10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2009

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

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No.:	Blue Ridge 0-28-44
	Big Boulder 0-28-43

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 Road, 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.

ýYES          ¨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 ¨

Accelerated Filer                 ¨

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

Smaller reporting company ý

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

¨YES          ýNO

      The number of shares of the registrants’ common stock outstanding as of the close of business on March 12, 2009 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, all information applies to both Companies.  

INDEX

Page No.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Combined Condensed Balance Sheets - January 31, 2009 and October 31, 2008

1

Combined Condensed Statements of Operations - Three Months ended

January 31, 2009 and 2008

2

Combined Condensed Statement of Changes in Shareholders’ Equity –

Three months ended January 31, 2009

3

Combined Condensed Statements of Cash Flows - Three Months Ended

January 31, 2009 and 2008

4

Notes to Financial Statements

5

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

of Operations

10

Item 4T.  Controls and Procedures

16

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

17

Item 5.  Other Information

17

Item 6.  Exhibits

18

PART I – FINANCIAL INFORMATION

Item 1.   FINANCIAL STATEMENTS

BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED CONDENSED BALANCE SHEETS

	(UNAUDITED)
ASSETS	1/31/09	10/31/08
Land and land development costs (4,971 acres per land     ledger)	$23,374,958	$23,952,717
Land improvements, buildings & equipment, net	27,341,983	27,448,577
Land held for investment, (11,448 acres per land     ledger)	8,194,827	8,194,827
Land held for recreation (514 acres per land ledger)	8,693,860	8,693,860
Net investment in direct financing leases	8,320,719	8,324,258
Cash and cash equivalents	65,404	225,083
Cash held in escrow	97,610	232,059
Prepaid expenses and other assets	1,262,394	1,430,068
Accounts receivable and mortgages receivable	578,430	532,167
	77,930,185	$79,033,616

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Debt	$30,839,549	$31,273,294
Accounts payable	981,310	1,264,556
Accrued liabilities	472,435	628,325
Deferred income	841,440	866,660
Amounts due to related parties	15,833	48,959
Deferred income taxes	6,684,400	6,750,000
Accrued pension expense	1,179,643	1,179,643
Total liabilities	41,014,610	42,011,437
Commitments and contingencies
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	819,731	819,731
Capital in excess of stated value	19,805,918	19,785,264
Earnings retained in the business	19,069,800	19,197,058
Accumulated other comprehensive loss	(694,467)	(694,467)
	39,000,982	39,107,586
Less cost of 282,018 shares of capital stock in      treasury	2,085,407	2,085,407
Total shareholders’ equity	36,915,575	37,022,179
	$77,930,185	$79,033,616

See accompanying notes to unaudited financial statements.

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED JANUARY 31, 2009 and 2008
(UNAUDITED)
	2009	2008
Revenues:
Real estate management	$478,551	$1,654,433
Summer recreation operations	4,878	6,204
Land resource management	2,103,952	5,299
Rental income	581,689	583,816
	3,169,070	2,249,752
Costs and expenses:
Real estate management	589,106	1,685,435
Summer recreation operations	229,154	238,224
Land resource management	1,726,884	92,641
Rental income	282,325	319,119
General and administration	376,705	310,470
Loss on sale of assets	10,643	0
	3,214,817	2,645,889
Operating loss	(45,747)	(396,137)
Other income (expense):
Interest and other income	87,798	78,756
Interest expense (net of capitalized interest of          $106,923 and $180,116, respectively	(234,909)	(266,315)
	(147,111)	(187,559)
Loss from continuing operations before income taxes	(192,858)	(583,696)
Credit for income taxes	(65,600)	(198,200)
Net loss	($127,258)	($385,496)
Basic loss per weighted average combined share	($0.05)	($0.16)
Diluted loss per weighted average combined share	($0.05)	($0.16)

See accompanying notes to unaudited financial statements.

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2009

(UNAUDITED)

					Accumulated
	Capital Stock (a)		Capital in Excess of	Earnings Retained in	Other Comprehensive	Capital Stock in
	Shares	Amount	Stated Par	the Business	Loss	Treasury (b)	Total
Balances, October 31, 2008	2,732,442	$819,731	$19,785,264	$19,197,058	($694,467)	($2,085,407)	$37,022,179
Net loss				(127,258)			(127,258)
Compensation recognized under employee stock plan			20,654				20,654
Balances, January 31, 2009	2,732,442	$819,731	$19,805,918	$19,069,800	($694,467)	($2,085,407)	$36,915,575

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

(b) 282,018 shares held in treasury, at cost

See accompanying notes to unaudited financial statements

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED
JANUARY 31, 2009 and 2008
(UNAUDITED)
	2009	2008
Cash Flows Provided By (Used In) Operating Activities:
Net loss	($127,258)		($385,496)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation	348,555		347,323
Deferred income taxes	(65,600)		(198,200)
Loss on sale of assets	10,643		0
Compensation cost under employee stock plans	20,654		63,475
Changes in operating assets and liabilities:
Cash held in escrow	134,449		(197,307)
Accounts receivable and mortgages receivable	(46,263)		204,446
Prepaid expenses and other current assets	167,674		478,172
Land and land development costs	363,546		(1,042,206)
Accounts payable and accrued liabilities	(472,264)		(1,074,239)
Deferred income	(25,220)		191,777
Net cash provided by (used in) operating activities	308,916		(1,612,255)
Cash Flows Used In Investing Activities:
Additions to properties	(20,582)		(378,164)
Payments received under direct financing lease arrangements	3,539		4,281
Net cash used in investing activities	(17,043)		(373,883)
Cash Flows (Used In) Provided By Financing Activities:
Proceeds from debt	2,191,950		3,834,020
Payment of debt	(2,625,695)		(1,911,360)
Deferred financing costs	(17,807)		0
Net cash (used in) provided by financing activities	(451,552)		1,922,660
Net decrease in cash & cash equivalents	(159,679)		(63,478)
Cash and cash equivalents, beginning	225,083		189,702
Cash and cash equivalents, ending	$65,404		$126,224
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$345,233		$452,968
Income taxes	$500		$500
Supplemental disclosures of non cash investing and financing activities:
Reclassification of assets from land and land development costs    to land held for investment and land improvements, buildings    and equipment	$214,213		$572,563

See accompanying notes to unaudited financial statements.

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NOTES TO UNAUDITED FINANCIAL STATEMENTS

1. Basis of Combination

     The  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, LLCand Flower Fields Motel, LLC) (“Blue Ridge”) and Big Boulder Corporation and its  wholly-owned  subsidiaries  (Lake  Mountain  Company and BBC  Holdings, Inc.) (“Big Boulder” and, together with Blue Ridge, the “Companies”).  

     The condensed balance sheet as of October 31, 2008, which has been derived from audited financial statements, and the combined condensed financial statements as of and for the three month period ended January 31, 2009 and 2008, which are unaudited, are presented pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, these combined condensed financial statements should be read in conjunction with the combined financial statements and notes thereto contained in the Companies’ 2008 Annual Report on Form 10-K. In the opinion of management, the accompanying combined condensed financial statements reflect all adjustments (which are of a normal recurring nature) necessary for a fair statement of the results for the interim periods.

     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

     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 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, the unguaranteed residual value of assets under direct financing leasing arrangements, 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 condensed financial statements in the period they are determined to be necessary.

     Management believes that its accounting policies regarding revenue recognition, land development costs, long lived assets, net investment in direct financing leases, deferred income and income taxes among others, affect its more significant judgments and estimates used in the preparation of its combined condensed financial statements.  For a description of these critical accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. There are no significant changes in the Companies’ critical accounting policies or estimates since the Companies’ fiscal year ended October 31, 2008 (“Fiscal 2008”).

     Cash held in escrow represents deposits held by the Companies for real estate transactions or other funds placed into escrow with a third party intermediary for the purpose of an Internal Revenue Code Section 1031 tax deferred exchange.

     On November 1, 2008, the Companies adopted Financial Accounting Standards No. 157, Fair Value Measurements, (“SFAS 157”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value.  The provisions of SFAS 157 relating to financial assets and liabilities are effective for fiscal years beginning after November 15, 2007.  Financial Accounting Standards Board (“FASB”) Staff Position (“FSP”) 157-2 delays the effective date of SFAS 157 to fiscal years beginning after November 15, 2008 for non-financial assets and liabilities, except for those items that are recognized or disclosed at fair value on a recurring basis.  The Companies adopted the provisions of SFAS 157 related to financial assets and liabilities on November 1, 2008 with no effect to the consolidated financial position, results of operations, or

- 5 - -

cash flows.  The Companies are currently evaluating the impact of adopting the provisions of SFAS 157 related to non-financial assets and liabilities on their consolidated financial statements.

