent
Sales of Unregistered Securities




On December 31, 2007, we issued
5,000 shares of common stock to a consultant in exchange for services valued at
$0.08 per share or $400. Our management valued the shares of common stock at the
closing market price on the date of the transaction. We issued the shares of
common stock in reliance on Section 506 of Regulation D of the
Securities Act, and comparable exemptions for sales to “accredited” investors
under state securities laws.




On August 11, 2008, we issued 830,770
shares of common stock to Orchestra Finance, LLP in exchange for services valued
at $0.26 per share or $216,000. Our management valued the shares of common stock
at the closing market price on the date of the transaction. We issued the shares
of common stock in reliance on Section 506 of Regulation D of the
Securities Act, and comparable exemptions for sales to “accredited” investors
under state securities laws.




On
January 1, 2009, we issued 750,000 shares of common stock to an officer and an
employee in exchange for services valued at $0.10 per share or $75,000, and we
issued 600,000 shares of common stock to an accredited foreign private investor
valued at $0.10 per share or $60,000 and we recorded it as a financing fee for
agreeing to defer accrued and outstanding interest payments on a promissory note
due to the investor. Our management valued the shares of common stock at the
closing stock market price on the date of the transaction. We issued the shares
of common stock in reliance on Section 506 of Regulation D of the
Securities Act, and comparable exemptions for sales to “accredited” investors
under state securities laws.




14




Securities
Authorized for Issuance under Equity Compensation Plans




The following table provides
information about our common stock that may be issued upon the exercise of
options, warrants and rights that we have granted under (a) our 2006 Equity
Incentive Plan and (b) individual compensation arrangements in exchange for
consideration in the form of goods or services as of June 30,
2009.




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)
                
                
                425,000
                
                
                $
                5.22
                
                
                
                192,560Equity
      compensation plans not approved by security holders
                
                
                —
                
                
                $
                —
                
                
                
                N/ATotal
                
                
                425,000
                
                
                $
                5.22
                
                
                
                192,560





(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.




Our
2006 Equity Incentive Plan was approved by our shareholders at our annual
shareholders’ meeting on February 8, 2006. This plan permits us to grant
nonqualified stock options. Options under this plan generally vest over two to
four years, though the vesting periods may vary from person to person, and are
exercisable subject to continued employment and other conditions.




ITEM
6 — SELECTED FINANCIAL DATA




Item not required for a smaller
reporting company.




ITEM
7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS  OF OPERATIONS




The
following discussion should be read in conjunction with our consolidated
financial statements and notes thereto included elsewhere in this Report.
Forward-looking statements are statements not based on historical information
and which relate to future operations, strategies, financial results or other
developments. Forward-looking statements are based upon estimates, forecasts,
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond our
control and many of which, with respect to future business decisions, are
subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by us, or on our behalf. We disclaim any
obligation to update forward-looking statements.




The discussion and financial statements
contained herein are from our inception of March 3, 2005 to our fiscal year
ended June 30, 2009.




Background
and Corporate History




We are a multi-industry holding company
that was formed as a Nevada corporation in 1984. We, through our wholly-owned
subsidiaries, are owners of land and mineral rights. Our primary
revenue-generating business until January 24, 2008 was the transportation
and disposal of non-hazardous solid waste as well as the transportation of other
commodities. We provided limited rail-based transportation of commodities
through our MNJ subsidiary until March 31, 2009. We had, until January 24,
2008, been pursuing a growth strategy through acquisitions of assets, properties
and access rights that can be combined and strategic relationships with those
companies that focus on waste by rail services, rail transportation logistics,
and disposal options, including landfill management. We recently changed our
focus and are no longer pursuing strategies related to waste by rail, waste
disposal options and landfill management. We are currently re-evaluating our
strategy and we are focusing on evaluating the best business approach to
monetizing some land, mineral and mineral rights assets that we acquired to
generate liquidity to fund future business activity.


15




Until early 2005 our principal activity
consisted of the oversight of investments, principally in College Partnership,
Inc. On January 31, 2005, we transferred all assets and liabilities to our
then wholly-owned subsidiary, Kingsley Capital, Inc. and subsequently
transferred all of our Kingsley stock to our then existing shareholders as a
dividend effective March 3, 2005 effecting a spin-off of Kingsley Capital.
On March 23, 2005, in two separate but concurrent transactions, we sold
25,838,433 pre-split shares of our common stock to one of our directors in a
private transaction for $200,000, which proceeds were used to pay off the
promissory note issued previously to Kingsley Capital, and our controlling
affiliates sold an additional 19,161,567 pre-split shares of our common stock to
the same director in a private transaction for $250,000.




Since March 3, 2005 and following
the discontinuation of our former operations and business, we changed our focus
and strategic direction and pursued operations as a development stage company in
the natural resources and rail-based transportation industries. Most of our
activities during the period from March 3, 2005 to September 30, 2006
were dedicated to seeking acquisition targets with viable on-going operations,
or acquisition of assets, properties and access rights that could be combined
and allow us to begin operations.




On September 8, 2005, we acquired
E-Rail, a development stage company with assets and minimal operations in the
solid waste transportation and disposal industry. Because E-Rail was not deemed
a business, the acquisition was treated as an acquisition of assets. The
acquisition included E-Rail’s wholly-owned subsidiary, Belville based in Ohio
which has significant interests and rights to over 9,600 acres of land and
minerals in South-Central Ohio, a portion of which land we intend to permit for
certain industrial uses. The property principally contains coal, clay and
limestone. We are only beginning the permitting process, and cannot estimate
when operational use of the property will begin at this time. In addition to
permits, the site will require significant infrastructure improvements, which we
are evaluating. Subsequent to the acquisition, E-Rail assigned the Belville
shares to Chartwell so that it is functioning as one of our direct
subsidiaries.




On April 1, 2006, in an effort to
better streamline operations, E-Rail assigned all of its assets and liabilities
to Hudson. We surrendered the corporate charter of E-Rail on August 2,
2006.




On April 26, 2006, we completed
the acquisition of Cranberry Creek Railroad, Inc., a New Jersey corporation
including its wholly-owned subsidiary, MNJ. that owns and operates a regional
short-line railroad in Middletown, New York. MNJ owns and operates a regional
short-line railroad headquartered and based in Middletown, New York. MNJ’s
operations were limited and we made some limited capital improvements. We were
considering operational infrastructure alternatives to both increase the volume
of activity on the railroad including partnering with other railroads to manage
and operate MNJ on our behalf.





On May 12, 2006, in an effort to
further simplify our corporate structure, we assigned all the assets and
liabilities of Cranberry Creek to MNJ and began the process to surrender the
corporate charter of Cranberry Creek.




Founded in 1947, MNJ, headquartered in
Middletown, New York has historically been an integral part of the growth of
Orange County, New York. MNJ and its predecessors transported milk, milk
products, livestock, feed and coal. As recently as in the mid 1980s, MNJ
serviced a chemical and a fertilizer plant on its short-line. The business is
currently serving Genpak, a national plastic packaging company and Orange &
Rockland Utilities.





On
August 29, 2006, our wholly-owned subsidiaries, Hudson and Hudson Logistics
Loading, Inc. (“HLL”) completed the acquisition of certain agreements from Steel
Wheels Transport, LLC and Team G Loading, LLC, that they respectively held with
New York and Greenwood Lake Railway Company, Inc. (“Greenwood”). We acquired
these agreements as part of our strategy to offer rail-based solid waste
transportation and disposal services. We began transload activities on this site
on September 11, 2006. On January 24, 2008, our wholly-owned subsidiaries
HLI and HLL entered into an Amended and Restated Purchase Agreement with Perry
New Jersey, LLC for the sale of substantially all of their assets to Perry New
Jersey I, LLC for cash consideration of $1,700,000, subject to a $803,594
holdback, and assumption by Perry of certain debts and leases of Hudson and HLL.
This transaction closed on January 24, 2008. .  As a result of
the asset sale, we no longer had rail-based solid waste transportation
operations. We decided to discontinue pursuing any strategy related to waste by
rail, waste management and landfill operations. We have assigned remaining
assets and liabilities of HLI and HLL to Chartwell International, Inc. and
surrendered the corporate charters of HLL and HLI on May 30, 2008 and September
19, 2008, respectively.





On
January 31, 2009 we consummated an agreement with Tealinc, Ltd. for the sale of
all 60 of our completed railcars for a total of $1,380,000 in cash
proceeds.





On March
31, 2009 we and our wholly-owned subsidiary, MNJ, entered into a definitive
Agreement for Sale and Purchase of Business Assets with Middletown & New
Jersey Railroad, LLC, a Delaware limited liability company
(“Buyer”).  Under the terms of the agreement, we agreed to sell
substantially all of MNJ’s assets used in connection with operating our railroad
freight transportation business serving central Orange County in Middletown, New
York. The purchase price was $386,900 and the assumption by Buyer of certain
liabilities.  On April 6, 2009, we and MNJ consummated the
sale.  The purchase price was deposited into an escrow account subject
to the following release conditions: (a) $356,900 to be released to us upon our
providing Buyer with a title report and title insurance, and (b) $30,000 to be
released to us upon resolution of certain real property matters. Between March
31, 2009 and April 6, 2009 we did not have any operations in MNJ. Based on this
transaction we no longer have any active operations in rail transportation. We
in the process of selling off the remaining MNJ land holdings that were not
connected with MNJ’s rail transportation business. We anticipate that
substantially all of our MNJ land holdings will be sold within the next 6 to 12
months.


16




Effective
April 1, 2009, in our efforts to reduce operating costs, the limited operations
of our subsidiaries Greater Hudson Resources, Inc. and Greater Ohio Resources,
Inc. were terminated, all the assets and liabilities of both entities were
assigned to Chartwell International, Inc., and their corporate charters were
surrendered on May 12, 2009 and May 19, 2009, respectively.





On June
15, 2009 we assigned all the remaining assets and liabilities of MNJ to
Chartwell International, Inc. We surrendered the corporate charter of MNJ on
October 5, 2009.




Critical
Accounting Policies




Our Financial Statements are based on
the selection and application of significant accounting policies, which require
our management to make estimates and assumptions that affect the amounts
reported in the Balance Sheets and the Statements of Operations. We believe that
the following are the most critical areas that may affect our financial
condition and results of operations.




Revenue Recognition. We
generated revenue from rail transportation until March 31, 2009 and we generated
revenue from solid waste transportation and disposal services until
January 24, 2008. The timing of our revenue recognition for solid waste
transportation and disposal services depended on the type of service that we
provide to our customers. We recognized revenue at our transload facility upon
delivery by our customers of waste to our facilities. We recognized revenue for
waste management services when we complete the delivery of waste to the site
designated as part of our contract with the customer. Our credit terms for our
transload facility were generally prepayment, cash on delivery or weekly
payment. Our credit terms for waste management services were generally 15 to 30
days. We generated limited revenue from rail transportation and we recognized
revenue on the completion of transportation across our short line railroad. Our
credit terms were generally 15 to 30 days. We maintained reserves for
potential credit losses on solid waste disposal services based on a specific
identification of customers that have exceeded credit terms and our assessment
of their ability to pay. We did not maintain a reserve for rail transportation
as we had one customer and we had not incurred any losses since we began
generating revenue in February 2006.




Stock Based Compensation. Our 2006
Equity Incentive Plan (“2006 Plan”) was approved by our shareholders on
February 8, 2006 and permits the granting of up to 9% of our outstanding
shares of common stock or 905,060 shares to employees and directors. Stock
option awards are granted with an exercise price that is generally equal to or
greater than the market price of our common stock on the date of the grant. The
options vest generally over a range of two to four years and expire five years
after the grant date. Stock options under the 2006 Plan provide for accelerated
vesting if there is a change in control (as defined by the 2006
Plan).




The fair value of each stock option
granted is estimated on the date of the grant using the Black-Scholes option
pricing model and factors in an estimated forfeiture based on management
assessment of historical employee termination experience as well as estimates of
future terminations where historical information is limited. The Black-Scholes
option pricing model has assumptions for risk free interest rates, dividends,
stock volatility and expected life of an option grant. The risk free interest
rate is based the U.S. Treasury Bill rate with a maturity based on the expected
life of the options and on the closest day to an individual stock option grant.
Dividend rates are based on our dividend history. The stock volatility factor is
based on up to the past three years of market prices of our common stock. The
expected life of an option grant is based on its vesting period. The fair value
of each option grant is recognized as compensation expense over the expected
life of the option on a straight line basis.




Impairment of Long-Term
Assets. In the event that facts and circumstances indicate that the
carrying value of long-term assets may be impaired, an evaluation of
recoverability would be performed. If an evaluation is required, the estimated
future undiscounted cash flows associated with the asset would be compared to
the asset’s carrying amount to determine if a write-down to market value or
discounted cash flow value is required. The write-down, if any, would be charged
to operations in the period that impairment was identified. During the quarters
ended December 31, 2007, March 31, 2008, December 31, 2008 and June 30,
2009 our management identified certain railroad equipment assets, and, land and
related infrastructure associated with our MNJ and Belville subsidiaries that
were not being used in current operations and evaluated the market value of
these assets. We determined the value of these assets had been impaired in
comparison to prices for similar assets and we recorded write-downs totaling
$3,027,000 ($894,000 at December 31, 2007, $1,361,000 at March 31, 2008,
$470,000 at December 31, 2008 and $302,000 at June 30, 2009) based on our
estimates of their market value.




Results
of Operations




Comparison
for the year ended June 30, 2009 and 2008




We reported a net loss for the year
ended June 30, 2009 of $2,237,000 or $0.26 per share on a basic and diluted
basis as compared to a loss for the year ended June 30, 2008 of $5,053,000
or $0.72 per share on a basic and diluted basis.




Revenues




Revenues for the year ended June 30,
2009 of $140,000 consisted primarily of rail transportation income from MNJ of
$132,000. Revenues for the year ended June 30, 2008 of $2,543,000 consisted
primarily of solid waste disposal fees from our transload facility in Passaic,
New Jersey of $2,375,000 and rail transportation income from MNJ of $168,000. We
received disposal fees and revenue was recognized upon performance of the
services. The decline in our revenue during the year was the result the sale of
the assets related to and the permanent closure of our transload facility on
January 24, 2008.


17




Cost of Revenues




Cost of
revenues for the year ended June 30, 2009 was $0 or 0.0% of revenues as
compared to $2,397,000 or 94.3% of revenues for the year ended June 30,
2008. There is no cost of revenue associated with our rail transportation
income. Our cost of revenues in prior periods where we had solid waste disposal
operations consisted primarily of truck and rail transportation costs; landfill
tipping fees and other waste disposal equipment operational costs. Our cost of
revenues varied from period to period as percentage of revenue depending on such
factors as the volume of waste disposal services, the cost of fuel, our ability
to negotiate favorable contracts with transportation companies and landfills,
the type and cost of railway cars and other equipment used and the leveraging of
operational efficiencies.




