BELLAVISTA CAPITAL INC - FORM 10-Q

BELLAVISTA CAPITAL INC - FORM 10-Q - March 25, 2011

Attached files

Attached files

BELLAVISTA CAPITAL INC Reports

file	filename
EX-11.1 - COMPUTATION STATEMENT - BELLAVISTA CAPITAL INC	exhibit11.htm
EX-32.1 - CERTIFICATION - BELLAVISTA CAPITAL INC	exhibit32.htm
EX-31.1 - CERTIFICATION - BELLAVISTA CAPITAL INC	exhibit31.htm

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 June 30, 2010

[ ] 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: 0-30507

BellaVista Capital, Inc.

(Exact name of registrant as specified in its charter)

Maryland		94-3324992
(State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization)		Identification No.)


15700 Winchester Blvd.
Los Gatos, CA		95030
(Address of principal offices)		(zip code)

(408) 354-8424

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant has (1) 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 [ ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer		Accelerated filer
	Yes [ ] No [X]		Yes [ ] No [X]

	Non-accelerated filer (Do not Check if a smaller reporting company)		Smaller reporting company
	Yes [ ] No [ ]		Yes [X] No [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares of the registrant’s only class of common equity, its common stock,

outstanding as of March 15, 2011: 11,171,433

This Quarterly Report on Form 10-Q of BellaVista Capital, Inc. (the “Company”) contains forward-looking statements. All statements other than statements of historical fact may be forward-looking statements. These include statements regarding the Company’s future financial results, operating results, business strategies, projected costs and capital expenditures, investment portfolio, competitive positions, and plans and objectives of management for future operations. Forward-looking statements may be identified by the use of words such as “may,” “will,” “should,” “expect,” “plan,” anticipate,” “believe,” “estimate,” “predict,” “intend,” “seek,” “target” and “continue,” or the negative of these terms, and include the assumptions that underlie such statements. The Company’s actual results could differ materially from those expressed or implied in these forward-looking statements as a result of various risks and uncertainties, including those set forth in Part II, Item 1A - Risk Factors. All forward-looking statements in this report are based on information available to the Company as of the date hereof and the Company assumes no obligation to update any such statements.

Table of Contents

Part I.	Financial Information

Item 1.	Financial Statements (unaudited)	2

	Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and September 30, 2009 (Note 1)	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2010 and 2009 (unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2010 and 2009 (unaudited)	5

	Notes to the Condensed Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20

Item 4.	Controls and Procedures	20

Part II.	Other Information

Item 1.	Legal Proceedings	20

Item 1A.	Risk Factors	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 3.	Defaults Upon Senior Securities	23

Item 4.	Submission of Matters to a Vote of Security Holders	24

Item 5.	Other Information	24

Item 6.	Exhibits	25

	Signatures	26

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Attached are the following unaudited financial statements of BellaVista Capital, Inc., formerly known as Primecore Mortgage Trust, Inc. (the “Company”):

(1)

Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and September 30, 2009

(2)

Condensed Consolidated Statements of Operations for the Three Months and Nine Months ended June 30, 2010 and 2009 (unaudited)

(3)

Condensed Consolidated Statements of Cash Flows for the Nine Months ended June 30, 2010 and 2009 (unaudited)

(4)

Notes to Condensed Consolidated Financial Statements (unaudited)

The financial statements referred to above should be read in conjunction with the Company’s audited financial statements for the fiscal year ended September 30, 2009 as filed with the Securities and Exchange Commission in our Annual Report on Form 10-K, filed March 31, 2010.

BELLAVISTA CAPITAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2010 AND SEPTEMBER 30, 2009

	June 30, 2010 (unaudited)			September 30, 2009 (Note 1)
ASSETS:
Cash and cash equivalents	$	14,504		$	44,422
Accounts receivable, net of allowance of $260,160 and $327,044 at June 30, 2010 and September 30, 2009, respectively		47,282			96,687
Loans receivable secured by real estate		4,635,719			6,091,228
Joint venture investments in real estate developments		7,186,672			7,401,674
Investments in real estate developments		8,740,311			15,696,998
Investments in rental property, net of accumulated depreciation of $234,513 and $157,246 at June 30, 2010 and September 30, 2009, respectively		7,194,628			3,901,221
Fixed assets, net of accumulated depreciation of $18,756 and $16,630 at June 30, 2010 and September 30, 2009, respectively		-			2,126
Other assets, net		271,138			302,626
Total assets	$	28,090,254		$	33,536,982


LIABILITIES AND SHAREHOLDERS’ EQUITY:
Liabilities:
Secured notes payable and lines of credit	$	6,725,804		$	9,280,194
Unsecured notes payable		-			76,106
Accounts payable and accrued expenses		406,658			814,297
Total liabilities		7,132,462			10,170,597

Commitments and contingencies (see Note 10)	─			─

Shareholders’ equity:
Common stock: par value $0.01, 50,000,000 shares authorized, 11,171,433 issued and outstanding at June 30, 2010 and September 30, 2009		111,714			111,714
Additional paid-in capital		102,630,358			102,630,358
Accumulated deficit		(81,784,280	)		(79,375,687	)
Total shareholders’ equity		20,957,792			23,366,385
Total liabilities and shareholders’ equity	$	28,090,254		$	33,536,982

See accompanying notes to these condensed consolidated financial statements

BELLAVISTA CAPITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2010 AND 2009

(Unaudited)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2010			2009			2010			2009
REVENUES:
Revenues from loans receivable	$	71,612		$	75,656		$	182,117		$	351,991
Revenues from joint venture investments in real estate developments		-			-			240,800			-
Revenues from sales of investments in real estate developments		1,220,000			4,392,680			7,487,548			5,278,513
REO property rental revenues		40,508			-			132,835			235,680
Rental revenues		188,985			99,026			478,180			291,545
Other Income		-			-			-			202,536
Total revenues		1,521,105			4,567,362			8,521,480			6,360,265
Cost of investments in real estate developments		(1,167,793	)		(4,575,256	)		(7,385,211	)		(5,656,930	)
Rental expenses		(117,378	)		(58,956	)		(307,362	)		(181,171	)
Gross profit (loss)		235,934			(66,850	)		828,907			522,164

EXPENSES:
Legal and accounting expense		21,087			34,235			52,537			105,016
Board of directors fees		29,226			58,397			103,639			148,897
Asset management fee		52,500			67,351			167,500			273,587
Officers consulting fees for routine business operations – related party		27,175			52,136			69,525			110,050
D&O insurance expense		27,843			27,844			83,531			83,531
General and administrative expense		4,478			9,538			14,120			32,398
Reserve for uncollectible interest		-			49,413			80,005			143,328
Depreciation expense		542			215			2,126			3,329
BellaVista total operating expenses		162,851			299,129			572,983			900,136
REO carrying costs and expenses		197,273			434,790			600,637			791,102
Provision for impairment of real estate investments		1,010,342			514,861			1,507,851			3,458,156
Total operating expenses		1,370,466			1,248,780			2,681,471			5,149,394
Net loss from operations		(1,134,532	)		(1,315,630	)		(1,852,564	)		(4,627,230	)

OTHER INCOME (EXPENSE)
Interest income		-			-			-			1,081
Interest expense		(173,490	)		(209,818	)		(527, 884	)		(598,054	)
Total other income (expense)		(173,490	)		(209,818	)		(527,884	)		(596,973	)
Net loss before tax		(1,308,022	)		(1,525,448	)		(2,380,448	)		(5,224,203	)
Income tax benefit (expense)		800			(800	)		(28,145	)		(800	)
Net loss allocable to common stock	$	(1,307,222	)	$	(1,526,248	)	$	(2,408,593	)	$	(5,225,003	)

Basic and diluted net loss per common share	$	(0.12	)	$	(0.14	)	$	(0.22	)	$	(0.47	)

Basic and diluted weighted-average shares outstanding		11,171,433			11,171,433			11,171,433			11,202,161

See accompanying notes to these condensed consolidated financial statements

BELLAVISTA CAPITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JUNE 30, 2010 AND 2009

(Unaudited)

	Nine Months Ended June 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		(2,408,593	)		(5,225,003	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		79,393			21,934
Gain on sale of fully impaired investments		(240,800	)		-
Bad debt expense		80,005			143,328
Provision for impairment		1,507,851			3,458,156
Increase in accounts receivable and interest receivable		(30,600	)		(68,305	)
Decrease in other assets		31,488			274,802
Decrease in accounts payable and accrued expenses		(407,639	)		(510,931	)
Net cash used in operating activities		(1,388,895	)		(1,906,019	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from repayments and sales of loans, joint venture investments and investments in real estate		8,192,930			6,137,687
Investments in loans, joint venture investments and investments in real estate		(1,403,457	)		(1,620,559	)
Net cash provided by investing activities		6,789,473			4,517,128
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock repurchases		-			(734,004	)
Borrowings under notes payable and lines of credit		1,100,000			3,225,225
Repayment of notes payable and lines of credit		(6,530,496	)		(5,551,409	)
Net cash used in financing activities		(5,430,496	)		(3,060,188	)
Net decrease in cash and cash equivalents		(29,918	)		(449,079	)
Beginning cash and cash equivalents		44,422			636,346
Ending cash and cash equivalents	$	14,504		$	187,267

Cash paid for interest	$	527,884		$	606,819
Cash paid for income taxes	$	28,145		$	800
Debt acquired through foreclosure	$	2,800,000		$	-

See accompanying notes to these condensed consolidated financial statements

1. ORGANIZATION AND BUSINESS:

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months and nine months ended June 30, 2010 are not necessarily indicative of the results to be expected for any future period or the full fiscal year.