     Effective November 1, 2008, the Companies adopted Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, (“SFAS No. 159”).  SFAS No. 159 permits entities to make an irrevocable election to value certain financial assets and financial liabilities, on an instrument by instrument basis, at fair value and include the related change in fair value in net income. The Companies did not elect the fair value option for eligible items.

New Accounting Pronouncements

     In December 2008, the FASB issued FASB Staff Position (“FSP”) SFAS 132(R)-1, Employer’s Disclosures about Postretirement Benefit Plan Assets.  This FSP amends FASB Statement No. 132, Employer’s Disclosures about Pensions and Other Postretirement Benefits, to disclose more information about investment allocation decisions, major categories of plan assets, including concentrations of risk and fair value measurements, and the fair value techniques and inputs used to measure plan assets. The disclosures required by the FSP are required to be provided for fiscal years ending after December 15, 2009.  The Companies are in the process of evaluating the effect, if any, the adoption of this FSP will have on our financial statements.

3. Segment Reporting

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

4. Income Taxes

     The benefit for income taxes for the three months ended January 31, 2009 and 2008 is estimated using the estimated annual effective tax rate for the years ending October 31, 2009 and 2008.  The effective income tax rate for the first three months of the fiscal year ending October 31, 2009 (“Fiscal 2009”) and Fiscal 2008 was estimated at 34%.

     Effective November 1, 2007, the Companies adopted Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 requires the Companies to clarify their accounting for uncertainty in income taxes recognized in its financial statements in accordance with FASB Statement No. 109. FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The adoption of FIN 48 had no impact on the combined financial statements of the Companies.

     The Companies’ continuing 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 three months ended January 31, 2009, no interest and penalties have been accrued in the combined balance sheet and no expense has been incurred in the combined statement of operations.

     At January 31, 2009, federal and state tax returns for years ending October 31, 2005 and later are subject to future examination by the respective tax authorities.

5.  Stock Based Compensation

     During the three months ended January 31, 2009, no stock options were issued or exercised.

     The fair value of each option award is estimated at the date of grant using a Black-Scholes 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.

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     Option activity during the three month period ended January 31, 2009 is as follows:

	Shares	Weighted Average Exercise Price	Aggregate Intrinsic Value	Weighted Average Remaining Useful Life (in years)
Outstanding at October 31, 2008	64,600	$36.93	$2,385,600	2.4
Granted	0	0	0
Exercised	0	0	0
Canceled	0	0	0
Outstanding at January 31, 2009	64,600	$36.93	$2,385,600	2.1
Options exercisable at January 31, 2009	56,239	36.62
Option price range	$34.00-$39.00

       Activity related to non-vested options for the period ended January 31, 2009 is as follows:

	Shares	Weighted Average Grant Date Fair Value Price
Non-vested at October 31, 2008	11,945	$7.87
Granted	0	0
Vested	(3,584)	(9.90)
Non-vested at January 31, 2009	8,361	$7.00

     No options were exercised during the three months ended January 31, 2009 or 2008.  The Companies expect to recognize compensation expense related to non-vested awards totaling approximately $23,556 over the next two years based on graded average vesting.

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

6.  Land and Land Development Costs

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

	1/31/2009	10/31/2008
Land unimproved designated for development	$461,186	$461,186
Residential development	12,703,264	10,027,041
Infrastructure development	10,210,508	13,464,490
	$23,374,958	$23,952,717

The increase in residential development costs and the decrease in infrastructure costs is primarily due to the closing and subsequent allocation of the capital jobs relating to site development in Woodsbluff Court ($525,000) located in the Laurelwoods II residential community and the Boulder Lake Village condominium project ($2,570,000) on Big Boulder Lake.   

Residential development costs were further increased by the continued construction of the 18 unit Boulder Lake Village condominium ($1,050,000) and four Woodsbluff Duplex Units ($290,000).   This increase was offset by the sale of one Boulder Lake Village condominium unit ($470,000) and three Woodsbluff Duplex units ($1,150,000.)

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7.  Land

	1/31/09	10/31/08
Land held for investment
Land – Principally unimproved	$2,018,687	$2,018,687
Land – Commercial rental properties	6,176,140	6,176,140
	$8,194,827	$8,194,827
Land held for recreation
Land – Golf course	$8,656,154	$8,656,154
Land – Ski areas	37,706	37,706
	$8,693,860	$8,693,860

8.  Pension Benefits

   Components of Net Periodic Benefit Cost:

	Three Months Ended
	1/31/09	1/31/08
Service Cost	$34,500	$45,000
Interest Cost	89,750	79,250
Expected return on plan assets	($68,750)	($95,000)
Net amortization and deferral:
Amortization of transition obligation	717	717
Amortization of prior service cost	69	69
Amortization of accumulated gain	16,500	0
Net amortization and deferral	17,286	786
Total net periodic pension cost	$72,786	$30,036

     The Companies expect to contribute $536,260 to their pension plan in Fiscal 2009.  As of January 31, 2009, the Companies have not made any contributions.

9.  Investment in Direct Financing Leases

     The Companies lease the Jack Frost and Big Boulder ski areas under direct financing leases through 2034.  The leases provide for minimum rental payments plus scheduled increases based upon the consumer price index, which increases shall not exceed 4% in any given year.  Minimum annual future lease payments due under those leases at January 31 is as follows:

2010	$257,685
2011	264,127
2012	270,730
2013	277,499
2014	284,436
Thereafter	15,411,582
TOTAL	$16,766,059

     The Companies net investment in direct financing leases consists of the following as of January 31, 2009:

Minimum future lease payments	$8,335,180
Unguaranteed residual value of lease properties	8,430,879
Gross investment in lease	16,766,059
Unearned income	(8,445,340)
Net investment in direct financing leases	$8,320,719

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     Unearned income is amortized into earnings using the interest method.  The scheduled payment increase over the terms of the leases have been accounted for on a straight line basis in accordance with generally accepted accounting principles.  The unguaranteed residual is evaluated on an ongoing basis.

10.  Per Share Data

     Earnings per share (“EPS”) are based on the weighted average number of common shares outstanding during the period.  Diluted EPS assumes weighted average options have been exercised to purchase shares of common stock in the three months ended January 31, 2009 and 2008, net of assumed repurchases using the treasury stock method. Certain unexercised stock options to purchase shares of the Companies’ common stock were excluded from the dilutive calculation for the three months ended January 31, 2009 and 2008 due to the exercise price of the options being greater than the market price of the Companies’ common stock.

     Weighted average basic and diluted shares, taking into consideration shares issued, weighted average options used in calculating EPS and treasury shares repurchased, for each of the periods are presented  as follows:

	Three Months Ended
	1/31/09	1/31/08
Weighted average combined shares of common stock    outstanding used to compute basic earnings per    combined share	2,450,424	2,450,424
Additional combined common shares to be issued    assuming exercise of stock options, net of    combined shares assumed reacquired	0	0
Combined shares used to compute dilutive effect  of    stock option	2,450,424	2,450,424

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

	Three Months Ended
	1/31/09	1/31/08
Net loss	($127,258)	($385,496)
Weighted average combined shares of common stock     outstanding	2,450,424	2,450,424
Basic loss per weighted average combined share	($0.05)	($0.16)

     Diluted loss per weighted average combined share from continuing operations is computed as follows:

	Three Months Ended
	1/31/09	1/31/08
Net loss	($127,258)	($385,496)
Combined shares used to compute dilutive effect of stock option	2,450,424	2,450,424
Basic loss per weighted average combined share	($0.05)	($0.16)

11. Subsequent Event.

On February 27, 2009, the Companies entered into a Fourth Loan Modification Agreement and allonge with Manufacturers and Traders Trust Company, or M & T Bank.

The Fourth Modified Loan Agreement amends the original Loan Agreement and the Amended and Restated Construction and Site Development Line of Credit Mortgage Note entered into by the Companies and M & T Bank on April 20, 2006 (as amended and modified from time to time).  

Under the terms of the Fourth Modified Loan Agreement, M & T Bank decreased the Companies’ available line of credit of $25,000,000 by an aggregate of $5,000,000, to a maximum principal amount of $20,000,000, and amended the interest on the balance of the Loan to the greater of the overnight LIBOR plus 3.5% or the daily 30-day LIBOR rate plus 3.5%, establishing the minimum interest rate at 5.5%.  Also noted under the terms the $5 million open end mortgage intended for real estate transactions has been cancelled due to non-usage.

Also under the terms of the Fourth Modified Loan Agreement, the Site Development Sub Loan of $11,000,000 was decreased to $6,000,000 and the Companies agreed to establish an interest reserve account in the amount of $690,000 as security for the payment of interest on the Loan.  In addition, the Fourth Modified Loan Agreement stipulates that any advances under the Site Development Sub Loan or the Construction Sub Loan require written approval by M & T Bank’s Regional President.