Gross Profit




Gross profit for the year ended
June 30, 2009 was $140,000 as compared to $146,000 for the year ended
June 30, 2008. Our gross profit as a percentage of revenue has varied and
will continue to vary from period to period due to variations in factors
discussed above in ‘Cost of Revenues’.




General and Administrative
Expenses




General
and administrative expenses decreased by $2,997,000 to $1,599,000 for the year
ended June 30, 2009 from $4,596,000 for the year ended June 30, 2008.
This decrease was primarily due to the sale of the assets and the closure of our
transload facility on January 24, 2008, the impairment in the value of
certain railroad assets of $2,254,000 and bad debt expenses of $246,000 that was
recorded during the year ended June 30, 2008. General and administrative
expenses during the current year excluding the impairment in the value of
certain railroad assets of $772,000 consisted primarily of the
following:





•
            salaries
      and employee expenses of $279,000





•
            engineering
      and other consulting services of
$15,000





•
            rents,
      utilities, telephone and office related expenses of
  $42,000





•
            professional
      fees of $195,000





•
            investment
      and management consulting fees of
$120,000





•
            travel
      expenses of $50,000





•
            depreciation
      and amortization expense of
$21,000.





Loss from
operations for the year ended June 30, 2009 also included losses for the sale of
property and equipment of $102,000 and financing fees of $277,000 for
services provided in connection with equity, debt, acquisition and divestiture
transactions.




General
and administrative expenses of $4,596,000 for the year ended June 30, 2008
excluding the impairment in the value of assets of $2,254,000 and bad debt
expenses of $246,000 consisted primarily of the following:




•
            salaries
      and employee expenses of $849,000





•
            engineering
      and other consulting services of
$141,000





•
            rents,
      utilities, telephone and office related expenses of
    $142,000





•
            repairs
      and maintenance of $69,000





•
            professional
      fees of $405,000





•
            investment
      and management consulting fees of
$120,000





•
            travel
      expenses of $66,000





•
            depreciation
      and amortization expense of
$218,000.





Loss from
operations for the year ended June 30, 2008 also included losses for the sale of
property and equipment of $458,000 and a gain on the sale of capacity and
loading rights of $147,000.


18




Other Income and Expenses




Other
expenses increased by $103,000 to $395,000 for the year ended June 30, 2009
from $292,000 for the year ended June 30, 2008.  Other expenses
for the year ended June 30, 2009 consisted of net interest expenses. Other
expenses for the year ended June 30, 2008 consisted of net interest expenses of
$471,000 partially offset by a gain on the settlement of notes payable of
$179,000.




Income Tax Provision




We have incurred operating losses for
the reporting periods. Full reserves are provided for the related deferred tax
asset.




Liquidity
and Capital Resources




At June 30, 2009, we had working
capital deficiency of $2,413,000. We recorded a loss for the year ended
June 30, 2009 of $2,237,000 and we have accumulated losses from inception
on March 3, 2005 of $15,561,000. Given our June 30, 2009 cash balance
of $19,000 and our projected operating cash requirements, we anticipate that our
existing capital resources may not be adequate to satisfy our cash flow
requirements through June 30, 2010 and we will be required to raise capital
through debt or equity financings or sell, dispose or liquidate certain of our
assets to generate cash and reduce our short term debt obligations. There are no
assurances that any of these financing alternatives will be available to us, or
if available, on terms satisfactory to us. If we are unable to raise additional
capital or generate necessary working capital from operations or through the
sale of assets, our financial position will be seriously and adversely
affected.




During the year ended June 30,
2009, we sold our fleet or railcars and most of the assets of our MNJ short line
railroad in Middletown, New York. These events had the most significant impact
on our cash flow in this year. We received approximately $1,771,000 in net
proceeds from the sale of our railcars and railcar deposits, $311,000 in net
proceeds for the sale of the MNJ assets and we reduced a secured note by
$1,715,000. The following is a summary discussion of our cash flow.




Cash decreased by $163,000 for the year
ended June 30, 2009 from $182,000 on June 30, 2008 to
$19,000.




We reported cash flow used in
operations for the year ended June 30, 2009 of $139,000 consisting
primarily of our net loss of $2,237,000 mostly offset by increases of $329,000
in accounts payable and accrued liabilities, decreases of $410,000 in accounts
receivable and deposits, the non-cash losses due to asset impairments and asset
sales of $878,000, and the value of stock issues for services of
$426,000.




Cash provided by investing activities
in the year ended June 30, 3009 totaled $1,691,000 consisting primarily of
the proceeds of the sales of property and equipment of $1,691,000.




Cash used by financing activities for
the year ended June 30, 2009 totaled $1,715,000 consisting primarily of
principal payments on notes payable of $1,719,000.




Our long-term debt includes
approximately $2,137,000 of principal payments and $3,000 in accrued interest
expenses that are due within the next year. We cannot be sure that our future
working capital or cash flows will be sufficient to meet our debt obligations
and commitments. Any insufficiency and failure by us to renegotiate such
existing debt obligations and commitments would have a negative impact on our
business and financial condition, and may result in legal claims by our
creditors. Our ability to generate cash flow from operations sufficient to make
scheduled payments on our debt as they become due will depend on our future
performance and our ability to implement our business strategy successfully.
Failure to pay our interest expense or make our principal payments would result
in a default. A default, if not waived, could result in acceleration of our
indebtedness, in which case the debt would become immediately due and payable.
If this occurs, we may be forced to sell or liquidate assets, obtain additional
equity capital or refinance or restructure all or a portion of our outstanding
debt on terms that may be less favorable to us. In the event that we are unable
to do so, we may be left without sufficient liquidity and we may not be able to
repay our debt and the lenders may be able to foreclose on our
assets.




Capital
Expenditures




During the year ending June 30,
2009, we did not incur any material capital expenditures nor do we anticipate
any material capital expenditures during fiscal 2010.




Pursuant to a lease agreement executed
on June 12, 2006, we entered into a lease for office space in Morristown,
New Jersey that served as our corporate headquarters and administrative offices.
On September 13, 2007, we assigned the lease for office space in
Morristown, New Jersey that until August 31, 2007 served as our executive
offices. Although we assigned the lease to a third party we may have been
responsible for lease payments in the event the assignee defaulted on its
payments due to the landlord. The assigned lease expired on August 26, 2009
and had minimum monthly lease payments of $4,647.


19


The
following table outlines payments due under our significant contractual
obligations over the periods shown, exclusive of interest:
  Payments Due by PeriodContract Obligations
                              
                              
                              
                              
                              
                              Less than
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              More thanAt
      June 30, 2009
                              
                              Total
                              
                              
                              1
      Year
                              
                              
                              1-3
      years
                              
                              
                              3-5
      years
                              
                              
                              5
      yearsLong
      Term Debt
                              
                              $
                              4,946,000
                              
                              
                              $
                              2,137,000
                              
                              
                              $
                              2,329,000
                              
                              
                              $
                              —
                              
                              
                              $
                              480,000Lease
      Obligations
                              
                              
                              9,000
                              
                              
                              
                              9,000
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —Total
      Contractual Obligations
                              
                              $
                              4,955,000
                              
                              
                              $
                              2,146,000
                              
                              
                              $
                              2,329,000
                              
                              
                              $
                              —
                              
                              
                              $
                              480,000
  The above table outlines our
obligations as of June 30, 2009 and does not reflect any changes in our
obligations that have occurred after that date.
  Off-Balance
Sheet Transactions
  There are no off balance sheet items,
and all transactions are in U.S. dollars, and we are not subject to currency
fluctuations or similar market risks.
  ITEM
7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Item not required for smaller reporting
company.
  ITEM
8 — FINANCIAL STATEMENTS
  The Financial Statements that
constitute Item 8 are included at the end of this report beginning on Page
27.
  ITEM
9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  None.
  ITEM
9A(T) — CONTROLS AND PROCEDURES
  We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.
  Our management with the participation
and under the supervision of our Principal Executive Officer and Principal
Financial Officer reviewed and evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as defined by
Rule 240.13a-15(e) or 15d-15(e)) of the Exchange Act Rule 13a-15 as of
the end of the period covered by this report.  Based upon their evaluation,
our Principal Executive Officer and Principal Financial Officer concluded that,
as of the end of such period, our disclosure controls and procedures are not
effective as of the end of the fourth quarter of fiscal 2009 and that material
weaknesses exist in our internal control structure, due in particular to the
lack of appropriate resources dedicated to external financial reporting and
permitting appropriate segregation of duties.
  Management’s
Report on Internal Control over Financial Reporting
  Our management is responsible for
establishing and maintaining adequate internal control over financial reporting
as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, we conducted an evaluation
of the effectiveness of our internal control over financial reporting based on
criteria established in the framework inInternal Control –
Integrated Framework  issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, our
management concluded that our internal control over financial reporting was not
effective as of June 30, 2009.
  Our disclosure controls and procedures
are not effective as of the end of the fourth quarter of fiscal 2009 due to
material weaknesses that exist in our internal control structure that are
primarily due to the lack of appropriate resources dedicated to external
financial reporting. A key element to any effective system of internal control
is the segregation of tasks, duties and responsibilities between staff members
with regard to initiation, recording, verification, review and authorization of
transactions. We can remediate this material weakness by hiring two additional
staff persons to handle clerical and technical accounting functions which will
allow us to appropriately segregate duties that would result in more effective
internal controls over financial reporting. We estimate the annual cost of this
remediation to be approximately $120,000. This includes staff costs as well as
the infrastructure to support this staff expansion. Our current level of
operations is very limited as are the associated transactions. As a result, at
the present time, it is not practical or financially reasonable for us to
undertake this remediation until the size of operations and transactions
warrants the additional expenditure. In the interim, we have been providing our
non-executive Board of Directors members with detailed monthly financial reports
to enhance our internal control over financial reporting.
  20
  Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures
may deteriorate. All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.
  This annual report does not include an
attestation report of our registered public accounting firm regarding internal
control over financial reporting. Our management’s report was not subject to
attestation by our registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit us to provide only our
management’s report in this annual report.
  Changes
in Internal Control over Financial Reporting
  We have had very limited operations and
there were no changes in our internal controls over financial reporting that
occurred during the three months ended June 30, 2009 that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting. We believe that a control system, no matter how well
designed and operated, cannot provide absolute assurance that the objectives of
the control system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within any
company have been detected.
  ITEM
9B — OTHER INFORMATION
  None.
  21
  PART
III
  ITEM
10 — DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE;
  Directors
and Executive Officers
  The
following table sets forth the names and ages of our current directors and
executive officers, the principal offices and positions held by each person and
the date such person became one of our directors or executive officers. Our
executive officers are elected annually by the Board of Directors. Each year the
stockholders elect the Board of Directors. The executive officers generally
serve terms of one year or until their death, resignation or removal by the
Board of Directors. There was no arrangement or understanding between any
executive officer and any other person pursuant to which any person was elected
as an executive officer. The number of directors ranges from three to seven. The
Board has fixed the number of directors at four and has two vacancies, but is
actively seeking additional independent directors.
  Person
              
              Age
              
              PositionImre
      Eszenyi
              
              41
              
              Chairman
      of the Board, Acting President and Vice PresidentPaul
      Biberkraut
              
              48
              
              Chief
      Financial and Administrative Officer and SecretaryDavid
      Adams
              
              51
              
              Director,
      Assistant Secretary
  Mr. Imre
Eszenyi, CFA, is the founder and is currently the Managing Partner of Orchestra
Finance L.L.P., a London-based independent investment firm, which is authorized
and regulated by the Financial Services Authority. Mr. Eszenyi founded the
Orchestra Companies in 2001. In 2005, Mr. Eszenyi joined the Board of Directors
and currently serves as our Acting President, Vice President and Chairman of the
Board. Previously, he has gained extensive experience in structuring and
execution of capital markets and private equity transactions globally while
serving in various senior capacities at global investment banking firms,
including UBS Warburg, Credit Suisse First Boston and Bankers Trust. Most
recently with the Orchestra Finance L.L.P., Mr. Eszenyi was involved in
providing financing for fast developing publicly-listed companies, including
ThermoGenesis Corp. (“KOOL”), FX Energy, Inc. (“FXEN”) and Telkonet, Inc.
(“TKO”). Mr. Eszenyi received an M.B.A. from Ohio University, where he was
sponsored by the George Soros Foundation, and attended the Janus Pannonius
University of Economics. He is a Chartered Financial Analyst and is a member of
the Association for Investment Management and Research.
  Paul Biberkraut joined us as our Chief
Financial and Administrative Officer in January 2006 and became our
Secretary in 2007. Since May 2008, Mr. Biberkraut has served as the
Director of Finance and Resources for City YMCA, London, a not-for-profit youth
services organization. From December 2002 through January 2006,
Mr. Biberkraut was the Executive Vice President, Chief Financial Officer
and Secretary of Superior Galleries, Inc., a publicly traded dealer and
auctioneer of rare coins. Mr. Biberkraut served on the Board of Directors of
Superior Galleries, Inc. until December 2006 and had been a Director since
December 2002. From December 2000 to November 2002,
Mr. Biberkraut was a senior finance manager for information technology at
PacifiCare Health Systems, Inc., a public traded health care insurance company.
Mr. Biberkraut attended McGill University where he received a Bachelor of
Commerce and Graduate Diploma in Public Accountancy, and he received an M.B.A.
from Pepperdine University. Mr. Biberkraut is a Chartered Accountant and is
a member of Canadian Institute of Chartered Accountants.
  David Adams joined the Board of
Directors in April 2005, and also serves as Assistant Corporate Secretary.
He is a shareholder of the law firm of Weintraub Genshlea Chediak representing
public and private corporations in the areas of intellectual property, corporate
finance, mergers and acquisition, and regulatory matters from 2007 to the
present. From 2000 to 2007, he was a shareholder of the law firm of Bullivant
Houser Bailey representing public and private corporations. From
November 1996 to 2000, he served as General Counsel and V.P of Business
Development for ThermoGenesis Corp. (“KOOL”). Mr. Adams received his
Bachelor of Arts Degree in Psychology, with High Distinction, from the
University of Colorado, Colorado Springs in 1984, and his Juris Doctorate, with
Distinction, from the University of the Pacific, McGeorge School of Law in
1988.
  Audit
Committee
  We established a separately-designated
standing Audit Committee in December 2005 in accordance with section
3(a)(58)(A) of the Exchange Act and appointed Mr. Charles Srebnik as the
sole member of that committee. Mr. Srebnik resigned as chairman of our audit
committee and as a director on February 25, 2009. Until such time as an
independent director who qualifies as an audit committee financial expert is
appointed, our Board of Directors will act as the audit committee.
  Audit
Committee Financial Expert
  From December 2, 2005 and until
February 25, 2009, Mr. Srebnik served as the chairman of our Audit
Committee, and was qualified as an Audit Committee Financial Expert.
Mr. Srebnik was independent as determined by the NASD listing
standards.
  Compliance
with Section 16(a) of the Securities Exchange Act of 1934
  Based solely upon a review of Forms 3,
4 and 5 delivered to us as filed with the Securities Exchange Commission during
the year ended June 30, 2009, our executive officers and directors, and
persons who own more than 10% of our Common Stock timely filed all required
reports pursuant to Section 16(a) of the Securities Exchange
Act.
  22
  Code
of Ethics
  We have adopted a code of ethics that
applies to all of our employees, including our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. Our code of ethics appears on our web site
atwww.chartwellinternational.com.
  ITEM
11 — EXECUTIVE COMPENSATION
  Summary
Compensation
  The summary compensation table below
shows certain compensation information for services rendered in all capacities
to us by our chief executive officer and by each other executive officer whose
total annual salary and bonus exceeded $100,000 during the fiscal years ended
June 30, 2009 and 2008. Other than as set forth below, no executive
officer’s total annual salary and bonus exceeded $100,000 during our last fiscal
period.
  Summary
Compensation Table
  NON-EQUITY
                          
