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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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2012

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No.:      Blue Ridge 000-02844

                                       Big Boulder 000-02843

BLUE RIDGE REAL ESTATE COMPANY

BIG BOULDER CORPORATION

(exact name of Registrants as specified in their charters)

State or other jurisdiction of incorporation or organization: Pennsylvania

I.R.S. Employer Identification Number:     24-0854342 (Blue Ridge)   

                                                                24-0822326 (Big Boulder)   

          Address of principal executive office:   Route 940 and Moseywood Rd, Blakeslee, Pennsylvania

Zip Code:   18610                         

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

     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 period that the registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days.

x YES          o 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).  

x YES          o NO

     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 o

   o Accelerated Filer                 

Non-Accelerated filer    x  (Do not check if smaller reporting company)

o Smaller reporting company

     Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

o YES          x NO

      The number of shares of the registrants common stock outstanding as of the close of business on June 12, 2012 was 2,450,424 shares.*

*Under a Security Combination Agreement between Blue Ridge Real Estate Company ("Blue Ridge") and Big Boulder Corporation ("Big Boulder") (together, the "Companies") and under the by-laws of the Companies, shares of the Companies are combined in 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-Q is being filed.  Except as otherwise indicated in this Quarterly Report on Form 10-Q, all information applies to both Companies.






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. 1 on Form 10-Q/A (the First Amendment) to amend and restate the Form 10-Q of the Companies for the period ended April 30, 2012 as originally filed with the Securities and Exchange Commission (the SEC) on June 13, 2012 (the Original Filing).   This First Amendment is being filed to restate the Companies combined financial statements included in the Original Filing and related disclosures (Managements Discussion and Analysis of Financial Condition and Results of Operations) as of April 30, 2012 and October 31, 2011 and for the three and six months ended April 30, 2012 and 2011 as discussed in Note 4 to the combined financial statements included in this First Amendment and to restate Controls and Procedures included in Item 4.

As discussed in the Companies Current Report on Form 8-K dated September 24, 2012, the Companies are restating the combined financial statements 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 First Amendment supersedes the Original Filing in its entirety, this First Amendment only amends and restates Items 1 and 4 of Part I 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 First Amendment as Exhibits 31.1, 31.2, 32.1 and 32.2, respectively.  




i


INDEX



Page No.


PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements

Combined Balance Sheets

April 30, 2012 (Unaudited) and October 31, 2011

1


Combined Statements of Operations (Unaudited)

Three and Six Months ended April 30, 2012 and 2011

2


Combined Statement of Changes in Shareholders Equity (Unaudited)

Six months ended April 30, 2012

3


Combined Statements of Cash Flows (Unaudited)

Six Months Ended April 30, 2012 and 2011

4


Notes to Combined Financial Statements (Unaudited)

5


Item 2.  Management's Discussion and Analysis of Financial Condition

and Results of Operations

18


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

25


Item 4.  Controls and Procedures

25




PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

27


Item 1A.  Risk Factors

27


Item 4.  Mine Safety Disclosures

27


Item 6.  Exhibits

27








ii


PART I FINANCIAL INFORMATION


Item 1.   FINANCIAL STATEMENTS


BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES


COMBINED BALANCE SHEETS



 


(UNAUDITED)

As Restated

 

  ASSETS

04/30/12

10/31/11 (1) 

 

    Land and land development costs (3,392 and 3,394 acres per        land ledger, respectively)

$20,604,702 

$20,642,787 

 

    Land improvements, buildings and equipment, net

22,190,227 

22,613,121 

 

    Land held for investment, principally unimproved       (10,406 and 10,719 acres per land ledger, respectively)

6,890,282 

6,905,668 

 

    Long-lived assets held for sale

1,355,750 

2,941,148 

 

    Cash and cash equivalents

261,231 

377,158 

 

    Cash held in escrow

311,601 

211,881 

 

    Prepaid expenses and other assets

232,143 

483,434 

 

    Accounts receivable and mortgages receivable

494,034

160,290 

 

    Assets of discontinued operations

10,770,222 

 

    Total Assets

$52,339,970 

$65,105,709 

 




 

  LIABILITIES AND SHAREHOLDERS EQUITY



  LIABILITIES:



    Debt

$17,305,826 

$27,113,120 

    Accounts payable

141,439 

437,783 

    Accrued liabilities

291,785 

415,935 

    Deferred income

878,100 

733,734 

    Amounts due to related parties

24,792 

    Accumulated deferred income taxes

1,785,708 

2,303,708 

    Accrued pension expense

3,190,023 

3,312,316 

    Liabilities of discontinued operations

1,010,384 

    Total liabilities

23,592,881 

35,351,772 




  COMBINED SHAREHOLDERS EQUITY:



     Capital stock, without par value, stated value $0.30 per     combined share, Blue Ridge and Big Boulder each     authorized 3,000,000 shares, each issued 2,732,442 shares

819,731 

819,731 

     Capital in excess of stated value

19,829,475 

19,829,475 

     Earnings retained in the business

12,455,611 

13,462,459 

     Accumulated other comprehensive loss

(2,272,321)

(2,272,321)

     Shareholders equity before capital stock in treasury

30,832,496 

31,839,344 

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

2,085,407 

2,085,407 

     Total shareholders equity

28,747,089 

29,753,937 

     Total liabilities and shareholders equity

$52,339,970 

$65,105,709 

(1)

The Combined Balance Sheet as of October 31, 2011 has been restated to correct for the presentation of discontinued operations.  The correction has no impact on total assets.  See Notes 3 and 4.


See accompanying notes to unaudited combined financial statements.



