Unr 10Q/A 2009 Q4 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________

Form 10-Q/A

(Amendment No. 4)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

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 000-23712

UNR HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Colorado		02-0755762
(State or Other Jurisdiction of		(I.R.S. Employer Identification No.)
Incorporation or Organization)

301 East Pine Street, Suite 150, Orlando, FL		32801
(Address of principal executive offices)		(Zip Code)

(407) 210-6541

(Registrant's Telephone Number, Including Area Code)

1809 E. Broadway St., Suite 346, Oviedo, FL 32765

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. (Check One):

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o	Smaller reporting company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

The number of shares outstanding the issuer's common stock, no par value, was 24,464,799 as of May 1, 2009.

EXPLANATORY NOTE

UNR Holdings, Inc. (formerly known as Promotora Valle Hermoso, Inc. and referred to in this report as “we” or the “Company”) is filing this Amendment No. 4 to its Quarterly Report on Form 10-Q/A for the three months ended March 31, 2009 to reflect the restatement of its consolidated financial statements and the notes thereto.

As disclosed by the Company in its Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on April 8, 2010, the Audit Committee of the Board of Directors of the Company, upon the recommendation of management and in consultation with the Company’s independent registered public accounting firm, ZAO BDO, a member firm of BDO International (“BDO”), and its former independent registered public accounting firm, Wiener, Goodman & Company, P.C. (“Wiener Goodman”), concluded that the previously issued financial statements (the “2008 Financial Statements”) contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (the “2008 Annual Report”), should no longer be relied upon due to errors in such financial statements, and that the Company would restate such financial statements to make the necessary accounting corrections.

The errors that require the restatement of the above-referenced financial statements relate to the accounting treatment of certain accounts receivable in respect of one of the Company’s projects, construction of a multi-functional residential and commercial complex on Marshall Rybalko Street (the “Project”) in Moscow. The Company has been acting as the General Contractor of the Project for the Russian Ministry of Defense (the “Principal”). In this capacity, the Company organized the construction and subcontracted with other companies for the performance of certain parts of the Project. The amounts of such subcontractor services were $37,694,545 and $-0-, respectively, for our fi scal years ended December 31, 2008 and 2007. The Principal refused to pay for the amounts payable to these subcontractors for their services. We initiated a lawsuit in order to recover these amounts from the Principal, with the current amount of our claims equal to $35,341,012. The court of primary jurisdiction accepted our claims, however, the Principal filed an appeal to a higher court, and presently our management and counsel are not in the position to determine the ultimate outcome of the litigation. While the ultimate outcome of this litigation is uncertain, management believes that the Company will ultimately prevail and collect substantially all of these amounts due from the Principal. Accordingly, no provision for the unrecoverability of these accounts receivable has been recorded.

The Company’s 2008 Financial Statements have been restated to record the amounts of these subcontractor services as liabilities under “accounts payable and accrued expenses”, and to record the amount due from the Principal as an asset under “accounts receivable”, and a new note 10 has been added to the 2008 Financial Statements to reflect the correction of this error. Corresponding changes have been made to the consolidated balance sheets at December 31, 2008 (as restated) included in our 2008 Financial Statements, as well as to notes 7 and 11 (as note 10 in the previously issued financial statements is being renumber ed) thereto.

This Form 10-Q/A for the three months ended March 31, 2009, is being amended solely to reflect in Part I, Item 1, Financial Statements, the corresponding changes to the amounts set forth on the Company’s consolidated balance sheets at December 31, 2008, which are being corrected consistent with the above restatement, and related changes to the notes to the financial statements included in this Form 10-Q/A. For the sake of clarity, additional conforming changes have been made to the captions of the financial statements to reflect the Company’s name change from “Promotora Valle Hermos o, Inc.” to “UNR Holdings, Inc.” The other items of the Quarterly Report on Form 10-Q/A for the three months ended March 31, 2009 are being reproduced as part of the amendment solely for the convenience of the reader and the content set forth in such sections is as of May 13, 2009, the original filing date of our Quarterly Report on Form 10-Q for the three months ended March 31, 2009 (except as specifically amended, modified or updated in the amendments to that Quarterly Report on Form 10-Q/A filed subsequently by the Company with the Commission). Any forward-looking statements included in this Form 10-Q/A for the three months ended March 31, 2009, represent management’s view as of the original filing date of our Quarterly Report on Form 10-Q for the three months ended March 31, 2009, as explained above.