                          NON-INCENTI-
                          
                          QUALIFIEDVE
                          
                          DEFERRED
                          
                          ALLPLAN
                          
                          COMPENSA-
                          
                          OTHERSTOCK
                          
                          OPTION
                          
                          COMPEN-
                          
                          TION
                          
                          COMPENS-NAME
      AND
                          
                          
                          
                          
                          
                          SALARY
                          
                          BONUS
                          
                          AWARDS
      (4)
                          
                          AWARDS
      (4)
                          
                          SATION
                          
                          EARNINGS
                          
                          ATION
                          
                          TOTALPRINCIPAL
                          
                          YEAR
                          
                          ($)
                          
                          ($)
                          
                          ($)
                          
                          ($)
                          
                          ($)
                          
                          ($)
                          
                          ($)
                          
                          ($)POSITION
      (a)
                          
                          (b)
                          
                          (c)
                          
                          (d)
                          
                          (e)
                          
                          (f)
                          
                          (g)
                          
                          (h)
                          
                          (i)
                          
                          (j)Imre
      Eszenyi,
                          
                          
                          20098
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-Chairman
      of the Board, Acting President and Vice President (1)
                          
                          
                          2008
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-Paul
      Biberkraut,
                          
                          
                          2009
                          
                          
                          $
                          40,500
                          
                          
                          $
                          -0-
                          
                          
                          $
                          69,500
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          110,000Chief
      Financial and Administrative Officer and Secretary
                          
                          
                          2008
                          
                          
                          $
                          104,788
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          104,788Thomas
      Winant,
                          
                          
                          2009
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-Vice
      President of Sales and Operations (2)
                          
                          
                          2008
                          
                          
                          $
                          109,897
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          -0-
                          
                          
                          $
                          1,308
                          
                          
                          $
                          111,205
 
 (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, 2009 is
75,000.
 
 (2)
              Mr. Winant’s
      employment with Chartwell was terminated on January 31, 2008. All
      other compensation consists of
commission.
  Employment
Agreements
 
 Effective
January 16, 2006, we entered into a two-year employment agreement with Paul
Biberkraut to serve as our Chief Financial and Administrative Officer.
Mr. Biberkraut was paid an annual salary of $180,000 subject to an increase
of up to 15% based on an annual review. Initially, Mr. Biberkraut was paid
a bonus of $10,000 on January 16, 2006 and an additional bonus of $10,000
was paid on July 15, 2006. Mr. Biberkraut was entitled to participate
in our cash management incentive bonus and equity incentive plans upon formation
and approval by the Board of Directors, provided, however, cash bonuses shall
not exceed 50% of each his base salary then in effect. Additionally,
Mr. Biberkraut was granted 12,500 shares of restricted common stock vesting
based on certain future liquidity events and awarded an option to acquire 75,000
shares of common stock that vested in equal increments on February 15, 2007
and February 15, 2008. In September 2007, Mr. Biberkraut verbally
agreed to reduce his base annual salary to $60,000. The agreement expired on
January 16, 2008.
  23
  Outstanding
Equity Awards at Fiscal Year-End
 
 OPTION
      AWARDS
                        
                        
                        
                        
                        
                        
                        
                        
                        STOCK
      AWARDSEQUITYINCENTIVEEQUITY
                        
                        
                        PLANINCENTIVE
                        
                        
                        AWARDS:PLAN
                        
                        
                        MARKET
      OREQUITY
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        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
                        
                        
                        
                        —
                        
                        
                        
                        
                        
                        
                        $
                        6.00
                        
                        
                        02/15/11
                        
                        
                        
                        500,000
                        
                        
                        $
                        5,000
                        
                        
                        
                        —
                        
                        
                        
                        —Thomas
      Winant
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
 
 (1)
              The
      75,000 common stock options were granted under our 2006 Equity Incentive
      Plan and are fully vested. The 500,000 common shares vests at earlier of
      certain liquidity events in our common stock or January 1,
      2010.
  Compensation
of Directors
  During the year ended June 30, 2009 our
directors received compensation as follows:
  ·
              The
      chairman of the audit committee received $1,000 per month until December
      31, 2009 totaling $6,000 and received a grant under our 2006 Equity
      Incentive Plan of 112,500 shares of our common stock valued
      $29,250.
  ·
              David
      Adams received a grant under our 2006 Equity Incentive Plan of 100,000
      shares of our common stock valued at
$26,000.
  During
the year ended June 30, 2008, our directors did not receive any
compensation with the exception of the chairman of our audit committee who
received cash compensation of $1,000 per month totaling $12,000.
  All
directors are reimbursed for certain expenses in connection with attendance at
board meetings.
  The following table summarizes the
compensation earned by directors for the year ended June 30, 2009
  CHANGE
      INPENSION
      VALUEANDFEES
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    NON-EQUITY
                    
                    NONQUALIFIEDEARNED
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    INCENTIVE
                    
                    DEFERREDOR
      PAID
                    
                    STOCK
                    
                    OPTION
                    
                    PLAN
                    
                    COMPENSATION
                    
                    ALL
      OTHERIN
      CASH
                    
                    AWARDS
                    
                    AWARDS
                    
                    COMPENSATION
                    
                    EARNINGS
                    
                    COMPENSATION
                    
                    TOTALNAME
                    
                    ($)
                    
                    (1)
      ($)
                    
                    ($)
                    
                    ($)
                    
                    ($)
                    
                    ($)
                    
                    ($)(a)
                    
                    (b)
                    
                    (c)
                    
                    (d)
                    
                    
                    
                    
                    
                    (f)
                    
                    (g)
                    
                    (h)David
      Adams
                    
                    $
                    —
                    
                    
                    $
                    26,000
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    26,000Charles
      Srebnik
                    
                    $
                    6,000
                    
                    
                    $
                    29,250
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    35,250
 
 (1)
              The
      assumptions underlying the valuation of stock awards can be found in Note
      9 of our Notes to Consolidated Financials that begin on page 43 of this
      document. The aggregate number of stock awards outstanding at
      June 30, 2009 for Mr. Adams is
  100,000.
  As we continue to seek, identify and
retain additional independent directors, a director compensation policy in the
form of stock-based compensation or cash, or a combination of both, will be
established. We will be seeking at least three independent board members who
have relevant industry experience and financial expertise and to ensure that we
have a majority of outside independent directors.
  ITEM
12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  The following table sets forth, as of
August 7, 2009, the number and percentage of outstanding shares of our common
stock owned by (i) each person known to us to beneficially own more than 5%
of our outstanding common stock, (ii) each director, (iii) each named
executive officer, and (iv) all executive officers and directors as a
group. Share ownership is deemed to include all shares that may be acquired
through the exercise or conversion of any other security immediately or within
the next sixty days. Such shares that may be so acquired are also deemed
outstanding for purposes of calculating the percentage of ownership for that
individual or any group of which that individual is a member. Unless otherwise
indicated, the stockholders listed possess sole voting and investment power with
respect to the shares shown.
  24
  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) (3)
                                      
                                      Common
      (3)
                                      
                                      
                                      3,109,770
                                      
                                      
                                      
                                      32.769
                                      %Paul
      Biberkraut(2)
                                      
                                      Common
      (4)
                                      
                                      
                                      650,000
                                      
                                      
                                      
                                      6.79
                                      %David
      Adams(2)
                                      
                                      Common
      (5)
                                      
                                      
                                      189,375
                                      
                                      
                                      
                                      1.99
                                      %Orchestra
      Finance, LLP, No. 7 Inverness Gardens, London, UK W8
    4RN
                                      
                                      Common
                                      
                                      
                                      2,951,185
                                      
                                      
                                      
                                      31.80
                                      %Fonditel
      Velociraptor, FL Pedro Teixeira Street, 8, 3rd Floor 28020 Madrid,
      Spain
                                      
                                      Common
      (6)
                                      
                                      
                                      750,000
                                      
                                      
                                      
                                      7.90
                                      %Robert
      Skinner, 67 Buena Vista Avenue, Mill  Valley, CA
      94941
                                      
                                      Common
                                      
                                      
                                      692,000
                                      
                                      
                                      
                                      7.29
                                      %Faisal
      A. Alhegelan c/o Hogan & Hartson L.L.P. 555 Thirteenth Street, NW
      Washington, DC 20004
                                      
                                      Common
      )
                                      
                                      
                                      650,000
                                      
                                      
                                      
                                      6.81
                                      %All
      Executive Officers and Directors as a Group (3 persons)
                                      
                                      Common
      (3)(4)(5)
                                      
                                      
                                      7,370,620
                                      
                                      
                                      
                                      41.60
                                      %
 
 (1)
              Based
      upon information furnished to us by the directors and executive officers
      or obtained from our stock transfer books showing 9,494,013 shares of
      common stock outstanding as of August 7, 2009. 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 September xx, 2009, 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 and Adams is 7637 Leesburg
      Pike, Falls Church, VA 22043
 
 (3)
              Includes
      5,901,370 shares owned by Orchestra Finance, LLP, of which
      Mr. Eszenyi is the managing partner. Mr. Eszenyi disclaims
      beneficial ownership over these
shares.
 
 (4)
              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.
 
 (5)
              Includes
      50,000 shares owned by Weintraub Genshlea Chediak, a law firm of which
      Mr. Adams is a shareholder, and disclaims beneficial
      ownership.
 
 (6)
              Includes
      250,000 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.
  ITEM
13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
  On March 15, 2006, we entered into
a two-year agreement with Orchestra, whereby Orchestra would provide management
and financial advisory services to us for a monthly fee of $10,000 retroactive
to January 1, 2006. As of June 30, 2007, we reported $10,000 due to
Orchestra for consulting and financing placement fees. As of January 1,
2008, we extended the agreement on a month-to-month basis. On August 11,
2008, we renewed the agreement for two years retroactive to January 1,
2008. As of June 30, 2009 we reported $18,000 due to Orchestra.
  We paid $33,000 and $92,000 in cash for
legal services to a law firm, Weintraub Genshlea Chediak, during the years ended
June 30, 2009 and 2008, respectively, of which, David Adams, a director of
ours was a shareholder. In addition, we reported $83,000 due to a law firm,
Weintraub Genshlea Chediak, of which, David Adams, a director of ours is a
shareholder, for legal services at June 30,
2009.
  25
  ITEM
14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  The following table shows the fees paid
or accrued by us for the audit and other services provided Urish Popeck &
Co., LLC (“Urish”) for the fiscal years shown.
  June
      30,2009
                  
                  
                  2008Audit
      Fees
                  
                  $
                  80,000
                  
                  
                  $
                  125,000Audit
      — Related Fees
                  
                  
                  —
                  
                  
                  
                  —Tax
      Fees
                  
                  
                  35,000
                  
                  
                  
                  41,000All
      Other Fees
                  
                  
                  —
                  
                  
                  
                  —Total
                  
                  $
                  115,000
                  
                  
                  $
                  166,000
  Audit fees consist of fees billed for
professional services rendered for the audit of our financial statements and
review of the interim financial statements included in quarterly reports and
services that are normally provided by the above auditors in connection with
statutory and regulatory fillings or engagements.
  Tax Fees shown above are related to the
preparation of our corporate tax returns.
  Our Audit Committee approved the Audit
Fees for fiscal years ending June 30, 2009 and 2008. Our Audit Committee
policies require it to approve the fees and scope of work for all annual audits
and quarterly financial statement review. Prior to the formation of our audit
committee the full Board of Directors pre-approved all audit and non-audit
services to be performed by the independent registered public accounting firm in
accordance with the rules and regulations promulgated under the Securities
Exchange Act of 1934, as amended.
  ITEM
15 — 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.
  26
 
 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.10.20(18)
                
                Purchase
      Agreement with Perry New Jersey I, LLC10.21(19)
                
                Settlement
      Agreement with Hudson Logistics, Inc., Hudson Logistics Loading, Inc.,
      Imre Eszenyi, Raymond Kalafsky, Northern & Bergen Railroad, LLC, and
      New York & Greenwood Lake Railway10.22
                
                Termination
      and Release Agreement with Railway & Industrial Services,
      Inc.14.1(14)
                
                Code
      of Ethics21
                
                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
  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 10K 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.
 
 (18)
              Incorporated
      by reference to Form 8-K dated December 27,
  2007.
 