1


BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES


COMBINED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2012 and 2011

As Restated (2)

As Restated (2)

(UNAUDITED)

Three Months Ended

Six Months Ended


04/30/12

04/30/11

04/30/12

04/30/11

  Revenues:





     Real estate management revenue

$247,491 

$235,695 

$454,534 

$456,862 

     Land resource management revenue

1,037,506 

187,979 

1,990,091 

859,281 

     Rental income revenue

450,121 

461,090 

904,093 

912,531 

     Total revenues

1,735,118 

884,764 

3,348,718 

2,228,674 

  Costs and expenses:





     Real estate management costs

233,736 

249,538 

509,314 

505,330 

     Land resource management costs

1,306,234 

495,265 

2,318,383 

1,399,896 

     Rental income costs

239,316 

241,766 

486,018 

482,780 

     General and administrative expense

434,619 

448,533 

969,088 

895,779 

     Total costs and expenses

2,213,905 

1,435,102 

4,282,803 

3,283,785 

         Operating loss from continuing operations

(478,787)

(550,338)

(934,085)

(1,055,111)






  Other income and expense:





     Interest and other income

203 

661 

2,941 

10,106 

     Interest expense (net of capitalized interest for     the three and six months ended April 30, 2012     and 2011 of $0, $52,721, $0 and $111,014,      respectively.)

(274,919)

(349,957)

(599,210)

(707,807)

     Total other income and expense

(274,716)

(349,296)

(596,269)

(697,701)






  Loss from operations before income taxes

(753,503)

(899,634)

(1,530,354)

(1,752,812)






  Credit for income taxes

(255,000)

(305,000)

(520,000)

(595,000)






  Net loss before discontinued operations

(498,503)

(594,634)

(1,010,354)

(1,157,812)






  Discontinued operations (including $82 gain on    disposals in 2012)

(7,916)

160,071 

5,506 

314,597 






  (Credit) provision for income taxes on discontinued    operations

(3,000)

54,000 

2,000 

106,000 






  Net (loss) income from discontinued operations

(4,916)

106,071 

3,506 

208,597 






  Net loss

($503,419)

($488,563)

($1,006,848)

($949,215)






  Earnings (loss) per combined share:





  Net loss before discontinued operations

($0.20)

($0.24)

($0.41)

($0.47)

  Income from discontinued operations, net of tax

0.00 

0.04 

0.00 

0.08 

  Total basic loss per weighted average combined    share

($0.20)

($0.20)

($0.41)

($0.39)

(2)

The Combined Statements of Operations for three and six months ended April 30, 2012 and 2011 have been restated to correct for the presentation of discontinued operations.  The correction had no impact on the net loss.  See Notes 3 and 4.

See accompanying notes to unaudited combined financial statements.



2


BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES


COMBINED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYFOR THE SIX MONTHS ENDED APRIL 30, 2012(UNAUDITED)





Capital Stock (1)

Capital inExcess of

EarningsRetained in

AccumulatedOtherComprehensive

CapitalStock in



Shares

Amount

Stated Par

the Business

Loss

Treasury (2)

Total

Balance, October 31, 2011

2,732,442 

$819,731 

$19,829,475 

$13,462,459 

($2,272,321)

($2,085,407)

$29,753,937 









Comprehensive loss:








Net loss




($1,006,848)



(1,006,848)









Balance, April 30, 2012

2,732,442 

$819,731 

$19,829,475 

$12,455,611 

($2,272,321)

($2,085,407)

$28,747,089 


(1) Capital stock, at stated value of $0.30 per combined share

(2) 282,018 combined shares held in treasury, at cost


See accompanying notes to unaudited combined financial statements



3


BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES


COMBINED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED APRIL 30, 2012 and 2011 (UNAUDITED)




Six Months Ended


04/30/12

04/30/11

  Cash Flows Provided By (Used In) Operating Activities:



      Net loss

($1,006,848)

($949,215)

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



          Depreciation and amortization

629,669 

702,669 

          Impairment

70,700 

          Net book value of properties sold

2,277,785 

          Deferred income taxes

(518,000)

(489,000)

          Changes in operating assets and liabilities:



                    Cash held in escrow

(99,720)

207,609 

                    Accounts receivable and mortgages receivable

(333,744)

86,997 

                    Prepaid expenses and other current assets

1,147,169 

169,434 

                    Land and land development costs

31,085 

(19,166)

                    Long-lived assets held for sale

1,196,872 

272,139 

                    Accounts payable and accrued liabilities

(567,579)

(631,128)

                    Deferred income

144,366 

373,644 

       Net cash provided by (used in) operating activities

2,971,755 

(276,017)




  Cash Flows Provided By (Used In) Investing Activities:



       Additions to properties

(58,199)

(191,115)

       Payments received under direct financing lease arrangements

7,788,195 

4,299 

       Net cash provided by (used in) investing activities

7,729,996 

(186,816)




  Cash Flows (Used In) Provided By Financing Activities:



       Proceeds from debt

1,782,909 

2,221,117 

       Payment of debt

(12,600,587)

(1,962,891)

       Net cash (used in) provided by financing activities

(10,817,678)

258,226 

  Net decrease in cash and cash equivalents

(115,927)

(204,607)

  Cash and cash equivalents, beginning of period

377,158 

389,962 

  Cash and cash equivalents, end of period

$261,231 

$185,355 

See accompanying notes to unaudited combined financial statements.



4


NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS

1. Basis of Combination

     The accompanying unaudited combined financial statements include the accounts of Blue Ridge Real Estate Company 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 WNJ, LLC and Blue Ridge WMN, LLC) (collectively Blue Ridge) and Big Boulder Corporation and its wholly-owned subsidiaries (Lake  Mountain  Company and BBC  Holdings, Inc.) (collectively Big Boulder and, together with Blue Ridge, the Companies).

     The combined balance sheet as of October 31, 2011, which has been derived from audited financial statements, and the combined financial statements as of and for the three and six month periods ended April 30, 2012 and 2011, which are unaudited, are presented pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, these combined financial statements should be read in conjunction with the combined financial statements and notes thereto contained in the Companies 2011 Annual Report on Form 10-K. In the opinion of management, the accompanying combined financial statements reflect all adjustments (which are of a normal recurring nature) necessary for a fair statement of the results for the interim periods. All significant intercompany accounts and transactions are eliminated.

     Due to intermittent revenues from land resource management, the results of operations for any interim period are not necessarily indicative of the results expected for the full fiscal year.

2. Significant Accounting Policies

     Use of estimates:

     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 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.  For example, unexpected changes in market conditions or a continued or further downturn in the economy could adversely affect actual results.  Estimates are used in accounting for, among other things, land development costs, accounts and mortgages receivables, legal liability, insurance liability, depreciation, employee benefits, taxes, and contingencies.  Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the combined financial statements in the period such revisions are determined to be necessary.