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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 current and future real estate market in the Pocono Mountains; the timing and outcome of the Companies’ planned land development; compensation expense related to non-vested awards; contributions to the Companies’ pension plan; the Companies’ land development and infrastructure plans in and around Jack Frost Mountain and Big Boulder Lake and Ski Resort; and the Companies’ anticipated cash needs.

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

▪

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

▪

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

▪

An increase in 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;

▪

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

▪

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

▪

The Companies’ ability to provide competitive pricing to sell homes;

▪

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

▪

Fluctuations in the price of building materials;

▪

The Companies’ ability to effectively manage the Companies’ business;

▪

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

▪

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

▪

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

▪

Actions by the Companies’ competitors;

▪

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

▪

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

As a result of these factors, the Companies cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate.  Furthermore, if the Companies’ 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 the Companies or any other person that the Companies will achieve their objectives and plans in any specified time frame, if at all.  

The Companies may not update these forward-looking statements, even though their situation may change in the future.

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The Companies qualify all the forward-looking statements contained in this Quarterly Report on Form 10-Q by the foregoing cautionary statements.

Overview

Since the early 1980s, the Companies have developed five resort communities in close proximity to their Jack Frost Mountain and Big Boulder Ski Area resorts.  The Companies’ resorts are located in the Pocono Mountains of Pennsylvania, an area which offers year-round regional tourist appeal and a quiet, relaxing vacation environment.

The Companies own 16,920 acres of land in Northeastern Pennsylvania, along with 13 acres in various other states.  Of these land holdings, the Companies’ have designated 4,971 acres as held for development.  It is expected that all of the Companies’ planned developments will be subdivided and sold as parcels of land, while others will be developed into single and multi-family housing.

The Companies believe the real estate market in the Pocono Mountains continues to offer an attractive investment alternative for buyers seeking a second home in a resort community.  The Companies believe this is partially attributable to current moderate mortgage interest rates and a challenging economy that may be facilitating more regional tourist destinations.

The Companies are constructing Phase I and II of the Laurelwoods II community of single family and multi-family homes and a condominium project known as Boulder Lake Village.  Plans to develop residential communities near Jack Frost Mountain and Big Boulder ski resorts are in place in anticipation of an economic recovery.  This is part of the Companies’ comprehensive plan for their “core land” development in and around their two ski areas.  Management is very cautious, in the unpredictable housing market, not to commence any residential developments until the market stabilizes.

For the fiscal year ended October 31, 2009, or Fiscal 2009, management intends to continue selective sales of land, some of which may be treated as section 1031 tax deferred exchanges under the Internal Revenue Code.

Management is also taking various steps to attract new home and land sale customers. For example, purchasers who want to purchase newly constructed single family homes in the Companies’ Laurelwoods II community development and can make a down payment of at least 20%, have the option of financing their mortgage through Big Boulder Corporation with interest only payments for five years.  The Companies are also offering to the purchasers of the existing Laurelwoods II single family and duplex townhomes $8,000 toward the payment of such purchaser’s closing costs, dues for a one year membership with the Lake Mountain Club and complimentary passes to the Jack Frost National Golf Course.  The Companies are also offering to pay six months’ of homeowner’s association fees on behalf of any current homeowner in the Blue Heron, Midlake Condominium, Laurelwoods Community and Snow Ridge Village developments that provide a purchaser referral which results in the sale of an existing Laurelwoods II single family home.  The Companies have instituted discount price incentives for the 18 units to be sold in Building J of the Boulder Lake Village condominiums.  For the first six units sold, a 3% discount will apply, for the next six units sold, a 2% discount will apply, and for the final six units sold, a 1% discount will apply. The Companies are also offering financing opportunities for the purchase of selected tracts of land.

The Companies also generate revenue by the selective timbering of their land.  Management relies on the advice of their forester, who is engaged on a consulting basis, for the timing and selection of certain parcels for timbering whereby significant attention is given to protecting the environment and retaining the value of these parcels for future timber harvests.  The Companies’ forester is in the process of updating the inventory of the Companies’ timber resources to aid in land valuations so that management will have more current valuation information 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.

Plans are in place for a community surrounding the Jack Frost National Golf Course.  This community is expected to be comprised of single family homes and multi-family units, as well as golf club amenities and the necessary infrastructure.

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The Companies also intend to advertise certain subdivisions for sale to recognized land developers in order to facilitate the market for housing and to reduce the inherent risk associated with land development.

The Companies currently operate Jack Frost-Big Boulder Real Estate which is located in Lake Harmony, Pennsylvania and markets new and previously owned homes in and around the Companies’ resort communities primarily to buyers seeking a second home.  

Recent Developments

On December 1, 2008, the Companies entered into a lease agreement with Boulder View Tavern, Inc. to lease the restaurant owned by the Companies located near the entrance to Big Boulder Lake and Ski Area.  The term of the lease is five years with two five year renewal options.

Infrastructure improvements for Boulder Lake Village are complete and municipal approval to construct 144 condominium units is in place.   Construction of “Building J” in Boulder Lake Village, which is comprised of 18 condominium units, has been substantially completed.  On December 29, 2008, the first unit was sold.

The Companies have reviewed a study conducted by Penn Environmental and Remediation, Inc. regarding the potential for natural gas resources on company-owned land.  Management is currently evaluating options and the market feasibility of natural gas.  

Due to the recent decline in 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.

The Companies continue to research income producing investment properties for potential acquisition.

Critical Accounting Policies and Significant Judgments and Estimates

The Companies have identified the most critical accounting policies upon which the Companies’ financial status 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 net deferred tax assets and 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, golf activities, timbering and leasing activities.  Revenues are recognized as services are performed, except as noted below.

Timbering revenues from stumpage contracts are recognized at the time a stumpage contract is signed in accordance with Staff Accounting Bulletin No. 104 – Revenue Recognition, (“SAB 104”). At the time a stumpage contract is signed, the risk of ownership is passed to the buyer at a fixed, determinable cost.  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 under SAB 104 guidance.

The Companies recognize income on the disposition of real estate in accordance with the provisions of Statement of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate" (“SFAS 66”) using the full accrual method.  The full accrual method is appropriate at closing when the sales contract has been signed, the buyer has arranged permanent financing and the risks and rewards associated with ownership have been transferred to the buyer.  In the few instances that the Companies finance the sale, more than a 20% down payment is required from the buyers.  The remaining financed purchase price is not subject to subordination.  Down payments of less than 20% are accounted for as deposits as required by SFAS 66.

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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.

The Companies recognize revenue on custom home construction in accordance with SFAS 66.  Under the provisions of SFAS 66, revenues and costs are recognized using the percentage of completion method of accounting when construction is beyond the preliminary stage, the buyer is committed and may only require a refund in the event of non-delivery, if the sales proceeds are collectible and if the aggregate sales proceeds and the total cost of the project can be reasonably estimated.  Total estimated revenues and construction costs are reviewed periodically, and any change is applied prospectively.

Management’s 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.

The Companies 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 a portion of the lease transactions as direct financing leases.  The accounting was based on estimates and assumptions about the fair values and estimated useful lives of the leased properties, as well as the collectibility of lease payments and recoverability of the unguaranteed residual value of the leased properties.  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.

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

The Companies review their long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In that event, the Companies calculate the expected future net cash flows to be generated by the asset.  If those net future cash flows are less than the carrying value of the asset, an impairment loss is recognized in operating 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.

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

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The Companies sponsor a defined benefit pension plan as detailed in footnote 8.  The accounting for pension benefits is determined by specialized accounting and actuarial methods using numerous estimates, including discount rates, expected long-term investment returns on plan assets, employee turnover, mortality and retirement ages, and future salary increases.  Changes in these key assumptions can have a significant effect on the pension plan’s impact on the Companies’ financial statements.  The Companies engage the services of an independent actuary and investment consultant to assist them in determining these assumptions and in calculating pension income.  The plan is currently underfunded and, accordingly, the Companies have made contributions to the fund of $467,392 and $444,494 in the fiscal years ending October 31, 2008, or Fiscal 2008, and October 31, 2007, or Fiscal 2007, respectively.  The Companies expect to contribute $536,260 to the pension plan in Fiscal 2009.  The Companies also have in place a 401K pension plan available to all full time employees, which is funded entirely by employee contributions.

The Companies account for their employee stock options in accordance with SFAS No. 123R, “Share-Based Payment”.  SFAS No. 123R requires the Companies to 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 provided under SFAS No. 123R.

The fair value of each option award is estimated at the date of grant using a Black-Scholes 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.

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

Results of Operations for the Three Months Ended January 31, 2009 and 2008

Operations for the three months ended January 31, 2009 resulted in a net loss of ($127,258), or ($0.05) per combined share, compared to a net loss of ($385,496), or ($0.16) per combined share, for the three months ended January 31, 2008.