 (19)
              Incorporated
      by reference to Form 8-K dated January 30,
  2008.
  27
  SIGNATURES
  In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) the Registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
  CHARTWELL
INTERNATIONAL, INC.
  Dated:
      October 13, 2009
                /s/ Imre EszenyiBy:
      Imre EszenyiIts:
      Acting President (Principal Executive Officer) and
                  Chairman
      of the BoardDated:
      October 13, 2009
                /s/ Paul BiberkrautBy:
      Paul BiberkrautIts:
      Chief Financial and Administrative Officer(Principal
      Financial Officer and Principal Accounting Officer)
  Pursuant
to requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
  Signature
              
              Capacity
              
              Date/s/
      Imre Eszenyi
                Imre
      Eszenyi
              
              Director
              
              October
      13, 2009/s/
      David C. Adams
                David
      C. Adams
              
              Director
              
              October
      13, 2009
  Chartwell
International, Inc.
 Index to
Financial Statements
 June 30,
2009
  INDEX
  PageIndependent Registered Public Accounting Firm’s
      Report
                29Financial
      StatementsConsolidated Balance Sheets
                30Consolidated Statements of
      Operations
                318Consolidated Statements of Stockholders’
      Equity
                329Consolidated Statements of Cash
      Flows
                34Notes to Consolidated Financial
      Statements
                365
  28
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Board of
Directors
 Chartwell
International, Inc. and Subsidiaries
 (a
development stage company)
 Falls
Church, Virginia
  We have
audited the accompanying consolidated balance sheet of Chartwell International,
Inc. and Subsidiaries (a development stage Company) as of June 30, 2009 and
2008 and the related consolidated statements of operations, stockholders’ equity
and cash flows for the years ended June 30, 2009 and 2008. We have also audited
the consolidated statements of operations, stockholders’ equity and cash flows
for the period from inception (March 3, 2005) to June 30, 2009, except
that we did not audit these financial statements for the period from inception
(March 3, 2005) through July 31, 2005. Those statements were audited
by other auditors whose report dated December 14, 2005 expressed an
unqualified opinion on those statements. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits. Our opinion, insofar
as it relates to the amounts for the period from inception (March 3, 2005)
to July 31, 2005, is based solely on the report of the other
auditors.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal controls over
financial reporting. Our audit included consideration of internal controls over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal controls over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, based on our audits and the report of other auditors, the consolidated
financial statements referred to above present fairly, in all material respects,
the financial position of Chartwell International, Inc. and Subsidiaries (a
development stage Company) as of June 30, 2009 and 2008 and the results of
its operations and its cash flows for the years ended June 30, 2009 and
2008 and for the period from inception (March 3, 2005) to June 30,
2009, in conformity with accounting principles generally accepted in the United
States of America.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Notes 1 and 5 to the financial
statements, the Company has suffered recurring losses from operations, currently
has no active operations and has a significant working capital deficiency that
raise substantial doubt about its ability to continue as a going concern.
Management’s plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
  Pittsburgh,
      Pennsylvania
                /s/ Urish Popeck & Co.,
      LLCOctober
      13, 2009
                URISH
      POPECK & CO., LLC
  29
  Chartwell
International, Inc. and Subsidiaries
 (A
Development Stage Company)
 Consolidated
Balance Sheets
 (in
thousands)
 June
      30,
                  
                  
                  June
      30,2009
                  
                  
                  2008AssetsCurrent
      assetsCash
      and cash equivalents (Note 1)
                  
                  $
                  19
                  
                  
                  $
                  182Accounts
      receivable, net of allowance for uncollectible accounts of $0
      (2009) and $0 (2008) (Note 1)
                  
                  
                  —
                  
                  
                  
                  19Deposits
      (Note 2)
                  
                  
                  —
                  
                  
                  
                  391Prepaid
      expense and other
                  
                  
                  6
                  
                  
                  
                  19Total
      current assets
                  
                  
                  25
                  
                  
                  
                  611Long-term assets (Notes
      1, 4)Property
      and equipment, net (Note3)
                  
                  
                  —
                  
                  
                  
                  2,125Land
                  
                  
                  728
                  
                  
                  
                  1,192Mineral
      rights
                  
                  
                  5,447
                  
                  
                  
                  5,447Investment,
      at cost
                  
                  
                  123
                  
                  
                  
                  123Other
                  
                  
                  9
                  
                  
                  
                  9Total
      long-term assets
                  
                  
                  6,307
                  
                  
                  
                  8,896Total
      assets
                  
                  $
                  6,332
                  
                  
                  $
                  9,507Liabilities
      and Stockholders’ EquityCurrent
      LiabilitiesAccounts
      payable and accrued liabilities
                  
                  $
                  201
                  
                  
                  $
                  345Due
      to related parties
                  
                  
                  100
                  
                  
                  
                  19Notes
      payable (Note 4)
                  
                  
                  2,137
                  
                  
                  
                  2,007Total
      current liabilities
                  
                  
                  2,438
                  
                  
                  
                  2,371Long-term
      liabilitiesNotes
      payable, net of current portion (Note 4)
                  
                  
                  2,809
                  
                  
                  
                  4,264Total
      long-term liabilities
                  
                  
                  2,809
                  
                  
                  
                  4,264Total
      liabilities
                  
                  
                  5,247
                  
                  
                  
                  6,635Commitments and
      Contingencies (Notes 4 and 7)Stockholders’ Equity
      (Note 6)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
      outstanding
                  
                  
                  2,000
                  
                  
                  
                  2,000Common
      shares, $0.001 par value, 100,000 shares authorized 9,494 and 7,026 issued
      and outstanding at June 30, 2009 and 2008,
    respectively
                  
                  
                  9
                  
                  
                  
                  14Additional
      paid in capital
                  
                  
                  14,637
                  
                  
                  
                  14,182Accumulated
      deficit
                  
                  
                  (15,561
                  )
                  
                  
                  (13,3244
                  )Total
      stockholders’ equity
                  
                  
                  1,085
                  
                  
                  
                  2,872Total
      liabilities and stockholders’ equity
                  
                  $
                  6,332
                  
                  
                  $
                  9,507
  (See
accompanying notes to Consolidated Financial Statements)
  30
  Chartwell
International, Inc. and Subsidiaries
 (A
Development Stage Company)
 Consolidated
Statements of Operations
 (in
thousands, except per share data)
 
 CumulativeFor the
                  
                  
                  For the
                  
                  
                  from March 3,year ended
                  
                  
                  year ended
                  
                  
                  2005, InceptionJune
      30,
                  
                  
                  June
      30,
                  
                  
                  to
      June 30,2009
                  
                  
                  2008
                  
                  
                  2009Revenue
                  
                  $
                  140
                  
                  
                  $
                  2,543
                  
                  
                  $
                  10,041Cost
      of revenue
                  
                  
                  —
                  
                  
                  
                  2,397
                  
                  
                  
                  9,221Gross
      profit
                  
                  
                  140
                  
                  
                  
                  146
                  
                  
                  
                  820General
      and administrative expenses
                  
                  
                  1,599
                  
                  
                  
                  4,596
                  
                  
                  
                  13,468Loss
      (gain) on sale of property and equipment
                  
                  
                  106
                  
                  
                  
                  458
                  
                  
                  
                  430Loss
      (gain) on sale of capacity and loading rights
                  
                  
                  —
                  
                  
                  
                  (147
                  )
                  
                  
                  (147
                  )Finance
      placement fees
                  
                  
                  277
                  
                  
                  
                  —
                  
                  
                  
                  1,336Loss
      from operations
                  
                  
                  (1,842
                  )
                  
                  
                  (4,761
                  )
                  
                  
                  (14,267
                  )Other
      income (expense)Interest,
      net (Note 4 )
                  
                  
                  (395
                  )
                  
                  
                  (471
                  )
                  
                  
                  (1,548
                  )Gains
      on notes settlements
                  
                  
                  —
                  
                  
                  
                  179
                  
                  
                  
                  254Total
      other income (expense)
                  
                  
                  (395
                  )
                  
                  
                  (292
                  )
                  
                  
                  (1,294
                  )Loss
      before income tax provision
                  
                  
                  (2,237
                  )
                  
                  
                  (5,053
                  )
                  
                  
                  (15,561
                  )Income
      tax provision
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Net
      loss
                  
                  $
                  (2,237
                  )
                  
                  $
                  (5,053
                  )
                  
                  $
                  (15,561
                  )Net loss per common
      share, basic and diluted
                  
                  $
                  (0.26
                  )
                  
                  $
                  (0.72
                  )
                  
                  $
                  (2.20
                  )Weighted average number of
      common shares outstanding, basic and diluted
                  
                  
                  8,681
                  
                  
                  
                  7,023
                  
                  
                  
                  7,077
  (See
accompanying notes to Consolidated Financial Statements)
  31
  Chartwell
International, Inc and Subsidiaries
 (A
Development Stage Company)
 Consolidated
Statements of Stockholders’ Equity
 (in
thousands)
 
 Preferred
                    
                    
                    Preferred
                    
                    
                    Common
                    
                    
                    Common
                    
                    
                    Additional
                    
                    
                    
                    
                    
                    
                    TotalStock
                    
                    
                    Stock
                    
                    
                    Stock
                    
                    
                    Stock
                    
                    
                    Paid-in
                    
                    
                    Accumulated
                    
                    
                    Stockholders’Shares
                    
                    
                    $
                    
                    
                    Shares
                    
                    
                    $
                    
                    
                    Capital
                    
                    
                    Deficit
                    
                    
                    EquityBalance,
      March 3, 2005
                    
                    
                    —
                    
                    
                    $
                    —
                    
                    
                    
                    1,208
                    
                    
                    $
                    1
                    
                    
                    $
                    (201
                    )
                    
                    $
                    —
                    
                    
                    $
                    (200
                    )Common
      stock issued for cash
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    4,489
                    
                    
                    
                    4
                    
                    
                    
                    9,787
                    
                    
                    
                    
                    
                    
                    
                    9,791Common
      stock issued for services
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    147
                    
                    
                    
                    1
                    
                    
                    
                    440
                    
                    
                    
                    
                    
                    
                    
                    441Net
      loss from March 3, 2005, Inception to July 31,
    2005
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (973
                    )
                    
                    
                    (973
                    )Balance,
      July 31, 2005
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    5,844
                    
                    
                    
                    6
                    
                    
                    
                    10,026
                    
                    
                    
                    (973
                    )
                    
                    
                    9,059Common
      stock issued for cash
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    232
                    
                    
                    
                    —
                    
                    
                    
                    850
                    
                    
                    
                    
                    
                    
                    
                    850Common
      stock issued in partial payment of notes receivable
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    150
                    
                    
                    
                    —
                    
                    
                    
                    325
                    
                    
                    
                    
                    
                    
                    
                    325Common
      stock issued in partial payment of acquisition
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    601
                    
                    
                    
                    1
                    
                    
                    
                    1,802
                    
                    
                    
                    
                    
                    
                    
                    1,803Common
      stock issued for services
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    271
                    
                    
                    
                    —
                    
                    
                    
                    812
                    
                    
                    
                    
                    
                    
                    
                    813Fair
      value of stock options granted
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    32
                    
                    
                    
                    
                    
                    
                    
                    32Common
      stock redeemed for cash
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (150
                    )
                    
                    
                    —
                    
                    
                    
                    (275
                    )
                    
                    
                    
                    
                    
                    
                    (275
                    )Net
      loss for the eleven months end June 30, 2006
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (3,298
                    )
                    
                    
                    (3,298
                    )Balance,
      June 30, 2006
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    6,948
                    
                    
                    
                    7
                    
                    
                    
                    13,573
                    
                    
                    
                    (4,271
                    )
                    
                    
                    9,309Common
      stock issued for cash
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    60
                    
                    
                    
                    —
                    
                    
                    
                    283
                    
                    
                    
                    
                    
                    
                    
                    283Series A
      Preferred stock issued for cash and common stock
redemption
                    
                    
                    2
                    
                    
                    
                    2,000
                    
                    
                    
                    (200
                    )
                    
                    
                    —
                    
                    
                    
                    (500
                    )
                    
                    
                    
                    
                    
                    
                    1,500Common
      stock issued for services
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    213
                    
                    
                    
                    —
                    
                    
                    
                    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
                    
                    
                    
                    7,021
                    
                    
                    
                    7
                    
                    
                    
                    13,979
                    
                    
                    
                    (8,271
                    )
                    
                    
                    7,715Common
      stock issued for services
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    5
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    
                    
                    
                    
                    —Fair
      value of stock options granted
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    210
                    
                    
                    
                    
                    
                    
                    
                    210Net
      loss for the year end June 30, 2008
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (5,053
                    )
                    
                    
                    (5,053
                    )Balance,
      June 30, 2008
                    
                    
                    2
                    
                    
                    $
                    2,000
                    
                    
                    
                    7,026
                    
                    
                    $
                    7
                    
                    
                    $
                    14,189
                    
                    
                    $
                    (13,324
                    )
                    
                    $
                    2,872Common
      stock issued for services
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    2,468
                    
                    
                    
                    2
                    
                    
                    
                    424
                    
                    
                    
                    
                    
                    
                    
                    426Fair
      value of stock options granted
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    20
                    
                    
                    
                    
                    
                    
                    
                    20Swing
      sale profit on commonstock
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    4
                    
                    
                    
                    
                    
                    
                    
                    4Net
      loss for the year end June 30, 2009
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (2,237
                    )
                    
                    
                    (2.236
                    )Balance,
      June 30, 2009
                    
                    
                    2
                    
                    
                    $
                    2,000
                    
                    
                    
                    9,494
                    
                    
                    $
                    9
                    
                    
                    $
                    14,637
                    
                    
                    $
                    (15,561
                    )
                    
                    $
                    1,085
  (See
accompanying notes to Consolidated Financial Statements)
  32
  Chartwell
International, Inc. and Subsidiaries
 (A
Development Stage Company)
 Consolidated
Statements of Cash Flows
 (in
thousands)
 
 CumulativeFor the
                  
                  
                  For the
                  
                  
                  from March 3,year ended
                  
                  
                  year ended
                  
                  
                  2005, InceptionJune 30,
                  
                  
                  June 30,
                  
                  
                  to June 30,2009
                  
                  
                  2008
                  
                  
                  2009Cash
      flows from operating activitiesNet
      loss
                  
                  $
                  (2,237
                  )
                  
                  $
                  (5,053
                  )
                  
                  $
                  (15,5614
                  )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activitiesDepreciation
      and amortization
                  
                  
                  21
                  
                  
                  
                  218
                  
                  
                  
                  597Impairment
      of asset value
                  
                  
                  772
                  
                  
                  
                  2,255
                  
                  
                  
                  3,027Loss
      (gain)on sales of property and equipment
                  
                  
                  106
                  
                  
                  
                  457
                  
                  
                  
                  430Gain
      on sale of capacity and loading rights
                  
                  
                  —
                  
                  
                  
                  (147
                  )
                  
                  
                  (147
                  )Gain
      on settlement of note receivable
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (35
                  )Gain
      on settlement of note payable
                  
                  
                  —
                  
                  
                  
                  (179
                  )
                  
                  
                  (219
                  )Fair
      value of stock options granted
                  
                  
                  20
                  
                  
                  
                  209
                  
                  
                  
                  455Fair
      value of common stock issued for services
                  
                  
                  426
                  
                  
                  
                  —
                  
                  
                  
                  2,109Increase
      (decrease) in cash from changes in assets and
    liabilitiesAccounts
      receivable
                  
                  
                  19
                  
                  
                  
                  488
                  
                  
                  
                  2Deposits
                  
                  
                  391
                  
                  
                  
                  145
                  
                  
                  