     Management believes that its accounting policies regarding revenue recognition, land development costs, long lived assets, deferred income and income taxes among others, affect its more significant judgments and estimates used in the preparation of its combined financial statements.  For a description of these critical accounting policies and estimates, see Managements Discussion and Analysis of Financial Condition and Results of Operations. There were no significant changes in the Companies critical accounting policies or estimates since the Companies fiscal year ended October 31, 2011 (Fiscal 2011), except for presentation of discontinued operations as disclosed in Notes 3 and 4.  Material subsequent events are evaluated and disclosed through the issuance date of this Quarterly Report on Form 10Q.

     Cash held in escrow:

     Cash held in escrow consists of deposits held by the Companies for interest payments on lines of credit, golf course memberships and real estate transactions and other funds placed into escrow with a third party intermediary for the purpose of a tax deferred exchange under section 1031 of the Internal Revenue Code of 1986, as amended (the IRC).

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.




5


   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

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 and sold on December 15, 2011.  Operating activities relating to this land are part of the discontinued operations.

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 2011 and 2012 financial statement amounts.

   Certain amounts in the Fiscal 2011 combined financial statements have been reclassified to conform to the Fiscal 2012 presentation.

New Accounting Pronouncements

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 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.  In December 2011, the FASB issued Accounting Standards Update No. 2011-12 (ASU 2011-12) which is a




6


deferral of the effective date for the amendments to the presentation of reclassifications of items out of accumulated other comprehensive income in Accounting Standards Update No. 2011-05 effective for fiscal years and interim periods within those years beginning after December 1, 2011.

3.  Discontinued operations

   On September 30, 2011, the Applebees located in Fort Collins, Colorado was sold and as a result the operating activity for the three and six months ending April 30, 2012 and 2011 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 April 30, 2012 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 three and six months ending April 30, 2012 and 2011 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 April 30, 2012 there were no remaining assets or liabilities related to Jack in the Box.  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.  At April 30, 2012 there were no remaining assets or liabilities related to Jack in the Box.

   On December 15, 2011, the Jack Frost Mountain and Big Boulder ski areas were sold and as a result the operating activity for the three and six months ending April 30, 2012 and 2011 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.  At April 30, 2012 there were no remaining assets or liabilities related to the Jack Frost Mountain and Big Boulder ski areas.  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.  At April 30, 2012 there were no remaining assets or liabilities related to the Jack Frost Mountain and Big Boulder ski areas.

   The combined assets and liabilities as of October 31, 2011 are summarized as follows:

BALANCE SHEET

10/31/11



ASSETS


Land improvements, buildings & equipment, net

$268,288

Land held for investment, principally unimproved

37,706

Long-lived assets held for sale

1,780,155

Net investment in direct financing leases

7,788,195

Prepaid expenses and other assets

895,878

Total assets of discontinued operations

$10,770,222



LIABILITIES


Debt

$1,010,384

Total liabilities of discontinued operations

$1,010,384





7


   Operating results, including interest expense incurred, of the discontinued operations in three and six months ending April 30, 2012 and 2011 are as follows:


Three months ended

Six months ended


4/30/12

4/30/11

4/30/12

4/30/11

Revenues:





   Applebees

$0 

$29,000 

$0 

$58,000 

   Jack in the Box

33,246

10,971 

66,492 

   Jack Frost Mountain Ski Area

43,124 

5,097 

83,131 

   Big Boulder Ski Area

24,616

5,097 

46,117 

Total Revenue

129,986 

21,165 

253,740 






Expenses (excluding interest):





   Applebees

1,548 

3,727 

   Jack in the Box

11,894 

136 

24,405 

   Jack Frost Mountain Ski Area

7,730 

7,595

7,730 

10,279 

   Big Boulder Ski Area

186 

324

489 

3,166 

Total Expenses

7,916 

21,361 

8,355 

41,577 






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

31,668

63,336 

   Big Boulder Ski Area

48,750 

97,499 

Total Interest and Other Income

80,418 

160,835 






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





   Applebees

11,725 

23,450 

   Jack in the Box

17,247

7,386

34,951 

   Jack Frost Mountain Ski Area

   Big Boulder Ski Area

Total Interest

28,972 

7,386 

58,401 






Gain (Loss) on Disposal:





   Applebees

   Jack in the Box

9,402 

   Jack Frost Mountain Ski Area

(4,803)

   Big Boulder Ski Area

(4,517)

Total Gain (loss) on Disposal

82






Income (loss) from discontinued operations before income taxes

($7,916) 

$160,071 

$5,506 

$314,597 





8


4. Restatement

In the fourth quarter of Fiscal 2012 Management determined to restate the financial statements for the fiscal year ended October 31, 2011, 2010 & 2009, the three months ended January 31, 2012 and 2011, the six months ended April 30, 2012 and 2011 and the nine months ended July 2012 and 2011.  The restatement is to reclassify the financial results from certain properties sold or held for sale by the Companies in 2011 or 2012 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 for the relevant periods.  The following are the previously reported and restated balances on the combined balance sheet as of October 2011 and the combined statements of operations for the six months ended April 30, 2012 & 2011:

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 





9


COMBINED STATEMENTS OF OPERATIONS


For the three months ended April 30, 2012

 

As Previously Reported

Reclassified

As Restated

Costs and expenses:




     Rental income costs

$247,232

($7,916)

$239,316

     Total costs and expenses

2,221,821

(7,916)

2,213,905

        (Loss) profit from continuing operations

(486,703)

7,916

(478,787)





(Loss) from continuing operations before income taxes

(761,419)

7,916

(753,503)





   Credit for income taxes on continuing operations

(258,000)

3,000

(255,000)





Net loss before discontinued operations

(503,419)

4,916

(498,503)





Discontinued operations


(7,916)

(7,916)





Credit for income taxes on discontinued operations


(3,000)

(3,000)





Net income from discontinued operations


(4,916)

(4,916)

COMBINED STATEMENTS OF OPERATIONS


For the three months ended April 30, 2011

 

As Previously Reported

Reclassified

As Restated

Revenues:




     Rental income revenue

$591,076

($129,986)

$461,090

     Total revenues

1,014,750

(129,986)

884,764





Costs and expenses:




     Rental income costs

263,127

(21,361)