Promotora Valle Hermoso, Inc.

Index
		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Balance Sheets as of March 31, 2009
	and December 31, 2008 (unaudited)	3

	Consolidated Statements of Operations for the
	Three Months Ended March 31, 2009 and 2008 (Unaudited)	4

	Consolidated Statements of Comprehensive Income for the
	Three Months Ended March 31, 2009 and 2008 (Unaudited)	5

	Consolidated Statement of Stockholders' Equity
	(Deficiency) for the Period Ended March 31, 2009
	(Unaudited)	6

	Statement of Cash Flows for the Three Months
	Ended March 31, 2009 and 2008	7-8

	Notes to Unaudited Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial
	Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4T.	Controls and Procedures	40

PART II.	OTHER INFORMATION

Item 6.	Exhibits.	42

Signatures		42

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ending December 31, 2008.

The results of operations for the three months ended March 31, 2009 and 2008 are not necessarily indicative of the results for the entire fiscal year or for any other period.

UNR HOLDINGS, INC. AND SUBSIDIARY

(FORMERLY PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY)

FINANCIAL STATEMENTS

March 31, 2009 and 2008

(Unaudited)

UNR HOLDINGS, INC. AND SUBSIDIARY
(FORMERLY PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY)
CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,			December 31,
	2009 (As restated)			2008 (As restated)
ASSETS

Cash and cash equivalents	$	4,188,612		$	16,430,669
Inventories		72,464,003			83,699,178
Receivables - net of allowance for doubtful accounts
of $500,000 and $-0-		46,805,063			47,005,170
Property, plant and equipment - net		716,234			678,147
Other assets		143,275			165,868

TOTAL ASSETS	$	124,317,187		$	147,979,032


LIABILITIES AND EQUITY

Notes payable	$	8,870,557		$	18,365,007
Accounts payable and other liabilities		38,222,027			38,651,801
Customer deposits		46,616,086			61,913,672
Deferred income taxes		7,088,470			6,974,741
Total Liabilities		101,297,140			125,905,221


Commitments and Contingencies		-			-

Equity:
Promotora Valle Hermoso, Inc. and Subsidiary Stockholders' Equity:
Common stock, $0.001 par value; authorized 100,000,000
shares; outstanding 24,464,799 and 24,464,799 shares, respectively		24,465			24,465
Paid-in capital		99,579			99,579
Retained earnings		19,953,677			17,195,878
Accumulated other comprehensive loss		(7,021,199	)		(3,840,847	)
Total Promotora Valle Hermoso, Inc. and Subsidiary Stockholders' Equity		13,056,522			13,479,075

Noncontrolling interest		9,963,525			8,594,736
Total Equity		23,020,047			22,073,811

TOTAL LIABILITIES AND EQUITY	$	124,317,187		$	147,979,032

See notes to unaudited consolidated financial statements.

UNR HOLDINGS, INC. AND SUBSIDIARY
(FORMERLY PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)


	For the Three Months Ended
	March 31,
	2009 (As restated)		2008 (As restated)

Revenues:
Home building	$	10,444,215	$	11,739,581
Road base product		926,270		5,228,996
		11,370,485		16,968,577

Costs and expenses:
Cost of sales		5,877,290		12,550,709
Selling, general and administrative costs		723,598		1,195,975
		6,600,888		13,746,684

Income from operations		4,769,597		3,221,893
Other income (expense):
Foreign currency transaction gain		50,799		1,524,056
Other income (principally rental income)		421,645		704,608
		472,444		2,228,664
Income before provision for income taxes		5,242,041		5,450,557

Provision for income taxes		1,115,453		1,308,134

Net earnings		4,126,588		4,142,423

Less: Net income attributable to the
noncontrolling interest		1,368,789		1,373,627

Net earnings attributable to Promotora
Valle Hermoso Inc. and Subsidiary	$	2,757,799	$	2,768,796

Earnings per share - basic and diluted:
Earnings per common share attributable to
Promotora Valle Hermoso, Inc. and Subsidiary
common shareholders	$	0.11	$	0.14

Weighted average common shares
outstanding - basic and diluted		24,464,799		20,500,000

Amounts attributable to Promotora Valle
Hermoso, Inc. and Subsidiary common shareholders:
Net earnings	$	2,757,799	$	2,768,796

See notes to unaudited consolidated financial statements.

