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, 2010

( ) 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 have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).  

¨YES          ¨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   ý (Do not check if smaller reporting company)

Smaller reporting company ¨

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

¨YES          ýNO

      The number of shares of the registrants’ common stock outstanding as of the close of business on March 16, 2010 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, 2010 and October 31, 2009

1

Combined Condensed Statements of Operations - Three Months ended

January 31, 2010 and 2009

2

Combined Condensed Statement of Changes in Shareholders’ Equity –

Three months ended January 31, 2010

3

Combined Condensed Statements of Cash Flows - Three Months Ended

January 31, 2010 and 2009

4

Notes to Financial Statements

5

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

of Operations

10

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

17

Item 4T.  Controls and Procedures

17

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

18

Item 1A.  Risk Factors

18

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	1/31/10	10/31/09
Land and land development costs (3,162 and 4,971, respectively,     acres per land ledger)	$15,884,730	$15,965,609
Land improvements, buildings and equipment, net	26,061,561	25,936,464
Land held for investment (10,546 and 8,737, respectively, acres      per land ledger)	7,641,166	7,774,879
Land held for recreation (514 acres per land ledger)	8,693,860	8,693,860
Long-lived assets held for sale	3,249,351	3,441,944
Net investment in direct financing leases	8,307,246	8,310,073
Cash and cash equivalents	104,476	161,772
Cash held in escrow	916,721	1,041,677
Prepaid expenses and other assets	1,164,232	1,281,775
Accounts receivable and mortgages receivable	392,100	351,328
	$72,415,443	$72,959,381

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Debt	$26,916,350	$26,294,719
Accounts payable	228,898	641,504
Accrued liabilities	480,492	591,265
Deferred income	842,876	723,608
Amounts due to related parties	11,666	7,292
Deferred income taxes	5,419,000	5,677,000
Accrued pension expense	3,178,270	3,192,663
Total liabilities	37,077,552	37,128,051
Commitments and contingencies
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	19,829,475	19,823,586
Earnings retained in the business	18,846,976	19,346,304
Accumulated other comprehensive loss	(2,072,884)	(2,072,884)
	37,423,298	37,916,737
Less cost of 282,018 shares of capital stock in treasury	2,085,407	2,085,407
Total shareholders’ equity	35,337,891	35,831,330
	$72,415,443	$72,959,381

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, 2010 and 2009
(UNAUDITED)
	2010	2009
Revenues:
Real estate management	$305,086	$478,551
Summer recreation operations	10,298	4,878
Land resource management	323,979	2,103,952
Rental income	525,145	581,689
	1,164,508	3,169,070
Costs and expenses:
Real estate management	329,425	589,106
Summer recreation operations	247,432	229,154
Land resource management	407,429	1,726,884
Rental income	271,288	282,325
General and administration	442,984	376,705
Loss on sale of assets	0	10,643
	1,698,558	3,214,817
Operating loss	(534,050)	(45,747)
Other (expense) income:
Interest and other income	87,855	87,798
Interest expense (net of capitalized interest of $94,377 and            106,923, respectively)	(311,133)	(234,909)
	(223,278)	(147,111)
Loss from operations before income taxes	(757,328)	(192,858)
Credit for income taxes	(258,000)	(65,600)
Net loss	($499,328)	($127,258)
Basic loss per weighted average combined share	($0.20)	($0.05)
Diluted loss per weighted average combined share	($0.20)	($0.05)

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, 2010

(UNAUDITED)

	Capital Stock (a)		Capital in Excess of	Earnings Retained in	Accumulated Other Comprehensive	Capital Stock in
	Shares	Amount	Stated Par	the Business	Loss	Treasury (b)	Total
Balances, October 31, 2009	2,732,442	$819,731	$19,823,586	$19,346,304	($2,072,884)	($2,085,407)	$35,831,330
Comprehensive loss:							&nbs p;
Net loss:				(499,328)			(499,328)
						;
Compensation recognized under employee stock plan			5,889				5,889
						;
Balances, January 31, 2010	2,732,442	$819,731	$19,829,475	$18,846,976	($2,072,884)	($2,085,407)	$35,337,891

(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, 2010 and 2009
(UNAUDITED)
	2010	2009
Cash Flows (Used In) Provided By Operating Activities:
Net loss	($499,328)	($127,258)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation	331,893	348,555
Deferred income taxes	(272,393)	(65,600)
Loss on sale of assets	0	10,643
Compensation cost under employee stock plans	5,889	20,654
Changes in operating assets and liabilities:
Cash held in escrow	124,956	134,449
Accounts receivable and mortgages receivable	(40,772)	(46,263)
Prepaid expenses and other current assets	117,543	167,674
Land and land development costs	(238,480)	(506,098)
Long-lived assets held for sale	192,593	869,644
Accounts payable and accrued liabilities	(519,005)	(472,264)
Deferred revenue	119,268	(25,220)
Net cash (used in) provided by operating activities	(677,836)	308,916
Cash Flows Used In Investing Activities:
Proceeds from disposition of assets	0	0
Additions to properties	(3,918)	(20,582)
Payments received under direct financing lease arrangements	2,827	3,539
Net cash used in investing activities	(1,091)	(17,043)
Cash Flows Provided By (Used In) Financing Activities:
Proceeds from debt	1,436,156	2,191,950
Payment of debt	(814,525)	(2,625,695)
Deferred financing costs	0	(17,807)
Net cash provided by (used in) financing activities	621,631	(451,552)
Net decrease in cash & cash equivalents	(57,296)	(159,679)
Cash and cash equivalents, beginning	161,772	225,083
Cash and cash equivalents, end	$104,476	$65,404
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$405,510	$345,233
Income taxes	$10,300	$500
Supplemental disclosures of non cash operating and investing activities:
Reclassification of assets from land development to land improvements, buildings and equipment, net and from land held for investment to land held for development	$319,359	$0
Reclassification of assets from land development to land held for investment and land improvements, buildings and equipment, net	$0	$214,213

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

     The condensed balance sheet as of October 31, 2009, 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, 2010 and 2009, 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’ 2009 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, employ ee 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, 2009 (“Fiscal 2009”).

     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.

New Accounting Pronouncements

   In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” as codified in ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 provides guidance for using fair value to measure assets and liabilities. ASC 820 also responds to investors’ requests for expanded information about the extent to which a company measures assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The Company adopted ASC 820 with respect to financial instruments effective for its fiscal year beginning November 1, 2008. In Februa ry 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-2 (“FSP 157-2”) (codified in ASC 820) which delays the effective date of ASC 820 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or

- 5 -

disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP 157-2 applies to, but is not limited to, long-lived assets (asset groups) measured at fair value for an impairment assessment (i.e., inventory impairment assessments). FSP 157-2 defers the effective date for non-financial assets and non-financial liabilities of ASC 820 for the Companies to November 1, 2009. The Companies adoption of ASC 820 related to non-financial assets and non-financial liabilities did not have a material impact on the Companies’ combined condensed balance sheet, results of operations and cash flows.

   In December 2008, the FASB issued FSP SFAS No. 132(R)-1, “Employer’s Disclosures about Postretirement Benefit Plan Assets.” The disclosure requirements of this FSP are included in ASC Topic 715 — “Compensation-Retirement Benefit” (“Topic 715”) as pending transition guidance that require the disclosure of more information about investment allocation decisions, major categories of plan assets, including concentrations of risk and fair value measurements, and the fair value techniques and inputs used to measure plan assets. The disclosures about plan assets required by Topic 715 must be provided for fiscal y ears ending after December 15, 2009. With the adoption of Topic 715 there has been no impact on the Companies’ combined condensed financial statements.

   In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 has not yet been codified. SFAS 166 eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. SFAS 166 is applicable for annual periods beginning after November 15, 2009 and interim periods therein and thereafter. SFAS 166 will be effective for the Company’s fiscal year beginning November&nbs p;1, 2010. The Company is currently assessing the impact, if any, of SFAS 166 on its combined condensed financial statements.

   In August 2009, the FASB issued Accounting Standards Update No. 2009-5, “Fair Value Measurements and Disclosures (Topic 820) — Measuring Liabilities at Fair Value,” (“ASU 2009-5”), which amends ASC 820 to provide additional guidance to clarify the measurement of liabilities at fair value in the absence of observable market information. ASU 2009-5 is effective for the Company beginning November 1, 2009. The adoption of ASU 2009-5 did not have a material impact on the Companies’ combined condensed balance sheet, results of operations and cash flows

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, 2010 and 2009 is estimated using the estimated annual effective tax rate for the years ending October 31, 2010 and 2009.  The effective income tax rate for the first three months of the fiscal year ending October 31, 2010 (“Fiscal 2010”) and Fiscal 2009 was estimated at 34%.

   The Companies changed their policies for Accounting for Uncertainty in Income Taxes as of the quarter ended January 31, 2008. This change clarified the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, by defining a criterion that an individual tax position must meet for any part of the position to be recognized in an enterprise’s financial statements. The interpretation requires a review of all tax positions and applies a “more-likely-than-not” recognition threshold. A tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon the ultimate settlement with the taxing authority that has full knowledge of all relevant information. As of November 1, 2007, there has been no impact on the Companies’ combine d financial statements, nor has there been any impact on any subsequent periods.

   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, 2010, no interest and penalties have been accrued in the combined balance sheet and no expense has been incurred in the combined statement of operations.