241,766

     Total costs and expenses

1,456,463

(21,361)

1,435,102

        Loss from continuing operations

(441,713)

(108,625)

(550,338)





Other income and (expense):




     Interest and other income

81,079

(80,418)

661

     Interest expense

(378,929)

28,972

(349,957)

     Total other income and expense

(297,850)

(51,446)

(349,296)





(Loss) from continuing operations before income taxes

(739,563)

(160,071)

(899,634)





      Credit for income taxes on continuing operations

(251,000)

(54,000)

(305,000)





Net loss before discontinued operations

(488,563)

(106,071)

(594,634)





Discontinued operations


160,071

160,071





Provision for income taxes on discontinued operations:


54,000

54,000





Net income from discontinued operations


106,071

106,071




10


COMBINED STATEMENTS OF OPERATIONS


For the six months ended April 30, 2012

 

As Previously Reported

Reclassified

As Restated

Revenues:




     Land resource management revenue

$12,901,510 

($10,911,419)

$1,990,091 

     Rental income revenue

925,258 

(21,165)

904,093 

     Total revenues

14,281,302 

(10,932,584)

3,348,718 





Costs and expenses:




     Land resource management costs

13,229,720 

(10,911,337)

2,318,383 

     Rental income costs

494,373 

(8,355)

486,018 

     Total costs and expenses

15,202,495 

(10,919,692)

4,282,803 

        (Loss) profit from continuing operations

(921,193)

(12,892) 

(934,085)





Other income and (expense):




     Interest expense

(606,596)

7,386 

(599,210)

     Total other income and expense

(603,655)

7,386

(596,269)





(Loss) from continuing operations before income taxes

(1,524,848)

(5,506)

(1,530,354)





   Credit for income taxes on continuing operations

(518,000)

(2,000)

(520,000)





Net loss before discontinued operations

(1,006,848) 

(3,506)

(1,010,354)





Discontinued operations

5,506 

5,506 





Provision for income taxes on discontinued operations

2,000 

2,000 





Net income from discontinued operations

3,506 

3,506 






11


COMBINED STATEMENTS OF OPERATIONS


For the six months ended April 30, 2011

 

As Previously Reported

Reclassified

As Restated

Revenues:




     Rental income revenue

$1,166,271 

($253,740)

$912,531 

     Total revenues

2,482,414 

(253,740)

2,228,674 





Costs and expenses:




     Rental income costs

524,357 

(41,577)

482,780 

     Total costs and expenses

3,325,362 

(41,577)

3,283,785 

        (Loss) profit from continuing operations

(842,948)

(212,163)

(1,055,111)





Other income and (expense):




     Interest and other income

170,941 

(160,835)

10,106

     Interest  expense

(766,208)

58,401 

(707,807)

     Total other income and expense

(595,267)

(102,434)

(697,701)





(Loss) from continuing operations before income taxes

(1,438,215)

(314,597)

(1,752,812)





      Credit for income taxes on continuing operations

(489,000)

(106,000)

(595,000)





Net loss before discontinued operations

(949,215) 

(208,597)

(1,157,812)


 



Discontinued operations

314,597 

314,597 





Provision for income taxes on discontinued operations:

0

106,000

106,000





Net income from discontinued operations

$0 

$208,597 

$208,597 

5. Segment Reporting

   The Companies currently operate in two business segments, which consist of Real Estate Management/Rental Operations and Land Resource Management.

During the six months ended April 30, 2012, the Companies had two material property sales, the revenue from which totaled $10,911,419, which was 76% of total revenue for such period: one sale for $9,000,000 to JFBB Ski Areas, Inc. and one sale for $1,911,419 to Phyllis Enfield Trust.

6. Income Taxes

   The benefit for income taxes for the three and six months ended April 30, 2012 and 2011 is estimated using the estimated annual effective tax rate for the fiscal years ending October 31, 2012 and 2011.  The effective income tax rate for the first six months of the Companies fiscal year ending October 31, 2012 (such fiscal year Fiscal 2012) and Fiscal 2011 was estimated at 34%.

   The Companies practice is to recognize interest and/or penalties related to income tax matters as income tax expense in its combined financial statements. As of and for the six months ended April 30, 2012, no interest and penalties have been accrued in the combined balance sheet and no expense is reflected in the combined statement of operations.  At April 30, 2012, federal and state tax returns for fiscal years ending October 31, 2008 and later are subject to future examination by the respective tax authorities.




12


7.  Stock Based Compensation

   During the six months ended April 30, 2012 and April 30, 2011 no stock options were issued or exercised.

   Option activity during the six month period ended April 30, 2012 is as follows:


Shares


WeightedAverage Exercise Price

AggregateIntrinsicValue

WeightedAverageRemainingUseful Life(in years)

Outstanding at October 31, 2011

14,000 


$39.00 

$546,000 

0.42 

Granted



Exercised



Expired

14,000 


$39.00 

0.00 

Outstanding at April 30, 2012


$0.00 

$0 

0.00 







Options exercisable at April 30, 2012


$0.00 









Option exercise price range

$0.00 





   The Companies do not expect to recognize any compensation expense related to non-vested awards during Fiscal 2012.

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

8.  Land and Land Development Costs

     Land and improvements in progress held for development consist of the following:


04/30/2012 

10/31/2011 

Land unimproved designated for development

$10,857,336 

$10,901,859 

Residential development

5,084,262 

5,084,262 

Infrastructure development

4,663,104 

4,656,666 


$20,604,702 

$20,642,787 

     The decrease in land unimproved designated for development was mainly related to the sale of a lot in Saylorsburg, Pennsylvania.

9.  Land


04/30/2012 

10/31/2011 

Land held for investment



   Land Unimproved

$2,287,106 

$2,302,492 

   Land Commercial rental properties

4,603,176 

4,603,176 


$6,890,282 

$6,905,668 





13


10.  Pension Benefits

     Components of Net Periodic Pension Cost:


Three Months Ended

Six Months Ended


04/30/12


04/30/11

04/30/12


04/30/11








Service Cost

$12,276 


$14,000 

$24,552 


$28,000 

Interest Cost

96,235 


98,000 

192,470 


196,000 

Expected return on plan assets

(102,812)


(95,500)

(205,624)


(191,000)








Net amortization and deferral:







   Amortization of accumulated loss

83,568 


50,250 

167,136 


100,500 

   Net amortization and deferral

83,568 


50,250 

167,136 


100,500 

   Total net periodic pension cost

$89,267 


$66,750 

$178,534 


$133,500 

The Companies expect to contribute $545,687 to their pension plan in Fiscal 2012.  As of April 30, 2012, the Companies made contributions totaling $300,829 and anticipate contributing an additional $244,858 to fund their pension plan in Fiscal 2012.

