UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





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


For
the quarterly period ended March 31, 2009


o
              
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 f


For
the transition period from
to





Commission
File No. 000-51342





CHARTWELL
INTERNATIONAL, INC.


(Exact
name of small business issuer as specified in its charter)





NEVADA
                    
                    95-3979080(State
      or Other Jurisdiction of
                    
                    (I.R.S.
      Employer Identification No.)Incorporation
      or Organization)





7637
Leesburg Pike


Falls
Church, Virginia 22043


(Address
of Principal Executive Offices)





(703) 635-7980


(Issuer’s
Telephone Number)





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
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yesþ 
Noo





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.





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





Indicate
by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yeso Noþ





As
of May 11, 2009 the Registrant had 9,494,013
outstanding shares of common stock, $0.001 par value per share.









CHARTWELL
INTERNATIONAL, INC.


FORM
10-Q


MARCH 31,
2009


INDEX





PAGEPart
      I. FINANCIAL INFORMATIONItem 1.
      Financial Statements
                                
                                3Consolidated
      Balance Sheets at March 31, 2009 (Unaudited) and June 30,
      2008
                                
                                3Consolidated
      Statements of Stockholders’ Equity at March 31, 2009
      (Unaudited)
                                
                                4Consolidated
      Statements of Operations (Unaudited) for the three and nine months ended
      March 31, 2009 and 2008, and, from inception on March 3, 2005 to
      March 31, 2009
                                
                                5Consolidated
      Statements of Cash Flows (Unaudited) for the nine months ended March 31,
      2009 and 2008, and, from inception on March 3, 2005 to March 31,
      2009
                                
                                6Notes
      to Interim Consolidated Financial Statements
                                
                                8Item 2.
      Management’s Discussion and Analysis of Financial Conditions and Results
      of Operation
                                
                                16Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                                
                                22Item 4.
      Controls and Procedures
                                
                                22Part
      II. OTHER INFORMATION
                                
                                23Item 1.
      Legal Proceedings
                                
                                23Item
      1A. Risk Factors
                                
                                23Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                                
                                26Item 3.
      Defaults Upon Senior Securities
                                
                                26Item
      4. Submission of Matters to a Vote of Security Holders
                                
                                26Item
      5. Other Information
                                
                                26Item
      6. Exhibits
                                
                                27Signatures
                                
                                28Exhibit
      Index
                                
                                29





2





PART
1. FINANCIAL INFORMATION


Item 1. Financial
Statements


Chartwell
International, Inc.


(A
Development Stage Company)


Consolidated
Balance Sheets


(In
thousands)


March 31,
                                                                              
                                                                              
                                                                              June 30,2009
                                                                              
                                                                              
                                                                              2008(Unaudited)AssetsCurrent
      AssetsCash
                                                                              
                                                                              $
                                                                              78
                                                                              
                                                                              
                                                                              $
                                                                              182Accounts
      receivable
                                                                              
                                                                              
                                                                              14
                                                                              
                                                                              
                                                                              
                                                                              19Deposits
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              
                                                                              391Prepaid
      expense and other
                                                                              
                                                                              
                                                                              32
                                                                              
                                                                              
                                                                              
                                                                              19Total
      current assets
                                                                              
                                                                              
                                                                              124
                                                                              
                                                                              
                                                                              
                                                                              611Long-term
      AssetsProperty
      and equipment, net
                                                                              
                                                                              
                                                                              357
                                                                              
                                                                              
                                                                              
                                                                              2,125Land
                                                                              
                                                                              
                                                                              1,030
                                                                              
                                                                              
                                                                              
                                                                              1,192Mineral
      rights
                                                                              
                                                                              
                                                                              5,447
                                                                              
                                                                              
                                                                              
                                                                              5,447Investment,
      at cost
                                                                              
                                                                              
                                                                              123
                                                                              
                                                                              
                                                                              
                                                                              123Other
                                                                              
                                                                              
                                                                              9
                                                                              
                                                                              
                                                                              
                                                                              9Total
      long-term assets
                                                                              
                                                                              
                                                                              6,966
                                                                              
                                                                              
                                                                              
                                                                              8,896Total
      Assets
                                                                              
                                                                              $
                                                                              7,090
                                                                              
                                                                              
                                                                              $
                                                                              9,507Liabilities
      and Stockholders’ EquityCurrent
      LiabilitiesAccounts
      payable and accrued liabilities
                                                                              
                                                                              $
                                                                              312
                                                                              
                                                                              
                                                                              $
                                                                              345Due
      to related parties
                                                                              
                                                                              
                                                                              70
                                                                              
                                                                              
                                                                              
                                                                              19Notes
      payable
                                                                              
                                                                              
                                                                              2,105
                                                                              
                                                                              
                                                                              
                                                                              2,007Total
      current liabilities
                                                                              
                                                                              
                                                                              2,487
                                                                              
                                                                              
                                                                              
                                                                              2,371Long-term
      LiabilitiesNotes
      payable, net of current portion
                                                                              
                                                                              
                                                                              3,061
                                                                              
                                                                              
                                                                              
                                                                              4,264Total
      long-term liabilities
                                                                              
                                                                              
                                                                              3,061
                                                                              
                                                                              
                                                                              
                                                                              4,264Total
      Liabilities
                                                                              
                                                                              
                                                                              5,548
                                                                              
                                                                              
                                                                              
                                                                              6,635Commitments
      and ContingenciesStockholders’
      EquityPreferred
      stock, $0.001 par value, 25,000 shares authorized.Series A
      Preferred shares, $0.001 par value, 20 shares designated and 2 issued and
      outstanding, at redemption value
                                                                              
                                                                              
                                                                              2,000
                                                                              
                                                                              
                                                                              
                                                                              2,000Common
      shares, $0.001 par value, 100,000 shares authorized 18,988 and 14,051
      shares issued and outstanding at March 31, 2009 and June 30, 2008,
      respectively
                                                                              
                                                                              
                                                                              19
                                                                              
                                                                              
                                                                              
                                                                              14Additional
      paid in capital
                                                                              
                                                                              
                                                                              14,625
                                                                              
                                                                              
                                                                              
                                                                              14,182Accumulated
      deficit
                                                                              
                                                                              
                                                                              (15,102
                                                                              )
                                                                              