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   At January 31, 2010, federal and state tax returns for years ending October 31, 2006 and later are subject to future examination by the respective tax authorities.

5.  Stock Based Compensation

          During the three months ended January 31, 2010, 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.

     Option activity during the three month period ended January 31, 2010 is as follows:

	Shares	Weighted Average Exercise Price	Aggregate Intrinsic Value	Weighted Average Remaining Useful Life (in years)
Outstanding at October 31, 2009	64,600	$36.93	$2,385,600	1.4
Granted	0	0	0
Exercised	0	0	0
Canceled	0	0	0
Outstanding at January 31, 2010	64,600	$36.93	$2,385,600	1.1
Options exercisable at January 31, 2010	63,406	36.89
Option price range	$34.00-$39.00

       Activity related to non-vested options for the period ended January 31, 2010 is as follows:

	Shares	Weighted Average Grant Date Fair Value Price
Non-vested at October 31, 2009	2,986	$9.86
Granted	0	0
Vested	(1,792)	$9.86
Non-vested at January 31, 2010	1,194	$9.86

     No options were exercised during the three months ended January 31, 2010 or 2009.

     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:

	1/31/2010	10/31/2009
Land unimproved designated for development	$596,079	$462,406
Residential development	6,876,341	6,668,267
Infrastructure development	8,412,310	8,834,936
	$15,884,730	$15,965,609

   The increase in land unimproved designated for development was result of a reclassification of land costs from land held for investment. Residential development costs were increased by primarily the continued construction of the Boulder Lake Village condominium project located on Big Boulder Lake.

   Infrastructure development decreased as these projects progressed to the residential development phase ($368,262).

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7.  Land

	1/31/2010	10/31/2009
Land held for investment
Land –Unimproved	$2,642,407	$2,776,120
Land – Commercial rental properties	4,998,759	4,998,759
	$7,641,166	$7,774,879
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
	1/31/10	1/31/09
Service Cost	$50,000	$34,500
Interest Cost	103,000	89,750
Expected return on plan assets	(80,000)	(68,750)

	Three Months Ended
	1/31/10	1/31/09
Net amortization and deferral:
Amortization of transition obligation	717	717
Amortization of prior service cost	69	69
Amortization of accumulated gain	64,500	16,500
Net amortization and deferral	65,286	17,286
Total net periodic pension cost	$138,286	$72,786

   The Companies expect to contribute $402,121 their pension plan in Fiscal 2010.  As of January 31, 2010, the Companies made contributions totaling $79,286.  The Companies anticipate contributing an additional $322,835 to fund its pension in Fiscal 2010.

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, 2010 is as follows:

2011	$257,685
2012	264,127
2013	270,730
2014	277,499
2015	284,436
Thereafter	15,081,285
TOTAL	$16,435,762

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     The Companies net investment in direct financing leases consists of the following as of January 31, 2010:

Minimum future lease payments	$8,004,883
Unguaranteed residual value of lease properties	8,430,879
Gross investment in lease	16,435,762
Unearned income	(8,128,516)
Net investment in direct financing leases	$8,307,246

     Unearned interest income is amortized to income using the interest method.  The scheduled lease increases 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, 2010 and 2009, 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, 2010 and 2009 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
	1/31/10	1/31/09
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
	1/31/10	1/31/09
Net loss	($499,328)	($127,258)
Weighted average combined shares of common stock outstanding	2,450,424	2,450,424
Basic loss per weighted average combined share	($0.20)	($0.05)

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

	Three Months Ended
	1/31/10	1/31/09
Net loss	($499,328)	($127,258)
Combined shares used to compute dilutive effect of stock option	2,450,424	2,450,424
Dilutive loss per weighted average combined share	($0.20)	($0.05)

11. Subsequent Event

On February 25, 2010, the Companies entered into a Deed of Trust and Security Agreement and Purchase Money Promissory Note (the “Note”) with The Stephen A. Grove Descendants Trust in the amount of $670,000, which encumbers certain real property owned by Blue Ridge located in Fort Collins, Colorado.  This property is currently leased to AmRest, LLC d/b/a Applebee’s. The Note has a term of five years and requires monthly payments in the amount of $3,908.33 beginning March 1, 2010 and ending February 28, 2015, at which time the remaining principal balance and all interest accrued shall become due and payable. The interest rate is fixed at 7.00%.

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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 of the agreements of sale with The Conservation Fund, 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;

▪

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

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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 14,208 acres of land in Northeastern Pennsylvania, along with 14 acres in various other states.  Of these land holdings, the Companies’ have designated 3,162 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 real estate industry is cyclical and is subject to numerous economic factors including general business conditions, changes in interest rates, inflation and oversupply of properties.  Any sustained period of weakness or weakening business or economic condition in the markets in which the Companies currently operate or intend to do business or in related markets, such as those they have experienced, will impact the demand for the type of properties the Companies intend to develop.

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.

For the fiscal year ended October 31, 2010, or Fiscal 2010, 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 a one year membership with the Lake Mountain Club and complimentary passes to the Jack Frost National Golf Course to the purchasers of the existing Laurelwoods II single family and duplex townhomes.  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 re sults 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 and who receives a commission on each stumpage contract, 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.

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.

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Recent Developments

On February 25, 2010, the Companies purchased certain real property and all improvements thereon located in Fort Collins Colorado.  The property was purchased from RCI Realty, LLC and consists of a free-standing Applebee’s restaurant including 4,593 square feet of leasable space and 0.822 acres of land.  The property and improvements is currently leased to AmRest, LLC (formerly Restaurant Concepts II, LLC) pursuant to a lease agreement dated January 1, 2007.  The tenant began operations effective the same date.  

The purchase price of the acquired asset was $1,364,000.  The purchase price was funded by cash held in escrow from the sale of the Laurens, South Carolina Wal-Mart property via a third party intermediary, a Deed of Trust and Security Agreement and Purchase Money Promissory Note with The Stephen A. Grove Descendants Trust and funds from the Companies’ general operating line of credit.  The acquisition is a replacement property for the tax deferred like-kind exchange of the Wal-Mart property in accordance with Internal Revenue Code Section 1031.

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

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

The Companies recognize income on the disposition of real estate using the full accrual method.  The full accrual method is appropriate at closing when the sales contract has been signed, the buyer has arranged permanent financing and the risks and rewards associated with ownership have been transferred to the buyer.  In the few instances that the Companies finance the sale, more than 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.

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

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.

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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 these 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.

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 $362,058 and $467,392 in Fiscal 2009, and in the fiscal year ended October 31, 2008, or Fiscal 2008, respectively.  The Companies expect to contribute $402,121 to the pension plan in Fiscal 2010.  The Companies also have in place a 401(k) pension plan available to all full time employees, which is funded entirely by employee contributions.

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

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The fair value of each option award is estimated at the date of grant using 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, 2010 and 2009

Operations for the three months ended January 31, 2010 resulted in a net loss of ($499,328), or ($0.20) per combined share, compared to a net loss of ($127,258), or ($0.05) per combined share, for the three months ended January 31, 2009.

Revenues

Combined revenue of $1,164,508 for the three months ended January 31, 2010 represents a decrease of $2,004,562, compared to the three months ended January 31, 2009.  Real Estate Management Operations / Rental Operations revenue decreased $230,009, or 22%, for the three months ended January 31, 2010, compared to the three months ended January 31, 2009. Summer Recreation Operations revenue increased $5,420, or 111%, for the three months ended January 31, 2010, compared to the three months ended January 31, 2009. Land Resource Management revenue decreased $1,779,973, or 85% for the three months ended January 31, 2010 compared to the three months ended January 31, 2009.

Real Estate Management/Rental Operations

Real Estate Management Operations / Rental Operations had revenue of $830,231 for the three months ended January 31, 2010, compared to $1,060,240 for the three months ended January 31, 2009, which resulted in a decrease of $230,009, or 22%.  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, 2010 was $84,596.43, compared to $186,012 for the three months ended January 31, 2009, a decrease of $101,416 or 55%.   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.  Additionally sales commissions revenue on residential home sales at our resort communities for the three months ended January 31, 2010 was $0 as compared to $87,434 for the three months ended January 31, 2009, a decrease of $87,314 or 100%. Management made the decision to close the Jack Frost – Big Boulder Real Estate sales office and, on April 24, 2009, the companies signed an Agreement with Pocono Resorts Realty. The Agreement provided for, among other things, the transfer of current home sale listings, the use of Company-owned signboards and the use of real estate sales offices currently located in the Jack Frost Mountain and Big Boulder Ski Area lodges. Also as part of the Agreement and upon approval by municipal and state agencies, Pocono Resorts Realty will be allowed to use a model home in either the Laurelwoods II or Boulder Lake Village developments as a sales office to sell the Companies’ newly constructed homes at Big Boulder.  Trust service fees, which are fees for water, sewer and road maintenance, for the three months ended January 31, 2010, were $167,698 as compared to $149,307 for the three months ended January 31, 2009, which resulted in an increase of $18,392 or 12%.  Rental revenue for the three months ended January 31, 2010 was $525,145 as compared to $581,689 for the three months ended January 31, 2009 resulting in a decrease of $56,544, or 10%.