11.  Investment in Direct Financing Leases (Included in assets of discontinued operations at October 31, 2011)

During Fiscal 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:


10/31/11 

Minimum future lease payments

$7,426,946 

Unguaranteed residual value of lease properties

8,430,879 

Gross investment in lease

15,857,825 

Unearned income

(7,567,630)

Valuation allowance

(502,000)

Net investment in direct financing leases

$7,788,195 

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 three months ended April 30, 2012 and 2011 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 was recorded as impairment at October 31, 2011.  The interest income which resulted in the direct financing lease is reported as a portion of the discontinued operations.

12.  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 the three and six months ended April 30, 2012 and 2011 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.




14


     Weighted average basic shares, taking into consideration shares issued, weighted average options used in calculating EPS and treasury shares repurchased, and basic loss per weighted average combined share for the three and six months ended April 30, 2012 and April 30, 2011 are as follows:


Three Months Ended

Six Months Ended


04/30/12

04/30/11

04/30/12

04/30/11

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 

2,450,424 

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





   Net loss from continuing operations

($498,503)

($594,634)

($1,010,354)

($1,157,812)

   Weighted average combined shares of common stock outstanding

2,450,424 

2,450,424 

2,450,424 

2,450,424 

   Basic loss per weighted average combined share

($0.20)

($0.24)

($0.41)

($0.47)






Net (loss) income from discontinued operations

($4,916)

$106,071

$3,506

$208,597 

   Weighted average combined shares of common stock outstanding

2,450,424 

2,450,424 

2,450,424 

2,450,424 

Basic earnings per weighted average combined share

$0.00 

$0.04 

$0.00 

$0.08 






   Net loss

($503,419)

($488,563)

($1,006,848)

($949,215)

   Weighted average combined shares of common stock outstanding

2,450,424 

2,450,424 

2,450,424 

2,450,424 

   Basic loss per weighted average combined share

($0.20)

($0.20)

($0.41)

($0.39)


13.  Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the six months ended April 30, 2012 and 2011:


2012

2011

Supplemental disclosures of cash flow information:



   Cash paid during the period for:



           Interest

$625,059 

$876,429 

           Income taxes

$5,300 

$19,684 




Supplemental disclosures of non cash operating and investing activities:






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

$388,526 

$0 




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

$0 

$171,930 




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

$0 

$37,706 

14. 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, Louisiana, Colorado and Texas; 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.  The investment property located in Colorado was sold September 30, 2011, the investment property in Texas was sold November 30, 2011 and the Jack Frost Mountain and Big Boulder Ski Areas were sold December 15, 2011.




15


   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.

     Information by business segment is as follows:


Three months ended

Six months ended


4/30/12 

4/30/11 

4/30/12 

4/30/11 

Revenues from continuing operations:





Real estate management/rental operations

$697,612

$696,785

$1,358,627 

$1,369,393 

Land resource management

1,037,506

187,979

1,990,091 

859,281 

Total revenues from operations

$1,735,118

$884,764

$3,348,718 

$2,228,674 






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





Real estate management/rental operations

$224,560

$205,481

$363,295 

$381,283 

Land resource management

(268,728)

(307,286)

(328,292)

(540,615)

Total operating profit (loss), excluding general and administrative expenses


($44,168)


($101,805)

$35,003 

($159,332) 






General and administrative expenses:





Real estate management/rental operations

$174,741

$353,237

$393,174 

$550,405 

Land resource management

259,878

95,296

575,914 

345,374 

Total general and administrative expenses

$434,619

$448,533

$969,088 

$895,779 






Interest and other income, net:





Real estate management/rental operations

$58

$431

$1,144 

$6,083 

Land resource management

145

230

1,797 

4,023 

Total interest and other income, net

$203

$661

$2,941 

$10,106 






Interest expense:





Real estate management/rental operations

$273,045

$336,362

$588,457 

$682,952 

Land resource management

1,874

13,595

10,753 

24,855 

Total Interest expense

$274,919

$349,957

$599,210 

$707,807 






Loss from continuing operations before income taxes

($753,503)

($899,634)

($1,530,354)

($1,752,812)

  

   16


     Identifiable assets, net of accumulated depreciation at April 30, 2012 and October 31, 2011 and depreciation expense and capital expenditures for six months ended April 31, 2012 and the fiscal year ended October 31, 2011 by business segment are as follows:

April 30, 2012

Identifiable  Assets 

Depreciation and  Amortization Expense 

Capital  Expenditures 

  Real estate management/rental operations

$27,241,297 

$410,179 

$2,544 

  Land resource management

24,953,577 

173,652 

  Other corporate

145,096 

45,838 

55,655 

  Discontinued operations

0

0

0

  Total Assets

$52,339,970 

$629,669 

$58,199

October 31, 2011




  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

0

  Total Assets

$65,105,709 

$1,354,830 

$429,557 

For the six months ended April 30, 2011, no one customer represented more than 10% of total revenues.  During the six months ended April 30, 2012, the Companies had two material property sales, the revenue from which totaled $10,911,419: one sale for $9,000,000 to JFBB Ski Areas, Inc. and one sale for $1,911,419 to Phyllis Enfield Trust.

15. Subsequent Events

     The Companies have evaluated and disclosed subsequent events from April 30, 2012 through the issuance date of the Form 10-Q.




