##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 000-51342
 CHARTWELL INTERNATIONAL, INC.
  NEVADA
    
    95-3979080(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)
 140 East Main Street
Middletown, New York 10940  (Address of Principal Executive Offices)
 (949) 335-5319  (Issuers Telephone Number)
 þ o
 o þ
  o þ




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PAGEPart I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    3Consolidated Balance Sheets at September 30, 2007 (Unaudited) and June 30, 2007
    
    
    3Consolidated Statements of Operations (Unaudited) for the three months ended
September 30, 2007 and 2006, and, from inception on March 3, 2005 to
September 30, 2007
    
    
    4Consolidated Statements of Cash Flows (Unaudited) for the three months ended
September 30, 2007 and 2006, and, from inception on March 3, 2005 to
September 30, 2007
    
    
    5Notes to Interim Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Conditions and Results of
Operation
    
    
    22Item 3.
    
    Controls and Procedures
    
    
    36Part II.
    
    OTHER INFORMATIONSignatures
    
    
    37Exhibits
    
    
    38EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
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PART 1. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Chartwell
International, Inc.  (A Development Stage Company)
 
 Consolidated Balance Sheets
(In thousands)
 September 30,
    
    
    June 30,2007
    
    
    2007(Unaudited)AssetsCurrent AssetsCash
    
    $
    253
    
    
    $
    704Restricted cash
    
    
    283
    
    
    
    279Accounts receivable, net of allowance for uncollectible accounts
    
    
    649
    
    
    
    507Deposits
    
    
    528
    
    
    
    536Prepaid expense and other
    
    
    65
    
    
    
    47Total current assets
    
    
    1,778
    
    
    
    2,073Long-term AssetsProperty and equipment, net
    
    
    4,912
    
    
    
    5,178Land
    
    
    1,681
    
    
    
    1,681Mineral rights
    
    
    5,447
    
    
    
    5,447Capacity and loading rights, net
    
    
    1,345
    
    
    
    1,383Investment, at cost
    
    
    100
    
    
    
    100Other
    
    
    116
    
    
    
    121Total long-term assets
    
    
    13,601
    
    
    
    13,910Total Assets
    
    $
    15,379
    
    
    $
    15,983Liabilities and Stockholders EquityCurrent LiabilitiesAccounts payable and accrued liabilities
    
    $
    1,946
    
    
    $
    1,403Due to related parties
    
    
    14
    
    
    
    14Notes payable
    
    
    803
    
    
    
    773Total current liabilities
    
    
    2,763
    
    
    
    2,190Long-term LiabilitiesNotes payable, net of current portion
    
    
    6,018
    
    
    
    6,078Total long-term liabilities
    
    
    6,018
    
    
    
    6,078Total Liabilities
    
    
    8,781
    
    
    
    8,268Commitments and ContingenciesStockholders EquityPreferred 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
14,041 shares issued and outstanding at September 30, 2007 and June 30, 2007
    
    
    14
    
    
    
    14Additional paid in capital
    
    
    14,050
    
    
    
    13,972Accumulated deficit
    
    
    (9,466
    )
    
    
    (8,271
    )Total stockholders equity
    
    
    6,598
    
    
    
    7,715Total Liabilities and Stockholders Equity
    
    $
    15,379
    
    
    $
    15,983
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Chartwell International, Inc.
(A Development Stage Company)
 
 Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
 CumulativeFor the three
    
    
    For the three
    
    
    from March 3,months ended
    
    
    months ended
    
    
    2005, InceptionSeptember 30,
    
    
    September 30,
    
    
    to September2007
    
    
    2006
    
    
    30, 2007Revenues
    
    $
    2,221
    
    
    $
    1,549
    
    
    $
    9,579Cost of revenues
    
    
    2,289
    
    
    
    1,468
    
    
    
    9,114Gross profit (loss)
    
    
    (68
    )
    
    
    81
    
    
    