Summer Recreation Operations

Summer Operations revenue relating to the Jack Frost National Golf Course for the three months ended January 31, 2010 was $10,298 as compared to $4,878 for the three months ended January 31, 2009, for an increase of $5,420.  These revenues were primarily 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, 2010, Land Resource Management had revenue of $323,979 compared to $2,103,952 for the three months ended January 31, 2009, which resulted in a decrease of $1,779,973.  This decrease is primarily attributable to one condominium sale ($320,000) in the Boulder Lake

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Village community for the three months ended January 31, 2010, as compared to three home sales in Laurelwoods II community and one condominium sale in Boulder Lake Village for the three months ended January 31, 2009 ($1,834,956) for a decrease of $1,514,956.  For the three months ended January 31, 2010, timbering revenue was $0 as compared to $261,483 for the three months ended January 31, 2009.

Operating Costs

Real Estate Management/Rental Operations

Operating costs associated with Real Estate Management Operations / Rental Operations for the three months ended January 31, 2010 were $600,713 compared to $871,431 for the three months ended January 31, 2009, which represents a decrease of $270,718, or 31%.  For the three months ended January 31, 2010, new home construction costs were $75,148 compared to $196,974 for the three months ended January 31, 2009, for a decrease of $121,825, or 62%.  Operating expenses for the new home construction division for the three months ended January 31, 2010 were $17,947 as compared to $87,997 for the three months ended January 31, 2009 for a decrease of $70,050, or 80%. These decreases relate to management’s decision on July 3, 2008 not to accept any new home construction contracts.

Summer Recreation Operations

Operating expenses associated with Summer Operations for the three months ended January 31, 2010 were $242,501 as compared to $230,666 for the three months ended January 31, 2009, which represents an increase of $11,835, or 5%.  These increased costs are primarily attributable to an increase in course repairs and maintenance ($11,447).

Land Resource Management

Operating costs associated with Land Resource Management for the three months ended January 31, 2010 were $407,429 compared with $1,726,884 for the three months ended January 31, 2009, which represents a decrease of $1,319,455.  This is primarily attributable to a decrease in construction costs related to real estate development, which was $246,733 for the three months ended January 31, 2010 as compared to $1,254,695 for the three months ended January 31, 2009, for a decrease of $1,007,963.  This is the result of one condominium sale in Boulder Lake Village for the three months ended January 31, 2010, as compared to three home sales in the Laurelwoods II community and one condominium sale in Boulder Lake Village for the three months ended January 31, 2009.  Correspondingly, the Land Resource Management operating expenses for the three months ended January 31, 2010 were $192,88 9 as compared to $489,688 for the three months ended January 31, 2009, for a decrease of $296,800.  

General and Administration

General and Administration costs for the three months ended January 31, 2010 were $442,982 compared to $376,705 for the three months ended January 31, 2009, which represents an increase of $66,279 or 18%.  This is primarily the result of a reallocation of salaries, related benefits and payroll taxes to better reflect actual job related duties.

Other Income (Expense)

Interest and other income was $87,855 for the three months ended January 31, 2010 compared to $87,798 for the three months ended January 31, 2009, which represents an increase of $57.

Interest expense for the three months ended January 31, 2010 was $311,133 compared to $234,909 for the three months ended January 31, 2009, which represents an increase of $76,244 or 32%.  This was primarily the result of the refinancing of two commercial retail properties in August 2009.

Tax Rate

The effective tax rate for the three months ended January 31, 2010 and 2009 was 34%.  The rate for 2010 is specific to federal taxes.  There is no benefit for state income tax in 2010 because the Companies fully reserved the future benefit.  

Liquidity and Capital Resources

As reflected in the Combined Condensed Statements of Cash Flows, net cash used in operating activities was $677,836 for the three months ended January 31, 2010 versus net cash provided by operating activitiesof

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$308,916 for the three months ended January 31, 2009.  The decrease in net cash provided by operating activities for the three months ended January 31, 2010 is primarily attributable to reduced sales in Phase II of the Laurelwoods II residential community.  

For the three months ended January 31, 2010, the construction of Building J in the Boulder Lake Village condominium community at Big Boulder was our major capital expenditure.

On May 22, 2009, the Companies entered into a Deed of Trust and Security Agreement and Real Estate Lien Note (the “Barbers Hill Note”) with Barbers Hill Bank, a branch of Anahuac National Bank, in the amount of $1,050,000, which encumbers certain real property owned by Blue Ridge located in Chambers County, Texas.  This property is currently leased to Jack in the Box Eastern Division, L.P. The Barbers Hill Note has a term of five years and requires monthly payments in the amount of $7,254 beginning June 22, 2009 and ending May 22, 2014, at which time the remaining principal balance and all interest accrued shall become due and payable.  The proceeds of the Barbers Hill Note will be used toward funding the completion of Building J of the Boulder Lake Village condominium project and general operations.  The interest rate is fixed at 6.75%.

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

On August 28, 2009, Blue Ridge, through its wholly owned subsidiary, Blue Ridge WMN, LLC, entered into a mortgage and security agreement and a $4,340,000 Senior Secured Note (the “Second Wells Fargo Note”) with Wells Fargo.  The Second Wells Fargo Note is secured by the mortgage, which encumbers certain real property known as the Walgreens Store located in White Bear Lake, Washington County, Minnesota.  A portion of the proceeds of the Second Wells Fargo Note were used to prepay the existing note outstanding with State Farm Bank which previously encumbered the Minnesota Walgreens property.  Beginning on September 15, 2009, interest and principal payments are due and payable monthly until August 15, 2031.  The interest rate is fixed at 6.90%.

The Companies have a line of credit with Manufacturers and Traders Trust (“M&T”) Company to fund real estate development in the aggregate amount of $17,900,000 with an interest rate of the greater of overnight LIBOR plus 3.5% or the daily 30-day LIBOR plus 3.5%, with an interest rate floor of 5.5%.  In addition, the Companies were required to establish an interest reserve account of $690,000 as security for the payment of interest, which was established in the third quarter of Fiscal 2009 with the proceeds from a sale of land.  Interest is due and payable on a monthly basis and, at January 31, 2010, the interest rate equaled 5.5% and the balance of the interest reserve escrow account was $353,055.  The remaining principal and any accrued interest is due and payable on April 19, 2010.  The Companies are currently negotiating an extension of this credit facili ty.  The Companies are using $7,900,000 of the $17,900,000 M & T line of credit to fund the construction of residential development projects.  The Companies have utilized a portion of the proceeds from the sale of one Boulder Lake Village condominium unit to pay $217,988 on this sublimit during first quarter of Fiscal 2010.  At January 31, 2010, $4,775,389 was outstanding on this sub-limit.  The Companies also utilized $6,000,000 of the $17,900,000 to fund site-development.    The Companies have utilized a portion of the proceeds from the sale of one Boulder Lake Village condominium unit to pay $66,655 on this sublimit during the first quarter of Fiscal 2010.  At January 31, 2010, $3,823,192 was outstanding on this sub-limit.  The Companies also utilize a total of $4,000,000 of the $17,900,000 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 constructi on.  The Companies have utilized the proceeds of two land sales to repay the balance of $3,461,510 on this sublimit during Fiscal 2009.  At January 31, 2010, $0 was outstanding on the $4,000,000 sub-limit.  The total principal amount outstanding under the aggregate line of credit will not exceed the lesser of (a) $17,900,000, or (b) 80% of the cost or appraised value of the units.  The loan agreement requires, among other things, that the Companies comply with consolidated debt to worth, debt service coverage and tangible net worth ratios.  The Companies had not met the required debt service coverage ratio at October 31, 2009, but had obtained a waiver from the Bank for this covenant.

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The Companies also have a $3,100,000 line of credit with M & T for general operations.  At January 31, 2010, $1,553,862 was outstanding on the $3,100,000 line at a 5.5% interest rate.  

Contractual Obligations:	Total	Less than 1 year	1-3 years	4-5 years	More than 5 years
Lines of Credit	$10,152,444	$10,152,444	$0	$0	$0
Long-Term Debt	16,666,872	504,211	1,075,008	8,022,005	7,065,648
Capital Leases	97,034	52,073	44,961	0	0
Purchase Obligations	252,275	252,275	0	0	0
Pension Contribution Obligations	322,835	322,835	0	0	0
Total Contractual Cash Obligations	$27,491,460	$11,283,838	$1,119,969	$8,022,005	$7,065,648

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 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness.  At January 31, 2010, we had $10,337,923 of variable rate indebtedness, representing 38% of our total debt outstanding, at an average rate of 4.38% (calculated as of January 31, 2010).  Our average interest rate is based on our various credit facilities and our market risk exposure fluctuates based on changes in underlying interest rates.

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

Item 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’ prin cipal 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 1A.  RISK FACTORS

No update.

