content: FORM 10-Q
  
  
                                    UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
  (Mark One)
  [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934
  For the quarterly period ended  JANUARY 31, 1998
  
                                         OR
  
  [ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
       EXCHANGE ACT OF 1934
  For the transition period from  ____________  to ____________
  
  Commission file number                       33-1406
  
                               BUCK HILL FALLS COMPANY
               (Exact name of registrant as specified in its charter)
  
           PENNSYLVANIA                                    24-0536840
  (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                         Identification No.)
  
                  CRESCO ROAD, BUCK HILL FALLS, PENNSYLVANIA 18323
                 (Address of principal executive offices)(Zip Code)
  
                                   (717) 595-7511
                (Registrant's telephone number, including area code)
  
  
                (Former name, former address and former fiscal year,
                            if changed since last report)
  
           Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
  1934  during  the  preceding  12 months  (or for such  shorter  period  that the
  registrant was required to file such reports),  and (2) has been subject to such
  filing requirements for the past 90 days.
  
  Yes     X       No ___
  
           As of January 31,  1998,  the  registrant  had 79,811  shares of Common
  Stock and  24,400  shares of Common  Stock  Class A, no par  value,  issued  and
  outstanding.
  
  <PAGE>
  
                                      FORM 10-Q
  
                               BUCK HILL FALLS COMPANY
  
                                        INDEX
  
                                                                              Page
  
  Part I:           Financial Information
  
  Item 1.  Financial Statements
  
                    Condensed Consolidated Balance Sheet -
                    January 31, 1998 and October 31, 1997                      1
  
                    Condensed Consolidated Statement of Operations -
                    Three Months Ended January 31, 1998 and 1997               2
  
                    Condensed Consolidated Statement of Cash Flows -
                    Three Months Ended January 31, 1998 and 1997               3
  
                    Notes to Condensed Consolidated Financial Statements     4-5
  
  Item 2.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations            6-9
  
  Part II:          Other Information                                         10
  
                    Signatures                                                11
  
  
  
  <PAGE>
                           PART I - FINANCIAL INFORMATION
                            ITEM 1. FINANCIAL STATEMENTS
  
                       BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
                        CONDENSED CONSOLIDATED BALANCE SHEET
  <TABLE>
  <CAPTION>
  -------------------------------------------------------------------------------------
                                                        JANUARY 31,
                                                           1998             OCTOBER 31,
                                                        (UNAUDITED)            1997 *
  -------------------------------------------------------------------------------------
  <S>                                                  <C>                 <C>        
  
                                       ASSETS
  
  CURRENT ASSETS:
      Cash                                             $    59,377         $    76,973
      Accounts receivable, net                             328,416             328,854
      Prepaid expenses and other current assets             24,406              21,659
                                                       -----------         -----------
  
            Total current assets                           412,199             427,486
  
  RESTRICTED CASH                                           77,577              69,122
  
  PROPERTY, PLANT AND EQUIPMENT, Net                     2,616,584           2,643,058
  
  DEFERRED COSTS, Net                                        1,959               3,143
                                                       -----------         -----------
  
                 TOTAL                                 $ 3,108,319         $ 3,142,809
                                                       ===========         ===========
  
                        LIABILITIES AND STOCKHOLDERS' EQUITY
  
  CURRENT LIABILITIES:
      Current portion of long-term debt                $   444,606         $   504,268
      Accounts payable, trade                               39,655             124,095
      Accrued expenses and other                           289,794              92,411
      6-1/4% subordinated notes                            140,000             140,000
                                                       -----------         -----------
  
            Total current liabilities                      914,055             860,774
  
  CUSTOMER DEPOSITS                                         77,577              69,122
  
  LONG-TERM DEBT                                           903,578             912,812
                                                       -----------         -----------
  
            Total liabilities                            1,895,210           1,842,708
                                                       -----------         -----------
  
  STOCKHOLDERS' EQUITY:
      Common stock                                       1,720,661           1,720,661
      Contributed capital                                  799,227             799,227
      Deficit                                           (1,306,779)         (1,219,787)
                                                       -----------         -----------
  
            Total stockholders' equity                   1,213,109           1,300,101
                                                       -----------         -----------
  
                 TOTAL                                 $ 3,108,319         $ 3,142,809
                                                       ===========         ===========
  
  *Condensed from audited financial statements
  
  ------------------------------------------------------------------------------------
  </TABLE>
                   See notes to condensed consolidated financial statements.
  