The condensed consolidated balance sheet at September 30, 2009 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the BellaVista Capital, Inc. Annual Report on Form 10-K for the fiscal year ended September 30, 2009.

Organization

BellaVista Capital, Inc., a Maryland corporation (the Company, BellaVista, BVC, our, we), was formed on March 18, 1999 and commenced operations effective May 1, 1999. We have been engaged in the business of investing in real estate development projects, primarily in California. Our investments are structured as loans secured by real estate, loans made to real estate development entities and joint venture investments in real estate development entities. We are organized in a single operating segment for purposes of making operating decisions and assessing performance. In addition, BellaVista Capital, Inc. is the 100% shareholder of Sands Drive San Jose, Inc., and Frank Norris Condominiums Inc., both of which are California corporations formed for the purpose of developing and selling residential real estate. The Company holds a 100% interest in Cummings Park Associates, LLC, a California Limited Liability Company formed to develop and sell a mixed use residential and retail project in East Palo Alto California. The Company also holds a 100% interest in MSB Brighton LLC, a California Limited Liability Company, (“Brighton”) and Brighton currently owns and operates a residential rental property.

The financial statements are presented on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business as the company proceeds with is previously discussed plans for a controlled liquidation and repurchase of existing shares. The Company has experienced significant losses and expects to continue to generate negative cash flows due to Real Estate Owned (REO) and operating expenses. The Company’s ability to continue as a going concern is, therefore, dependent upon its ability and the timing to sell its existing real estate investments and obtain additional funds from those net proceeds and further borrowings, if necessary. Failure to do so would result in a depletion of its available funds. The Company believes that it currently has sufficient cash and financial resources to meet its REO and operating requirements over the next year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Consolidation Policy

The consolidated financial statements include the accounts of BellaVista Capital, Inc. and its wholly owned subsidiaries: Sands Drive San Jose, Inc., MSB Brighton LLC, Frank Norris Condominiums Inc. and Cummings Park Associates, LLC. All intercompany accounts and transactions have been eliminated in consolidation. We may enter into various joint venture agreements with unrelated third parties to hold or develop real estate assets. We must determine for each of these joint ventures whether to consolidate the entity or account for our investment under the equity or cost basis of accounting. Investments acquired or created are evaluated based on the accounting guidance relating to variable interest entities (“VIEs”), which requires the consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment is determined not to be a VIE, then the investment is evaluated for consolidation (primarily using a voting interest model) under the remaining consolidation guidance relating to real estate. If we are the general partner in a limited partnership, or manager of a limited liability company, we also consider the consolidation guidance relating to the rights of limited partners or non-managing members, as the case may be, to assess whether any rights held by the limited partners, or non-managing members, as the case may be, overcome the presumption of control by us. We evaluate our accounting for investments on a quarterly basis or when a reconsideration event (as defined in GAAP) with respect to our investments occurs. The analysis required to identify VIEs and primary beneficiaries is complex and requires substantial management judgment. Accordingly, we believe the decisions made to choose an appropriate accounting framework are critical.

Use of Estimates

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements 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. Valuations of investments in real estate include management’s best estimates of the amounts expected to be realized on the sale of its investments. The estimates are based on an analysis of the properties, including certain inherent assumptions and estimates that are involved in preparing such valuations. The amounts the Company will ultimately realize could differ materially in the near term from these estimates.

Loans Receivable Secured By Real Estate

We have originated loans secured by real estate. These loans are secured by deeds of trust on real property, pay interest on a monthly basis and are typically additionally collateralized by personal guarantees from the principals of our borrowers. We recognize interest income on these loans during the period in which the interest is earned and recognize income on any loan fees charged under the effective interest method.

We establish and maintain credit reserves for loans receivable secured by real estate based on estimates of credit losses inherent in these loans as of the balance sheet date. To calculate the credit reserve, we assess inherent losses by determining loss factors (defaults, the timing of defaults, and loss severities upon defaults) that can be specifically applied to each loan.

Joint Venture Investments in Real Estate Developments

Our joint venture investments in real estate developments are comprised of loans, known as Acquire, Develop, and Construct loans (ADC Loans), which are secured by real estate and have many characteristics of joint venture investments and investments in real estate joint ventures.

ADC Loans

We have originated secured loans to acquire, develop and construct residential real estate. These loans contain many of the following characteristics which are identified with ADC loans:

1.	The lender has agreed to provide all or substantially all necessary funds to acquire, develop or construct the property. The borrower has title to but little or no cash equity in the project;

2.	The lender funds substantially all the interest and fees during the term of the loan by adding them to the loan balance;

3.	Typically, the lender’s only security is the project itself. The lender has no recourse to other assets of the borrower, and the borrower does not guarantee the debt;

4.	In order for the lender to recover its investment in the project, the property must be sold to independent third parties or the borrower must obtain refinancing from another source.

Because our ADC loans contain many of the characteristics of investments in real estate, they are classified for financial reporting purposes as joint venture investments in real estate developments (Note 4). ADC loans with no equity participation interest are stated at the lower of cost or fair value and accounted for as an investment in real estate. Revenue from interest and points is recognized as cash is received from the sale or refinancing of such properties. ADC loans that include an equity participation interest are accounted for in the same manner as joint venture investments in real estate developments. ADC loans include amounts funded under the loan agreements and capitalized interest expense, where applicable. If our ADC loans qualified as borrowings under US GAAP, interest and points would be recognized in income as earned instead of at the time of sale of the underlying property.

Joint Venture Investments in Real Estate

We provide equity capital to real estate developers necessary to acquire, develop and construct real estate developments. Such investments are structured as membership interests in the development entity. We account for such investments using the equity method of accounting.

Management conducts a review for impairment on an investment-by-investment basis whenever events or changes in circumstances indicate that the carrying amount of an investment may not be recoverable, or at least quarterly. Impairment is recognized when estimated expected future cash flows (undiscounted and without interest charges), typically from the sale of a completed property, are less than the carrying amount of the investment, which does not include accrued interest and points. The estimation of expected future net cash flows is inherently uncertain and relies to a considerable extent on assumptions regarding current and future economic and market conditions. If, in future periods, there are changes in the estimates or assumptions incorporated into the impairment review analysis, the changes could result in an adjustment to the carrying amount of the investments. To the extent impairment has occurred, the excess of the carrying amount of the investment over its estimated fair value, less estimated selling costs, is charged to operations.

Investments in Real Estate Developments

Investments in Real Estate Development, (“IRED”) represent development projects that the Company has obtained through foreclosure of its mortgage loans or controls by virtue of its operating agreements with development entities, and relate to real properties for which the Company has a controlling ownership interest. We consolidate the assets and liabilities of these IREDs in our financial statements. The Company’s basis in these projects is the carrying amount of the project at the time of loan foreclosure. Management conducts a review for impairment of these assets on an investment-by-investment basis whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, but not less frequently than quarterly. Impairment is recognized when estimated expected future cash flows (undiscounted and without interest charges), typically from the sale of a completed property, are less than the carrying amount of the investment, which does not include accrued interest and points. The estimation of expected future net cash flows is inherently uncertain and relies to a considerable extent on assumptions regarding current and future economic and market conditions. If, in future periods, there are changes in the estimates or assumptions incorporated into the impairment review analysis, the changes could result in an adjustment to the carrying amount of the investments. To the extent impairment has occurred, the excess of the carrying amount of the investment over its estimated fair value, less estimated selling costs, is charged to operations.

Cash and Cash Equivalents

Cash and cash equivalents include cash held in financial institutions and other highly liquid short-term investments with original maturities of three months or less.

