Attached files

file filename
EX-32 - PRINCIPAL FINANCIAL OFFICERS SECTION 1350 CERTIFICATION - BLUE RIDGE REAL ESTATE COexhibit322.htm
EX-31 - PRINCIPAL FINANCIAL OFFICERS RULE 13A-14(A)/15D-14(A) CERTIFICATION - BLUE RIDGE REAL ESTATE COexhibit312.htm
EX-32 - PRINCIPAL EXECUTIVE OFFICERS SECTION 1350 CERTIFICATION - BLUE RIDGE REAL ESTATE COexhibit321.htm
EX-31 - PRINCIPAL EXECUTIVE OFFICERS RULE 13A-14(A)/15D-14(A) CERTIFICATION - BLUE RIDGE REAL ESTATE COexhibit311.htm
EXCEL - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COFinancial_Report.xls
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR8.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR26.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR16.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR21.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR3.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR6.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR5.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR2.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR7.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR1.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR9.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR4.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR28.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR29.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR18.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR12.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR10.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR24.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR22.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR20.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR31.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR17.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR13.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR14.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR15.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR23.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR30.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR11.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR25.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR27.htm
XML - IDEA: XBRL DOCUMENT - BLUE RIDGE REAL ESTATE COR19.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 2

FOR ANNUAL AND TRANSITION REPORTS PURSUANT

TO SECTIONS 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

(X)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THESECURITIES ACT OF 1934 For the fiscal year ended October 31, 2011

OR

(  )

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934     For the transition period from           to        


Commission File No. 0-2844 (Blue Ridge)

Commission File No. 0-2843 (Big Boulder)


BLUE RIDGE REAL ESTATE COMPANY

BIG BOULDER CORPORATION

(Exact name of Registrants as Specified in their Charters)


Pennsylvania

24-0854342 (Blue Ridge)24-0822326 (Big Boulder)

(State or other Jurisdiction of Incorporation or Organization)

I.R.S. Employer Identification Number:



P O Box 707

Route 940 and Moseywood Road

Blakeslee, Pennsylvania



18610

(Address of Principal Executive Office)

(Zip Code)

Registrants telephone number, including area code: (570) 443-8433

Securities registered pursuant to Section 12(b) of the Act: None

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

Common Stock, without par value, stated value $0.30 per combined share*

(Title of Class)

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.Yes  ¨ No  þ







Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ¨ No  þ

Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes  þ No  ¨

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).       þYES          ¨NO

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

     Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers or smaller reporting companies.  See 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   þ (Do not check if smaller reporting company)                Smaller reporting company   ¨

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of Act).  Yes  ¨ No  þ

The aggregate market value of common stock, without par value, stated value $0.30 per combined share, held by non-affiliates at April 30, 2011 (the last business day of the registrants most recently completed second fiscal quarter), was $7,770,375.  Such aggregate market value was computed by reference to the closing price of the common stock of the registrants on the over-the-counter bulletin board on April 30, 2011.  There is no established public trading market for the registrants stock.

The number of shares of common stock of the registrants classes of common stock outstanding as of January 27, 2012 was 2,450,424.

DOCUMENTS INCORPORATED BY REFERENCE

Specified portions of the registrants 2011 Annual Report to Shareholders for the fiscal year ended October 31, 2011 are incorporated by reference into Parts II and IV hereof.

Specified portions of the registrants definitive Proxy Statement to be used in connection with its 2011 Annual Meeting of Shareholders (the Proxy Statement), that were filed with the United States Securities and Exchange Commission (the SEC) on February 23, 2012 are incorporated by reference into Part III of this Annual Report on Form 10-K/A to the extent provided herein. Except as specifically incorporated by reference herein, the Proxy Statement is not to be deemed filed as part of this Annual Report on Form 10-K/A.

__________________

*Under a Security Combination Agreement between Blue Ridge Real Estate Company, Blue Ridge, and Big Boulder Corporation, Big Boulder (each referred to herein as a Company and together, the Companies) and under the bylaws of the Companies, shares of the Companies are combined into unit certificates, each certificate representing the same number of shares of each of the Companies.  Shares of each Company may be transferred only together with an equal number of shares of the other Company.  For this reason, a combined Blue Ridge/Big Boulder Form 10-K/A is being filed. Except as otherwise indicated, all information applies to both Companies.




ii




EXPLANATORY NOTE

Blue Ridge Real Estate Company (Blue Ridge) and Big Boulder Corporation (Big Boulder and together with Blue Ridge, the Companies or the Registrants) are filing this Amendment No. 2 on Form 10-K/A (the Second Amendment) to amend and restate the Annual Report on Form 10-K of the Companies for the fiscal year ended October 30, 2011, as originally filed with the Securities and Exchange Commission (the SEC) on January 30, 2012 (the Original Filing) and the Form 10-K/A Amendment No. 1 (the First Amendment), as filed with the SEC on January 30, 2012.   This Second Amendment is being filed to restate the Companies Combined Balance Sheet and Statement of Operations included in Exhibit 13.1 to the Original Filing and related disclosures (including Combined Summary of Selected Financial Data and Managements Discussion and Analysis of Financial Condition and Results of Operations) as of October 31, 2011 and 2010 and for the fiscal years ended October 31, 2011, 2010 and 2009 as discussed in Note 2 to the combined financial statements included in Item 8 of this Second Amendment and to restate Managements Report on Internal Control Over Financial Reporting and Disclosure Controls and Procedures included in Item 9A.

As discussed in the Companies Current Report on Form 8-K dated September 24, 2012, the Companies are restating the Combined Statement of Operations for all relevant periods in the Original Filing referenced above to include four properties in discontinued operations.  The restatement does not affect the Companies net income (loss) for the relevant periods.  The properties include:

1.

approximately 1 acre of land in Fort Collins, Colorado on which an Applebees restaurant was located, sold by Blue Ridge on September 30, 2011;

2.

1.2 acres of land in Wallisville, Texas on which a Jack in the Box restaurant was located, sold by Blue Ridge on November 30, 2011;

3.

201 acres of land comprising the Jack Frost Mountain Ski Area, sold by Blue Ridge on December 15, 2011; and

4.

approximately 110 acres of land comprising the Big Boulder Ski Area, sold by Big Boulder on December 15, 2011.

Although this Second Amendment supersedes the Original Filing and the First Amendment in their entirety, this Second Amendment only amends and restates Items 6, 7, 8 and 9A of Part II as a result of and to reflect the restatements and the treatment of the four properties as discontinued operations, and no other information in the Original Filing and First Amendment is amended hereby.  While the foregoing items have been updated, this amended report does not reflect any other events occurring after the Original Filing.  In addition, currently dated certifications from our Chief Executive Officer and Chief Financial Officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, are attached to this Second Amendment as Exhibits 31.1, 31.2, 32.1 and 32.2, respectively.  





iii



BLUE RIDGE REAL ESTATE COMPANY

BIG BOULDER CORPORATION

ANNUAL REPORT ON FORM 10-K For Fiscal Year Ended October 31, 2011 TABLE OF CONTENTS

Page


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

1

PART I


Item 1  Business

2


Item 1A  Risk Factors

6


Item 2  Properties

10


Item 3  Legal Proceedings

11


Item 4  Mine Safety Disclosures

11


PART II


Item 5  Market for Registrants Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities

11


Item 6  Selected Financial Data

13


Item 7  Managements Discussion and Analysis of Financial Condition and

Results of Operations

13


Item 7A  Quantitative and Qualitative Disclosures about Market Risk

22


Item 8  Financial Statements and Supplementary Data

22


Item 9  Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure

23


Item 9A  Controls and Procedures

23


Item 9B  Other Information

24







iv



PART III


Item 10  Directors, Executive Officers and Corporate Governance

24


Item 11  Executive Compensation

25


Item 12  Security Ownership of Certain Beneficial Owners and Management and

Related Stockholder Matters

25


Item 13  Certain Relationships and Related Transactions, and Director Independence

25


Item 14  Principal Accounting Fees and Services

25



PART IV


Item 15  Exhibits, Financial Statement Schedules

25




v




For convenience, references in this Annual Report on Form 10-K/A to we, us, our, and the Companies mean or relate to Blue Ridge Real Estate Company, Big Boulder Corporation and their subsidiaries.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are made based upon, among other things, our current assumptions, expectations and beliefs by management concerning future developments and their potential effect on us.  In some cases you can identify forward-looking statements where statements are preceded by, followed by or include the words believes, expects, anticipates, plans, future, potential, probably, predictions, continue or the negative of such terms or similar expressions.  All statements, other than statements of historical fact, regarding our strategy, future operations, financial position, estimated revenue, projected costs, projected savings, prospects, plans, opportunities and objectives constitute forward-looking statements, including but not limited to statements regarding the conducting of future construction in phases and the use of profits of such construction; the effect of accounting policies on significant judgments; the materiality of current legal proceedings with which we are involved; the current and future real estate market in the Pocono Mountains; the timing and outcome of our planned land development; contributions to our pension plan; our land development and infrastructure plans in and around Jack Frost Mountain and Big Boulder Lake and Ski Resort; our issuance of options and recognition of compensation expense; commencement of new development projects; acquisitions of income producing properties; land tract sales that are to be treated as tax deferred exchanges; the impact on our business of the land sales made in November and December 2011, and our anticipated cash needs.

These statements involve known and unknown risks, uncertainties and other factors that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.  Because forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including but not limited to:

·

Changes in market demand and/or economic conditions within our local region and nationally, including changes in consumer confidence, volatility of mortgage interest rates and inflation;

·

The status of the current and future real estate market in the Pocono Mountains;

·

Borrowing costs and our ability to generate cash flow to pay interest and scheduled debt payments as well as our ability to refinance such indebtedness;

·

Our ability to continue to generate sufficient working capital to meet our operating requirements;

·

Our ability to obtain and maintain approvals from local, state and federal authorities for on regulatory issues;

·

Our ability to provide competitive pricing to sell homes;

·

Our ability to achieve gross profit margins to meet operating expenses;

·

Fluctuations in the price of building materials;

·

Our ability to effectively manage our business;

·

Our ability to attract and retain qualified personnel in our business;

·

Our ability to negotiate leases for the future operations of our facilities;

·

Our relations with our controlling shareholder, including its continuing willingness to provide financing and other resources;

·

Actions by our competitors;

·

Effects of changes in accounting policies, standards, guidelines or principles; and

·

Terrorist acts, acts of war and other factors over which the Companies have little or no control.




1




As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report on Form 10-K/A will prove to be accurate.  Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material.  In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, if at all.  

We do not intend to update these forward-looking statements, to reflect circumstances or events that occur after the date of the forward-looking statements are made or to reflect the occurrence of unanticipated events except as required by law.  We qualify all the forward-looking statements contained in this Annual Report on Form 10-K/A by the cautionary statements referenced above.

PART I

ITEM 1.  BUSINESS

Blue Ridge Real Estate Company

Blue Ridge Real Estate Company, or Blue Ridge, was incorporated in Pennsylvania in 1911 and is believed to be one of the largest owners of investment property in Northeastern Pennsylvania.  At October 31, 2011, Blue Ridge owned 13,236 acres of land predominately located in the Pocono Mountains, along with 13 acres of land in various other states.  Of this acreage, 10,159 acres were held for investment, 3,090 acres were held for development.  Income is derived from these lands through leases, selective timbering by third parties, sales and other dispositions. Included in the properties owned by Blue Ridge are: the Jack Frost National Golf Course on 203 acres of land;89 acres of land in Northeast Land Company of which 3 acres are held for investment and 86 acres of land held for development; a commercial property comprised of 2.9 acres of vacant land; a shopping center with 9.4 acres of land; four residential investment properties; three retail stores, two of which are leased to Walgreen Company on 3.4 acres and one of which was leased to Jack in the Box on 1.2 acres.  On November 29, 2011, Blue Ridge sold the retail store which was leased to Jack in the Box on 1.2 acres of land.  All of these investment properties are more fully described under Item 2 below.

Jack Frost Mountain Company, a wholly-owned subsidiary of Blue Ridge, was incorporated in Pennsylvania in 1980 and commenced operations on June 1, 1981. It was created to lease and operate the Jack Frost Mountain Ski Area and to provide certain services to other facilities, such as the Snow Ridge resort community, and to operate recreational facilities located within the Jack Frost Mountain tract. The lease between Blue Ridge and Jack Frost Mountain Company for the Jack Frost Mountain Ski Area was terminated on November 30, 2005.  On December 1, 2005, Blue Ridge entered into a 28-year lease with JFBB Ski Areas Inc., an unrelated party and an affiliate of Peak Resorts, for the lease of the Jack Frost Mountain Ski Area.  JFBB Ski Areas Inc. operated the Jack Frost Mountain Ski Area and made monthly lease payments to Blue Ridge during the ski season (January to April).  On December 15, 2011, Blue Ridge sold the Jack Frost Mountain Ski Area on approximately 201 acres of land to JFBB Ski Areas, Inc. and the lease was terminated.  Revenue generated by the lease prior to its termination is included in the Real Estate Management/Rental Operations business segment.

Northeast Land Company, a wholly-owned subsidiary of Blue Ridge, was incorporated in Pennsylvania in 1967. The primary asset of this subsidiary is 89 acres of land in Northeast Pennsylvania of which 3 acres are held for investment and 86 acres are held for development.  Revenue for Northeast Land Company is derived from property leases.  Effective October 1, 2006, Mountain Resort Villas, an unrelated party and an affiliate of Appletree Management Group, Inc. purchased certain property management and rental management contracts from Northeast Land Company.  Mountain Resort Villas currently leases certain buildings from the Companies for use in the operation and maintenance of Northeast Land Companys former rental program. In April 2009, management closed the real estate sales office known as Jack Frost Big Boulder Real Estate located in our Blue Heron Community in Lake Harmony, Pennsylvania.  Effective April 24, 2009, the Companies signed an agreement with Pocono Resorts Realty, a well-known local real estate agency, pursuant to which Pocono Resorts Realty markets the Companies current home sale listings and the newly constructed homes at Big Boulder.  Northeast Land Company has no employees.

BRRE Holdings, Inc., a wholly-owned subsidiary of Blue Ridge, was incorporated in Delaware in 1986.  It was established for investment purposes.

Moseywood Construction Company, a wholly-owned subsidiary of Blue Ridge, was incorporated in Pennsylvania in May 2003 and commenced operations in November 2003.  It was primarily focused on facilitating land development




2




and expanding our real estate sales division.  Due to the downturn in the housing market, in July 2008 we stopped accepting new construction contracts for the Stoney Run Builders and Stoney Run Realty custom home division and closed the sales office located in Stroudsburg, Pennsylvania.  All of the signed contracts for custom built homes have been completed.

Coursey Commons Shopping Center, LLC, a wholly-owned subsidiary of Blue Ridge organized in Louisiana in May 2004, owns and leases the Coursey Commons Shopping Center, which is located on 9.4 acres of land in Baton Rouge, Louisiana.  Coursey Commons Shopping Center, LLC has no employees and is managed by Kimco Realty Corporation.

Boulder Creek Resort Company was incorporated in Pennsylvania in December 2004.  It was created to consolidate the branding and marketing of our properties in the Pocono Mountains as a single resort destination.

Jack Frost National Golf Course, Inc., a wholly-owned subsidiary of Blue Ridge, was incorporated in Pennsylvania in February 2005.  It operates the Jack Frost National Golf Course, which opened in the spring of 2007 and is managed by Billy Casper Golf, LLC, an unaffiliated third party.

Blue Ridge Acquisition Company, a wholly-owned subsidiary of Blue Ridge, was incorporated in Pennsylvania in March 2006.  It was created to facilitate the acquisition of investment properties.

Flower Fields Motel, LLC, a wholly-owned subsidiary of Blue Ridge organized in Pennsylvania in September 2006, owns certain commercial property, which consists of 2.9 acres of vacant land.  It has no employees and is managed by Blue Ridge Real Estate Company.

Blue Ridge WNJ, LLC, a wholly-owned subsidiary of Blue Ridge, was organized in New Jersey in May 2009 to own and lease a Walgreens Store in Toms River, New Jersey, which consists of 1.9 acres of land.  It has no employees and is managed by Blue Ridge Real Estate Company.

Blue Ridge WMN, LLC, a wholly-owned subsidiary of Blue Ridge, was organized in Minnesota in May 2009 to own and lease a Walgreens Store in White Bear Lake, Minnesota, which consists of 1.5 acres of land.  It has no employees and is managed by Blue Ridge Real Estate Company.

As of October 31, 2011, Blue Ridge employed 12 full-time employees and Jack Frost National Golf Course, Inc. employed one full time employee in its food and beverage department.  

Big Boulder Corporation

Big Boulder Corporation, or Big Boulder, was incorporated in Pennsylvania in 1949. At October 31, 2011, Big Boulders primary asset was 864 acres of land, which included a 175 acre lake, the Big Boulder Ski Area and the Boulder View Tavern (formerly known as the Mountains Edge Restaurant). Of the 864 acres, 560 acres were held for investment, and 304 acres were held for development. The principal source of revenue for Big Boulder is the sale of residential homes and real estate in close proximity to the Big Boulder Ski Area.  On December 1, 2005, Big Boulder entered into a 28-year lease with JFBB Ski Areas, Inc., an unrelated party and affiliate of Peak Resorts, for the lease of the Big Boulder Ski Area.  JFBB Ski Areas Inc. operated the Big Boulder Ski Area and made monthly lease payments to Big Boulder during the ski season (January to April).  On December 15, 2011, Big Boulder sold the Big Boulder Ski Area on approximately 110 acres of land to JFBB Ski Areas, Inc. and the lease was terminated.  Revenue generated by the lease prior to its termination is included in the Real Estate Management/Rental Operations business segment.

Lake Mountain Company, a wholly-owned subsidiary of Big Boulder, was incorporated in Pennsylvania in 1983 and commenced operations on June 1, 1983.  Lake Mountain Company currently leases the Lake Mountain Club which includes the recreational facility at Big Boulder Lake.  Effective March 30, 2007, we entered into a long-term lease for the operation of this facility with Appletree Management Group.  Revenue generated by this operation is now included in the Real Estate Management/Rental Operations business segment.

BBC Holdings, Inc., a wholly-owned subsidiary of Big Boulder, was incorporated in Delaware in 1986. It was established for investment purposes.

Big Boulder has no employees.




3




Strategy

Over the past 30 years, we have developed resort residential communities adjacent to the Jack Frost Mountain and Big Boulder Ski Areas located in Lake Harmony, Kidder Township, Pennsylvania.  These communities are located in the Pocono Mountains of Pennsylvania, a popular recreation destination for local and regional visitors, especially from the New York City and Philadelphia metropolitan areas.  The scenic hills and valleys of the Pocono Mountains offer many opportunities to enjoy outdoor activities such as golfing, fishing, hunting, skiing, snowboarding and other sport venues.

At October 31, 2011, we owned 14,100 acres of land in Northeast Pennsylvania along with 13 acres in various other states.  Of these land holdings, we designated 10,719 as held for investment, 3,394 acres as held for development.  It is expected that all of our planned developments will either be subdivided and sold as parcels of land, or be developed into single and multi-family housing.

The real estate industry is cyclical and is subject to numerous economic factors including general business conditions, changes in interest rates, inflation and oversupply of properties.  Any sustained period of weakness or weakening business or economic condition in the markets in which we currently operate or intend to do business or in related markets, such as those we have experienced, will impact the demand for the type of properties we intend to develop.

We maximize the value of our land holdings through recreational land leases for hunting and fishing.

With recent changes in management and in light of the economic environment, we will undertake a thoughtful review of our strategic plan and update our master development plan.  We have initiated a process of cataloging our land inventory and our oil, gas and mineral rights and are developing a long term portfolio strategy with a view to maximize shareholder value.  We will continue to opportunistically look at asset sales.

Business Segments

We currently operate in two business segments, which consist of Real Estate Management/Rental Operations and Land Resource Management.  Our business segments were determined from our internal organization and management reporting, which are based primarily on differences in services we provide.  Financial information about our segments can be found in Note 17 to our audited financial statements.  We previously operated in three business segments, the third being Summer Recreation Operations.  Effective April 30, 2010, results of operations for the golf course were reclassified to the Land Resource Management segment from the Summer Recreation Operations segment.  The Summer Recreation Operations segment no longer exists as a result of the reclassification.  Certain amounts in the Fiscal 2009 and 2010 combined financial statements have been reclassified to conform to the Fiscal 2011 presentation.

Real Estate Management/Rental Operations

Real Estate Management/Rental Operations consists of: investment properties leased to others located in Eastern Pennsylvania, New Jersey, Minnesota, Louisiana and Texas; recreational club activities and services to the trusts that operate resort residential communities; sales of investment properties; and rental of land and land improvements, which includes the leasing of the Jack Frost Mountain and Big Boulder Ski Areas.

Land Resource Management

Land Resource Management consists of: land sales; land purchases; timbering operations; the Jack Frost National Golf Course, and a real estate development division.  Timbering operations consist of selective timbering on our land holdings.  Contracts are entered into for parcels that have had the timber selectively marked.  We rely on the advice of our forester, who is engaged on a consulting basis and who receives a commission on each stumpage contract, for the timing and selection of certain parcels of land for timbering.  Our forester gives significant attention to protecting the environment and retaining the value of these parcels for future timber harvests.  The real estate development division is responsible for the residential land development activities which include overseeing the construction of single and multi-family homes and development of infrastructure.

Funds expended to date for real estate development have been primarily for infrastructure improvements and home construction in the Laurelwoods II and Boulder Lake Village communities.  Construction of 22 single family homes and four duplex homes in Laurelwoods II have been completed.  The construction of 18 condominium units within




4




Building J at Boulder Lake Village on Big Boulder Lake have been completed as well.  Other expenditures for our development projects in the planning phases include fees for architects, engineers, consultants, studies and permits.

Competition

Our Real Estate Management/Rental Operations segment faces competition from similar retail centers that are near our retail properties with respect to the renewal of leases and re-letting of space as leases expire.  Any new competitive properties that are developed close to our existing properties may impact our ability to lease space to creditworthy tenants.  Increased competition for tenants may require us to make capital improvements to properties that we would not have otherwise planned to make or may also have a downward impact on rental prices, which could adversely affect our results of operations.

Planned Real Estate Development

We have constructed 22 of 23 planned single family homes and eight of 44 duplex units in Phase I and Phase II of the Laurelwoods II community. In addition, we have constructed 18 of 144 planned condominium units at the Boulder Lake Village on Big Boulder Lake condominium community.  Of these projects, all of the single family homes, five of the duplex units and six of the condominium units have been sold.

Due to the sustained weakness of the housing market nationwide, we continue to monitor the progress of residential home sales within the Northeast region.  No new residential development projects until the market stabilizes.

For the fiscal year ended October 31, 2012, or Fiscal 2012, we intend to continue selective sales of land, some of which may be treated as 1031 tax deferred exchanges under the Internal Revenue Code of 1986, as amended.

We are also taking various steps to attract new home and land sale customers.  For example, purchasers who want to purchase newly constructed duplex homes in our Laurelwoods II community development and can make a down payment of at least 20%, have the option of financing their mortgage through Big Boulder Corporation with interest only payments for five years.  We are also offering to the purchasers of the Laurelwoods II duplex townhomes and Boulder Lake Village condominiums prepaid dues for a one year membership with the Lake Mountain Club and complimentary passes to the Jack Frost National Golf Course.  We are also offering to pay six months of homeowners association fees on behalf of any current homeowner in the Blue Heron, Midlake Condominium, Laurelwoods Community and Snow Ridge Village developments that provide a purchaser referral which results in the sale of an existing Laurelwoods II duplex home.  We are also offering financing opportunities for the purchase of selected tracts of land.

We also continue to generate revenue through the selective timbering of our land.  We rely on the advice of our forester, who is engaged on a consulting basis and who receives a commission on each stumpage contract, for the timing and selection of certain parcels of land for timbering.  Our forester gives significant attention to protecting the environment and retaining the value of these parcels for future timber harvests.  Our forester has completed an inventory of our timber resources to aid us in considering valuations before entering into future timber agreements.

Executive Officers of the Registrant

Name and Title

Age

Office Held Since

Bruce Beaty

     Chief Executive Officer and President

53

2011

Richard T. Frey

     Vice President and Chief Operating Officer

61

2012

Cynthia A. Van Horn     Chief Financial Officer and Treasurer

47

2012

Bruce Beaty has served as President and Chief Executive Officer of Blue Ridge and Big Boulder since his appointment on August 12, 2011.  Mr. Beaty has served as a Director of the Companies since April, 2006, and currently serves on the Boards of Directors Audit Committee.  In addition, Mr. Beaty has been the Managing Partner of Asterion Capital LLC, an investment management firm based in Stamford, Connecticut, since he founded the company in February 2004.