                                                                              
                                                                              (13,324
                                                                              )Total
      stockholders’ equity
                                                                              
                                                                              
                                                                              1,542
                                                                              
                                                                              
                                                                              
                                                                              2,872Total
      Liabilities and Stockholder’s Equity
                                                                              
                                                                              $
                                                                              7,090
                                                                              
                                                                              
                                                                              $
                                                                              9,507




See
accompanying notes to unaudited interim consolidated financial
statements





3





Chartwell
International, Inc and Subsidiaries


(A
Development Stage Company)


Consolidated
Statements of Stockholders' Equity


(in
thousands)


(Unaudited)





Preferred
                                      
                                      
                                      Preferred
                                      
                                      
                                      Common
                                      
                                      
                                      Common
                                      
                                      
                                      Additional
                                      
                                      
                                      
                                      
                                      
                                      TotalStock
                                      
                                      
                                      Stock
                                      
                                      
                                      Stock
                                      
                                      
                                      Stock
                                      
                                      
                                      Paid-in
                                      
                                      
                                      Accumulated
                                      
                                      
                                      Stockholders'Shares
                                      
                                      
                                      $
                                      
                                      
                                      Shares
                                      
                                      
                                      $
                                      
                                      
                                      Capital
                                      
                                      
                                      Deficit
                                      
                                      
                                      EquityBalance,
      June 30, 2008
                                      
                                      
                                      2
                                      
                                      
                                      $
                                      2,000
                                      
                                      
                                      
                                      14,051
                                      
                                      
                                      $
                                      14
                                      
                                      
                                      $
                                      14,182
                                      
                                      
                                      $
                                      (13,324
                                      )
                                      
                                      $
                                      2,872Fair
      value of stock options granted
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      15
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      15Common
      stock issued for services
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      4,937
                                      
                                      
                                      
                                      5
                                      
                                      
                                      
                                      424
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      429Swing
      sale profit on common stock
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      4
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      4Net
      loss for the period ended March 31, 2009
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      (1,778
                                      )
                                      
                                      
                                      (1,778
                                      )Balance,
      March 31, 2009
                                      
                                      
                                      2
                                      
                                      
                                      $
                                      2,000
                                      
                                      
                                      
                                      18,988
                                      
                                      
                                      $
                                      19
                                      
                                      
                                      $
                                      14,625
                                      
                                      
                                      $
                                      (15,102
                                      )
                                      
                                      $
                                      1,542





(See
accompanying notes to unaudited interim consolidated financial
statements)





4




Chartwell
International, Inc.


(A
Development Stage Company)


Consolidated
Statement of Operations


(In
thousands, except per share data)


(Unaudited)





CumulativeFor the three
                                
                                
                                For the three
                                
                                
                                For the nine
                                
                                
                                For the nine
                                
                                
                                from March 3,months ended
                                
                                
                                months ended
                                
                                
                                months ended
                                
                                
                                months ended
                                
                                
                                2005, InceptionMarch 31,
                                
                                
                                March 31,
                                
                                
                                March 31,
                                
                                
                                March 31,
                                
                                
                                to March2009
                                
                                
                                2008
                                
                                
                                2009
                                
                                
                                2008
                                
                                
                                31, 2009Revenues
                                
                                $
                                38
                                
                                
                                $
                                130
                                
                                
                                $
                                132
                                
                                
                                $
                                2,491
                                
                                
                                $
                                10,032Cost
      of revenues
                                
                                
                                -
                                
                                
                                
                                (247
                                )
                                
                                
                                -
                                
                                
                                
                                2,489
                                
                                
                                
                                9,221Gross
      profit
                                
                                
                                38
                                
                                
                                
                                377
                                
                                
                                
                                132
                                
                                
                                
                                2
                                
                                
                                
                                811General
      and administrative expenses
                                
                                
                                302
                                
                                
                                
                                1,616
                                
                                
                                
                                1,258
                                
                                
                                
                                4,354
                                
                                
                                
                                13,127Loss
      (gain) on sale of property andequipment
                                
                                
                                60
                                
                                
                                
                                211
                                
                                
                                
                                60
                                
                                
                                
                                418
                                
                                
                                
                                384Gain
      on sale of capacityand
      loading rights
                                
                                
                                -
                                
                                
                                
                                (137
                                )
                                
                                
                                -
                                
                                
                                
                                (137
                                )
                                
                                
                                (147
                                )Finance
      placement fees
                                
                                
                                61
                                
                                
                                
                                -
                                
                                
                                
                                277
                                
                                
                                
                                -
                                
                                
                                
                                1,336Loss
      from operations
                                
                                
                                (385
                                )
                                
                                
                                (1,313
                                )
                                
                                
                                (1,463
                                )
                                
                                
                                (4,633
                                )
                                
                                
                                (13,,889
                                )Other
      income (expense)Interest,
      net
                                
                                
                                (91
                                )
                                
                                
                                (116
                                )
                                
                                
                                (315
                                )
                                
                                
                                (359
                                )
                                
                                
                                (1,467
                                )Gains
      on notes settlements
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                254Total
      other income (expense)
                                
                                
                                (91
                                )
                                
                                
                                (116
                                )
                                
                                
                                (315
                                )
                                
                                
                                (359
                                )
                                
                                
                                (1,213
                                )Loss
      before income tax provision
                                
                                
                                (476
                                )
                                
                                
                                (1,429
                                )
                                
                                
                                (1,778
                                )
                                
                                
                                (4,992
                                )
                                
                                
                                (15,102
                                )Income
      tax provision
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Net
      loss
                                
                                $
                                (476
                                )
                                
                                $
                                (1,429
                                )
                                
                                $
                                (1,778
                                )
                                
                                $
                                (4,992
                                )
                                
                                $
                                (15,102
                                )Net
      loss per common share,basic
      and diluted
                                
                                $
                                (0.03
                                )
                                
                                $
                                (0.10
                                )
                                
                                $
                                (0.11
                                )
                                
                                $
                                (0.36
                                )
                                
                                $
                                (1.09
                                )Weighted
      average number ofcommon
      shares outstanding,basic
      and diluted
                                
                                
                                18,958
                                
                                
                                
                                14,051
                                
                                
                                
                                16,822
                                
                                
                                
                                14,045
                                
                                
                                
                                13,858





See
accompanying notes to unaudited interim consolidated financial
statements





5




Chartwell
International, Inc.