17


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q 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, that are made based upon, among other things, current assumptions by management, expectations and beliefs concerning future developments and their potential effect on the Companies.  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 the Companies 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 the Company is involved; the current and future real estate market in the Pocono Mountains; the timing and outcome of the Companies planned land development; contributions to the Companies pension plan; 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; our review and update to our master development plan and the Companies 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:


ª

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

ª

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

ª

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

ª

The Companies ability to continue to generate sufficient working capital to meet the Companies operating requirements;

ª

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

ª

The Companies ability to provide competitive pricing to sell homes;

ª

The Companies ability to achieve gross profit margins to meet operating expenses;

ª

Fluctuations in the price of building materials;

ª

The Companies ability to effectively manage the Companies business;

ª

The Companies ability to attract and retain qualified personnel in the Companies business;

ª

The Companies ability to negotiate leases for the future operations of the Companies facilities;

ª

The Companies relations with the Companies controlling shareholder, including its continuing willingness to provide financing and other resources;

ª

Actions by the Companies competitors;

ª

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

ª

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

As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q 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.  




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We do not intend to update these forward-looking statements to reflect circumstances or events that occur after the date 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 Quarterly Report on Form 10-Q by the cautionary statements referenced above.

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 sports.

At April 30, 2012, we owned 13,786 acres of land in Northeastern Pennsylvania along with 13 acres of land in various other states.  Of these land holdings, we designated 3,392 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.

With recent changes in management and in light of the economic environment, we intend to 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 intend to continue considering asset sales opportunistically.

For Fiscal 2012, 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 a condominium in our Boulder Lake Village complex 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 original purchasers of the existing Boulder Lake Village Condominiums.  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 an alternate format in order to reflect our assets and liabilities in order of their importance.



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Recent Developments

On February 8, 2012, the Companies entered into an employment agreement (the Agreement) with Mr. Bruce Beaty, pursuant to which Mr. Beaty serves as President and Chief Executive Officer of the Companies.  The initial term of the Agreement became effective January 1, 2012 and expires January 1, 2013.  Thereafter, the Agreement continues in effect indefinitely until either party gives notice of termination to the other party.  The Agreement provides that Mr. Beaty will receive a $120,000 base annual salary, will receive a bonus of not less than $30,000, is eligible to participate in the Companies 401(k) plan and will be reimbursed for his health care costs incurred under his existing personal health insurance policy.  Mr. Beaty will perform such duties and fulfill such assignments as may be assigned by the Boards of Directors or its designee and devote a majority of his time, energy, attention and skill to the performance of his duties and to the promotion and advancement of the Companies business and interests.

On February 20, 2012 the Companies entered into a second amendment (the Second Amendment) to the Phase 3 Agreement of Sale dated February 17, 2011 with The Conservation Fund (the Purchaser) for 376 acres in Thornhurst, Lackawanna County for the purchase price of $1,600,000.  The Second Amendment extended the end date of the inspection period during which the Purchaser may perform due diligence from February 16, 2012 to November 30, 2012, and specified a closing date of December 31, 2012.  The second amendment also provides that, if prior to the expiration of the Inspection Period, the parties are unable to reach an agreement on the terms under which the Companies will retain and exercise gas and oil rights on the property following closing, then either party may terminate the Agreement on ten days written notice and the $5,000 deposit under the Agreement will be refunded to the Purchaser.  

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 respective buyer.  In the few instances that the Companies finance the sale, a minimum 20% down payment is required from the respective 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.

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 timber 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 the Companies 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 the Companies 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.  The Companies recognize revenue related to the



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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.

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. The Companies 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.  Jack Frost Mountain and Big Boulder Ski Areas were sold on December 15, 2011.

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 applicable 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 unaudited combined financial statements.  The accounting for pension costs is determined by specialized accounting and actuarial methods using numerous estimates, including discount rates, expected long-term investment returns on plan assets, employee turnover and mortality and retirement ages.  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 them 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 in Fiscal 2011.  The Companies expect to contribute $545,687 to the pension plan in Fiscal 2012.  As of April 30, 2012, the Companies made contributions totaling $300,829.  Future benefit accruals under the pension plan ceased as of August 31, 2010.  The Companies also have 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.




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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.

Results of Operations for the Three and Six Months Ended April 30, 2012 and 2011

Operations for the three and six months ended April 30, 2012 resulted in a net loss of $503,419 and $1,006,848, or $0.20 and $0.41 per combined share, respectively, compared to a net loss of $488,563 and $949,215, or $.20 and $.39 per combined share, for the three and six month periods ended April 30, 2011, respectively.

Revenues

Combined revenue of $1,735,118 and $3,348,718 for the three and six months ended April 30, 2012 represents an increase of $850,354 and $1,120,044 respectively, compared to the three and six months ended April 30, 2011.  Real Estate Management Operations / Rental Operations revenue increased $827 and decreased $10,766, or (0%) and (1%), respectively, for the three and six months ended April 30, 2012, compared to the three and six months ended April 30, 2011. Land Resource Management revenue increased $849,527 and $1,130,810, or greater than 100% for the three and six months ended April 30, 2012 compared to the three and six months ended April 30, 2011, respectively.

Real Estate Management/Rental Operations

Real Estate Management Operations / Rental Operations revenue was $1,358,627 for the six months ended April 30, 2012, compared to $1,369,393 for the six months ended April 30, 2011, which resulted in a decrease of $10,766, or (1%).  Rental revenue for the six months ended April 30, 2012 decreased to $904,093 as compared to $912,531 for the six months ended April 30, 2011, a decrease of $8,438, or (1%).  This decrease was primarily related to the leased investment property in Saylorsburg Pennsylvania that was vacant for three months in the six month period ending April 30, 2012.

Land Resource Management

For the six months ended April 30, 2012, Land Resource Management revenues increased to $1,990,091, compared to $859,281 for the six months ended April 30, 2011, an increase of $1,130,810, or greater than 100%.   There were four condominium sales in Boulder Lake Village community totaling $899,000 and three duplex townhouse sales in Laurelwoods II community totaling $667,000 for the six months ended April 30, 2012, as compared to one condominium sale in Boulder Lake Village for $299,000 and one duplex townhouse in Laurelwoods II community for $285,000 for the six months ended April 30, 2011, an increase of $982,000, or greater than 100%.  For the six months ended April 30, 2012, timbering revenue was $321,722 as compared to $77,900 for the three months ended April 30, 2011, an increase of $243,822 or greater than 100%.  The Jack Frost National Golf Courses revenue for the six months ended April 30, 2012 increased to $61,618 as compared to $31,185 for the six months ended April 30, 2011, an increase of $30,433, or 98%, which was primarily due to favorable weather conditions in the spring of 2012 that allowed an early opening day.