UNR HOLDINGS, INC. AND SUBSIDIARY
(FORMERLY PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)


	Three Months Ended
	March 31,
	2009 (As restated)			2008 (As restated)

Net earnings	$	4,126,588		$	4,142,423

Other comprehensive income (loss) - net of tax:
Currency translation adjustment		(3,180,352	)		1,070,032

Comprehensive income		946,236			5,212,455

Comprehensive income attributable to noncontrolling
interest		(313,866	)		(1,728,450	)

Comprehensive income attributable to Promotora
Valle Hermoso, Inc. and Subsidiary	$	632,370		$	3,483,973

See notes to unaudited consolidated financial statements.

UNR HOLDINGS, INC. AND SUBSIDIARY
(FORMERLY PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY)
CONSOLIDATED STATEMENT OF EQUITY
(Unaudited)

																Accumulated
																Other
				Comprehensive			Common Stock				Paid-In		Retained			Comprehensive			Noncontrolling
	TOTAL			Income			No of shares		Amount		Capital		Earnings			Income (Loss)			Interests

Balance, January 1, 2008	$	11,380,002						20,500,000	$	20,500	$	99,579	$	7,373,321		$	169,103		$	3,717,499

Effect of recapitalization		-						3,964,799		3,965				(3,965	)

Net income		14,703,759		$	14,703,759							-		9,826,522			-			4,877,237

Currency translation adjustment		(4,009,950	)		(4,009,950	)						-					(4,009,950	)

Comprehensive income				$	10,693,809

Balance, December 31, 2008 (As restated)		22,073,811						24,464,799		24,465		99,579		17,195,878			(3,840,847	)		8,594,736


Net income		4,126,588		$	4,126,588							-		2,757,799			-			1,368,789

Currency translation adjustment		(3,180,352	)		(3,180,352	)						-					(3,180,352	)

Comprehensive income				$	946,236

Balance, March 31, 2009 (As restated)	$	23,020,047						24,464,799	$	24,465	$	99,579	$	19,953,677		$	(7,021,199	)	$	9,963,525

See notes to unaudited consolidated financial statements.

UNR HOLDINGS, INC. AND SUBSIDIARY
(FORMERLY PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
	For the Three Months Ended
	March 31,
	2009 (As restated)			2008 (As restated)

Cash flows from operating activities:
Net earnings	$	4,126,588		$	4,142,423

Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation		8,774			18,091
(Gain) on sale of property, plant and equipment		-			(129,052	)
Deferred income taxes		(291,659	)		1,307,591
Change in operating assets and liabilities		(7,678,748	)		(4,117,569	)
Net cash provided by (used in) operating activities		(3,835,045	)		1,221,484

Cash flows from investing activities:
Purchase of property, plant and equipment		(40,800	)		(2,693	)

Cash flows from financing activities:
Proceeds from borrowings		-			7,600,000
Repayment of loans		(8,194,450	)		(6,378,744	)
Net cash provided by (used in) financing activities		(8,194,450	)		1,221,256

Effect of exchange rate changes on cash		(171,762	)		295,243

Net increase (decrease) in cash		(12,242,057	)		2,735,290

Cash - beginning of period		16,430,669			6,736,680

Cash - end of period	$	4,188,612		$	9,471,970

Changes in operating assets
and liabilities consist of:
(Increase) decrease in accounts receivable	$	(769,644	)	$	(1,456,874	)
(Increase) decrease in inventories		8,318,256			(2,190,355	)
(Increase) decrease in customer deposits		(15,297,586	)		(2,259,792	)
Increase in accounts payable and
other liabilities		70,226			1,789,452
	$	(7,678,748	)	$	(4,117,569	)

See notes to unaudited consolidated financial statements.