Fixed Assets

Fixed assets, which include equipment and furniture, are carried at cost less accumulated depreciation. Depreciation and amortization is recorded using the straight-line method over the estimated useful life of the asset. Furniture and equipment have useful lives ranging from 3 to 7 years. Buildings have useful life of 30 to 40 years.

Income Taxes

Our taxable income differs from income measured in accordance with generally accepted accounting principles in the United States of America due to timing differences in the recognition of income from our ADC loans and REO properties. For tax purposes, interest and points are accrued as income according to the terms of our loan contracts, but not recognized under generally accepted accounting principles in the United States of America until the contract has been paid through sale or refinancing of the secured property.

The Company uses the asset and liability methods whereby deferred tax assets and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation. These reclassifications have no effect on previously reported financial position or performance.

New Accounting Pronouncements

The FASB issued Accounting Standard Update (ASU) 2009-17, Consolidations (Topic 810) - Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. ASU 2009-17 changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. This determination is based on, among other things, the other entity’s purpose and design and the Company’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. ASU 2009-17 also required additional disclosures concerning an enterprise’s continuing involvement with variable interest entities. ASU 2009-17 is effective at the start of the Company’s first fiscal year beginning after November 15, 2009. The adoption is not expected to have an effect on the Company’s financial position, results of operations, or cash flows.

3. LOANS RECEIVABLE SECURED BY REAL ESTATE:

As of June 30, 2010, loans receivable secured by real estate summarized by location consisted of the following:

Description		Amount Invested		Recognized Cumulative Impairments		Carrying Amount		In Default
SF Bay Area	$	3,762,407	$	548,381	$	3,214,026	$	1,232,619
California Central Valley		551,008		¾		551,008		¾
Southern California		355,801		89,800		266,001		¾
Other States		604,684		¾		604,684		600,000
Total	$	5,273,900	$	638,181	$	4,635,719	$	1,832,619

As of September 30, 2009, loans receivable secured by real estate summarized by location consisted of the following:

Description		Amount Invested		Recognized Cumulative Impairments		Carrying Amount		In Default
SF Bay Area	$	5,074,264	$	545,294	$	4,528,970	$	2,485,969
California Central Valley		866,958		¾		866,958		800,000
Southern California		185,100		89,800		95,300		¾
Other States		600,000		¾		600,000		¾
Total	$	6,726,322	$	635,094	$	6,091,228	$	3,285,969

Loans Receivable Secured by Real Estate consist of loans to real estate developers which are secured by deeds of trust on real property, pay interest monthly and generally have repayment guarantees from the principals of the borrowing entity. As of June 30, 2010 $3,617,218 of these loans was secured by first trust deeds and $1,018,501 was secured by second trust deeds. As of September 30, 2009 $3,804,883 of these loans was secured by first trust deeds and $2,286,345 was secured by second trust deeds. As of June 30, 2010, four (4) loans totaling $1,832,619 were in default under the terms of our loans and we have recognized cumulative impairments on three (3) of our loans receivable totaling $638,181. As of September 30, 2009, six (6) loans totaling $3,285,969 were in default under the terms of our loans and we have recognized cumulative impairments on four (4) of our loans receivable totaling $635,094.

Provision for impairment of loans receivable secured by real estate amounted to zero and $445,186 for the three and nine months ended June 30, 2010, respectively, compared to zero for the three and nine months ended June 30, 2009.

4. JOINT VENTURE INVESTMENTS IN REAL ESTATE DEVELOPMENTS:

As of June 30, 2010, joint venture investments in real estate developments summarized by location consisted of the following:

Description		Amount Invested		Recognized Cumulative Impairments		Carrying Amount		Remaining Funding Obligation
SF Bay Area	$	9,702,207	$	2,998,250	$	6,703,957	$	-
California Central Valley		1,770,662		1,287,947		482,715		-
Southern California		7,484,906		7,484,906		-		-
Total	$	18,957,775	$	11,771,103	$	7,186,672	$	-

As of September 30, 2009, joint venture investments in real estate developments summarized by location consisted of the following:

Description		Amount Invested		Recognized Cumulative Impairments		Carrying Amount		Remaining Funding Obligation
SF Bay Area	$	9,761,119	$	2,654,605	$	7,106,514	$	¾
California Central Valley		967,753		672,593		295,160		¾
Southern California		7,484,906		7,484,906		¾		¾
Total	$	18,213,778	$	10,812,104	$	7,401,674	$	¾

Joint Venture Investments in real estate developments consist of ADC loans and joint investments with real estate developers. ADC Loans are loan arrangements that are typically secured by real property, provide for the payment of interest from an interest reserve established from loan funds and may also provide for the payment of a share of project profits. Joint Venture investments are equity investments in operating entities formed for the purpose of developing real estate. Our investment typically earns a preferred return calculated based on our investment amount at a specific rate during the term of the investment and a share of the project profits. As of June 30, 2010, we have recognized cumulative impairments totaling approximately $11.8 million on seven (7) of our joint venture investments in real estate developments. As of September 30, 2009, we have recognized cumulative impairments totaling approximately $10.8 million on five (5) of our joint venture investments in real estate developments.

Provision for impairment of joint venture investments in real estate developments amounted to $747,176 and $799,499 for the three and nine months ended June 30, 2010, respectively, compared to $514,861 and $1,752,239 for the three and nine months ended June 30, 2009, respectively.

5. INVESTMENTS IN REAL ESTATE DEVELOPMENTS:

Investments in Real Estate Developments (REOs) include real estate development projects we own, either directly or through a subsidiary company we own or control. As of June 30, 2010, our investments in real estate developments summarized by location consisted of the following:

Description		Amount Invested (net of payments)		Recognized Cumulative Impairment		Carrying Amount		Costs to Complete
SF Bay Area	$	10,300,767	$	1,560,456	$	8,740,311	$	426,420

As of September 30, 2009, investments in real estate developments summarized by location consisted of the following:

Description		Amount Invested (net of payments)		Recognized Cumulative Impairment		Carrying Amount		Costs to Complete
SF Bay Area	$	20,581,120	$	4,884,122	$	15,696,998	$	426,420

Provision for impairment of investments in real estate developments amounted to $49,366 for the three and nine months ended June 30, 2010, respectively, compared to zero and $1,705,917 for the three and nine months ended June 30, 2009, respectively.

6. INVESTMENTS IN RENTAL PROPERTY:

Investment in rental property at June 30, 2010 and September 30, 2009 consisted of the following:

		June 30, 2010		September 30, 2009
Land	$	2,829,341	$	1,076,589
Buildings		4,587,270		2,969,348
Furniture, Fixtures & Equipment		12,530		12,530
Total rental property		7,429,141		4,058,467
Less accumulated depreciation		(234,513	)	(157,246	)
Rental property, net	$	7,194,628	$	3,901,221

Depreciation expense amounted to $29,937 and $77,267 for the three and nine months ended June 30, 2010, respectively, compared with $6,385 and $18,605 for the three and nine months ended June 30, 2009, respectively.

Provision for impairment of investments in rental properties amounted to $213,800 for the three and nine months ended June 30, 2010, respectively, compared to zero for the three and nine months ended June 30, 2009.

7. FIXED ASSETS:

Fixed assets at June 30, 2010 and September 30, 2009 consisted of the following:

	June 30, 2010			September 30, 2009
Computer equipment	$	18,756		$	18,756
Accumulated depreciation		(18,756	)		(16,630	)
Fixed assets, net	$	-		$	2,126

Depreciation expense was $542 and $2,126 for the three and nine months ended June 30, 2010, respectively, compared with $215 and $3,329 for the three and nine months ended June 30, 2009, respectively.

8. NOTES PAYABLE AND LINES OF CREDIT:

Notes payable and lines of credit at June 30, 2010 and September 30, 2009 consisted of the following:

	June 30, 2010		September 30, 2009
Gilmartin secured note	$	-	$	2,450,000
Cummings Park secured note		925,804		2,320,424
Frank Norris secured note		-		2,284,770
Alum Rock secured note		2,800,000		-
Brighton line of credit		1,500,000		1,500,000
Pulgas line of credit		1,500,000		725,000
Total	$	6,725,804	$	9,280,194

The Gilmartin note was secured by a deed of trust on a luxury home on Gilmartin Avenue in Tiburon, CA. It bore interest at the Wells Fargo Prime Rate plus 2.0% (5.25% at September 30, 2009). The note matured on June 5, 2008, and was extended to December 31, 2009. This Note was paid off in December of 2009 upon the sale of this property.