                                        -1-
  <PAGE>
                       BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
                   CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                     (UNAUDITED)
  
  ----------------------------------------------------------------------
                                                  THREE MONTHS ENDED
                                                      JANUARY 31,
                                                1998              1997
  ----------------------------------------------------------------------
  REVENUES                                   $ 328,150         $ 323,914
  
  COST OF REVENUES                             344,614           355,154
                                             ---------         ---------
  
  GROSS LOSS FROM OPERATIONS                   (16,464)          (31,240)
  
  GENERAL AND ADMINISTRATIVE EXPENSES           54,385            81,461
                                             ---------         ---------
  
  LOSS FROM OPERATIONS                         (70,849)         (112,701)
                                             ---------         ---------
  
  OTHER (EXPENSE) INCOME:
       Interest expense                        (32,634)          (49,503)
       Miscellaneous                            14,476            13,949
       Gain on sale of equipment                 2,015                --
                                             ---------         ---------
  
                  Other expense, net           (16,143)          (35,554)
                                             ---------         ---------
  
  NET LOSS                                   $ (86,992)        $(148,255)
                                             =========         =========
  
  WEIGHTED AVERAGE NUMBER OF SHARES
       OUTSTANDING                             101,090            80,093
                                             =========         =========
  
  NET LOSS PER COMMON SHARE:
       Basic                                 $   (0.86)        $   (1.85)
                                             =========         =========
  
       Diluted                               $   (0.86)        $   (1.85)
                                             =========         =========
  --------------------------------------------------------------------------------
              See notes to condensed consolidated financial statements.
  
                                        -2-
  <PAGE>
                       BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                     (UNAUDITED)
  <TABLE>
  <CAPTION>
  -----------------------------------------------------------------------------------
                                                             THREE MONTHS ENDED
                                                                 JANUARY 31,
                                                            1998              1997
  -----------------------------------------------------------------------------------
  <S>                                                    <C>               <C>       
  CASH PROVIDED BY:
       OPERATIONS:
          Net loss                                       $ (86,992)        $(148,255)
          Gain on sale of equipment                         (2,015)
          Adjustments for noncash charges,
              Depreciation and amortization                 53,044            55,209
          Changes in assets and liabilities                111,818           194,530
                                                         ---------         ---------
  
                  Net cash provided by operations           75,855           101,484
                                                         ---------         ---------
  
       INVESTING:
          Purchase of property and equipment               (26,570)          (13,753)
          Proceeds from sale of equipment                    2,015
                                                         ---------         ---------
  
                  Net cash used in investing               (24,555)          (13,753)
                                                         ---------         ---------
  
       FINANCING:
          Proceeds from issuance of debt                   115,338           100,000
          Repayment of debt                               (184,234)         (199,479)
          Proceeds from issuance of stock                                     41,579
                                                         ---------         ---------
  
                  Net cash used in financing               (68,896)          (57,900)
                                                         ---------         ---------
  
  (DECREASE) INCREASE IN CASH                              (17,596)           29,831
  
  CASH, BEGINNING OF PERIOD                                 76,973           106,703
                                                         ---------         ---------
  
  CASH, END OF PERIOD                                    $  59,377         $ 136,534
                                                         =========         =========
  
  CASH PAID FOR,
       Interest                                          $  32,634         $  49,503
                                                         =========         =========
  </TABLE>
  
  --------------------------------------------------------------------------------
              See notes to condensed consolidated financial statements.
  
                                        -3-
  <PAGE>
  
                       BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (UNAUDITED)
  ------------------------------------------------------------------------------
  
  NOTE 1:  BASIS OF PRESENTATION
  
                Although the interim condensed  consolidated  financial statements
  of Buck Hill Falls Company and Subsidiary (the  "Company") are unaudited,  it is
  the opinion of the Company's  management that all normal  recurring  adjustments
  necessary for a fair statement of the results for the interim periods  presented
  have been  reflected  therein.  The results of operations for any interim period
  are not  necessarily  indicative  of results that may be expected for the entire
  year.
  
                These   statements   should  be  read  in  conjunction   with  the
  consolidated  financial  statements  and related notes included in the Company's
  annual report on Form 10-K for the year ended October 31, 1997.
  
  
  NOTE 2:  CHANGES IN COMPONENTS OF COMMON STOCK CLASS A
  <TABLE>
  <CAPTION>
                                                                                           STOCK
                                    ...COMMON STOCK...          .STOCK SUBSCRIBED.     SUBSCRIPTION
                                   SHARES       AMOUNT         SHARES       AMOUNT      RECEIVABLE
  <S>                            <C>         <C>              <C>         <C>          <C>      
  Balance, October 31, 1997        24,400      $343,811         4,200       $84,190      $(84,190)
  Common Stock Issued
  Common Stock Subscribed
                                   ------      --------         -----       -------      -------- 
  
  Balance, January 31, 1998        24,400      $343,811         4,200       $84,190      $(84,190)
                                   ======      ========         =====       =======      ======== 
  </TABLE>
  
                                        -4-
  <PAGE>
  
  BUCK HILL FALLS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (UNAUDITED)
  ------------------------------------------------------------------------------
  
  NOTE 3:  EARNINGS PER SHARE
  
                In 1997,  the Company  adopted  Statement of Financial  Accounting
  Standards  ("SFAS") No. 128, "Earnings Per Share," which changed the computation
  of earnings  per share  ("EPS") and  requires  presentation  of two new amounts,
  basic and diluted EPS, and additional informational disclosures. The adoption of
  SFAS No. 128 is required for all reporting  periods after  December 15, 1997 and
  requires restatement for all prior periods The adoption of SFAS No. 128 resulted
  in the restatement of the Company's January 31, 1997 EPS, as follows:
  
       Previously reported
           Primary fully diluted        $(1.85)
  
       Restated amounts:
           Basic EPS                    $(1.85)
           Diluted EPS                  $(1.85)
  
            The following data show the amounts used in computing earnings per
  share and the  effects of income and the  weighted  average  number of shares of
  dilutive potential common stock for the years ended January 31, 1998 and 1997:
  
                                        INCOME       COMMON SHARES
                                       NUMERATOR      DENOMINATOR     EPS
       January 31, 1998
           Basic and diluted EPS
                Net loss               $(86,992)        101,090      $(.86)
                                      =========       =========      =====
  
       January 31, 1997
           Basic and diluted EPS
                Net loss              $(148,255)         80,093     $(1.85)
                                      =========       =========      =====
  
       The 4,200  shares  of  Common  Stock A  Subscriptions  Receivable  were not
       included in computing diluted EPS because their effects were antidilutive.
  