Revenues

Combined revenue of $3,169,070 for the three months ended January 31, 2009 represents an increase of $919,318, compared to the three months ended January 31, 2008.  Real Estate Management Operations / Rental Operations revenue decreased $1,178,009, or 53%, for the three months ended January 31, 2009, compared to the three months ended January 31, 2008. Summer Recreation Operations revenue decreased $1,326, or 21%, for the three months ended January 31, 2009, compared to the three months ended January 31, 2008. Land Resource Management revenue increased $2,098,653 for the three months ended January 31, 2009 compared to the three months ended January 31, 2008.

Real Estate Management/Rental Operations

Real Estate Management Operations / Rental Operations had revenue of $1,060,240 for the three months ended January 31, 2009, compared to $2,238,249 for the three months ended January 31, 2008, which resulted in a decrease of $1,178,009, or 53%.  This was primarily attributed to a decrease in Moseywood Construction Company’s new home construction sales.  Revenue for the new home construction for the three months ended January 31, 2009 was $186,012, compared to $1,408,535 for the three months ended January 31, 2008, a decrease of $1,222,523, or 87%.  This is the result of having fewer homes under construction in Fiscal 2009 as compared to Fiscal 2008.  As of January 31, 2009, there were 12 homes under various stages of construction compared to 34 homes for the period ended January 31, 2008.  On July 3, 2008, management decided to complete all new homes under contract and not to accept any new home construction contracts due to the ongoing slowdown of the overall economy.  This was offset by sales commissions revenue on residential home sales at our resort communities for the three months ended January 31, 2009 of $87,434 as compared to $58,490 for the three months ended January 31, 2008, an increase of $28,944 or 49%.  Trust service fees, which are fees for water, sewer and road maintenance, for the three months ended January 31, 2009 were $149,307 as compared to $129,692 for the three months ended January 31, 2008, which resulted in an increase of $19,615 or

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15%.  Rental revenue for the three months ended January 31, 2009 was $581,689 as compared to $583,816 for the three months ended January 31, 2008 resulting in a decrease of $2,127.

Summer Recreation Operations

Summer Operations revenue relating to the Jack Frost National Golf Course for the three months ended January 31, 2009 was $4,878 as compared to $6,204 for the three months ended January 31, 2008, for a decrease of $1,326, or 21%.  These revenues were derived from minimal course play in early November of each season prior to the course closing.

Land Resource Management

For the three months ended January 31, 2009, Land Resource Management had revenue of $2,103,952 compared to $5,299 for the three months ended January 31, 2008, which resulted in an increase of $2,098,653.  This increase is primarily attributable to three duplex home sales in the Laurelwoods II community and one condominium sale at Boulder Lake Village for the three months ended January 31, 2009, as compared to no home sales in Laurelwoods II community or Boulder Lake Village for the three months ended January 31, 2008.  For the three months ended January 31, 2009, timbering revenue was $261,483 as compared to $0 for the three months ended January 31, 2008.  There was one land sale for the three month period ended January 31, 2009 for $4,500.  Land sales occur sporadically and do not follow any set schedule.  

Operating Costs

Real Estate Management/Rental Operations

Operating costs associated with Real Estate Management Operations / Rental Operations for the three months ended January 31, 2009 were $871,431 compared to $2,004,554 for the three months ended January 31, 2008, which represents a decrease of $1,133,123, or 57%.  For the three months ended January 31, 2009, new home construction costs were $196,974 compared to $1,170,251 for the three months ended January 31, 2008 for a decrease of $973,277, or 83%.  This decrease relates to fewer new homes being constructed in Fiscal 2009 as the result of a slowdown of current economic conditions and management’s decision not to accept any new home construction contracts. Operating expenses for the new home construction division for the three months ended January 31, 2009 were $87,997 as compared to $275,511 for the three months ended January 31, 2008 for a decrease of $187,514, or 68%. This was primarily related to management’s decision not to accept any new home construction contracts.

Summer Recreation Operations

Operating expenses associated with Summer Operations for the three months ended January 31, 2009 were $229,154 as compared to $238,224 for the three months ended January 31, 2008, which represents a decrease of $9,070, or 4%.  These reduced costs are primarily attributable to a reduction in seasonal payroll ($14,921, or 98%), utilities ($7,303, or 62%) offset by an increase in insurance ($13,481, or 98%).

Land Resource Management

Operating costs associated with Land Resource Management for the three months ended January 31, 2009 were $1,726,884 compared with $92,641 for the three months ended January 31, 2008, which represents an increase of $1,634,243.  This is primarily attributable to an increase in construction costs related to real estate development, which was $1,254,695 for the three months ended January 31, 2009 as compared to $2,884 for the three months ended January 31, 2008, for an increase of $1,251,811.  This is the result of three home sales in the Laurelwoods II community and one condominium sale in Boulder Lake Village for the three months ended January 31, 2009, as compared to no home sales in our resort communities for the three months ended January 31, 2008.  Land Resource Management operating expenses for the three months ended January 31, 2009 were $489,688 as compared to $120,105 for the three months ended January 31, 2008 for an increase of $369,583.  Operating expense increases were the result of home sales.

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General and Administration

General and Administration costs for the three months ended January 31, 2009 were $376,705 compared to $310,470 for the three months ended January 31, 2008, which represents an increase of $66,235 or 21%.  This is primarily the result of a reallocation of salaries and corporate service fees to better reflect actual job related duties.

Other Income (Expense)

Interest and other income was $87,798 for the three months ended January 31, 2009 compared to $78,756 for the three months ended January 31, 2008, which represents an increase of $9,042 or 11%.  This was primarily attributable to payments made by a third party on a note receivable.

Interest expense for the three months ended January 31, 2009 was $234,909 compared to $266,315 for the three months ended January 31, 2008, which represents a decrease of $31,406 or 12%.  This was primarily the result of the pay down of certain mortgage debt and declining interest rates.

Tax Rate

The effective tax rate for the three months ended January 31, 2009 and 2008 was 34%.  The rate for 2009 is specific to federal taxes.  There is no benefit for state income tax in 2009 because the Companies fully reserved the future benefit.  

Liquidity and Capital Resources

As reflected in the Combined Condensed Statements of Cash Flows, net cash provided by operating activities was $308,916 for the three months ended January 31, 2009 versus net cash used in operating activitiesof $1,612,255 for the three months ended January 31, 2008.  The increase in net cash provided by operating activities for the three months ended January 31, 2009 was primarily attributable to the change in Land and Land Development costs, which resulted from the sale of three Woodsbluff duplex units and one Boulder Lake Village Condominium unit.

For the three months ended January 31, 2009, the construction of Building J in the Boulder Lake Village condominium community at Big Boulder was our major expenditure.

On December 11, 2006, the Companies entered into a Mortgage and Security Agreement and a $3,000,000 promissory note with State Farm F.S.B. The note is secured by a mortgage, which encumbers certain real property purchased on August 18, 2006, known as the Walgreens Store located in Dover Township, Ocean County, New Jersey.  The agreement was scheduled to mature on January 1, 2009.  On December 29, 2008, the Companies received a one year extension of the agreement and an adjustment of interest from LIBOR plus .9% to LIBOR plus 4.50%.  Interest only payments are due and payable monthly until January 1, 2010, at which time the principal is due.  The interest rate, calculated LIBOR plus four and one-half of one percent (4.5%), equaled 4.95% at January 31, 2009.

On December 15, 2006, the Companies entered into a Mortgage and Security Agreement and a $4,000,000 promissory note with State Farm F.S.B. The note is secured by a mortgage, which encumbers certain real property purchased on October 31, 2006, known as the Walgreens Store located in White Bear Lake, Washington County, Minnesota.  The agreement was scheduled to mature on January 1, 2009.  On December 29, 2008, the Companies received a one year extension of the agreement and an adjustment of interest from LIBOR plus .9% to LIBOR plus 4.5%.  Interest only payments are due and payable monthly until January 1, 2010, at which time the principal is due.  The interest rate, calculated at LIBOR plus four and one-half of one percent (4.5%), equaled 4.95% at January 31, 2009.