The Cummings Park secured note was originated for the purpose of financing the construction of a residential and retail mixed use project in East Palo Alto, California. The original amount of the note was $14.9 million. The loan is owed by Cummings Park Associates, LLC and is secured by the real property that is owned by Cummings Park Associates, a wholly owned subsidiary of the Company. The loan bears interest at Prime plus 2% with an original floor of 6.75%, (6.75% at June 30, 2010 and September 30, 2009) and now matures on June 30, 2011. When the loan maturity date was extended in December 2010, the interest rate floor was modified to 8% effective in December 2010. Interest-only payments are due monthly on the outstanding balance of the note. Principal payments will be made from the proceeds when units are sold. Payments made under this note amounted to $1,394,620 during the nine months ended June 30, 2010.

The Frank Norris secured note was assumed by the Company in 2008. The note is secured by the Frank Norris Condominium Inc. property, which is fully owned by the Company. The loan bears interest at The Wall Street Journal Prime rate plus 1% with a floor of 6.5% (6.5% at June 30, 2010 and September 30, 2009) and matures on April 15, 2012. Payments made under this note amounted to $2,284,770 during the nine months ended June 30, 2010. The Note was paid in full as of May 2010.

The Alum Rock secured note was assumed by the Company as a result of its completed foreclosure of this 14 unit retail property in San Jose, CA. The terms of the $2.8 million note were modified when the Company assumed the note as of March 1, 2009. The maturity date of the note was extended until March 1, 2013 and the note bears interest at 7.5% for the first year, 8.5% for the second year, and 9.5% for the final year of the extension. In December 2010, the interest rate was modified and reduced to 6.0% for the balance of the term on the Note. Interest-only payments are due monthly on the outstanding balance. The property is currently 93% leased and generates revenue to cover the interest payments and other associated operating expenses.

The $1.5 million Brighton line of credit is secured by our Brighton rental property in Modesto, California through our wholly-owned investment in MSB Brighton LLC. The line bears interest at 11.5%. Interest-only payments are due monthly on the outstanding balance. The line matures on October 1, 2011. The outstanding balance of this line as of June 30, 2010 is $1,500,000 of which $1,045,000 is owed to two related parties and the remaining balance of $455,000 is owed to unrelated private lenders. There were no payments or draws made on this line during the nine months ended June 30, 2010.

The $1.5 million Pulgas line of credit, of which $1,500,000 is outstanding as of June 30, 2010, is secured by one of our direct investments in real estate in East Palo Alto, CA. The line bears interest at 11.5%. Interest-only payments are due monthly on the outstanding balance. The line matures on February 1, 2012 and is due to certain related parties. Payments made under this line amounted to $325,000 and draws on this line amounted to $1,100,000 during the nine months ended June 30, 2010.

9. SHAREHOLDERS’ EQUITY:

There is currently no public trading market for our stock. We are authorized to issue up to 50,000,000 shares of Common Stock. As of June 30, 2010 we have repurchased and cancelled 1,564,097 shares in connection with legal settlements and 6,747,822 shares under tender offers at various prices. At June 30, 2010 and September 30, 2009 we had 11,171,433 shares of Common Stock outstanding.

The Company has not declared or paid any dividends on its capital stock during the period from January 1, 2005 through the date of this report.

For the three and nine months ended June 30, 2010 the Company made no stock repurchases or cancellations. During the year ended September 30, 2009 the Company repurchased and cancelled 419,437 shares of stock for approximately $734,000.

10. COMMITMENTS AND CONTINGENCIES

Litigation

As of June 30, 2010, the Company was involved in the following litigation in which claims for damages would be material if the plaintiff prevailed and there is at least a reasonable possibility that a loss may have occurred:

Richard Aster v BellaVista Capital, Inc. et al.

This action was initiated in California Civil Court on August 10, 2007. The plaintiff is Richard Aster, the party that purchased the completed home from BellaVista. The defendants are BellaVista, Ainsworth Construction, Masma (the original developer) and various subcontractors who did work for each of these two construction companies. This lawsuit alleges construction defects in the installation of windows, decking and roofing related to a single family home that was purchased by the plaintiff from the Company after the Company acquired the property through foreclosure. In this lawsuit the plaintiff is requesting compensation for all of their costs related to correcting the construction defects and pursuing this action. In addition, a lawsuit has been filed by the original developer (Masma) against the Company for indemnification and defense. The Company believes it has strong and viable defenses and plans to vigorously defend these actions. The Company has hired both legal and engineering experts who specialize in construction defects matters. In addition, the Company has tendered to the respective insurance companies for insurance coverage and defense costs owed to it under the construction contracts of both the original contractor and the contractor that the Company hired to complete the construction after the Company took ownership of the property by foreclosure. This case is currently in mediation.

Eden CDM v MAC Homes, LLC

This action was initiated in the Superior Court of the State of California for the County of Alameda on July 20, 2009. The plaintiff is Eden CDM (“Eden”), the general contractor hired to build the MacArthur project. The defendant is MAC Homes, LLC (“MAC Homes”), the developer and Bella Vista’s joint venture partner. The plaintiff is seeking the retention amounts not paid at completion and legal fees. The contract with the general contractor had penalty provisions for delayed completion, which the Company strongly believes are owed by the general contractor and are greater than the retention amounts sought. The Company has retained expert construction litigation counsel on behalf of MAC Homes. A settlement of this dispute was reached in December 2010 on terms and conditions acceptable to the Company.

General Uninsured Losses

We require that our borrowers carry comprehensive liability, fire, flood, extended coverage, and rental loss insurance with policy specifications, limits, and deductibles customarily carried for similar properties. Additionally, we carry insurance on our direct investments in real estate development. There are, however, certain types of extraordinary losses that may be either uninsurable or not economically insurable. Further, all of our investments are located in areas that are subject to earthquake activity, and we generally do not require our borrowers to maintain earthquake insurance. Should an investment sustain damage as a result of an earthquake, we may incur losses due to insurance deductibles, co-payments on insured losses, or uninsured losses. Should an uninsured loss occur, we could lose our investment in, and anticipated profits and cash flows from an investment.

11. TRANSACTIONS WITH AFFILIATES:

The Company has obtained lines of credit that were partially or fully funded by some of its directors. The terms of these relationships and lines of credit have been previously disclosed in the Company’s quarterly 10-Q filings, the Company’s Annual 10-K filing and are detailed below.

It should be noted that both lines of credit were structured such that the Company could draw on them only as needed and repay principal at any time cash became available. In this way, the total interest costs paid by the Company would be minimized. Therefore, the principal balances of both these lines of credit fluctuate based on the draws and pay downs that routinely occur, typically on a monthly basis. These lines have been funded through advances by two related parties and two independent third party private lenders.

Brighton line of credit

The $1.5 million line of credit had an outstanding balance of $1.5 million as of June 30, 2010 and September 30, 2009. The line is secured by our MSB Brighton rental property in Modesto, California, (“Brighton”) through our wholly-owned investment in MSB Brighton LLC. The line bears interest at 11.5% and matures on October 1, 2011. Interest-only payments are due monthly on the outstanding balance. This line of credit is partially funded by two of our directors, Mr. William Offenberg and Mr. Jeffrey Black. Of the $1.5 million outstanding balance, $1,045,000 and $1,345,000 is owed to these two related parties as of June 30, 2010 and September 30, 2009, respectively. During the nine months ended June 30, 2010, Mr. Offenberg sold and assigned $300,000 of his portion of the note balance for the price of $300,000 to other unrelated third party private lenders.

		Nine Months Ended June 30, 2010		Activity from Inception: Oct 30, 2008 to June 30, 2010
Balance of Line - Brighton
William Offenberg	$	395,000	$	395,000
Jeffrey Black	$	650,000	$	650,000
Unrelated third parties	$	455,000	$	455,000
Advances to the Company
William Offenberg	$	-	$	1,120,000
Jeffrey Black	$	-	$	350,000
Unrelated third parties	$	-	$	30,000
Repayments to the Lenders
William Offenberg	$	-	$	-
Jeffrey Black	$	-	$	-
Interest paid or payable
William Offenberg	$	52,965	$	143,966
Jeffrey Black	$	59,437	$	105,532

Pulgas line of credit

The $1.5 million line of credit had an outstanding balance of $1,500,000 and $725,000 as of June 30, 2010 and September 30, 2009, respectively. The line is secured by one of our direct investments in real estate in East Palo Alto, California, (“Pulgas”). The line bears interest at 11.5% and matures on February 1, 2012. Interest-only payments are due monthly on the outstanding balance. This line of credit was initially funded by two of our directors, Mr. William Offenberg and Mr. Jeffrey Black. The balance of $725,000 as of September 30, 2009, was owed to these two related parties. During the nine months ended June 30, 2010, Mr. Black sold and assigned $75,349 of his portion of the note balance to Mr. Offenberg. The entire outstanding balance of $1,500,000 as of June 30, 2010 was owed to Mr. Offenberg.