(A
Development Stage Company)


Consolidated
Statement of Cash Flows


(In
thousands)


(Unaudited)




CumulativeFor
      the nine
                                                
                                                
                                                For
      the nine
                                                
                                                
                                                from
      March 3,months
      ended
                                                
                                                
                                                months
      ended
                                                
                                                
                                                2005,
      InceptionMarch
      31,
                                                
                                                
                                                March
      31,
                                                
                                                
                                                to
      March 31,2009
                                                
                                                
                                                2008
                                                
                                                
                                                2009Cash
      flows from operating activitiesNet
      loss
                                                
                                                $
                                                (1,778
                                                )
                                                
                                                $
                                                (4,992
                                                )
                                                
                                                $
                                                (15,102
                                                )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activitiesDepreciation
      and amortization
                                                
                                                
                                                21
                                                
                                                
                                                
                                                199
                                                
                                                
                                                
                                                597Impairment
      of asset value
                                                
                                                
                                                470
                                                
                                                
                                                
                                                2,255
                                                
                                                
                                                
                                                2,725Loss
      (gain) on sale of property and equipment
                                                
                                                
                                                60
                                                
                                                
                                                
                                                418
                                                
                                                
                                                
                                                384Gain
      on sale of capacity and loading rights
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (137
                                                )
                                                
                                                
                                                (147
                                                )Gain
      on settlement of note receivable
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (35
                                                )Gain
      on settlement of note payable
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (219
                                                )Stock
      compensation
                                                
                                                
                                                18
                                                
                                                
                                                
                                                204
                                                
                                                
                                                
                                                452Fair
      value of common stock issued for services
                                                
                                                
                                                425
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                2,109Increase
      (decrease) in cash from changes in assets and
    liabilitiesAccounts
      receivable
                                                
                                                
                                                5
                                                
                                                
                                                
                                                491
                                                
                                                
                                                
                                                (12
                                                )Deposits
                                                
                                                
                                                391
                                                
                                                
                                                
                                                11
                                                
                                                
                                                
                                                —Prepaid
      expense and other
                                                
                                                
                                                (13
                                                )
                                                
                                                
                                                13
                                                
                                                
                                                
                                                (31
                                                )Accounts
      payable and accrued liabilities
                                                
                                                
                                                280
                                                
                                                
                                                
                                                (691
                                                )
                                                
                                                
                                                897Due
      to related parties
                                                
                                                
                                                51
                                                
                                                
                                                
                                                (1
                                                )
                                                
                                                
                                                70Net
      cash provided by (used in) operating activities
                                                
                                                
                                                (69
                                                )
                                                
                                                
                                                (2,231
                                                )
                                                
                                                
                                                (8,312
                                                )Cash
      flows from investing activitiesPurchase
      of property and equipment
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (3,794
                                                )Purchase
      of capacity and loading rights
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (1,509
                                                )Proceeds
      on sale of property and equipment
                                                
                                                
                                                1,380
                                                
                                                
                                                
                                                391
                                                
                                                
                                                
                                                1,999Proceeds
      on sale of capacity and loading rights
                                                
                                                
                                                —
                                                
                                                
                                                
                                                1,445
                                                
                                                
                                                
                                                1,455Exercise
      of mining rights options
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (102
                                                )Deposits
                                                
                                                
                                                —
                                                
                                                
                                                
                                                6
                                                
                                                
                                                
                                                (109
                                                )Investment
      in affiliate
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (123
                                                )Restricted
      cash
                                                
                                                
                                                —
                                                
                                                
                                                
                                                279
                                                
                                                
                                                
                                                —Cash
      paid in acquisitions
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (4,597
                                                )Cash
      received in acquisitions
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                82Net
      cash provided by (used in) investing activities
                                                
                                                
                                                1,380
                                                
                                                
                                                
                                                2,121
                                                
                                                
                                                
                                                (6,698
                                                )Cash
      flows from financing activitiesProceeds
      from notes receivable
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                635Payment
      for notes receivable
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (275
                                                )Borrowings
      under notes payable
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                5,375Repayments
      under notes payable
                                                
                                                
                                                (1,419
                                                )
                                                
                                                
                                                (163
                                                )
                                                
                                                
                                                (2,800
                                                )Issuance
      of common stock
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                10,924Short
      swing sale profit on common stock
                                                
                                                
                                                4
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                4Issuance
      of preferred stock
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                1,500Redemption
      of common stock
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (275
                                                )Net
      cash provided by (used in) financing activities
                                                
                                                
                                                (1,415
                                                )
                                                
                                                
                                                (163
                                                )
                                                
                                                
                                                15,088




See
accompanying notes to unaudited interim consolidated financial
statements





6




Chartwell
International, Inc.


(A
Development Stage Company)


Consolidated
Statement of Cash Flows (continued)


(In
thousands)


(Unaudited)




CumulativeFor the nine
                                                                        
                                                                        
                                                                        For the nine
                                                                        
                                                                        
                                                                        from March 3,months ended
                                                                        
                                                                        
                                                                        months ended
                                                                        
                                                                        
                                                                        2005, InceptionMarch 31,
                                                                        
                                                                        
                                                                        March 31,
                                                                        
                                                                        
                                                                        to March 31,2008
                                                                        
                                                                        
                                                                        2007
                                                                        
                                                                        
                                                                        2008Net
      increase (decrease) in cash
                                                                        
                                                                        
                                                                        (104
                                                                        )
                                                                        
                                                                        
                                                                        (273
                                                                        )
                                                                        
                                                                        
                                                                        78Cash
      and cash equivalents, beginning of period
                                                                        
                                                                        
                                                                        182
                                                                        
                                                                        
                                                                        
                                                                        704
                                                                        
                                                                        
                                                                        
                                                                        —Cash
      and cash equivalents, end of period
                                                                        
                                                                        $
                                                                        78
                                                                        
                                                                        
                                                                        $
                                                                        431
                                                                        
                                                                        
                                                                        $
                                                                        78Supplemental
      disclosure of cash flow informationCash
      paid during the period for:Interest
                                                                        
                                                                        $
                                                                        99
                                                                        
                                                                        
                                                                        $
                                                                        207
                                                                        
                                                                        
                                                                        $
                                                                        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
                                                                        
                                                                        $
                                                                        (216
                                                                        )
                                                                        
                                                                        $
                                                                        (89
                                                                        )
                                                                        
                                                                        $
                                                                        (699
                                                                        )




See
accompanying notes to unaudited interim consolidated financial
statements





7




Chartwell
International, Inc.