                  (391
                  )Prepaid
      and other
                  
                  
                  14
                  
                  
                  
                  28
                  
                  
                  
                  (6
                  )Accounts
      payable and accrued liabilities
                  
                  
                  248
                  
                  
                  
                  (758
                  )
                  
                  
                  866Due
      to related parties
                  
                  
                  81
                  
                  
                  
                  5
                  
                  
                  
                  100Net
      cash used in operating activities
                  
                  
                  (139
                  )
                  
                  
                  (2,332
                  )
                  
                  
                  (8,382
                  )Cash
      flows from investing activitiesPurchase
      of property and equipment
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (3,794
                  )Purchase
      of capacity and loading rights
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (1,509
                  )Proceeds
      on sales of property and equipment
                  
                  
                  1,691
                  
                  
                  
                  390
                  
                  
                  
                  2,310Proceeds
      on sale of capacity and loading rights
                  
                  
                  —
                  
                  
                  
                  1,455
                  
                  
                  
                  1,455Exercise
      of mining rights options
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (102
                  )Deposits
                  
                  
                  —
                  
                  
                  
                  6
                  
                  
                  
                  (108
                  )Investment,
      at cost
                  
                  
                  —
                  
                  
                  
                  (23
                  )
                  
                  
                  (123
                  )Restricted
      cash
                  
                  
                  —
                  
                  
                  
                  279
                  
                  
                  
                  —Cash
      paid in acquisitions
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (4,597
                  )Cash
      received in acquisitions
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  82Net
      cash provided by (used in) investing activities
                  
                  
                  1,691
                  
                  
                  
                  2,107
                  
                  
                  
                  (6,387
                  )Cash
      flows from financing activitiesProceeds
      from notes receivable
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  635Payment
      for notes receivable
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (275
                  )Borrowings
      under notes payable
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  5,375Repayments
      under notes payable
                  
                  
                  (1,719
                  )
                  
                  
                  (297
                  )
                  
                  
                  (3,100
                  )Issuance
      of common stock
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  10,924Issuance
      of preferred stock
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,500Short
      swing sale profit on common stock
                  
                  
                  4
                  
                  
                  
                  
                  
                  
                  
                  4Redemption
      of common stock
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (275
                  )Net
      cash provided by (used in) financing activities
                  
                  
                  (1,715
                  )
                  
                  
                  (297
                  )
                  
                  
                  14,788Net
      increase (decrease) in cash
                  
                  
                  (163
                  )
                  
                  
                  (522
                  )
                  
                  
                  19Cash
      and cash equivalents, beginning of period
                  
                  
                  182
                  
                  
                  
                  704
                  
                  
                  
                  —Cash
      and cash equivalents, end of period
                  
                  $
                  19
                  
                  
                  $
                  182
                  
                  
                  $
                  19
  (See
accompanying notes to Consolidated Financial Statements)
  33
  Chartwell
International, Inc. and Subsidiaries
 (A
Development Stage Company)
 Consolidated Statements of Cash
Flows  (continued)
 (in
thousands)
 
 CumulativeFor
      the
                  
                  
                  For
      the
                  
                  
                  from
      March 3,year
      ended
                  
                  
                  year
      ended
                  
                  
                  2005,
      InceptionJune
      30,
                  
                  
                  June
      30,
                  
                  
                  to
      June 30,2009
                  
                  
                  2008
                  
                  
                  2009Supplemental
      disclosure of cash flow informationCash
      paid during the period for:Interest
                  
                  $
                  99
                  
                  
                  $
                  238
                  
                  
                  $
                  1,297Income
      taxes
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  —Non-Cash
      Investing and Financing ActivitiesNotes
      payable assumed by purchaser on sale of equipment
                  
                  $
                  —
                  
                  
                  $
                  337
                  
                  
                  $
                  337Deposits
      applied to accounts payable
                  
                  $
                  —
                  
                  
                  $
                  (105
                  )
                  
                  $
                  (105
                  )Preferred
      stock issued in exchange for redemption of common stock
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  (500
                  )Common
      stock issued in partial payment of note receivable
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  (325
                  )Software
      acquired under capital lease
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  (27
                  )Common
      stock issued in partial payment of acquisition of E-Rail Logistics,
      Inc.
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  (1,803
                  )Note
      payable issued in partial payment of acquisition of Cranberry Creek
      Railroad, Inc.
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  (500
                  )Interest
      accrued to notes payable
                  
                  $
                  (296
                  )
                  
                  $
                  (233
                  )
                  
                  $
                  (779
                  )
  (See
accompanying notes to Consolidated Financial Statements)
  34
  Chartwell
International, Inc. and Subsidiaries
 (A
Development Stage Company)
 Notes to
Consolidated Financial Statements
  Note
1 — Summary of Significant Accounting Policies
  Organization
and Business
  Chartwell International, Inc. (the
“Company,” “we,” “us,” “our”) is a multi-industry holding company that was
formed as a Nevada corporation in 1984. We, through our wholly-owned
subsidiaries, are owners of land and mineral rights. Our primary
revenue-generating business until January 24, 2008 was the transportation
and disposal of non-hazardous solid waste as well as the transportation of other
commodities. We provided limited rail-based transportation of commodities
through our MNJ subsidiary until March 31, 2009. We had, until January 24, 2008,
been pursuing a growth strategy through acquisitions of assets, properties and
access rights that can be combined and strategic relationships with those
companies that focus on waste by rail services, rail transportation logistics,
and disposal options, including landfill management. We recently changed our
focus and are no longer pursuing strategies related to waste by rail, waste
disposal options and landfill management. We are currently re-evaluating our
strategy and we are focusing on evaluating the best business approach to
monetizing some land, mineral and mineral rights assets that we acquired to
generate liquidity to fund future business activity.
  Until early 2005 our principal activity
consisted of the oversight of investments, principally in College Partnership,
Inc. On January 31, 2005, we transferred all assets and liabilities to our
then wholly owned subsidiary, Kingsley Capital, Inc. and subsequently
transferred all of our Kingsley stock to our then existing shareholders as a
dividend effective March 3, 2005 effecting a spin-off of Kingsley Capital.
On March 23, 2005, in two separate but concurrent transactions, we issued
25,838,433 pre-split shares of our common stock to one of our directors in a
private transaction for $200,000, which proceeds were used to pay off the
promissory note issued previously to Kingsley Capital, and we issued an
additional 19,161,567 pre-split shares of our common stock to the same director
in a private transaction for $250,000.
  Since March 3, 2005 and following
the discontinuation of our former operations and business, we changed our focus
and strategic direction and pursued operations as a development stage company in
the natural resources and rail-based transportation industries. Most of our
activities during the period from March 3, 2005 to June 30, 2007 were
dedicated to seeking acquisition targets with viable on-going operations, or
acquisition of assets, properties and access rights that would allow us to begin
operations.
  On September 8, 2005, we acquired
E-Rail Logistics, Inc. (“E-Rail”), a development stage company with assets and
minimal operations in the solid waste disposal industry. Because E-Rail was not
deemed a business, the acquisition was treated as an acquisition of assets. The
acquisition included E-Rail’s wholly-owned subsidiary, Belville Mining Company,
Inc. (“Belville”) based in Ohio which has significant interests and rights to
over 9,600 acres of land and minerals in South-Central Ohio, a portion of which
land we intend to permit for certain industrial uses. The property principally
contains coal, clay and limestone. We are only beginning the permitting process,
and cannot estimate when operational use of the property will begin at this
time. In addition to permits, the site will require significant infrastructure
improvements, which we are evaluating. Subsequent to the acquisition, E-Rail
assigned the Belville shares to Chartwell so that it is functioning as one of
our direct subsidiaries.
  On April 1, 2006, in an effort to
better streamline operations, E-Rail assigned all of its assets and liabilities
to Hudson Logistics, Inc. (“Hudson”). We surrendered the corporate charter of
E-Rail on August 2, 2006.
  On April 26, 2006, we completed
the acquisition of Cranberry Creek Railroad, Inc. (“Cranberry Creek”), a New
Jersey corporation including its wholly owned subsidiary, Middletown & New
Jersey Railway Company, Inc. that owns and operates a regional short-line
railroad in Middletown, New York (“MNJ”). MNJ owned and operated a regional
short-line railroad headquartered and based in Middletown, New York. MNJ’s
operations were limited and we made some limited capital improvements. We were
considering operational infrastructure alternatives to both increase the volume
of activity on the railroad including partnering with other railroads to manage
and operate MNJ on our behalf.
  On May 12, 2006, in an effort to
further simplify our corporate structure, we assigned all the assets and
liabilities of Cranberry Creek to MNJ. We surrendered the corporate charter of
Cranberry Creek on November 15, 2006.
  Founded
in 1947, MNJ, headquartered in Middletown, New York has historically been an
integral part of the growth of Orange County. MNJ and its predecessors
transported milk, milk products, livestock, feed and coal. As recently as in the
mid 1980s, MNJ serviced a chemical and a fertilizer plant on its short-line. The
business is currently serving Genpak, a national plastic packaging company and
Orange & Rockland Utilities.
  35
  Chartwell
International, Inc. and Subsidiaries
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Continued)
  Note
1 — Summary of Significant Accounting Policies (continued)
  Organization
and Business (continued)
 
 On
August 29, 2006, our wholly-owned subsidiaries, Hudson and Hudson Logistics
Loading, Inc. (“HLL”) completed the acquisition of certain agreements from Steel
Wheels Transport, LLC and Team G Loading, LLC, that they respectively held with
New York and Greenwood Lake Railway Company, Inc. (“Greenwood”). We acquired
these agreements as part of our strategy to offer rail-based solid waste
transportation and disposal services. We began transload activities on this site
on September 11, 2006. On January 24, 2008, our wholly-owned subsidiaries
HLI and HLL entered into an Amended and Restated Purchase Agreement with Perry
New Jersey, LLC for the sale of substantially all of their assets to Perry New
Jersey I, LLC for cash consideration of $1,700,000, subject to a $803,594
holdback, and assumption by Perry of certain debts and leases of Hudson and HLL.
This transaction closed on January 24, 2008.  As a result of the
asset sale, we no longer had rail-based solid waste transportation operations.
We decided to discontinue pursuing any strategy related to waste by rail, waste
management and landfill operations. We have assigned remaining assets and
liabilities of HLI and HLL to Chartwell International, Inc. and surrendered the
corporate charters of HLL and HLI on May 30, 2008 and September 19, 2008,
respectively.
 
 On March
31, 2009 we and our wholly-owned subsidiary, MNJ, entered into a definitive
Agreement for Sale and Purchase of Business Assets with Middletown & New
Jersey Railroad, LLC, a Delaware limited liability company
(“Buyer”).  Under the terms of the agreement, we agreed to sell
substantially all of MNJ’s assets used in connection with operating our railroad
freight transportation business serving central Orange County in Middletown, New
York. The purchase price was $386,900 and the assumption by Buyer of certain
liabilities.  On April 6, 2009, we and MNJ consummated the
sale.  The purchase price was deposited into an escrow account subject
to the following release conditions: (a) $356,900 to be released to us upon our
providing Buyer with a title report and title insurance, and (b) $30,000 to be
released to us upon resolution of certain real property matters. Between March
31, 2009 and April 6, 2009 we did not have any operations in MNJ. Based on this
transaction we no longer have any active operations in rail transportation. We
in the process of selling off the remaining MNJ land holdings that were not
connected with MNJ’s rail transportation business. We anticipate that
substantially all of our MNJ land holdings will be sold within the next 6 to 12
months.
 
 Effective
April 1, 2009, in our efforts to reduce operating costs, the limited operations
of our subsidiaries Greater Hudson Resources, Inc. and Greater Ohio Resources,
Inc. were terminated, all the assets and liabilities of both entities were
assigned to Chartwell International, Inc., and their corporate charters were
surrendered on May 12, 2009 and May 19, 2009, respectively.
 
 On June
15, 2009 we assigned all the remaining assets and liabilities of MNJ to
Chartwell International, Inc. We surrendered the corporate charter of MNJ on
October 5, 2009.
 
 Our
executive offices were based in Middletown, New York until March 31, 2009 and
have been relocated to Falls Church, Virginia with an effective date of April 1,
2009.
  Principles
of Consolidation and Basis of Presentation
  The consolidated financial statements
as at June 30, 2009 and for the year ended June 30, 2009 include the
accounts of Chartwell International, Inc. and its wholly-owned subsidiaries,
Belville, MNJ, Greater Ohio Resources, Inc. (“GOR”) and Greater Hudson
Resources, Inc. (“GHR”). The consolidated financial statements as at
June 30, 2008 and for the year ended June 30, 2008 include the
accounts of Chartwell International, Inc. and its wholly-owned subsidiaries,
Belville, Hudson, HLL, MNJ, GOR and GHR.
  For
purposes of the consolidated financial statements during the year ended
June 30, 2009 and 2008, and, at June 30, 2009 and 2008, all
significant inter-company transactions have been eliminated in
consolidation.
  Reclassifications
  Certain amounts may have been
reclassified in the 2008 financial statements to conform to the basis of
presentation used in 2009 consolidated financial statements.
  Cash and Cash Equivalents
  The Company considers all highly liquid
investments with original maturities of three months or less when purchased to
be cash equivalents. The Company places its cash with high credit quality
institutions. The Federal Deposit Insurance Corporation (“FDIC”) insures cash
accounts at each institution for up to $250,000. The Company has maintained and
maintains cash in excess of the FDIC limit.
  36
  Chartwell
International, Inc. and Subsidiaries
 (A
Development Stage Company)
 Notes
to Consolidated Financial Statements (Continued)
  Note
1 — Summary of Significant Accounting Policies (continued)
  Property and Equipment
  Property and equipment are stated at
cost and are depreciated or amortized (as applicable) using the straight-line
method over the estimated useful lives of the related assets, ranging from three
to thirty years. Maintenance and repairs are charged to expense as incurred.
Significant renewals and betterments are capitalized. At the time of retirement
or other disposition of property and equipment, the cost and accumulated
depreciation and amortization are removed from the accounts and any resulting
gain or loss is reflected in operations.
  Mineral Mining Rights
  A significant portion of the Company’s
coal and other mineral reserves are controlled through mining rights. Amounts
paid to acquire such reserves are capitalized and will be depleted over the life
of those reserves that are proven and probable. Depletion of mineral mining
rights will be computed using the units-of-production method, and the rights are
assumed to have no residual value. The rights are long-term in nature (original
terms begin at 10 years) and most of the rights contain provisions for
renewals and extensions. As of June 30, 2009, no mining operations have
commenced, no depletion expense has been recorded and the net book value of the
mineral mining rights was $5,447,000.
  Impairment of Long-Term
Assets
  In the event that facts and
circumstances indicate that the carrying value of long-term assets may be
impaired, an evaluation of recoverability would be performed. If an evaluation
is required, the estimated future undiscounted cash flows associated with the
asset would be compared to the asset’s carrying amount to determine if a
write-down to market value or discounted cash flow value is required. The
write-down, if any, would be charged to operations in the period that impairment
was identified. During the quarters ended December 31, 2007, March 31,
2008, December 31, 2008 and June 30, 2009 our management identified certain
railroad equipment assets, and, land and related infrastructure associated with
our MNJ and Belville subsidiaries that were not being used in current operations
and evaluated the market value of these assets. We determined the value of these
assets had been impaired in comparison to prices for similar assets and we
recorded write-downs totaling $3,027,000 ($894,000 at December 31, 2007,
$1,361,000 at March 31, 2008, $470,000 at December 31, 2008 and $302,000 at June
30, 2009) based on our estimates of their market value. These write-downs are
included in general and administrative expenses on the Consolidated Statement of
Operations.
  Use of Estimates
  The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the
reported amounts of asset and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reported periods. Actual results
could materially differ from those estimates. Areas where significant estimation
is involved include, but are not limited to the valuation of stock-based
compensation, the value of long-term assets, contingency reserves and
depreciation.
  Revenue Recognition
  We generated revenue from rail
transportation until March 31, 2009 and we generated revenue from solid waste
transportation and disposal services until January 24, 2008. The timing of
our revenue recognition for solid waste transportation and disposal services
depended on the type of service that we provide to our customers. We recognized
revenue at our transload facility upon delivery by our customers of waste to our
facilities. We recognized revenue for waste management services when we complete
the delivery of waste to the site designated as part of our contract with the
customer. Our credit terms for our transload facility were generally prepayment,
cash on delivery or weekly payment. Our credit terms for waste management
services were generally 15 to 30 days. We generated limited revenue from rail
transportation and we recognized revenue on the completion of transportation
across our short line railroad. Our credit terms were generally 15 to
30 days. We maintained reserves for potential credit losses on solid waste
disposal services based on a specific identification of customers that have
exceeded credit terms and our assessment of their ability to pay. We did not
maintain a reserve for rail transportation as we had one customer and we had not
incurred any losses since we began generating revenue in
February 2006.
  37