    465General and administrative expenses
    
    
    914
    
    
    
    807
    
    
    
    8,187Loss from operations
    
    
    (982
    )
    
    
    (726
    )
    
    
    (7,722
    )Other income (expense)Interest, net
    
    
    (120
    )
    
    
    (118
    )
    
    
    (801
    )Gain (loss) on sale of property and
equipment
    
    
    (93
    )
    
    
    59
    
    
    
    41Gains on notes settlements
    
    
    
    
    
    
    
    
    
    
    74Finance placement fees
    
    
    
    
    
    
    
    
    
    
    (1,058
    )Total other income (expense)
    
    
    (213
    )
    
    
    (59
    )
    
    
    (1,744
    )Loss before income tax provision
    
    
    (1,195
    )
    
    
    (785
    )
    
    
    (9,466
    )Income tax provision
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (1,195
    )
    
    $
    (785
    )
    
    $
    (9,466
    )Net loss per common share,basic and diluted
    
    $
    (0.09
    )
    
    $
    (0.06
    )
    
    $
    (0.73
    )Weighted average number of
common shares outstanding,basic and diluted
    
    
    14,041
    
    
    
    13,896
    
    
    
    12,940
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Chartwell International, Inc.
(A Development Stage Company)
 
 Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
 CumulativeFor the three
    
    
    For the three
    
    
    from March 3,months ended
    
    
    months ended
    
    
    2005, InceptionSeptember 30,
    
    
    September 30,
    
    
    to September 30,2007
    
    
    2006
    
    
    2007Cash flows from operating activitiesNet loss
    
    $
    (1,195
    )
    
    $
    (785
    )
    
    $
    (9,466
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activitiesDepreciation and amortization
    
    
    92
    
    
    
    39
    
    
    
    450Gain (loss) on sale of property and equipment
    
    
    93
    
    
    
    (59
    )
    
    
    (41
    )Gain on settlement of note receivable
    
    
    
    
    
    
    
    
    
    
    (35
    )Gain on settlement of note payable
    
    
    
    
    
    
    
    
    
    
    (39
    )Fair value of stock options granted
    
    
    78
    
    
    
    34
    
    
    
    304Fair value of common stock issued for services
    
    
    
    
    
    
    
    
    
    
    1,683Increase (decrease) in cash from changes in assets
and liabilitiesAccounts receivable
    
    
    (142
    )
    
    
    (915
    )
    
    
    (647
    )Deposits
    
    
    8
    
    
    
    (17
    )
    
    
    (528
    )Prepaid and other
    
    
    (18
    )
    
    
    (51
    )
    
    
    (65
    )Accounts payable and accrued liabilities
    
    
    569
    
    
    
    836
    
    
    
    1,944Due to related parties
    
    
    
    
    
    
    33
    
    
    
    14Net cash used in operating activities
    
    
    (515
    )
    
    
    (885
    )
    
    
    (6,426
    )Cash flows from investing activitiesPurchase of property and equipment
    
    
    
    
    
    
    (135
    )
    
    
    (3,794
    )Purchase of capacity and loading rights
    
    
    
    
    
    
    (1,504
    )
    
    
    (1,509
    )Proceeds on sale of property and equipment
    
    
    119
    
    
    
    69
    
    
    
    348Exercise of mining rights options
    
    
    
    
    
    
    
    
    
    
    (102
    )Deposits
    
    
    5
    
    
    
    
    
    
    
    (110
    )Investment in affiliate
    
    
    
    
    
    
    
    
    
    
    (100
    )Restricted cash
    
    
    (4
    )
    
    
    
    
    
    
    (283
    )Cash paid in acquisitions
    
    
    
    
    
    
    
    
    
    
    (4,597
    )Cash received in acquisitions
    
    
    
    
    
    
    
    
    
    
    82Net cash provided by (used in) investing activities
    
    
    120
    
    
    
    (1,570
    )
    