		Nine Months Ended June 30, 2010		Activity from Inception: Jan 20, 2009 to June 30, 2010
Balance of Line - Pulgas
William Offenberg	$	1,500,000	$	1,500,000
Jeffrey Black	$	-	$	-
Advances to the Company
William Offenberg	$	1,100,000	$	2,825,000
Jeffrey Black	$	-	$	300,000
Repayments to the Lenders
William Offenberg	$	249,651	$	1,325,000
Jeffrey Black	$	75,349	$	300,000
Interest paid or payable
William Offenberg	$	83,560	$	140,833
Jeffrey Black	$	1,030	$	13,695

12. SUBSEQUENT EVENTS:

Secured lines of credit

As of February 15, 2011 the total amount of debt that the Company and its subsidiaries have in aggregate is $6,463,113 which includes $2,800,000 of additional debt assumed upon the foreclosure of the Alum Rock retail property in San Jose in January 2010. The Company has decreased its debt by $262,691 since June 30, 2010. This decrease in debt is primarily due to the repayment of various mortgage obligations associated with the sale of properties during this period and the repayment of certain debt as required by the lending banks as a condition to the release of these properties. Of the total amount of debt currently owed by the Company $3,000,000 is attributable to the Brighton and Pulgas secured lines of credit.

139 Stillman Street Homeowners Association v BellaVista Capital, Inc. et al.

This action was initiated in San Francisco County Superior Court on January 19, 2011. The plaintiff is 139 Stillman Street Homeowners Association. The plaintiff alleges that there are certain defects to the project that the Company had previously foreclosed on, completed unfinished units and sold to the various homeowners. The Company has retained legal counsel and will vigorously defend against this action.

Eden CDM v MAC Homes, LLC

A settlement of this dispute was reached in December 2010 on terms and conditions acceptable to the Company.

International Blvd – Oakland, CAThe company had an investment in a loan secured by two commercial properties in Oakland, CA. The borrower defaulted on the Note and in December 2010 the property was foreclosed on and put into a single asset LLC. BVC was a 69.5% owner of the Note and therefore is a 69.5% stockholder in the new LLC. The new LLC will manage and liquidate the property.

Short Term Unsecured Loan

In December 2010 the Company borrowed $106,000 from Mr. Offenberg to pay REO property taxes. The company would have incurred a ten (10%) penalty on property taxes due on December 10, 2010. The company borrowed funds for a period of approximately 40 days to avoid these substantial penalties. The Note was paid back in January 2011 with interest at a rate of 1% per month.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

General

Our material financial transactions have been purchasing and holding a portfolio of construction mortgage loans, and the construction and sale of real estate acquired through foreclosure or deed in lieu of foreclosure. Statements contained in this Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations,'' and elsewhere in this Form 10-Q, which are not historical facts, may be forward-looking statements. Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future actions, which may be provided by management, are

also forward-looking statements. These statements are not guaranties of future performance. Forward-looking statements are based on current expectations and projections about future events and are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those described under the heading “Risk Factors” included in Part II, Item 1A. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to publicly release any revisions to these forward-looking statements, to reflect events or circumstances after the date of this Form 10-Q, or to reflect the occurrence of unanticipated events, other than as required by law.

Overview

BellaVista Capital was incorporated in March 1999 as Primecore Mortgage Trust, Inc. Since incorporation and through December 2000, Primecore engaged in the business of providing loans for the development of primarily high-end single family residential real estate. During 1999 and 2000 Primecore raised the capital to fund these loans from the sale of shares of Preferred Stock. This capital was invested primarily in high priced San Francisco Bay Area residential real estate at a time when prices were increasing at a rapid pace. By the end of 2000, Primecore had loan commitments of $436 million on 117 loans with over $216 million funded.

After 2000, the market for high-end real estate in the San Francisco Bay Area began to rapidly deteriorate; Primecore began to experience borrower defaults and through 2003 took title to 48 properties by way of foreclosure or deed in lieu of foreclosure. Primecore also recognized significant impairments in its portfolio. The impairment of the investment portfolio resulted in substantial operating losses. The Company realized that these net operating losses could be carried forward and used to reduce future taxable income. In prior years, the company used its REIT status, and the payment of dividends, to eliminate corporate level taxation. However, the REIT rules restricted the types of loans the Company could make. In particular, the Company was prohibited from making loans with equity participation. With the ability to carry forward prior years’ net operating losses to offset future taxable income, the Company was free to terminate its REIT status, which it did effective January 1, 2004, and was no longer restricted in the types of investments it could make.

In April 2004 Primecore changed its name to BellaVista Capital in order to reflect its new business focus. During 2004 new management focused on completing and liquidating the existing portfolio of assets, internalizing operations, resolving outstanding legal issues and developing a pipeline of new investment opportunities. In addition to the completion and sale of a number of our non-performing investments, management completed the transition to internal management and reduced continuing operating expenses.

In October 2007, the Board began a restructuring program that has ultimately resulted in significant operating cost savings and increased efficiencies, including: closing the Palo Alto office, terminating all direct employees, outsourcing the administration and asset management functions and enlisting a Board member to function as CFO on an as needed basis and another board member to assume the CEO responsibilities on an as-needed consulting basis.

The current real estate market in which our properties are located has experienced significant deflationary pricing and significant inventory buildup. While it is true that some recent publicly published statistics appear to demonstrate an increase in sale rate, a significant portion of this increase is at distressed or foreclosure pricing, a clear negative factor for pricing in the foreseeable future. As the credit markets appear to have begun to return to some form of normalcy, high unemployment and the insecurities fostered by layoffs have evolved as the latest major drag on the economy, consumer confidence and the real estate market. Thus, as indicated in Part 1, Item 1 of the Company’s Annual Report on Form 10-K for the year ended September 30, 2009, the Company has discontinued originating any new investments secured by deeds of trust or subordinated debt or investments in equity partnerships.

As a result of the current difficult market conditions, the Company has taken ownership of certain underlying projects associated with certain nonperforming loans and equity partnership investments. Ownership was obtained by settlement with the borrower or by assuming the role of managing partner. These properties are now categorized as REOs, which are investments in real estate developments (REOs). For each of these properties, the Company has developed individual plans in order to maximize value based on the local market conditions, potential for future appreciation, and the properties’ operating and debt structure. In a number of cases, these REO’s are being operated as either a rental or a hybrid of units used for rental and units available for sale. In a particular case of a condominium project, it was deemed appropriate to auction the individual units versus renting or offering for sale and thereby having to continue to fund the carrying costs for an extended period.

In terms of the path forward, as has been discussed in previous letters and meetings of shareholders, the Company has continued to evaluate the real estate and credit markets as well as our existing portfolio and is not planning on originating any new investments in the foreseeable future. The Company is managing the

existing REO and other properties under its control with the goals of maximizing value and completing the sale of all these folio properties, which is expected to happen over the next several years (market permitting). The resulting proceeds will first be used to retire any outstanding debt and then fund current operating and REO expenses. Any remaining proceeds will be used to provide liquidity to existing shareholders through a share repurchase program. It should be clearly be noted that the timing for share repurchases is highly dependent the timing of when properties are sold, the sales price and the repayment of all the existing debt.

RESULTS OF OPERATIONS

Three and Nine Months Ended June 30, 2010 compared to the Three and Nine Months Ended June 30, 2009

Revenues

Revenues from Loans Receivable

We reported revenues totaling $71,612 and $182,117 for the three and nine months ended June 30, 2010, respectively, compared with $75,656 and $351,991 for the three and nine months ended June 30, 2009, respectively. The decrease in revenues was due to a decrease in the average amount invested in these loans during the comparable periods and a decline in our average return due to nonperforming loans in the portfolio.

Revenues from Joint Venture Investments in Real Estate Developments

We reported revenues of zero and $240,800 for the three and nine months ended June 30, 2010, respectively, compared with $0 for the three and nine months ended June 30, 2009. These revenues are derived from repayment of loans and equity participations. These proceeds represent only a return of our capital investment. The 2010 revenues represented gains from the disposition and sale of fully impaired investments.