Notes
to Interim Consolidated Financial Statements


March
31, 2009


(Unaudited)





Note
1. Basis of Presentation and Accounting Policies





Unaudited
Interim Financial Information. The accompanying unaudited interim consolidated
financial statements have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission (“SEC”) for the
presentation of interim financial information, but do not include all the
information and footnotes required by accounting principles generally accepted
in the United States of America. The balance sheet as of June 30, 2008 has
been derived from the audited consolidated financial statements of Chartwell
International, Inc. at that date. Unless stated otherwise, references in this
Form 10-Q to “we,” “us,” or “our” refer to Chartwell International,
Inc.





In the
opinion of our management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended March 31, 2009 and the operating results from inception on
March 3, 2005 through March 31, 2009 are not necessarily indicative of the
results that may be expected for the year ending June 30, 2009. Further, we
have had limited operations in all reporting periods through March 31, 2009. For
further information, refer to the financial statements included in our Annual
Report on Form 10-KSB filed on September 17, 2008.





Principles
of Consolidation





The
consolidated financial statements as of March 31, 2009 and for the three and
nine months ended March 31, 2009 include the accounts of Chartwell
International, Inc., and the operations of our wholly-owned subsidiaries:
Belville Mining Company, Inc. (“Belville”), Greater Ohio Resources, Inc.
(“Greater Ohio”), Greater Hudson Resources, Inc. (“Greater Hudson”), Hudson
Logistics, Inc. (“Hudson”), and Middletown and New Jersey Railway Company, Inc.
(“MNJ”). The consolidated financial statements for the three months ended March
31, 2008 include the accounts of Chartwell International, Inc. and the
operations of our wholly-owned subsidiaries Belville, Greater Ohio, Greater
Hudson, Hudson, Hudson Logistics Loading, Inc. (“HLL) and MNJ. Inter-company
accounts and transactions have been eliminated. The corporate charter of HLL was
surrendered on May 30, 2008.





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 assets 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 evaluations of long-term assets and the valuation of stock-based
compensation.





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
provided 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 completed 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 generate limited revenue from rail transportation and we
recognize revenue on the completion of transportation across our short line
railroad. Our credit terms are 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 revenue as we had one customer and we have not incurred any
losses since we began generating revenue in February 2006.





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 and December 31, 2008, our management identified certain railroad
equipment assets, and, land and related infrastructure associated with our MNJ
subsidiary 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





8




Chartwell
International, Inc.


Notes
to Interim Consolidated Financial Statements (Continued)


March
31, 2009


(Unaudited)





Note
1. Basis of Presentation and Accounting Policies (continued)





Impairment
of Long-Term Assets (continued)





and we
recorded write-downs totaling $2,725,000 ($894,000 at December 31, 2007,
$1,361,000 at March 31, 2008 and $470,000 at December 31, 2008) based on our
estimates of their market value. These write-downs were included in general and
administrative expenses on the Consolidated Statement of
Operations.





Stock
Based Compensation





On
February 8, 2006 our shareholders approved a stock based compensation plan
(the “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 fiscal year that began on
August 1, 2005, we adopted the accounting and disclosure provisions of 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 prior stock option grants outstanding
nor did the Company have a stock based compensation plan.





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 and March 31, 2009.





In May
2007, the FASB issued FSP 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 and March 31, 2009, we had
no accrued interest related to uncertain tax positions and no accrued
penalties.





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 use 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).  Adoption of this standard did not
have an impact on our financial statements at March 31, 2009.





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.  Adoption of this standard did not
have an impact on our financial statements at March 31, 2009.





9





Chartwell
International, Inc.


Notes
to Interim Consolidated Financial Statements (Continued)


March
31, 2009


(Unaudited)





Note
1. Basis of Presentation and Accounting Policies (continued)





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 141R 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.





Note
2. Description of Business





We are a
development stage holding company that was formed as a Nevada corporation in
1984. We, until March 31, 2009 and through our wholly-owned subsidiaries, were
providers of rail-based transportation. 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 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 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 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. (“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 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 rail-based transportation and
solid waste management industries. Most of our activities during the period from
March 3, 2005 to March 31, 2009 were dedicated to seeking acquisition
targets with viable on-going operations, or acquisition of assets, properties
and access rights that could be most synergistically combined and 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
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 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 solid waste landfill and other industrial uses. The
property principally contains coal, clay and limestone. We are only beginning
the permitting process, and cannot estimate at this time when operational use of
the property will begin. 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”), including its wholly-owned subsidiary, Middletown and
New Jersey Railway Company, Inc. (“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
current operations are limited and we had begun capital improvements and were
considering operational infrastructure alternatives to both increase the volume
of activity on the railroad as well as integrating the railroad with our other
developing operations.




10




Chartwell
International, Inc.


Notes
to Interim Consolidated Financial Statements (Continued)


March
31, 2009


(Unaudited)





Note
2. Description of Business (continued)





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.





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”). One agreement
is a Facility Capacity Agreement, which granted Hudson the right to utilize a
guaranteed amount of capacity at Greenwood’s railroad at Dundee Yard in Passaic,
New Jersey. The other agreement was a Railroad Car Loading Agreement, which
granted HLL the exclusive right to perform loading of bulk materials primarily
consisting of construction and demolition debris to railcars at Greenwood’s
railroad at Dundee Yard. As consideration for the assignment and assumption of
these agreements Hudson and HLL paid an aggregate of $1,475,000 and agreed to
either payoff or assume certain equipment loans and leases.  We
acquired the Facility Capacity Agreement and Railroad Car Loading 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 have
rail-based solid waste transportations 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.  The purchase price was deposited into an escrow account
upon the closing of the transaction 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. 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.





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.





Note
3. 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 March 31, 2009 the outstanding balances including accrued
interest were $1,039,000 of which $559,000 are due in one year or
less.