    
    (10,065
    )Cash flows from financing activitiesProceeds from notes receivable
    
    
    
    
    
    
    
    
    
    
    635Payment for notes receivable
    
    
    
    
    
    
    
    
    
    
    (275
    )Borrowings under notes payable
    
    
    
    
    
    
    47
    
    
    
    5,375Repayments under notes payable
    
    
    (56
    )
    
    
    (59
    )
    
    
    (1,141
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    10,925Issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    1,500Redemption of common stock
    
    
    
    
    
    
    
    
    
    
    (275
    )Net cash provided by (used in) financing activities
    
    
    (56
    )
    
    
    12
    
    
    
    16,744Net increase (decrease) in cash
    
    
    (451
    )
    
    
    (2,467
    )
    
    
    253Cash and cash equivalents, beginning of period
    
    
    704
    
    
    
    3,018
    
    
    
    Cash and cash equivalents, end of period
    
    $
    253
    
    
    $
    551
    
    
    $
    253
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Chartwell International, Inc.
(A Development Stage Company)
Consolidated Statement of Cash Flows (continued)
(In thousands)
(Unaudited)
 CumulativeFor the three
    
    
    For the three
    
    
    from March 3,months ended
    
    
    months ended
    
    
    2005, InceptionSeptember 30,
    
    
    September 30,
    
    
    to September 30,2007
    
    
    2006
    
    
    2007Supplemental disclosure of cash flow informationCash paid during the period for:Interest
    
    $
    94
    
    
    $
    106
    
    
    $
    1,053Income taxes
    
    $
    
    
    
    $
    
    
    
    $
    Non-Cash Investing and Financing ActivitiesPreferred 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
    
    $
    (26
    )
    
    $
    (28
    )
    
    $
    (276
    )
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Chartwell International, Inc.
 
 Notes to Interim Consolidated Financial Statements
 September 30, 2007
 (Unaudited)
 Note 1. Basis of Presentation and Accounting Policies
   Principles of Consolidation
  Use of Estimates
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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 1. Basis of Presentation and Accounting Policies (continued)
 Revenue Recognition
  Comprehensive Income
  Stock Based Compensation
   8




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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 1. Basis of Presentation and Accounting Policies (continued)
 Recently Issued Accounting Pronouncements
 SFAS No. 123(R)
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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 2. Description of Business
      10




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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 2. Description of Business (continued)
       11




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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 3. Acquisitions
 E-Rail Logistics, Inc.
  Determining Whether a
Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business
  Cash
    
    $
    2,867,0001,201,981 shares of common stock @ $1.50 per share
    
    
    1,803,000Assumption of debt
    
    
    1,822,000Total Purchase Price
    
    $
    6,492,000
  Cash
    
    $
    26,000Other Assets
    
    
    5,000Property and Equipment
    
    
    108,000Land
    
    
    1,008,000Mineral Rights
    
    
    1,606,000Option for Mineral Rights
    
    
    3,739,000Total Assets Acquired
    
    $
    6,492,000
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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 3. Acquisitions (continued)
 E-Rail Logistics, Inc. (continued)
     13




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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 3. Acquisitions (continued)
 Cranberry Creek Railroad, Inc.
     February 10, 2006Cash
    
    $
    56,000Accounts receivable
    
    
    2,000Land
    
    
    726,000Property and equipment
    
    
    1,524,000Accounts payable and accrued liabilities
    
    
    (78,000
    )Purchase price
    
    $
    2,230,000
 Note 4. Restricted Cash
  14




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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 5. Capacity and Loading Rights
   Note 6. Line of Credit
  Note 7. Notes Payable
  15




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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 7. Notes Payable (continued)
        16




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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 7. Notes Payable (continued)
   Note 8. Equity
 Common Stock Transactions
     Preferred Stock Transactions
  17




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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2006
(Unaudited)
 Note 8  Equity (continued)
 Preferred Stock Transactions
  Stock Options
    18