Item 6.  EXHIBITS

Exhibit Number	Description
10.1*	Deed of Trust and Security Agreement, dated February 25, 2010, between Blue Ridge Real Estate Company and Public Trustee of Larimer County, Colorado, Trustee.
10.2*	$670,000 Purchase Money Promissory Note, dated February 25, 2010, between Blue Ridge Real Estate Company and The Stephen A. Grove Descendants Trust.
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 17, 2010

/s/ Eldon D. Dietterick

Eldon D. Dietterick

Executive Vice President/Treasurer

Dated:   March 17, 2010

/s/ Cynthia A. Van Horn

Cynthia A. Van Horn

Chief Accounting Officer

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EXHIBIT INDEX

Exhibit Number		Description
10.1*		Deed of Trust and Security Agreement, dated February 25, 2010, between Blue Ridge Real Estate Company and Public Trustee of Larimer County, Colorado, Trustee.
10.2*		$670,000 Purchase Money Promissory Note, dated February 25, 2010, between Blue Ridge Real Estate Company and The Stephen A. Grove Descendants Trust.
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

Upon recording return to:

Heritage Title Company
National Commercial Services
1401 17^th Street, Suite 1000
Denver, CO 80202

STATE OF COLORADO
COUNTY OF LARIMER

DEED OF TRUST AND SECURITY AGREEMENT

THIS DEED OF TRUST AND SECURITY AGREEMENT is made this 25th day of February, 2010, by and between BLUE RIDGE REAL ESTATE COMPANY (hereinafter called "Grantor") whose address is: P.O. Box 707, Blakeslee, Pennsylvania 18610 and the PUBLIC TRUSTEE OF LARIMER COUNTY, COLORADO (hereinafter called "Trustee") of the County in which the Property (as hereinafter defined) is situated, for the benefit of THE STEPHEN A. GROVE DESCENDANTS TRUST, whose address is P.O. Box 1807, Covington, Georgia 30015, (hereinafter called "Grantee").

W I T N E S S E T H:

FOR AND IN CONSIDERATION of the trust herein created and the loan to Grantor by Grantee resulting in the indebtedness which is hereinafter more particularly described, and in order to secure that loan and payment of the note evidencing the same, Grantor hereby grants, bargains, conveys, transfers, assigns and sells unto Trustee in trust, with power of sale, the following:

ALL THAT TRACT OR PARCEL OF LAND being Lot 4, Fort Collins Retail Center, P.U.D. to the City of Fort Collins, County of Larimer, State of Colorado.

TOGETHER WITH: (i) all buildings, structures and other improvements now or hereafter located on the Property or on any part or parcel of the Property (hereinafter called the "Improvements"); (ii) all and singular the tenements, hereditaments, easements and appurtenances belonging to the Property or in anywise appertaining to the Property, and the reversion or reversions, remainder or remainders thereof; (iii) all income, revenues and profits now or hereafter accruing from, and all accounts and contract rights now or hereafter arising in connection with, the Property or any part or parcel of the Property or any of the Improvements; (iv) all minerals, flowers, crops, trees, timber, shrubbery and other emblements now or hereafter located on the Property or under the Property or on or under any part or parcel of the Property; (v) all estates, rights , title and interest in the Property, or in any part or parcel of the Property; (vi) all equipment, machinery, apparatus, fittings, furniture, furnishings and personal property of every kind or description whatsoever now or hereafter located on the Property or on any part or parcel of the Property or in or on any of the Improvements, and used in connection with the operation or maintenance of the Property or any of the Improvements, all accessions and additions to and replacements of the foregoing and all proceeds (direct and remote) of the foregoing, including without limitation all plumbing, heating, lighting, ventilating, refrigerating, water-heating, incinerating, air-conditioning and heating, and sprinkling equipment and systems, and all screens, awnings and signs; (vii) all fixtures (including all trade, domestic and ornamental fixtures) now or hereafter on the Property or on any part or parcel of the Property or in or on any of the Improvements, whether actually or constructively attached or affixed, including without limitation all plumbing, heating, lighting, ventilating, refrigerating, water-heating, incinerating, air-conditioning and heating, and sprinkling

fixtures, and all screens, awnings and signs which are fixtures; (viii) all building materials, supplies, goods, machinery and equipment delivered to the Property and placed on the Property for the purpose of being affixed to or installed or incorporated or otherwise used in or on the Property or any part or parcel of the Property or any of the Improvements, and all accessions and additions to and replacements of the foregoing and all proceeds (direct or remote) of the foregoing; (ix) all payments, awards, judgments and settlements (including interest thereon) to which Grantor may be or become entitled as a result of the exercise of the right of eminent domain with respect to the Property or any part or parcel of the Property or any of the Improvements; and (x) all policies of insurance which insure against loss or damage to any property described abo ve and all proceeds from and payments under such policies. The Property and all of the foregoing are hereinafter sometimes collectively called the "Premises".

TO HAVE AND TO HOLD the Premises to the only proper use, benefit and behoof of Grantee, forever, in fee simple.

GRANTOR WARRANTS that Grantor has good and marketable fee simple title to the Premises, that Grantor is lawfully seized and possessed of the Premises, that Grantor has the right to convey the Premises, that the Premises are unencumbered except as may be herein expressly provided and that Grantor shall forever warrant and defend the title to the Premises unto Grantee against the claims of all persons whomsoever.

This Deed of Trust is made and intended to secure payment and performance of: (i) an indebtedness of Grantor to Grantee evidenced by that certain Promissory Note of even date herewith, made by Grantor and payable to the order of Grantee, in the stated principal amount of Six Hundred Seventy Thousand and 00/100 ($670,000.00) Dollars (the "Indebtedness") bearing interest and default interest and payable as therein provided with all principal and any accrued and unpaid interest being due and payable in full on February 28, 2015, if not sooner paid (hereinafter called the "Note"); (ii) any and all renewals, extension or extensions, modification or modifications of the Note, and substitution or substitutions for the Note, either in whole or in part; (iii) all advances, if any, made by Grantee pursuant to the terms of this Deed of Trust; (iv) all expenses inc ident to the collection of the Indebtedness secured by this Deed of Trust; (v) all duties and obligations of Grantor under this Deed of Trust; and (vi) all indebtedness now or hereafter owing by Grantor to Grantee, however or whenever created, incurred, arising or evidenced, whether direct or indirect, primary or secondary, joint or several, absolute or contingent, or due or to become due, and whether from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred, and any and all renewal or renewals, extension or extensions, modification or modifications of said indebtedness, and substitution or substitutions for said indebtedness, either in whole or in part.

ARTICLE I
COVENANTS OF GRANTOR

Section 1.01. Junior Encumbrances. Without the prior written consent of Grantee, which consent Grantee may give, deny or condition in its reasonable discretion, Grantor shall not create or permit to exist any liens or encumbrances on the Premises which are junior and inferior in terms of priority to this Deed of Trust.

Section 1.02. Payments by Grantor. Grantor shall pay, when due and payable: (i) the Indebtedness in accordance with the terms and conditions of the instruments evidencing the same; (ii) all taxes, all assessments, general or special, and all other charges

levied or imposed upon or assessed or placed or made against the Premises, this Deed of Trust, the Note or the Indebtedness or any interest of Grantee in the Premises, this Deed of Trust, the Note or the Indebtedness; (iii) premiums on policies of fire and casualty insurance covering the Premises required by this Deed of Trust or now or hereafter required by Grantee; (iv) premiums on all life insurance policies now or hereafter pledged as collateral for the Indebtedness or any part thereof; (v) premiums on all liability, rental, rental value, business interruption mortgage and flood insurance policies required by this Deed of Trust or now or hereafter required by Grantee in connection with the Premises or the Indebtedness or any part of either; and (vi) all ground rents, lease rentals and other payments respecting the Premises payable by Grantor. Grantor shall promptly deliver to Grantee, upon request by Grantee, receipts showing payment in full of all of the foregoing items, other than the Indebtedness. In the event of the passage of any state, federal, municipal or other governmental law, order, rule or regulation, subsequent to the date hereof, in any manner changing or modifying the laws in force governing the taxation of the Indebtedness or the manner of collecting such taxes so as to adversely affect Grantee, Grantor will promptly pay any such tax on or before the date it is due if, in the opinion of counsel for Grantee, Grantee is not prohibited by any such law, order, rule or regulation from requiring such payment by Grantor. If, in the opinion of counsel for Grantee, Grantee is prohibited by any such law, order, rule or regulation from requiring such payment by Grantor, then, at Grantee's option, Grantor shall be in default under this Deed of Trust as if an event of default had occurred, and Grantee may exercise any or all of the rights and remedies Grantee has upon the occurrence of a default under this Deed of Trust.

Section 1.03. Grantee's Acts on Behalf of Grantor. In the event Grantor shall either fail or refuse to payor cause to be paid, as the same shall become due and payable, any item (including all items specified in Section 1.02 hereof) which Grantor is required to pay hereunder or which Grantor may pay to cure a default under this Deed of Trust, or in the event Grantor shall either fail or refuse to do or perform any act which Grantor is obligated to do or perform under this Deed of Trust or which Grantor may do or perform to cure a default under this Deed of Trust, or in the event Grantee shall be required, or shall find it necessary or desirable in Grantee's discretion, to defend, enforce or protect any of the rights and benefits accruing to Grantee under any provision of this Deed of Trust (including, without limitation, Grantee's interest in t he Premises, insurance and condemnation proceeds and the Rents,) then Grantee, at Grantee's option, may make such payment or do or perform such act on behalf of Grantor, or proceed in any manner to defend, enforce or protect any such rights and benefits. All such payments made by Grantee and all reasonable costs and expenses incurred by Grantee in doing or performing all such acts shall be and shall become part of the Indebtedness and shall bear interest at the rate per annum two (2) percentage points in excess of the highest rate of interest then being charged with respect to any portion of the Indebtedness from the date paid or incurred by Grantee, and the interest thereon shall also be part of the Indebtedness.