11




Chartwell
International, Inc.


Notes
to Interim Consolidated Financial Statements (Continued)


March
31, 2009


(Unaudited)





Note
3. 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 $3.165
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 March
31, 2009, the balance of the note payable plus accrued interest was $545,000 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 March 31, 2009, the
balance of the note payable plus accrued interest was $1,001,000 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 $2.30 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 1,200,000 shares of our
restricted common stock valued at $60,000. On January 31, 2009 we made a
principal repayment of $1,100,000. At March 31, 2009, the balance of the note
payable plus accrued interest was $1,731,000 and reported in the long-term
liabilities in the consolidated balance sheet.





On
October 23, 2006, we issued five 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 $3.00 per share at
any time. At March 31, 2009, the balance of the notes payable plus accrued
interest was $297,000 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 notes
are repaid or converted, and the principal balance plus any accrued interest can
be converted into our common stock at the rate of $2.50 per share at any time.
At March 31, 2009, the balance of the notes payable plus accrued interest was
$553,000 and reported in the long-term liabilities in the consolidated balance
sheet.





12




Chartwell
International, Inc.


Notes
to Interim Consolidated Financial Statements (Continued)


March
31, 2009


(Unaudited)





Note
4. Equity





Common
Stock Transactions





On
March 5, 2007 we redeemed 400,000 shares of common stock valued at $500,000
in exchange for a portion of the issuance of 1,950 Series A preferred
shares and related redemption rights as discussed below in Preferred Stock
Transactions. Our management valued the shares of common stock at $1.25 per
share, the then current stock market price.





On
March 12, 2007 we issued 400,000 shares of common stock to a consultant in
exchange for services valued at $1.00 per share or $400,000. Our management
valued the shares of common stock at the closing stock market price on the date
of the transaction.





On
December 31, 2007 we issued 10,000 shares of common stock to a consultant
in exchange for services valued at $0.04 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 575,000 shares of common stock to an officer and two
directors in exchange for services valued at $0.13 per share or $74,750, and we
issued 1,661,539 common shares to Orchestra for services valued $0.13 per share
or $215,000. 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
59,000 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.





On
January 1, 2009 we issued 1,500,000 shares of common stock to an officer and an
employee in exchange for services valued at $0.05 per share or $75,000, and we
issued 1,200,000 shares of common stock to an accredited foreign private
investor valued at $0.05 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.





Preferred
Stock Transactions





On
March 2, 2007, we designated 20,000 shares of our authorized Preferred
Stock as Series A Preferred Stock (“Series A Stock”). 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 had 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.





On
March 5, 2007 we issued 1,950 shares of Series A Stock for a purchase
price of $0.50 per share to a foreign accredited investor. Additionally, the
investor acquired the Redemption Right. The 1,950 shares of Series A Stock
and the Redemption Right were acquired for an aggregate purchase price of
$2,000,000 consisting of $1,500,000 in cash and 400,000 shares of our common
stock redeemed at a value of $500,000.





Stock
Options





Our 2006
Equity Incentive Plan (the “2006 Plan”) was approved by shareholders on
February 8, 2006, and permits the granting of up to 9% of our outstanding
shares of common stock and the number of common shares issuable from convertible
securities or 1,809,614 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 or the most recent
direct issuance of our common stock for cash closest to the date of the option
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).





13





Chartwell
International, Inc.


Notes
to Interim Consolidated Financial Statements (Continued)


March
31, 2009


(Unaudited)





Note
4. Equity (continued)





Stock
Options (continued)





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 on 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 requisite service period on a straight line
basis.





During
the nine-month periods ended March 31, 2009 and 2008 we did not grant any stock
options to our employees or directors.





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




Nine-month period endedAll Options
                          
                          March 31, 2009Weighted AverageShares
                          
                          Exercise PriceOutstanding
      at beginning of period
                          
                          
                          850,000
                          
                          
                          $
                          2.61Options
      granted
                          
                          
                          —
                          
                          
                          
                          —Options
      forfeited
                          
                          
                          —
                          
                          
                          
                          —Options
      expired
                          
                          
                          —
                          
                          
                          
                          —Options
      exercised
                          
                          
                          —
                          
                          
                          
                          —Outstanding
      at end of period
                          
                          
                          850,000
                          
                          
                          $
                          2.61Exercisable
      at end of period
                          
                          
                          816,667
                          
                          
                          $
                          2.61





Stock
Options





Nine-month period endedNon-vested Options
                              
                              March 31, 2009Weighted AverageShares
                              
                              Exercise PriceNon-vested
      at beginning of period
                              
                              
                              33,333
                              
                              
                              $
                              2.70Options
      granted
                              
                              
                              —
                              
                              
                              
                              —Options
      forfeited
                              
                              
                              —
                              
                              
                              
                              —Options
      expired
                              
                              
                              —
                              
                              
                              
                              —Options
      vested
                              
                              
                              —
                              
                              
                              
                              —Non-vested
      at end of period
                              
                              
                              33,333
                              
                              
                              $
                              2.70




The
weighted average remaining contractual lives of the options outstanding and
options exercisable at March 31, 2009, were 2.7 years and 2.7 years
respectively.





We
recorded $18,000 of compensation expense for employee and non-employee stock
options during the nine-month period ending March 31, 2009. At March 31, 2009
there was a total of $2,000 of unrecognized compensation costs related to
non-vested share-based compensation arrangements under the 2006 Plan. The cost
is expected to be recognized over a weighted average period of 0.1 years. The
total fair value of shares vested during the nine-month period ended March 31,
2009 was $0.





14




Chartwell
International, Inc.


Notes
to Interim Consolidated Financial Statements (Continued)


March
31, 2009


(Unaudited)





Note
5. 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 March 31, 2009 fees totaling
$90,000 have been incurred and paid in the current year to date. 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. On
August 11, 2008, we issued 1,661,539 common shares valued at $216,000 for
finance placement fees to Orchestra related to services for equity, debt,
acquisition and divestiture transactions.





On
September 2 and 3, 2008, our principal shareholder, Orchestra, involuntary sold
59,000 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 or our common stock.





We paid
$28,000 in cash for legal services to a law firm, during the nine months ended
March 31, 2009, at which a director of ours is a shareholder. As of March 31,
2009, we reported $70,000 due to this same firm for legal services.