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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2006
(Unaudited)
 Note 8  Equity (continued)
 Stock Options (continued)
  Three-month period endedSeptember 30, 2007Weighted AverageAll Options
    
    Shares
    
    Exercise PriceOutstanding at beginning of period
    
    
    950,000
    
    
    $
    2.62Options granted
    
    
    
    
    
    
    Options forfeited
    
    
    
    
    
    
    Options expired
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    Outstanding at end of period
    
    
    950,000
    
    
    $
    2.62Exercisable at end of period
    
    
    558,334
    
    
    $
    2.60
 Three-month period endedSeptember 30, 2007Weighted AverageNon-vested Options
    
    Shares
    
    Exercise PriceNon-vested at beginning of period
    
    
    558,334
    
    
    $
    2.60Options granted
    
    
    
    
    
    
    Options forfeited
    
    
    
    
    
    
    Options expired
    
    
    
    
    
    
    Options vested
    
    
    
    
    
    
    Non-vested at end of period
    
    
    558,334
    
    
    $
    2.60
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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 9. Related Party Transactions
    Note 10. Contingencies and Commitments
 Letter of Credit
  Legal Proceedings
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Chartwell International, Inc.
Notes to Interim Consolidated Financial Statements (continued)
September 30, 2007
(Unaudited)
 Note 10. Contingencies and Commitments (continued)
 Legal Proceedings (continued)
    Leases
  21




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
   Background and Corporate History
    22




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23




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Subsequent Event
  Critical Accounting Policies and Estimates
  Revenue Recognition.
 Stock Based Compensation.
  24




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Impairment of Long-Term Assets.
 Results of Operations
 Comparison of the Three Months Ended September 30, 2007 and September 30, 2006
  Revenues
  Cost of Revenues
  Gross Profit (Loss)
  General and Administrative Expenses
  
    
    salaries and employee expenses of $411,000
    
    engineering and other consulting services of $85,000
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
    
    rents, utilities, telephone and office related expenses of $63,000
    
    professional fees of $97,000
    
    investment and management consulting fees of $30,000
    
    travel expenses of $26,000
    
    depreciation and amortization expense of $92,000.
  
    
    salaries and employee expenses of $249,000
    
    engineering and other consulting services of $109,000
    
    rents, utilities, telephone and office related expenses of $64,000
    
    professional fees of $164,000
    
    investment and management consulting fees of $30,000
    
    travel expenses of $57,000
    
    depreciation and amortization expense of $39,000.
  Other Income and Expenses
  Income Tax Provision
  Liquidity and Capital Resources
    26




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Off-Balance Sheet Transactions
  27