UNR HOLDINGS, INC. AND SUBSIDIARY
(FORMERLY PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY)
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(Unaudited)

	For the Three Months Ended
	March 31,
	2009 (As restated)		2008 (As restated)

Supplementary Information:
Cash paid during the period for
Interest	$	399,890	$	256,693
Income taxes	$	18,026	$	13,608


Non-cash investing activities:
Services rendered in lieu of proceeds from
the sale of plant, property and equipment	$	-	$	674,912

See notes to unaudited consolidated financial statements.

UNR HOLDINGS, INC.

(Formerly Promotora Valle Hermoso, Inc.)

Notes to Unaudited Consolidated Financial Statements

March 31, 2009

1.	DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated balance sheet as of March 31, 2009 and the consolidated statements of operations, stockholders’ equity and cash flows for the periods presented herein have been prepared by the Company (as defined below) and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders’ equity and cash flows for all periods presented has been made. The information for the consolidated balance sheet as of December 31, 2008 was derived from audited financial statements.

Organization

UNR Holdings, Inc. and Subsidiary (formerly Promotora Valle Hermoso, Inc. and Subsidiary) (“Promotora Valle Hermoso” or the “Company”) operates its business through its majority-owned subsidiary, 494 UNR Open Joint Stock, Inc. (“494 UNR”). 494 UNR, a Russian Federation corporation, is a construction contractor operating in the Russian Federation. In addition to the general construction services, the Company develops and constructs multi-functional, multi-apartment residential complexes and produce and supply infrastructure projects with a proprietary polyethylene road base material.

494 UNR operates primarily in the Moscow regions of the Russian Federation and has completed projects in a number of other cities or urban areas. All revenue is earned within the Russian Federation.

Basis of Presentation

Effective March 24, 2008, Promotora Valle Hermoso entered into an Acquisition Agreement with the stockholders of 494 UNR, providing for the acquisition by the Company of 66.83% of the outstanding shares of common and preferred stock of 494 UNR. In connection with the final agreement, as of August 5, 2008, the Company issued 20,500,000 of its common stock to Alexey Ivanovich Kim (the “Controlling Shareholder”). Based on the number of outstanding voting securities as of August 5, 2008, the Controlling Shareholder owns beneficially approximately 84% of the Company’s issued and outstanding shares of common stock. In connection with the share exchange, the Company acquired the assets and assumed the liabilities of 494 UNR as the acquirer. The financial statements prior to August 5, 2008, reflect the assets and liabilities of 494 UNR at historical carrying amounts.

Under the March 24, 2008 Acquisition Agreement providing for the share exchange with the controlling stockholder of 494 UNR, the former management of Promotora Valle Hermoso had agreed to assume all debt of Promotora Valle Hermoso in exchange for the assets of the Company’s former subsidiary, “Conjunto Habitacional Maria Paz”. The sale of this subsidiary’s assets to former management was accomplished by the transfer of the ownership interests in this subsidiary in exchange for the assumption of approximately $1.0 million of debt of Promotora Valle Hermoso as of the August 4, 2008 closing date of the sale. The net assets sold in this transaction were approximately $400,000, representing the net assets of the Company as shown on its June 30, 2008, unaudited balance sheet included in its Quarterly Report on Form 10 - -Q, filed with the Securities and Exchange Commission (“SEC”) on August 11, 2008, reduced by approximately $400,000 for the reduced value of raw land and inventory due to the economic conditions within the construction industry sector in Ecuador. Following the sale of the existing business to former management, the Company retained no assets or liabilities attributable to operations of the parent corporation or operations of the Ecuador subsidiary prior to the sale of subsidiary’s assets and assumption by prior management of its liabilities.

The share exchange was accounted for as a recapitalization. The financial statements show a retroactive restatement of the Company’s historical stockholders’ equity to reflect the equivalent number of shares of common stock issued in the acquisition.

Effective August 5, 2008, the Company’s officers and directors resigned and new officers and a new Board of Directors were appointed, as well as the sale of the Company’s existing business to former management.

Summary of Significant Accounting Policies

Principles of Consolidation

The financial statements include the accounts of the Company and its majority-owned subsidiary. All intercompany transactions and balances have been eliminated. Where the Company’s ownership is less than 100 percent, the minority ownership interests are reported in the Consolidated Balance Sheet as a liability. The minority ownership interest of the Company’s earnings is classified as “Minority interests share of earnings of consolidated subsidiary” in the consolidated statement of operations.