Revenues from Sale of Investments in Real Estate Developments

We reported revenues totaling $1,220,000 and $7,487,548 for the three and nine months ended June 30, 2010, respectively, compared with $4,392,680 and $5,278,513 for the three and nine months ended June 30, 2009, respectively. The decrease in the three month period was due to a one time sale of a commercial project in May 2009. This increase in the nine month period was due to the sale of condominium units at the Frank Norris project on Polk Street in San Francisco and the sale of our Gilmartin project, a single family home in Marin County. The net proceeds from these sales were used to repay the debt associated with this investment. The remaining proceeds were used to pay various operating and REO expenses and the repayment of other Company debt.

REO Property Rental Revenues

We reported revenues totaling $40,508 and $132,835 for the three and nine months ended June 30, 2010, respectively, compared with $0 and $235,680 for the three and nine months ended June 30, 2009, respectively. The decrease in the nine month periods is due to the sale of several of our properties that had previously been used as rental units.

Rental Revenue

We reported revenues totaling $188,985 and $478,180 for the three and nine months ended June 30, 2010, respectively, compared with $99,026 and $291,545 for the three and nine months ended June 30, 2009, respectively. The increase is due to an increase in the number of apartment units rented at the Brighton project and from the rental revenues collected as a result of the foreclosure on the Alum Rock retail property. The associated rental expenses including depreciation were $117,378 and $307,362 for the three and nine months ended June 30, 2010, respectively, compared with $58,956 and $181,171 for the three and nine months ended June 30, 2009, respectively.

Expenses

As a result of the continuing downturn in the real estate market and significant uncertainties associated with future investments, we have discontinued originating any new equity or subordinated debt investments and ceased originating new trust deed investments. In order to streamline the operations of the company and reduce operating expenses to compensate for the eroding market conditions and declining property values, the Board of Directors determined in 2007 that the best course of action to preserve shareholder’s value was to begin implementation of a restructuring program. The Board has continued to make significant progress under this program which has ultimately resulted in significant operating cost savings and increased efficiencies, including: closing the Palo Alto office, terminating all direct employees, outsourcing the administration and asset management functions and enlisting a Board member to function as CFO on an as needed consulting basis and another board member to assume the CEO responsibilities on an as-needed consulting basis. In addition, in 2010 the Board continued to optimize the operating and expenses structure by decreasing the size of the Board from 4 to 3 members and consolidating the CEO and CFO positions, enlisting one Board member to assume these functions on an as-needed consulting basis.

We group our expenses in three categories: BellaVista operating expenses, REO expenses, and impairments. BellaVista operating expenses are associated with the ongoing operations of the Company. REO expenses include all of the carrying costs for REO properties such as property taxes, insurance, maintenance, marketing, legal, debt service and general and administrative expenses.

BellaVista total operating expenses before REO expenses and provision for impairment (including controllable, nonrecurring and non-cash expenses) were $162,851 and $572,983 for the three and nine months ended June 30, 2010, respectively, compared with $299,129 and $900,136 for the three and nine months ended June 30, 2009, respectively. The BellaVista operating expenses for the three months and nine months ended June 30, 2010 include non-cash items for reserve for uncollectible interest and depreciation of fixed assets of approximately $542 and $82,131, respectively, compared with $49,628 and $146,657 for the same periods in 2009. Excluding these non-cash items of reserve for uncollectible interest expense and depreciation expense, BellaVista operating expenses would have been $162,309 and $490,852 for the three and nine months ended June 30, 2010, respectively, compared with $249,501 and $753,479 for the three months and nine months ended June 30, 2009, respectively.

During the three and nine months ended June 30, 2010, REO expenses were $197,273 and $600,637, respectively, compared with $434,790 and $791,102 for the three and nine months ended June 30, 2009, respectively. This decrease during the nine months ended June 30, 2010 is due to the sale of a number of REO properties, decreasing the Companies ongoing costs associated with the REO properties.

We recorded impairment charges totaling $1,010,342 and $1,507,851 for the three and nine months ended June 30, 2010, respectively, compared with $514,861 and $3,458,156 for the three and nine months ended June 30, 2009, respectively. The impairments reported during the three months ended June 30, 2010 were related to certain investments whose values had declined due to the continuing decreases in real estate prices and longer than normal projected marketing periods. We have impaired these investments based on our estimate of the decrease in value and the increase in carrying and operating costs associated with either holding or renting these properties for periods longer than originally projected due to the continued weakness and highly uncertain conditions in the real estate and credit markets. The impairment charges for the nine months ended June 30, 2010 compared to the nine months ended June 30, 2009 were substantially less because the Company has sold a number of the affected properties during the period.

Liquidity and Capital Resources

Liquidity means the need for, access to and uses of cash. Our principal source of liquidity is the repayment of our real estate investments. Our principal demands for liquidity are funds that are required to satisfy obligations under existing loan commitments, costs of operating and holding investments in real estate development for future sales, and operating expenses.

Sources of Cash

At June 30, 2010, we had cash and cash equivalents of $14,504. As of June 30, 2010, our primary sources of liquidity were proceeds from the sale of our completed investments in REO properties, investments in trust deeds that paid interest monthly, and our lines of credit and cash on hand.

We typically receive repayment on our investments when the development project has been completed and sold or refinanced to third parties. Accordingly, our repayments are a function of our developers’ ability to complete and sell the development properties in which we have invested. During the nine months ended June 30, 2010 we received repayments, totaling approximately $8.2 million compared with approximately $6.1 million during the nine months ended June 30, 2009. Due to the continued weakness and uncertainty in the real estate and credit markets in 2010, we believe that there is a high degree of uncertainty in estimating the timing of the sales or the amount of proceeds we might receive from the future sale of our properties.

It is possible that our repayments may not be sufficient to meet our commitments including REO and operating expenses and we may be forced to sell assets or seek financing at terms that may be unfavorable. This would have a negative impact on the estimated net realizable value of our assets.

As of June 30, 2010 the total balance owed on the two lines of credit, which are secured by trust deeds recorded on the Brighton and Pulgas properties, amounted to $3,000,000.

As of February 15, 2011 the total amount of debt that the Company and its subsidiaries have in aggregate is $6,463,113 which includes $2,800,000 of additional debt assumed upon the foreclosure of the Alum Rock retail property in San Jose in January 2010. The Company has decreased its debt by $262,691 since June 30, 2010This decrease in debt is primarily due to the repayment of various mortgage obligations associated with the sale of properties during this period and the repayment of certain debt as required by the lending banks as a condition to the release of these properties. Of the total amount of debt currently owed by the Company $3,000,000 is attributable to the Brighton and Pulgas secured lines of credit.

Historically, we have experienced significant operating losses with corresponding reductions in working capital and shareholders' equity. In the past, the Company either used its real estate assets as collateral to secure additional borrowing or sold its real estate assets to support operating cash flow requirements. The Company’s need to borrow funds has diminished due to the sale of certain assets and the resulting reduction of debt associated with those assets and other related operating expenses. These reductions in the ongoing cost of operations combined with the proceeds from the asset sales have resulted in sufficient improvement in the Company’s liquidity that it has not needed to pursue any additional loans or lines of credit.

Going forward, on an as needed basis the Company expects to continue to borrow against its real estate assets or sell its real estate projects in order to fund REO expenses, operating expenses, and retire the Company’s indebtedness. The Company has real estate assets which it believes it can use as collateral for additional borrowing if such borrowing is necessary to satisfy its cash needs. We have no current arrangements to borrow against these additional real estate assets and can offer no assurance as to the availability or terms of any such additional debt financing. We believe, however, that we will be able to obtain loans or lines of credit secured by these assets should the need arise.

Uses of Cash

We invested approximately $1.4 million in the completion of continuing development projects during the nine months ended June 30, 2010, compared with approximately $1.6 million during the nine months ended June 30, 2009. At June 30, 2010, we estimated the costs to complete our investments in real estate developments plus the remaining funding obligation on our joint venture investments in real estate developments to be approximately $426,000. All of these estimated costs relate to tenant improvements at the remaining retail space in East Palo Alto and will not be incurred until a tenant has been secured; consequently the timing is currently unknown.

Stock Repurchases and Cancellations

The Company made no stock repurchases or cancellations during the nine months ended June 30, 2010 compared with stock repurchases of approximately $734,000 for the same period in 2009.

STOCKHOLDER LIQUIDITY AND REALIZABLE VALUE OF INVESTMENTS

In the past, provided that certain Company liquidity requirements were satisfied, we have provided liquidity to our stockholders through the repurchase of outstanding shares. Because our stock does not trade in any secondary market, no market value exists for our stock and another method must be used to determine the repurchase price. The Board of Directors has used the net realizable value of the Company’s assets as well as an assessment of the risk profile for each of the investments in the portfolio to guide in the determination of the repurchase price for planned repurchases as well as Company repurchases in response to unsolicited tender offers.