  
  
                                        -5-
  
  -----------------------------------------------------------------------------
  
  <PAGE>
  
  FORM 10-Q
  
  BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
  ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
  GENERAL
  
           The  Company's  business,  insofar as it relates  to the  provision  of
  recreational  facilities,  is  largely  seasonal  in  nature.  As a result,  the
  Company's revenues and cost of revenues typically increase  significantly in its
  third and fourth fiscal quarters.
  
  
  RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
  JANUARY 31, 1998
  COMPARED TO THE THREE MONTHS ENDED
  JANUARY 31, 1997
  
           Revenues  increased  approximately  $4,300 for the three  months  ended
  January 31, 1998,  as compared to the same period in the prior fiscal year.  The
  Company had an increase of $2,400 in its cottage  inspections  due to management
  increasing  opportunities  to bill on a more timely and  accurate  basis,  and a
  $4,000 increase in finance charges.  Additionally,  a $7,600 increase in plowing
  and cindering  revenues was due to a policy change whereby plowing and cindering
  will no longer be included in the dues, but instead invoiced  separately.  These
  increases  were offset by a $9,700  decrease in the company's dues which was the
  effect of a management  decision to treat  unimproved  lots as being exempt from
  dues. The decision was based on an evaluation by management  which  identified a
  lack of continuity in the billing for unimproved lots which was a primary reason
  for collection efforts to become increasingly difficult.
  
           Cost of revenues decreased  approximately  $10,500 for the three months
  ended January 31, 1998, as compared to the same period in the prior fiscal year.
  Salaries  increased  $20,000 due to the hiring of a new full time  mechanic  for
  golf  maintenance,  the  increased  salary  of the  new  general  manager  and a
  management  decision  to keep four golf  course  workers  on the  payroll  until
  December in order to take  advantage  of good  weather  and  further  reduce the
  amount of work that will be  necessary  to  prepare  the  greens  for the spring
  season.  Snowplowing  expenses  increased  $2,800  due to the  plowing  expenses
  associated with the golf cottage community as discussed above. Auto expense also
  increased  $2,500  due to major  repairs  required  for three  trucks  and a new
  preventative  maintenance program instituted in an effort to extend the lives of
  the companies  vehicles.  Offsetting  the increases in the above expenses was an
  $8,000  decrease in repairs  and  maintenance  expense  which was related to the
  utilization of the full-time mechanic.  Also, there was a substantial  reduction
  in the cost of insurance of $6,100 due to an aggressive  effort by management to
  reduce insurance  expense through a restructuring of the existing policies which
  began in fiscal 1997 but the benefit of which is being  realized in fiscal 1998.
  Road and path expense also decreased $4,200 due to a milder winter but also less
  
                                        -6-
  
  <PAGE>
  
  maintenance  was required  since the roads  throughout the grounds are in better
  condition due to road maintenance programs instituted in fiscal 1997. Contracted
  maintenance  decreased  $4,000 due to an effort to better  utilize the company's
  personnel for repairs where more expensive contractors may have been used in the
  past.  Fuel  expense  decreased  approximately  $2,300  due to prior  policy  of
  refueling  all  machinery at the close of the season which was not  continued in
  fiscal 98 and an overall  drop in fuel  prices as compared to the same period in
  1997. Supplies expense also decreased $2,500 due to increased control and better
  utilization of existing inventories while miscellaneous expense decreased $8,700
  due to better allocation of expenditures among expense categories by management.
  
           General and administrative costs decreased approximately $27,000 due to
  a substantial  drop in  professional  fees of $21,100 in  particular  legal fees
  associated with the issuance of the common stock A subscription  that were later
  allocated to the issuance. Also, there was a $4,100 decrease in payroll due to a
  more  accurate  allocation  from  administration  expense to cost of sales while
  supplies  expense  decreased  $1,800 due to better  utilization  and controls of
  unused supplies.
  
           Other  income/expense   decreased   approximately  $19,000  due  almost
  entirely to the $17,000  decrease in  interest  expense  caused by  management's
  continued policy to utilize  available cash to pay down the line of credit which
  has been reduced substantially when compared to the same period ending 1997.
  
  
  
                                        -7-
  <PAGE>
  
  
  LIQUIDITY AND CAPITAL RESOURCES
  
           At January  31,1998,  the Company had a working  capital  deficiency of
  $501,856  as compared  to  $649,143  in the first  quarter of 1997.  Included in
  current  liabilities  is  the  entire  $374,000  outstanding  on  the  Company's
  $1,000,000  line of credit with a bank  (described in the following  paragraph),
  which is  payable on  demand.  An  additional  $55,554  in  scheduled  principal
  payments on long-term debt are due within the next twelve months.
  