Economic and Political Risks

The Company faces a number of risks and challenges since its operations are in the Russian Federation and its primary market is in the Russian Federation. 100% of the consolidated revenue is earned in the Russian Federation and 100% of the assets are located in the Russian Federation. Management cannot presently predict what future impact the political risk will have on the Company, if any, or how the political climate in the Russian Federation will affect the Company’s operations. Accordingly, events resulting from any change in the political climate could have a material effect on the Company.

Use of Estimates

The preparation of financial statements in conformity with accounting principles accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company is primarily engaged in developing several high-rise and mid-rise buildings and commercial centers that will take more than 12 months to complete as compared to sales of developments and houses that would be completed within a 12 month time frame. This change in activity during 2008, primarily commencing with the fourth quarter of 2008, qualified the Company under the percentage of completion method of accounting. As these buildings qualify under accounting principles, revenues and costs are recognized using the percentage of completion method of accounting in accordance with Financial Accounting Standards (“SFAS”) No. 66, “Accounting for Sales of Real Estate” (“SFAS 66”). Under the p ercentage of completion method, revenues and costs are to be recognized when construction is beyond the preliminary stage, the buyer is committed to the extent of having a sufficient initial and continuing investments that the buyer cannot require be refunded except for non-delivery of the apartment, sufficient apartments in the building have been sold to ensure that the property will not be converted to rental property, the sales prices are collectible and the aggregate sales proceeds and the total cost of the building can be reasonably estimated.

Revenue from sales of developments that do not meet the percentage of completion criteria are recognized under the revenue recognition method for completed work under SFAS 66. Revenue and costs will be recorded at the time of completion of apartment construction and delivery to the buyer. Revenue is not recognized until the sale is consummated, the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay, the seller’s receivable is not subject to subordination and the usual risks and rewards of ownership have been transferred to the buyer.

The cash received on the sale of apartments is recorded as customer advances or progress payments until the revenue is recognized. Cash advances at March 31, 2009 and December 31, 2008 against future revenue was $46,616,088 and $61,913,672, respectively.

Revenue from the sale of materials for road base product is recognized when the work is completed and accepted by the purchaser in accordance with SOP 81-1. The contracts are usually of a short duration. As a result, the revenue recognized would not differ under the percentage of completion or the completed-contract method.

Land, land development and the other common costs, both incurred and estimated to be incurred in the future, are amortized or allocated to the cost of projects closed based upon the total number of apartments to be constructed in each project. Any changes resulting from a change in the estimated number of apartments to be constructed or in the estimated costs subsequent to the commencement of delivery of apartments in the project are allocated to the remaining undelivered apartments. Construction and related costs are charged to the cost of apartments covered under the specific identifiable method.

The Company receives a significant amount of cash advances or progress payments from customers. Advances received from government agencies are not refundable but advances received from non-government customers are refundable at the customer’s request the Company not proceed with the consummation of the construction. A customer can receive a refund from a cancelled contract only if the Company or the customer replaces the contract and the advance with another customer.

Cash and Cash Equivalents

Cash and cash equivalents include cash deposited in checking accounts, overnight repurchase agreements and money market funds with maturities of 90 days or less when purchased. The cash balances are held at a few institutions and may, at times, exceed insurable amounts. The Company believes it mitigates this risk by depositing cash in major financial institutions.