5




Richard T. Frey has served as Chief Operating Officer of Blue Ridge and Big Boulder since January 1, 2012.  Since October 2001, Mr. Frey has served as Vice President.  From 1992 until October 2001, Mr. Frey was employed as our Director of Food Services at both the Jack Frost Mountain and Big Boulder Ski Areas.  

Cynthia A.  Van Horn has served as the Companies Chief Financial Officer and Treasurer since January 1, 2012.  From October 1996 until December 31, 2011, Mrs. Van Horn served as Controller.  From November 1995 until October 1996 Mrs. Van Horn was employed as the Companies Accounting Manager.   

The executive officers are elected or appointed by our board of directors to serve until the election or appointment and qualification of their successors or their earlier death, resignation or removal.

ITEM 1A.  RISK FACTORS

Our business faces significant risks. Some of the following risks relate principally to our business and the industry and statutory and regulatory environment in which we operate. Other risks relate principally to the securities markets and ownership of our stock. The risks described below may not be the only risks we face. Additional risks that we do not yet know of or that we currently think are immaterial may also impair our business operations. If any of the events or circumstances described in the following risk factors actually occur, our business, financial condition or results of operations could suffer, and the trading price of our common stock could decline.

Risks Related to Our Business and Our Industry

We are exposed to risks associated with real estate development.

We have extensive real estate holdings near our mountain resorts and elsewhere in the United States.  The value of our real property and the revenue from related development activities may be adversely affected by a number of factors, including:

·

unexpected construction costs or delays;

·

government regulations and changes in real estate, zoning, land use, environmental or tax laws;

·

attractiveness of the properties to prospective purchasers and tenants;

·

local real estate conditions (such as an oversupply of space or a reduction in demand for real estate in an area);

·

competition from other available property or space;

·

potential liabilities under environmental and other laws;

·

our ability to obtain adequate insurance;

·

interest rate levels and the availability of financing; and

·

national and local economic climate.

A continued downturn in the demand for residential real estate, combined with the increase in the supply of real estate available for sale and declining prices, will continue to adversely impact our business.

The real estate development industry is cyclical in nature and is particularly vulnerable to shifts in regional and national economic conditions.  The United States housing market has suffered a dramatic downturn since July 2007.  The collapse of the housing market has contributed to the current recession in the national economy, which exerts further downward pressure on housing demand.  As a result, the supply of existing homes for sale has risen nationwide.  Resort vacation unit rental and ownership is a discretionary activity entailing relatively high costs, and a continued decline in the regional or national economies where we operate could adversely impact our real estate sales and revenues.  Accordingly, our financial condition could be adversely affected by a continued weakening in the regional or national economy.

If the market values of our home sites, our remaining inventory of completed homes and other developed real estate assets were to drop below the book value of those properties, we would be required to write-down the book value of those properties, which would have an adverse effect on our balance sheet and our earnings.

We have owned the majority of our land for many years, having acquired most of our land in the 1960s.  Consequently, we have a very low cost basis in the majority of our land holdings.  We have subdivided and developed parcels with infrastructure improvements and also constructed a golf course and clubhouse, which required significant capital expenditures.  Many of these costs are capitalized as part of the book value of the land development.  Adverse




6




market conditions, in certain circumstances, may require the book value of the real estate assets to be decreased, often referred to as a write-down or impairment.  A write-down of an asset would decrease the value of the asset on our balance sheet and would reduce our earnings for the period in which the write-down is recorded.

During 2011, we recorded total asset impairment costs of $1,178,651 which primarily related to the write-down of capitalized costs of two real estate projects due to current market conditions and the impairment of the direct financing lease which relates to the sale of the ski areas on December 15, 2011.  If market conditions were to continue to deteriorate, and the market values of our home sites, remaining homes held in inventory and other land developments were to fall below the book value of these assets, we could be required to take additional write-downs of the book value of those assets.

If we are not able to obtain suitable financing, our business and results of operations may decline.

Our business and earnings depend substantially on our ability to obtain financing for the development of our residential communities, whether from bank borrowings, public offerings or private placements of debt or equity.  Our revolving credit facilities mature in September 2012 and with approximately $20,770,000 of our long term debt due and payable at various times from December 2011 through August 2031.  Approximately 8,800,000 of that debt was paid with the proceeds of property sales which took place November 30, 2011 and December 15, 2011.

If we are not able to obtain suitable financing at reasonable terms or replace existing debt and credit facilities when they become due or expire, our costs for borrowings will likely increase and our revenues may decrease, or we could be precluded from continuing our operations at current levels.

If our net worth declines, we could default on our revolving credit facilities, which could have a material adverse effect on our financial condition and results of operation.

We have two revolving credit facilities available to provide a source of funds for operations, capital expenditures and other general corporate purposes.  The credit facilities contain financial covenants that we must meet on an annual basis.  These restrictive covenants require, among other things, that the Companies comply with consolidated debt to worth, debt service coverage and tangible net worth ratios.  The Companies did not meet the required debt service coverage ratio at October 31, 2011 and 2010 and have obtained waivers from the Bank for this covenant.  Future compliance with this covenant will be challenging if we continue to experience significant operating losses, asset impairments, abandonments, pension plan losses and other reductions in our net worth.

If we do not comply with the financial covenants, and cannot obtain covenant waivers from the Bank, we could have an event of default under our credit facility.  There can be no assurance that the bank will be willing to amend the facility to provide for more lenient terms prior to any such default, or that it will not charge significant fees in connection with any such amendment.  If we have borrowings under the facility at the time of a default, the bank may choose to terminate the facility or seek to negotiate additional or more severe restrictive covenants or increased pricing and fees.  We could be required to seek an alternative funding source, which may not be available at all or available on acceptable terms.  Any of these events could have a material adverse effect on our financial condition and results of operations.

Competition and market conditions relating to our real estate management operations could adversely affect our operating results.

We face competition from similar retail centers that are near our retail properties with respect to the renewal of leases and re-letting of space as leases expire. Any new competitive properties that are developed close to our existing properties also may impact our ability to lease space to creditworthy tenants. Increased competition for tenants may require us to make capital improvements to properties that we would not have otherwise planned to make or may also have a downward impact on rental prices. Any unbudgeted capital improvements could adversely affect our results of operations. Also, to the extent we are unable to renew leases or re-let space as leases expire, it would result in decreased cash flow from tenants and could adversely affect our results of operations.

Our retail properties are subject to adverse market conditions, such as population trends and changing demographics, income, sales and property tax laws, availability and costs of financing, construction costs and weather conditions that may increase energy costs, any of which could adversely affect our results of operations. If the sales of stores operating at our properties were to decline significantly due to economic conditions, the risk that our tenants will be unable to fulfill the terms of their leases or will enter into bankruptcy may increase. Economic and market conditions have




7




a substantial impact on the performance of our anchor and other tenants and may impact the ability of our tenants to make lease payments and to renew their leases. If, as a result of such tenant difficulties, our properties do not generate sufficient income to meet our operating expenses, including debt service, our results of operations would be adversely affected.

Our business is subject to heavy environmental and land use regulation.

We are subject to a wide variety of federal, state and local laws and regulations relating to land use and development and to environmental compliance and permitting obligations, including those related to the use, storage, discharge, emission and disposal of hazardous materials.  Any failure to comply with these laws could result in capital or operating expenditures or the imposition of severe penalties or restrictions on our operations that could adversely affect our present and future resort operations and real estate development.  In addition, these laws and regulations could change in a manner that materially and adversely affects our ability to conduct our business or to implement desired expansions and improvements to our facilities.

We are subject to litigation in the ordinary course of business.

We are, from time to time, subject to various legal proceedings and claims, either asserted or unasserted. Any such claims, whether with or without merit, could be time-consuming and expensive to defend and could divert managements attention and resources. While management believes we have adequate insurance coverage and accrued loss contingencies for all known matters, we cannot assure that the outcome of all current or future litigation will not have a material adverse effect on us.

Implementation of existing and future legislation, rulings, standards and interpretations from the FASB or other regulatory bodies could affect the presentation of our financial statements and related disclosures.

Future regulatory requirements could significantly change our current accounting practices and disclosures. Such changes in the presentation of our financial statements and related disclosures could change the interpretation or perception of our financial position and results of operations.

If we are unable to retain our key executive personnel and hire additional personnel as required, our business and prospects for growth could suffer.

We believe that our operations and future development are dependent upon the continued services of our key executive personnel.  Moreover, we believe our future success will depend in large part upon our ability to attract, retain and motivate highly skilled management employees.  If one or more members of our management team or other key personnel become unable or unwilling to continue in their present positions and if additional key personnel cannot be hired as needed, our business and prospects for growth could be materially adversely affected.

The cyclical nature of the forest products industry could adversely affect our timbering operations.

Our results of operations are affected by the cyclical nature of the forest products industry.  Historical prices for logs and wood products have been volatile, and we, like other participants in the forest products industry, have limited direct influence over the time and extent of price changes for logs and wood products. The demand for logs and wood products is affected primarily by the level of new residential construction activity and, to a lesser extent, repair and remodeling activity and other industrial uses. The demand for logs is also affected by the demand for wood chips in the pulp and paper markets. These activities are, in turn, subject to fluctuations due to, among other factors:

·

changes in domestic and international economic conditions;

·

interest rates;

·

population growth and changing demographics; and

·

seasonal weather cycles (e.g., dry summers, wet winters).

Decreases in the level of residential construction activity generally reduce demand for logs and wood products. This results in lower revenues, profits and cash flows in our Land Resources Management segment. In addition, industry-wide increases in the supply of logs and wood products during favorable price environments can also lead to downward pressure on prices. Timber owners generally increase production volumes for logs and wood products during favorable price environments. Such increased production, however, when coupled with even modest declines in demand for these products in general, could lead to oversupply and lower prices.




8




Risks Related to Our Common Stock

The exercise of outstanding options may dilute your ownership of our common stock.

As of January 27, 2012, options to acquire 14,000 shares of our common stock were outstanding; all of which are exercisable at per share prices of $39.00, with a weighted average exercise price of $39.00.

We do not expect to pay dividends on our common stock.

Although we have previously declared and paid dividends on our common stock in the past, we do not anticipate declaring or paying any dividends in the foreseeable future. We plan to retain any future earnings to finance the continued expansion and development of our business. As a result, our dividend policy could depress the market price for our common stock.

We are effectively controlled by Kimco Realty Services, Inc., and other shareholders have little ability to influence our business.

As of January 27, 2012, Kimco Realty Services, Inc., a wholly-owned subsidiary of Kimco Realty Corporation, owned at least 1,425,154 shares, or approximately 58% of our outstanding voting stock. Kimco Realty Services is able to exercise significant control over all matters requiring shareholder approval, including the election of directors and approval of significant corporate actions, such as mergers and other business combination transactions.  This concentration of ownership may also have the effect of delaying or preventing a change in control over us unless it is supported by Kimco Realty Services.  Accordingly, your ability to influence us through voting your shares is very limited.

Mr. Michael J. Flynn, the Chairman of our board of directors, was also President, Chief Operating Officer and Vice Chairman of the board of directors of Kimco Realty Corporation until his retirement on December 31, 2008.  In addition, Mr. Patrick M. Flynn, who served as one of our directors and was our President and Chief Executive Officer until his resignation on August 12, 2011, was also a Managing Director of Real Estate at Kimco Realty Corporation.  Finally, Mr. Milton Cooper, who serves as one of our directors, also serves as Chief Executive Officer and Chairman of the board of directors of Kimco Realty Corporation.

Our common stock is thinly traded. Our stock price may fluctuate more than the stock market as a whole.

As a result of the thin trading market for our stock, its market price may fluctuate significantly more than the stock market as a whole or the stock prices of similar companies.  Of the 2,450,424 shares of our common stock outstanding as of January 27, 2012, approximately 42% of such shares are beneficially owned by persons other than Kimco Realty Services, our controlling shareholder.  Without a larger float, our common stock will be less liquid than the stock of companies with broader public ownership, and, as a result, the trading prices for our common stock may be more volatile. Among other things, trading of a relatively small volume of our common stock may have a greater impact on the trading price for our stock than would be the case if our public float were larger.

Our shareholders may perceive a conflict of interest because we do not currently maintain a fully independent audit committee.

Prior to August 12, 2011, our audit committee was made up of three individuals: Bruce F. Beaty, Patrick Flynn and Michael J. Flynn.  Effective August 12, 2011, Mr. Patrick Flynn, who was our President and served as a member of our board of directors, resigned from the Companies, and as of August 12, 2011 our audit committee has been comprised of Messrs. Beaty and Michael J. Flynn.  Effective August 12, 2011 Mr. Beaty was appointed as President of the Companies.  Mr. Michael J. Flynn was formerly the President, Chief Operating Officer and Vice Chairman of the board of directors of Kimco Realty Corporation until his retirement in December 2008.  Although we are exempt from regulations mandating an independent audit committee, our shareholders may perceive a conflict of interest because of the nature of the relationships of certain members of the audit committee.




9




ITEM 2.  PROPERTIES

Blue Ridge Real Estate Company

At October 31, 2011, the properties of Blue Ridge and its subsidiaries consisted of 13,249 acres of land owned by Blue Ridge, Northeast Land Company, Coursey Commons Shopping Center, LLC, Flower Fields Motel, LLC, Blue Ridge WNJ, LLC and Blue Ridge WMN, LLC.  These properties included the Jack Frost Mountain Ski Area, the Jack Frost National Golf Course, a commercial property comprised of 2.9 acres of vacant land, one shopping center, four residential investment properties, a sewage treatment facility, a corporate headquarters building and other miscellaneous facilities.  At October 31, 2011 Blue Ridge also owned three retail stores, two of which are leased to affiliates of Walgreen Company and one of which was leased to Jack in the Box during Fiscal Year 2011.  

At October 31, 2011 Blue Ridge owned 13,143 acres of land in the Pocono Mountain region of Northeast Pennsylvania.  The majority of this property is leased to various hunting clubs.  Blue Ridge owns and leases to Jack Frost National Golf Course, Inc. an 18-hole golf facility known as Jack Frost National Golf Club, which is located on 203 acres near White Haven, Carbon County, Pennsylvania.  It commenced operations on April 20, 2007 and is managed by Billy Casper Golf, LLC, an unaffiliated third party operator.  Blue Ridge owns four residential investment properties, two of which are located in our resort communities.  Blue Ridge owns a sewage treatment facility that serves the resort housing at the Jack Frost Mountain Ski Area. The facility has the capacity of treating up to 400,000 gallons of wastewater per day.  Blue Ridge also owns The Stretch, an exclusive members-only fishing club located along a two mile stretch of the Tunkhannock Creek in Blakeslee, Pennsylvania.  Blue Ridges corporate office building is located at the intersection of Route 940 and Mosey Wood Road in Blakeslee, Pennsylvania.

During Fiscal Year 2011, Blue Ridge owned and leased to Jack in the Box Eastern Division, L.P., a retail store located in Anahuac, Texas.  On November 29, 2011, Blue Ridge sold the property. The property consisted of a free standing Jack in the Box restaurant, including 1 acre of land, with approximately 4,981 square feet of leasable space.

The Jack Frost Mountain Ski Areas properties, located on approximately 201 acres of land, were leased under a direct financing lease to JFBB Ski Areas, Inc., an affiliate of Peak Resorts, for a 28 year period beginning December 1, 2005.  On December 15, 2011, Blue Ridge sold the Jack Frost Mountain Ski Area to JFBB Ski Areas, Inc. and the lease was terminated.  

Northeast Land Company owns 89 acres of land located in the Pocono Mountains.  

Coursey Commons Shopping Center, located in East Baton Rouge Parrish, Louisiana, is owned by Coursey Commons Shopping Center, LLC, a wholly-owned subsidiary of Blue Ridge.  The center consists of 9.4 acres, which includes approximately 67,750 square feet of retail space.  As of October 31, 2011, there were 15 tenants leasing 59,710 square feet, which represents 88% of the total square footage.

Flower Fields Motel, LLC owns approximately 3 acres of vacant commercial property located along Route 611 in Tannersville, Pennsylvania.  The property was the former location of a motel and two cottage buildings which were demolished during the summer of 2008.

Blue Ridge WNJ, LLC owns and leases to Walgreen Eastern Co., Inc., a retail store in Toms River, New Jersey.  The property consists of a free standing Walgreens store, including 2 acres of land, with approximately 14,820 square feet of leasable space.

Blue Ridge WMN, LLC owns and leases to Walgreen Co., Inc., a retail store located in White Bear Lake, Minnesota. The property consists of a free standing Walgreens store, including 2 acres of land, with approximately 14,820 square feet of leasable space.

Big Boulder Corporation

At October 31, 2011, the properties owned by Big Boulder consisted of 864 acres located in the Pocono Mountains.  The properties included the Big Boulder Ski Area, a sewage treatment facility, Boulder View Tavern (formerly known as the Mountains Edge Restaurant) and the Big Boulder Lake Club.



10




Big Boulder Ski Area commenced operations in 1947.  As of December 1, 2005, the Big Boulder Ski Area, located on approximately 110 acres of land, was leased under a direct financing lease to JFBB Ski Areas Inc., an affiliate of Peak Resorts, for a 28 year period.  On December 15, 2011, Big Boulder sold the Big Boulder Ski Area to JFBB Ski Areas, Inc. and the lease was terminated.  

A sewage treatment facility was constructed by Big Boulder to serve the resort housing within the Big Boulder Ski Area tract.  The facility has the capacity of treating 225,000 gallons of wastewater per day.  

Big Boulder also constructed Boulder View Tavern, which consists of 8,800 square feet and is located on the eastern shore of Big Boulder Lake, Kidder Township, Carbon County, Pennsylvania.  The restaurant initially commenced operations in May 1986.  Effective December 1, 2008, Management entered into a lease agreement with Boulder View Tavern, Inc. an affiliate of Peak Resorts, to lease the facility for a 5 year period with two 5-year renewal options.  The restaurant has dining capacity for 100 patrons.

Big Boulder also owns the Big Boulder Lake Mountain Club, which includes a 175-acre lake, swimming pool, tennis courts, boat docks and accompanying buildings. Effective March 30, 2007, Big Boulder entered into a lease agreement with Appletree Management Group, Inc. to operate the Lake Mountain Club for a period of 10 years.

ITEM 3.   LEGAL PROCEEDINGS

We are presently a party to certain lawsuits arising in the ordinary course of our business.  We believe that none of our current legal proceedings will be material to our business, financial condition or results of operations.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.


PART II

ITEM 5.  MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

STOCK AND DIVIDEND INFORMATION

Market Price of Common Stock

Our common stock is quoted on the OTC Bulletin Board under the symbol BLRGZ.  There has been a limited and sporadic trading market for our common stock.  Our management does not believe such limited activity constitutes an established public trading market.  As of January 27, 2012, we had 358 holders of record of our common stock.

The following table sets forth the high asked and low bid price quotations as reported on the monthly statistical reports of the National Association of Securities Dealers, Inc. for each quarter of Fiscal 2011 and 2010. No dividends were paid on common stock in either period.

Fiscal Year 2011

HIGH ASKED

LOW BID

First Quarter

8.05

5.00

Second Quarter

10.05

8.00

Third Quarter

9.00

5.76

Fourth Quarter

8.90

4.75


Fiscal Year 2010

HIGH ASKED

LOW BID

First Quarter

11.00

8.25

Second Quarter

10.03

8.00

Third Quarter

9.00

7.35

Fourth Quarter

8.25

5.99




11




The reported quotations represent prices between dealers, do not reflect retail mark-ups, mark-downs or commissions and do not necessarily represent actual transactions.

   Dividend Policy

We do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance our operations and expand our business. Any future determination to pay cash dividends will be at the discretion of the board of directors and will be dependent upon our financial condition, operating results, capital requirements, and other factors the board of directors deems relevant.

STOCK PERFORMANCE GRAPH

The following graph compares the percentage change in the cumulative total shareholder return on our common stock (BLRGZ) during the Companies five fiscal years ended October 31, 2011 to the cumulative total return of the NASDAQ Composite Index (IXIC) and the PHLX Housing Sector (HGX) Index during such period.  

Our management has determined that it is appropriate to compare the Companies cumulative total shareholder return with the cumulative total return of the PHLX Housing Sector (HGX) Index, which is an index composed of 20 smaller companies whose primary lines of business are directly associated with the U.S. housing construction market.

The comparison assumes that $100 was invested at the beginning of such period in the Companies shares of common stock (BLRGZ), in the NASDAQ Composite Index (IXIC) and in the PHLX Housing Sector (HGX) Index and assumes the reinvestment of any dividends.

[blueridgeform10kz002.gif]




12




ITEM 6. SELECTED FINANCIAL DATA

You should read the following selected financial data together with our consolidated financial statements and the related notes appearing elsewhere in this report and the Managements Discussion and Analysis of Financial Condition and Results of Operations section and other financial data included in this report.

Blue Ridge Real Estate Company and Subsidiaries

and Big Boulder Corporation and Subsidiaries

COMBINED SUMMARY OF SELECTED FINANCIAL DATA

 

10/31/11

10/31/10

10/31/09

10/31/08

10/31/07

Revenues from continuing operations

$5,697,146 

$5,432,279 

$15,515,265 

$9,777,741 

$15,211,819 

Net (loss) income from continuing operations

($2,581,572)

($3,808,518)

($237,139)

($1,675,906)

($249,834)

Net (loss) income from continuing operations per combined share

($1.05)

($1.55)

($0.10)

($0.68)

($0.10)

Revenues from discontinued operations

$491,608 

$454,951 

$381,401 

$380,372 

$460,863 

Net (loss) income from discontinued operations

$106,807 

$399,438 

$386,385 

$390,276 

$436,061 

Net (loss) income from discontinued operations per combined share

$0.04 

$0.16 

$0.16 

$0.16 

$0.18 

Net (loss) income

($2,474,765)

($3,409,080)

$149,246 

($1,285,630)

$186,227 

Net (loss) income per combined share

($1.01)

($1.39)

$0.06 

($0.52)

$0.08 

Cash dividends per combined share

$0 

$0 

$0 

$0 

$0 

Combined shares outstanding

2,450,424 

2,450,424 

2,450,424 

2,450,424 

2,450,424 

Total assets

$65,105,709 

$70,257,390 

$72,959,381 

$79,033,616 

$76,081,126 

Debt (includes discontinued operations)

$28,123,504 

$28,947,454 

$26,294,719 

$31,273,294 

$26,465,930 

Shareholders' equity

$29,753,937 

$32,797,583 

$35,831,330 

$37,022,179 

$38,586,859 

ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Over the past 30 years, we have developed resort residential communities adjacent to the Jack Frost Mountain and Big Boulder Ski Areas located in Lake Harmony, Kidder Township, Pennsylvania.  These communities are located in the Pocono Mountains of Pennsylvania, a popular recreation destination for local and regional visitors, especially from the New York City and Philadelphia metropolitan areas.  The scenic hills and valleys of the Pocono Mountains offer many opportunities to enjoy outdoor activities such as golfing, fishing, hunting, skiing, snowboarding and other sport venues.

At October 31, 2011, we owned 14,100 acres of land in Northeastern Pennsylvania along with 13 acres of land in various other states.  Of these land holdings, we designated 3,394 acres as held for development.  It is expected that all of our planned developments will either be subdivided and sold as parcels of land, or be developed into single and multi-family housing.

The real estate industry is cyclical and is subject to numerous economic factors including general business conditions, changes in interest rates, inflation and oversupply of properties.  Any sustained period of weakness or weakening business or economic condition in the markets in which we intend to do business or in related markets, such as those we have experienced, will impact the demand for the type of properties we intend to develop.

Due to the sustained weakness of the housing market nationwide, the Companies continue to monitor the progress of residential home sales within the Northeast region.  No new residential development projects will be started until the market stabilizes.




13




With recent changes in management and in light of the economic environment, we will undertake a thoughtful review of our strategic plan and update our master development plan.  We have initiated a process of cataloging our land inventory and our oil, gas and mineral rights and are developing a long term portfolio strategy with a view to maximize shareholder value.  We will continue to opportunistically look at asset sales.

For Fiscal 2011, we intend to continue selective sales of land, some of which may be treated as Section 1031 tax deferred exchanges under the Internal Revenue Code.

We are also taking various steps to attract new home and land sale customers.  For example, purchasers who want to purchase newly constructed single family homes in our Laurelwoods II community development and can make a down payment of at least 20%, have the option of financing their mortgage through Big Boulder Corporation with interest only payments for five years.  We are also offering prepaid dues for a one year membership with the Lake Mountain Club and complimentary passes to the Jack Frost National Golf Course to the purchasers of the existing Laurelwoods II single family and duplex townhomes.  We are also offering to pay six months of homeowners association fees on behalf of any current homeowner in the Blue Heron, Midlake Condominium, Laurelwoods Community and Snow Ridge Village developments that provide a purchaser referral which results in the sale of an existing Laurelwoods II single family home.  We are also offering financing opportunities for the purchase of selected tracts of land.