           On July 24, 1992, the Company entered into a loan agreement with a bank
  relating to a secured  revolving line of credit in the amount of $1,000,000 (the
  "Revolving  Credit  Facility").  Amounts  borrowed  under the  Revolving  Credit
  Facility bear interest at the prime rate (8.5% at January  31,1998) plus 1-1/4%.
  Pursuant  to the  loan  agreement,  approximately  2,600  acres of land and land
  improvements  located in Barrett  Township,  Monroe  County,  Pennsylvania,  are
  pledged as  collateral,  along  with dues,  assessments  and fee  revenues.  The
  Revolving Credit Facility is available through May 24, 1998, contingent upon the
  Company  maintaining  a  satisfactory  financial  position and subject to annual
  review of the Company's  financial  statements by the bank.  The loan  agreement
  with the bank  provides  that  if,  in the  opinion  of the  authorized  lending
  officers of the bank, the Company's credit worthiness  materially declines,  the
  credit  line will cease to be  available  for  future  draws,  and any  existing
  balance will be required to be fully amortized over a reasonable term.
  
           The Company has been required to make certain improvements in its water
  system.  In May 1995, the Company  entered into a $900,000 loan agreement with a
  bank to refinance the existing debt and to complete the improvements.  Principal
  is payable in monthly installments of $8,985 over a 20-year amortization period.
  Interest  is  payable at the bank's  base rate  (8.5% at January  31,1998)  plus
  1-1/4%.  The loan  matures  in May 2015 and is secured  by a first  mortgage  on
  approximately  2,600  acres of land and land  improvements  located  in  Barrett
  Township, Monroe County, Pennsylvania and a collateral assignment of all revenue
  and assessments of the Company's water operations.
  
           The Company expects to meet its current liabilities (other than payment
  of the entire $374,000 under the Revolving Credit Facility,  which, although not
  currently  due, is  classified as a current  liability  because of the Revolving
  Credit Facility's demand terms) through increased collections as a result of the
  seasonal  increase in revenues which typically occurs during the Company's third
  and fourth quarters through the provision of recreational  services. The Company
  does not anticipate that the bank will demand payment under the Revolving Credit
  Facility.
  
  
                                        -8-
  <PAGE>
  
  
           Overall cash for the quarter ended January 31, 1998  decreased  $17,596
  as compared to an increase of $29,831 for the same period in 1997. Cash used for
  investing  activities  increased  $10,802  as  capital  projects  including  the
  purchase of computer equipment of $2,200, golf maintenance  equipment of $18,849
  and water pumping  equipment of $5,921 accounted for the majority of the change.
  Net  repayment  of debt  amounted  to $68,896 in 1998 as  compared to $94,479 in
  1997.  However,  in 1997 an additional $41,579 was provided from the issuance of
  Class A common  stock  resulting  in the  majority  of the  decrease  in cash of
  $47,247 between 1998 and 1997.
  
           At January 31, 1998,  the Company had drawn  $374,000 on its $1,000,000
  line of credit, leaving $626,000 available.
  
           The  Company  incurred a loss of  $86,992  for the three  months  ended
  January 31, 1998 and at January 31, 1998,  the Company has a cumulative  deficit
  of  $1,306,779  and a working  capital  deficiency  of  $486,804.  Although  the
  Company's  line of credit is  available  through  May 24,  1998,  the ability to
  borrow  under  the  line  is  contingent  upon  certain  factors.  As a  result,
  continuation of the Company in its present form is dependent upon the successful
  maintenance  of its debt terms,  its ability to obtain  additional  financing if
  needed and the eventual achievement of sustained profitable operations.
  
           Management   believes  that   revisions  in  the  Company's   operating
  requirements,  including an increase in dues from $2,800 to $2,950  provides the
  opportunity for the Company to continue as a going concern. However, there is no
  assurance  that  management's  actions  will be  successful  or, if they are not
  successful, that the Company would be able to continue as a going concern.
  
  
                                        -9-
  <PAGE>
  
                             PART II - OTHER INFORMATION
  
  
  Item 1.       Legal Proceedings
  
                    None
  
  Item 2.       Changes in Securities
  
                    None
  
  Item 3.       Defaults Upon Senior Securities
  
                    None
  
  Item 4.       Submission of Matters to a Vote of Security Holders
  
                    None
  
  Item 5.       Other Information
  
                    None
  
  Item 6.       Exhibits and Reports on Form 8-K
  
                    Exhibit 27 - Financial Data Schedule
  
  
                                        -10-
  <PAGE>
  
                                      SIGNATURE
  
  
           Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
  the  registrant  has duly  caused  this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
                                        BUCK HILL FALLS COMPANY
                                              (Registrant)
  
  Date: March 12, 1998                By: /s/ David B. Ottaway, Chairman
                                      David B. Ottaway, Chairman
  