Receivables

Accounts receivable are recorded when the apartments are delivered. Accounts receivables are presented in the balance sheet net of allowance for doubtful accounts. Receivables are due in 90 days from the date of the invoice and each customer is evaluated on their ability to demonstrate a commitment to pay. Receivables are written off when they are determined to be uncollectible. The allowance for doubtful accounts is estimated based on the Company’s historical losses, the existing economic conditions in the construction industry, and the financial ability of its customers. The Company determined the amount to record as an allowance for doubtful accounts at December 31, 2008 based on a percentage of the current year write offs to the total of accounts receivables outstanding. The Company also analyzed the days outstanding of receivables to determine an adequate reserve. The Company incurred historical losses for the first time during 2008 primarily due to the current economic crisis. The collectability of receivables remains strong despite the economic crisis and the Company believes the amount reserved will be more than sufficient to cover any bad debts. The days outstanding of receivables has decreased and the economic situation in the Russian Federation expects to be much stronger by the end of 2009. For the three months ended March 31, 2009 and 2008, the Company recorded bad debt expense of approximately $-0- and $-0-, respectively. In addition, as of March 31, 2009 and December 31, 2008, the Company established a reserve of $500,000 against future allowances for doubtful acc ounts. The reserve has been established due to the global financial crisis and the existing economic conditions in the Russian Federation. During 2008, the Company had a write-off of approximately $711,000, which was the first time the Company experienced a problem with their outstanding receivables. The Company expects this trend to continue during 2009 until the economic conditions in the Russian Federation improve. The $500,000 reserve is based on a percentage of 2008 bad debts to revenue during the period. The Company will monitor the economic conditions during 2009 to determine if additional reserves are needed.

Inventories

Inventories held for sale are recorded at the lower of cost or fair value less direct costs to sell. Fair value is defined as the amount at which an asset could be bought or sold in a current transaction between willing parties, that is, other than in a forced or liquidation sale. Construction costs are accumulated during the period of construction and charged to cost of sales under specific identification methods. Land, land development and common facility costs are allocated based on buildable acres to product types within each project, then charged to cost of sales equally based upon the number of apartments to be constructed in each product type. For inventories of projects under development, a loss is recorded when events and circumstances indicate impairment and the undiscounted future cash flows generated are less than the related carrying amounts and estimated cost to complete. The impairment loss is the difference between the recorded value of the individual project, and the discounted future cash flows generated from expected revenue of the individual project, less the associated cost to complete and direct costs to sell, which approximates fair value. The estimates used in the determination of the estimated cash flows and fair value of a project are based on factors known to us at the time such estimates are made and our expectations of future operations. These estimates of cash flows are significantly impacted by estimates of the amounts and timing of revenues and costs and other factors which, in turn, are impacted by local market economic conditions and the actions of competitors. Should the estimates or expectations used in determining estimated cash flows or fair value decrease or differ from current estimates in the future, we may be r equired to recognize additional impairments related to current and future projects.

Post Development Completion Costs

In instances where a development is substantially completed and sold and the Company has additional construction work to be incurred, an estimated liability is provided to cover the cost of such work and is recorded as cost of sales and included in accounts payable in the accompanying balance sheet. Post development completion costs relate to the Company’s home building operations. The nature of these costs would be any additional work that needs to be completed after the buyer has accepted title to the property. Revenue from the sale of the apartment is recorded under the Company’s revenue recognition policy which is prior to the completion of additional work. The additional work to be performed and the amount invoiced is usually not material to the amount billed to the buyer for the sale of the apartment.

Fair Value of Financial Instruments

For financial instruments, including cash, accounts receivable, accounts payable, notes payable and accrued expenses, it was assumed that the carrying amount approximated fair value because of the short maturities of such instruments. Management believes that the carrying amount debt is a reasonable estimate of its fair value.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. The Company grants credit to customers that are based on an evaluation of the customer's financial condition, without requiring collateral. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company controls its exposure to credit risk through credit approvals and progressive payments as the work is preformed.

The Company is also subject to the risk of currency fluctuations that may affect the prices paid for goods and the amounts received for revenue.

Advertising Costs

Advertising costs are treated as period costs and expensed as incurred. During the three months ended March 31, 2009 and 2008, advertising costs expenses were minimal as advertising costs are incurred by the agency hired by the Company to market its housing projects.