We also generate revenue through the selective timbering of our land.  We rely on the advice of our forester, who is engaged on a consulting basis and who receives a commission on each stumpage contract, for the timing and selection of certain parcels for timbering.  Our forester gives significant attention to protecting the environment and retaining the value of these parcels for future timber harvests.  Our forester has completed an inventory of our timber resources to aid us in considering valuations before entering into future timber agreements.

The Jack Frost National Golf Course opened in the spring of 2007.  The golf course is managed by Billy Casper Golf, LLC, a nationally-recognized golf course management company.

As a result of the Companies focus on real estate activities, we present our balance sheet in an unclassified presentation using the alternate format in order to reflect our assets and liabilities in order of their importance.

Recent Developments

Effective August 12, 2011, Mr. Patrick Flynn resigned his position as Director and President of the Companies.  On August 8, 2011 the Board of Directors unanimously approved the appointment of Bruce Beaty as President effective August 12, 2011. Mr. Beaty, age 52, has served on the Companies Board of Directors since April 2006.  Mr. Beaty also has served as the Managing Partner of Asterion Capital LLC, an investment management firm based in Stamford, Connecticut, since he founded the company in February 2004.  The Companies pay Mr. Beaty $50,000 as annual compensation for his service.

On August 15, 2011 the Companies entered into an amendment to the Phase 3 Agreement of Sale dated February 17, 2011 with The Conservation Fund, extending the inspection period from August 16, 2011 to February 16, 2012.  The Agreement of Sale is for 376 acres in Thornhurst, Lackawanna County for the purchase price of $1,600,000.

On September 30, 2011 the Companies sold the property located at 4306 South College Avenue in Fort Collins, Colorado for the purchase price of $1,450,000.

On October 1, 2011, the Companies entered into an Agreement of Sale for the property located in Chambers County, Texas for the purchase price of $1,911,410.  On November 30, 2011, the Companies closed on the sale of the Chambers County property to Phyllis Enfield Trust.  A portion of the net proceeds of the sale were used to repay in full the outstanding balance under a note of $1,009,002 to Barbers Hill Bank.

On October 31, 2011, the Companies entered into two separate Agreements of Sale with JFBB Ski Areas, Inc., a subsidiary of Peak Resorts, Inc. for the Jack Frost Mountain and Big Boulder Ski Areas located in Kidder Township, Carbon County, Pennsylvania for an aggregate purchase price of $9,000,000.  On December 15, 2011, Blue Ridge Real Estate Company and Big Boulder Corporation closed on the sale of the two ski areas to JFBB Ski Areas, Inc.  A portion of the net proceeds of the sale were used to repay outstanding debt to the Bank in the amount of $7,777,933.

We are currently offering for sale homes in our Laurelwoods II community and our Boulder Lake Village Condominium development overlooking Big Boulder Ski Resort located in Lake Harmony, Pennsylvania. In Phase I of




14




the Laurelwoods II community, we have completed construction on 22 single family homes, all of which have been sold.  We have received municipal approval for the construction of 44 duplex and 22 single units in Phase II of our Laurelwoods II community, and we have completed the construction of eight of the duplex units.  Five of these completed units have been sold and the three other units are in inventory.  We have also received municipal approval for the construction of 144 condominium units in our Boulder Lake Village Condominium development.  Boulder Lake Village Building J is comprised of 18 condominium units, and we have completed construction on all of these units.  Six of the units have been sold, one unit has been decorated as a model, one unit accommodates a sales office and ten are held in inventory.  Our management has made the decision not to begin construction on any additional planned homes or units until the housing market recovers.

Critical Accounting Policies and Significant Judgments and Estimates

We have identified the most critical accounting policies upon which our financial reporting depends.  The critical policies and estimates were determined by considering accounting policies that involve the most complex or subjective decisions or assessments.  The most critical accounting policies identified relate to deferred tax liabilities, net investment in direct financing leases, the valuation of land development costs and long-lived assets, and revenue recognition.

Revenues are derived from a wide variety of sources, including sales of real estate, management of investment properties, home construction, property management services, timbering, golf activities and leasing activities.  Revenues are recognized as services are performed, except as noted below.

We recognize income on the disposition of real estate using the full accrual method.  The full accrual method is appropriate at closing when the sales contract has been signed, the buyer has arranged permanent financing and the risks and rewards associated with ownership have been transferred to the buyer.  In the few instances that the Companies finance the sale, a minimum 20% down payment is required from the buyers.  The remaining financed purchase price is not subject to subordination.  Down payments of less than 20% are accounted for as deposits.

The costs of developing land for resale as resort homes and the costs of constructing certain related amenities are allocated to the specific parcels to which the costs relate. Such costs, as well as the costs of construction of the resort homes, are charged to operations as sales occur. Land held for resale and resort homes under construction are stated at lower of cost or market.

We recognize revenue and costs on custom home construction using the percentage of completion method of accounting when construction is beyond the preliminary stage, the buyer is committed and may only require a refund in the event of non-delivery, if the sales proceeds are collectible and if the aggregate sales proceeds and the total cost of the project can be reasonably estimated.  Total estimated revenues and construction costs are reviewed periodically, and any change is applied prospectively.

Timbering revenues from stumpage contracts are recognized at the time a stumpage contract is signed.  At the time a stumpage contract is signed, the risk of ownership is passed to the buyer at a fixed, determinable cost.  There is no transfer of title in connection with these contracts.  Reasonable assurance of collectibility is determined by the date of signing, and, at that time, the obligations of the Companies are satisfied.  Therefore, full accrual recognition at the time of contract execution is appropriate.

Deferred income consists of rents, ski area leases, dues and deposits on land or home sales. These rents, which are not yet earned, are rents from our commercial properties that have been paid in advance.  Ski area leases are paid over a four month period from December to March and recognized over the year.  Dues are dues paid in advance related to memberships in our hunting and fishing clubs and golf course memberships paid.  Revenues related to the hunting and fishing clubs and golf course memberships are recognized over the seasonal period that the dues cover.  We recognize revenue related to the fishing club over a five month period, from May through September, and the golf course over a seven month period, from April through October.  Deposits are required on land and home sales.

Managements estimate of deferred tax assets and liabilities is primarily based on the difference between the tax basis and financial reporting basis of depreciable assets and the net investment in direct financing leases, like-kind exchanges of assets, net operating losses, stock options and accruals.  Valuation allowances are established, when necessary to reduce tax assets to the amount expected to be realized.




15




We have capitalized as the net investment in direct financing leases, that portion of the leased premises pertaining to Jack Frost Mountain and Big Boulder Ski Areas, which met the criteria for accounting for these transactions as direct financing leases.  The accounting is based on estimates and assumptions about the fair values and estimated useful lives of the leased properties, as well as, the collectibility of lease payments and recoverability of the unguaranteed residual value of the leased properties.  We periodically review the net investment in direct financing leases for events or changes in circumstances that may impact collectibility, and recoverability of the unguaranteed residual value of leased properties.

We capitalize as land and land development costs, the original acquisition cost, direct construction and development costs, property taxes, interest incurred on costs related to land under development and other related costs (engineering, surveying, landscaping, etc.) until the property reaches its intended use.  The cost of sales for individual parcels of real estate or condominium units within a project is determined using the relative sales value method.  Revenue is recognized upon signing of the closing documents, at which time a binding contract is in effect, the buyer has arranged for permanent financing and the Companies are assured of payment in full.  In addition, at the time of closing, the risks and rewards associated with ownership have been transferred to the buyer.  Selling expenses are recorded when incurred.

Long-lived assets, namely properties, are recorded at cost. Depreciation and amortization is provided principally using the straight-line method over the estimated useful life of the asset. Upon sale or retirement of the asset, the cost and related accumulated depreciation are removed from the related accounts, and resulting gains or losses are reflected in income.

Interest, real estate taxes, and insurance costs, including those costs associated with holding unimproved land, are normally charged to expense as incurred. Interest cost incurred during construction of facilities is capitalized as part of the cost of such facilities. Maintenance and repairs are charged to expense, and major renewals and betterments are added to property accounts.

We review our long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.  In that event, we calculate the expected future net cash flows to be generated by the asset.  If those net future cash flows are less than the carrying value of the asset, an impairment loss is recognized in operating income.  The impairment loss is the difference between the carrying value and the fair value of the asset.  The impairment loss is recognized in the period incurred.

We sponsor a defined benefit pension plan as detailed in footnote 10 to the accompanying combined financial statements.  The accounting for pension cost is determined by specialized accounting and actuarial methods using numerous estimates, including discount rates, expected long-term investment returns on plan assets, employee turnover, mortality and retirement ages, and future salary increases.  Changes in these key assumptions can have a significant effect on the pension plans impact on the Companies financial statements.  We engage the services of an independent actuary and investment consultant to assist us in determining these assumptions and in calculating pension income.  The pension plan is currently underfunded and accordingly the Companies have made contributions to the fund of $637,600 and $402,126 in Fiscal 2011 and Fiscal 2010, respectively.  The Companies expect to contribute $545,687 to the pension plan in Fiscal 2012.   Future benefit accruals under the pension plan ceased as of August 31, 2010.  The Companies also have in place a 401(k) pension plan that is available to all full time employees.  Effective August 1, 2010, the Companies match 50% of employee salary deferral contributions up to 3% of their pay for each payroll period.

The Companies recognize as compensation expense an amount equal to the grant date fair value of the stock options issued over the required service period.  Compensation cost was measured using the modified prospective approach.

The fair value of each option award is estimated at the date of grant using an option pricing model.  Expected volatilities are based upon historical volatilities of the Companies stock.  The Companies use historical data to estimate option exercises and employee terminations with the valuation model.  The expected term of options granted is derived from the output of the valuation model and represents the period of time that options granted are expected to be outstanding.  The risk-free rate for periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

We have no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.  




16




Results of Operations

FISCAL 2011 VERSUS FISCAL 2010

Net Income

   For Fiscal 2011, we reported a net loss of ($2,474,765), or ($1.01) per combined share, as compared with a net loss of ($3,409,080), or ($1.39) per combined share for Fiscal 2010.

Revenues

   Combined revenue of $5,697,146 in Fiscal 2011 represents an increase of $264,867, or 5%, compared to $5,432,279 for Fiscal 2010. Real Estate Management Operations/Rental Operations revenue decreased $50,790, or 2%, compared to Fiscal 2010.  Land Resource Management revenue increased $315,657, or 12%, compared to Fiscal 2010.

Real Estate Management/Rental Operations

   The Real Estate Management Operations/Rental Operations revenue was $2,824,476 in Fiscal 2011 as compared to $2,875,266 in Fiscal 2010, which represented a decrease of $50,790, or 2%. This was primarily attributable to a decrease in new home construction revenue resulting from managements decision to stop accepting new home construction contracts as of July 1, 2008. For Fiscal 2011 and 2010, there were no new homes under construction.

Land Resource Management

   Land Resource Management revenue was $2,872,670 in Fiscal 2011 as compared to $2,557,013 for Fiscal 2010, an increase of $315,657, or 12%. In Fiscal 2011, new homes sales totaling $1,830,315 consisted of four condominiums in Boulder Lake Village development ($1,198,700) and two duplexes in the Laurelwoods II development ($631,615) as compared to one condominium in the Boulder Lake Village development ($320,000) and three single family residences ($873,575) in the Laurelwoods II development totaling $1,193,575 in Fiscal 2010, for an increase of $636,740, or 53%. These increases were offset by the sale of two land sales totaling $159,500, as compared to four land sales in Fiscal 2010 totaling $336,750, a decrease of $177,250, or greater than 100%.

Operating Costs

   Real Estate Management/Rental Operations

   Operating costs associated with Real Estate Management Operations/Rental Operations for Fiscal 2011 were $1,990,356 as compared to $2,129,344 for Fiscal 2010, which represents a decrease of $138,988 or 7%. For Fiscal 2011, construction costs of $250 and operating expenses of $0 for residual work on existing residential housing units as compared to Fiscal 2010 construction costs of $77,428 and operating expenses of $113,134 for residual work on existing residential housing units, a decrease of $190,312, or 100%. This was primarily attributable to a decrease in new home construction resulting from managements decision to stop accepting new home construction contracts as of July 1, 2008. For Fiscal 2011 and 2010, there were no additional homes under construction.  All outstanding construction contracts have been completed. This was offset by increased operating expenses for real estate taxes ($57,815), repairs and maintenance ($12,026), insurance ($7,872) and supplies ($5,408) relating to the land leased to various hunting clubs and the Stretch fishing club.

   Land Resource Management

   Operating costs associated with Land Resource Management for Fiscal 2011 were $4,436,374 compared to $5,612,485 for Fiscal 2010, a decrease of $1,176,111, or 21%.  Construction costs for Fiscal 2011 were $1,092,851 compared to $842,313 for Fiscal 2010, an increase of $250,358, or 30%. For Fiscal 2011, two duplex units and four condominium units were sold as compared to three single family residential units and one condominium unit sold in Fiscal 2010. Correspondingly, the operating and sales expenses also increased $1,078,346, or greater than 100%. These operating and sales expenses primarily related to impairments ($676,651), interest ($110,891), closing costs ($60,112), commissions ($31,506) and salaries with corresponding payroll taxes and benefits ($51,323).    The cost of sales for land and buildings for Fiscal 2011 was $123,004 compared to $241,639 for Fiscal 2010, a decrease of $118,635, or 49%. This decrease was offset by an asset impairment of $73,000 related to unimproved land reflected in Fiscal 2010 and $0 in Fiscal 2011.




17




   General and Administration

   General and administration costs for Fiscal 2011 were $1,791,381, as compared with $2,438,220 for Fiscal 2010, which represents a decrease of $646,839, or 27%. This decrease was primarily the result of decreased salaries, payroll taxes and benefits ($150,660), pension expense ($278,641), due to the defined benefit plan being frozen as of August 31, 2010 resulting in reduced contributions, professional fees ($75,154), consultants ($69,430) and closing costs ($24,686).

Other Income (Expense)

   Interest and other income was $11,259 in Fiscal 2011, as compared to $21,591 in Fiscal 2010, a decrease of $10,332, or 48% relating to miscellaneous revenue administration.   

   Interest expense for Fiscal 2011 was $1,415,031 as compared to $1,261,339 for Fiscal 2010, an increase of $153,692, or 12%. This increase was primarily attributable to a $174,360 increase in interest expense associated with the companies operating lines of credit related to infrastructure costs and general operating expenses and a decrease in capitalized interest due to the units being completed.  These increases were offset by an $11,841 reduction in interest expense relating to four completed units in the Laurelwoods II community.

Discontinued Operations

   Due to managements decision to sell the two ski areas and two commercial properties, the results of operations for these four properties for Fiscal 2011 and 2010 are being reported as discontinued operations. Future cash flows and operating results for the two ski areas and two commercial properties will no longer be reported in the Real Estate Management / Rental segment. Both the loss resulting from the sale of the two ski areas (reported as a valuation allowance) and the gain resulting from the sale of the Applebees are no longer reported in the Land Resource Management segment.  

   The net income before taxes from the discontinued operations for the Applebees in Fiscal 2011 was $84,075 as compared to $41,591 in Fiscal 2010.  The increase of $42,484 includes the gain of $25,721 on the sale of the property and two additional months of operation.  The Applebees was purchased February 25, 2010 and sold September 30, 2011.

   The net income before taxes from discontinued operations for the Jack in the Box was $19,063 in Fiscal 2011 versus $10,326 in Fiscal 2010.  The increase of $8,737 is primarily due to reduced depreciation expense as the asset was reclassified to Long-lived assets held for sale in October 2011.

  The net income before taxes from discontinued operations for the Jack Frost Mountain and Big Boulder ski areas was $57,669 in Fiscal 2011 compared to $553,521 in Fiscal 2010.  The decrease of $495,852 is primarily due to a valuation allowance of $502,000 recorded in Fiscal 2011.  The sale transaction on December 15, 2011 resulted in a loss; therefore an allowance was reported in Fiscal 2011.

Tax Rate

   The effective tax rate for income taxes (benefit) was 34% in Fiscal 2011 as compared to 37% in Fiscal 2010.  The rate is different than the United States Federal statutory rate of 34% in Fiscal 2010 primarily due to the impact of state income taxes and non-deductible expenses.

Results of Operations

FISCAL 2010 VERSUS FISCAL 2009

Net Income

   For Fiscal 2010, we reported a net loss of ($3,409,080), or ($1.39) per combined share, as compared with a net income of $149,246, or $0.06 per combined share for Fiscal 2009.

Revenues

   Combined revenue of $5,432,279 in Fiscal 2010 represents a decrease of $10,082,986, or 65%, compared to $15,515,265 for Fiscal 2009. Real Estate Management Operations/Rental Operations revenue decreased $649,758, or 18%, compared to Fiscal 2009.  Land Resource Management revenue decreased $9,433,228, or 79% compared to Fiscal 2009.




18




Real Estate Management/Rental Operations

   The Real Estate Management Operations/Rental Operations revenue was $2,875,266 in Fiscal 2010 as compared to $3,525,024 in Fiscal 2009, which represented in a decrease of $649,758, or 18%. This was primarily attributable to a decrease in new home construction revenue resulting from managements decision to stop accepting new home construction contracts as of July 1, 2008. For Fiscal 2010, there were no new homes under construction as compared to two new homes under construction in Fiscal 2009.

Land Resource Management

   Land Resource Management revenue was $2,557,013 in Fiscal 2010 as compared to $11,990,241 for Fiscal 2009, a decrease of $9,443,228, or 79%. This is primarily attributable to four land sales in Fiscal 2010 totaling $336,750 as compared to six land sales in Fiscal 2009 totaling $8,167,000, a decrease of $7,830,250, or 97%. In Fiscal 2009 there were two separate land sale transactions in June 2009 and August 2009 to The Conservation Fund of 2,699 acres of land for an aggregate sale price of $6,875,000. In September 2009, we also sold a commercial property in Laurens, South Carolina for the sale price of $1,275,000. In Fiscal 2010, new home sales consisted of three single family residences ($873,575) and one condominium in the Boulder Lake Village development ($320,000) totaling $1,193,575 as compared to Fiscal 2009 new home sales of three single family residences ($985,590), three duplex units ($1,362,596) in the Laurelwoods II community and one condominium unit in the Boulder Lake Village development ($472,000), totaling $2,820,546 for a decrease of $1,626,971, or 58%.

Operating Costs

   Real Estate Management/Rental Operations

   Operating costs associated with Real Estate Management Operations/Rental Operations for Fiscal 2010 were $2,129,344 as compared to $3,095,898 for Fiscal 2009, which represents a decrease of $966,554, or 31%. For Fiscal 2010, construction costs of $77,428 and operating expenses of $113,134 for residual work on existing residential housing units as compared to Fiscal 2009 construction costs of $615,245 and operating expenses of $360,430 on two residential housing units, a decrease of $785,112, or 80%. This was primarily attributable to a decrease in new home construction resulting from managements decision to stop accepting new home construction contracts as of July 1, 2008. For Fiscal 2010, there were no additional homes under construction as compared to two homes under construction in Fiscal 2009.  All outstanding construction contracts have been substantially completed.

Land Resource Management

   Operating costs associated with Land Resource Management for Fiscal 2010 were $5,612,485 compared to $10,266,197 for Fiscal 2009, a decrease of $4,653,712, or 45%. This decrease is primarily the result of asset abandonments totaling $0 in Fiscal 2010 as compared to $1,686,209 for Fiscal 2009 and asset impairments in Fiscal 2010 totaling $2,376,000 as compared to $2,518,000 for Fiscal 2009. The abandonment expense is the result of various capital projects written off due to changes in the economic climate and changes in governmental regulations which management believes make the development projects economically unfeasible. The impairment expense is the result of various asset carrying values in excess of fair market value that may not be recoverable.  The fair market value is determined using numerous estimates, including discount rates, sales prices and sale dates.  Changes in these key assumptions can have a significant effect on the fair market value of these assets and thus an impact on the Companies financial statements.  We engaged the services of an independent specialist to assist us in determining these assumptions and the calculation of fair values.  Additionally, the decrease in land resource management operating costs in Fiscal 2010 was also impacted by the decrease in construction costs related to the single family residential units and duplex units at Laurelwoods and the Boulder Lake Village condominium. Construction costs for Fiscal 2010 were $842,313 compared to $2,014,162 for Fiscal 2009, a decrease of $1,171,849, or 58%. For Fiscal 2010, three single family residential units and one condominium unit were sold as compared to three single family residential units, three duplex units and one condominium unit sold in Fiscal 2009. Correspondingly, the operating and sales expenses also decreased $104,747, or 12%. These operating and sales expenses primarily related to closing costs ($78,817), commissions ($79,619), advertising ($34,159), and professional fees ($22,255) and were offset by increases to interest expense ($66,123) and holding costs ($8,301). The cost of sales for land and buildings for Fiscal 2010 was $241,639 compared to $1,703,344 for Fiscal 2009, a decrease of $1,461,705, or 86%. This decrease was attributable to two land sale transactions to The Conservation Fund in June 2009 and August 2009 ($527,739) and the sale of the commercial property in Laurens, South Carolina in September 2009 ($1,175,585).




19




   General and Administration

   General and administration costs for Fiscal 2010 were $2,438,220, as compared with $1,639,307 for Fiscal 2009, which represents an increase of $797,913, or 49%. This increase was primarily the result of a $251,707 increase in salary expense as a result of no longer capitalizing salaries, $330,620 increase in pension expense, resulting from reduced investment returns, and an increase of $211,110 in professional fees related to regulatory reporting requirements.

Other Income (Expense)

   Interest and other income was $21,591 in Fiscal 2010, as compared to $12,812 in Fiscal 2009, an increase of $8,779, or 69%.  This increase was the result of a loss from the disposal of an asset occurring in Fiscal 2009 as the asset was no longer available for use.

   Interest expense for Fiscal 2010 was $1,261,339 as compared to $1,035,171 for Fiscal 2009, an increase of $226,168, or 22%. This increase was primarily attributable to a $209,643 increase in interest expense associated with two commercial investment properties, which was the result of the refinancing in Fiscal 2009 of the debt related to these commercial investment properties. The previous financing for these two commercial investment properties was in short-term notes with interest only payments due until maturity. On August 28, 2009, we replaced the debt on both of these properties with long-term financing.  These increases were offset by an $11,689 reduction in interest expense relating to two completed units in the Laurelwoods II community which were sold in Fiscal 2010.

Tax Rate

   The effective tax rate for income taxes (benefit) was 37% in Fiscal 2010 as compared to (126%) in Fiscal 2009.  The rate is different than the United States Federal statutory rate of 34% primarily due to the impact of state income taxes and non-deductible expenses.

Discontinued Operations

   Due to managements decision to sell the two ski areas and two commercial properties, the results of operations for these four properties for Fiscal 2010 and 2009 are being reported as discontinued operations. Future cash flows and operating results for the two ski areas and two commercial properties will no longer be reported in the Real Estate Management / Rental segment.  

   The net income before taxes from the discontinued operations for the Applebees in Fiscal 2010 was $41,591 as compared to $0 in Fiscal 2009.  The Applebees was purchased February 25, 2010.

   The net income before taxes from discontinued operations for the Jack in the Box was $10,326 in Fiscal 2010 versus $50,351 in Fiscal 2009.  The decrease of ($40,025) is primarily due to interest expense.  The property was mortgaged in May 2009; therefore Fiscal 2010 has twelve months of interest versus six months of interest in Fiscal 2009.

  The net income before taxes from discontinued operations for the Jack Frost Mountain and Big Boulder ski areas was $553,521 in Fiscal 2010 compared to $535,034 in Fiscal 2009.  The increase of $18,487 is primarily due to reduced insurance expense.

Liquidity and Capital Resources:

   The Combined Statement of Cash Flows reflects net cash provided by operating activities of $1,179,506 for Fiscal 2011, net cash used in operating activities of $847,826 for Fiscal 2010, and net cash provided by operating activities of $5,535,364 for Fiscal 2009.  The increase in net cash provided by operating activities for Fiscal 2011 was primarily attributable to increased sales in land and real estate development and decreased net loss.

   Material non-recurring cash items during the past three years include the sale of Applebees in Fort Collins, Colorado for $1,450,000 in Fiscal 2011 and the sale of 2,699 acres of land to The Conservation Fund for $6,875,000 in Fiscal 2009.

   On September 30, 2011, the Companies sold the Applebees located in Fort Collins, Colorado.  A portion of the proceeds from the sale were used to pay off the Deed of Trust and Security Agreement and Purchase Money Promissory Note held by The Stephen A. Grove Descendants Trust in the amount of $670,000, which encumbered the property.