The Companies have a line of credit with Manufacturers and Traders Trust Company in the aggregate amount of $25,000,000 to fund real estate development.  Interest is due and payable on a monthly basis at a rate equal to LIBOR (as announced by the Wall Street Journal as of the first day of the calendar month) plus 2.5% which equaled 2.95%at January 31, 2009.  The aggregate amount available on the line has been amended from $25,000,000 to $20,000,000 and the interest rate has been amended from LIBOR plus 2.5% to LIBOR plus 3.5%, with a minimum of 5.5%, effective February 27, 2009.  The total principal amount outstanding under the aggregate line of credit will not exceed the lesser of (a) $25,000,000, or (b) 80% of the cost or appraised value of the units.  The remaining principal and any accrued interest is due and payable on April 19, 2010.  The Companies are using $7,900,000 of the $25,000,000 line of credit to fund the construction of residential development projects.  The Companies have utilized a portion of the proceeds from the sale of three Woodsbluff Court duplex units and one Boulder Lake Village condominium unit to pay $909,323 on this sublimit during the first quarter of Fiscal 2009.  At January 31, 2009, $5,691,457 was outstanding on this sub-limit.  A total of $11,000,000 of the $25,000,000 line of credit is used to fund site development improvements for residential developments.  The $11,000,000 sub-limit has been modified effective February 27, 2009 to $6,000,000.  The Companies have utilized a portion of the proceeds from the sale of three Woodsbluff Court duplex units and one Boulder Lake Village condominium unit to pay $280,000 on this sublimit during the first quarter of Fiscal 2009.  At January 31, 2009, $4,392,933 was outstanding on this sub-limit.  The remaining $6,100,000 of the $25,000,000 line of credit is used to fund the expansion of the water and sewer systems at both Big Boulder and Jack Frost Mountain Ski Areas. This expansion is necessary to accommodate the new construction.  At January 31, 2009, $2,461,510 was outstanding on the $6,100,000 sub-limit.  The term on this sub-limit is two years with interest only payments due until the maturity date after which time the Companies plan to seek a term mortgage note.   

The Companies have two other loan facilities with Manufacturers and Traders Trust Company totaling $8,100,000: a $3,100,000 line of credit for general operations and a $5,000,000 open end mortgage for real estate transactions.  During the three months ended January 31, 2009, we borrowed against the $3,100,000 line of credit in varying amounts with a maximum amount of $3,094,868.  At January 31, 2009, $2,960,180 is outstanding on the $3,100,000 line and there are no borrowings outstanding on the $5 million mortgage.  Effective February 27, 2009, the $5 million open end mortgage intended for real estate transactions has been cancelled due to non-usage.  The rates of interest are one percentage point less than the prime rate on the $3.1 million line (which equaled 2.25% at January 31, 2009) and one half of one percentage point (0.50%) less than the prime rate on the $5 million line (which equaled 2.75% at January 31, 2009).

Purchase obligations total $3,108,063 and consist of material contracts with multiple contractors all relating to real estate development.  Payments and adjustments made through January 31, 2009 total $2,611,219.

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

Item 4T.  CONTROLS AND PROCEDURES

(a)  Evaluation of Disclosure Controls and Procedures.

Management, with the participation of the Companies’ chief executive officer and chief financial officer, evaluated the effectiveness of the Companies’ disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Companies’ chief executive officer and chief financial officer concluded that the Companies’ disclosure controls and procedures as of the end of the period covered by this report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and is accumulated and communicated to the Companies’ management, including the Companies’ principal executive and principal financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Companies believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b)  Change in Internal Control over Financial Reporting.

No change in the Companies' internal control over financial reporting occurred during the Companies’ most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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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 5.  OTHER INFORMATION

On March 11, 2009, the Companies entered into two Agreements of Sale with The Conservation Fund for the sale of eight non-contiguous parcels of raw land belonging to the Companies.  The first Agreement of Sale, or the Phase 1 Agreement, relates to the sale of 1,175 acres located in Monroe and Lackawanna Counties, Pennsylvania, for a total purchase price of $2,100,000, $5,000 of which is payable to the Companies within five business days of the date of the Phase I Agreement and the remainder of which is payable to the Companies at the closing.  The second Agreement of Sale, or the Phase 2 Agreement, relates to the sale of 2,797 acres located in Lackawanna, Luzerne and Monroe Counties, Pennsylvania, for a total purchase price of $8,150,000, $5,000 of which is payable to the Companies within five business days of the date of the Phase 2 Agreement and the remainder of which is payable to the Companies at the closing.  

The closing of the Phase 1 Agreement and the Phase 2 Agreements are contingent upon, among other things, The Conservation Fund’s satisfactory completion of its due diligence on the land parcels.  In connection with the Phase 1 Agreement, The Conservation Fund has a period of 75 days to complete its due diligence review and in connection with the Phase 2 Agreement, The Conservation Fund has a period of 120 days to complete its due diligence review.  In both cases, the Companies expect closing to occur on or before 30 days following the termination of the relevant due diligence period.

The Phase 1 Agreement and the Phase 2 Agreement both contain customary representations and warranties, as well as standard closing conditions.

The Companies intend to use the proceeds of these land sales to pay down debt.

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Item 6.   EXHIBITS

Exhibit Number	Description
10.1*	Agreement of Sale, Phase 1, dated March 11, 2009 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 1,175 acres located in Monroe and Lackawanna Counties, Pennsylvania.
10.2*	Agreement of Sale, Phase 2, dated March 11, 2009 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 2,797 acres located in Lackawanna, Luzerne and Monroe Counties, Pennsylvania.
31.1*	Principal Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification
31.2*	Principal Financial Officer’s Rule 13a-14(a)/15d-14(a) Certification
32.1*	Principal Executive Officer’s Section 1350 Certification
32.2*	Principal Financial Officer’s Section 1350 Certification

* Filed herewith

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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:   March 13, 2009

/s/ Eldon D. Dietterick

Eldon D. Dietterick

Executive Vice President/Treasurer

Dated:   March 13, 2009

/s/ Cynthia A. Van Horn

Cynthia A. Van Horn

Chief Accounting Officer

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EXHIBIT INDEX

Exhibit Number	Description
10.1*	Agreement of Sale, Phase 1, dated March 11, 2009 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 1,175 acres located in Monroe and Lackawanna Counties, Pennsylvania.
10.2*	Agreement of Sale, Phase 2, dated March 11, 2009 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 2,797 acres located in Lackawanna, Luzerne and Monroe Counties, Pennsylvania.
31.1*	Principal Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification
31.2*	Principal Financial Officer’s Rule 13a-14(a)/15d-14(a) Certification
32.1*	Principal Executive Officer’s Section 1350 Certification
32.2*	Principal Financial Officer’s Section 1350 Certification

* Filed herewith

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EX-10

Exhibit 10.1

AGREEMENT OF SALE

Phase 1-1,175 acres Monroe and Lackawanna Counties, PA

THIS AGREEMENT OF SALE (the "Agreement"), is made this 11th day of March. 2009, by and between BLUE RIDGE REAL ESTATE COMPANY, a corporation duly organized under the laws of the Commonwealth of Pennsylvania, having an address of P.O. Box 707, Blakeslee, PA 18640 (the "Seller"), and THE CONSERVATION FUND, A Non-Profit Corporation organized under the laws of the State of Maryland, having an address of 1655 North Fort Myer Drive, Suite 1300, Arlington, Virginia 22209 (the "Purchaser").

WITNESSED, WHEREAS, Seller is the owner of eight non-contiguous parcels of land containing an aggregate of approximately 3,972 acres of unimproved property located in Lackawanna, Luzerne, and Monroe counties, Pennsylvania, (the "Land"); and

WHEREAS, Purchaser has offered to purchase and Seller has agreed to sell the Land in two phases under two separate contracts.

WHEREAS, in this Phase 1 Agreement of Sale, Seller agrees to sell and Purchaser agrees to acquire a portion of the above described land consisting of 1,175 acres of the Land located in Monroe and Lackawanna Counties, Pennsylvania, as more fully described herein as the "Property"; and

WHEREAS, the Purchaser and the Seller have documented their agreement concerning the transfer and sale of the balance of the Land in a Phase 2 contract executed by Purchaser and Seller simultaneously with this Agreement.

NOW THEREFORE, for and in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller agrees to sell and Purchaser agrees to purchase the Property, subject to and in accordance with the terms and conditions set forth in this Agreement.

Section 1.

The Property. Seller agrees to sell and Purchaser agrees to purchase certain unimproved property containing an aggregate of approximately 1,175+/- acres located in Coolbaugh Township, Monroe County and Thornhurst Township, Lackawanna County, Pennsylvania as more particularly shown on the map attached hereto as Exhibit A-1, and consisting of those tax parcels listed on the table attached hereto as Exhibit A-2 including, without limitation but except as otherwise provided herein, any and all buildings, improvements, personalty and fixtures situated thereon, and any and all mineral, timber, water, grazing and other surface and subsurface rights, permits, hereditaments, easements, incidents and appurtenances belonging thereto (the "Property"). The Property shall be sold subject to Seller reserving the oil and gas rights on the Property for a period commencing up the date for Closing (as hereinafter defined in Section 4), and terminating on December 31, 2031 (the "Oil and Gas Reservation") provided such rights are exercised in accordance with the terms and conditions of a surface rights agreement (as more fully described in Section 6.2).

Section 2.

Good Faith Deposit. Within five (5) business days from the Effective Date of this Agreement (as defined below in Section 15.17), Purchaser shall deliver a good faith deposit in the amount of Five Thousand and 00/100 Dollars ($5,000.00) to be held in an interest bearing escrow account with Pocono Area Abstract Company, PO Box 128, Blakeslee, PA 18610, Attn: Rick Hanna, Phone: 570-646-0282, as escrow agent (the "Title Company"). The good faith deposit, and all interest earned thereon (the "Deposit") shall be applied towards the payment of the Purchase Price for the Property, as described below, unless otherwise forfeited to Seller or returned to Purchaser in accordance with the terms of this Agreement.