Interest

In accordance with SFAS 34, "Capitalization of Interest Cost", interest incurred is first capitalized to the property under development during the land development and construction period and expensed along with the associated cost of sales as the related inventory is sold. No interest was expensed for the three months ended March 31, 2009 and 2008 as all amounts were capitalized in ongoing projects that expect to be completed in future periods. Capitalized interest is included in Inventories – sold and unsold projects under development – in the Company’s consolidated balance sheet at March 31, 2009 and December 31, 2008. Interest has been capitalized for the Marchall project, where the estimated cost of construction is approximately $400 million. The Company commenced sale s of the Marchall project during the first quarter of 2009 and expects to complete the sales of the apartments in 2009. The balance of the commercial portion of the project will not be completed until 2011. The Marchall project is reviewed for impairment on a quarterly basis and no inventory or costs related to the project has been impaired as of March 31, 2009. The Marchall project consists of the construction of approximately 19,000 sq, m. of residential apartments, commercial retail space and the related infrastructure costs. As of March 31, 2009 and December 31, 2008, the total capitalized interest on the Marchall project was approximately $5.2 million and $6.5 million, respectively. Interest will be allocated to cost of sales as revenue is recognized.

Interest cost incurred, expensed and capitalized were:

	Three Months Ended
	March 31,
	2009
Interest capitalized at beginning of year	$	6,504,231
Plus interest incurred		399,890
Less cost of sales interest expense		-
Less other interest expense		-
Less unrealized exchange loss		(1,687,806	)
	$	5,216,315

Depreciation

Equipment is stated at cost less accumulated depreciation and amortization. Depreciation is calculated primarily using the straight-line method over their estimated useful lives.

Income Taxes

The Company accounts for income taxes using an asset and liability approach under which deferred income taxes are recognized by applying enacted tax rates applicable in future years to the differences noted in the financial statement carrying amounts and the tax basis of the reported assets and liabilities.

The principal item giving rise to deferred taxes is expenses deductible for tax purposes that are not deductible for book purposes.

The Company accounts for income taxes in accordance with the Internal Income Tax Law of the Russian Federation. The Company is taxed at a rate of 20% in 2009 and 24% in 2008.

Foreign Currency Translation

The Russian ruble is the Company’s functional currency and the United States dollar is the reporting currency.

Conversion of currency from the Russian ruble into a United States dollar (“US $”) has been made at the respective applicable rates of exchange. Monetary assets and liabilities denominated in foreign currencies are converted into US $ at the applicable rate of exchange at the balance sheet date. Income and expense items are converted at the average rates for the years then ended.

Earnings Per Share

Basic earnings per common share are computed by dividing net earnings by weighted average number of common shares outstanding during the year. Diluted earnings per common share are computed by dividing net earnings by the weighted average number of common share and potential common shares outstanding during the year. There were no potential common shares outstanding for the three months ended March 31, 2009 and 2008.

Advance payments to Contractors

Advance payments to Contractors principally include prepayments to subcontractors for goods and services and which relate to specific housing projects (home building operations) which are expensed to cost of sales as the applicable inventory are sold. The projects typically are one to three years in length and the subcontractor costs are expensed on a specific project to project basis. The payment to subcontractors include prepayments prior to the work commencing, advance payments for raw materials, and architectural and engineering services prior to the work being submitted to the authorities. All projects are reviewed quarterly for impairment issues. If any impairment exists, costs will be written down at that time. Advance payments to contractors are included in inve ntory on the Company’s consolidated balance sheet at March 31, 2009 and December 31, 2008.

Rental Income

The Company leases, to third parties, buildings and equipment under operating lease arrangements for a period of up to one year. The lease terms usually begin on January 1 and terminate on December 31 and are renewable on an annual basis after new negotiations. Minimum lease revenues are recognized on a straight-line basis over the minimum lease term. Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the initial lease term.

Reclassifications

Effective January 1, 2009, the Company completed its implementation of SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51”. As a result of adopting SFAS No. 160, prior years balances were reclassified to conform to current presentation.

New Financial Accounting Standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which enhances existing guidance for measuring assets and liabilities using fair value. This Standard provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. In February 2008, the FASB issued FASB Staff Position SFAS 157-1, “Application of SFAS No. 157 to SFAS No. 13 and Its Related Interpretative Accounting Pronouncements that Address Leasing Transactions” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2, “Effective Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes SFAS No. 13 and its related interpretive acco unting pronouncements that address leasing transactions from the requirements of SFAS No. 157, with the exception of fair value measurements of assets and liabilities recorded as a result of a lease transaction but measured pursuant to other pronouncements within the scope of SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective for the Company upon adoption of SFAS No. 157 on January 1, 2008. See Note 3 of Notes to Consolidated Financial Statements for disclosures related to the Company’s financial assets accounted for at fair value on a recurring or nonrecurring basis. The Company completed its implementation of SFAS No. 157 effective January 1, 2009 and it did not have a material impact on its financial statements.