   On July 29, 2010, the Companies entered into a Loan Agreement (the Loan) and Term Note (the Note) with the Bank in the amount of $2,600,000.  The principal amount of the Loan was to be paid in full on July 29, 2011.  Effective as




20




of July 29, 2011, the Companies entered into the Amended and Restated Note with the Bank (the Amended and Restated Note), which increased the loan by an aggregate of $2,000,000 to $4,600,000 and extended the maturity date of the Note from July 29, 2011 to December 31, 2011.  Interest is due and payable on a monthly basis and accrues at a variable rate equal (a) 3.00 percentage points above one-month LIBOR (3.25% at October 31, 2011.  The Amended and Restated Note is secured by (a) Amended and Restated Mortgages granted by the Companies and their wholly owned subsidiary, Northeast Land Company, on all of the Companies right, title and interest in and to the land and improvements at Jack Frost Mountain Ski Area and Big Boulder Ski Area, both of which are located in Kidder Township, Carbon County, Pennsylvania and Tunkhannock Township, Monroe County, Pennsylvania; (b) a first priority perfected security interest in all non-real estate assets of each of the Companies; and (c) the unlimited and unconditional guaranty and suretyship of Kimco Realty Corporation, the Companies majority shareholder.  The proceeds of the Loan were used to complete construction of certain residential units and for other working capital purposes.  The additional proceeds of the Amended and Restated Note are being used for working capital purposes. Subsequently, on December 15, 2011, a portion of the proceeds from the sale of the ski areas was used to pay the balance on this note.

  On May 22, 2009, the Companies entered into a Deed of Trust and Security Agreement and Real Estate Lien Note with Barbers Hill Bank, a branch of Anahuac National Bank, in the amount of $1,050,000, which encumbered certain real property owned by Blue Ridge located in Chambers County, Texas.  This property was leased to Jack in the Box Eastern Division, L.P. The loan had a term of five years and required monthly payments in the amount of $7,255 beginning June 22, 2009 and ending May 22, 2014, at which time the remaining principal balance and all interest accrued would become due and payable.  The proceeds of the loan were used to fund the completion of Building J of the Boulder Lake Village condominium project and general operations.  The interest rate was fixed at 6.75%.  Subsequently, on November 30, 2011 the Jack in The Box was sold and a portion of the proceeds were used to pay the balance of $1,009,002 on this note.

   On August 28, 2009, Blue Ridge, through its wholly owned subsidiary, Blue Ridge WNJ, LLC, entered into a mortgage and security agreement and a $4,038,000 Senior Secured Note with Wells Fargo Bank Northwest, N.A.  This note is secured by the mortgage, which encumbers certain real property known as the Walgreens Store located in Dover Township, Ocean County, New Jersey.  A portion of the proceeds of the loan were used to pay off an existing note outstanding with State Farm Bank, which previously encumbered the New Jersey Walgreens property.  The loan requires monthly interest and principal payments beginning September 15, 2009 and ending August 15, 2031.  The interest rate is fixed at 6.90%.

   On August 28, 2009, Blue Ridge, through its wholly owned subsidiary, Blue Ridge WMN, LLC, entered into a mortgage and security agreement and a $4,340,000 Senior Secured Note with Wells Fargo Bank Northwest, N.A.  This note is secured by the mortgage, which encumbers certain real property known as the Walgreens Store located in White Bear Lake, Washington County, Minnesota.  A portion of the proceeds of the loan were used to pay off an existing note outstanding with State Farm Bank which previously encumbered the Minnesota Walgreens property.  The loan requires monthly interest and principal payments beginning September 15, 2009 and ending August 15, 2031.  The interest rate is fixed at 6.90%.

   The Companies have a $9,000,000 line of credit with the Bank to fund real estate development with a construction sub-limit of $4,400,000 and site development sub-limit of $4,600,000.  The interest rate on this line of credit is equal to the greater of overnight LIBOR plus 3.5% or the daily 30-day LIBOR plus 3.5%, with an interest rate floor of 5.5%.  The Companies maintain an interest reserve account which was established in the third quarter of Fiscal 2009 as security for the payment of interest with the proceeds from a sale of land.  Interest is due and payable on a monthly basis and at October 31, 2011, the interest rate equaled 5.5% and the balance of the interest reserve escrow account was $114,351.  The remaining principal and any accrued interest is due and payable on September 30, 2012.  The Companies utilized a portion of the proceeds from the sale of four Boulder Lake Village condominium units and two Laurelwoods Longview Drive duplex units to repay $1,166,258 and $472,512 on the Construction and Site Development sublimits, respectively, during Fiscal 2011.  At October 31, 2011, $3,239,131 and $2,917,521 were outstanding on the Construction and Site Development sub-limits, respectively.  Subsequently, on December 15, 2011 a portion of the proceeds from the sale of the ski areas was used to repay $181,500 on the Construction sub-limit and to repay in full the then outstanding balance of $2,881,311 on the Site Development sub limit.

   The total principal amount outstanding under the aggregate line of credit will not exceed the lesser of (a) $9,000,000, or (b) 80% of the cost or appraised value of the units.  The loan agreement requires, among other things, that the Companies comply with consolidated debt to worth, debt service coverage and tangible net worth ratios.  The Companies have not




21




met the required debt service coverage ratio at October 31, 2011 and 2010 and have obtained waivers from the Bank for this covenant.

   The Companies also have a $3,100,000 line of credit with the Bank for general operations.  During Fiscal 2011 and 2010, we borrowed against the $3,100,000 line of credit in varying amounts with maximum total outstanding amounts of $2,981,012 and $2,893,306, respectively.  At October 31, 2011, $1,197,131 was outstanding on the $3,100,000 line at a 5.5% interest rate.  

   For Fiscal 2011, maintenance equipment for our golf course was the major capital expenditure.

   The following table sets forth certain of our contractual obligations or commitments as of October 31, 2011 and their expected year of payment or expiration.

Contractual Obligations:

Total

Less than 1 year

1-3 years

4-5 years

More than 5 years

   Lines of Credit (1)

$7,353,782 

$7,353,782 

$0 

$0 

$0 

   Long-Term Debt (2)

19,616,883 

4,975,183 

7,513,300 

533,154 

6,595,246 

   Debt from Discontinued Operations (2)

1,010,384 

18,480 

991,904 

   Capital Leases

142,455 

45,030 

97,425 

   Debt Subtotal

$28,123,504 

$12,392,475 

$8,602,629 

$533,154 

$6,595,246 

   Fixed Rate Interest

8,019,015 

1,009,925 

2,381,700 

968,951 

3,658,439 

   Variable Rate Interest (3)

815,238 

410,148 

204,820 

133,513 

66,757 

   Interest Subtotal

$8,834,253 

$1,420,073 

$2,586,520 

$1,102,464 

$3,725,196 

   Pension Contribution Obligations (4)

545,687 

545,687 

   Purchase Obligations

10,158 

10,158 

   Total Contractual Obligations

$37,513,602 

$14,368,393 

$11,189,149 

$1,635,618 

$10,320,442 

(1)

In December 2011, proceeds from the sale of the ski areas were utilized to repay $3,062,811 of the outstanding balance of the lines of credit.

(2)

In November and December 2011, proceeds from the sales of the Jack in the Box and the ski areas were utilized to repay $5,724,124 of the outstanding balance of the long term debt.

(3)

The variable rate interest is calculated based on the outstanding balances and the interest rate in effect as of October 31, 2011.

(4)

 The pension contribution obligations are for Fiscal 2012.  Estimated funding obligations beyond the current fiscal year are not presented because the requirements fluctuate based on the performance of the plan assets, discount rate assumptions and demographics.

   Purchase obligations total $3,073,447 and consist of material contracts with multiple contractors all relating to real estate development.  Payments and adjustments made through October 31, 2011 total $3,063,289.

   We currently anticipate that the funds needed for future operations and to implement our land development strategy will be satisfied through operating cash, borrowed funds, public offerings or private placements of debt or equity and reinvested profits from completed and sold units or lots. We expect that with respect to land development, future construction will be conducted in phases, with the profits from each phase used to fund additional future construction. Construction is being implemented in phases as to reduce market risk associated with changing economic conditions.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This information is incorporated by reference to the section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations in our 2011 Annual Report to Shareholders which was included in Exhibit 13.1 to the Annual Report on Form 10-K filed on January 30, 2012.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

We have listed the combined financial statements required under this Item in Part IV, Item 15(a)(1) of this annual report on Form 10-K/A. We have listed the financial statement schedule required under Regulation S-X in Part IV, Item 15(a)(2) of this annual report on Form 10-K/A. The financial statements and schedule appear in this annual report on Form 10-K/A beginning on page F-1.  



22




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

ITEM 9A.  CONTROLS AND PROCEDURES

Restatement of Previously Issued Financial Statements

As disclosed in our Current Report on Form 8-K dated September 24, 2012, the Audit Committee of the Boards of Directors of the Companies and management determined that previously issued financial statements for the fiscal years ended October 31, 2009, 2010 and 2011, the three months ended January 31, 2011, the six months ended April 30, 2011 and the nine months ended July 31, 2011 contained in our Annual Report on Form 10-K for the fiscal year ended October 31, 2011 and in our Quarterly Reports on Form 10-Q for the quarterly periods ended January 31, 2012, April 30, 2012 and July 31, 2012, as applicable, should no longer be relied upon and that we would restate the statements of operations for those periods.

a)  Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded in our Original Report on Form 10-K for the year ended October 31, 2011, that, as of October 31, 2011, our disclosure controls and procedures were effective.  Subsequent to the evaluation made in connection with the original filing and in connection with the restatement and as reflected in the filing of this Form 10-K/A, our management, including our Chief Executive Office and Chief Financial Officer, re-evaluated the effectiveness of the design and operation of our disclosure controls and procedures.  Based upon that re-evaluation, our Chief Executive Officer and Chief Financial Officer concluded that because of the material weaknesses in the internal control over financial reporting discussed below, our disclosure controls and procedures were not effective as of October 31, 2011.

The control deficiency related to the financial results from certain properties sold or held for sale by the Companies in 2011 which should have been, but were not, reported in discontinued operations for periods prior to the respective dates of their disposition.  Management previously determined that treating the properties as discontinued operations would not have had a material effect on the Companies statement of operations for the fiscal year ended October 31, 2011, and further analysis led management to the same conclusion with respect to the fiscal year ended October 31, 2010.  However, further analysis of some of the other periods covered by the statements of operations included in the periodic reports referenced above, particularly the statement of operations for the fiscal year ended October 31, 2009, led management to conclude that restatement would be appropriate.  Accordingly, the Companies are restating the financial statements for all relevant periods in the periodic reports referenced above to include the properties in discontinued operations.  The restatement will not affect the Companies net income (loss) for the relevant periods.  The properties include:

1.

approximately 1 acre of land in Fort Collins, Colorado on which an Applebees restaurant was located, sold by Blue Ridge on September 30, 2011;

2.

1.2 acres of land in Wallisville, Texas on which a Jack in the Box restaurant was located, sold by Blue Ridge on November 30, 2011;

3.

201 acres of land comprising the Jack Frost Mountain Ski Area, sold by Blue Ridge on December 15, 2011; and

4.

approximately 110 acres of land comprising the Big Boulder Ski Area, sold by Big Boulder on December 15, 2011.

b)

Managements Annual Report on Internal Control over Financial Reporting.

We are responsible for establishing and maintaining adequate internal control over financial reporting for the Companies.  Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.



23




We assessed the effectiveness of our internal control over financial reporting as of October 31, 2011 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Integrated Framework.  Based on this assessment, we concluded that our internal control over financial reporting was effective as of October 31, 2011.

It should be noted that a control system, no matter how well designed and operated, can provide only reasonable, not absolute assurance that the objectives of the control system are met. As a result, there can be no assurance that a control system will succeed in preventing all possible instances of error and fraud.  The Companies disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and the conclusions of our Chief Executive Officer and Chief Financial Officer are made at the reasonable assurance level.

The Companies independent auditors have not issued an attestation report on managements assessment of the Companies internal control over financial reporting.

 (c)  Change in Internal Control over Financial Reporting.

In connection with the identification of the errors related to our financial statements described above and in Note 2 to our restated combined financial statements, we have identified the following deficiency that constituted a material weakness in our internal control over financial reporting for the periods described above:

·

We did not establish an appropriate review process to determine when the financial results for certain properties that were sold or are held for sale should be treated as discontinued operations.

Accounting errors resulting from the material weakness described above, resulted in the need to restate our annual and interim combined financial statements.

Remediation of Material Weakness

To address the material weakness, we have undertaken the following remedial steps. Management has revised the internal control procedure related to the Financial Reporting Cycle.  The quarterly Disclosure Committee meeting will review the adequate criteria of classifying any long-lived asset to Held for Sale.  Review will include materiality analysis for all periods presented in the financial report and a determination made as to whether or not separate presentation of discontinued operations is required.

We will continue to monitor the effectiveness of our internal control over financial reporting in the areas affected by the material weakness described above and employ any additional tools and resources as appropriate to provide reasonable assurance that our financial statements are fairly stated in all material respects.

As previously disclosed, there were no changes in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) and 15d-15(e) of the Exchange Act that occurred during the quarter ended October 31, 2011 that materially affected, or was reasonably likely to materially affect, our internal control over financial reporting.  As described above, we have taken steps subsequently to the period covered by this Second Amendment to remedy the material weakness in our internal control over financial reporting.


ITEM 9B. OTHER INFORMATION

None.


PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 of Form 10-K with respect to executive officers is set forth in Part 1 Item 1 of Form 10-K/A. Executive Officers of the Registrant.  Information required by this Item with respect to members of our Board of Directors and with respect to our audit committee is contained in the Proxy Statement for the 2011 Annual Meeting of Shareholders (2011 Proxy Statement) under the captions Proposal 1 - Election of Directors and The Boards of Directors and Committees of the Boards   and is incorporated herein by reference.  

Our Code of Ethics for our executive officers and senior financial officers and the charter of the Audit Committee of our Boards of Directors are posted on our website at http://www.bouldercreekresort.com/investor.asp and are available in print, free of charge, upon request.



24




ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 of Form 10-K is set forth under the caption Executive Compensation in our 2011 Proxy Statement and is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 of Form 10-K is set forth under the caption Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters in our 2011 Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 of Form 10-K is set forth in the Notes to Combined Financial Statements section, Note 19, under the caption Related Party Transactions and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 of Form 10-K is set forth under the caption Independent Registered Public Accounting Firm - Principal Accounting Fees and Services in our 2011 Proxy Statement and is incorporated herein by reference.

PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) (1) As noted below, the following financial statements of ours, supplementary data and related documents are incorporated herein by reference to other portions of this Annual Report on Form 10-K/A:

·

Report of Independent Registered Public Accounting Firm on Combined Financial Statements, dated January 27, 2012, except with respect to Note 2 and 3, as to which the date is as of November 28, 2012 (appears in this annual report on Form 10-K/A on page F-1).

·

Report of Independent Registered Public Accounting Firm, dated January 27, 2012 except with respect to Note 2 and 3, as to which the date is as of November 28, 2012 (appears in this annual report on Form 10-K/A on page F-2).

·

Combined Balance Sheets as of October 31, 2011 and 2010 (appears in this annual report on Form 10-K/A beginning on page F-3).

·

Combined Statements of Operations for each of the years ended October 31, 2011, 2010 and 2009 (appears in this annual report on Form 10-K/A beginning on page F-4).

·

Combined Statements of Changes in Shareholders Equity for each of the years ended October 31, 2011, 2010 and 2009 (appears in this annual report on Form 10-K/A beginning on page F-5).

·

Combined Statements of Cash Flows for each of the years ended October 31, 2011, 2010 and 2009 (appears in this annual report on Form 10-K/A beginning on page F-7).

·

Notes to Combined Financial Statements (appears in this annual report on Form 10-K/A beginning on page F-8).

·

Quarterly Financial Information (unaudited) (appears in this annual report on Form 10-K/A beginning on page F-35).

(a)(2) Financial Statement Schedules

The following is a list of financial statement schedules filed as part of this Annual Report on Form 10-K/A.  The report of Independent Registered Public Accounting Firm for the financial statement schedule appears on page F-1 of this Annual Report on Form 10-K/A.  All other schedules omitted herein are so omitted because either (1) they are not applicable, (2) the required information is shown in the financial statements or (3) conditions are present which permit their omission, as set forth in the instructions pertaining to the content of financial statements:

·

Schedules: III.  Real Estate and Accumulated Depreciation

(b)  Exhibits, Including Those Incorporated by Reference

The information required by this Item is set forth in the Exhibit Index hereto which is incorporated herein by reference.




25



Report of Independent Registered Public Accounting Firmon Financial Statement Schedules





To the Shareholders of

Blue Ridge Real Estate Company

and Big Boulder Corporation


We have audited the combined financial statements of Blue Ridge Real Estate Company and Subsidiaries and Big Boulder Corporation and Subsidiaries (the Companies) as of October 31, 2011 and 2010, and for each of the three years in the period ended October 31, 2011, and have issued our report thereon dated January 27, 2012; such financial statements and report are included in your October 31, 2011 Annual Report to Shareholders and are incorporated herein by reference.  Our audits also included the combined financial statement schedules of the Companies listed in Item 15.  These financial statement schedules are the responsibility of the Companies management.  Our responsibility is to express an opinion based on our audit.  In our opinion, such combined financial statement schedules, when considered in relation to the basic combined financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.


/s/Kronick Kalada Berdy & Co., P.C.

Kingston, Pennsylvania


January 27, 2012, except with respect to Notes 2 and 3

as to which the date is as of November 28, 2012





F-1




Report of Independent Registered Public Accounting Firm





Boards of Directors and Shareholders

Blue Ridge Real Estate Company

and Big Boulder Corporation


We have audited the accompanying combined balance sheets of Blue Ridge Real Estate Company and Subsidiaries and Big Boulder Corporation and Subsidiaries as of October 31, 2011 and 2010, and the related combined statements of operations, changes in shareholders equity, and cash flows for each of the three years in the period ended October 31, 2011.  These financial statements are the responsibility of the Companies management.  Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Companies are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companies internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Blue Ridge Real Estate Company and Subsidiaries and Big Boulder Corporation and Subsidiaries at October 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2011, in conformity with accounting principles generally accepted in the United States of America.


As discussed in Note 3 to the combined financial statements, the Companies have restated the October 31, 2011, 2010 and 2009 combined financial statements.



/s/ Kronick Kalada Berdy & Co., P.C.

Kingston, Pennsylvania


January 27, 2012, except with respect to Notes 2 and 3

as to which the date is as of November 28, 2012




F-2




BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED BALANCE SHEETS

October 31, 2011 and 2010


ASSETS

(As Restated) 10/31/11 (1) 

(As Restated) 10/31/10 (1) 




  Land and land development costs (3,394 and 3,433        acres per land ledger, respectively)

$20,642,787 

$21,410,737 

  Land improvements, buildings and equipment, net

22,613,121 

23,795,723 

  Land held for investment, principally unimproved (10,719 and        10,723 acres per land ledger, respectively)

6,905,668 

6,905,668 

  Long-lived assets held for sale

2,941,148 

3,943,479 

  Cash and cash equivalents

377,158 

389,962 

  Cash held in escrow

211,881 

605,159 

  Prepaid expenses and other assets

483,434 

501,137 

  Accounts receivable and mortgages receivable

160,290 

409,987 

  Assets of discontinued operations

10,770,222 

12,295,538 

  Total assets

$65,105,709 

$70,257,390 




LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

LIABILITIES:



  Debt

$27,113,120 

$27,249,809 

  Accounts payable

437,783 

646,961 

  Accrued liabilities

415,935 

385,606 

  Deferred income

733,734 

794,244 

  Amounts due to related parties

24,792 

7,292 

  Accumulated deferred income taxes

2,303,708 

3,964,378 

  Unfunded pension liability

3,312,316 

2,713,872 

  Liabilities of discontinued operations

1,010,384 

1,697,645 

  Total liabilities

35,351,772 

37,459,807 




COMBINED SHAREHOLDERS' EQUITY:



  Capital stock, without par value, stated value $.30 per



    combined share, Blue Ridge and Big Boulder each



    authorized 3,000,000 shares, each issued 2,732,442

819,731 

819,731 

  Capital in excess of stated value

19,829,475 

19,829,475 

  Earnings retained in the business

13,462,459 

15,937,224 

  Accumulated other comprehensive loss

(2,272,321)

(1,703,440)

  Shareholders equity before capital stock in treasury

31,839,344 

34,882,990 

    Less cost of 282,018 combined shares of capital stock in treasury

2,085,407 

2,085,407 

  Total shareholders' equity

29,753,937 

32,797,583 

  Total liabilities and shareholders equity

$65,105,709 

$70,257,390 

(1)

 The combined balance sheets as of October 31, 2011 and 2010 and the combined statements of operations as of October 31, 2011, 2010 and 2009 have been restated to correct for the presentation of discontinued operations.  The correction had no impact on total assets or net income (loss).  See Notes 2 and 3.

The accompanying notes are an integral part of the combined financial statements.



F-3




BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED STATEMENTS OF OPERATIONS

for the years ended October 31, 2011, 2010 and 2009

 

(As Restated) 10/31/11 (1)

(As Restated) 10/31/10 (1)

(As Restated) 10/31/09 (1)

Revenues:




     Real estate management revenue

$993,602 

$1,081,270 

$1,552,798 

     Land resource management revenue

2,872,670 

2,557,013 

11,990,241 

     Rental income revenue

1,830,874 

1,793,996 

1,972,226 

     Total revenues

5,697,146 

5,432,279 

15,515,265 

Costs and expenses:




     Real estate management costs

1,016,444 

1,131,626 

1,994,154 

     Land resource management costs

4,436,374 

5,612,485 

10,266,197 

     Rental income costs

973,912 

997,718 

1,101,744 

     General and administration expense

1,791,381 

2,438,220 

1,639,307 

     (Gain) loss on sale of assets

(19,165)

10,643 

     Total costs and expenses

8,198,946 

10,180,049 

15,012,045 

        Loss (profit) from continuing operations

(2,501,800)

(4,747,770)

503,220 





Other income and (expense):




     Interest and other income

11,259 

21,591 

12,812 

     Interest expense  (net of capitalized interest of  $198,728  in      2011, $312,944 in 2010 and  $499,637 in 2009)

(1,415,031)

(1,261,339)

(1,035,171)

     Total other income and expense

(1,403,772)

(1,239,748)

(1,022,359)





(Loss) from continuing operations before income taxes

(3,905,572)

(5,987,518)

(519,139)





(Credit) provision for income taxes on continuing operations:




      Current income taxes on continuing operations

2,000 

(3,000)

47,000 

      Deferred income taxes on continuing operations

(1,326,000)

(2,176,000)

(329,000)

      Total (credit) provision for income taxes on continuing operations

(1,324,000)

(2,179,000)

(282,000)





Net loss before discontinued operations

(2,581,572)

(3,808,518)

(237,139)





Discontinued operations (including $476,279 loss on disposal in 2011)

160,807 

605,438 

585,385 





Provision (credit) for income taxes on discontinued operations:




     Current income taxes on discontinued operations

     Deferred income taxes on discontinued operations

54,000 

206,000 

199,000 

     Total  provision (credit) for income taxes on discontinued operations

54,000 

206,000 

199,000 

Net income from discontinued operations

106,807 

399,438 

386,385 

Net (loss) income

($2,474,765)

($3,409,080)

$149,246 





Basic (loss) earnings per weighted average combined share:




     Net loss before discontinued operations

($1.05)

($1.55)

($0.10)

     Income from discontinued operations, net of tax

$0.04 

$0.16 

$0.16 

     Total basic (loss) earnings per weighted average combined share

($1.01)

($1.39)

$0.06 

(1)

 The combined balance sheets as of October 31, 2011 and 2010 and the combined statements of operations as of October 31, 2011, 2010 and 2009 have been restated to correct for the presentation of discontinued operations.  The correction had no impact on total assets or net income (loss).  See Notes 2 and 3.

The accompanying notes are an integral part of the combined financial statements.