Section 3.

Purchase Price. The purchase price for the Property, including the Deposit, shall be TWO MILLION ONE HUNDRED THOUSAND and 00/100 Dollars ($2,100,000.00) (the "Purchase Price"). The Purchase Price shall be paid by Purchaser to Seller at Closing (as defined below in Section 4) in cash, certified funds, or by wire transfer of federal or other immediately available funds.

Section 4.

Closing. The closing of the purchase and sale of the Property (the "Closing") shall be held at the office of the "Title Company" on or before thirty (30) days following the termination of the Inspection Period, as defined below in Section 5.

Section 5.

Due Diligence Review. Purchaser's obligation to purchase the Property is subject to Purchaser satisfactorily completing its due diligence review of the Property, as more fully set forth herein.

5.1.

Inspection Period. Purchaser shall have a period commencing upon the Effective Date of this Agreement and terminating no later than seventy five (75) days after the Effective Date, in which to obtain, secure, conduct, review and analyze any and all tests, studies, applications, reports and documents deemed necessary by Purchaser, including but not limited to: surveys, appraisals, title reports, title commitments, funding commitments and environmental assessments which Purchaser deems necessary to satisfy itself as to the feasibility of proceeding with an acquisition of the Property (the "Inspection Period").

5.2

Documents: Evidence of Title. During the Inspection Period Purchaser shall obtain at Purchaser's expense, a title commitment issued by the Title Company, together with copies of all exceptions, pursuant to which the Title Company shall issue to Purchaser a standard coverage owner's policy of title insurance subject only to those matters not otherwise raised as an objection during the Inspection Period, insuring good and marketable title to the Property in the amount of the Purchase Price. Issuance of a title insurance policy covering the Property in the amount of the Purchase Price, as described above, shall be a condition precedent to Purchaser's obligation to close on the purchase and sale of the Property.

5.3

Right of Entry onto the Property. Purchaser and its employees, contractors and agents, shall have the right to enter upon the Property at reasonable times for appraising, surveying, inspecting the Property, and for other reasonable purposes related to Purchaser's acquisition of the Property. Purchaser shall provide Craig Harahus, (Telephone No. 570-433-8433), the Seller's representative, with telephonic notice prior to entry onto the Property. Purchaser agrees to indemnify and hold Seller harmless from and against any claims,

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liens, damages, losses, and causes of action arising solely from Purchaser exercising its rights of entry onto the Property as described herein.  Notwithstanding the foregoing, Purchaser's indemnification under this Section 5.3. shall not apply to claims arising out of the negligent, willful or wanton conduct of Seller or its employees, contractors, agents and invitees.

5.4.

Election at the End of the Inspection Period. Should Purchaser determine, for any reason prior to the expiration of the Inspection Period, that it is not feasible for Purchaser to proceed with its acquisition of the Property, Purchaser shall notify Seller in writing on or before the expiration of the Inspection Period of its dissatisfaction, at which time this Agreement shall be considered null and void and of no further force and effect and the Deposit shall be promptly returned to Purchaser. Upon such termination the Purchaser shall, within ten (10) days of receipt of Seller's written request, provide the Seller with copies of all due diligence materials obtained by Purchaser from third party contractors in connection with this transaction, to the extent such third party contractors allow delivery of the same to the Seller at no further cost or expense to Purchaser (other than copying and postage). The Purchaser's transfer of the due diligence materials shall be made without representation or warranty of any kind. Purchaser shall, at any time, have the right to waive its due diligence condition precedent, as described in this Section 5, before the end of the Inspection Period and if Purchaser elects to waive this condition precedent or to terminate the Inspection Period, this Agreement will remain in full force and effect and the Deposit shall become non-refundable except as otherwise provided herein. Failure of Purchaser to notify Seller of its dissatisfaction prior to the expiration of the Inspection Period shall be deemed a waiver of this condition precedent.

5.5.

Election to Cure.

Notwithstanding anything to the contrary contained in Section 5.4. above, in the event Purchaser's due diligence inspection of the Property reveals physical or title defects impacting the Property, which are capable of being cured, Purchaser may elect to provide Seller with the option of curing such defects, as opposed to terminating this Agreement. In such event, the Purchaser shall offer such option in a written notice to Seller prior to. the termination of the Inspection Period, specifying the nature of the defect and the amount of time proposed by Purchaser for such cure. If Seller is willing to accept such option to cure the defects, Seller shall so advise Purchaser in writing within ten (10) days of receipt of Purchaser's notice of defect, and the parties will then document their agreement to have Seller cure such defects to Purchaser's satisfaction within a specified time, by having both parties execute an amendment to the Agreement. If Seller is unwilling to cure the defects, Purchaser shall have ten (10) days after receipt of Seller's written notice to notify Seller of Purchaser's intention to waive the defect and proceed to Closing or terminate this Agreement whereupon the Deposit shall be immediately refunded to Purchaser and this Agreement shall be null, void, and of no further force or effect.

5.6.

Seller's Delivery of Documents. Within seven (7) days of the Effective Date, Seller at its expense shall deliver or cause to be delivered to Purchaser for Purchaser's review in connection with its due diligence inspection of the Property the following documents or records relating to the Property:

(a)

true, complete and correct copies of all agricultural, residential, oil and gas or other leases, timber agreements and all other third party agreements

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 encumbering the Property including; licenses and third party contracts, and current and up-to-date security deposit and rent payment records;

(b)

most recent historic title insurance policy and deeds issued to Seller;

(c)

tax bills and assessment records for the past two tax fiscal years, including but not limited to real estate taxes, school taxes, special assessments and personal property taxes and all documentation pertaining to Property's tax classification under the Clean and Green Program;

(d)

copies of all studies, reports and all other documents which Seller possesses or other otherwise reasonably available to Seller, including without limitation, environmental reports, soils reports, property condition assessment reports, and maps, but specifically excluding appraisals and a 2006 Phase I Environmental Site Assessment, which by its terms cannot be distributed by Seller to any other party;

(e)

copies of most recent survey(s), plans, specifications and governmental licenses and permits; and

(f)

copies of all maintenance agreements, vendor contracts, and agreements with Property caretakers.

Section 6.

Additional Conditions Precedent. Purchaser's obligation to purchase the Property is subject to the satisfactory completion of the following conditions precedent set forth below:

6.1.

Approval of Purchaser's Board. Purchaser's acquisition of the Property shall be subject to the approval of Purchaser's Board' of Directors. Purchaser acknowledges that this condition was satisfied on April 15, 2008.

6.2

Surface Rights Agreement. The Seller and Purchaser shall successfully negotiate a Surface Rights Agreement prior to the expiration of the Inspection Period, and shall incorporate such final form of surface rights agreement into the Agreement by Amendment (the "Surface Rights Agreement"). In addition, the Seller and Purchaser shall execute and record the Surface Rights Agreement at the Closing.

6.3.

Removal of Hunting Cabin. At least ten (10) days prior to Closing, the Seller shall remove and dispose of offsite at its sole cost and expense and in accordance with applicable law, the hunting cabin located on that portion of the Property, and shall repair and restore any damage or destruction caused by the Property as a result of the removal of the hunting cabin, including grading and re-seeding of the site. At least five (5) business days prior to Closing, the Seller shall make the Property available for inspection by Purchaser to confirm removal of the hunt cabin in accordance with this provision.

If the conditions precedent set forth above are not satisfied on or before the dates set forth above, Purchaser may elect to waive the conditions and proceed to Closing, or alternatively, terminate the Agreement, be relieved of all liability hereunder, in which event the Deposit shall be promptly returned to Purchaser.

Section 7.

Seller's Representations and Warranties. To induce Purchaser to enter into this Agreement, Seller makes the following representations and warranties as of the date of

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this Agreement (the "Representations and Warranties") for the benefit of Purchaser and its successors and assigns. These representations and warranties are continuing in nature and shall remain true, accurate and correct through the date of Closing.

7.1

Title to the Property. Seller is the record owner of the Property to be conveyed hereunder. Upon the Closing Date, Purchaser will have good, marketable and insurable title to the Property.

7.2.

Authority. Seller is duly incorporated, validly existing and in good standing under the laws of the State of Pennsylvania and has taken all necessary corporate proceedings to execute and perform this Agreement and this Agreement is enforceable against Seller in accordance with its terms.

7.3.

Legal Proceedings.

There are no actions, suits, proceedings or investigations pending or, to Seller's knowledge threatened, against or affecting the Property, or arising out of Seller's conduct on the Property.

7.4

Compliance with Laws. To the best of Seller's knowledge, Seller is in substantial compliance with the laws, orders, and regulations of each governmental department, commission, board, or agency having jurisdiction over the Property in those cases where noncompliance would have a material adverse effect on the Property.