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
1 — Summary of Significant Accounting Policies (continued)




Income Taxes




The Company accounts for income taxes
under Statement of Financial Accounting Standards No. 109. “Accounting for
Income Taxes,” (“SFAS 109”). Under SFAS 109, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. A valuation allowance is provided for significant deferred tax assets
when it is less likely to be realized.




Stock Based Compensation




On February 8, 2006 our
shareholders approved a stock based compensation plan (“2006 Plan”) for the
benefit of our employees, directors and other eligible parties. The 2006 Plan
permits the granting of restricted stock and options of up to 9% of our
outstanding common stock including common stock that is convertible from other
securities. Effective with our current fiscal year that began on August 1,
2005, we adopted the accounting and disclosure provisions of Statement of
Accounting Standards (“SFAS”) No. 123(R),“Share-Based
Payments”.




As part of adopting the modified
prospective approach during the transitional period, the Company has implemented
the modified prospective application for SFAS No. 123(R) that includes the
determination of a one-time cumulative effect adjustment for the portion of
stock options granted after December 15, 1994 that had not vested by
July 31, 2005. No cumulative effect adjustment was required as the Company
did not have any stock option grants outstanding nor did the Company have a
stock based compensation plan as of that date.




Earnings (Loss) Per Share




Basic “Earnings Per share (“EPS”)”, is
computed as net income (loss) applicable to shares of common stock divided
by the weighted average number of shares of common stock outstanding for the
period. Net income (loss) applicable to shares of common stock is
calculated as net income (loss) less dividends. No dividends were paid. Diluted
EPS reflects the potential that could occur from shares of common stock issuable
through stock options, warrants and other convertible securities. The total
potential shares of common stock that have not been included in the calculation
of diluted net loss per common share totaled 987,000 and 782,000 at
June 30, 2009 and 2008, respectively, as the effects of such are
anti-dilutive for those years.




Segment Reporting




The Company had adopted SFAS no. 131
(“SFAS 131”), “Disclosures about Segments of an Enterprise and Related
Information”. SFAS 131 establishes standards for the way that public companies
report information about operating segments and related disclosures about
products and services, geographic areas and major customers in annual financial
statements. The Company is primarily in the development stage and operated and
managed its operations in one segment, rail-based transportation until March 31,
2009 and currently has no operations.




Comprehensive Income




Effective January 1, 1998,
we adopted Statement of Accounting Standards No. 130, “Reporting
Comprehensive Income” (“SFAS 130”). SFAS 131 established new rules for the
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. The adoption of SFAS 130 had no affect
on the accompanying financial statements, because we had and continue to have no
components of comprehensive income.




Customer
and Vendor Concentrations




During the year ended June 30,
2009, we had one customer that represented 94% of our net revenue.




During
the year ended June 30, 2008, we have three vendors that represented 87% of
our cost of revenues.


38




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
1 — Summary of Significant Accounting Policies (continued)




Fair Value of
Financial Instruments




Statement of Financial Accounting
Standards No. 7, “Disclosures about Fair Value of Financial Instruments,
“requires the disclosure of the fair value, if reasonably obtainable, of the
Company’s financial instruments. The Company’s financial instruments consist of
its cash, accounts receivable, deposits, accounts payable and accrued
liabilities; and notes payable. Management has determined that the fair value of
the Company’s financial instruments approximate their carrying values at
June 30, 2009 and 2008, based upon their short-term nature.




Recently Issued
Accounting Pronouncements




We adopted the provisions of Financial
Accounting Standards Board (FASB) Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes – an interpretation of FASB No. 109 (FIN 48) on
July 1, 2007. As a result of the implementation of FIN 48, we recognized no
liability for unrecognized income tax benefits at June 30,
2008.




In May 2007, the FASB issued FSB
FIN 48-1, Definition of a Settlement in FASB Interpretation No. 48 (FSP FIN
48-1). FSP FIN 48-1 clarifies when a tax position is considered settled under
FIN 48. Under FSP FIN 48-1, a tax position is considered “effectively settled”
upon completion of the examination by the taxing authority without being legally
extinguished. For “effectively settled” tax positions, a company can recognize
the full amount of the tax benefit. FSP FIN 48-1 is effective upon a company’s
adoption of FIN 48. FSP FIN 48-1 did not have a material impact on our financial
position or results of operations.




Our continuing practice is to recognize
interest and/or penalties related to income tax matters in income tax expense.
At June 30, 2008, we had no accrued interest related to uncertain tax
positions and no accrued penalties.




In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (SFAS 157). SFAS 157 provides enhanced guidance for using fair
value to measure assets and liabilities and also expands information about the
extent to which companies measure assets and liabilities at fair value, the
information used to measure fair value, and the effect of fair value
measurements on earnings. SFAS 157 applies whenever other accounting standards
require or permit assets and liabilities to be measured at fair value and does
not expand the use of fair value in any new circumstances. SFAS 157 is effective
for financial statements issued for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal
years.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities” (SFAS 159). SFAS 159 provides
companies with an option to report selected financial assets and liabilities at
fair value. SFAS 159 also establishes presentation and disclosure requirements
designed to facilitate comparisons between companies that choose different
measurement attributes for similar types of assets and liabilities and to
provide additional information that will help investors and other financial
statement users to more easily understand the effect of the company’s choice to
use fair value on its earnings. Finally, SFAS 159 requires entities to display
the fair value of those assets and liabilities for which the company has chosen
to se fair value on the face of the balance sheet. SFAS 159 is effective as of
the beginning of an entity’s first fiscal year beginning after November 15,
2007. Early adoption is permitted as of the beginning of the previous fiscal
year provided that the entity makes that choice in the first 120 days of
that fiscal year and also elects to apply the provisions of SFAS 157 (see
below). We are currently assessing the impact of SFAS 159, which we will be
required to adopt no later than the first quarter of our 2009 fiscal
year.




In March
2007, the Emerging Issues Task Force (EITF) ratified EITF No. 06-4,
“Accounting for Deferred Compensation and Postretirement Benefit Aspects of
Endorsement Split-Dollar Life Insurance Arrangements”, and EITF No. 06-10,
“Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements”.
The consensus on both issues requires the Company to recognize a liability for
the estimated cost, net of expected recoveries, of maintaining the split-dollar
life insurance policy during the postretirement period of the employee. The
Company adopted the requirements of EITF No. 06-4 and EITF No. 06-10
during fiscal 2009 and it did not have a material impact on the financial
statements.


39




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
1 — Summary of Significant Accounting Policies (continued)




Recently Issued
Accounting Pronouncements





In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations – Revised 2007. SFAS 141R provides guidance on improving the
relevance, representational faithfulness, and comparability of information that
a reporting entity provides in its financial reports about a business
combination and its effects. SFAS 121R applies to business combinations where
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. The Company is in the
process of analyzing the effects SFAS 141R will have on its financial
statements.





In
December 2007, the FASB ratified the consensus reached on EITF Issue
No. 07-1, “Collaborative Arrangements,” (“EITF No. 07-1”).  This
Issue addresses accounting for collaborative arrangement activities that are
conducted without the creation of a separate legal entity for the
arrangement.  Revenues and costs incurred with third parties in connection
with the collaborative arrangement should be presented gross or net by the
collaborators pursuant to the guidance in EITF Issue No. 99-19, “Reporting
Revenue Gross as a Principal versus Net as an Agent,” and other applicable
accounting literature.  Payments to or from collaborators should be
presented in the income statement based on the nature of the arrangement, the
nature of the company’s business and whether the payments are within the scope
of other accounting literature.  Other detailed information related to the
collaborative arrangement is also required to be disclosed.  The
requirements under this Issue must be applied to collaborative arrangements in
existence at the beginning of the Company’s fiscal 2010 using a modified version
of retrospective application.  The Company is currently not a party to
significant collaborative arrangement activities, as defined by EITF
No. 07-1.




In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51,” (SFAS
No. 160). SFAS No. 160 amends ARB 51 to establish accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in
a subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. SFAS No. 160
is effective for fiscal years beginning on or after December 15, 2008. At
this time, the impact of adoption of SFAS No. 160 on our consolidated
financial position is being assessed.





In
February 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS
157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13
and Other Accounting Pronouncements That Address Fair Value Measurements for
Purposes of Lease Classification or Measurement under Statement 13.”  This
FSP amends SFAS No. 157 to exclude certain leasing transactions accounted
for under previously existing accounting guidance.  However, this scope
exception does not apply to assets acquired and liabilities assumed in a
business combination, regardless of whether those assets and liabilities are
related to leases.





In
February 2008, the FASB issued FSP No. FAS 157-2, “Effective Date for
FASB Statement No. 157” (“FSP No. FAS 157-2”).  This FSP permits
the delayed application of SFAS No. 157 for nonfinancial assets and
nonfinancial liabilities, as defined in this FSP, except for those that are
recognized or disclosed at fair value in the financial statements at least
annually, until the beginning of the Company’s fiscal 2010.  As of
July 1, 2008, the Company adopted SFAS No. 157 (see Note 12), with the
exception of its application to nonfinancial assets and nonfinancial
liabilities, which the Company will defer in accordance with FSP No. FAS
157-2 until the beginning of fiscal 2010.  Nonfinancial assets and
nonfinancial liabilities principally consist of intangible assets acquired
through business combinations, long-lived assets when assessing potential
impairment, and liabilities associated with restructuring activities.  The
Company is currently evaluating the impact of the provisions for such
nonfinancial assets and nonfinancial liabilities on its consolidated financial
statements.




In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No. 133.”
This Statement amends and expands the disclosure requirements of SFAS
No. 133. This Statement is effective for fiscal years and interim periods
beginning after November 15, 2008. The adoption of this Statement in the
third quarter of fiscal 2009 did not have a material impact on the Company’s
financial position or results of operations.


40




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
1 — Summary of Significant Accounting Policies (continued)




Recently Issued
Accounting Pronouncements





In
April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the
Useful Life of Intangible Assets” (“FSP No. FAS 142-3”).  This FSP
amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
under SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS
No. 142”).  This FSP also adds certain disclosures to those already
prescribed in SFAS No. 142.  FSP No. FAS 142-3 becomes effective
for fiscal years, and interim periods within those fiscal years, beginning in
the Company’s fiscal 2010.  The guidance for determining useful lives must
be applied prospectively to intangible assets acquired after the effective
date.  The disclosure requirements must be applied prospectively to all
intangible assets recognized as of the effective date.




In June
2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted
in Share-Based Payment Transactions Are Participating Securities.” This FSP
addresses whether instruments granted in share-based payment transactions are
participating securities prior to vesting and, therefore, need to be included in
the computation of earnings per share. This FSP is effective for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. The Company does not expect the adoption of this FSP in fiscal 2010 will
have a material impact on its financial position or results of
operations.





In
October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair
Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP
No. FAS 157-3”), which clarifies the application of SFAS No. 157 in a
market that is not active and provides an example to illustrate key
considerations in determining the fair value of a financial asset when the
market for that financial asset is not active.  The FSP is effective upon
issuance, including prior periods for which financial statements have not been
issued.  Revisions resulting from a change in the valuation technique or
its application should be accounted for as a change in accounting estimate
following the guidance in SFAS No. 154, “Accounting Changes and Error
Corrections” (“SFAS No. 154”).  However, the disclosure provisions in
SFAS No. 154 for a change in accounting estimate are not required for
revisions resulting from a change in valuation technique or its
application.  The Company adopted SFAS No. 157 beginning in its fiscal
2009 first quarter.  As part of this adoption, the Company evaluated the
fair value measurements of its financial assets and liabilities and determined
that these instruments are valued in active markets.  As such, the guidance
in this FSP did not impact the Company’s consolidated financial
statements.





In
November 2008, the FASB ratified the consensus reached on Emerging Issues
Task Force (“EITF”) Issue No. 08-7, “Accounting for Defensive Intangible
Assets” (“EITF No. 08-7”).  Defensive intangible assets are assets
acquired in a business combination that the acquirer (a) does not intend to
use or (b) intends to use in a way other than the assets’ highest and best
use as determined by an evaluation of market participant assumptions. 
While defensive intangible assets are not being actively used, they are likely
contributing to an increase in the value of other assets owned by the acquiring
entity.  EITF No. 08-7 will require defensive intangible assets to be
accounted for as separate units of accounting at the time of acquisition and the
useful life of such assets would be based on the period over which the assets
will directly or indirectly affect the entity’s cash flows.  This Issue
would be applied prospectively for defensive intangible assets acquired on or
after the beginning of the Company’s fiscal 2010, in order to coincide with the
effective date of SFAS No. 141 (revised 2007), “Business Combinations”
(“SFAS No. 141(R)”).