F-4




BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITYfor the years ended October 31, 2011, 2010 and 2009







Accumulated




 


Capital in

Earnings

Other

Capital



Capital Stock (a)

Excess of

Retained in

Comprehensive

Stock in



Shares

Amount

Stated Value

the Business

Loss

Treasury (b)

Total

Balances, October 31, 2008

2,732,442 

$819,731 

$19,785,264 

$19,197,058 

($694,467)

($2,085,407)

$37,022,179 









Comprehensive loss:








Net (loss) income




149,246 



149,246 









Other comprehensive (loss) income:








   Defined benefit pension








     Deferred actuarial (loss),      gain net





(1,380,283)


(1,380,283)

     Prior service costs, net





163 


163 

     Unrecognized transition       cost, net





1,703 


1,703 

     Total defined benefit       pension, net of deferred       tax expense of $943,000







(1,378,417)

      








Total comprehensive loss







(1,229,171)

Compensation recognized under employee stock plan



38,322 




38,322 









Balances, October 31, 2009

2,732,442 

$819,731 

$19,823,586 

$19,346,304 

($2,072,884)

($2,085,407)

$35,831,330 









Comprehensive loss:








Net (loss) income




(3,409,080)



(3,409,080)









Other comprehensive (loss) income:








   Defined benefit pension








     Deferred actuarial (loss)      gain net





362,652 


362,652 

     Prior service costs, net





688 


688 

     Unrecognized transition       cost, net





6,104 


6,104 

     Total defined benefit       pension, net of deferred      tax expense of $257,000







369,444 

Total comprehensive loss







(3,039,636)









Compensation recognized under employee stock plan



5,889 




5,889 









Balances, October 31, 2010

2,732,442 

$819,731 

$19,829,475 

$15,937,224 

($1,703,440)

($2,085,407)

$32,797,583 













F-5




BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITYfor the years ended October 31, 2011, 2010 and 2009 (contd)






Accumulated




 


Capital in

Earnings

Other

Capital



Capital Stock (a)

Excess of

Retained in

Comprehensive

Stock in



Shares

Amount

Stated Value

the Business

Loss

Treasury (b)

Total

Balances, October 31, 2010

2,732,442 

$819,731 

$19,829,475 

$15,937,224 

($1,703,440)

($2,085,407)

$32,797,583 









Comprehensive loss:








Net (loss) income




(2,474,765)



(2,474,765)









Other comprehensive (loss) income:








   Defined benefit pension








     Deferred actuarial (loss) gain, net of tax expense of $389,000





(568,881)


(568,881)

Total comprehensive loss







(3,043,646)









Balances, October 31, 2011

2,732,442 

$819,731 

$19,829,475 

$13,462,459 

($2,272,321)

($2,085,407)

$29,753,937 


(a) Capital stock, at stated value of $.30 per combined share

(b) 282,018 combined shares held in treasury, at cost at October 31, 2011, 2010, and 2009


The accompanying notes are an integral part of the combined financial statements.




F-6




BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED STATEMENTS OF CASH FLOWS

for the years ended October 31, 2011, 2010 and 2009



10/31/11 

10/31/10 

10/31/09 

Cash Flows (Used In) Provided By Operating Activities:




      Net (loss) income  

($2,474,765)

($3,409,080)

$149,246 

      Adjustments to reconcile net (loss) income to net cash       provided by (used in) operating activities:




          Depreciation and amortization

1,354,830 

1,341,774 

1,391,153 

          Impairment

1,178,651 

2,376,000 

2,571,000 

          Abandonment

1,686,209 

          Net book value of properties sold

1,361,786 

1,164,551 

          Deferred income taxes

(1,272,000)

(1,970,000)

(130,000)

          (Gain) loss on sale of assets

(19,165)

10,643 

          Compensation recognized under employee stock plan

5,889 

38,322 

          Changes in operating assets and liabilities:




                    Cash held in escrow

393,278 

436,518 

(809,618)

                    Accounts receivable and mortgages receivable

249,697 

(58,659)

180,839 

                    Prepaid expenses and other assets

(105,470)

7,933 

(160,104)

                    Land and land development costs

92,460 

(570,414)

(1,822,464)

                    Long-lived assets held for sale

1,001,171 

973,748 

2,110,418 

                    Accounts payable and accrued liabilities

(520,457)

(52,171)

(701,779)

                    Deferred income

(60,510)

70,636 

(143,052)

      Net cash provided by (used in) operating activities

1,179,506 

(847,826)

5,535,364 





Cash Flows (Used In) Provided By Investing Activities:




       Proceeds from disposition of assets

52,600 

       Additions to properties

(429,557)

(1,542,999)

(75,973)

       Payments received under direct financing lease arrangements

8,598 

11,280 

14,185 

       Net cash used in investing activities

(368,359)

(1,531,719)

(61,788)





Cash Flows Provided By (Used In) Financing Activities:




       Proceeds from debt

6,474,530 

7,928,262 

16,644,742 

       Payment of debt

(7,298,481)

(5,275,527)

(21,623,317)

       Deferred financing costs

(45,000)

(558,312)

       Net cash (used in) provided by financing activities

(823,951)

2,607,735 

(5,536,887)

Net (decrease) increase in cash and cash equivalents

(12,804)

228,190 

(63,311)

Cash and cash equivalents, beginning of period

389,962 

161,772 

225,083 

Cash and cash equivalents, ending of period

$377,158 

$389,962 

$161,772 






The accompanying notes are an integral part of the combined financial statements.





F-7




NOTES TO COMBINED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Combination:

   The accompanying combined financial statements include the accounts of Blue Ridge Real Estate Company (Blue Ridge) and its wholly-owned subsidiaries (Northeast Land Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, Jack Frost National Golf Course, Inc., Blue Ridge Acquisition Company, BRRE Holdings, Inc., Coursey Commons Shopping Center, LLC, Coursey Creek, LLC, Cobble Creek, LLC, Flower Fields Motel, LLC, Blue Ridge WMN, LLC and Blue Ridge WNJ, LLC) and Big Boulder Corporation (Big Boulder) and its wholly-owned subsidiaries (Lake Mountain Company and BBC Holdings, Inc.) (collectively, the Companies).  Under a Security Combination Agreement between Blue Ridge and Big Boulder and under the by-laws of both Companies, shares of the Companies are combined in unit certificates, each certificate representing concurrent ownership of the same number of shares of each company; shares of each company may be transferred only together with an equal number of shares of the other company. All significant intercompany accounts and transactions are eliminated.

Revenue Recognition:

   Revenues are derived from a wide variety of sources, including sales of real estate, management of investment properties, home construction, property management services, golf activities, timbering and leasing activities. Generally, revenues are recognized as services are performed, except as noted below.

Land and Resort Homes:

   The Companies recognize income on the disposition of real estate using the full accrual method.  The full accrual method is appropriate at closing when the sales contract has been signed, the buyer has arranged permanent financing and the risks and rewards associated with ownership have been transferred to the buyer.  In the few instances that the Companies finance the sale, more than 20% down payment is required.  The remaining financed purchase price is not subject to subordination. Down payments of less than 20% are accounted for as deposits.

   The costs of developing land for resale as resort homes and the costs of constructing certain related amenities are allocated to the specific parcels to which the costs relate. Such costs, as well as the costs of construction of the resort homes, are charged to operations as sales occur. Land held for resale and resort homes under construction are stated at lower of cost or market.

Custom Home Construction:

   The Companies recognize revenue and costs on custom home construction using the percentage of completion method of accounting when construction is beyond the preliminary stage, the buyer is committed to the extent of being unable to require a refund except for non-delivery, the sales proceeds are collectible and the aggregate sales proceeds and the total cost of the project can be reasonably estimated.  Total estimated revenues and construction costs are reviewed periodically, and the effects of revisions are reflected in the combined financial statements in the period in which the revisions are determined.

Timbering Revenues:

   Timbering revenues from stumpage contracts are recognized at the time a stumpage contract is signed, at which time the risk of ownership has been passed to the buyer at a fixed, determinable cost.  Reasonable assurance of collectibility has been determined by the date of signing, and the few obligations of the Companies have already been met.  Therefore, full accrual recognition at the time of contract execution is appropriate under SAB 104 guidance.

Land and Land Development Costs:

   The Companies capitalize as land and land development costs, the original acquisition cost, direct construction and development costs, property taxes, interest incurred on costs related to land under development and other related costs (engineering, surveying, landscaping, etc.) until the property reaches its intended use.  The cost of sales for individual parcels of real estate or condominium units within a project is determined using the relative sales value method.  Revenue is recognized upon signing closing documents.   At closing a binding contract is in effect, the buyer has arranged for permanent financing and the Companies are assured of payment in full.  Also at this time, the risks and rewards associated



F-8




with ownership have been transferred to the buyer.  Selling expenses are recorded when incurred.  In Fiscal 2010, the Jack Frost National Golf Course was reclassified from land held for recreation to land held for development.  The reclassification was based on managements current determination to market the golf course and the planned residential development surrounding the golf course together as a parcel to a national developer.  The Summer Recreation Operations segment no longer exists as a result of the reclassification.

Land Improvements, Buildings, Equipment and Depreciation:

   Land improvements, buildings and equipment are stated at cost. Depreciation, including amortization of equipment under capital lease is provided principally using the straight-line method over the estimated useful lives as set forth below:

Land improvements

 10-30 years

Buildings and improvements

   3-40 years

Equipment and furnishings

   3-20 years

   Upon sale or retirement of depreciable property, the cost and related accumulated depreciation are removed from the related accounts, and resulting gains or losses are reflected in income.

   Interest, real estate taxes, and insurance costs, including those costs associated with holding unimproved land, are charged to expense as incurred. Interest cost incurred during construction of facilities is capitalized as part of the cost of such facilities.

   Maintenance and repairs are charged to expense, and major renewals and betterments are added to property accounts.

Land Held for Investment:

   Land held for investment is stated at cost and is principally unimproved.  Portions of this land are leased on an annual basis primarily to hunting and sportsman clubs.  Real estate taxes and insurance are expensed as incurred.  In the second quarter of 2011, Land held for recreation was reclassified to Land held for investment, principally unimproved. The 311 acres that were reclassified, house our ski areas which were leased to a third party operator during Fiscal 2011.  Subsequently, on December 15, 2011 the ski areas were sold.  Reported interest income principally relates to this direct financing lease.  Operating activities relating to this land are part of the rental income segment.  Real estate taxes and insurance were the responsibility of the operator.

Long-Lived Assets Held for Sale:

   Long-lived assets held for sale primarily relate to housing units constructed in real estate developments projects.  The Companies classify assets as a long-lived asset held for sale upon the completion of construction.  The carrying value of the assets held for sale are stated at the lower of carrying value or fair market value less costs to sell.  The impairment loss for long-lived assets held for sale is the difference between their carrying value and their fair value less cost to sell.  Real estate taxes, insurance, utilities and any related interest are expensed upon completion of construction.  Also included in long-lived assets held for sale at October 31, 2011 is the Jack in the Box, which was sold on November 30, 2011.

Investment in Direct Financing Leases:

   The Companies have capitalized as the net investment in direct financing leases, the portion of the leased premises pertaining to Jack Frost Mountain and Big Boulder ski areas, which meets the criteria for accounting for these lease transactions as direct financing leases.  The accounting was based on estimates and assumptions about the fair values and estimated useful lives of the leased properties, as well as the collectibility of lease payments and recoverability of the unguaranteed residual value of the leased properties.  Management had periodically reviewed the net investment indirect financing leases for events or changes in circumstances that could impact collectibility, and recoverability of the unguaranteed residual value of leased properties and at October 31, 2011 wrote down the net investment indirect financing lease to the amount expected to be recoverable.  Subsequently, on December 15, 2011 the ski areas were sold.

Accounts and Mortgages Receivable:

   Accounts receivable are reported at net realizable value.  Accounts or a portion thereof are written off when they are determined to be uncollectible based upon managements assessment of individual accounts.  An allowance for doubtful accounts, if deemed necessary, is estimated based upon a review of individual accounts.  The allowance amount was $1,222 at October 31, 2011 and $1,192 at October 31, 2010.




F-9




   The Companies account for mortgages receivable on a cost basis.  Interest income is recorded on a monthly basis.  Late payment fees are charged on overdue payments.  Mortgages receivable are evaluated at origination and monitored on an ongoing basis for credit worthiness.  Mortgages receivable are considered fully collectible by management and accordingly no allowance for losses is considered necessary.  Any mortgage 90 days past due is reviewed by management for collectibility.  Mortgages receivable were $2,920 and $175,687 at October 31, 2011 and 2010, respectively.

Impairment:

   The Companies review their long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, which is primarily due to the state of the industry and the economy.  In that event, the Companies calculate the expected future net cash flows to be generated by the asset.  If those net future cash flows are less than the carrying value of the asset, an impairment loss is recognized in operating (loss) profit.  The impairment loss is the difference between the carrying value and the fair value of the asset.  The impairment loss is recognized in the period incurred.

Deferred Income:

   Deferred income includes dues, rents and deposits on land or home sales. Rents that are not yet earned relate to the Companies commercial properties that have been paid in advance, and dues are related to memberships in the Companies hunting and fishing clubs and golf club memberships paid in advance. The Companies recognize revenue related to the hunting and fishing clubs and golf course memberships over the period that the dues cover.  The Companies recognize revenue related to the fishing club over a five month period, May through September, and the golf course over a seven month period, April through October.  Deposits are required on land and home sales.

   Also included in deferred income is a reimbursement from the Pennsylvania Department of Transportation for the cost of a sewer line.  Income will be recognized over the depreciation period.  This sewer line has not yet been placed in service.

Comprehensive Income (Loss):

   The Companies comprehensive income (loss) differs from net income (loss) due to changes in the funded status of the Companies defined benefit pension plan (see Note 10).  The Companies have elected to disclose comprehensive income and loss in its Combined Statements of Changes in Shareholders Equity.

Income Taxes:

   The Companies account for income taxes utilizing the asset and liability method of recognizing the tax consequence of transactions that have been recognized for financial reporting or income tax purposes.  Among other things, this method requires current recognition of the effect of changes in statutory tax rates on previously provided deferred taxes.  For federal income tax purposes, Blue Ridge and its subsidiaries and Big Boulder and its subsidiaries each file as consolidated entities. State income taxes are reported on a separate company basis. Valuation allowances are established, when necessary to reduce tax assets to the amount expected to be realized.

   The Companies policies for Accounting for Uncertainty in Income Taxes in an enterprises financial statements, requires a review of all tax positions and applies a more-likely-than-not recognition threshold to determine whether any part of an individual tax position should be recognized in an enterprises financial statements. A tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon the ultimate settlement with the taxing authority that has full knowledge of all relevant information.

Advertising Costs:

   Advertising costs are primarily related to real estate development and golf course operation.  Advertising costs are expensed when incurred and the advertising expense for Fiscal 2011, Fiscal 2010 and Fiscal 2009 was $25,739, $43,441, and $87,733, respectively.

Use of Estimates and Assumptions:

   The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported




F-10




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 reporting period.  Actual results could differ from those estimates.  Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the combined financial statements in the period in which the revisions are determined.

Statement of Cash Flows:

   For purposes of reporting cash flows, the Companies consider cash equivalents to be all highly liquid investments with maturities of three months or less when acquired.

Concentration of Credit Risk:

   Financial instruments which potentially subject the Companies to concentration of credit risk consist principally of temporary cash investments. The Companies temporary cash investments are held by financial institutions. The Companies have not experienced any losses related to these investments.  At October 31, 2011, the Companies had no cash in excess of the FDIC limits.

Earnings Per Share:

   Basic earnings per share is calculated based on the weighted-average number of shares outstanding.  Diluted earnings per share includes the dilutive effect of stock options, if applicable.

Business Segments:

   The Companies currently operate in two business segments, which consist of the Real Estate Management/Rental Operations and Land Resource Management segments.  The Companies previously operated in three business segments, the third being Summer Recreation Operations.  Effective April 30, 2010, results of operations for the golf course were reclassified to the Land Resource Management segment from the Summer Recreation Operations segment.  The Summer Recreation Operations segment no longer exists as a result of the reclassification.  Financial information about our segments can be found in Note 17.

Stock Compensation:

   The Companies recognize as compensation expense an amount equal to the grant date fair value of the stock options issued over the required service period.  Compensation cost is measured using the modified prospective approach.

   The fair value of each option award is estimated at the date of grant using an option pricing model.  Expected volatilities are based upon historical volatilities of the Companies stock.  The Companies use historical data to estimate option exercises and employee terminations with the valuation model.  The expected term of options granted is derived from the output of the valuation model and represents the period of time that options granted are expected to be outstanding.  The risk-free rate for periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Discontinued Operations:

   A component of the Companies is classified as a discontinued operation when (i) the operations and cash flows of the component of the Companies can be clearly distinguished and have been or will be eliminated from our ongoing operations; (ii) the component has either been disposed of or is classified as held for sale; and (iii) we will not have any significant continuing involvement in the operations of the component of the Companies after the disposal transactions.  Significant judgments are involved in determining whether a component meets the criteria for discontinued operations reporting and the period in which these criteria are met.

   If a component of the Companies is reported as a discontinued operation, the results of operations through the date of sale, including any gain or loss recognized on the disposition, are presented on a separate line of the income statement.

Reclassification:

     Effective as of April 30, 2010, results of operations for the golf course were reclassified to the Land Resource Management segment from the Summer Recreation Operations segment.  The reclassification was based on managements current determination to market the golf course and the planned residential development surrounding the golf course together as a parcel to a national developer.  The Summer Recreation Operations segment no longer exists as a result of the reclassification.  This was also reflected for balance sheet purposes, as the golf course cost basis was transferred from land held for recreation to land and land development costs.  



F-11




   In the second quarter of 2011, Land held for recreation was reclassified to Land held for investment, principally unimproved.  The 311 acres that were reclassified house our ski areas which were leased to a third party operator during Fiscal 2011.  Subsequently, on December 15, 2011 the ski areas were sold.  Operating activities relating to this land are part of the rental income segment.

   The Companies report the results of discontinued operations as a separate component of income on the combined statements of operations under the caption Discontinued operations.  This reporting resulted in certain reclassifications of the 2010 and 2009 financial statement amounts.

   Certain amounts in the Fiscal 2010 and Fiscal 2009 combined financial statements have been reclassified to conform to the Fiscal 2011 presentation.

New Accounting Pronouncements:

In September 2006, the Financial Accounting Standards Board FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements as codified in FASB Accounting Standards Codification ASC 820, Fair Value Measurements and Disclosures (ASC 820). ASC 820 provides guidance for using fair value to measure assets and liabilities. ASC 820 also responds to investors requests for expanded information about the extent to which a company measures assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The Company adopted ASC 820 with respect to financial instruments effective for its fiscal year beginning November 1, 2008. In February 2008, the FASB issued FASB Staff Position (FSP) FAS 157-2 (FSP 157-2) (codified in ASC 820) which delays the effective date of ASC 820 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP 157-2 applies to, but is not limited to, long-lived assets (asset groups) measured at fair value for an impairment assessment (i.e., inventory impairment assessments). FSP 157-2 defers the effective date for non-financial assets and non-financial liabilities of ASC 820 for the Companies to November 1, 2009. The Companies adoption of ASC 820 related to non-financial assets and non-financial liabilities did not have a material impact on the Companies combined financial statements.

In August 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-5, Fair Value Measurements and Disclosures (Topic 820)  Measuring Liabilities at Fair Value, (ASU 2009-5), which amends ASC 820 to provide additional guidance to clarify the measurement of liabilities at fair value in the absence of observable market information. ASU 2009-5 was effective for the Companies beginning November 1, 2009. The adoption of ASU 2009-5 did not have a material impact on the Companies combined financial statements.

In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements (ASU 2010-06). ASU 2010-06 requires certain new disclosures and clarifies some existing disclosure requirements regarding fair value measurement as set forth in Accounting Standards Codification (ASC) Subtopic 820-10. ASU 2010-06 amends ASC Subtopic 820-10 to now require that (1) a reporting entity disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; (2) in the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity present separately information about purchases, sales, issuances, and settlements, and (3) a reporting entity provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of ASU No. 2010-06 did not have a material impact on the Companies combined financial statements.

In December 2008, the FASB issued FSP SFAS No. 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets. The disclosure requirements of this FSP are included in ASC Topic 715  Compensation-Retirement Benefit (Topic 715) as pending transition guidance that require the disclosure of more information about investment allocation decisions, major categories of plan assets, including concentrations of risk and fair value measurements, and the fair value techniques and inputs used to measure plan assets. The disclosures about plan assets required by Topic 715 must be provided for fiscal years ending after December 15, 2009. The adoption of Topic 715 did not have a material impact on the Companies combined financial statements.




F-12




In December 2009, the FASB issued ASU No. 2009-16, Accounting for Transfers of Financial Assets (ASU 2009-16), which is an amendment of ASC 860, Transfers and Servicing.  ASU 2009-16 requires more information about the transfers of financial assets.  More specifically, ASU 2009-16 eliminates the concept of a qualified special purpose entity, changes the requirements for derecognizing financial assets, and enhances the information reported to users of financial statements.  ASU 2009-16 is effective for fiscal years beginning on or after November 15, 2009. ASU 2009-16 is effective for the Companies financial statements for fiscal years beginning November 1, 2010. The adoption of ASU 2009-16 did not have a material impact on the Companies combined financial statements.

In December 2009, the FASB issued ASU No. 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (ASU 2009-17). ASU 2009-17 changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entitys purpose and design and the reporting entitys ability to direct the activities of the other entity that most significantly impact the other entitys economic performance. The new standard will require a number of new disclosures, including additional disclosures about the reporting entitys involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entitys financial statements. ASU 2009-17 is effective for fiscal years beginning after November 15, 2009. The adoption of ASU 2009-17 did not have a material impact on the Companies combined financial statements.

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Statement of Comprehensive Income (ASU 2011-05), which requires entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income.  The adoption of this guidance, which relates to presentation only, is not expected to have a material impact on the Companies combined financial statements.  ASU 2011-05 will be effective for the Companies fiscal year beginning November 1, 2012.

2.  DISCONTINUED OPERATIONS:

   On September 30, 2011, the Applebees located in Fort Collins, Colorado was sold and as a result the operating activity for the years ending October 31, 2011 and 2010 is being reported as a discontinued operation.  The operating results of Applebees were previously reported in the Rental Operations of the combined statements of operations.  At October 31, 2011, there were no remaining assets or liabilities related to Applebees.

   On November 30, 2011, the Jack in the Box located in Wallisville, Texas was sold and as a result the operating activity for the years ending October 31, 2011, 2010 and 2009 is being reported as a discontinued operation.  The operating results of Jack in the Box were previously reported in the Rental Operations of the combined statements of operations.   At October 31, 2011, there was $1,814,573 of assets related to Jack in the Box included in assets of discontinued operation and $1,010,384 of debt included in liabilities of discontinued operations on the Companies combined balance sheet.

   On December 15, 2011, the Jack Frost Mountain and Big Boulder ski areas were sold and as a result the operating activity for the years ending October 31, 2011, 2010 and 2009 is being reported as a discontinued operation.  The ski areas had been leased to an operator and a portion of the leased premises had been capitalized as net investment in direct financing leases. Therefore a portion of the operating results were previously reported in the Rental Operations and a portion of the operating results were previously reported in the Interest and Other Income line of the combined statements of operations.  The sale transaction resulted in a loss, therefore a valuation allowance was previously reported as impairment expense in the Land Resource Management segment of the combined statements of operations.  At October 31, 2011, there was $8,955,649 of assets related to the two ski areas included in assets of discontinued operations on the Companies combined balance sheet and there were no liabilities.




F-13




   The combined assets and liabilities as of October 31, 2011 and 2010, and the results of operations of the properties classified as discontinued operations for the years ended October 31, 2011, 2010 and 2009, are summarized as follows:


BALANCE SHEET

10/31/11

10/31/10

ASSETS



Land improvements, buildings & equipment, net

$268,288

$1,605,985

Land held for investment, principally unimproved

37,706

1,618,055

Long-lived assets held for sale

1,780,155

Net investment in direct financing leases

7,788,195

8,298,793

Prepaid expenses and other assets

895,878

772,705

Total assets of discontinued operations

$10,770,222

$12,295,538




LIABILITIES



Debt

$1,010,384

$1,697,645

Total liabilities of discontinued operations

$1,010,384

$1,697,645



Years ended October 31,

STATEMENT OF OPERATIONS

2011

2010

2009

Revenues:




   Applebees

$106,011 

$78,714 

$0 

   Jack in the Box

133,335 

132,984 

127,379 

   Jack Frost Mountain Ski Area

163,143 

158,639 

164,024 

   Big Boulder Ski Area

89,119 

84,614 

89,998 

Total Revenue

491,608 

454,951 

381,401 





Expenses (excluding interest):




   Applebees

4,665 

5,342 

   Jack in the Box

44,478 

51,336 

47,377 

   Jack Frost Mountain Ski Area

10,279 

1,018 

17,336 

   Big Boulder Ski Area

3,983 

7,671 

17,764 

Total Expenses

63,405 

65,367 

82,477 





Interest and other income (interest income related to ski area net investment in direct financing lease):




   Applebees

   Jack in the Box

   Jack Frost Mountain Ski Area

126,672 

126,092 

125,473 

   Big Boulder Ski Area

194,997 

192,865 

190,639 

Total Interest and Other Income

321,669 

318,957 

316,112 


F-14





Years ended October 31,


2011

2010

2009

Interest expense (calculated on debt related to the property):




   Applebees

42,992 

31,781 

   Jack in the Box

69,794 

71,322 

29,651 

   Jack Frost Mountain Ski Area

   Big Boulder Ski Area

Total Interest

112,786 

103,103 

29,651 





Gain (Loss) on Disposal:




   Applebees

25,721 

   Jack in the Box

   Jack Frost Mountain Ski Area

(387,000)

   Big Boulder Ski Area

(115,000)


(476,279)

Income from discontinued operations before income taxes

$160,807 

$605,438 

$585,385 

3.  RESTATEMENT

   In the fourth quarter of Fiscal 2012 Management determined to restate the financial statements for the fiscal years ended October 31, 2011, 2010 and 2009, the three months ended January 31, 2011, the six months ended April 30, 2011 and the nine months ended July 2011.  The restatement is to reclassify the financial results from certain properties sold by the Companies in 2011 which should have been, but were not, reported in discontinued operations for the periods prior to the respective dates of their disposition.  The properties include:

1.

approximately 1 acre of land in Fort Collins, Colorado on which an Applebees restaurant was located, sold by Blue Ridge on September 30, 2011;

2.