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





Note
6. Contingencies and Commitments




Legal Proceedings





On June
14, 2007 U.S. Rail Corporation filed a lawsuit against us 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 intend to
legally dispute this claim, however we have recorded the total disputed amount
of the lawsuit as a current liability on our balance sheets.





On July
17, 2008, 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.





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.





Subsequent
Events





Subsequent
to our fiscal quarter ended March 31, 2009, on April 8, 2009, we effected a
one-for-two reverse split of our common stock. As a result of the reverse stock
split our company began trading under the new symbol “CWLT” on the OTC Bulletin
Board. Our company previously traded under the symbol “CHWN.”





Subsequent
to our quarter ended March 31, 2009, on April 6, 2009, we entered into an
Amendment to Secured Promissory Note with Chris Gordon whereby in exchange for
adding an additional $1,000 to the outstanding principal balance of the original
promissory note, Mr. Gordon agreed to extend the repayment date until July 15,
2009.  At March 31, 2009, the balance of the note payable plus accrued
interest was $1,001,000.





15


Subsequent to our fiscal quarter ended
March 31, 2009, on April 6, 2009 we and our wholly-owned subsidiary, MNJ,
consummated the sale of substantially all of MNJ’s assets used in connection
with operating our railroad freight transportation business serving central
Orange County in Middletown, New York to Middletown & New Jersey Railroad,
LLC. The purchase price was $386,900 and the assumption by Buyer of certain
liabilities.  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 MNJ we did not
operate our railroad freight transportation business in anticipation of closing
the asset sale.





Item 2.
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 quarterly
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





Overview





We are a
holding company that is currently in the development stage. We, until March 31,
2009 and through our wholly-owned subsidiaries, were providers of rail-based
transportation. During the current quarter we were involved in transactions to
sell our remaining rail-based assets that resulted in the cessation of all
active rail-based transportation operations. Our primary revenue-generating
business until January 24, 2008 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 through March 31, 2009 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 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 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.





Background
and Corporate History





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. (“Kingsley Capital”), 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 one of our
Directors 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 rail-based transportation and
solid waste management industries. Most of our activities during the period from
March 3, 2005 to March 31, 2009 were dedicated to seeking acquisition
targets with viable on-going operations, or acquisition of assets, properties
and access rights that could be most synergistically combined and 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
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 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 solid waste landfill and other 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
Belville 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 and New Jersey Railway Company, Inc. (“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 current operations are limited and we have begun
capital improvements and are considering operational infrastructure alternatives
to both increase the volume of activity on the railroad as well as integrating
the railroad with our other developing operations.




16





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.





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.





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”). One agreement
was a Facility Capacity Agreement, which granted Hudson the right to utilize a
guaranteed amount of capacity at Greenwood’s railroad at Dundee Yard in Passaic,
New Jersey. The other agreement was a Railroad Car Loading Agreement, which
grants HLL the exclusive right to perform loading of bulk materials primarily
consisting of construction and demolition debris to railcars at Greenwood’s
railroad at Dundee Yard. As consideration for the assignment and assumption of
these agreements Hudson and HLL paid an aggregate of $1,475,000. Additionally,
we incurred approximately $34,000 in legal fees bringing our capitalized cost of
these agreements to $1,509,000. We further agreed to either pay off or assume
certain equipment loans and leases.





We
acquired the Capacity and Loading 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 (“Perry”) for
the sale of substantially all of their assets to Perry for cash consideration of
$1,700,000, subject to an $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 have rail-based solid waste
transportations operations. We have assigned the 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.





We have
been exploring and continue to explore a variety of opportunities to increase
our cash position through selling strategic assets.  On September 26,
2008, we entered into a non-binding letter of intent to sell a controlling
interest in our company to Universal Property Development and Acquisition
Corporation (“UPDA”) through a series of transactions involving several asset
transfers.  On October 27, 2008, we were notified by UPDA that it
decided not to proceed with the contemplated transactions given the challenging
economic environment, significant declines in the global financial markets and
continuing credit and liquidity crisis.





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





Subsequent
to our fiscal quarter ended March 31, 2009, on April 8, 2009, we effected a
one-for-two reverse split of our common stock. As a result of the reverse stock
split we began trading under the new symbol “CWLT” on the OTC Bulletin Board.
Our company previously traded under the symbol “CHWN”





We are
continuing to pursue other opportunities to sell or lease our land and mineral
resource assets in Ohio.  We will consider all available and remaining
options to best address our immediate needs, including less desirable options
like the sale of certain assets at discounted values, bankruptcy proceedings or
voluntary dissolution.





Critical
Accounting Policies and Estimates





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.




17




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 generate limited revenue from rail transportation and we recognize
revenue on the completion of transportation across our short line railroad. Our
credit terms are 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
revenue 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 and the number of shares of common stock issuable from
convertible securities, or 1,809,614 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 on 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 requisite service life 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, and December 31, 2008 our
management identified certain railroad equipment assets, and, land and related
infrastructure associated with our MNJ subsidiary 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 $2,725,000 ($894,000 at December 31,
2007, $1,361,000 at March 31, 2008 and $470,000 at December 31, 2008) based on
our estimates of their market value.





Results
of Operations





Comparison
of the Three Months Ended March 31, 2009 and March 31, 2008





We
reported a net loss for the three months ended March 31, 2009 of $476,000 or
$0.03 per share on a basic and diluted basis as compared to a loss of $1,429,000
or $0.10 per share on a basic and diluted basis for the three months ended March
31, 2008.





Revenues





Revenues
for the three months ended March 31, 2009 of $38,000 consisted primarily of rail
transportation income from MNJ. We recorded revenue of $130,000, which consisted
primarily of solid waste disposal fees from our transload facility in Passaic,
New Jersey of $88,000 and rail transportation income from MNJ of $42,000 during
the three-month period ended March 31, 2008. The decline in our revenue during
the current period was the result of the sale of the assets and closure of our
transload facility on January 24, 2008.





Cost
of Revenues





Cost of
revenues for the three months ended March 31, 2009 was $0 or 0.0% of revenues as
compared to $(247,000) or -189.8% of revenues for the three months ended March
31, 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. We incurred a
negative cost of revenues during the three months ended March 31, 2008 as a
result of negotiation of one-time cost reductions primarily with landfill
vendors that related to charges incurred in prior quarters. 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.