In
November 2008, the FASB ratified the consensus reached on EITF Issue
No. 08-6, “Accounting for Equity Method Investment Considerations” (“EITF
No. 08-6”).  EITF No. 08-6 addresses questions about the
potential effect of SFAS No. 141(R) and SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial Statements - an amendment of
ARB No. 51” (“SFAS No. 160”) on equity-method accounting.  The
primary issues include how the initial carrying value of an equity method
investment should be determined, how to account for any subsequent purchases and
sales of additional ownership interests, and whether the investor must
separately assess its underlying share of the investee’s indefinite-lived
intangible assets for impairment.  The effective date of EITF No. 08-6
coincides with that of SFAS No. 141(R) and SFAS No. 160 and is to
be applied on a prospective basis beginning in the Company’s fiscal 2010. 
Early adoption is not permitted for entities that previously adopted an
alternate accounting policy.


41


Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
1 — Summary of Significant Accounting Policies (continued)





Recently Issued
Accounting Pronouncements





In
December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’
Disclosures about Postretirement Benefit Plan Assets” (“FSP No. FAS
132(R)-1”) to require employers to provide additional disclosures about plan
assets of a defined benefit pension or other post-retirement plan.  These
disclosures should principally include information detailing investment policies
and strategies, the major categories of plan assets, the inputs and valuation
techniques used to measure the fair value of plan assets and an understanding of
significant concentrations of risk within plan assets.  While earlier
application of the provisions of this FSP is permitted, the disclosures required
by this FSP shall be provided for fiscal years ending after December 15,
2009 (or the Company’s fiscal 2010, the anticipated period of adoption). 
Upon initial application, the provisions of this FSP are not required for
earlier periods that are presented for comparative purposes.





In
April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP
No. FAS 157-4”).  This FSP provides additional guidance for estimating
fair value in accordance with SFAS No. 157 when there has been a
significant decrease in market activity for a financial asset.  An entity
is required to base its conclusion about whether a transaction was distressed on
the weight of the evidence presented.  This FSP also re-affirms that the
objective of fair value, when the market for an asset is not active, is the
price that would be received to sell the asset in an orderly market (as opposed
to a distressed or forced transaction).  Additional enhanced disclosures
are also required in accordance with this FSP.  FSP No. FAS 157-4 must
be applied prospectively and is effective for interim and annual periods ending
after June 15, 2009.  The adoption of this standard did not have an
impact on the Company’s consolidated financial statements as its financial
assets are currently valued in active markets.





In
April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments,” principally to require
publicly traded companies to provide disclosures about fair value of financial
instruments in interim financial information.  The adoption of this
disclosure-only guidance will not have an impact on the Company’s consolidated
financial results and is effective beginning with its fiscal 2010 interim period
ending September 30, 2009.




In
April 2009, the FASB issued FSP No. FAS 141(R)-1, “Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies,” to require that assets acquired and liabilities assumed in
a business combination that arise from contingencies be recognized at fair value
if fair value can be reasonably determined.  If the fair value of such
assets or liabilities cannot be reasonably determined, then they would generally
be recognized in accordance with SFAS No. 5, “Accounting for Contingencies”
and FASB Interpretation No. 14, “Reasonable Estimation of the Amount of a
Loss — an interpretation of FASB Statement No. 5.”  This FSP also
amends the subsequent accounting for assets and liabilities arising from
contingencies in a business combination and certain other disclosure
requirements.  This FSP is effective for assets or liabilities arising from
contingencies in business combinations that are consummated during the Company’s
fiscal 2010





In
May 2009, the FASB issued Statement of Financial Accounting Standards
(“SFAS”) No. 165, “Subsequent Events” (“SFAS No. 165”).  SFAS
No. 165 requires the disclosure of the date through which an entity has
evaluated subsequent events for potential recognition or disclosure in the
financial statements and whether that date represents the date the financial
statements were issued or were available to be issued.  This standard also
provides clarification about circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements and the disclosures that an entity should make about events
or transactions that occurred after the balance sheet date.  This standard
is effective for interim and annual periods beginning with the Company’s fiscal
year ended June 30, 2009.  The adoption of this standard did not have
a material impact on the Company’s consolidated financial
statements.




In June
2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140.” This Statement improves the
relevance, representational faithfulness and comparability of information
provided about a transfer of financial assets, the effects of a transfer of
financial assets on an entity’s financial statements, and a transferor’s
continuing involvement, if any, in financial assets transferred. This Statement
is effective for fiscal years beginning after November 15, 2009. The
Company is in the process of determining the impact of adopting this
Statement.


42




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
1 — Summary of Significant Accounting Policies (continued)





Recently Issued
Accounting Pronouncements




In June
2009, the Financial Accounting Standards Board (FASB) issued SFAS No. 168,
“The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles – a Replacement of FASB Statement No. 162”
(SFAS No. 168). SFAS No. 168 establishes the Codification as the
source of authoritative GAAP recognized by the FASB to be applied by
nongovernmental entities. Following this Statement, the FASB will not issue new
standards in the form of Statements, FASB Staff Positions, or Emerging Issues
Task Force Abstracts. Instead, it will issue Accounting Standards Updates. All
guidance contained in the Codification carries an equal level of authority. The
GAAP hierarchy will be modified to include only two levels of GAAP:
authoritative and nonauthoritative. All nongrandfathered non-SEC accounting
literature not included in the Codification will become nonauthoritative. SFAS
No. 168 is effective for interim or annual financial periods ending after
September 15, 2009. The Company will adopt this statement in fiscal 2010,
and does not anticipate adoption will have a material impact on its consolidated
financial position, results of operations or liquidity.




In
June 2009, the FASB issued SFAS No. 167, “Amendments to FASB
Interpretation No. 46(R)” (“SFAS No. 167”).  SFAS No. 167
eliminates the exception to consolidate a qualifying special-purpose entity,
changes the approach to determining the primary beneficiary of a variable
interest entity and requires companies to more frequently re-assess whether they
must consolidate variable interest entities.  Under the new guidance, the
primary beneficiary of a variable interest entity is identified qualitatively as
the enterprise that has both (a) the power to direct the activities of a
variable interest entity that most significantly impact the entity’s economic
performance, and (b) the obligation to absorb losses of the entity that
could potentially be significant to the variable interest entity or the right to
receive benefits from the entity that could potentially be significant to the
variable interest entity.  SFAS No. 167 becomes effective for the
Company’s fiscal 2011 year-end and interim reporting periods thereafter. 
The Company does not expect SFAS No. 167 to have a material impact on its
consolidated financial statements.


43




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
2 — Deposit on Railcar Purchase




Effective July 11, 2005, the
Company entered into a Purchase and Sale Agreement with Railway and Industrial
Services, Inc. for the purchase of 95 retrofitted railcars for a purchase price
of $4,085,000. The agreement called for the Company to pay an initial deposit of
$1,425,000 and an additional $28,000 per railcar that is accepted and delivered,
as defined. The parties also entered into a Purchase Money Security Agreement
effective July 11, 2005 granting the Company a security interest in the 95
railcars until such railcars are accepted and delivered. The total deposit was
allocated and correspondingly reduced at the rate of $15,000 per railcar
delivered. As of June 30, 2006, the Company took delivery of and fully paid
for 60 railcars. On April 2, 2008, 8 of the railcars that had not been
retrofitted were sold to a third party and the proceeds of sale of $134,000 were
applied against the deposit. The remaining deposit balance on the 27 railcars
yet to be delivered of $391,000 was included as part of Deposits at June 30,
2008. On July 24, 2008 the deposit on the 27 remaining railcars was sold to
a third party and the net proceeds of $391,000 were applied against the deposit
bringing it to a nil balance. We recorded a loss of $60,000 on the sale of the
railcars.




Note
3 — Property and Equipment




Property and equipment consist of the
following:




June 30,
                
                
                June 30,2009
                
                
                2008(in thousands)Buildings
                
                $
                —
                
                
                $
                138Railroad
      structures and improvements
                
                
                —
                
                
                
                532Leasehold
      improvements
                
                
                —
                
                
                
                —Office
      furniture & equipment
                
                
                3
                
                
                
                13Computer
      hardware and software
                
                
                56
                
                
                
                58Railway
      locomotives and cars
                
                
                —
                
                
                
                1,555Railway
      equipment
                
                
                —
                
                
                
                —Waste
      disposal equipment
                
                
                —
                
                
                
                —59
                
                
                
                2,296Accumulated
      depreciation and amortization
                
                
                (59
                )
                
                
                (171
                )$
                —
                
                
                $
                2,125




Depreciation and amortization expense
for the year ending June 30, 2009 and 2008 were $21,000 and $143,000
respectively. Refer to Note 1 regarding asset impairments.




Note
4 — Notes Payable





On
September 8, 2005, in connection with our acquisition of E-Rail, we assumed
five promissory notes with a face value of $1,823,000 bearing interest at rates
between 0% to 6.5% per annum secured by land owned by our Belville subsidiary
and payable over two to five years in monthly installments of principal and
interest. The promissory notes were recorded with a value of $1,638,000 which
our management believes fairly represents the present value of minimum payments
required to be paid under the notes with an interest rate of 11% per annum based
on our then current accessible borrowing rate based on proposals for debt
financing on comparable assets. On June 8, 2006, we negotiated an early
payoff of one of the notes that resulted in gain on the settlement of the note
of $39,000. During the year ended June 30, 2007 we either paid off or
renegotiated the repayment terms of the notes and have determined that the
remaining face value fairly represents the present value of minimum future
payments based on the borrowing rates that we recently received from new debt
assumed. We suspended making payments against the remaining notes in February
2008 while we are in the process of restructuring certain of the terms with the
note holders.  We continue to accrue interest based on the existing
interest rates. As of June 30, 2009 the outstanding balances including accrued
interest were $1,047,000 of which $567,000 are due in one year or
less.


44




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
4 — Notes Payable (continued)





On
February 15, 2006, we issued a $500,000 convertible promissory note payable
to a selling shareholder of Cranberry Creek in connection with our acquisition.
The note bears interest at the rate of 8% per annum, was due on
February 15, 2008, interest is payable quarterly, and the principal balance
plus any accrued interest can be converted into shares of our common stock at a
rate of $6.33 per share at any time. The conversion rights have expired. With
the written consent of the note holder, we did not pay off the note payable on
its due date. To date, we have attempted and continue to negotiate with the note
holder to extend and restructure the note payable beyond its original due date.
However, we are in default of the note and the note holder filed a lawsuit
against us in Orange County, New York on July 17, 2008.   We have
continued to accrue interest on the note payable at the original note interest
rate. At June 30, 2009, the balance of the note payable plus accrued interest
was $555,000 and reported in current liabilities in the consolidated balance
sheet.




On
March 15, 2006, we issued a $1,000,000 convertible promissory note payable
to an accredited private investor. The note bore interest at the rate of 6% per
annum, was due on March 15, 2009, interest accrued until the note is repaid
or converted, and the principal balance plus any accrued interest could be
converted into shares of our common stock at a rate of $2.00 per share at any
time. On June 10, 2008 we agreed to renegotiate the note whereby accrued
interest and principal totaling $174,000 was forgiven, the note became secured
by substantially all of our assets subject to the existing lien priorities of
other secured lenders and the conversion feature was eliminated. The interest
rate, interest accrual provision and due date remain unchanged. On April 6,
2009, we agreed to extend the note until July 15, 2009 for an extension fee of
$1,000 with other conditions remaining the same. At June 30, 2009, the balance
of the note payable plus accrued interest was $1,015,000 and reported in current
liabilities in the consolidated balance sheet.




On April 30, 2006, we issued a
$3,000,000 secured convertible promissory note payable to an accredited foreign
private investor. The note bears interest at the rate of 10% per annum, is due
on April 30, 2012, interest is payable monthly, is secured by our railway
flatbed cars, and the principal balance plus any accrued interest can be
converted into shares of our common stock at a rate of $4.60 per share at any
time subject to a maximum of 5% of our outstanding common stock at the time of
the conversion. In June 2008, we agreed to increase the collateral securing
the note to include substantially all of our assets subject to the existing lien
priorities of other secured lenders in exchange for delays in interest payments.
We further agreed to make principal reductions as collateral was sold. In
April 2008 we paid a principal repayment of $134,000. On July 24, 2008 we
made interest and principals payments totaling $315,000.  On January 1,
2009, the investor agreed to extend past due and upcoming interest payments in
exchange for 600,000 shares of our restricted common stock valued at $60,000. On
January 31, 2009 we made a principal repayment of $1,100,000. On June 9, 2009 we
made a principal payment of $300,000. At June 30, 2009, the balance of the note
payable plus accrued interest was $1,468,000 and reported in the long-term
liabilities in the consolidated balance sheet.





On
October 23, 2006, we issued four convertible notes payable totaling
$250,000 to accredited foreign private investors. The notes bear interest at the
rate of 7.75% per annum, are due on May 23, 2012, interest accrues until the
notes are repaid or converted, and the principal balances plus any accrued
interest can be converted into our common stock at rate of $6.00 per share at
any time. At June 30, 2009, the balance of the notes payable plus accrued
interest was $302,000 and reported in the long-term liabilities in the
consolidated balance sheet.




On
March 5, 2007, we issued a convertible note payable totaling $500,000 to an
accredited foreign private investor. The note bears interest at the rate of
5.00% per annum, is due on May 23, 2012, interest accrues until the note is
repaid or converted, and the principal balances plus any accrued interest can be
converted into our common stock at rate of $5.00 per share at any time. At
June 30, 2009, the balance of the note payable plus accrued interest was
$559,000 and reported in the long-term liabilities in the consolidated balance
sheet.




The summary of notes payable
follows:





June30,2009
                
                
                June30,2008(In thousands)Total
                
                $
                4,946
                
                
                $
                6,271Less
      current portion
                
                
                (2,137
                )
                
                
                (2,007
                )Long-term
                
                $
                2,809
                
                
                $
                4,264


45




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note 4 — Notes Payable
(continued)




Interest
expense incurred during the year ended June 30, 2009 and 2008 totaled $
395,000 and $483,000 respectively. Future minimum payments under notes payable
are as follows:





Year Ending
                  
                  AmountJune30,
                  
                  (Inthousands)2010
                  
                  $
                  2,1372011
                  
                  $
                  —2012
                  
                  $
                  2,3292013
                  
                  $
                  —2014
      and beyond
                  
                  $
                  480$
                  6,271




Note
5 — Income Taxes




The Company has an estimated net
operating loss carry forward for Federal income tax purposes at June 30,
2008 and 2009 of approximately $13,250,000 and $15,450,000, which will begin to
expire in varying amounts in 2023 if not used. The resulting deferred tax asset
of approximately $4,506,000 and $4,017,000 as of June 30, 2008 and 2009,
respectively, has been offset by a 100% valuation allowance. The valuation
allowance increased by approximately $511,000 for the year ended June 30,
2009 due to additional operating losses for the current year.