1.2 acres of land in Wallisville, Texas on which a Jack in the Box restaurant was located, sold by Blue Ridge on November 30, 2011;

3.

201 acres of land comprising the Jack Frost Mountain Ski Area, sold by Blue Ridge on December 15, 2011; and

4.

approximately 110 acres of land comprising the Big Boulder Ski Area, sold by Big Boulder on December 15, 2011.

   The restatement did not impact the Companies total net (loss) income for the relevant periods.  The following are the previously reported and restated balances on the combined balance sheets as of October 2011 and 2010 and the combined statement of operations for the years ended October 31, 2011, 2010 and 2009:

COMBINED BALANCE SHEET


October 31, 2011

ASSETS

As Previously Reported

Reclassified

As Restated 





  Land improvements, buildings and equipment, net

$22,881,409 

($268,288)

$22,613,121 

  Land held for investment, principally unimproved

6,943,374 

(37,706)

6,905,668 

  Long-lived assets held for sale

4,721,303 

(1,780,155)

2,941,148 

  Net investment in direct financing leases

7,788,195 

(7,788,195)

  Prepaid expenses and other assets

1,379,312 

(895,878)

483,434 

  Assets of discontinued operations

10,770,222

10,770,222 





LIABILITIES:




  Debt

28,123,504 

(1,010,384)

$27,113,120 

  Liabilities of discontinued operations

1,010,384 

1,010,384 




F-15




COMBINED BALANCE SHEET


October 31, 2010

ASSETS

As Previously Reported

Reclassified

As Restated





  Land improvements, buildings and equipment, net

$25,401,708 

($1,605,985)

$23,795,723 

  Land held for investment, principally unimproved

8,523,723 

(1,618,055)

6,905,668 

  Net investment in direct financing leases

8,298,793 

(8,298,793)

  Prepaid expenses and other assets

1,273,842 

(772,705)

501,137 

  Assets of discontinued operations

12,295,538 

12,295,538 





LIABILITIES:




  Debt

28,947,454 

(1,697,645)

$27,249,809 

  Liabilities of discontinued operations

1,697,645 

1,697,645 

COMBINED STATEMENTS OF OPERATIONS


For the year ended October 31, 2011

 

As Previously Reported

Reclassified

As Restated

Revenues:




     Land resource management revenue

$4,322,670 

($1,450,000)

$2,872,670 

     Rental income revenue

2,322,482 

(491,608)

1,830,874 

     Total revenues

7,638,754 

(1,941,608)

5,697,146 





Costs and expenses:




     Land resource management costs

6,362,653 

(1,926,279)

4,436,374 

     Rental income costs

1,037,317 

(63,405)

973,912 

     Total costs and expenses

10,188,630 

(1,989,684)

8,198,946 

        Loss (profit) from continuing operations

(2,549,876)

48,076 

(2,501,800)





Other income and (expense):




     Interest and other income

332,928 

(321,669)

11,259 

     Interest

(1,527,817)

112,786 

(1,415,031)

     Total other income and expense

(1,194,889)

(208,883)

(1,403,772)





(Loss) from continuing operations before income taxes

(3,744,765)

(160,807)

(3,905,572)





(Credit) provision for income taxes on continuing operations:




      Deferred income taxes on continuing operations

(1,272,000)

(54,000)

(1,326,000)

      Total (credit) provision for income taxes on continuing operations

(1,270,000)

(54,000)

(1,324,000)





Net loss before discontinued operations

(2,474,765) 

(106,807)

(2,581,572)





Discontinued operations

160,807 

160,807 





Provision (credit) for income taxes on discontinued operations:




     Deferred income taxes on discontinued operations

54,000 

54,000 





Net income from discontinued operations

106,807 

106,807 




F-16




COMBINED STATEMENTS OF OPERATIONS


For the year ended October 31, 2010

 

As Previously Reported

Reclassified

As Restated

Revenues:




     Rental income revenue

$2,248,947 

($454,951)

$1,793,996 

     Total revenues

5,887,230 

(454,951)

5,432,279 





Costs and expenses:




     Rental income costs

1,063,085 

(65,367)

997,718 

     Total costs and expenses

10,245,416 

(65,367)

10,180,049 

        Loss (profit) from continuing operations

(4,358,186)

(389,584)

(4,747,770)





Other income and (expense):




     Interest and other income

340,548 

(318,957)

21,591 

     Interest

(1,364,442)

103,103 

(1,261,339)

     Total other income and expense

(1,023,894)

(215,854)

(1,239,748)





(Loss) from continuing operations before income taxes

(5,382,080)

(605,438)

(5,987,518)





(Credit) provision for income taxes on continuing operations:




      Deferred income taxes on continuing operations

(1,970,000)

(206,000)

(2,176,000)

      Total (credit) provision for income taxes on continuing operations

(1,973,000)

(206,000)

(2,179,000)





Net loss before discontinued operations

(3,409,080)

(399,438)

(3,808,518)


 



Discontinued operations

605,438 

605,438 





Provision (credit) for income taxes on discontinued operations:




     Deferred income taxes on discontinued operations

206,000 

206,000 





Net income from discontinued operations

399,438 

399,438 





F-17




COMBINED STATEMENTS OF OPERATIONS


For the year ended October 31, 2009

 

As Previously Reported

Reclassified

As Restated

Revenues:




     Rental income revenue

$2,353,627 

($381,401)

$1,972,226 

     Total revenues

15,896,666 

(381,401)

15,515,265 





Costs and expenses:




     Rental income costs

1,184,221 

(82,477)

1,101,744 

     Total costs and expenses

15,094,522 

(82,477)

15,012,045 

        Loss (profit) from continuing operations

802,144 

(298,924)

503,220 





Other income and (expense):




     Interest and other income

328,924 

(316,112)

12,812 

     Interest

(1,064,822)

29,651 

(1,035,171)

     Total other income and expense

(735,898)

(286,461)

(1,022,359)





(Loss) profit from continuing operations before income taxes

66,246 

(585,385)

(519,139)





(Credit) provision for income taxes on continuing operations:




      Deferred income taxes on continuing operations

(130,000)

(199,000)

(329,000)

      Total (credit) provision for income taxes on continuing operations

(83,000)

(199,000)

(282,000)





Net income (loss) before discontinued operations

149,246 

(386,385)

(237,139)





Discontinued operations

585,385 

585,385 





Provision (credit) for income taxes on discontinued operations:




     Deferred income taxes on discontinued operations

199,000 

199,000 





Net income from discontinued operations

386,385 

386,385 

4.  CONDENSED FINANCIAL INFORMATION:

Condensed financial information of Blue Ridge and its subsidiaries and Big Boulder and its subsidiaries, at October 31, 2011, 2010 and 2009 and for each of the years then ended is as follows:


Blue Ridge and Subsidiaries


10/31/11

10/31/10

10/31/09

FINANCIAL POSITION:




  Total assets

$51,526,111 

$54,244,597 

$56,121,655 

  Total liabilities

33,108,155 

33,548,251 

32,643,664 

  Shareholders' equity

18,417,958 

20,696,349 

23,477,988 

OPERATIONS:




  Revenues

3,427,638 

3,823,407 

12,301,912 

Income (loss) from continuing operations before taxes

(2,580,184)

(5,351,948)

2,392,973 

Provision (credit) for income taxes

(873,000)

(1,978,000)

859,000 

  Net (loss) income

($1,709,510)

($3,156,971)

$1,746,485 


F-18





Big Boulder and Subsidiaries


10/31/11 

10/31/10 

10/31/09 

FINANCIAL POSITION:




  Total assets

$13,579,598 

$16,012,793 

$16,837,726 

  Total liabilities

2,243,617 

3,911,556 

4,484,387 

  Shareholders' equity

11,335,979 

12,101,234 

12,353,342 

OPERATIONS:




  Revenues

2,269,508 

1,608,872 

3,213,353 

Loss from continuing operations before taxes

(1,325,388)

(635,570)

(2,912,112)

Provision (credit) for income taxes

(451,000)

(201,000)

(1,141,000)

  Net (loss)

($765,255)

($252,109)

($1,597,239)

5.  LAND AND LAND DEVELOPMENT COSTS:

Land and land development costs as of October 31, 2011 and 2010 consist of the following:


10/31/2011

10/31/2010

Land unimproved designated for development

$10,901,859 

$11,021,647 

Residential development

5,084,262 

5,906,189 

Infrastructure development

4,656,666 

4,482,901 


$20,642,787 

$21,410,737 

The decrease in land improvements designated for development ($119,788) was due to two land sales in Fiscal 2011.  The carrying value of land improvements designated for development reflects an impairment allowance of $73,000 in Fiscal 2011 and Fiscal 2010.  The decrease in the residential development was primarily due to the sale of two condominium units at Boulder Lake Village ($891,693) and the transfer to assets held for sale of three condominium units at Boulder Lake Village ($1,196,693), net of their impairment allowance of $859,749, which was offset by additions of $406,710.  The increase in infrastructure development cost of $173,765 was primarily related to the costs associated with the Big Boulder wastewater treatment plan upgrade.  The carrying value of the infrastructure development assets reflects an impairment allowance of $1,900,000 in Fiscal 2011 and Fiscal 2010 and the carrying value of the residential development assets reflects an impairment allowance of $0 in Fiscal 2011 and $859,749 in Fiscal 2010.

6.  ABANDONMENT OF LAND DEVELOPMENT COSTS:

In Fiscal 2009, two capital projects previously under development were abandoned as the Companies determined that these investments in the projects were not expected to be recoverable due to environmental regulation changes. The major expenditures abandoned included permits, surveys, architectural and legal fees and capitalized costs including labor, interest and property taxes.  

The following is a summary of the planned residential developments (PRD) that were abandoned:


Total Investment at 10/31/09

Abandonment

Net Investment After Abandonment

Jack Frost Mountain PRD

$1,753,115 

$1,528,083 

$225,032 

Big Boulder Slopeside PRD

158,126 

158,126 

Totals

$1,911,241 

$1,686,209 

$225,032 

7.  LAND:


10/31/2011 

10/31/2010 

Land held for investment



  Land Unimproved

$2,340,198 

$2,340,198 

  Land Commercial rental properties

4,565,470 

4,565,470 


$6,905,668 

$6,905,668 





F-19




8.  DEBT AND LETTER OF CREDIT:

Debt as of October 31, 2011 and 2010 consists of the following:


10/31/11 

10/31/10 

Mortgage notes payable to bank, interest fixed at 6.90% payable in monthly installments of $61,769 including interest through Fiscal 2031.

$7,997,897 

$8,180,380 

Mortgage notes payable to bank, interest at the banks prime rate (3.25% at October 31, 2011) payable in monthly installments of $3,198 through January 2014.

118,320 

156,698 

Mortgage note payable to bank, interest fixed at 5.59% payable in monthly installments of $44,156 including interest through October 2014.

6,900,665 

7,035,263 

Construction and site development line of credit mortgage note payable to bank, interest at the greater of LIBOR plus 3.5% or 5.5% (5.5% at October 31, 2011) payable in installments due at the closing of each unit within the development through September 2012 or on demand.

6,156,652 

7,795,423 

Revolving line of credit payable to bank, interest at the greater of LIBOR plus 3.5% or 5.5% (5.5% at October 31, 2011) payable on demand.

1,197,131 

1,427,386 

Term note payable to bank, interest at one-month LIBOR plus 3.0% (3.25% at October 31, 2011).  Interest only payments due monthly through December 2011 at which time principal balance is due in full.

4,600,000 

2,600,000 

Capital lease obligation payable to bank, interest fixed at 5.23%, payable in 24 installments of $8,682 due April 2011 through September 2014.   

142,455 

Capital lease obligation payable to bank, interest fixed at 6.48%, payable in 48 monthly installments of $5,131 including interest through October 2011.

54,659 


27,113,120 

27,249,809 

Discontinued operations debt:



Mortgage note payable to bank, interest fixed at 6.75% payable in monthly installments of $7,255 including interest through May 2014.  (Now included in Liabilities of discontinued operations.)

1,010,384 

1,027,645 

Promissory note payable to a descendants trust, interest fixed at 7%, interest only payments of $3,908 due monthly through February 2015, at which time principal balance is due.  (Now included in Liabilities of discontinued operations.)

670,000 


$28,123,504 

$28,947,454 

   The Companies have two lines of credit with Manufacturers and Traders Trust Company (the Bank) totaling $12,100,000 at October 31, 2011.  The lines are as follows: a $9,000,000 line of credit mortgage note with sub-limits for construction and site development and a $3,100,000 revolving line of credit for general operations.

   During Fiscal 2011, the $9,000,000 line of credit mortgage had a site-development sublimit of $4,600,000 and a construction sub-limit of $4,400,000.  At October 31, 2011, the Companies had utilized $6,156,652 of this line which bears interest at the greater of overnight LIBOR plus 3.5% or the daily 30-day LIBOR plus 3.5%, in all cases at a minimum interest rate of 5.5% (such interest rate was 5.5% at October 31, 2011). The interest reserve account included in cash held in escrow, which was established in 2009 as security for the payment of interest on the mortgage note, and had a balance of $114,351 at October 31, 2011.  Subsequently, on December 15, 2011 the ski areas were sold. Sale proceeds of $3,062,811 were utilized to pay this line of credit and $325,000 was deposited into the interest reserve account.

   At October 31, 2011, Blue Ridge had utilized $1,197,131 of its $3,100,000 general line of credit, which is an on demand, revolving line with no maturity date. The general line of credit bears interest at the greater of the overnight LIBOR plus 3.5% or the daily 30-day LIBOR plus 3.5%, with in all cases a minimum interest rate of 5.5% (such interest rate was 5.5% at October 31, 2011).




F-20




   The weighted average short term borrowings and interest rate for the year ended October 31, 2011 were $12,629,000 and 5.04% respectively.  The weighted average interest rate at ended October 31, 2011 was 4.62%.  The loan agreement requires, among other things, that the Companies comply with consolidated debt to worth, debt service coverage and tangible net worth ratios.  The Companies have not met the required debt service coverage ratio at October 31, 2011 and 2010 and have obtained waivers from the Bank for this covenant.

  The site development sub-limit agreement enables the Companies to issue letters of credit in amounts up to $4,600,000.  During the fiscal year ended October 31, 2005, or Fiscal 2005, the Bank agreed to issue, on the Companies behalf, an irrevocable standby Letter of Credit to Kidder Township for the purpose of guaranteeing, as required by Kidder Township, completion of the infrastructure improvements to the Boulder Lake Village premises.  On September 12, 2005, the letter of credit was issued in the amount of $3,831,594.  As of October 31, 2011, the Companies have utilized $2,628,657 of the site development sub-limit and the net balance of the letter of credit was $1,202,937.  The amount available on the site development sub-limit as of October 31, 2011 was $479,542.

   On September 30, 2011, the Companies sold a property leased to AmRest, LLC in Fort Collins, Colorado and subsequently paid off the outstanding principal balance of $670,000 on a purchase money promissory note with The Stephen A. Grove Descendants Trust.

   On May 22, 2009, the Companies entered into a Deed of Trust and Security Agreement and Real Estate Lien Note with Barbers Hill Bank totaling $1,050,000.  The agreement encumbered certain real property located in Chambers County, Texas.  The property was leased to Jack in the Box Eastern Division, L.P. during Fiscal Year 2011 and was subsequently sold.  The note, which had a maturity date of May 22, 2014 and bore interest at a fixed rate of 6.75%, had an outstanding balance of $1,010,384 as of October 31, 2011.  On November 30, 2011, the Companies sold the property in Chambers County, Texas and subsequently repaid in full the outstanding balance under the note of $1,009,002 to Barbers Hill Bank.

   On July 29, 2010 the Companies entered into a Loan Agreement and Term Note with the Bank in the amount of $2,600,000.  The agreement encumbers, among other things, certain real property at Jack Frost Mountain Ski Area and Big Boulder Ski Area and all non-real estate assets of the Companies and is secured by the guaranty of Kimco Realty Corporation, the Companies majority shareholder.  The principal amount of the Loan was to be paid in full on July 29, 2011.  Effective as of July 29, 2011, the Companies entered into the Amended and Restated Note with the Bank, which increased the loan by an aggregate of $2,000,000 to $4,600,000 and extended the maturity date of the note from July 29, 2011 to December 31, 2011.  The note bears interest at a rate of one-month LIBOR plus 3.0% (such interest rate was 3.25% at October 31, 2011). On December 15, 2011 the note was paid in full with the proceeds from the sale of the ski areas.

   The Companies had a capital lease agreement with the Bank for a modular Pro Shop at Jack Frost National Golf Course.  The capital lease was payable in 48 monthly installments of $5,131 and bore interest at a fixed rate of 6.48%.  The capital lease was paid in full in October 2011.

   All properties have been pledged as collateral for debt.

 The aggregate amount of long-term debt maturing in each of the next five years and thereafter ending subsequent to October 31, 2011, is as follows: 2012  $12,392,475; 2013  $465,654; 2014  $7,896,679; 2015  $240,295; 2016  $257,410; thereafter $6,870,991.

9.  INCOME TAXES:

   The credit for income taxes from continuing operations is as follows:


10/31/11 

10/31/10 

10/31/09 

Currently payable:




                Federal

$0 

($5,000)

$44,000 

                State

2,000 

2,000 

3,000 


2,000 

(3,000)

47,000 

Deferred:




                Federal

(1,328,000)

(1,991,000)

(169,000)

                State

2,000 

(185,000)

(160,000)


(1,326,000)

(2,176,000)

(329,000)

Total

($1,324,000)

($2,179,000)

($282,000)




F-21




   A reconciliation between the amount computed using the statutory federal income tax rate of 34% and the actual credit for income taxes is as follows:


10/31/11 

10/31/10 

10/31/09 

Computed at statutory rate

($1,327,000)

($2,035,000)

($176,000) 

State income taxes, net of federal income tax

2,000 

(121,000)

(102,000)

Nondeductible expenses

1,000 

(24,000)

Other

1,000 

(4,000)

   (Credit) provision for income taxes from continuing operations

($1,324,000)

($2,179,000)

($282,000)

   The components of the deferred tax assets and liabilities as of October 31, 2011 and 2010 are as follows:


10/31/11 

10/31/10 

Deferred tax assets:



        Accrued expenses

$27,000 

$27,000 

        Deferred income

147,000 

162,000 

        Defined benefit pension

1,553,000 

1,164,000 

        Asset impairment

2,132,000 

1,951,000 

        AMT credit carryforward

364,000 

364,000 

        Net operating losses

6,287,000 

4,680,000 

        Valuation allowance

(2,778,000)

(2,451,000)

        Contribution carryforward

32,000 

29,000 

        Stock options

164,000 

165,000 

        Deferred tax asset

7,928,000 

6,091,000 



10/31/11 

10/31/10 

Deferred tax liability:



        Depreciation

9,398,000 

9,222,000 

        Land basis

834,000 

834,000 


10,232,000 

10,056,000 




        Deferred income tax liability, net

$2,304,000 

$3,965,000 

   At October 31, 2011, the Companies have approximately $364,000 of Alternative Minimum Tax (AMT) credit carryforward available to reduce future income taxes.  The AMT credit has no expiration date.

   At October 31, 2011, the Companies had available approximately $10,321,000 of federal net operating loss carryforwards which will expire from 2024 to 2031. The Companies also have state net operating loss carryforwards of approximately $27,805,000 that will expire from 2019 to 2031.  The Companies have recorded a valuation allowance against state net operating losses, which are not expected to be utilized.

   The Companies recognize interest and/or penalties related to income tax matters in income tax expense.

   At October 31, 2011, the Companies had unsettled federal tax returns for Fiscal 2008, 2009 and 2010 and unsettled state tax returns for Fiscal 2008, 2009 and 2010 for the states of Louisiana, Minnesota, New Jersey, Pennsylvania, South Carolina, Texas and Colorado.





F-22




10.  PENSION BENEFITS:

   Effective July 15, 2010 the Companies sponsored defined benefit pension plan was amended such that future benefit accruals ceased effective as of August 31, 2010.  Benefits under the plan were based on average compensation and years of service.  The Companies funding policy is to contribute annually at least the minimum amounts required under the Employee Retirement Income Security Act of 1974.

Weighted Average Assumptions

10/31/11 

10/31/10 

10/31/09 

 Discount Rates used to determine net periodic pension cost as of October 31, 2011, 2010 and 2009

5.26%

5.67%

8.25%

 Expected long-term rates of return on assets

7.50%

7.50%

7.50%

 Rates of increase in compensation levels

N/A

N/A

4.00%


Change in Benefit Obligation

10/31/11 

10/31/10 

 Benefit obligation at beginning of year

$7,583,064 

$7,392,287 

 Service cost (net of expenses)

55,788 

186,427 

 Interest cost

391,258 

415,441 

 Curtailment

(164,981)

 Actuarial loss

1,010,136 

19,173 

 Benefits paid

(275,040)

(265,283)

 Benefit obligation at end of year

$8,765,206 

$7,583,064 


Change in Plan Assets

10/31/11 

10/31/10 

 Fair value of plan assets at beginning of year

$4,869,192 

$4,199,624 

 Actual return on plan assets

267,951 

598,148 

 Employer contributions

637,600 

402,126 

 Benefits paid

(275,040)

(265,283)

 Administrative expenses

(46,813)

(65,423)

 Fair value of plan assets at end of year

$5,452,890 

$4,869,192 


Reconciliation of Funded Status of the Plan

10/31/11 

10/31/10 

 Funded status at end of year

($3,312,316)

($2,713,872)

 Unrecognized transition obligation

 Unrecognized net prior service cost

 Unrecognized net actuarial loss

3,824,812 

2,867,261 

 Net amount recognized at end of year

$512,496 

$153,389 


Amounts Recognized in the Combined Balance Sheet

10/31/11 

10/31/10 

 Accrued pension expense

($3,312,316)

($2,713,872)

 Accumulated other comprehensive loss (pre-tax)

3,824,812 

2,867,261 

 Net amount recognized

$512,496 

$153,389 


Additional Year-End Information for Pension Plan with Accumulated Benefit Obligation in Excess of Plan Assets

10/31/11 

10/31/10 

 Projected benefit obligation

$8,765,206 

$7,583,064 

 Accumulated benefit obligation

$8,765,206 

$7,583,064 

 Fair value of plan assets

$5,452,890 

$4,869,192 


F-23




Amounts Recognized in Accumulated Other Comprehensive Loss

10/31/11 

10/31/10 

 Net actuarial loss

$3,824,812 

$2,867,261 

 Prior service cost

 Unrecognized net initial obligation

 Total (before tax effects)

$3,824,812 

$2,867,261 


Components of Net Periodic Benefit Cost

10/31/11 

10/31/10 

10/31/09 

 Service cost

$55,788 

$186,427 

$133,037 

 Interest cost

391,258 

415,441 

352,191 

 Expected return on plan assets

(369,382)

(316,795)

(265,883)

 Amortization of transition obligation

2,868 

2,868 

 Amortization of prior service cost

274 

274 

 Amortization of accumulated loss

200,829 

268,919 

60,656 

 Total net periodic benefit expense

$278,493 

$557,134 

$283,143 


Other changes in plan assets and benefit obligationsrecognized in other comprehensive loss

10/31/11 

10/31/10 

 Net loss (gain)

$1,111,567 

($262,180)

 Recognized net actuarial gain (loss)

(200,829)

(268,919)

 Prior service cost (credit)

 Recognized prior service (cost) credit

(274)

 Recognized net transition (obligation) asset

(2,868)

 Total recognized in other comprehensive loss  (before tax effects)

$910,738 

($534,241)




 Total recognized in net periodic benefit cost and   other comprehensive income (before tax effects)

$1,189,231 

$22,893 


Amounts expected to be recognized into net periodic cost in the coming year

10/31/11 

10/31/10

 Loss recognition

$334,273 

$201,428 

 Prior service cost recognition

$0 

$0 

 Net initial obligation/(asset) recognition

$0 

$0 



Estimated Future Benefits Payments

Fiscal Year

Benefits


2012

$348,379 


2013

$347,424 


2014

$365,018 


2015

$385,135 


2016

$468,794 


2017-2021

$2,654,169 





F-24




   The Companies expect to contribute $545,687 to the pension plan in fiscal 2012.