Section 1.04. Further Assurances. Grantor shall at any time, and from time to time, upon request by Grantee, make, execute and deliver, or cause to be made, executed and delivered, any and all other and further instruments, documents, certificates, agreements, letters, representations and other writings as may be necessary or desirable, in the opinion of Grantee, in order to effectuate, complete, correct, perfect or continue and preserve the liability and obligation of Grantor for payment of the Indebtedness and the lien, security interest and security title of Grantee under this Deed of Trust. Grantor shall, upon request by Grantee, certify in writing to Grantee, or to any proposed assignee of this Deed of

Trust, the amount of principal and interest then owing on the Indebtedness and whether or not any setoffs or defenses exist against all or any part of the Indebtedness.

Section 1.05. Maintenance and Repair. Grantor shall maintain the Premises in good condition and repair, shall not commit or suffer any actual or threatened waste to the Premises, and shall comply with, or cause to be complied with, all statutes, ordinances, rules, regulations and directives of any governmental authority (hereinafter called "Laws") relating to the Premises or any part thereof or the use or occupancy of the Premises or any part thereof. No part of the Premises, including but not limited to any of the Improvements, shall be removed, demolished or materially altered without the prior written consent of Grantee. If at any time during the continuance of the Indebtedness any addition, alteration, change, repair, reconstruction or other work on the Premises, of any nature, structural or otherwise, becomes necessary or desirable because of damage to or destruction of the Premises or any part thereof, the entire expense thereof, regardless of when the same shall be incurred or become due, shall be the sole obligation and responsibility of Grantor, and Grantor shall pay the entire expense thereof promptly when due. Grantor shall not initiate, join in, consent to or acquiesce in any change in any private restrictive covenant, zoning ordinance or other public or private restriction limiting or defining the use which may be made of the Premises or any part thereof.

Section 1.06. Insurance. Grantor shall keep the Premises insured against loss or damage by fire and such other casualties and risks as the Grantee may require from time to time. The insurance maintained by Grantor may, at Grantee's option, include rental, rental value and business interruption insurance. Such policies shall be written by such companies, in such amounts and under such forms of policies as Grantee may approve. Such policies shall insure Grantee's interest in the Premises, name Grantee as an insured party thereunder, provide that losses thereunder shall be payable to Grantee pursuant to such forms of loss payable clauses as Grantee may approve and provide that no cancellation or reduction in coverage shall be effective unless the insurer first gives Grantee thirty (30) days prior written notice. Irrespective of the insurance requi red and approved by Grantee hereunder, the security interest of Grantee hereunder shall cover all policies of insurance which insure against loss or damage to the Premises, and the proceeds from any and all such policies. Grantor shall also procure and maintain general comprehensive public liability insurance coverage with such companies, in such amounts and under such forms of policies as Grantee may approve, naming Grantee as an additional insured thereunder and providing that no cancellation or reduction in coverage thereunder shall be effective unless the insurer first gives Grantee thirty (30) days prior written notice. Forthwith upon the issuance of all such policies, Grantor shall deliver the same to Grantee together with evidence satisfactory to Grantee that the premiums have been paid. Within fifteen (15) days prior to the expiration date of each such policy, Grantor shall deliver to Grantee a renewal policy together with evidence satisfactory to Grantee that the premium therefor has been paid. In t he event of a foreclosure and sale by Grantee of the Premises, the purchaser of the Premises shall succeed to all rights of Grantor in and to such policies, including the right to the refund of unearned premiums and to dividends thereunder, and Grantee may, at Grantee's election, assign and deliver the policies to such purchaser without any warranty or representation, express or implied, and without recourse. In the event of damage to or destruction of the Premises or any part thereof, Grantee may adjust, settle or compromise claims under such policies, and the proceeds therefrom shall be paid to Grantee. Grantee, at Grantee's option and in Grantee's sole discretion, may either (i) apply the proceeds or any part thereof to payment of the Indebtedness, in such order as Grantee may determine, or (ii) require Grantor to repair,

replace or reconstruct the Premises or any part thereof and disburse the proceeds to Grantor to be applied against the reasonable costs and expenses thereof as incurred or paid by Grantor, pursuant to a disbursement procedure, and under such other terms and conditions, as shall be acceptable to Grantee; provided, however, if Grantor is not in default, or with notice, the passage of time or both would be in default, under this Deed of Trust or any other document or agreement with Grantor, then Grantee shall elect option (ii) above.

Section 1.07. Inventory of Personal Property. In the event of the early termination of the existing Lease Agreement for the Premises with AmRest, LLC, as tenant, then upon request of Grantee, Grantor shall deliver to Grantee an inventory describing and showing the make, model, serial number and location of all fixtures and personal property used in the management, maintenance and operation of the Premises with a certification by Grantor that said inventory is a true and complete schedule of such fixtures and personal property used in the management, maintenance and operation of the Premises and that such items specified in the inventory constitute all of the fixtures and personal property required in the management, maintenance and operation of the Premises, and that such items are owned by Grantor free and clear of any security interests, liens, con ditional sales contracts or title retention arrangements, other than the lien and security interest of this Deed of Trust.

Section 1.08. Condemnation. Notwithstanding any injury or damage to, or loss of, the Premises or any part thereof as a result of the exercise of the right of eminent domain, Grantor shall continue to pay the Indebtedness. All sums paid or payable to Grantor by reason of any injury or damage to, or loss of, the Premises or any part thereof as a result of the exercise of the right of eminent domain shall be delivered to Grantee and Grantee, at Grantee's option and at Grantee's sole discretion, may either (i) apply the sum or any part thereof to payment of the Indebtedness, in such order as Grantee may determine, or (ii) require Grantor to repair, replace or reconstruct the Premises or any part thereof and disburse such sums to Grantor to be applied against the reasonable costs and expenses thereof as incurred or paid by Grantor pursuant to a disbursement procedure, and un der such other terms and conditions, as shall be acceptable to Grantee.

Section 1.09. Inspection. Grantor shall permit any person designated by Grantee to visit and inspect the Premises, to examine the books of account and other records of Grantor with respect to the Premises, and to discuss the affairs, finances and accounts of Grantor with and to be advised as to the same by Grantor or a knowledgeable and duly authorized representative of Grantor, all at such reasonable times and intervals as Grantee may desire.

Section 1.10. Restriction on Transfer. Without the prior written consent of Grantee thereto (which consent may be granted or withheld at Grantee's sole and absolute discretion) and the recordation of such consent in the public deed records of the County in which the Premises or any part thereof is located, prior to the cancellation, satisfaction and release by Grantee of this Deed of Trust, neither Grantor nor any party comprising Grantor shall grant, bargain, sell, convey, transfer, assign or exchange all or any portion of the Premises or the interest of Grantor or such other party in the Premises. The foregoing proscription shall apply to any sale, conveyance, transfer, assignment or exchange, whether made with or without consideration, and whether arising voluntarily or involuntarily, by reason of merger, consolidation or reorganization, by op eration of law, or otherwise. Notwithstanding the foregoing provisions, or any other provision of this Deed of Trust to the contrary, Grantor shall have the right to prepay the Indebtedness, without penalty or premium, as provided in the Note.

Section 1.11. Subrogation. Grantee shall be subrogated to all right, title, equity, liens and claims of all persons to whom Grantee has paid or pays money in settlement of claims, liens, encumbrances or charges or in the acquisition bf any right or title for Grantee's benefit under this Deed of Trust or for the benefit and account of Grantor.

Section 1.12. Flood Insurance. Grantor represents and certifies to Grantee that no part of the Premises lies within a "special flood hazard area" as defined and specified by the United States Department of Housing and Urban Development pursuant to the Flood Disaster Protection Act of 1973. In the event Grantee determines that the rules or regulations of the Federal Reserve Board, the Comptroller of the Currency or any other governing agency licensing or regulating the operations of Grantee require that flood insurance coverage be obtained for the Premises or any part thereof in order for Grantee to comply with such rules or regulations or with the Flood Disaster Protection Act of 1973 as then in effect, then Grantor, upon receiving written notice from Grantee of such determination: (i) shall promptly purchase and pay the premiums for su ch flood insurance policies as Grantee deems required by such agency or agencies and so that Grantee shall be deemed in compliance with the rules and regulations of such agency or agencies and with the Flood Disaster Protection Act of 1973 as then in effect; and (ii) shall deliver such policies to Grantee together with evidence satisfactory to Grantee that the premiums therefor have been paid. Such policies of flood insurance shall be in a form satisfactory to Grantee, shall name Grantee as an insured thereunder, shall provide that losses thereunder be payable to Grantee pursuant to such forms of loss payable clause as Grantee may approve, shall be for an amount at least equal to the Indebtedness or the maximum limit of coverage made available with respect to the Premises under the National Flood Insurance Act of 1968, as amended, whichever is less, and shall be non-cancelable as to Grantee except upon thirty (30) days prior written notice given by the insurer to Grantee. Within fifteen (15) days prior to th e expiration date of each such flood insurance policy, Grantor shall deliver to Grantee a renewal policy or endorsement together with evidence satisfactory to Grantee that the premium therefor has been paid.

Section 1.13. Hazardous Materials Covenants.