  
  Date: March 14, 1998                By: /s/ Anthony C. Bowe
                                      Anthony C. Bowe, Vice-President,
                                      Treasurer and Chief Financial Officer
                                     (Principal Financial and Accounting Officer)
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 27064}]
metadata_filer: {"company-data": {"conformed-name": "BUCK HILL FALLS CO /PA/", "cik": "0000783283", "assigned-sic": "6500", "irs-number": "240536840", "state-of-incorporation": "PA", "fiscal-year-end": "1031"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "033-01406-W", "film-number": "98565883"}, "business-address": {"street1": "PO BOX 426", "city": "BUCK HILL FALLS", "state": "PA", "zip": "18323", "phone": "7175957511"}, "mail-address": {"street1": "PO BOX 426", "city": "BUCK HILL FALLS", "state": "PA", "zip": "18323"}}
text: FORM 10-Q
  
                                    UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
  (Mark One)
  [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934
  For the quarterly period ended  JANUARY 31, 1998
  
                                         OR
  
  [ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
       EXCHANGE ACT OF 1934
  For the transition period from  ____________  to ____________
  
  Commission file number                       33-1406
  
                               BUCK HILL FALLS COMPANY
               (Exact name of registrant as specified in its charter)
  
           PENNSYLVANIA                                    24-0536840
  (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                         Identification No.)
  
                  CRESCO ROAD, BUCK HILL FALLS, PENNSYLVANIA 18323
                 (Address of principal executive offices)(Zip Code)
  
                                   (717) 595-7511
                (Registrant's telephone number, including area code)
  
                (Former name, former address and former fiscal year,
                            if changed since last report)
  
           Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
  1934  during  the  preceding  12 months  (or for such  shorter  period  that the
  registrant was required to file such reports),  and (2) has been subject to such
  filing requirements for the past 90 days.
  
  Yes     X       No ___
  
           As of January 31,  1998,  the  registrant  had 79,811  shares of Common
  Stock and  24,400  shares of Common  Stock  Class A, no par  value,  issued  and
  outstanding.
  FORM 10-Q
  
                               BUCK HILL FALLS COMPANY
  
                                        INDEX
  
                                                                              Page
  
  Part I:           Financial Information
  
  Item 1.  Financial Statements
  
                    Condensed Consolidated Balance Sheet -
                    January 31, 1998 and October 31, 1997                      1
  
                    Condensed Consolidated Statement of Operations -
                    Three Months Ended January 31, 1998 and 1997               2
  
                    Condensed Consolidated Statement of Cash Flows -
                    Three Months Ended January 31, 1998 and 1997               3
  
                    Notes to Condensed Consolidated Financial Statements     4-5
  
  Item 2.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations            6-9
  
  Part II:          Other Information                                         10
  
                    Signatures                                                11
  PART I - FINANCIAL INFORMATION
                            ITEM 1. FINANCIAL STATEMENTS
  
                       BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
                        CONDENSED CONSOLIDATED BALANCE SHEET
  -------------------------------------------------------------------------------------
                                                        JANUARY 31,
                                                           1998             OCTOBER 31,
                                                        (UNAUDITED)            1997 *
  -------------------------------------------------------------------------------------
  ASSETS
  
  CURRENT ASSETS:
      Cash                                             $    59,377         $    76,973
      Accounts receivable, net                             328,416             328,854
      Prepaid expenses and other current assets             24,406              21,659
                                                       -----------         -----------
  
            Total current assets                           412,199             427,486
  
  RESTRICTED CASH                                           77,577              69,122
  
  PROPERTY, PLANT AND EQUIPMENT, Net                     2,616,584           2,643,058
  
  DEFERRED COSTS, Net                                        1,959               3,143
                                                       -----------         -----------
  
                 TOTAL                                 $ 3,108,319         $ 3,142,809
                                                       ===========         ===========
  
                        LIABILITIES AND STOCKHOLDERS' EQUITY
  
  CURRENT LIABILITIES:
      Current portion of long-term debt                $   444,606         $   504,268
      Accounts payable, trade                               39,655             124,095
      Accrued expenses and other                           289,794              92,411
      6-1/4% subordinated notes                            140,000             140,000
                                                       -----------         -----------
  
            Total current liabilities                      914,055             860,774
  
  CUSTOMER DEPOSITS                                         77,577              69,122
  
  LONG-TERM DEBT                                           903,578             912,812
                                                       -----------         -----------
  
            Total liabilities                            1,895,210           1,842,708
                                                       -----------         -----------
  
  STOCKHOLDERS' EQUITY:
      Common stock                                       1,720,661           1,720,661
      Contributed capital                                  799,227             799,227
      Deficit                                           (1,306,779)         (1,219,787)
                                                       -----------         -----------
  
            Total stockholders' equity                   1,213,109           1,300,101
                                                       -----------         -----------
  
                 TOTAL                                 $ 3,108,319         $ 3,142,809
                                                       ===========         ===========
  
  *Condensed from audited financial statements
  
  ------------------------------------------------------------------------------------
  See notes to condensed consolidated financial statements.
  
