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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
October 31, 2000
Commission File Number 0-27395
CHARTWELL INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 95-3979080
State (or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5275 DTC PARKWAY, SUITE 110, ENGLEWOOD, CO 80111
(Address of principal executive offices including zip code)
(303) 804-0100
(Registrant's telephone number including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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.
Yes X No
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Number of shares outstanding of Common Stock, $0.001 par value outstanding at
December 13, 2000: 60,272,512
(This Form 10-QSB includes 9 pages)
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CHARTWELL INTERNATIONAL, INC.
FORM 10-QSB
For the Quarterly Period Ended
October 31, 2000
INDEX
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Page
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet at October 31, 2000 3
Consolidated Statements of Operations for the Three-Month Periods Ended
October 31, 2000 and 1999 4
Consolidated Statements of Cash Flows for the Three-Month Periods Ended
October 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION 8
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHARTWELL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
As of October 31, 2000
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October 31, 2000
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ASSETS
Current assets:
Cash $ 23,454
Trade credits 77,357
Receivables from related parties 79,243
Prepaids and other 79,742
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Total current assets 259,796
Investment in real estate 1,195,655
Mineral properties 2,014,800
Recruiting systems and publishing rights, net 1,414,090
Receivables from related parties 58,750
Other assets, net 71,668
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Total assets $ 5,014,759
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 101,313
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Total current liabilities 101,313
Long-term debt:
Due to related parties 1,441,594
Other notes payable 600,000
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Total liabilities 2,142,907
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Stockholders' Equity:
Preferred Series B Stock (preferable in liquidation
to other classes of stock 300,000
Preferred Series A Stock (preferable to common
stock and equal to Preferred Series C stock
in liquidation) 600
Preferred Series C Stock (preferable to common
stock and equal to Preferred Series A stock
in liquidation) 506,120
Common stock; $.001 par value; 90,000,000
shares authorized; 60,272,512 shares issued 60,272
Additional paid-in capital 10,754,401
Accumulated deficit (8,742,656)
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2,878,737
Less, Treasury stock (68,850 shares) at cost (6,885)
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Total stockholders' equity 2,871,852
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Total liabilities and stockholders' equity $ 5,014,759
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CHARTWELL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE-MONTH PERIODS ENDED
OCTOBER 31, 2000 AND 1999
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Three-Month Periods Ended
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October 31, October 31,
2000 1999
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Management and license fee revenue $ 37,500 $ 31,486
Operating expenses:
General and administrative 67,919 70,797
Depreciation and amortization 32,455 26,174
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Total operating expenses 100,374 96,971
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Operating loss (62,874) (65,485)
Other income (expense):
Interest (expense), net (50,956) (58,957)
Miscellaneous income (expense), net 1,578 (359)
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Total other income (expense), net (49,378) (59,316)
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Net loss $ (112,252) $ (124,801)
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Basic and diluted (loss) per share $ (0.00) $ (0.00)
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Weighted average number of common shares outstanding 60,272,512 60,272,512
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The accompanying notes are an integral part of the consolidated financial
statements.
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CHARTWELL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three-Month Periods Ended
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October 31, October 31,
2000 1999
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Cash Flows From Operating Activities:
Net loss $(112,252) $(124,801)
Adjustments to reconcile net loss to net cash
(used for) operating activities:
Depreciation and amortization 32,455 26,174
Changes in assets and liabilities:
Decrease in trade credits 16,182 7,201
(Increase) in due from related parties (5,797) (25,789)
(Increase) decrease in prepaid and other assets 49,040 (4,224)
(Decrease) increase in accounts payable and accruals (36,797) 60,453
Increase in interest due to related parties 33,607 37,850
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Net cash (used for) operating activities (23,562) (23,136)
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Cash Flows From Investing Activities:
None -- --
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-- --
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Cash Flows From Financing Activities:
Proceeds from borrowings from related parties -- 41,401
Repayments on borrowings from third parties -- (27,081)
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-- 14,320
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Net (decrease) in cash (23,562) (8,816)
Cash, beginning of period 47,016 15,574
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Cash, end of period $ 23,454 $ 6,758
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SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
No significant noncash investing or financing activities occurred during the
three-month periods ended October 31, 2000 and 1999.
The accompanying notes are an integral part of the consolidated financial
statements.
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CHARTWELL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - UNAUDITED INTERIM INFORMATION
Chartwell International, Inc. (the "Company") and its wholly-owned subsidiaries
prepare and report financial results using a fiscal year ending July 31. This
Form 10-QSB includes the consolidated financial statements of the Company and
its wholly-owned subsidiaries. The Company's consolidated financial statements
included in this Form 10-QSB for the interim periods ended October 31, 2000 and
1999, include all normal recurring adjustments which, in the opinion of the
Company, are necessary for a fair statement of the results of operations,
financial position, and cash flows as of the dates and for the periods
presented. The Company's operating results for the three-month period ended
October 31, 2000 are not necessarily indicative of the results that may be
expected for the fiscal year ending July 31, 2001.
The Notes to Consolidated Financial Statements included in the Company's July
31, 2000 Form 10-KSB should be read in conjunction with these consolidated
financial statements.
NOTE 2 - PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Chartwell International, Inc., its wholly owned subsidiary, National College
Recruiting Association, Inc. (NCRA), and Chartwell's 30% owned entity College
Bound Student Alliance, Inc. (CBSA) (f/k/a SportsStar Marketing, Inc.), which is
accounted for by the equity method commencing August 1, 1998. Previously, CBSA
was a consolidated subsidiary. Intercompany accounts and transactions have been
eliminated.