Operating Costs

Real Estate Management/Rental Operations

Operating costs associated with Real Estate Management Operations / Rental Operations for the six months ended April 30, 2012 increased to $995,332 compared to $988,110 for the six months ended April 30, 2011, an increase of $7,222 or (1%). This increase was primarily due to increased repairs and maintenance costs associated with trust services in our resort communities.

Land Resource Management

Operating costs associated with Land Resource Management for the six months ended April 30, 2012 increased to $2,318,383 compared with $1,399,896 for the six months ended April 30, 2011, an increase of $918,847, or 66%.  The increase in cost of goods sold related to real estate development, which was $856,253 for the six months ended April 30, 2012 as compared to $283,042 for the six months ended April 30, 2011, an increase of $573,211 or greater than 100% and an increase in real estate development operating expenses, which was $849,810 for the six months ended April 30, 2012




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as compared to $490,827 for the six months ended April 2011, an increase of $358,983 or 73%.  These increases were the result of three duplex townhouse sales in the Laurelwoods II community and four Boulder Lake Village condominium sales for the six months ended April 30, 2012 as compared to one duplex townhouse sale in the Laurelwoods II community and one Boulder Lake Village condominium sale during the six months ended April 30, 2011.  The Jack Frost National Golf Course expenses decreased by ($55,990) for the six months ended April 30, 2012 as compared to the six months ended April 30, 2011 primarily due to decreased depreciation expense ($26,015), equipment rental expense ($21,807) and course repairs and maintenance ($9,061).  There were two timbering contracts for the six months ended April 30, 2012 and one timbering contract for the six months ended April 30, 2011.  Consulting fees relating to these timber contracts were $30,572 for the six months ended April 30, 2012 compared to $7,790 for the six months ended April 30, 2011, an increase of $22,782 relating to the increase in timber revenue.

General and Administration

General and Administration costs for the six months ended April 30, 2012 increased to $969,088 as compared to $895,779 for the six months ended April 30, 2011, an increase of $73,309, or 8%.  This increase is primarily related to increased salaries and related benefits and payroll taxes $129,378, pension expense $45,036, offset by a decrease in consulting fees ($48,861), legal & audit fees ($40,955) and depreciation expense ($13,143).

Other Income (Expense)

Interest and other income decreased to $2,941 for the six months ended April 30, 2012 compared to $10,106 for the six months ended April 30, 2011, a decrease of $7,165, or 71%. This was primarily due to miscellaneous revenue received for the six months ended April 30, 2011 for reimbursements from various leased properties related to storm damages.

Interest expense for the six months ended April 30, 2012 decreased to $599,210 compared to $707,807 for the six months ended April 30, 2011, a decrease of $108,597, or (15%). Interest expense on our $4,600,000 term note with M&T Bank (the Bank) was $14,982 for the six months ended April 30, 2012 as compared to $68,630 for the six months ended April 30, 2011 for a decrease of $53,648 or 78%.  This note was paid in full on December 15, 2011.  The interest expense on our $3,100,000 available line of credit with the Bank was $16,183 for the six months ended April 30, 2012 as compared to $59,431 for the six months ended April 30, 2011 for a decrease of $43,248, or 73%.  This decrease is due to the line of credit being paid down a net of $531,691 during six months ended April 30, 2012.  The Companies also have a $9,000,000 line of credit with the Bank to fund real estate development which resulted in interest expense related to the completed and unsold units at Boulder Lake Village and Woodsbluff duplexes increasing to $95,600 for the six months ended April 30, 2012 as compared to $93,708 for the six months ended April 30, 2011, an increase of $1,982 or 2%.  

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 the six months ended April 30, 2012 and the six months ended April 30, 2011 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 and the gain resulting from the sale of the Jack in the Box are no longer reported in the Land Resource Management segment.  

   The net income after taxes from the discontinued operations for the Applebees for the six months ended April 30, 2012 was $0 as compared to $20,823 for the six months ended April 30, 2011.  The decrease of $20,823 relates to The Applebees sale on September 30, 2011.

   The net income after taxes from discontinued operations for the Jack in the Box was $8,851 for the six months ended April 30, 2012 versus $5,136 for the six months ended April 30, 2011.  The increase of $3,715 is primarily due to the gain on disposal of $9,402 recognized in the six months ended April 30, 2012.  The Jack in the Box was sold November 30, 2011.

  The net loss after taxes from discontinued operations for the Jack Frost Mountain and Big Boulder ski areas was $5,345 for the six months ended April 30, 2012 compared to net income of $182,638 for the six months ended April 30, 2011.  The decrease of $187,983 is primarily due to interest income of $0 for the six months ended April 30, 2012 as compared to $160,835 received for the six months ended April 30, 2011. A loss on disposal of $9,320 was recognized on the ski areas for the six month period ended April 30, 2012 as the ski areas were sold on December 15, 2011. Additionally operating expenses for the six month period ended April 30, 2012 was $8,219 as compared to $13,445 for the six month period ended April 30, 2011 for a decrease of $5,226 primarily relating to insurance expense.  




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Tax Rate

The effective tax rate for the six months ended April 30, 2012 and 2011 was 34%.  The rate for Fiscal 2012 is specific to federal taxes.  There is no benefit for state income tax because the Companies fully reserved the future benefit.  

Liquidity and Capital Resources  

As reflected in the Combined Statements of Cash Flows, net cash provided by operating activities was $2,971,755 for the six months ended April 30, 2012 versus net cash used in operating activities of $276,017 for the six months ended April 30, 2011.  The increase in net cash provided by operating activities for the six months ended April 30, 2012 is primarily attributable to the sales of the Jack Frost Mountain and Big Boulder Ski Areas and the Jack In The Box.

Material non-recurring cash items for the six months ended April 30, 2012 include the sales of Jack Frost Mountain Ski Area for $5,650,000, Big Boulder Ski Area for $3,350,000 and the Jack In The Box for $1,911,419.

On November 30, 2011 the Companies sold the Jack In The Box located in Wallisville, Texas.  A portion of the proceeds from the sale were used to pay off the Deed of Trust and Security Agreement and Real Estate Lien Note held by Barbers Hill Bank in the amount of $1,009,002, which encumbered the property.