The realizable value of our assets represents our current estimate of the amount of proceeds we expect to receive once our investments are completed and ready for sale. The estimate relies on a number of assumptions including the expected value of the investment once completed, less applicable selling costs, the remaining costs and the length of time required to complete the project. Many factors outside of the Company’s control can cause changes in these estimates and produce significantly different results. Furthermore, as noted above, there is no organized public market for the Company’s shares, so the Company’s calculation of the estimated realizable value of its assets per outstanding share should not be viewed as an estimate of any market value per share, and there can be no assurance as to the amount or timing of any investment returns on the shares.

During the period from June 2005 to March 2011, the Company has not used its funds to pay dividends or distributions or, except in certain extraordinary circumstances, to redeem shares. Such extraordinary circumstances have included Company tender offers in response to unsolicited third party tender offers which the Board deemed inadequately priced and opportunistic. The Board will determine the timing and terms of any future share redemptions based on available liquidity, net realizable value, and assessment of the risk profile for each of the investments in the portfolio.

The information presented below reconciles the differences between the carrying value of our investments based on US GAAP and the estimated realizable value of our investments.

		June 30, 2010		September 30, 2009
Loans receivable secured by real estate	$	4,635,719	$	6,091,228
Joint venture investments in real estate developments		7,186,672		7,401,674
Investments in real estate developments		8,740,311		15,696,998
Investments in rental property, net		7,194,628		3,901,221
Total investments in real estate per US GAAP		27,757,330		33,091,121
Collectible interest and preferred return not reportable per US GAAP		1,948,754		1,948,754
Estimated realizable value of investments in real estate	$	29,706,084	$	35,039,875

Net Realizable Value of Assets per Share

The following calculation determines the estimated net realizable value per share of stock:

		June 30, 2010		September 30, 2009
Cash & cash equivalents	$	14,504	$	44,422
Other assets		318,420		401,439
Estimated realizable value of investments in real estate		29,706,084		35,039,875
Total realizable assets		30,039,008		35,485,736
Accounts and notes payable		(7,132,462)		(10,170,597	)
Estimated net realizable assets		22,906,546		25,315,139
Shares outstanding		11,171,433		11,171,433
Estimated net realizable assets per share	$	2.05	$	2.27

Our estimated net realizable value of assets per share (NRV) as of June 30, 2010 was $2.05, representing a decrease of $0.12 during the three months ended June 30, 2010 as compared to the March 31, 2010 NRV of $2.17, and a decrease of $0.22 during the nine months ended June 30, 2010 as compared to the September 30, 2009 NRV of $2.27. The decrease was primarily attributable to decreases in the estimated realizable value of our investments, and secondarily attributable to the ongoing REO carrying costs and operational expenses.

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of Financial Condition and Results of Operation covers our financial statements, which have been prepared in accordance with accounting principles generally, accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. On an on-going basis, management evaluates its estimates and judgments, including those related to the valuation of our assets and liabilities. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies, among others, affect the most significant judgments and estimates used in the preparation of its consolidated financial statements.

Valuation and Realizability of Investments

All of our Acquire, Develop, and Construct loans (ADC loans) are classified for financial reporting purposes as joint venture investments in real estate developments. We have taken ownership on some ADC loans that are classified as investments in real estate developments. Such investments are stated at the lower of cost or fair value. Management conducts a review for impairment on an investment-by-investment basis whenever events or changes in circumstances indicate that the carrying amount of an investment may not be recoverable. Impairment is recognized when estimated expected future cash flows (undiscounted and without interest charges), typically from the sale of a completed property, are less than the carrying amount of the investment, plus estimated costs to complete. The estimation of expected future net cash flows is inherently uncertain and relies to a considerable extent on assumptions regarding current and future economics and market conditions. If, in future periods, there are changes in the estimates or assumptions incorporated into the impairment review analysis, the changes could result in an adjustment to the carrying amount of the investments. To the extent that there is impairment, the excess of the carrying amount of the investment over its estimated fair value, less estimated selling costs, will be charged to operations. We believe that all of our investments are carried at the lower of cost or fair value; however, conditions may change and cause our ADC loans and investments in real estate to decline in value in a future period.

Loan Accounting

In accordance with the ADC accounting rules, we treat these loans as if they were real estate joint ventures, and thus we do not accrue income for interest and points until the sale or refinancing of a property. Revenue from interest and points from these ADC loans is recognized as cash is received from the sale or refinancing of such properties. ADC loans are classified as joint venture investments in real estate developments and include amounts funded under the loan agreements. If our ADC loans qualified as loans under GAAP, interest and points would be recognized as income in periods prior to the sale of the underlying property. In addition to ADC loans, we have made direct equity investments in real estate joint ventures. These joint venture investments are accounted for in the same manner as our ADC loans and are classified as joint venture investments in real estate developments.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as of June 30, 2010.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of June 30, 2010. Based on this evaluation, as a result of the significant deficiency in internal controls over financial reporting as previously disclosed in our Annual Report on Form 10-K for the twelve months ended September 30, 2009 filed with the Securities and Exchange Commission on March 31, 2010, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not fully effective to ensure that all information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Refer to the discussion under the heading “Litigation” in Note 10 of the Notes to the Condensed Consolidated Financial Statements (unaudited), included in Part I, Item 1 above, for a description of certain Legal Proceedings in which the Company is involved.

ITEM 1A. RISK FACTORS.

General Economic Conditions in Lending Areas

Our business plan previously sought to diversify our investments throughout California and other states in the western United States of America. Approximately 78.8% of our investments are currently located in the San Francisco Bay Area, 18.8% in California’s Central Valley, 1.0% in Southern California, and 2.1% in other states of the United States of America. The potential success of real estate investments in general is subject to fluctuations in local market conditions, including fluctuations in the supply of and demand for similar properties, and the performance of our investments has and will continue to depend on the economic and real estate market conditions prevailing in the markets where our investments are located. Since the investments are located in a limited geographical region, they may be subject to a greater risk of delinquency or default if the industries concentrated in these areas suffer adverse economic or business developments.

Realization of Assets

The Company’s liquidity and ability to meet its obligations as they become due are subject to, among other things, its ability to obtain timely repayments or other dispositions of its investments. Many of the investments rely on the completion and sale of the developed real estate in order to realize repayment or other disposition proceeds. In the event that proceeds from repayments or other investment dispositions are not sufficient to timely meet our commitments and conventional commercial credit facilities are not available to us, we may therefore be required to seek credit facilities from private placement debt sources and/or to sell some of our investments prematurely. In such cases, the amount of proceeds received could be substantially less than what we would

have expected if we allowed a proper marketing period for a particular investment. This would have a negative impact on the estimated net realizable value of our assets. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Demand for new homes is sensitive to economic conditions over which we have no control

Demand for homes is sensitive to changes in economic conditions such as the level of employment, consumer confidence, consumer income, the availability of financing and interest rate levels. If mortgage interest rates increase or if any of these other economic factors adversely change nationally, or in the market in which we operate, the ability or willingness of prospective buyers to purchase new homes could be adversely affected.

Our results of operations and financial condition are greatly affected by the performance of the real estate industry

Our real estate activities are subject to numerous factors beyond our control, including local real estate market conditions, substantial existing and potential competition, general national, regional and local economic conditions, fluctuations in interest rates and mortgage availability and changes in demographic and environmental conditions. Real estate markets have historically been subject to strong periodic cycles driven by numerous factors beyond the control of market participants. Real estate investments often cannot easily be converted into cash and market values may be adversely affected by these economic circumstances, market fundamentals, competition and demographic conditions. Because of the effect these factors have on real estate values, it is difficult to predict with certainty the level of future sales or sales prices that will be realized for individual assets.

We may not be able to conduct successful operations in the future

The results of our operations will depend, among other things, upon our ability to develop and market our properties. Furthermore, our proposed operations may not generate income sufficient to meet operating expenses or will generate income and capital appreciation, if any, at rates lower than those anticipated or necessary to sustain ourselves. Our operations may be affected by many factors, some known by us, some unknown, and some which are beyond our control. Any of these problems, or a combination thereof, could have a materially adverse effect on our viability as an entity and might cause the investment of our shareholders to be impaired or lost.

We are subject to risks associated with investments in real estate

The value of, and our income from, our properties may decline due to developments that adversely affect real estate generally and those that are specific to our properties. General factors that may adversely affect our real estate portfolios include:

increases in interest rates;

a general tightening of the availability of credit;

a decline in the economic conditions in one or more of our primary markets;

an increase in competition for customers or a decrease in demand by customers;

an increase in supply of our property types in our primary markets;

declines in consumer spending during an economic recession that adversely affect our revenue; and

the adoption on the national, state or local level of more restrictive laws and governmental regulations, including more restrictive zoning, land use or environmental regulations and increased real estate taxes.