   Measurement Date   October 31

Weighted Average Assumptions

For Determination of:


Benefit Obligations as of October 31, 2011

Benefit Obligations as of October 31, 2010

 Discount rate

4.48%

5.26%

 Rate of compensation increase

N/A

N/A


Weighted-Average Asset Allocations

10/31/11

10/31/10

 Asset Category



 Equity

62.86%

63.32%

 Fixed Income

35.92%

36.03%

 Cash Equivalents

1.22%

.65%

  Total

100.00%

100.00%

   The Companies goal is to conservatively invest the plan assets in high-grade securities with a minimum risk of market fluctuation.  Based on the allocation of our assets between equity, fixed income and money market funds, we estimate our long term rate of return to be approximately 7.5%.

   Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction value hierarchy which requires an entity to maximize the use of observable inputs when measuring fair value.

   The standard describes three levels of inputs that may be used to measure fair value:

   Level 1 Fair value is based on unadjusted quoted prices in active markets that are accessible to the Plan for identical assets.  These generally provide the most reliable evidence and are used to measure fair value whenever available.

   Level 2 Fair value is based on significant inputs, other than level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data.  Level 2 inputs include quoted market prices in active markets for similar assets, quoted market prices in markets that are not active for identical or similar assets, and other observable inputs.

   Level 3 Fair value would be based on significant unobservable inputs.  Examples of valuation methodologies that would result in level 3 classification include option pricing models, discounted cash flows, and other similar techniques.

   Information about the Plans fair value levels follows as at October 31, 2011:


Level 1

Level 2

Level 3

Total

Money Market Fund

$66,594 



$66,594 

Common Collective Trust Funds:





     Strategic Bond Portfolio


$614,794 


614,794 

     Long Duration Portfolio


610,900 


610,900 

     Intermediate Fixed Income Portfolio


559,924 


559,924 

     Strategic Growth Portfolio


429,711 


429,711 

     Large Company Domestic Growth Portfolio


428,527 


428,527 

     Fundamental Value Portfolio


426,977 


426,977 

     Large Company Value Portfolio


431,316 


431,316 

     International Core Portfolio


344,025 


344,025 

     International Value Portfolio


335,582 


335,582 

     Small Company Growth Portfolio


259,632 


259,632 

     Mid-Cap Growth Portfolio


252,851 


252,851 

     Mid-Cap Fundamental Value Portfolio


260,101 


260,101 

     Small Company Value Portfolio


259,062 


259,062 

     Guaranteed Investment Contract



$172,894 

172,894 

Total

$66,594 

$5,213,402 

$172,894 

$5,452,890 


F-25




GIC Portfolio


Assets at Fair Value

Balance, beginning of year

$173,652 


$173,652 

Purchases, sales, issuances and settlements, net

(758)


(758)

Balance, end of year

$172,894 


$172,894 

Information about the Plans fair value levels follows as at October 31, 2010:


Level 1

Level 2

Level 3

Total

Money Market Fund

$31,448 



$31,448 

Common Collective Trust Funds:





     Strategic Bond Portfolio


$552,976 


552,976 

     Long Duration Portfolio


535,164 


535,164 

     Intermediate Fixed Income Portfolio


492,702 


492,702 

     Strategic Growth Portfolio


394,777 


394,777 

     Large Company Domestic Growth Portfolio


388,282 


388,282 

     Fundamental Value Portfolio


370,668 


370,668 

     Large Company Value Portfolio


376,815 


376,815 

     International Core Portfolio


316,470 


316,470 

     International Value Portfolio


314,915 


314,915 

     Small Company Growth Portfolio


240,743 


240,743 

     Mid-Cap Growth Portfolio


229,719 


229,719 

     Mid-Cap Fundamental Value Portfolio


228,283 


228,283 

     Small Company Value Portfolio


222,578 


222,578 

     Guaranteed Investment Contract



$173,652 

173,652 

Total

$31,448 

$4,664,092 

$173,652 

$4,869,192 



GIC Portfolio


Fair Value

Balance, beginning of year

$174,297 


$174,297 

Purchases, sales, issuances and settlements, net

(645)


(645)

Balance, end of year

$173,652 


$173,652 

   The following is a description of the valuation methodologies used for assets measured at fair value.  There have been no changes in the methodologies used at October 31, 2011 and 2010.

   Money market fund is valued at cost, which approximates fair value.

   Common collective trust funds are valued based upon the unit values of such collective trust funds held by the Plan at year end.  Unit values are based on the fair value of the underlying assets of the fund.  The fair value of the level 2 funds are derived from inputs principally from or corroborated by observable market data by correlation or other means.  Included in the common collective trust funds is a level 3 GIC Portfolio which includes both traditional and separate account guaranteed investment contracts (GICs) as well as synthetic GICs.  The traditional and separate account GICs are valued by calculating the sum of the present values of all projected future cash flows of each investment.  The synthetic GIC wrapper contracts are valued by determining the replacement cost of the wrapper contract and the present value of the contractually obligated payments in the original wrapper contract.  Debt securities underlying synthetic GICs are traded primarily in the over-the-counter (OTC) markets and are valued at the latest available price in the OTC market or on the basis of values obtained by an independent pricing service.

   The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.





F-26




11.  LAND IMPROVEMENTS, BUILDING AND EQUIPMENT, NET:

   These assets consist of the following at October 31, 2011 and 2010.


10/31/2011 

10/31/2010 

Land improvements

$10,198,986 

$10,263,581 

Corporate buildings

579,175 

579,175 

Buildings leased to others

23,271,567 

23,270,805 

Equipment and furnishings

2,452,412 

2,582,270 


36,502,140 

36,695,831 

Less accumulated depreciation and amortization

13,889,019 

12,900,108 


$22,613,121 

$23,795,723 

12.  ACCRUED LIABILITIES:

   Accrued liabilities consist of the following at October 31, 2011 and 2010.


10/31/11 

10/31/2010 

    Payroll

$62,555 

$47,112 

    Security and Other Deposits

39,267 

45,433 

    Professional Fees

45,682 

26,942 

    Real Estate Taxes

78,124 

78,120 

    Other

190,307 

187,999 


$415,935 

$385,606 


13.  OPERATING LEASES:

   The Companies lease land, land improvements and investment properties each of which are accounted for as operating leases. Rents are reported as income over the terms of the leases as they are earned.  Our shopping center is leased to various tenants for renewable terms averaging 2.38 years with options for renewal.  Information concerning rental properties and minimum future rentals under current leases as of October 31, 2011 is as follows:



Properties Subject to Lease



Cost


Accumulated Depreciation 

       Investment properties leased to others

$23,271,567 


$6,160,089 

       Land and land improvements

17,064,102 


5,312,854 

       Minimum future rentals:




           Fiscal years ending October 31:

2012

$1,612,805 




2013

1,440,866 




2014

1,322,342 




2015

1,285,704 




2016

1,281,437 




Thereafter

20,495,517 





$27,438,671 



   Minimum future rentals subsequent to 2016 include $1,179,500 under a land lease expiring in 2072; $3,078,669 under a net lease for a store expiring in 2024; $6,957,500 and $7,735,000 under net leases for two stores expiring in December 2035 and August 2036. There were no contingent rentals included in income for Fiscal 2011, 2010 and 2009.  The above information includes rental escalations recognized using straight-line basis.





F-27




14.  INVESTMENT IN DIRECT FINANCING LEASES (Now included in Assets of discontinued operations):

   During Fiscal Year 2011, the Companies leased the Jack Frost and Big Boulder ski areas to a third party under direct financing leases that extended through 2034.  The Companies net investment in direct financing leases consisted of the following as of October 31:


2011 

2010 

Minimum future lease payments

$7,426,946 

$7,757,213 

Unguaranteed residual value of lease properties

8,430,879 

8,430,879 

Gross investment in lease

15,857,825 

16,188,092 

Unearned income

(7,567,630)

(7,889,299)

Valuation Allowance

(502,000)

0

Net investment in direct financing leases

$7,788,195 

$8,298,793 

   Subsequently, on December 15, 2011 the Jack Frost and Big Boulder ski areas were sold to the previous third party lessee, therefore the operating activity for the Fiscal years ending October 31, 2011, 2010 and 2009 is being reported as discontinued operations.  The transaction resulted in a loss of approximately $502,000 primarily related to the reversal of the accrued rent receivable based on the straight line amortization of the lease.  The valuation allowance is recorded as a portion of the loss on disposal in discontinued operations Fiscal 2011.  The interest income which resulted from the direct financing lease is reported as a portion of discontinued operations.

15.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

   The estimated fair values of the Companies' financial instruments at October 31, 2011 and 2010 are as follows:


10/31/11

10/31/10


Carrying Amount

Fair Value

Carrying Amount

Fair Value

ASSETS:



Cash and cash equivalents

$589,039 

$589,039 

$995,121 

$995,121 

Accounts and mortgages receivable

160,290 

160,290 

409,987 

409,987 


LIABILITIES:



Accounts payable

437,783 

437,783 

646,961 

646,961 

Accrued liabilities

415,935 

415,935 

385,606 

385,606 

Amounts due to related parties

24,792 

7,292 

Debt (Discontinued operations and other)

$28,123,504 

$27,794,385 

$28,947,454 

$28,529,765 

   Fair Values were determined as follows:

   Cash and cash equivalents, accounts and mortgages receivable, accounts payable and accrued liabilities:  The carrying amounts approximate fair value because of the short-term maturity of these instruments.

   Amounts due to related parties: Estimating the fair value of these instruments is not practicable because the terms of these transactions could not be duplicated in the market.

   Debt: The fair value of debt is estimated using discounted cash flows based on current borrowing rates available to the Companies for similar types of borrowing arrangements.

   As of October 31, 2011, the carrying amount net of prior period impairments for land and land development costs are $20,642,787 less impairment expense of $0 in Fiscal 2011 for a fair value of $20,642,787.  Prior period impairments for impairment on land and land development costs were $1,973,000.  The carrying amount net of prior period impairments for land improvements, buildings and equipment, net are $22,613,121 less impairment expense of $0 in Fiscal 2011 for a fair value of $22,613,121 as of October 31, 2011.  Prior period impairment on land improvements, buildings and equipment, net were $53,000.  The carrying amount net of prior period impairments for land held for investment is $6,905,668.  There was no impairment on land held for investment in Fiscal 2011, and prior period impairments were $403,000.  The carrying amount net of prior period impairments for long-lived assets held for sale as of October 31, 2011 was $3,617,799 less impairment expense of $676,651 in Fiscal 2011 for a fair value of $2,941,148.  The prior period




F-28




impairments on long-lived assets held for sale were $1,644,823.  The assets of discontinued operations as of October 31, 2011 have a carrying value net of prior period adjustments for impairment of $11,272,222 less $502,000 impairment expense in Fiscal 2011 for a fair value of $10,770,220.  There were $0 prior period impairments on assets of discontinued operations.  The overall total impairment in Fiscal 2011 was $1,178,651.  The impairment for long-lived assets held for sale, land and land development costs and land held for investment was determined using level 2 criteria wherein fair value is determined using significant observable inputs, generally either quoted prices in an active market for similar assets or liabilities or quoted prices in markets that are not active. The impairment in the net investment in direct financing leases was determined with the calculation of the loss generated on the sale of the ski areas on December 15, 2011.

   As of October 31, 2010, the carrying amount net of prior period impairments for land and land development costs are $23,383,737 less impairment expense of $1,973,000 in the Fiscal 2010 for a fair value of $21,410,737.  Prior period impairments for impairment on land and land development costs were $859,749.  The carrying amount net of prior period impairments for land improvements, buildings and equipment, net are $23,795,723 less impairment expense of $0 in Fiscal 2010 for a fair value of $23,795,723 as of October 31, 2010.  Prior period impairment on land improvements, buildings and equipment, net were $53,000.  The carrying amount net of prior period impairments for land held for investment is $7,308,668.  Impairment on land held for investment in Fiscal 2010 was $403,000 and there were $0 prior period impairments.  The carrying amount net of prior period impairments for long-lived assets held for sale as of October 31, 2010 was $3,943,479 less impairment expense of $0 in Fiscal 2010 for a fair value of $3,943,479.  The prior period impairments on long-lived assets held for sale were $1,517,875.  The assets of discontinued operations as of October 31, 2010 have a carrying value net of prior period adjustments for impairment of $12,295,538 less $0 impairment expense in Fiscal 2010 for a fair value of $12,295,538.  There were $0 prior period impairments on assets of discontinued operations.  The total impairment of $2,376,000 was included in the earnings for 2010.  The impairment was determined using level 2 criteria wherein fair value is determined using significant observable inputs, generally either quoted prices in an active market for similar assets or liabilities or quoted prices in markets that are not active.

16.  QUARTERLY FINANCIAL INFORMATION (Unaudited):

   The results of operations for each of the quarters in Fiscal 2011 and Fiscal 2010 years are presented below.  


1st

2nd

3rd

4th

Total

Year ended 10/31/11






Operating revenues

$1,343,911 

$884,762 

$2,404,625 

$1,063,848 

$5,697,146 

Operating loss

(504,772)

(550,390)

(372,866)

(1,073,772)

(2,501,800)

Net income (loss) from discontinued operations

102,526 

105,072 

106,392 

(207,183)

106,807 

Net loss

(460,652)

(488,563)

(377,474)

(1,148,076)

(2,474,765)

Net loss before discontinued operations per weighted average combined share

(0.23)

(0.24)

(0.20)

(0.38)

(1.05)

Net loss per weighted average combined share

($.19)

($.20)

($.15)

($0.47)

($1.01)



1st

2nd

3rd

4th

Total

Year ended 10/31/10






Operating revenues

$1,070,269 

$940,762 

$2,109,637 

$1,311,611 

$5,432,279 

Operating loss

(608,050)

(663,342)

(792,892)

(2,683,486)

(4,747,770)

Net income from discontinued operations

89,367 

92,453 

99,277 

118,341 

399,438 

Net loss

(499,328)

(544,719)

(635,300)

(1,729,733)

(3,409,080)

Net loss before discontinued operations per weighted average combined share

(0.24)

(0.26)

(0.30)

(0.75)

(1.55)

Net loss per weighted average combined share

($0.20)

($0.22)

($0.26)

($0.71)

($1.39)


   The quarterly results of operations for Fiscal 2011 and 2010 reflect the impact of land dispositions that occur from time to time during the period and do not follow any pattern during the fiscal year.  




F-29




17.  BUSINESS SEGMENT INFORMATION:

   The following information is presented in accordance with the accounting pronouncement regarding disclosures about segments of an enterprise and related information".  The Companies' business segments were determined from the Companies' internal organization and management reporting, which are based primarily on differences in services.  

   Real Estate Management/Rental Operations

   Real Estate Management/Rental Operations consists of: investment properties leased to others located in Eastern Pennsylvania, New Jersey, Minnesota and Louisiana; recreational club activities; services to the trusts that operate resort residential communities; sales of investment properties; and rental of land and land improvements, which includes the leasing of our two ski areas located in the Pocono Mountains of Northeastern Pennsylvania.  

   Land Resource Management

   Land Resource Management consists of: land sales; land purchases; timbering operations; the Jack Frost National Golf Course; and a real estate development division.  Timbering operations consist of selective timbering on our land holdings.  Contracts are entered into for parcels that have had the timber selectively marked.  We rely on the advice of our forester, who is engaged on a consulting basis and who receives a commission on each stumpage contract, for the timing and selection of certain parcels of land for timbering.  Our forester gives significant attention to protecting the environment and retaining the value of these parcels for future timber harvests.  The Jack Frost National Golf Course is managed by Billy Casper Golf, LLC, an unaffiliated third party.  The real estate development division is responsible for the residential land development activities which include overseeing the construction of single and multi-family homes and development of infrastructure.

   Funds expended to date for real estate development have been primarily for infrastructure improvements and home construction in the Laurelwoods II and Boulder Lake Village communities.  Construction of 22 single family homes and four duplex homes in Laurelwoods II has been completed.  The construction of 18 condominium units within Building J at Boulder Lake Village on Big Boulder Lake has been completed as well.  Other expenditures for our development projects in the planning phases include fees for architects, engineers, consultants, studies and permits.



10/31/11 

10/31/10 

10/31/09 

Revenues from continuing operations:




Real estate management/rental operations

$2,824,476 

$2,875,266 

$3,525,024 

Land resource management

2,872,670 

2,557,013 

11,990,241 


$5,697,146 

$5,432,279 

$15,515,265 





Operating profit (loss) from continuing operations, excluding general and administrative expenses:




Real estate management/rental operations

$834,120 

$745,922 

$418,483 

Land resource management

(1,544,539)

(3,055,472)

1,724,044 


($710,419)

($2,309,550)

$2,142,527 





General and administrative expenses:




Real estate management/rental operations

$888,114 

$1,290,532 

$372,446 

Land resource management

903,267 

1,147,688 

1,266,861 


1,791,381 

$2,438,220 

$1,639,307 

Interest and other income, net:




Real estate management/rental operations

$9,277 

$0 

$0 

Land resource management

1,982 

21,591 

12,812 


$11,259 

$21,591 

$12,812 

Interest expense:




Real estate management/rental operations

$1,369,305 

$1,197,069 

$945,101 

Land resource management

45,726 

64,270 

90,070 


$1,415,031 

$1,261,339 

$1,035,171 





Income (loss) from continuing operations before income taxes

($3,905,572)

($5,987,518)

 ($519,139) 




F-30




   For the fiscal years ended October 31, 2010, no one customer represented more than 10 % of total revenues.  In fiscal year ended October 31, 2011, we sold Applebees for $1,450,000 which is 19% of total revenue and in fiscal year ended October 31, 2009, we had land sales to The Conservation Fund totaling revenue of $6,875,000 which was 43% of total revenue.

   Identifiable assets, net of accumulated depreciation at October 31, 2011, 2010, and 2009 and depreciation expense and capital expenditures for the years then ended by business segment are as follows:




Depreciation and 




Identifiable 

Amortization 

Capital 

October 31, 2011


Assets 

Expense 

Expenditures 

Real estate management/rental operations


$20,861,471 

$632,556 

$761 

Land resource management


33,251,319 

382,559 

225,105 

Other corporate


222,697 

109,991 

203,691 

Discontinued operations


10,770,222 

229,724 

Total


$65,105,709 

$1,354,830 

$429,557 





Depreciation and 




Identifiable 

Amortization 

Capital 

October 31, 2010


Assets 

Expense 

Expenditures 

Real estate management/rental operations


$24,453,293 

$680,582 

$1,462,552 

Land resource management


33,186,415 

381,607 

73,084 

Other corporate


322,144 

89,714 

7,363 

Discontinued operations


12,295,538 

189,871 

Total


$70,257,390 

$1,341,774 

$1,542,999 





Depreciation and 




Identifiable 

Amortization 

Capital 

October 31, 2009


Assets 

Expense 

Expenditures 

Real estate management/rental operations


$25,594,578 

$770,643 

$51,220 

Land resource management


36,192,161 

382,325 

14,086 

Other corporate


318,713 

96,534 

10,667 

Discontinued operations


10,853,929 

141,651 

Total


$72,959,381 

$1,391,153 

$75,973 






   All asset impairments and abandonments in Fiscal 2011, 2010 and 2009 relate to the Land Resource Management segment.

18.  CONTINGENT LIABILITIES:

The Companies are party to various legal proceedings incidental to their business. Certain claims, suits, and complaints arising in the ordinary course of business have been filed or are possible of assertion against the Companies.  In the opinion of management, all such matters are without merit or are of such kind, or involve such amounts, which are not expected to have a material effect on the combined financial position or results of operations of the Companies.

19.  RELATED PARTY TRANSACTIONS:

   Kimco Realty Services, Inc., or Kimco, is our controlling shareholder and Kimco Realty Corporation, the parent company of Kimco, is presently providing consulting services to us.  The services are focused on land development, acquisitions and disposals.    Kimco was paid $75,000 in consulting fees in Fiscal 2011, $100,000 in consulting fees, in each Fiscal 2010 and 2009.

   Kimco Realty Corporation has served as the management company for the Coursey Commons Shopping Center in Baton Rouge, Louisiana since June 2004.  A wholly owned subsidiary of Kimco Realty Corporation, KRC Property Management I, Inc., receives a fixed monthly fee of 4.5% of rental income on store leases in this shopping center.  During Fiscal 2011, 2010 and 2009, that subsidiary received $41,272, $40,465 and $42,747, respectively for management fees earned on the shopping center.  



F-31




   Michael J. Flynn, the Chairman of our board of directors, was also the President, Chief Operating Officer and Vice Chairman of the board of directors of Kimco Realty Corporation during Fiscal 2008.  Effective December 31, 2008, Mr. Michael Flynn retired from Kimco Realty Corporation.  Mr. Michael Flynn received an annual fee of $17,500 from Blue Ridge Real Estate Company as compensation for consulting in each of Fiscal 2010 and 2009, there was no annual fee for Fiscal 2011.  In addition, Patrick M. Flynn, who served as one of our directors and our President and Chief Executive Officer until his resignation on August 12, 2011, was a Managing Director of Real Estate at Kimco Realty Corporation since 2001.  We paid Mr. Patrick Flynn a bonus of $100,000 in Fiscal 2010 and 2009.  No bonus was paid in Fiscal 2011.  

Finally, Mr. Milton Cooper, who serves as one of our directors, also serves as Chief Executive Officer and Chairman of the board of directors of Kimco Realty Corporation.

   Amounts due to the above related parties total $24,792 at October 31, 2011 and $7,292 at October 31, 2010.

20.  STOCK OPTIONS and CAPITAL STOCK:

During Fiscal 2011, Fiscal 2010 and Fiscal 2009, no stock options were issued or exercised.

Option activity during Fiscal 2011, 2010 and 2009 is as follows:


10/31/11


10/31/10


10/31/09



Shares

Weighted Average Exercise Price

Shares

Weighted Average Exercise Price

Shares

Weighted Average Exercise Price

Outstanding at beginning of year:

43,000 

$38.40 

64,600 

$36.93 

64,600 

$36.93 

Granted




Exercised




Expired

29,000 

$38.11 

21,600 

$34.00 


Outstanding at year-end

14,000 

$39.00 

43,000 

$38.40 

64,600 

$36.93 








Options exercisable at year-end

14,000 


43,000 

$38.40 

61,614 

$36.83 

Option price range

$39.00 


$37.80-$39.00 


$34.00-$39.00 


Weighted average fair value   of options granted during year




Weighted average grant date   fair value of options granted   during year




Weighted average remaining   contractual life (in years)

0.42 


0.88 


1.4 


   Activity related to non-vested options for the year ended October 31, 2011 is as follows:


Shares

Weighted Average Grant Date Fair Value Price

Non-vested at beginning of year:

Granted


Vested

Non-vested at year-end


All options are vested, therefore the Companies do not expect to recognize any compensation expense related to non-vested awards over the next year.

The Companies policy regarding the exercise of options requires that optionees utilize an independent broker to manage the transaction, whereby the broker sells the exercised shares on the open market.




F-32




21.  PER SHARE DATA:

   Earnings per share (EPS) is based on the weighted average number of common shares outstanding during the period.  The calculation of diluted EPS assumes weighted average options have been exercised to purchase shares of common stock in the relevant period, net of assumed repurchases using the treasury stock method. For Fiscal 2011, 2010 and 2009, all outstanding unexercised stock options would be excluded from the calculation of diluted EPS because the exercise price of all such options exceeded the market price of the Companies common stock.  As a result, the calculation of diluted EPS has been excluded from the table below since diluted EPS for these periods is equal to EPS.