NOTE 3 - PREPAID EXPENSES
In October 2000, the Company extended an agreement with a third party firm to
provide public relations services to the Company. The third party firm was
compensated by the extension of the term of warrants and options to purchase
1,903,000 shares of common stock at an exercise price of $.05 per share. The
terms of these warrants and options were extended from October 11, 2000 to
October 11, 2001. The Company has recorded this as an increase to additional
paid in capital of $84,000, which is the fair market value of the services to be
provided during the one-year additional term, as indicated by the third-party
firm. This amount is being amortized to expense over the one-year period over
which the services are performed.
NOTE 4 - MODIFICATIONS TO ARRANGEMENTS WITH CBSA
Effective August 1, 2000, the Company entered into a modification of its
arrangements with CBSA. Under the modified arrangement, CBSA will pay to the
Company a minimum monthly license fee of $12,500 or, if greater, 1.5% of CBSA's
revenues up to $10,000,000 and 1% of annual revenues of CBSA in excess of
$10,000,000. The Company has agreed to defer collection of $6,250 per month of
the minimum license fee depending on the cash flow circumstances of CBSA. This
arrangement will exist for 12 years from August 1, 2000 or, if earlier, until
total payments to the Company have equaled $2,120,000 plus 10% annual interest
on the unpaid amount of this total, at which point CBSA will not be required to
make any more license payments to the Company. As a result, the Company has
reduced the remaining useful lives of its recruiting systems and publishing
rights, net, to 12 years from August 1, 2000, and is amortizing the net book
value of these assets over 12 years from that date. This change in useful life
increased amortization expense for the three months ended October 31, 2000 by
$5,814.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATIONS AND LIQUIDITY
At October 31, 2000, the Company's working capital ratio was 2.6 to 1 based on
current assets of $259,796 and current liabilities of $101,313.
In the statement of cash flows, net cash (used) in operations was $(23,562) in
2000 and $(23,136) in 1999.
In 1999, the Company had net cash provided by financing activities of $14,320 as
a result of net cash advanced by related parties.
On July 31, 2000, the Company's 30% owned entity, College Bound Student
Alliance, Inc. (CBSA) acquired College Resources Management, Inc., (CRM) for
stock and notes. CRM is profitable and has contributed significantly to reducing
CBSA's cash operating losses in the quarter ended October 31, 2000.
ANALYSIS OF STATEMENT OF OPERATIONS
Management and license fee revenue increased to $37,500 in 2000 from $31,486 in
1999 primarily because of the implementation of the new arrangement with CBSA,
effective August 1, 2000, pursuant to which the Company receives a minimum
monthly license fee of $12,500.
General and administrative expenses were at approximately the same level with
$67,919 in 2000 and $70,797 in 1999.
Depreciation and amortization expense increased to $32,455 in 2000 from
$26,174 in 1999 as a result of the change in useful life of recruiting
systems and publishing rights, net.
Interest expense decreased to $50,956 in 2000 from $58,957 in 1999 primarily as
a result of reductions in the Company's interest bearing debt that occurred
prior to the beginning of the current fiscal year, but after the end of the
first quarter of the prior fiscal year.
FORWARD LOOKING INFORMATION
From time to time, the Company or its representatives have made or may make
forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but not limited to, press releases, oral
statements made with the approval of an authorized executive officer or in
various filings made by the Company with the Securities and Exchange Commission.
Words or phrases "will likely result", "are expected to", "will continue", "is
anticipated", "estimate", "project or projected", or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). The Company
wishes to ensure that such statements are accompanied by meaningful cautionary
statements, so as to maximize to the fullest extent possible the protections of
the safe harbor established in the Reform Act. Accordingly, such statements are
qualified in their entirety by reference to and are accompanied by the following
7
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discussion of certain important factors that could cause actual results to
differ materially from such forward-looking statements.
Management is currently unaware of any trends or conditions that could have a
material adverse effect on the Company's consolidated financial position, future
results of operations, or liquidity.
However, investors should also be aware of factors that could have a negative
impact on the Company's prospects and the consistency of progress in the areas
of revenue generation, liquidity, and generation of capital resources. These
include: (i) variations in the mix of corporate trading and trade exchange
revenue, (ii) possible inability of the Company to attract investors for its
equity securities or otherwise raise adequate funds from any source, (iii)
increased governmental regulation of the barter business, (iv) a decrease in the
cash fees and commissions realized by the Company based upon a substantial
decrease in corporate or retail trade exchange transactions, and (v) unfavorable
outcomes to litigation to which the Company may become a party in the future.
The risks identified here are not all inclusive. Furthermore, reference is also
made to other sections of this report that include additional factors that could
adversely impact the Company's business and financial performance. Moreover, the
Company operates in a very competitive and rapidly changing environment. New
risk factors emerge from time to time and it is not possible for Management to
predict all of such risk factors, nor can it assess the impact of all such risk
factors on the Company's business or the extent to which any factor or
combination of factors may cause actual results to differ materially from those
contained in any forward-looking statements. Accordingly, forward-looking
statements should not be relied upon as a prediction of actual results.
PART II. OTHER INFORMATION
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CHARTWELL INTERNATIONAL, INC.
December 15, 2000 By: /s/ Janice A. Jones
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Date Janice A. Jones, Chief Executive Officer
8
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION
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27 Financial Data Schedule for the Three Months Ended October 31, 2000
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