7.5 Third Party Contracts. Seller is not party to nor subject to or bound by any agreement, contract or lease of any kind relating to the Property, except for those hunting leases which are listed on Exhibit C (the "Hunting Leases"). The Hunting Leases are appended to Exhibit C. On or before the Closing, the Seller shall terminate all the Hunting Leases and those parties possessing rights under the Hunting Leases shall have vacated the Property and removed all of their personal property and improvements.

7.6 Environmental Condition of the Property. The Property, to the best of Seller's knowledge, is not in violation of any federal, state or local law, ordinance or regulation relating to environmental conditions on, under or about the Property, including, but not limited to soil and groundwater conditions. To the best of Seller's knowledge, there are no underground storage tanks currently or previously situated in the Property. Neither Seller, nor to the best of Seller's knowledge has any third party used, generated, manufactured, refined, produced, processed, stored or disposed of on, or under the Property or transported to or from the Property any Hazardous Materials. For the purposes of this Agreement, "Hazardous Materials" means any flammable explosives, radioactive materials, asbestos, petroleum, organic compounds known as polychlorinated biphenyls, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, including, without limitation, any substances defined as or included in the definition of "hazardous substances", "hazardous material" or "toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801, et seq., the Resource Conservation and Recovery Act, 42 D.S.C. § 6901 et seq., or any other federal, state or local statute, law, ordinance, code, rule, regulation, order, decree or other requirement of governmental authority

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regulating, relating to or imposing liability or standard of conduct concerning any hazardous, toxic or dangerous substance or material, as now or at any time hereafter in effect, and in the regulations adopted, published and/or promulgated pursuant to said laws.

Section 8.

Indemnification.

Seller agrees to indemnify and hold harmless Purchaser and Purchaser's successors and assigns against any and all damages, claims, losses, liabilities and expenses, including without limitation, reasonable legal, accounting, consulting, engineering and other expenses, which may be imposed upon or incurred by Purchaser or its successors and assigns, by any other party or parties (including, without limitation, a governmental entity), arising out of or in connection with the use, ownership, and operation of the Property prior to the Closing Date by Seller, including but not limited to claims arising from the existence of any "Hazardous Materials" situated on the Property, and the exposure to persons of any such "Hazardous Materials". This indemnity shall survive the Closing and shall be in addition to Seller's obligation for breach of any representation or warranty.

Section 9.

Title. At Closing, Seller shall execute and deliver to Purchaser or its assigns a good and sufficient special warranty deed in a form acceptable to Purchaser, conveying good marketable and insurable title to the Property, including legal access to and from a public highway, for any and all purposes to the Property,. free and clear of all liens, encumbrances and other exceptions, except such easements, restrictions and other exceptions as are of record and are approved by Purchaser during the Inspection Period. The final legal description in the deed shall be subject the approval of Purchaser and Seller. The Purchaser and Seller shall also execute and record all documentation necessary to complete Seller's retention of an Oil and Gas Reservation, including execution of the Surface Rights Agreement. Seller shall also execute and deliver to Purchaser all usual and customary documents and agreements required by the Title Company for closing the transaction. At Closing Seller shall deliver the Property to Purchaser in a neat, orderly and clean condition and all trash, debris, abandoned structures or equipment located on the Property raised by the Purchaser as an objection during the Inspection Period, shall be removed from the Property.

Section 10. Taxes. Seller shall pay all general taxes and assessments for the Property for years prior to Closing, including, but not limited to, any and all so-called "Rollback" or "Recapture" taxes, if any, which may become due upon transfer of the Property. Notwithstanding the foregoing, the parties acknowledge that the Property is currently assessed for Real Property taxes under Pennsylvania's Clean and Green Program. The Purchaser agrees to continue the Property's enrollment in the Clean and Green Program, provided that at least sixty (60) days prior to Closing the Seller provides the Purchaser with all applicable documentation pertaining to the Property's enrollment in the Clean and Green Program, including necessary application forms and statistical data about the Property needed to complete the application. At Closing real property taxes shall be prorated as of the date of closing utilizing the customary tax cycle(s) in the taxing district in which the Property is situated, based on the most recent ascertainable tax bill.

Section 11. Closing Costs and Fees. Closing fees and the Property transfer tax(es) shall be equally divided between the parties. Notwithstanding the foregoing, the parties expect this transaction to be exempt from transfer taxes under an exception for transfers of property to a

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501(c)(3) organization for conservation purposes. The premium for the title insurance policy described above shall be paid by Purchaser. All other Closing costs shall be borne by the parties in accordance with local custom.

Section 12. Preservation of the Property: Risk of Loss. Seller shall not mortgage, lease, encumber or otherwise dispose of the Property or any part thereof, prior to Closing or the termination of this Agreement without first having obtained the prior written consent of Purchaser. Seller agrees that the Property shall remain as it now is until Closing, and that Seller shall neither use nor consent to any use of the Property for any purpose or in any manner that is inconsistent with Purchaser's acquisition or intended use of the Property as a conservation area. This covenant expressly precludes any timber cutting on the Property. In the event that Seller shall use or consent to such use of the Property, Purchaser may, without liability, refuse to proceed with its acquisition of the Property, in which event the Deposit shall be refunded; or it alternatively Purchaser may elect to acquire title to the Property or a portion thereof, subject to an equitable adjustment of the Purchase Price based on the changes to the physical condition or legal status of the Property. If prior to Closing, all or a substantial part of the Property is destroyed or damaged, then this Agreement at the option of Purchaser, upon notice to Seller shall be null and void and the Deposit shall be refunded to Purchaser.

Section 13. Remedies on Default.

13.1. Purchaser's Default. In the event that: a) all of the conditions to this Agreement for the benefit of Purchaser shall have been satisfied or waived by Purchaser; and b) Seller has or is willing to fully perform all of its obligations under this Agreement, but Purchaser is unable or unwilling to perform its obligations under this Agreement, then the entire amount of the Deposit shall be retained by Seller as liquidated damages under this Agreement, and Purchaser shall have no further liability to Seller. Purchaser and Seller hereby acknowledge and agree that Seller's damages would be difficult or impossible to determine and that the amount of the Deposit is the parties' best and most accurate estimate of the damages Seller would suffer in the event the transaction provided for in this Agreement fails to close, and is reasonable under the circumstances existing as of the date of this Agreement. Purchaser and Seller agree that Seller's right to retain the Deposit shall be the sole remedy of Seller in the event of a breach of this Agreement by Purchaser.

13.2. Seller's Default. In the event that: a) all of the conditions to this Agreement for the benefit of Seller shall have been satisfied or waived by Purchaser; and b) Purchaser has or is willing to fully perform all of its obligations under this Agreement, but Seller is unable or unwilling to perform its obligations under this Agreement, Purchaser may elect, at Purchaser's sole option to either: (i) terminate this Agreement and be released from its obligations hereunder, in which event the Deposit shall be returned to Purchaser; or (ii) proceed against Seller for specific performance of this Agreement, but shall not be entitled to attorney's fees. In either event, Purchaser shall have the right to seek and recover from Seller all damages suffered by Purchaser as a result of Seller's default in the performance of its obligations hereunder.

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Section 14. Notices. All notices required or permitted hereunder will be deemed to have been delivered when posted with the U.S. Postal Service, Federal Express, United Parcel Service, or sent by facsimile, telecopier or other such electronic device, directed as follows:

If to Seller:	BLUE RIDGE REAL ESTATE COMPANY P.O. Box 707 Blakeslee, PA 18610 Attention: Eldon Dietterick Phone: 570-443-8433 Fax: 570-443-8414
With Copy To:	David Shulman, Esquire 1935 Center Street Northhampton, PA 18067 Phone: 610-261-9000/Fax 610-262-2239
If to Purchaser:	THE CONSERVATION FUND 410 Severn Avenue, Suite 204 Annapolis, Maryland 21403 Attention: Jodi R. O'Day, Esquire Vice President and Regional Counsel Phone: 443-482-2826 Fax: 443-482-2806
With Copy To:	THE CONSERVATION FUND 1655 North Fort Myer Drive, Suite 1300 Arlington, Virginia 22209 Attention: General Counsel Phone: 703/525-6300 Fax: 703/525-4610

Section 15. Miscellaneous.

15.1 Broker's Commission. Seller and Purchaser each represents to the other that they have not contracted with any broker or finder with regard to this transaction. Each agrees to indemnify, defend and hold harmless the other from and against any and all liability, claims, demands, damages and costs of any kind arising out of or in connection with any broker's or finder's fee, commission or charges claimed to be due any person in connection with such person's conduct respecting this transaction.