18





Gross
Profit





We
incurred a gross profit of $38,000 for the three months ended March 31, 2009 as
compared to a gross profit of $377,000 for the three months ended March 31,
2008. Our gross profit as a percentage of revenue varied 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 $1,314,000 to $302,000 for the
three-month period ended March 31, 2009 from $1,616,000 for the three-month
period ended March 31, 2008. This decrease was primarily due the impairment in
the value of certain railroad assets of $1,361,000 that was recorded during the
three-month period ended March 31, 2008. General and administrative expenses
during the current period consisted primarily of the following:





•
            
            salaries
      and employee expenses of $115,000•
            
            engineering
      and other consulting services of $8,000•
            
            rents,
      utilities, telephone and office related expenses of
  $10,000•
            
            professional
      fees of $83,000





•
            
            investment
      and management consulting fees of $30,000•
            
            travel
      expenses of $8,000•
            
            depreciation
      and amortization expense of $5,000.





Loss from
operations for the three months ended March 31, 2009 also included losses for
the sale of property and equipment of $60,000 and financing fees of
$61,000.





General
and administrative expenses during the three-month period ended March 31, 2008
excluding the impairment in the value of assets of $1,361,000 consisted
primarily of the following:





•
                            
                            salaries
      and employee expenses of $142,000•
                            
                            engineering
      and other consulting services of $32,000•
                            
                            rents,
      utilities, telephone and office related expenses of
  $27,000




•
                        
                        professional
      fees of $94,000•
                        
                        investment
      and management consulting fees of $30,000•
                        
                        travel
      expenses of $16,000•
                        
                        depreciation
      and amortization expense of
$20,000.




Loss from
operations for the three months ended March 31, 2008 also included losses for
the sale of property and equipment of $211,000 and a gain on the sale of
capacity and loading rights of $137,000.





Other
Income and Expenses





Other
expenses decreased by $25,000 to $91,000 for the three-month period ended March
31, 2009 from $116,000 for the three-month period ended March 31, 2008. Other
expenses incurred during the current period consisted of net interest expense of
$91,000.  Other expenses for the three-month period ended March 31,
2008 consisted of net interest expense of $116,000.





Income
Tax Provision





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




19




Comparison
of the Nine months Ended March 31, 2009 and March 31, 2008





We
reported a net loss for the nine months ended March 31, 2009 of $1,778,000 or
$0.11 per share on a basic and diluted basis as compared to a loss of $4,992,000
or $0.36 per share on a basic and diluted basis for the three months ended March
31, 2008.





Revenues





Revenues
for the nine months ended March 31, 2009 of $132,000 consisted primarily of rail
transportation income from MNJ. We recorded revenue of $2,491,000, which
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
$116,000 during the nine-month period ended March 31, 2008. The decline in our
revenue during the current period was the result of the sale of the assets and
closure of our transload facility on January 24, 2008.





Cost
of Revenues





Cost of
revenues for the nine months ended March 31, 2009 was $0 or 0.0% of revenues as
compared to $2,489,000 or 99.9% of revenues for the nine months ended March 31,
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 (Loss)





We
incurred a gross profit of $132,000 for the nine months ended March 31, 2009 as
compared to a gross profit of $2,000 for the three months ended March 31, 2008.
Our gross profit as a percentage of revenue varied 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 $3,096,000 to $1,258,000 for the
nine-month period ended March 31, 2009 from $4,354,000 for the nine-month period
ended March 31, 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 nine-month period
ended March 31, 2008. General and administrative expenses during the current
period excluding the impairment in the value of certain railroad assets of
$470,000 consisted primarily of the following:





•
            
            salaries
      and employee expenses of $258,000•
            
            engineering
      and other consulting services of $15,000•
            
            rents,
      utilities, telephone and office related expenses of
  $29,000•
            
            professional
      fees of $178,000





•
            
            investment
      and management consulting fees of $60,000•
            
            travel
      expenses of $28,000•
            
            depreciation
      and amortization expense of
$21,000.





Loss from
operations for the nine months ended March 31, 2009 also included losses for the
sale of property and equipment of $60,000 and financing fees of
$277,000.





General
and administrative expenses during the nine-month period ended March 31, 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 $780,000•
                            
                            engineering
      and other consulting services of $160,000•
                            
                            rents,
      utilities, telephone and office related expenses of
    $127,000




20




•
              
              professional fees of
      $339,000•
              
              investment and management
      consulting fees of $90,000•
              
              travel expenses of
      $52,000•
              
              depreciation and amortization
      expense of $199,000.




Loss from
operations for the nine months ended March 31, 2008 also included losses for the
sale of property and equipment of $418,000, a gain on the sale of capacity and
loading rights of $137,000 and financing fees of $277,000 for services provided
in connection with equity, debt, acquisition and divestiture
transactions.





Other
Income and Expenses





Other
expenses decreased
by $44,000 to $315,000 for the nine-month period ended March 31, 2009 from
$359,000 for the nine-month period ended March 31, 2008. Other expenses incurred
during the current period consisted of net interest expense of $315,000. Other
expenses for the nine-month period ended March 31, 2008 consisted of net
interest expense of $359,000.





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 March
31, 2009, we had working capital deficiency of $2,363,000. We recorded a loss
for the nine-month period ended March 31, 2009 of $1,778,000 and we have
accumulated losses from inception on March 3, 2005 of $15,102,000. Given
our March 31, 2009 cash balance of $78,000 and our projected operating cash
requirements, we anticipate that our existing capital resources will not be
adequate to satisfy our cash flow requirements through June 30, 2009 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, we may have to explore a
sale of our company or assets, or dissolution proceedings.





The
following is a summary discussion of our cash flow for the nine months ended
March 31, 2009:





Cash
decreased by $104,000 from $182,000.





We
reported cash flow from operations of $69,000 consisting primarily of our loss
of $1,778,000 that was mostly offset by the decrease in deposits of $391,000,
the fair value of common stock issued for services of $425,000, the value of
asset impairments of $470,000, and, the increase in accounts payable and accrued
liabilities of $280,000.





Cash
provided by investing activities consists of the proceeds of the disposal of
property and equipment of $1,380,000.