(a)

Grantor hereby represents and warrants to and for the benefit of Grantee that the Premises will not be used or operated in any manner that will result in the storage, use, treatment, manufacture or disposal of any Hazardous Materials (hereinafter defined) upon the Premises or any portion thereof or which will result in Hazardous Materials Contamination (hereinafter defined). For purposes hereof, the term "Hazardous Materials" shall mean and refer to (i) any "hazardous waste" as defined by the Resource Conservation and Recovery Act of 1976 (42 D.S.C. Section 6901 et seq.), as amended from time to time, and regulations promulgated thereunder; (ii) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 D.S.C. Section 9601 et seq.) ("CERCLA"), as amended from time to time, and regulations promulgated thereunder; (iii) asbestos; (iv) polychlorinated biphenyls; (v) any substance the presence of which on the Premises is prohibited by any Laws or by any other legal requirements affecting the Premises; (vi) petroleum based materials; and (vii) any other substance which is defined as hazardous, toxic, infectious or radioactive by any Laws or by any other legal requirements affecting the Premises. The term "Hazardous Materials Contamination" shall mean and refer to the unlawful contamination of the Premises, soil, surface water, ground water, air, or other elements on, or of, the buildings, facilities, soil, surface water, ground water, air, or other elements on, or of, any other property as a result of Hazardous Materials at any time emanating from the Premises.

(b)

In addition to and without limiting the generality of any other provisions of this Deed of Trust, Grantor shall and hereby does indemnify and hold Grantee harmless from and against any and all losses, damages, expenses, fees, claims, demands, causes of action, judgments, costs, and liabilities, including, but not limited to, reasonable attorneys' fees and costs of litigation, and costs and expenses of response, remedial and corrective work and other clean up activities, arising out of or in any manner connected with (i) the "release" or "threatened release" (as those terms are defined in CERCLA and the rules and regulations promulgated thereunder, as from time to time amended) by Grantor or Grantor's employees, agents, delegees, invitees, licensees, concessionaires, lessees, tenants, contractors or representatives, of any Hazardous Materials, or (ii) a n occurrence of Hazardous Materials Contamination, arising out of or in any manner connected with the use or occupancy of the Premises; provided however, the Grantor shall not be obligated to indemnify the Grantee from claims or damages asserted against the Grantee if the circumstances giving rise to such claims arose subsequent to satisfaction in full of the Grantor's obligation under the Note. The provisions of this Section 1.14 shall survive any payment or satisfaction of the Indebtedness and any acquisition of the Premises by Grantee pursuant to the power of sale contained in this Deed of Trust, by conveyance in lieu of foreclosure or otherwise; and such provisions shall remain in full force and effect as long as the possibility exists that Grantee may suffer or incur any such losses, damages, expenses, fees, claims, demands, causes of action, judgments, costs and liabilities.

ARTICLE II
EVENTS OF DEFAULT

The following shall constitute events of default by Grantor hereunder:

Section 2.01. Payment of Indebtedness. If Grantor should fail to pay the Indebtedness or any part thereof when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment or at a date fixed by reason of acceleration of the due date thereof or otherwise, and such failure continues beyond ten (10) days after the giving of written notice thereof by Grantee to Grantor.

Section 2.02. Other Payments and Terms. If Grantor should fail to make any payment (other than on the Indebtedness) required hereunder, or if Grantor should fail fully and completely to perform its duties and obligations under, or should violate or breach or fail fully and completely to observe, satisfy or comply with any of the terms, covenants, conditions, agreements, requirements, restrictions or provisions set forth in, this Deed of Trust (and if such failure, breach or violation shall not have been cured within twenty (20) days after the giving of a written notice thereof by Grantee to Grantor, or, if such cannot be cured within such 20-day period and Grantor is diligently pursuing such cure, then within such longer period as is reasonable, but in no event longer than sixty (60) days following such notice), or any other instrument, documen t, agreement, letter or other writing now or hereafter evidencing or securing the Indebtedness or any portion thereof, or heretofore, concurrently herewith or in the future executed by Grantor in favor of Grantee in connection with any transaction which resulted in the Indebtedness or any part thereof, including, without limiting the generality of the foregoing, the Note (and if such failure, breach or violation shall not have been cured within the periods, if any, provided therein).

Section 2.03. False Statements. If any certificate, representation, warranty, statement or other writing made herein or furnished to Grantee by or on behalf of Grantor in connection with any transaction which resulted in the Indebtedness or any part thereof should be false, untrue, incomplete or misleading in any material respect as of the date

made; provided, however, Grantor shall be given twenty (20) days following written notice (or such longer period, up to sixty (60) days following notice, if Grantor is diligently pursuing such cure) to change such facts or circumstances so that the statements made shall be true, correct and complete.

Section 2.04. Adverse Change. Any material adverse change in the condition, financial or otherwise, of Grantor after the date of this agreement; or any damage to any part of the Premises which is not repaired promptly to the reasonable satisfaction of Grantee; or any taking of any part of the Premises in any eminent domain, condemnation or similar proceeding or the pendency of such proceeding which, in Grantee's reasonable judgment, materially affects the value or intended use of the Premises.

Section 2.05. Seizure or Levy. If the Premises or any part thereof should be seized or levied upon under legal process or a receiver should be appointed for the Premises or any part thereof.

Section 2.06. Liens. If any Federal tax lien or any claim of lien for labor or services performed or rendered or alleged to have been performed or rendered, or for materials supplied or furnished or alleged to have been supplied or furnished, or for architectural or engineering services performed or rendered or alleged to have been performed or rendered, in connection with the improvement of or with respect to the Premises should be filed of record against Grantor or the Premises and not be removed from record by payment or posting of bond within thirty (30) days from the date of such filing.

Section 2.07. Priority Claim. Should Grantor default under any of the provisions of the First in Priority Deed or if any claim of priority over this Deed of Trust should be asserted in any legal or equitable proceeding, and not be dismissed with prejudice within sixty (60) days after the filing thereof.

Section 2.08. Insolvency or Bankruptcy. If Grantor becomes insolvent as defined in the Colorado Uniform Commercial Code or makes an assignment for the benefit of creditors; or if any action is brought by Grantor seeking its dissolution or liquidation of its assets or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property; or if Grantor commences a voluntary proceeding under the Federal Bankruptcy Code; or if any reorganization or arrangement proceeding is instituted by Grantor for the settlement, readjustment, composition or extension of any of its debts upon any terms; or if any action or petition is otherwise brought by Grantor seeking similar relief or alleging that it is insolvent or unable to pay its debts as they mature; or if any action is brought against Grantor seeking its dissolution or liquidation of any of its assets, or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property, and any such action is consented to or acquiesced in by Grantor or is not dismissed within thirty (30) days after the date upon which it was instituted; or if any proceeding under the Federal Bankruptcy Code is instituted against Grantor and (i) an order for relief is entered in such proceeding or (ii) such proceeding is consented to or acquiesced in by Grantor or is not dismissed within thirty (30) days after the date upon which it was instituted; or if any reorganization or arrangement proceeding is instituted against Grantor for the settlement, readjustment, composition or extension of any of its debts upon any terms, and such proceeding is consented to or acquiesced in by Grantor or is not dismissed within thirty (30) days after the date upon which it was instituted; or if any action or petition is otherwise brought against Grantor seeking similar relief or alleging that it is insolvent, unable to pay its debts as they mature or generally not paying its debts as they become due, and such action or petition is consented to or acquiesced in by Grantor or is not dismissed

within thirty (30) days after the date upon which it was brought.

Section 2.09. Judgments. If any judgment should be rendered against Grantor and such judgment should not be paid in full and satisfied, or appealed from within the time allowed for appeals and be paid in full and satisfied when it becomes final.

Section 2.10. Dissolution or Liquidation. Should Grantor, if a corporation, be liquidated or dissolved or its articles of incorporation expire or be revoked, or, if a partnership or business association, be dissolved or partitioned, or, if a trust, be terminated or expire.

For the purposes of the events of default specified in sections 2.03, 2.05, 2.07, 2.08 and 2.09, the word "Grantor" shall specifically include, without limitation: (i) any party comprising Grantor, should more than one person or entity execute this Deed of Trust as Grantor; (ii) any person or entity now or hereafter liable, whether primarily, secondarily or contingently, for the payment of the Indebtedness or any part thereof including without limitation any principal, maker, endorser, guarantor or surety and the heirs, legal representatives, successors and assigns thereof; (iii) if Grantor or any party comprising Grantor be a general partnership or a limited partnership, any general partner thereof; and (iv) if Grantor or any party comprising Grantor be a joint venture, any joint venturer thereof.

ARTICLE III
REMEDIES AND POWER OF SALE

Upon the occurrence of an event of default, Grantor shall be in default hereunder. If Grantor shall be in default hereunder, Grantee may, at its option and election and without notice to Grantor, do anyone or more of the following:

Section 3.01. Acceleration of Indebtedness. Grantee may immediately declare all or any portion of the Indebtedness to be immediately due and payable, whereupon the same shall be and shall become due and payable forthwith without presentment, demand, protest or notice of any kind, all of which are expressly waived by Grantor.

Section 3.02. Entry and Possession. Grantee may enter upon the Premises or any part thereof and take possession thereof, excluding therefrom Grantor and all agents, employees and representatives of Grantor; employ a manager of the Premises or any part thereof; hold, store, use, operate, manage, control, maintain and lease the Premises or any part thereof; conduct business thereon; make all necessary and appropriate repairs, renewals and replacements; insure or keep the Premises insured; and carry out or enter into agreements of any kind with respect to the Premises.

Section 3.03. Payments. Grantee may pay any sum or sums deemed necessary or appropriate by Grantee to protect the Premises or any part thereof or Grantee's interest therein.

Section 3.04. Other Remedies. Grantee may exercise all rights and remedies contained in any other instrument, document, agreement or other writing now or hereafter evidencing or securing the Indebtedness or any part thereof, or heretofore, concurrently herewith or in the future executed by Grantor in favor of Grantee in connection with any transaction resulting in the Indebtedness or any part thereof.