Note
6 — Equity




Authorized
Capital




Preferred Stock




The Company has the authority to issue
25,000,000 shares of preferred stock. The Board of Directors has the authority
to issue such preferred shares in series and determine the rights and
preferences of the shares.




On March 2, 2007, we designated
20,000 shares of our authorized Preferred Stock as Series A Preferred Stock
(“Series A Stock”), of which 1,950 shares were outstanding at June 30,
2007.  Each share of Series A Stock is convertible at the option of
the holder at any time into shares of our common stock as is determined by
dividing $1,025.65 per share by the conversion price, as adjusted for stock
splits, subdivision and stock dividends. The initial conversion price is $2.50.
Additionally, a holder of Series A Stock has the right to acquire a
redemption right prior to March 5, 2007. If a holder of Series A Stock
acquires such redemption right, the holder may require us to redeem its shares
of Series A Stock at $1,000.00 per share on December 31, 2010 if we
are not traded on a national exchange at such date. Our Series A Stock has
no voting rights.




Common Stock




The Company has 100,000,000 authorized
shares of common stock, par value $0.001, of which 9,494,013 and 7,025,681
shares were outstanding at June 30, 2009 and 2008
respectively.




Common
Stock Transactions





On
December 31, 2007, we issued 5,000 shares of common stock to a consultant
in exchange for services valued at $0.08 per share or $400. Our management
valued the shares of common stock at the closing stock market price on the date
of the transaction.





On August
11, 2008 we issued 287,500 shares of common stock to an officer and two
directors in exchange for services valued at $0.26 per share or $74,750, and we
issued 830,770 common shares to Orchestra for services valued $0.26 per share or
$216,000. Our management valued the shares of common stock at the closing stock
market price on the date of the transaction.





On
September 2 and 3, 2008, our principal shareholder, Orchestra, involuntary sold
29,500 common shares as result of a broker margin call. On September 23, 2008,
Orchestra remitted $4,000 to us which represented the profit on the short swing
sale of our common stock.


46




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
6 — Equity (continued)




Common
Stock Transactions (continued)





On
January 1, 2009 we issued 750,000 shares of common stock to an officer and an
employee in exchange for services valued at $0.10 per share or $75,000, and we
issued 600,000 shares of common stock to an accredited foreign private investor
valued at $0.10 per share or $60,000 as a financing fee for agreeing to defer
accrued and outstanding interest payments on a promissory note due to the
investor. Our management valued the shares of common stock at the closing stock
market price on the date of the transaction.





On
February 19, 2009 our shareholders approved a one-for-two reverse stock split of
our common stock that became effective on April 8, 2009. The effect of the
reverse split has been reflected in our financial statements
retroactively.




Stock
Options




The Company’s 2006 Equity Incentive
Plan (“2006 Plan”) was approved by shareholders on February 8, 2006, and
permits the granting of up to 9% of the Company’s outstanding shares of common
stock and number common shares issuable from convertible securities or 905,060
shares to employees and directors. Stock option awards are granted with an
exercise price that is generally equal to or greater than the market price of
the Company’s common stock on the date of the grant. The options vest generally
over a range of two to four years and expire five years after the grant date.
Stock options under the 2006 Plan provide for accelerated vesting if there is a
change in control (as defined by the 2006 Plan).




The fair value of each stock option
granted is estimated on the date of the grant using the Black-Scholes option
pricing model and factors in an estimated forfeiture based on management
assessment of historical employee termination experience as well as estimates of
future terminations where historical information is limited. The Black-Scholes
option-pricing model has assumptions for risk free interest rates, dividends,
stock volatility and expected life of an option grant. The risk free interest
rate is based the U.S. Treasury Bill rate with a maturity based on the expected
life of the options and on the closest day to an individual stock option grant.
Dividend rates are based on the Company’s dividend history. The stock volatility
factor is based on up to the past three years of market prices of the Company’s
common stock. The expected life of an option grant is based on its vesting
period. The fair value of each option grant is recognized as compensation
expense over the expected life of the option on a straight line
basis.




During the years ended June 30,
2008 and 2009 we did not grant any stock options.




The following table summarizes
information about stock option transactions for the period shown:





Year EndedJune 30, 2009Weighted AverageAll Options
                
                
                
                
                Exercise PriceOutstanding
      at beginning of year
                
                
                425,000
                
                
                $
                5.22Options
      granted
                
                
                —
                
                
                
                —Options
      forfeited
                
                
                —
                
                
                
                —Options
      expired
                
                
                —
                
                
                
                —Options
      exercised
                
                
                —
                
                
                
                —Outstanding
      at end of year
                
                
                425,000
                
                
                
                5.22Exercisable
      at end of year
                
                
                425,000
                
                
                $
                5.22





Year EndedJune 30, 2009Weighted AverageNon-vested Options
                
                
                
                
                Exercise PriceNon-vested
      at beginning of year
                
                
                16,666
                
                
                $
                5.40Options
      granted
                
                
                —
                
                
                
                —Options
      forfeited
                
                
                —
                
                
                
                —Options
      expired
                
                
                —
                
                
                
                —Options
      vested
                
                
                16,666
                
                
                
                5.40Non-vested
      at end of year
                
                
                —
                
                
                $
                —


47




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
6 — Equity (continued)




Stock
Options (continued)




The
following table summarizes information about stock option transactions for the
period shown:





Year EndedJune 30, 2008Weighted AverageAll Options
                
                
                
                
                Exercise PriceOutstanding
      at beginning of year
                
                
                475,000
                
                
                $
                5.20Options
      granted
                
                
                —
                
                
                
                —Options
      forfeited
                
                
                50,000
                
                
                
                5.40Options
      expired
                
                
                —
                
                
                
                —Options
      exercised
                
                
                —
                
                
                
                —Outstanding
      at end of year
                
                
                425,000
                
                
                
                5.22Exercisable
      at end of year
                
                
                408,334
                
                
                $
                5.22





Year EndedJune 30, 2008Weighted AverageNon-vested Options
                
                
                
                
                Exercise PriceNon-vested
      at beginning of year
                
                
                195,833
                
                
                $
                5.32Options
      granted
                
                
                —
                
                
                
                —Options
      forfeited
                
                
                25,000
                
                
                
                5.40Options
      expired
                
                
                —
                
                
                
                —Options
      vested
                
                
                154,167
                
                
                
                5.28Non-vested
      at end of year
                
                
                16,666
                
                
                $
                5.40




The weighted average remaining
contractual lives of the options outstanding and options exercisable at
June 30, 2009 and 2008, were 2.4 and 2.4 years, and, 3.4 and
3.4 years respectively.




We recorded $20,000 and $209,000 of
compensation expense for employee stock options during the year ended
June 30, 2009 and 2008, respectively. At June 30, 2009 and 2008 there
was a total of $0 and $20,000 respectively of unrecognized compensation costs
related to non-vested share-based compensation arrangements under the 2006 Plan.
The total fair value of shares vested during the year ended June 30, 2009
was approximately $24,000.


48




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
6 — Equity (continued)




Stock
Options (continued)




The following table provides additional
information for stock options outstanding at June 30, 2008 and
2009:




2008





Outstanding
                            
                            
                            ExercisableWeighted
                            
                            
                            Weighted
                            
                            
                            
                            
                            
                            WeightedAverage
                            
                            
                            Average
                            
                            
                            
                            
                            
                            AverageRange
                            
                            
                            
                            
                            
                            Exercise
                            
                            
                            Contractual
                            
                            
                            
                            
                            
                            ExerciseFrom
                            
                            To
                            
                            
                            Number
                            
                            
                            Price
                            
                            
                            Life
                            
                            
                            Number
                            
                            
                            Price$
                            5.00
                            
                            $
                            5.00
                            
                            
                            
                            300,000
                            
                            
                            $
                            5.00
                            
                            
                            
                            3.7
                            
                            
                            
                            300,000
                            
                            
                            $
                            5.00$
                            5.4070
                            
                            $
                            5.400
                            
                            
                            
                            50,000
                            
                            
                            $
                            5.40
                            
                            
                            
                            2.9
                            
                            
                            
                            33,334
                            
                            
                            $
                            5.40$
                            6.00
                            
                            $
                            6.00
                            
                            
                            
                            75,000
                            
                            
                            $
                            6.00
                            
                            
                            
                            2.6
                            
                            
                            
                            75,000
                            
                            
                            $
                            6.00425,000
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            408,334




2009





Outstanding
                                              
                                              
                                              ExercisableWeighted
                                              
                                              
                                              Weighted
                                              
                                              
                                              
                                              
                                              
                                              WeightedAverage
                                              
                                              
                                              Average
                                              
                                              
                                              
                                              
                                              
                                              AverageRange
                                              
                                              
                                              
                                              
                                              
                                              Exercise
                                              
                                              
                                              Contractual
                                              
                                              
                                              
                                              
                                              
                                              ExerciseFrom
                                              
                                              To
                                              
                                              
                                              Number
                                              
                                              
                                              Price
                                              
                                              
                                              Life
                                              
                                              
                                              Number
                                              
                                              
                                              Price$
                                              5.00
                                              
                                              $
                                              5.00
                                              
                                              
                                              
                                              300,000
                                              
                                              
                                              $
                                              5.00
                                              
                                              
                                              
                                              2.7
                                              
                                              
                                              
                                              300,000
                                              
                                              
                                              $
                                              5.00$
                                              5.4070
                                              
                                              $
                                              5.400
                                              
                                              
                                              
                                              50,000
                                              
                                              
                                              $
                                              5.40
                                              
                                              
                                              
                                              1.9
                                              
                                              
                                              
                                              50,000
                                              
                                              
                                              $
                                              5.40$
                                              6.00
                                              
                                              $
                                              6.00
                                              
                                              
                                              
                                              75,000
                                              
                                              
                                              $
                                              6.00
                                              
                                              
                                              
                                              1.6
                                              
                                              
                                              
                                              75,000
                                              
                                              
                                              $
                                              6.00425,000
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              425,000




As of June 30, 2009 and 2008, we
had reserved shares of common stock for the following purposes:





June 30,
                
                
                June 30,2009
                
                
                2008Options
                
                
                425,000
                
                
                
                425,000Convertible
      preferred stock
                
                
                400,000
                
                
                
                400,000Convertible
      notes payable
                
                
                162,209
                
                
                
                472,828Total
                
                
                987,209
                
                
                
                1,297,828


49




Chartwell
International, Inc. and Subsidiaries


(A
Development Stage Company)


Notes to
Consolidated Financial Statements (Continued)




Note
7 — Commitments and Contingencies




Leases




On September 13, 2007, we assigned
the lease for office space in Morristown, New Jersey that until August 31,
2007 served as our executive offices. Although we assigned the lease to a third
party we may still be held responsible for lease payments in the event the
assignee defaults on its payments due to the landlord. The assigned lease
expires on August 26, 2009 and has minimum monthly lease payments of
$4,647. Future minimum rental payments required under the above leases as of
June 30, 2009 are as follows:





Years
      ending June 302010
                    
                    $
                    9,000$
                    9,000




Rent expense for all leases for the
periods ended June 30, 2009 and 2008 was $6,000 and $65,000
respectively.




Legal
Proceedings




On June 14, 2007, U.S. Rail
Corporation filed a lawsuit against us in the U.S. District Court for the
Southern District of Ohio, alleging that we failed to pay for railcar storage
services totaling $88,200 from October 2005 through March 2006. We did
not contract for these services and we have legally disputed this claim, however
we had recorded the total disputed amount of the lawsuit as a current liability
on our balance sheets until such time as this matter was resolved. On April 29,
2009, this lawsuit was settled in exchange for a payment of $22,500 to us to
offset our legal fees and transfer of certain railway equipment assets to the
plaintiff that were of de minimis value to us. We had previously accrued the
railcar storage service fees and the settlement resulted in a reduction of our
general and administrative expenses of $88,000 for the year ended June 30,
2009.





On August
20, 2009, Lucy Rasmussen filed a lawsuit against the Company for non-payment of
a $500,000 note payable that was due on February 15, 2008. The Company had been
and will continue to attempt to negotiate a reasonable settlement, including an
extension to this note.  This note plus accrued interest is included in
current liabilities in the accompanying consolidated balance sheet.




In the normal course of operations, we
may have disagreements or disputes with employees, vendors or customers. These
disputes are seen by our management as a normal part of business, and except as
set forth above, there are no pending actions currently or no threatened actions
that management believes would have a significant material impact on our
financial position, results of operations or cash flows.




Note
8 — Related Party Transactions




On March 15, 2006, we entered into
a two-year agreement with Orchestra, whereby Orchestra would provide management
and financial advisory services to us for a monthly fee of $10,000 retroactive
to January 1, 2006. As of January 1, 2008, we extended the agreement
on a month-to-month basis. Subsequent to our fiscal year end, on August 11,
2008, we renewed the agreement for two years retroactive to January 1,
2008. In addition, we reported $18,000 and $0 due to Orchestra for consulting
and financing placement fees at June 30, 2009 and 2008,
respectively




We paid $33,000 and $92,000 in cash for
legal services to law firms, during the year ended June 30, 2009 and 2008,
respectively, of which a director of ours was a shareholder. In addition, we
reported $82,000 and $19,000 due to a law firm of which a director of ours is a
shareholder for legal services at June 30, 2009 and 2008,
respectively.




We also reimburse officers and
directors for approved business expenses incurred in the ordinary course of
business and in accordance with our expense reimbursement policy.




Note
9 — Subsequent Events





On August
7 and 21, 2009 we issued a total of 2,500,000 shares of common stock to
accredited private investors for cash at $0.015 per share or
$37,500.


50




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.10.20(18)
              
              Purchase
      Agreement with Perry New Jersey I, LLC10.21(19)
              
              Settlement
      Agreement with Hudson Logistics, Inc., Hudson Logistics Loading, Inc.,
      Imre Eszenyi, Raymond Kalafsky, Northern & Bergen Railroad, LLC, and
      New York & Greenwood Lake Railway10.22
              
              Termination
      and Release Agreement with Railway & Industrial Services,
      Inc.14.1(14)
              
              Code
      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


51





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 10K 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.





(18)
            Incorporated
      by reference to Form 8-K dated December 27,
  2007.





(19)
            Incorporated
      by reference to Form 8-K dated January 30,
  2008.


52