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Factors That May Affect Our Business, Future Operating Results and Financial Condition
  Recent change of control and discontinued prior operations do not give a historical basis upon
which to evaluate our current efforts, and the change in strategic direction has certain inherent
risks.
 We have changed our business focus and we intend to acquire operations unrelated to past
activities, and there are no assurances that management will be successful in acquiring a business
or integrating the operations successfully, which would impair our value further.
 We may be unable to execute our acquisition growth strategy.
 We face challenges in attracting and retaining a qualified and experienced management team.
 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.
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Additional factors may negatively impact our acquisition growth strategy.
 We may not be able to attract the required capital, through either debt or equity financings,
in order to complete strategic acquisitions or make required purchases of capital equipment needed
to conduct our operations efficiently, either of which could adversely affect our financial
condition and ability to execute on our business plan.
 There may be undisclosed liabilities in the businesses that we acquire which we fail or are
unable to discover which could have a material adverse effect on our operations and business
conditions.
 Larger competitors may compete with us for acquisition targets, making it more difficult for
us to acquire businesses that fit within our business strategy, or increasing the cost of making
such acquisitions, either of which could negatively affect our performance.
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The success of our railroad operations is dependant on our continuing relationships with Class
I carriers.
 Much of the freight transported by railroads moves on railcars supplied by other independent
providers.
 We may be partially depending on government funding for our existing and future capital
projects and track rehabilitation.
 Our planned mining operations are inherently subject to conditions that could affect levels of
production and production costs at particular mines for varying lengths of time and could reduce
our profitability.
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We have reclamation obligations and if we are required to honor reclamation obligations that
have been assumed by previous mine operators, we could be required to expend greater amounts than
we currently anticipate, which could affect our profitability in future periods.
 Defects in title or loss of any leasehold interests in our properties could limit our ability
to mine these properties or result in significant unanticipated costs.
 Estimates of proven and probable reserves are subject to considerable uncertainty.
 We may not be able to raise sufficient capital or generate sufficient cash flow to meet our
debt service requirements.
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Regulatory approval to develop or expand our landfills and transfer stations may be delayed or
denied.
 Seasonal changes may adversely affect our businesses and operations.
 Risks Related to our Industry
 Strategic growth through acquisitions is dependent on our ability to internally grow our
logistics infrastructure, and there is no historical perspective to validate our belief that we can
attain certain gross margins competitively, the failure of which would adversely affect our
financial condition.
 Rapid growth could create risks of over leverage or undercapitalization to meet our
obligations, which could materially impact our financial condition and strategy.
 The rail-based transportation, transloading and intermodal logistics businesses are highly
competitive, and we will face competition from companies that may be better financed than we are,
which could impact our ability to compete for customers and employees.
 We compete directly with other modes of transportation, including motor carriers, ships and
barges.
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Our railroad and real estate ownership are subject to significant governmental regulation and
our failure to comply with such regulations could have a material adverse effect on our operating
results, financial condition and liquidity.
 Rising
fuel costs could adversely affect our business.
 As part of our railroad operations, we may transport hazardous materials.
 Increased consolidation and competition within the coal industry may adversely affect our
ability to sell coal, and excess production capacity in the industry could put downward pressure on
coal prices.
 We may be unable to obtain and renew permits necessary for our operations, which would reduce
our production, cash flow and profitability.
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Our operations may impact the environment or cause exposure to hazardous substances, and our
properties may have environmental contamination, which could result in material liabilities to us.
 Our inability to maintain landfill permits and licenses could adversely affect financial
resources or require significant expenditures to comply with the regulations, either of which could
materially affect gross margins and cash flow from operations.
 Judicial and administrative proceedings related to our business are routine, and penalties,
fines, or remediation orders could materially impact our cash flow or working capital from
time-to-time, which could impair our business plan objectives.
 We may be subject to liability for any environmental damage that our solid waste facilities
may cause, including damage to neighboring landowners or residents, particularly as a result of the
contamination of soil, groundwater or surface water, and especially drinking water, which could
materially impact our cash flow in any given period.
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Various states have enacted, or are considering enacting, laws that restrict the disposal,
within the state, of solid waste generated outside the state.
 Downturns in the U.S. economy have had and may have an adverse impact on our industries and
hence our operating results.
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Item 3. Controls and Procedures
   36




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PART II. OTHER INFORMATION
  SIGNATURES IMMEDIATELY FOLLOW
 
 SIGNATURES
  CHARTWELL INTERNATIONAL, INC.(Registrant)Date: November 14, 2007
    
By:
    /s/ Imre EszenyiImre Eszenyi, Acting President(Principal Executive Officer) and Chairman of the BoardDate: November 14, 2007
    
By:
    /s/ Paul BiberkrautPaul Biberkraut, Chief Financial and Administrative Officer(Principal Financial Officer and
Principal Accounting Officer)
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Exhibits
 31.1
    
    
    Certificate of Principal Executive Officer pursuant to Section 302 of
The Sarbanes-Oxley Act of 200231.2
    
    
    Certificate of Principal Financial Officer and Principal Accounting
Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 200232
    
    
    Certificate of Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer pursuant to Section 906 of
The Sarbanes-Oxley Act of 2002
 38