    Weighted average basic shares, taking into consideration shares issued, weighted average options used in calculating EPS and treasury shares repurchased, for Fiscal 2011, 2010 and 2009 are as follows:


10/31/11 

10/31/10 

10/31/09 

Weighted average combined shares of common stock outstanding used to compute basic earnings per combined share

2,450,424 

2,450,424 

2,450,424 

Basic (loss) earnings per weighted average combined share is computed as follows:


10/31/11

10/31/10

10/31/09

Net (loss) income before discontinued operations

($2,581,572)

($3,808,518)

($237,139) 

Weighted average combined shares of common stock outstanding

2,450,424 

2,450,424 

2,450,424 

Basic (loss) earnings per weighted average combined share

($1.05)

($1.55)

($0.10)





Net income from discontinued operations

$106,807

$399,438

$386,385

Weighted average combined shares of common stock outstanding

2,450,424

2,450,424

2,450,424

Basic earnings per weighted average combined share

$0.04

$0.16

$0.16





Net (loss) income

($2,474,765)

($3,409,080)

$149,246

Weighted average combined shares of common stock outstanding

2,450,424

2,450,424

2,450,424

Basic (loss) earnings per weighted average combined share

($1.01)

($1.39)

$0.06 


22.  SUPPLEMENTAL DISCLOSURE TO STATEMENTS OF CASH FLOWS


10/31/11 

10/31/10 

10/31/09 

Supplemental disclosures of cash flow information:




   Cash paid during the year for:




           Interest

$1,713,780

$1,677,388 

$1,576,723 

           Income taxes

$36,591

$209,727 

$140,014 





Non cash:




Reclassification of assets from land and land development costs to land improvements, buildings and equipment, net

$0

$460,966 

$215,971 

Reclassification of assets from land held for investment to land and land development costs

$0

$127,808 

$0 

Reclassification of assets from land and land development costs to long-lived assets held for sale

$675,490

$1,475,283 

$0 

Reclassification of assets from land held for recreation to land held for investment, principally unimproved

$37,706

$0 

$0 

Reclassification of assets from land improvements, buildings and equipment, net and land held for investment to long-lived assets held for sale

$1,780,155

$0 

$0 

Pension liability and accumulated other comprehensive loss was increased (decreased) by $568,881 and ($568,881) in 2011, by ($369,444) and $369,444 in 2010 and by $1,378,417 and ($1,378,417) in 2009 resulting from the changes in the funded status, the prior service cost and the net actuarial loss.




F-33




23.  SUBSEQUENT EVENTS:

The Companies have evaluated subsequent events thru the issuance of the financial statements.

On November 30, 2011, Blue Ridge Real Estate Company closed on the sale to Phyllis Enfield Trust of the property located at 22902 Interstate Highway 10, Wallisville, Texas for the purchase price of $1,911,419.  A portion of the net proceeds of the sale were used to repay in full the outstanding balance under a note of $1,009,002 to Barbers Hill Bank and the balance of the net proceeds were deposited and utilized for the revolving line of credit.  As of October 31, 2011, the book value of the assets was included in long-lived assets held for sale.

On December 15, 2011, Blue Ridge Real Estate Company and Big Boulder Corporation closed on the sale of the Jack Frost Mountain and Big Boulder ski areas in Kidder Township, Carbon County, Pennsylvania to JFBB Ski Areas, Inc., a subsidiary of Peak Resorts, Inc., for the aggregate purchase price of $9,000,000.  The 311 acres that housed the ski areas were included in land held for investment.  The ski areas had been leased to Peak Resorts, Inc. and a portion of the leased premises had been capitalized as net investment in direct financing leases.  The transaction resulted in a loss therefore a valuation allowance of $502,000 was recorded as impairment expense in Fiscal 2011.  A significant portion of the net proceeds of the sale were used to repay outstanding debt to the Bank as follows:

Outstanding debt

Outstanding Balance

Term note repaid in full

$4,600,000

Line of credit mortgage note site development sublimit repaid in full

$2,881,311

Line of credit mortgage note construction sublimit

$181,500

Mortgage notes repaid in full

$115,122

Total

$7,777,933

In addition, $325,000 of the net proceeds was deposited into the interest reserve account and the balance was deposited and utilized for the revolving line of credit.

Effective December 31, 2011, Eldon D. Dietterick, Chief Financial Officer, Executive Vice President and Treasurer of the Companies, retired.  Mr. Dietterick has served as the Companies Chief Financial Officer, Executive Vice President and Treasurer since 2001.  He has been employed by the Companies since January 1985 in various other capacities.

Effective January 1, 2012, the Boards of Directors of the Companies, pursuant to the Companies Bylaws and in accordance with their Restated Articles of Incorporation, have appointed Cynthia A. Van Horn as Chief Financial Officer (CFO) and Treasurer of the Companies.  Mrs. Van Horn, age 47, has served as the Companies Controller since her appointment in October 1996.  From November 1995 until October 1996 Mrs. Van Horn was employed as the Companies Accounting Manager.  The Companies did not enter into any material plan, contract or arrangement with, and did not make a grant or award to Mrs. Van Horn in connection with Mrs. Van Horns appointment as CFO and Treasurer.

Effective January 1, 2012, the Boards of Directors of the Companies, pursuant to the Companies Bylaws and in accordance with their Restated Articles of Incorporation, have appointed Richard T. Frey as Vice President and Chief Operating Officer (COO) of the Companies.  Mr. Frey, age 60, has served as the Companies Vice President since his appointment in October 2001.  From 1992 until October 2001, Mr. Frey was employed as the Companies Director of Food Services at both the Jack Frost Mountain and Big Boulder Ski Areas.  The Companies did not enter into any material plan, contract or arrangement with, and did not make a grant or award to Mr. Frey in connection with Mr. Freys appointment as Vice President and COO.





F-34




QUARTERLY FINANCIAL INFORMATION (Unaudited):

   The results of operations for each of the quarters in Fiscal 2011 and Fiscal 2010 years are presented below.  


1st

2nd

3rd

4th

Total

Year ended 10/31/11






Operating revenues

$1,343,911 

$884,762 

$2,404,625 

$1,063,848 

$5,697,146 

Operating loss

(504,772)

(550,390)

(372,866)

(1,073,772)

(2,501,800)

Net income (loss) from discontinued operations

102,526 

105,072 

106,392 

(207,183)

106,807 

Net loss

(460,652)

(488,563)

(377,474)

(1,148,076)

(2,474,765)

Net loss before discontinued operations per weighted average combined share

(0.23)

(0.24)

(0.20)

(0.38)

(1.05)

Net loss per weighted average combined share

($.19)

($.20)

($.15)

($0.47)

($1.01)



1st

2nd

3rd

4th

Total

Year ended 10/31/10






Operating revenues

$1,070,269 

$940,762 

$2,109,637 

$1,311,611 

$5,432,279 

Operating loss

(608,050)

(663,342)

(792,892)

(2,683,486)

(4,747,770)

Net income from discontinued operations

89,367 

92,453 

99,277 

118,341 

399,438 

Net loss

(499,328)

(544,719)

(635,300)

(1,729,733)

(3,409,080)

Net loss before discontinued operations per weighted average combined share

(0.24)

(0.26)

(0.30)

(0.75)

(1.55)

Net loss per weighted average combined share

($0.20)

($0.22)

($0.26)

($0.71)

($1.39)

   The quarterly results of operations for Fiscal 2011 and 2010 reflect the impact of land dispositions that occur from time to time during the period and do not follow any pattern during the fiscal year.  










F-35




BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OCTOBER 31, 2011


Initial Cost






Total Cost Net





Buildings &

Subsequent


Building and


Accumulated

of  Accumulated


Date of

Description

Land

Improvements

to Acquisition

Land

Improvements

Total

Depreciation

Depreciation

Encumbrances

Acquisition












Land located in Northeast. PA

$3,276,233 


$1,309,667

$4,585,901 


$4,585,901 


$4,585,901 


Various

   Various  improvements











      Sewage Plants, wells and access      roads at Jack Frost & Big Boulder      Ski Areas


6,093,877 

566,350 


6,660,227 

6,660,227 

4,287,922 

2,372,305 


Various / 1982 on

     Jack Frost National Golf Course

8,656,154 

3,048,817 

8,684 

8,656,154 

3,057,501 

11,713,655 

1,024,929 

10,688,726


2007












Corporate Building


282,918 

296,257 


579,175 

579,175 

513,104 

66,071


1982












Building Leased to Others











Asset-Shopping Center-Baton Rouge Louisiana

2,208,165 

8,894,908 

82,290 

2,208,165 

8,977,198

11,185,363

1,744,131

9,441,232

7,700,000 

2004

Asset-Walgreens-Toms River New Jersey

948,181 

4,877,731 

483,028 

948,181 

5,360,759 

6,308,940 

730,603

5,578,337

4,038,000 

2006

Asset-Walgreens-White Bear Lake-Minnesota

1,446,831 

4,615,442 

380,783 

1,446,831 

4,996,225 

6,443,056 

681,643

5,761,413

4,340,000 

2006

Asset-Boulder View Tavern-Eastern PA


1,072,000 

556,152 


1,628,152 

1,628,152 

1,417,620

210,532


1986

Asset-Company owned rental properties-Eastern PA


1,112,062 

3,135 


1,115,197 

1,115,197 

403,158

712,039

372,000 

2004 thru 2005

Asset-Leased Lake Club Program-Eastern PA


1,005,166 



1,005,166 

1,005,166 

994,062

11,104


Various / 1980 on

Asset-Leased Rental Program -Eastern PA


188,872 



188,872 

188,872 

188,872 


Various / 1982 on












Total

$16,535,564 

$31,191,793 

$3,686,347 

$17,845,232 

$33,568,472 

$51,413,704 

$11,986,044 

$39,427,660 

$16,450,000 



Depreciation and Amortization are provided on a straight-line half year method over the estimated useful lives of the assets as follows:

Land improvements

10 to 30 years

Corporate building

10 to 30 years

Properties leased to others

10 to 30 years


The aggregate cost for federal income tax purposes is approximately $33,000,000 at October 31, 2011.





F-36




The changes in total real estate assets for the years ended October 31, 2011, 2010 and 2009 are as follows:


2011

2010

2009

Balance at beginning of period

$54,908,935 

$51,343,167 

$53,254,313 

Additions to Land

781,766 

6,623 

Additions to Land Improvements

560,455 

8,684 

Additions to Leased Buildings

761 

181,559 

603,331 

Additions to Corporate Building

Sale of Real Property

(3,495,992)

(50,557)

(2,529,784)

Transfers

2,092,545 

Balance at end of year

$51,413,704 

$54,908,935 

$51,343,167 


The changes in accumulated depreciation for the years ended October 31, 2011, 2010 and 2009 are as follows:


2011

2010

2009

Balance at beginning of year

$11,113,491 

$9,966,619 

$10,145,495 

   Addition during year: reclass

   Current year depreciation

1,106,816 

1,146,872 

1,175,717 

   Less retirements

(234,263)

(1,354,593)

Balance at end of year

$11,986,044 

$11,113,491 

$9,966,619 





F-37




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

BLUE RIDGE REAL ESTATE COMPANY

BIG BOULDER CORPORATION  

By:  /s/ Bruce Beaty

   Bruce Beaty  

   President and Chief Executive Officer

   Dated:  November 28, 2012

By:  /s/ Cynthia A. Van Horn

   Cynthia A. Van Horn  

   Chief Financial Officer and Treasurer

(Principal Financial Officer)

   Dated:  November 28, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrants and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Frederick N. Kurz, Jr.


November 28, 2012

Frederick N. Kurz, Jr.

Chairman of the Board


/s/ Bruce Beaty


November 28, 2012

Bruce Beaty

Director


/s/ Paul A. Biddelman


November 28, 2012

Paul A. Biddelman

Director


/s/ Mark Dawejko


November 28, 2012

Mark Dawejko

Director





/s/ Cynthia A. Van Horn


November 28, 2012

Cynthia A. Van Horn

Chief Financial Officer and Treasurer

(Principal Financial Officer)





26




EXHIBIT INDEX

The following is a list of Exhibits filed as part of this Annual Report on Form 10-K/A.  Where so indicated by a parenthetical, Exhibits that were previously filed are incorporated by reference.  For Exhibits incorporated by reference, the location of the Exhibit in the previous filing is also indicated in parentheses.

Exhibit Number

Description

 

3.1

Restated Articles of Incorporation of Blue Ridge Real Estate Company (filed February 11, 2005 as Exhibit 3.1 to Form 10-K and incorporated herein by reference)

 

3.2

Restated Articles of Incorporation of Big Boulder Corporation (filed February 11, 2005 as Exhibit 3.2 to Form 10-K and incorporated herein by reference)

 

3.3

Bylaws of Blue Ridge Real Estate Company, as amended through August 12, 1997 (filed January 5, 2005 as Exhibit 3.3 to Form S-1 (File No. 333-121855) and incorporated herein by reference)

 

3.4

Bylaws of Big Boulder Corporation, as amended through August 12, 1997 (filed January 5, 2005 as Exhibit 3.4 to Form S-1 (File No. 333-121855) and incorporated herein by reference)

 

4.1

Revised Specimen Unit Certificate Evidencing Shares of Registrants Common Stock (filed August 28, 1990 as an Exhibit to Form 10-K and incorporated herein by reference)

 

4.2

Security Combination Agreement between Blue Ridge Real Estate Company and Big Boulder Corporation (filed September 23, 1967 as Exhibit b-3 to Form 10 and incorporated herein by reference)

 

10.1

Mortgage, JP Morgan Chase Bank, Coursey Commons Shopping Center, Baton Rouge, Louisiana (filed February 11, 2005 as Exhibit 10.17 to Form 10-K and incorporated herein by reference)

 

10.2**

Form of Stock Option Agreement dated March 20, 2007 (filed June 14, 2007 as Exhibit 10.1 to Form 10-Q and incorporated herein by reference)

10.3

Schedule of Optionees and Material Terms of Stock Option Agreements dated March 20, 2007 (filed June 14, 2007 as Exhibit 10.2 to Form 10-Q and incorporated herein by reference)

10.4

Lease Agreement, dated as of December 1, 2005, between Big Boulder Corporation and JFBB Ski Areas, Inc. for the lease of the Big Boulder Ski Area (filed December 7, 2005 as Exhibit 10.2 to Form 8-K and incorporated herein by reference)

 

10.5

Agreement, dated January 27, 2006, by and between Big Boulder Corporation and Popple Construction, Inc. for infrastructure improvements to the Boulder Lake Village residential development. (filed February 2, 2006 as Exhibit 10.1 to Form 8K and incorporated herein by reference)

 

10.6

Credit Agreement, dated March 1, 2006, between Blue Ridge Real Estate Company, Big Boulder Corporation, Northeast Land Co., Lake Mountain Company and Jack Frost Mountain Company and Manufacturers and Traders Trust Company. (filed March 7, 2006 as Exhibit 10.1 to Form 8-K and incorporated herein by reference)

 

10.7

$3,000,000 Line of Credit Grid Note, dated March 1, 2006, between Blue Ridge Real Estate Company, Big Boulder Corporation, Northeast Land Co., Lake Mountain Company and Jack Frost Mountain Company and Manufacturers and Traders Trust Company. (filed March 7, 2006 as Exhibit 10.2 to Form 8-K and incorporated herein by reference)

 

10.8

Loan Agreement, dated April 20, 2006, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company and Moseywood Construction Company and Manufacturers and Traders Trust Company. (filed April 25, 2006 as Exhibit 10.1 to Form 8-K and incorporated herein by reference)

 

10.9

$10,000,000 Line of Credit Mortgage Note, dated April 20, 2006, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company and Moseywood Construction Company and Manufacturers and Traders Trust Company. (filed April 25, 2006 as Exhibit 10.2 to Form 8-K and incorporated herein by reference)

 

10.10

Loan Modification Agreement, dated June 15, 2007, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed June 21, 2007 as Exhibit 10.1 to Form 8-K and incorporated herein by reference.)

 

10.11

$25,000,000 Line of Credit Mortgage Note, dated June 15, 2007, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed June 21, 2007 as Exhibit 10.2 to Form 8-K and incorporated herein by reference.).

 

10.12

Third Loan Modification Agreement, dated September 16, 2008, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company. (filed September 22, 2008 as Exhibit 10.1 to Form 8-K and incorporated herein by reference.)

 

10.13

Fourth Loan Modification Agreement, dated February 27, 2009, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company. (filed on March 3, 2009 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.14

Deed of Trust and Security Agreement, dated May 22, 2009, between Blue Ridge Real Estate Company and Kenneth D. Moore, Trustee. (filed on September 14, 2009 as exhibit 10.1 to Form 10-Q and incorporated herein by reference.)

 

10.15

$1,050,000 Real Estate Lien Note, dated May 22, 2009, between Blue Ridge Real Estate Company and Barbers Hill Banking Center, a branch of Anahuac National Bank. (filed on September 14, 2009 as exhibit 10.2 to Form 10-Q and incorporated herein by reference.)

 

10.16

Mortgage and Security Agreement, Assignment of Leases and Rents and Fixture Filing Statement, dated August 28, 2009, between Blue Ridge WMN, LLC and Wells Fargo Bank Northwest, N.A. as Trustee (filed on September 3, 2009 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.17

$4,340,000 6.90% Senior Secured Note, dated August 28, 2009, between Blue Ridge WMN, LLC and Wells Fargo Bank Northwest, N.A. as Trustee (filed on September 3, 2009 as exhibit 10.2 to Form 8-K and incorporated by reference herein.)

 

10.18

Note Purchase Agreement, dated August 28, 2009, between Blue Ridge WMN, LLC and Wells Fargo Bank Northwest, N.A. as Trustee (filed on September 3, 2009 as exhibit 10.3 to Form 8-K and incorporated by reference herein.)

 

10.19

Mortgage and Security Agreement, Assignment of Leases and Rents and Fixture Filing Statement, dated August 28, 2009, between Blue Ridge WNJ, LLC and Wells Fargo Bank Northwest, N.A. as Trustee (filed on September 3, 2009 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.20

$4,038,000 6.90% Senior Secured Note, dated August 28, 2009, between Blue Ridge WNJ, LLC and Wells Fargo Bank Northwest, N.A. as Trustee (filed on September 3, 2009 as exhibit 10.2 to Form 8-K and incorporated by reference herein.)

 

10.21

Note Purchase Agreement, dated August 28, 2009, between Blue Ridge WNJ, LLC and Wells Fargo Bank Northwest, N.A. as Trustee (filed on September 3, 2009 as exhibit 10.3 to Form 8-K and incorporated by reference herein.)

 

10.22

Fifth Loan Modification Agreement, dated October 19, 2009, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed on October 22, 2009 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.23

Deed of Trust and Security Agreement, dated February 25, 2010, between Blue Ridge Real Estate Company and Public Trustee of Larimer County, Colorado, Trustee (filed on March 17, 2010 as exhibit 10.1 to Form 10-Q and incorporated by reference herein.)

 

10.24

$670,000 Purchase Money Promissory Note, dated February 25, 2010, between Blue Ridge Real Estate Company and The Stephen A. Grove Descendants Trust (filed on March 17, 2010 as exhibit 10.2 to Form 10-Q and incorporated by reference herein.)

 

10.25

April 2010 Allonge to the Amended and Restated Construction and Site Development Line of Credit Mortgage Note, dated April 6, 2010, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, individually and doing business as Stoney Run Realty Company and Stoney Run Builders Company, and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed on April 9, 2010 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.26

June 2010 Allonge to the Amended and Restated Construction and Site Development Line of Credit Mortgage Note, dated June 30, 2010, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, individually and doing business as Stoney Run Realty Company and Stoney Run Builders Company, and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed on June 6, 2010 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.27

Loan Agreement, dated July 29, 2010, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Company, Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed on August 3, 2010 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.28

$2,600,000 Term Note, dated July 29, 2010, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Company, Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed on August 3, 2010 as exhibit 10.2 to Form 8-K and incorporated by reference herein.)

 

10.29

$2,600,000 Open-end Mortgage, dated July 29, 2010, between Blue Ridge Real Estate Company and Manufacturers and Traders Trust Company (filed on August 3, 2010 as exhibit 10.3 to Form 8-K and incorporated by reference herein.)

 

10.30

$2,600,000 Open-end Mortgage, dated July 29, 2010, between Big Boulder Corporation and Manufacturers and Traders Trust Company (filed on August 3, 2010 as exhibit 10.4 to Form 8-K and incorporated by reference herein.)

 

10.31

August 2010 Allonge to the Amended and Restated Construction and Site Development Line of Credit Mortgage Note, dated August 23, 2010, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, individually and doing business as Stoney Run Realty Company and Stoney Run Builders Company, and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed on August 26, 2010 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.32

September 2010 Allonge to the Amended and Restated Construction and Site Development Line of Credit Mortgage Note, dated September 29, 2010, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, individually and doing business as Stoney Run Realty Company and Stoney Run Builders Company, and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed on October 1, 2010 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.33

Sixth Loan Modification Agreement, to the Amended and Restated Construction and Site Development Line of Credit Mortgage Note, dated October 22, 2010, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, individually and doing business as Stoney Run Realty Company and Stoney Run Builders Company, and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed on October 27, 2010 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)

 

10.34

October 2010 Allonge to the Amended and Restated Construction and Site Development Line of Credit Mortgage Note, dated October 22, 2010, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, individually and doing business as Stoney Run Realty Company and Stoney Run Builders Company, and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company (filed on October 27, 2010 as exhibit 10.2 to Form 8-K and incorporated by reference herein.)

 

10.35

Agreement of Sale, Phase 3, dated February 17, 2011between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 376 acres located in Thornhurst Township, Lackawanna County, Pennsylvania. (filed February 18, 2011as Exhibit 10.1 to Form 8-K and incorporated herein by reference.) 

 

10.36

$4,600,000 Amended and Restated Term Note, dated July 29, 2011, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Company, Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company, Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company. (filed August 12, 2011 as Exhibit 10.1 to Form 8-K and incorporated herein by reference.)

 

10.37

$4,600,000 Amended and Restated Open-End Mortgage, dated July 29, 2011, between Blue Ridge Real Estate Company and Manufacturers and Traders Trust Company (filed August 12, 2011 as Exhibit 10.2 to Form 8-K and incorporated herein by reference.)

 

10.38

$4,600,000 Amended and Restated Open-End Mortgage, dated July 29, 2011, between Big Boulder Corporation and Manufacturers and Traders Trust Company (filed August 12, 2011 as Exhibit 10.3 to Form 8-K and incorporated herein by reference.)

 

10.39

$4,600,000 Amended and Restated Open-End Mortgage, dated July 29, 2011, between Northeast Land Company and Manufacturers and Traders Trust Company (filed August 12, 2011 as Exhibit 10.4 to Form 8-K and incorporated herein by reference.)

 

10.40

First Amendment to Agreement of Sale, Phase 3, dated August 15, 2011between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 376 acres located in Thornhurst Township, Lackawanna County, Pennsylvania. (filed August 18, 2011as Exhibit 10.2 to Form 8-K and incorporated herein by reference.) 

 

10.41

Purchase and Sale Agreement, dated August 17, 2011, between Blue Ridge Real Estate Company and Scott Family Trust and Ross Family Trust (filed August 23, 2011 as Exhibit 10.1 to Form 8-K and incorporated herein by reference.)

 

10.42

Purchase and Sale Agreement, dated October 1, 2011, between Blue Ridge Real Estate Company and Phyllis Enfield Trust (filed on October 3, 2011 as Exhibit 10.2 to Form 8-K and incorporated herein by reference.)

 

10.43

Purchase and Sale Agreement, dated October 31, 2011, between Blue Ridge Real Estate Company and JFBB Ski Areas, Inc. (filed on November 4, 2011 as Exhibit 10.1 to Form 8-K and incorporated herein by reference.)

 

10.44

Purchase and Sale Agreement, dated October 31, 2011, between Big Boulder Corporation and JFBB Ski Areas, Inc. (filed on November 4, 2011 as Exhibit 10.2 to Form 8-K and incorporated herein by reference.)

 

13.1

Portions of the Companies Fiscal 2011 Annual Report to Shareholders (filed January 30, 2012 as Exhibit 13.1 to Form 10-K and incorporated herein by reference.)

 

14.1

Code of Ethics (filed February 11, 2005 as Exhibit 14.1 to Form 10-K and incorporated herein by reference)

 

21.1

List of all subsidiaries of the Registrants (filed January 30, 2012 as Exhibit 21.1 to Form 10-K and incorporated herein by reference.)

 

31.1*

Principal Executive Officers Rule 13a-14(a)/15d-14(a) Certification

 

31.2*

Principal Financial Officers Rule 13a-14(a)/15d-14(a) Certification

 

32.1*

Principal Executive Officers Section 1350 Certification

 

32.2*

Principal Financial Officers Section 1350 Certification

 

101.INS***

XBRL Instance Document

 

101.SCH***

XBRL Taxonomy Extension Schema Document

 

101.CAL***

XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF***

XBRL Taxonomy Extension Definition Linkbase Document

 

101.LAB***

XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE***

XBRL Taxonomy Extension Presentation Linkbase Document

 


* Filed herewith.

** Management or compensatory contract required to be filed pursuant to Item 15(b) of the requirements for Form 10-K reports.

*** Furnished herewith.

Copies of Exhibits are available to Shareholders by contacting the Corporate Secretary, Blue Ridge Real Estate Company, Blakeslee, PA 18610. A charge of $0.25 per page to cover the Registrants expenses will be made.