15.2 Certificate. At or prior to Closing, Seller shall furnish to Purchaser a duly executed Affidavit of Non-Foreign Status (the "Affidavit") in the form attached to this Agreement as Exhibit B. Seller hereby declares and represents to Purchaser that Seller is not a "foreign person" for purposes of withholding of federal tax as described in such Affidavit.

15.3 Assigns. Purchaser may assign its rights and obligations as Purchaser under this Agreement by entering into a dilly executed Assignment of Contract, wherein the assignee assumes all of the obligations of Purchaser hereunder. Upon entry into such Assignment

8

of Contract, Purchaser shall be relieved of all liability and obligations of Purchaser under this Agreement, arising from and after the date of the Assignment of the Contract.

15.4 Binding Effect. The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of Seller's heirs, executors, administrators, successors and assigns.

15.5 Exhibits. The exhibits attached hereto constitute an integral part of this Agreement and are hereby incorporated herein.

15.6 Counterparts. This Agreement may be executed in counterparts, all of which shall constitute one agreement which shall be binding on all of the parties, notwithstanding that all of the parties are not signatory to the original or the same counterpart.

15.7 Severability/Rules of Construction. If any provision of this Agreement shall be held invalid, the other provisions hereof shall not be affected thereby and shall remain in full force and effect. Each party has fully considered, negotiated and participated in the drafting of this Agreement. Accordingly, if any ambiguity or question of intent or interpretation arises after the Effective Date, then no presumption or burden of proof shall arise either favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

15.8 Entire Agreement. This Agreement represents the entire agreement of the parties and may not be amended except by a writing signed by each party thereto.

15.9 Authority. Each party to this Agreement warrants to the other that the respective signatories have full right and authority to enter into and consummate this Agreement and all related documents.

15.10 Merger. The obligations, covenants, representations, warranties and remedies set forth in this Agreement shall not merge with transfer of title but shall remain in effect during the period of the ownership of the Property by Purchaser, or its successors and assigns.

15.11 Further Assurances. Each party shall execute and deliver any instruments reasonably required to convey the Property to Purchaser and to vest in each party all rights, interests and benefits intended to be conferred by this Agreement.

15.12 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the commonwealth in which the Property is situated.

15.13 Offer. When signed and delivered by Purchaser to Seller, this Agreement will constitute an offer to Seller that can be accepted only by Seller signing and delivering an executed original of this Agreement to Purchaser on or before March 10, 2009. Purchaser may withdraw such offer in writing at any time prior to its acceptance.

9

15.14 Labor and Material. Seller shall deliver to Purchaser at settlement an affidavit, on a form acceptable to Purchaser's Title Company (or local counsel), signed by Seller that no labor or materials have been furnished to the Property within the statutory period for the filing of mechanics' or materialmen's liens against the Property. If labor or materials have been furnished during the statutory period, Seller shall deliver to Purchaser an affidavit signed by Seller and the person or persons furnishing the labor or materials that the costs thereof have been paid in full.

15.15. Saturdays. Sunday and Holidays. If the final date of any time period of limitation set out in any provision of this agreement falls on a Saturday, Sunday or a legal holiday under the laws of the state in which the Property is situated, then the time of such period shall be extended to the next day which is not a Saturday, Sunday or legal holiday.

15.16 Recitals. The recitals appearing at the beginning of this Agreement shall be deemed integral and binding provisions of this Agreement, as if fully set forth and restated in the body of this Agreement.

15.17 Effective Date. The Effective Date of this Agreement shall be the date on which the last party to this Agreement duly executed this Agreement.

15.18 1099 Reporting. The Title Company is designated as the party responsible for filing a Form 1099 with the Internal Revenue Service promptly after Closing, to the extent required by the Internal Revenue Code and Treasury Regulations.

Section 16. WAVERS OF APPLICATION OF TITLE 42 U.S.C.A. SECTION 4601 AND/OR JUST COMPENSATION UNDER APPLICABLE STATE STATUTES. Purchaser may assign this Agreement and its rights as Purchaser hereunder including the Deposit by written assignment to the Pennsylvania Department of Conservation and Natural Resources ("PADCNR"), wherein PADCNR assumes the obligations of Purchaser hereunder. Seller hereby waives any right to demand fair market value for the Property. In addition, recognizing that this Agreement is made in order to add lands to a PADCNR facility and that condemnation will not be used in any way as part of this transaction or in securing the Property, Seller hereby knowingly waives any potential right to receive compensation for the Property consistent with the requirements of either (i) Title II and Title III of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, Title 42 U.S.C.A. Section 4601, et seq. (Public Law 91-646, as amended) including those provisions relating to incidental expenses incurred by Seller; (ii) 49 Code of Federal Regulation Part 24; or (iii) applicable state statutes and regulations. Seller makes this waiver knowing that PADCNR will ultimately own the Property and/or that PADCNR may be an assignee of this Agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

SELLER

BLUE RIDGE REAL ESTATE COMPANY

By: /s/ Patrick M. Flynn

_

Date: March 11, 2009_

Printed Name: Patrick M. Flynn

Title:

President

PURCHASER

THE CONSERVATION FUND,
a Non-Profit Corporation

By: /s/ Jodi R. O’Day

_

Date: March 10, 2009_

Jodi R. O'Day

Vice President and Regional Counsel

11

Exhibit A-1

Map of Property

12

Exhibit A-2

DESCRIPTION OF THE PROPERTY

Attached

Final legal description used in deed of conveyance shall be subject to approval of both parties.

13

Exhibit B

AFFIDAVIT OF NON-FOREIGN STATUS

Section 1445 and Section 6045 of the Internal Revenue Code provide that the Transferee of a real property interest must withhold tax if the Transferor is a foreign person and must provide certain sales related information to the Internal Revenue Service. To inform THE CONSERVATION FUND, A Non-Profit Corporation (the "Transferee") that withholding of tax is not required upon its disposition of a U.S. real property interest, more particularly described in the Contract for Sale of Real Estate annexed hereto __________ ( collectively the "Transferor"), hereby certifies that:

1.

Transferor is not a non-resident alien for purposes of U.S. income taxation.

2.

Transferor's tax identification / social security number is: _______________________

3.

Transferor's principal address is:

4.

The gross sales price of this transfer is:

Transferor understands that this affidavit and information contained herein will be disclosed to the Internal Revenue Service by the Transferee and that any false statement made herein by Transferor could be punished by fine, imprisonment, or both.

Under penalties of perjury, Transferor declares that Transferor has examined this certification and, to the best of Transferor's knowledge and belief, it is true, correct and complete.

TRANSFEROR:

By: ______________________________

Printed Name:

Title:

Date:

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Exhibit C

Schedule of Third Parties Agreement, with copies of documents attached

Hunt Leases- To be terminated at or prior to closing.

a.

License Agreement #133-0 dated February 25, 2008 by and between Blue Ridge Real Estate Company and Kuehner Club for 765 acres.

b.

License Agreement #133-1 dated February 25, 2008 by and between Blue Ridge Real Estate Company and 1 Kuehner Club for 100 acres.

c.

License Agreement #89 dated February 25, 2008 by and between Blue Ridge Real Estate Company and Never Quit Hunting Club for 200 acres.

d.

License Agreement #103-B dated April 21, 2008 by and between Blue Ridge Real Estate Company and Ram Hunting Club for 100 acres.

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EX-10

AGREEMENT OF SALE

EX-31

EXHIBIT 31.1

EX-31

EXHIBIT 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Eldon D. Dietterick, certify that:

1. I have reviewed this Quarterly report on Form 10-Q for the period ended January 31, 2009 of Blue Ridge Real Estate Company and Big Boulder Corporation (together, the “Registrants”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrants as of, and for, the periods presented in this report;

4. The Registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the Registrants and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrants, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrants’ internal control over financial reporting that occurred during the Registrants’ most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrants’ internal control over financial reporting; and

5. The Registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants’ auditors and the audit committee of the Registrants’ boards of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants’ ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants’ internal control over financial reporting.

By:  /s/ Eldon D. Dietterick

Eldon D. Dietterick

Executive Vice President and Treasurer

(Principal Financial Officer)

Date:  March 13, 2009

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

I, Patrick M. Flynn, Chief Executive Officer and President of Blue Ridge Real Estate Company and Big Boulder Corporation (together, the “Registrants”), certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge,that:

(1)

The Registrants’ Quarterly report on Form 10-Q for the period ended January 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the ”Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrants.

/s/ Patrick M. Flynn

Patrick M. Flynn

Chief Executive Officer and President

March 13, 2009

EX-32

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

I, Eldon D. Dietterick, Executive Vice President and Treasurer of Blue Ridge Real Estate Company and Big Boulder Corporation (together, the “Registrants”), certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge,that:

(1)

The Registrants’ Quarterly report on Form 10-Q for the period ended January 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the ”Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrants.

/s/ Eldon D. Dietterick

Eldon D. Dietterick

Executive Vice President

and Treasurer

(Principal Financial Officer)

March 13, 2009