Section 3.05. Appointment of Receiver; Lender in Possession. Grantee or the holder of the Trustee's certificate of purchase shall be entitled to appoint a receiver for the

Property after acceleration, and shall also be so entitled during the time covered by foreclosure proceedings and the period of redemption, if any; and shall be entitled thereto as a matter of right without regard to the solvency or insolvency of Grantor or of the then owner of the Property, and without regard to the value thereof. Such receiver may be appointed by any Court of competent jurisdiction ex parte application and without notice - notice being hereby expressly waived.

Section 3.06. UCC Remedies. With respect to the personal property and fixtures in which a security interest is herein granted, at Grantee's option, Grantee may exercise any or all of the rights accruing to a secured party under this instrument, the Uniform Commercial Code of Colorado, and any other applicable law. Grantor shall, if Grantee requests, assemble all such personal property and make it available to Grantee at a place or places, to be designated by Grantee, which shall be reasonably convenient to Grantor and Grantee. Any notice required to be given by Grantee of a public or private sale, lease or other disposition of the personal property or any other intended action by Grantee may be personally delivered to Grantor or may be deposited in the United States mail with postage prepaid duly addressed to Grantor at the address shown in the par agraph herein captioned "Notices", or at any other address theretofore designated by Grantor in writing to Grantee, at least five (5) business days prior to such proposed action, and shall constitute reasonable and fair notice to Grantor of any such action.

Section 3.07. Power of Sale. Upon Grantor's breach of any covenant or agreement of Grantor in this Deed of Trust which is not cured or remedied by Grantor within the applicable notice and grace period, at Grantee's option, all sums secured by this Deed of Trust shall be immediately due and payable. To exercise this option, Grantee may invoke the power of sale and any other remedies permitted by law. Grantee shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this Deed of Trust, including but not limited to, reasonable attorney's fees.

If Grantee invokes the power of sale, Grantee shall give written notice to Trustee of such election. Trustee shall give such notice to Grantor of Grantor's rights as is provided by law. Trustee shall record a copy of such notice as required by law. Trustee shall advertise the time and place of the sale of the Property, for not less than four weeks in a newspaper of general circulation in each county in which the Property is situated, and shall mail copies of such notice of sale to Grantor and other persons as prescribed by law. After the lapse of such time as may be required by law, Trustee, without demand on Grantor, shall sell the Property at public auction to the highest bidder for cash at the time and place (which may be on the Property or any part thereof as permitted by law) in one or more parcels as Trustee may think best and in such order as Trust ee may determine. Grantee's designee may purchase the Property at any sale. It shall not be obligatory upon the purchaser at any such sale to see the application of the purchase money.

The proceeds of each sale by Trustee hereunder shall be applied first to the costs and expenses of the sale and of all proceedings in connection therewith (including without limitation the actual fees and expenses of the Trustee's and Grantee's attorneys in connection therewith) then to the payment of the balance of the Indebtedness, and the remainder, if any, shall be paid to Grantor or to the parties entitled thereto by law. If the proceeds of any sale are not sufficient to pay the Indebtedness in full, Grantee shall determine, at Grantee's option and in Grantee's discretion, the portions of the Indebtedness to which the proceeds (after deducting therefrom the costs and expenses of the sale and all proceedings in connection therewith) shall be applied and in what order the proceeds shall

be so applied. Grantor covenants and agrees that, in the event of any sale pursuant to the agency and power herein granted, Grantor shall be and become a tenant holding over and shall deliver possession of the Premises, or the part thereof or interest therein sold, to the purchaser or purchasers at the sale or be summarily dispossessed in accordance with the provisions of law applicable to tenants holding over.

Whenever foreclosure is commenced for nonpayment of any sums due hereunder, the owners of the Property or parties liable hereon shall be entitled to cure said defaults by paying all delinquent principal and interest payments due as of the date of cure, costs, expenses, late charges, attorney's fees and other fees all in the manner provided by law. Upon such payment, this Deed of Trust and the obligations secured hereby shall remain in full force and effect as though no Acceleration had occurred, and the foreclosure proceedings shall be discontinued.

All of the foregoing rights and remedies are cumulative of and in addition to, and not restrictive of or in lieu of, any right or remedy provided for by statute, or now or hereafter existing at law or in equity. Grantee may, at Grantee's election and at Grantee's sole discretion, exercise each and every such right and remedy concurrently or separately or in any combination.

ARTICLE IV
ADDITIONAL PROVISIONS

The following terms and conditions shall constitute additional covenants and agreements by Grantor:

Section 4.01. Non-Residential Status of Premises. Grantor represents and warrants to Grantee that neither all of the Premises nor any part thereof is to be used as a dwelling place by Grantor at the time this Deed of Trust is entered into.

Section 4.02. Release. Upon payment of all sums secured by this Deed of Trust and in accordance with the terms of the Loan Agreement, Grantee shall cause Trustee to release this Deed of Trust and shall produce for Trustee the Note. Grantor shall pay all costs of recordation and shall pay the statutory Trustee's fees. If Grantee shall not produce the Note as aforesaid, then Grantee, upon notice in accordance with Section 4.07 from Grantor to Grantee, shall obtain, at Grantee's expense, and file any lost instrument bond required by Trustee or pay the cost thereof to effect the release of this Deed of Trust.

Section 4.03. Applicable Law. This Deed of Trust shall be governed by, construed under and interpreted and enforced in accordance with the laws of the State of Colorado.

Section 4.04. Forbearance. Grantee shall not be deemed to waive any of Grantee's rights or remedies under this Deed of Trust unless such waiver be express in writing and signed by or on behalf of Grantee. No delay, omission or forbearance by Grantee in exercising any of Grantee's rights or remedies shall operate as a waiver of such rights or remedies. A waiver in writing on one occasion shall not be construed as a waiver of any right or any remedy on any future occasion.

Section 4.05. Time. Time is and shall be the essence of this Deed of Trust and the covenants and agreements by Grantor.

Section 4.06. Captions. Any captions or headings preceding the text of separate sections, paragraphs and sub-paragraphs hereof are solely for reference purposes

and shall not affect the meaning, construction, interpretation or effect of the text.

Section 4.07. Notices. All notices, requests, demands and other communications under this Deed of Trust or the Note shall be in writing and shall be deemed to have been duly given: (i) to Grantor when personally delivered to any office of Grantor, (ii) to Grantee when personally delivered to an officer of Grantee authorized to receive such notices or (Hi) three (3) days after deposited in the United States Mail, certified mail with return receipt requested and with all postage prepaid, addressed as follows:

(a) To Grantee: THE STEPHEN A. GROVE DESCENDANTS TRUST

  P.O. Box 1807

  Covington, GA 30015

(b) To Grantor: BLUE RIDGE REAL ESTATE COMPANY

  P.O. Box 707

  Blakeslee, Pennsylvania 18610

Either party may, by written notice to the other, designate a different address for receiving notices hereunder; provided, however, that no change in Grantor's address for receiving notices hereunder shall be effective until Grantee has actually received notice thereof. The foregoing address of Grantor constitutes the mailing address of the debtor, and the foregoing address of Grantee constitutes an address of the secured party from which information concerning the security interest may be obtained.

Section 4.08. Severability. Wherever possible, each provision of this Deed of Trust shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Deed of Trust shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Deed of Trust.

Section 4.09. Definitions. The word "Grantor" as used herein shall include the heirs, legal representatives, successors and assigns of Grantor as if so specified at length throughout this Deed of Trust, and all covenants, agreements, duties, obligations, liabilities and responsibilities of Grantor shall be binding upon and enforceable against the heirs, legal representatives, successors and assigns of Grantor. The word "Grantor" as used herein shall also include all parties executing this Deed of Trust as Grantor, and each of them, who shall be jointly and severally liable under this Deed of Trust, should more than one Grantor execute this Deed of Trust; and shall include the masculine and feminine genders, regardless of the gender of Grantor or any of them, and shall include partnerships, corporations and other legal entities. The word "Gra ntee" as used herein shall include the transferees, successors, legal representatives and assigns of Grantee as if so specified at length throughout this Deed of Trust, and all rights of Grantee under this Deed of Trust shall inure to the benefit of the transferees, successors, legal representatives and assigns of Grantee.

Section 4.10. WAIVERS. GRANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT GRANTOR MAY HAVE UNDER THE CONSTITUTION OF THE STATE OF COLORADO OR THE CONSTITUTION OF THE UNITED STATES OF AMERICA TO NOTICE OR TO A JUDICIAL HEARING PRIOR TO THE EXERCISE OF ANY RIGHT OR REMEDY PROVIDED TO GRANTEE BY THIS DEED OF TRUST, AND WAIVES GRANTOR'S RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE UNDER POWER DULY CONSUMMATED IN ACCORDANCE WITH THE PROVISIONS OF THIS DEED OF TRUST ON THE GROUND (IF SUCH BE THE

CASE) THAT THE SALE WAS CONSUMMATED WITHOUT PRIOR NOTICE OR JUDICIAL HEARING OR BOTH. GRANTOR FURTHER HEREBY EXPRESSLY WAIVES ALL HOMESTEAD EXEMPTION RIGHTS, IF ANY, WHICH GRANTOR OR GRANTOR'S FAMILY MAY HAVE PURSUANT TO THE CONSTITUTION OF THE UNITED STATES, THE STATE OF COLORADO OR ANY OTHER STATE OF THE UNITED STATES, IN AND TO THE PREMISES AS AGAINST THE COLLECTION OF THE INDEBTEDNESS, OR ANY PART THEREOF. ALL WAIVERS BY GRANTOR IN THIS PARAGRAPH HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY BY GRANTOR, AFTER GRANTOR HAS BEEN AFFORDED AN OPPORTUNITY TO BE INFORMED BY COUNSEL OF GRANTOR'S CHOICE AS TO POSSIBLE ALTERNATIVE RIGHTS. GRANTOR'S EXECUTION OF THIS DEED OF TRUST SHALL BE CONCLUSIVE EVIDENCE OF THE WAIVER AND THAT SUCH WAIVER HAS BEEN VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY MADE.