On December 15, 2011 The Companies paid the balance outstanding on a Loan Agreement and Term Note (the Note) with the Bank in the amount of $4,600,000.  The Companies utilized a portion of the proceeds from the sale of the ski areas to pay the balance of the Note.  

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%.  Interest is due and payable on a monthly basis and at April 30, 2012, the interest rate equaled 5.5% The Companies maintain an interest reserve account which was established in the third quarter of the fiscal year ended October 31, 2009 as security for the payment of interest with the proceeds from a sale of land.  On December 15, 2011 the Companies utilized a portion of the proceeds from the sale of Jack Frost Mountain and Big Boulder Ski Areas to deposit $221,201 into the interest reserve account and at April 30, 2012 the balance in the account was $213,952.  During the six months ended April 30, 2012 the Companies utilized a portion of the proceeds from the sale of three Laurelwoods Woodsbluff duplex units and four Boulder Lake Village condominium units to repay $1,280,189 and $36,211 on the Construction and Site Development sublimits, respectively.  On December 15, 2011 the Companies utilized a portion of the proceeds from the sale of the ski areas to repay $181,500 on the Construction sublimit and the balance outstanding of $2,881,311 on the Site Development sublimit. At April 30, 2012, $1,777,442 and $0 were outstanding on the Construction and Site Development sub-limits, respectively.   The remaining principal and any accrued interest are due and payable on September 30, 2012.

The total principal amount outstanding under the aggregate line of credit may 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 annually 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 have obtained a waiver from the Bank for this covenant.  The next calculation of the ratios is required October 31, 2012.

The Companies also have a $3,100,000 line of credit with the Bank for general operations.  On December 15, 2011 the Companies repaid $826,849 on the line of credit with a portion of the proceeds from the ski area sales.  At April 30, 2012, $665,439 was outstanding on the $3,100,000 line at a 5.5% interest rate.



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The following table sets forth the Companies significant contractual cash obligations for the items indicated as of April 30, 2012:

Contractual Obligations:

Total 

Less than 1 year 

1-3 years 

4-5 years 

More than  5 years 

  Lines of Credit

$2,442,881 

$2,442,881 

$0 

$0 

$0 

  Long-Term Debt-Investment Properties

14,732,848 

348,761 

7,382,179 

551,814 

6,450,094 

  Capital Leases

130,097 

46,624 

83,473 

  Debt Sub-total

$17,305,826 

$2,838,266 

$7,465,652 

$551,814 

$6,450,094 

  Fixed Rate Interest

7,350,247 

927,803 

2,058,823 

930,646 

3,432,975 

  Variable Rate Interest (1)

953,572 

136,225 

408,674 

272,449 

136,224 

  Interest Sub-total

$8,303,822 

$1,064,028 

$2,467,497 

$1,203,095 

$3,569,199 

  Pension Contribution Obligations (2)

244,858 

244,858 

Total Contractual Cash Obligations

$25,854,506 

$4,147,152 

$9,933,149 

$1,754,909 

$10,019,293 

(1)

The variable rate interest is calculated based on the outstanding balances and the interest rate in effect as of April 30, 2012.

(2)

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.

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

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness.  At April 30, 2012, we had $2,442,881 of variable rate indebtedness, representing 14% of our total debt outstanding, at an average rate of 5.50% (calculated as of April 30, 2012).  Our average interest rate is based on our various credit facilities and our market risk exposure fluctuates based on changes in underlying interest rates.

Exposure to market risk may also exist in our mortgages receivable issued in connection with land sales.  Mortgages receivable are considered fully collectible by management and accordingly, no allowance for loan losses is considered necessary.

Item 4.  CONTROLS AND PROCEDURES

(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-Q for the period ended April 30, 2012, that, as of April 30, 2012, 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 reflected in the filing of this Form 10-Q/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 weakness in the internal control over financial reporting discussed below, our disclosure controls and procedures were not effective as of April 30, 2012.

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




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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 have restated the financial statements for all relevant periods in the periodic reports referenced above to include the properties in discontinued operations.  The restatement did 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)  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 4 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 April 30, 2012 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 First Amendment to remedy the material weakness in our internal control over financial reporting.



26


PART II - OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

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

Item 1A.  RISK FACTORS

No update.

Item 4.  MINE SAFETY DISCLOSURES

Not applicable.

Item 6.  EXHIBITS

Exhibit Number

Description

10.1

$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.)

10.2

$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.)

10.3

$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.)

10.4

$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.)

10.5

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

10.6

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, 2011 as Exhibit 10.2 to Form 8-K and incorporated herein by reference.)

10.7

 

 

 

Employment Agreement effective January 1, 2012 between Blue Ridge Real Estate Company and Bruce Beaty (filed February 14, 2012 as Exhibit 10.1 to Form 8-K and incorporated herein by reference.)

 

                                                              27


 

10.8

Second Amendment to Agreement of Sale, Phase 3, dated February 20, 2012 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 376 acres located in Thornhurst Township, Lackawanna County, Pennsylvania (filed as exhibit 10.3 to Form 8-K filed on February 24, 2012 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

**Furnished herewith




28


SIGNATURES



Pursuant to the requirements 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

(Registrants)





Dated:   November 29, 2012

/s/ Bruce Beaty

Bruce Beaty

President and Chief Executive Officer




Dated:   November 29, 2012

/s/ Cynthia A. Van Horn

Cynthia A. Van Horn

Chief Financial Officer and Treasurer

(Principal Financial Officer)

























29


EXHIBIT INDEX


Exhibit Number

Description

10.1

$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.)

10.2

$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.)

10.3

$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.)

10.4

$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.)

10.5

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

10.6

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, 2011 as Exhibit 10.2 to Form 8-K and incorporated herein by reference.)

10.7

Employment Agreement effective January 1, 2012 between Blue Ridge Real Estate Company and Bruce Beaty (filed February 14, 2012 as Exhibit 10.1 to Form 8-K and incorporated herein by reference.)

10.8

Second Amendment to Agreement of Sale, Phase 3, dated February 20, 2012 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 376 acres located in Thornhurst Township, Lackawanna County, Pennsylvania (filed as exhibit 10.3 to Form 8-K filed on February 24, 2012 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

**Furnished herewith



31