                                        -1-
  BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
                   CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                     (UNAUDITED)
  
  ----------------------------------------------------------------------
                                                  THREE MONTHS ENDED
                                                      JANUARY 31,
                                                1998              1997
  ----------------------------------------------------------------------
  REVENUES                                   $ 328,150         $ 323,914
  
  COST OF REVENUES                             344,614           355,154
                                             ---------         ---------
  
  GROSS LOSS FROM OPERATIONS                   (16,464)          (31,240)
  
  GENERAL AND ADMINISTRATIVE EXPENSES           54,385            81,461
                                             ---------         ---------
  
  LOSS FROM OPERATIONS                         (70,849)         (112,701)
                                             ---------         ---------
  
  OTHER (EXPENSE) INCOME:
       Interest expense                        (32,634)          (49,503)
       Miscellaneous                            14,476            13,949
       Gain on sale of equipment                 2,015                --
                                             ---------         ---------
  
                  Other expense, net           (16,143)          (35,554)
                                             ---------         ---------
  
  NET LOSS                                   $ (86,992)        $(148,255)
                                             =========         =========
  
  WEIGHTED AVERAGE NUMBER OF SHARES
       OUTSTANDING                             101,090            80,093
                                             =========         =========
  
  NET LOSS PER COMMON SHARE:
       Basic                                 $   (0.86)        $   (1.85)
                                             =========         =========
  
       Diluted                               $   (0.86)        $   (1.85)
                                             =========         =========
  --------------------------------------------------------------------------------
              See notes to condensed consolidated financial statements.
  
                                        -2-
  BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                     (UNAUDITED)
  -----------------------------------------------------------------------------------
                                                             THREE MONTHS ENDED
                                                                 JANUARY 31,
                                                            1998              1997
  -----------------------------------------------------------------------------------
  CASH PROVIDED BY:
       OPERATIONS:
          Net loss                                       $ (86,992)        $(148,255)
          Gain on sale of equipment                         (2,015)
          Adjustments for noncash charges,
              Depreciation and amortization                 53,044            55,209
          Changes in assets and liabilities                111,818           194,530
                                                         ---------         ---------
  
                  Net cash provided by operations           75,855           101,484
                                                         ---------         ---------
  
       INVESTING:
          Purchase of property and equipment               (26,570)          (13,753)
          Proceeds from sale of equipment                    2,015
                                                         ---------         ---------
  
                  Net cash used in investing               (24,555)          (13,753)
                                                         ---------         ---------
  
       FINANCING:
          Proceeds from issuance of debt                   115,338           100,000
          Repayment of debt                               (184,234)         (199,479)
          Proceeds from issuance of stock                                     41,579
                                                         ---------         ---------
  
                  Net cash used in financing               (68,896)          (57,900)
                                                         ---------         ---------
  
  (DECREASE) INCREASE IN CASH                              (17,596)           29,831
  
  CASH, BEGINNING OF PERIOD                                 76,973           106,703
                                                         ---------         ---------
  
  CASH, END OF PERIOD                                    $  59,377         $ 136,534
                                                         =========         =========
  
  CASH PAID FOR,
       Interest                                          $  32,634         $  49,503
                                                         =========         =========
  --------------------------------------------------------------------------------
              See notes to condensed consolidated financial statements.
  
                                        -3-
  BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (UNAUDITED)
  ------------------------------------------------------------------------------
  
  NOTE 1:  BASIS OF PRESENTATION
  
                Although the interim condensed  consolidated  financial statements
  of Buck Hill Falls Company and Subsidiary (the  "Company") are unaudited,  it is
  the opinion of the Company's  management that all normal  recurring  adjustments
  necessary for a fair statement of the results for the interim periods  presented
  have been  reflected  therein.  The results of operations for any interim period
  are not  necessarily  indicative  of results that may be expected for the entire
  year.
  
                These   statements   should  be  read  in  conjunction   with  the
  consolidated  financial  statements  and related notes included in the Company's
  annual report on Form 10-K for the year ended October 31, 1997.
  
  NOTE 2:  CHANGES IN COMPONENTS OF COMMON STOCK CLASS A
  STOCK
                                    ...COMMON STOCK...          .STOCK SUBSCRIBED.     SUBSCRIPTION
                                   SHARES       AMOUNT         SHARES       AMOUNT      RECEIVABLE
  Balance, October 31, 1997        24,400      $343,811         4,200       $84,190      $(84,190)
  Common Stock Issued
  Common Stock Subscribed
                                   ------      --------         -----       -------      -------- 
  
  Balance, January 31, 1998        24,400      $343,811         4,200       $84,190      $(84,190)
                                   ======      ========         =====       =======      ========
  -4-
  BUCK HILL FALLS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (UNAUDITED)
  ------------------------------------------------------------------------------
  
  NOTE 3:  EARNINGS PER SHARE
  
                In 1997,  the Company  adopted  Statement of Financial  Accounting
  Standards  ("SFAS") No. 128, "Earnings Per Share," which changed the computation
  of earnings  per share  ("EPS") and  requires  presentation  of two new amounts,
  basic and diluted EPS, and additional informational disclosures. The adoption of
  SFAS No. 128 is required for all reporting  periods after  December 15, 1997 and
  requires restatement for all prior periods The adoption of SFAS No. 128 resulted
  in the restatement of the Company's January 31, 1997 EPS, as follows:
  
       Previously reported
           Primary fully diluted        $(1.85)
  