/s/ EDD (initial)

IN WITNESS WHEREOF, Grantor has executed this Deed of Trust under seal and Grantor has delivered this Deed of Trust to Grantee, all the day and year first written above.

GRANTOR:

BLUE RIDGE REAL ESTATE COMPANY

By: /s/ Eldon D. Dietterick

Name: Eldon D. Dietterick

Title: Executive Vice President and Treasurer

(CORPORATE SEAL)

STATE OF PENNSYLVANIA )

) ss.

COUNTY OF CARBON

)

The foregoing instrument was acknowledged before me this 25th day of February, 2010, by Eldon D. Dietterick, the Executive Vice President and Treasurer of Blue Ridge Real Estate Company, a Pennsylvania corporation.

/s/ John E. Riley

(SEAL)

COMMONWEALTH OF PENNSYLVANIA

Notarial Seal

John E. Riley, Notary Public

Kidder Twp., Carbon County

My Commission Expires May 14, 2011

Member, Pennsylvania Association of Notaries

EX-10

PURCHASE MONEY PROMISSORY NOTE

February 25, 2010

$670,000.00

FOR VALUE RECEIVED, the undersigned BLUE RIDGE REAL ESTATE COMPANY, a Pennsylvania corporation, (the "Borrower"), promises to pay to the order of THE STEPHEN A GROVE DESCENDANTS TRUST (the "Lender"), at P.O. Box 1807, Covington, Georgia 30015 or at such other place as Lender may direct from time to time in writing, the principal sum of SIX HUNDRED SEVENTY THOUSAND AND NO/100 DOLLARS ($670,000.00), or so much thereof as remains unpaid, together with interest thereon at the rate or rates per annum designated herein computed on the basis of a 360-day year for the actual number of days in each interest period.

1.

Interest Rate: From the date hereof through and until repaid in full, this Note shall bear interest at the rate of seven percent (7%) per annum.

2.

Purchase Money Promissory Note: This Note evidences a purchase money loan, the proceeds of which have been used by Borrower to purchase the Property, as described below.

3.

Repayment Terms: Interest only payments on the principal amount outstanding, each in the amount of $3,908.33, shall be due and payable in arrears on the first (1st) day of each month beginning on April 1, 2010, and continuing on the first (1st) day of each month thereafter until February 28, 2015 (the "Maturity Date"), at which date the entire principal balance and all accrued and unpaid interest shall be due and payable.

4.

Application of Payments: All payments on this Note shall be applied, first to accrued interest, then to fees or late charges, if any, then to principal due.

5.

Prepayment: Except as may be otherwise herein specifically provided, the Borrower shall have the privilege to prepay the principal and any accrued but unpaid interest in full or in part at anytime and from time to time, without penalty or without premium.

6.

Interest After Default: Any past due installments, whether of principal or interest, shall bear interest at the rate or rates herein set out above until paid, except that after this Note shall become due, whether by acceleration after an Event of Default (as that term is hereinafter defined), or on and after the Maturity Date, this Note shall, at Lender's option, bear interest at the lesser of (a) the highest contract rate, if any, permitted by applicable law or (b) fifteen percent (15%) per annum. The applicable interest rate herein shall apply whether before or after any judgment hereon.

7.

Late Charge: Time is of the essence of this Note. To the extent not prohibited by law, a late charge of five percent (5%) or the applicable statutory maximum, whichever is greater, shall be assessed on any payment remaining past due for ten (10) days or more.

8.

Collateral: This Note is secured by that certain Deed of Trust, dated February 25, 2010 (the "Deed of Trust"), by and among the Borrower, the Public Trustee of Larimer County, Colorado, as Trustee, and Lender, as Beneficiary, by which the real property described therein (the "Property") has been granted and conveyed to Trustee. The terms and conditions of the Deed of Trust shall be considered a part hereof to the same extent as if written herein.

- 1 -

9.

Joint and Several Liability: The Borrower, if more than one person, shall be jointly and severally liable under this Note.

10.

Events of Default Acceleration: The following shall constitute defaults or events of default hereunder ("Events of Default"):

(a) Failure by the Borrower to pay, any of the monthly payments of interest due or principal and interest due hereunder, which failure is not cured within ten (10) days after notice thereof from Lender to Borrower; (b) failure of the Borrower to keep, perform or observe any agreement, covenant, or condition contained herein which failure to perform is not cured within twenty (20) days after notice thereof from the Lender to the Borrower; or (c) the failure by the Borrower to keep, perform or observe any agreement, covenant, or condition contained in the Deed of Trust which failure is not cured within the applicable cure or grace period contained therein, if any. The remaining unpaid principal of this Note and all accrued and unpaid interest thereon shall immediately become due and payable, at the option of the holder hereof, upon the occurrence of an Event of Default. The Lender shall be entitled to recover all expenses, including reasonable attorneys' fees and expenses of legal counsel, actually incurred by the Lender in any way arising from or relating to the enforcement or attempted enforcement of this Note and the related Lease or any document or other document and the collection or attempted collection, whether by litigation or otherwise, of this Note. All notices required or permitted under this Note, shall be delivered in the manner provided in the Deed of Trust.

11.

Governing Law: Changes: This Note may not be changed orally and shall be governed by and construed in accordance with the laws of the State of Colorado without regard to principles of conflict of laws.

12.

Jurisdiction: Venue: The Borrower (a) submits to personal jurisdiction in the State of Colorado, the courts thereof and the United States District Courts sitting therein, for the enforcement of this Note, (b) waives any and all personal rights under the law of any jurisdiction to object on any basis (including, without limitation, inconvenience of forum) to jurisdiction or venue within the State of Colorado for the purpose of litigation to enforce this Note, and (c) agrees that service of process may be made upon the Borrower in any manner prescribed by applicable federal rules of civil procedure or by applicable local rules or laws of civil procedure for the giving of notice to the Borrower. Nothing herein contained, however, shall prevent the Lender from bringing any action or exercising any rights against any security and against the Borrower personally, and against any assets of the Borrower, within any other state or jurisdiction.

13.

Payments Not to Violate Law: Nothing herein contained nor any transaction related thereto shall be construed or so operate as to require the Borrower to pay interest at a rate greater than it is now lawful in such case to contract for under applicable law, or to make any payment or to do any act contrary to applicable law, and the Lender shall reimburse the Borrower for any interest paid in excess of the highest rate allowed by applicable law or any other payment which may inadvertently be required by the Lender to be paid contrary to applicable law; and if any clauses or provisions herein contained operate or would prospectively operate to invalidate this Note, in whole or in part, then such clauses and provisions only shall be held for naught, as though not herein contained, and the remainder of this Note shall remain operative and in full force and effect.

- 2-

13.

Miscellaneous: The Borrower and all endorsers and sureties, if any, hereby waive presentment for payment, demand, protest, notice of nonpayment or dishonor and of protest, and any and all other notices and demands whatsoever, and agree to remain bound under this Note until the principal and interest are paid in full, notwithstanding any extensions of time for payment which may be granted even though the period or periods of extension be indefinite and notwithstanding any inaction by, or failure to assert any legal rights available to, the holder of this Note. Borrower acknowledges that Lender may reproduce (by electronic means or otherwise) any of the documents evidencing and/or securing this Note and thereafter may destroy the original documents. Borrower does hereby agree that any document so reproduced shall be the binding obligation of Borrower enforceable and admissible in evidence again st it to the same extent as if the original documents had not been destroyed. If this Note is a demand instrument, then the statement of a maturity date, the requirement for periodic payments of principal and/or interest, or the recitation of defaults and the right of the Lender to declare this Note due and payable upon any such default shall not constitute an election by the Lender to waive its right to demand payment at any time as specified in any demand or call provision as the Lender in its sole discretion may deem appropriate. The proceeds of this Note shall be used solely to acquire or carryon a business, professional, investment, or commercial enterprise or activity.

IN WITNESS WHEREOF, this Note has been executed under seal the day and year first above written.

"Borrower"

BLUE RIDGE REAL ESTATE COMPANY

By: /s/ Eldon D. Dietterick

Name: Eldon D. Dietterick

Title: Executive Vice President and Treasurer

(CORPORATE SEAL)

- 3 -

EX-31

EXHIBIT 31.1

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

I, Patrick M. Flynn, certify that:

1. I have reviewed this Quarterly report on Form 10-Q for the period ended January 31, 2010 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/ Patrick M. Flynn

Patrick M. Flynn

Chief Executive Officer and President

Date:  March 17, 2010

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, 2010 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 17, 2010

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, 2010, 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 17, 2010

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, 2010, 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 17, 2010