Cash
used in financing activities totaled $1,415,000 consisting primarily of
principal payments on notes payable.





Our
long-term debt includes approximately $2,105,000 of principal payments and
$17,000 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 or force us into bankruptcy proceedings
or involuntary receivership.





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.





21


Item
3. Quantitative and
Qualitative Disclosures About Market Risk.





Not
Applicable.





Item 4.
Controls and
Procedures.





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 third 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.





There
were no changes in our internal controls over financial reporting that occurred
during the three months ended March 31, 2009 that have materially affected, or
are reasonably likely to materially affect, our internal controls over financial
reporting.





22


PART
II. OTHER INFORMATION





Item
1. Legal
Proceedings.





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. While the outcome of lawsuits and other proceedings
against us cannot be predicted with certainty, in the opinion of management,
individually or in the aggregate, no such lawsuits are expected to have a
material effect on our financial position or results of operations.





Item
1A. Risk
Factors.




The risks
described below are the ones we believe are the most important for you to
consider, these risks are not the only ones that we face. If events anticipated
by any of the following risks actually occur, our business, operating results or
financial condition could suffer and the trading price of our common stock could
decline.





Risks
Related to Our Acquisition Strategy and Operations







The duration or severity of the
current global economic downturn and disruptions in the financial markets, and
their impact on us, are uncertain. The basic materials industry generally
is highly cyclical, with prices subject to worldwide market forces of supply and
demand and other influences. The recent global economic downturn, coupled with
the global financial and credit market disruptions, have had a historic negative
impact on commodity prices. These events have contributed to an unprecedented
decline in commodity prices, weak end markets, a sharp drop in demand, increased
global inventories, and higher costs of borrowing and/or diminished credit
availability. While we believe that the long-term prospects for coal and other
minerals remain bright, we are unable to predict the duration or severity of the
current global economic and financial crisis. There can be no assurance that any
actions we may take in response to further deterioration in economic and
financial conditions will be sufficient. A protracted continuation or worsening
of the global economic downturn or disruptions in the financial markets could
have a further material adverse effect on our business, financial condition or
results of operations.





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 as well as our ability to successfully consolidate acquired
operations into our business. 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, presents 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. 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 recently
assembled 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 recently assembled 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 competitors pursuing the
same acquisition candidates may increase purchase prices for short-line
railroads 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.





23


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.
Additionally, growth through the development or acquisition of new properties,
railroads, transfer stations and other facilities, as well as the ongoing
maintenance of such properties, railroads, transfer stations or other
facilities, may require substantial capital expenditures. 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. For example, our
wholly-owned subsidiary, MNJ has been approved for a federal railroad
improvement grant; however, there are no assurances that we will be successful
in receiving such funding if we do not meet certain state and local regulatory
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.Our planned coal mining 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.





24


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.Mining
operations are planned 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.





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 March 31, 2009, we had indebtedness of $5,166,000 of
which $2,105,000 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 or force us
into bankruptcy proceedings or involuntary receivership.





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 National Mining
Association, 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.





25


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.





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.Companies in the short-line and regional rail are frequently subject in
the normal course of business to judicial and administrative proceedings
involving federal, state or local agencies or citizens’ groups. Governmental
agencies may seek to impose fines or penalties on us or to revoke or deny
renewal of our operating permits, franchises or licenses for violations or
alleged violations of environmental laws or regulations or require us to make
expenditures to remediate potential environmental problems relating to waste
disposed of or stored by us or our predecessors, or resulting from us or our
predecessors’ transportation operations. Any adverse outcome in these
proceedings could have a material adverse effect on our business, financial
condition and results of operations and may subject us to adverse
publicity.





Item
2.  Unregistered Sales of Equity
Securities and Use of Proceeds.





None





Item 3.
Defaults Upon Senior
Securities.





None




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





At the
Annual Meeting of Shareholders held on February 19, 2009 at the law offices of
Weintraub Genshlea Chediak, 400 Capitol Mall, Suite 1100, Sacramento,
California, the shareholders elected the directors of the Company and approved
the 1 for 2 reverse split of our company’s common stock.




Votes


Broker
      Non-Directors
                
                For
                
                
                Against
                
                
                Withheld
                
                
                Abstention
                
                
                VotesImre
      Eszenyi
                
                
                10,194,434
                
                
                
                —
                
                
                
                454,517
                
                
                
                —
                
                
                
                —Charles
      Srebnik
                
                
                10,483,629
                
                
                
                —
                
                
                
                165,322
                
                
                
                —
                
                
                
                —David
      Adams
                
                
                10,483,729
                
                
                
                —
                
                
                
                165,222
                
                
                
                —
                
                
                
                —1
      for 2 reverse stock split
                
                
                10,483,729
                
                
                
                591,676
                
                
                
                —
                
                
                
                35,409
                
                
                
                —





Item
5.  Other
Information





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





Subsequent
to our fiscal quarter ended March 31, 2009, on April 6, 2009, we entered into an
Amendment to Secured Promissory Note with Chris Gordon whereby in exchange for
adding an additional $1,000 to the outstanding principal balance of the original
promissory note, Mr. Gordon agreed to extend the repayment date until July 15,
2009.  At March 31, 2009, the balance of the note payable plus accrued
interest was $1,001,000.





Subsequent
to our fiscal quarter ended March 31, 2009, on April 6, 2009 we and our
wholly-owned subsidiary, MNJ, consummated the sale of substantially all of MNJ’s
assets used in connection with operating our railroad freight transportation
business serving central Orange County in Middletown, New York to Middletown
& New Jersey Railroad, LLC. The purchase price was $386,900 and the
assumption by Buyer of certain liabilities.  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.




26




Item
6.  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




27




SIGNATURES





Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.





CHARTWELL
      INTERNATIONAL, INC.
                      (Registrant)Date:
      May 11, 2009
                    By:
                    /s/
      Imre EszenyiImre
      Eszenyi, Acting President and Chairman ofthe
  Board(Principal
      Executive Officer)Date:
      May 11, 2009
                    By:
                    /s/
      Paul BiberkrautPaul
      Biberkraut, Chief Financial and
                      Administrative
      Officer(Principal
      Financial Officer and
                      Principal
      Accounting
Officer)





28





Exhibit
Index





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




29