       Restated amounts:
           Basic EPS                    $(1.85)
           Diluted EPS                  $(1.85)
  
            The following data show the amounts used in computing earnings per
  share and the  effects of income and the  weighted  average  number of shares of
  dilutive potential common stock for the years ended January 31, 1998 and 1997:
  
                                        INCOME       COMMON SHARES
                                       NUMERATOR      DENOMINATOR     EPS
       January 31, 1998
           Basic and diluted EPS
                Net loss               $(86,992)        101,090      $(.86)
                                      =========       =========      =====
  
       January 31, 1997
           Basic and diluted EPS
                Net loss              $(148,255)         80,093     $(1.85)
                                      =========       =========      =====
  
       The 4,200  shares  of  Common  Stock A  Subscriptions  Receivable  were not
       included in computing diluted EPS because their effects were antidilutive.
  
                                        -5-
  
  -----------------------------------------------------------------------------
  FORM 10-Q
  
  BUCK HILL FALLS COMPANY AND SUBSIDIARY
  
  ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
  GENERAL
  
           The  Company's  business,  insofar as it relates  to the  provision  of
  recreational  facilities,  is  largely  seasonal  in  nature.  As a result,  the
  Company's revenues and cost of revenues typically increase  significantly in its
  third and fourth fiscal quarters.
  
  RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
  JANUARY 31, 1998
  COMPARED TO THE THREE MONTHS ENDED
  JANUARY 31, 1997
  
           Revenues  increased  approximately  $4,300 for the three  months  ended
  January 31, 1998,  as compared to the same period in the prior fiscal year.  The
  Company had an increase of $2,400 in its cottage  inspections  due to management
  increasing  opportunities  to bill on a more timely and  accurate  basis,  and a
  $4,000 increase in finance charges.  Additionally,  a $7,600 increase in plowing
  and cindering  revenues was due to a policy change whereby plowing and cindering
  will no longer be included in the dues, but instead invoiced  separately.  These
  increases  were offset by a $9,700  decrease in the company's dues which was the
  effect of a management  decision to treat  unimproved  lots as being exempt from
  dues. The decision was based on an evaluation by management  which  identified a
  lack of continuity in the billing for unimproved lots which was a primary reason
  for collection efforts to become increasingly difficult.
  
           Cost of revenues decreased  approximately  $10,500 for the three months
  ended January 31, 1998, as compared to the same period in the prior fiscal year.
  Salaries  increased  $20,000 due to the hiring of a new full time  mechanic  for
  golf  maintenance,  the  increased  salary  of the  new  general  manager  and a
  management  decision  to keep four golf  course  workers  on the  payroll  until
  December in order to take  advantage  of good  weather  and  further  reduce the
  amount of work that will be  necessary  to  prepare  the  greens  for the spring
  season.  Snowplowing  expenses  increased  $2,800  due to the  plowing  expenses
  associated with the golf cottage community as discussed above. Auto expense also
  increased  $2,500  due to major  repairs  required  for three  trucks  and a new
  preventative  maintenance program instituted in an effort to extend the lives of
  the companies  vehicles.  Offsetting  the increases in the above expenses was an
  $8,000  decrease in repairs  and  maintenance  expense  which was related to the
  utilization of the full-time mechanic.  Also, there was a substantial  reduction
  in the cost of insurance of $6,100 due to an aggressive  effort by management to
  reduce insurance  expense through a restructuring of the existing policies which
  began in fiscal 1997 but the benefit of which is being  realized in fiscal 1998.
  Road and path expense also decreased $4,200 due to a milder winter but also less
  
                                        -6-
  maintenance  was required  since the roads  throughout the grounds are in better
  condition due to road maintenance programs instituted in fiscal 1997. Contracted
  maintenance  decreased  $4,000 due to an effort to better  utilize the company's
  personnel for repairs where more expensive contractors may have been used in the
  past.  Fuel  expense  decreased  approximately  $2,300  due to prior  policy  of
  refueling  all  machinery at the close of the season which was not  continued in
  fiscal 98 and an overall  drop in fuel  prices as compared to the same period in
  1997. Supplies expense also decreased $2,500 due to increased control and better
  utilization of existing inventories while miscellaneous expense decreased $8,700
  due to better allocation of expenditures among expense categories by management.
  
           General and administrative costs decreased approximately $27,000 due to
  a substantial  drop in  professional  fees of $21,100 in  particular  legal fees
  associated with the issuance of the common stock A subscription  that were later
  allocated to the issuance. Also, there was a $4,100 decrease in payroll due to a
  more  accurate  allocation  from  administration  expense to cost of sales while
  supplies  expense  decreased  $1,800 due to better  utilization  and controls of
  unused supplies.
  
           Other  income/expense   decreased   approximately  $19,000  due  almost
  entirely to the $17,000  decrease in  interest  expense  caused by  management's
  continued policy to utilize  available cash to pay down the line of credit which
  has been reduced substantially when compared to the same period ending 1997.
  