Additional factors may adversely affect the value of, and our income from, specific properties, including:

adverse changes in the perceptions of prospective purchasers of the attractiveness of the property;

	·	opposition from local community or political groups with respect to development or construction at a particular site;

	·	a change in existing comprehensive zoning plans or zoning regulations that impose additional restrictions on use or requirements with respect to our property;

our inability to provide adequate management and maintenance or to obtain adequate insurance;

an increase in operating costs; and

new development of a competitor's property in or in close proximity to one of our current markets;

We are subject to real estate development risks

Our development projects are subject to significant risks relating to our ability to complete our projects on time and on budget. Factors that may result in a development project exceeding budget or being prevented from completion include:

an inability to secure sufficient financing on favorable terms, including an inability to refinance construction loans;

The subprime mortgage financial crisis beginning in 2008 brought about a rise in defaults and home foreclosures. It has also caused tighter lending standards. All this combined has driven down home prices and affected consumer confidence. The negative effect of the home mortgage lending crisis has continued to affect the Company’s ability to sell its properties and secure financing.

construction delays or cost overruns, either of which may increase project development costs;

an increase in commodity costs;

an inability to obtain zoning, occupancy and other required governmental permits and authorizations;

If any of these occur, we may not achieve our projected returns on properties under development and we could lose some or all of our investments in those properties.

The real estate business is competitive and many of our competitors are larger and financially stronger than we are

The real estate business is highly competitive. We compete with a large number of companies and individuals, and many of them have significantly greater financial and other resources than we have. Our competitors include local developers who are committed primarily to particular markets and also national developers who acquire properties throughout the U.S. We cannot assure that we will have the necessary resources to be competitive.

Unfavorable changes in economic conditions could adversely impact occupancy or rental rates

Weakened economic conditions, including decreased job growth and job losses, have affected and continue to significantly affect apartment home occupancy and rental rates. Significant decreases in occupancy or rental rates in the markets, in which we operate, in turn, may have a material adverse impact on our cash flows and operating results. The risks which may affect conditions in these markets include the following:

	•		changes in the national, regional, and local economic climates;
	•		local conditions, such as an oversupply of apartments or other housing available for rent, or a reduction in demand for apartments in the area;

	•		declines in the financial condition of our tenants, which may make it more difficult for us to collect rents from some tenants;
	•		changes in market rental rates;

	•		declines in mortgage interest rates, making alternative housing more affordable;
	•		government or builder incentives which enable first time home buyers to put little or no money down, making alternative housing options more attractive;

	•		a continued economic downturn which simultaneously affects one or more of our geographical markets; and
	•		increased operating costs, if these costs cannot be passed through to residents.

We may experience a decrease in rental revenues, an increase in operating expenses, or a combination of both, which may adversely affect our results of operations and our ability to satisfy our financial obligations.

Difficulties of selling real estate could limit our flexibility

We intend to evaluate the potential disposition of assets that may no longer help us meet our objectives. When we decide to sell an asset, we may encounter difficulty in finding buyers in a timely manner as real estate investments generally cannot be disposed of quickly, especially when market conditions are poor. These difficulties have been exacerbated in the current credit environment because buyers have experienced difficulty in obtaining the necessary financing. These factors may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions and may also limit our ability to utilize sales proceeds as a source of liquidity, which would adversely affect our ability finance current operations or repay debt.

Investments through joint ventures involve risks not present in investments in which we are the sole investor

We have invested and may continue to invest as a joint venture partner in joint ventures. These investments involve risks, including the possibility the other joint venture partner may have business goals which are inconsistent with ours, be in a position to take action or withhold consent contrary to our requests, or become insolvent and require us to assume and fulfill the joint venture’s financial obligations. We and our joint venture partner may each have the right to initiate a buy-sell arrangement, which could cause us to sell our interest, or acquire our joint venture partner’s interest, at a time when we otherwise would not have entered into such a transaction. Each joint venture agreement is individually negotiated, and our ability to operate and/or dispose of these investments in our sole discretion may be limited to varying degrees depending on the terms of the joint venture agreement.

We depend on our key personnel and resources

Our success depends in part on our ability to attract and retain the services of executive officers, board directors and other personnel resources. There is substantial competition for qualified personnel in the real estate industry, and the loss of any of our key personnel could have an adverse effect on us.

We may be unable to renew, repay, or refinance our outstanding debt

We are subject to the risk that indebtedness on our properties or our unsecured indebtedness will not be renewed, repaid, or refinanced when due or the terms of any renewal or refinancing will not be as favorable as the existing terms of such indebtedness. If we are unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of the properties on disadvantageous terms, which might result in losses to us. Such losses could have a material adverse effect on us and our ability to pay amounts due on our debt. Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgagee could foreclose on the property, appoint a receiver and exercise rights under an assignment of rents and leases, or pursue other remedies, all with a consequent loss of our revenues and asset value.

Variable rate debt is subject to interest rate risk

We have mortgage debt with varying interest rates dependent upon certain market indexes such as the Prime rate. We may incur additional variable rate debt in the future. Increases in interest rates on variable rate debt would increase our interest expense, unless we make arrangements which hedge the risk of rising interest rates, which would adversely affect net income and cash available for payment of our debt obligations.

Issuances of additional debt may adversely impact our financial condition

Our capital requirements depend on numerous factors, including the occupancy rates of our apartment properties, development and capital expenditures, and costs of operations. If our capital requirements vary materially from our plans, we may require additional financing earlier than anticipated. If we issue or assume more debt, we could become more leveraged, resulting in increased risk of default on our obligations and an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt in the future.

Insurance and Environmental Risks

In addition to these other significant business and financial risks, including but not limited to liquidity, the prevailing real estate market, fluctuations in prevailing interest rates, timely completion of projects by developers, we can be subject to uninsured risks such as earthquake and other casualty damage that may be uninsurable or insurable only at economically unfeasible costs, and potential environmental liabilities relating to properties on which we have made investments or received through foreclosure.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a)	Not Applicable.

(b)	Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

[Reserved].

ITEM 5. OTHER INFORMATION.

Not applicable.

ITEM 6. EXHIBITS.

(a)

Exhibits

Exhibits submitted with this Form 10-Q, as filed with the Securities and Exchange Commission, or those incorporated by reference to other filings are:

Exhibit No.

Description of Exhibit

3(i)	Articles of Incorporation of the Company is incorporated by reference to Exhibit 3(i) to the Company’s Form 10-12 G/A, previously filed on April 28, 2000

3(ii)

Bylaws, Amended March 30, 2000 is incorporated by reference to Exhibit 3(ii) to the Company’s Form 10-12 G/A, previously filed on April 28, 2000

3(iii)

Articles Supplementary of the Company is incorporated by reference to Exhibit 99.1 to the Company’s Form 10-12 G/A, previously filed on April 28, 2000

3(iv)

Specimen Stock Certificate, is incorporated by reference to Exhibit 99.2 to the Company’s Form 10-12 G/A, previously filed on April 28, 2000

4.1	Shareholder Rights Agreement dated July 19, 2004 is incorporated by reference to Exhibit 4.4 in the Form 8-K previously filed July 20, 2004

10.1	Compensation Agreement dated May 12, 2007 between BellaVista Capital, Inc. and Michael Rider is incorporated by reference to Exhibit 10.1 to the Company’s March 31, 2007 Form 10-QSB, previously filed on May 21, 2007

10.2	Compensation Agreement dated May 12, 2007 between BellaVista Capital, Inc. and Eric Hanke is incorporated by reference to Exhibit 10.2 to the Company’s March 31, 2007 Form 10-QSB, previously filed on May 21, 2007

10.3	Compensation Agreement dated September 25, 2007 between BellaVista Capital, Inc. and William Offenberg, is incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-KSB for the year ended September 30, 2007, filed on December 31, 2007

10.4	Management Agreement between BellaVista and RMRF Enterprises, Inc., dba Cupertino Capital is incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-KSB for the year ended September 30, 2008, filed on January 3, 2009

11.1	Statement regarding computation of per share earnings

14.1	Code of Ethics is incorporated by reference to Exhibit 14.1 to the Company’s 2003 Form 10-K, previously filed on April 14, 2004

31.1	Certification of Chief Executive Officer and Chief Financial Officer

32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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.

March 25, 2011

/s/ WILLIAM OFFENBERG

William Offenberg

Chief Executive Officer and Chief Financial Officer

BellaVista Capital, Inc.