                                        -7-
  LIQUIDITY AND CAPITAL RESOURCES
  
           At January  31,1998,  the Company had a working  capital  deficiency of
  $501,856  as compared  to  $649,143  in the first  quarter of 1997.  Included in
  current  liabilities  is  the  entire  $374,000  outstanding  on  the  Company's
  $1,000,000  line of credit with a bank  (described in the following  paragraph),
  which is  payable on  demand.  An  additional  $55,554  in  scheduled  principal
  payments on long-term debt are due within the next twelve months.
  
           On July 24, 1992, the Company entered into a loan agreement with a bank
  relating to a secured  revolving line of credit in the amount of $1,000,000 (the
  "Revolving  Credit  Facility").  Amounts  borrowed  under the  Revolving  Credit
  Facility bear interest at the prime rate (8.5% at January  31,1998) plus 1-1/4%.
  Pursuant  to the  loan  agreement,  approximately  2,600  acres of land and land
  improvements  located in Barrett  Township,  Monroe  County,  Pennsylvania,  are
  pledged as  collateral,  along  with dues,  assessments  and fee  revenues.  The
  Revolving Credit Facility is available through May 24, 1998, contingent upon the
  Company  maintaining  a  satisfactory  financial  position and subject to annual
  review of the Company's  financial  statements by the bank.  The loan  agreement
  with the bank  provides  that  if,  in the  opinion  of the  authorized  lending
  officers of the bank, the Company's credit worthiness  materially declines,  the
  credit  line will cease to be  available  for  future  draws,  and any  existing
  balance will be required to be fully amortized over a reasonable term.
  
           The Company has been required to make certain improvements in its water
  system.  In May 1995, the Company  entered into a $900,000 loan agreement with a
  bank to refinance the existing debt and to complete the improvements.  Principal
  is payable in monthly installments of $8,985 over a 20-year amortization period.
  Interest  is  payable at the bank's  base rate  (8.5% at January  31,1998)  plus
  1-1/4%.  The loan  matures  in May 2015 and is secured  by a first  mortgage  on
  approximately  2,600  acres of land and land  improvements  located  in  Barrett
  Township, Monroe County, Pennsylvania and a collateral assignment of all revenue
  and assessments of the Company's water operations.
  
           The Company expects to meet its current liabilities (other than payment
  of the entire $374,000 under the Revolving Credit Facility,  which, although not
  currently  due, is  classified as a current  liability  because of the Revolving
  Credit Facility's demand terms) through increased collections as a result of the
  seasonal  increase in revenues which typically occurs during the Company's third
  and fourth quarters through the provision of recreational  services. The Company
  does not anticipate that the bank will demand payment under the Revolving Credit
  Facility.
  
                                        -8-
  Overall cash for the quarter ended January 31, 1998  decreased  $17,596
  as compared to an increase of $29,831 for the same period in 1997. Cash used for
  investing  activities  increased  $10,802  as  capital  projects  including  the
  purchase of computer equipment of $2,200, golf maintenance  equipment of $18,849
  and water pumping  equipment of $5,921 accounted for the majority of the change.
  Net  repayment  of debt  amounted  to $68,896 in 1998 as  compared to $94,479 in
  1997.  However,  in 1997 an additional $41,579 was provided from the issuance of
  Class A common  stock  resulting  in the  majority  of the  decrease  in cash of
  $47,247 between 1998 and 1997.
  
           At January 31, 1998,  the Company had drawn  $374,000 on its $1,000,000
  line of credit, leaving $626,000 available.
  
           The  Company  incurred a loss of  $86,992  for the three  months  ended
  January 31, 1998 and at January 31, 1998,  the Company has a cumulative  deficit
  of  $1,306,779  and a working  capital  deficiency  of  $486,804.  Although  the
  Company's  line of credit is  available  through  May 24,  1998,  the ability to
  borrow  under  the  line  is  contingent  upon  certain  factors.  As a  result,
  continuation of the Company in its present form is dependent upon the successful
  maintenance  of its debt terms,  its ability to obtain  additional  financing if
  needed and the eventual achievement of sustained profitable operations.
  
           Management   believes  that   revisions  in  the  Company's   operating
  requirements,  including an increase in dues from $2,800 to $2,950  provides the
  opportunity for the Company to continue as a going concern. However, there is no
  assurance  that  management's  actions  will be  successful  or, if they are not
  successful, that the Company would be able to continue as a going concern.
  
                                        -9-
  PART II - OTHER INFORMATION
  
  Item 1.       Legal Proceedings
  
                    None
  
  Item 2.       Changes in Securities
  
                    None
  
  Item 3.       Defaults Upon Senior Securities
  
                    None
  
  Item 4.       Submission of Matters to a Vote of Security Holders
  
                    None
  
  Item 5.       Other Information
  
                    None
  
  Item 6.       Exhibits and Reports on Form 8-K
  
                    Exhibit 27 - Financial Data Schedule
  
                                        -10-
  SIGNATURE
  
           Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
  the  registrant  has duly  caused  this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
                                        BUCK HILL FALLS COMPANY
                                              (Registrant)
  
  Date: March 12, 1998                By: /s/ David B. Ottaway, Chairman
                                      David B. Ottaway, Chairman
  
  Date: March 14, 1998                By: /s/ Anthony C. Bowe
                                      Anthony C. Bowe, Vice-President,
                                      Treasurer and Chief Financial Officer
                                     (Principal Financial and Accounting Officer)