In December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 “Business Combinations”. This Statement is intended to improve the relevance, completeness and representational faithfulness of the information provided in financial reports about the assets acquired and the liabilities assumed in a business combination. This Statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the Statement. Under SFAS 141(R), acquisition-related costs, including restructuring costs, must be recognized separately from the acquisition and will generally be expensed as incurred. That replaces SFAS 141R 17;s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. SFAS 141(R) shall be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual report period beginning on or after December 15, 2008. The Company completed its implementation of SFAS No. 141(R) effective January 1, 2009 and it did not have a material impact on its financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States. The Company completed its implementation of SFAS No. 162 effective January 1, 2009 and it did not have a material impact on its financial statements.

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements - An amendment of ARB No. 51” (“SFAS 160”). SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of noncontrolling interests (minority interest) as equity in the consolidated financial statements and separate from parent’s equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. SFAS 160 clarifies that changes in a parent’s ownership in a subsidiary that does not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment of the deconsolidation date. SFAS 160 also includes expanded disclosure requirements regarding the interest of the parent and its noncontrolling interest. SFAS 160 is effective for fiscal years, and interim periods other than fiscal years, beginning on or after December 15, 2008. The Company completed its implementation of SFAS No. 160 effective January 1, 2009 and it did have a material impact on the Company’s Consolidated Balance Sheet. See Note 6 of Notes to Unaudited Consolidated Financial Statements.

2. Property

Property, plant and equipment consists of buildings, building improvements, furniture and equipment used in the ordinary course of business and are recorded at cost less accumulated depreciation. Accumulated depreciation related to these assets at March 31, 2009 and December 31, 2008 amounted to $133,845 and $173,261, respectively.

Depreciation expense for the three months ended March 31, 2009 and 2008 amounted to $8,774 and $18,091, respectively.

Classification		Expected Useful Lives

Buildings and building improvements		7-30 years
Transportation equipment		5-15 years
Equipment		5-10 years

3. Inventories

In accordance with Financial Accounting Standards No. 144, “Accounting for the Impairment of or Disposal of Long Lived Assets” (“SFAS 144”), the Company records impairment losses on inventory related to projects under development when events and circumstances indicate that they may be impaired and the undiscounted cash flows estimated by these assets are less than their related carrying amounts. The Company recorded no impairments for the three months ended March 31, 2009 and 2008.

As of March 31, 2009 and December 31, 2008, inventory consists of the following:

	March 31,		December 31,
	2009 (As restated)		2008 (As restated)
Unsold projects under development		57,953,908		71,330,736

Raw materials - home building		335,897		380,517
- road base product		1,692,387		1,989,155

Advance payments to contractors		12,481,813		9,998,770
	$	72,464,005	$	83,699,178

4. Notes Payable

Notes payable balances as of March 31, 2009 and December 31, 2008 were as follows:

	March 31,		December 31,
	2009		2008
Note payable to OJSC Ros Der Bank,	$	-	$	8,103,614
interest @ 14%, due November 18, 2008
and extended to February 2009. The note
was repaid in full in February 2009. (b)

Note payable to OJSC Sberbank of RF,		-		-
interest @ 14%, matured February 20, 2008

Note payable to OJSC Sberbank of RF,		8,820,053		10,210,889
interest @ 12.75%, due June 2009

Notes payable to Dunchoille Holdings Limited,		-		-
interest @ 10% due December 31, 2007.
The notes were paid in full in July 2008.
Interest in the amount of $718,167 has
been earned as of December 31, 2007 (a)

Note payable to officer, interest free,
due on demand		50,504		50,504
	$	8,870,557	$	18,365,007

The following table shows the maturities by year of the total amount of notes payable at March 31, 2009:

Year ending December 31, 2009

8,870,557

The notes payable are collateralized by the Company’s accounts receivable and current projects under construction. The loan agreements contain no debt covenants or required ratios that need to be maintained. There are penalties or increases in the interest rates for a delay in payments, which can be as high as 21%.

Interest expense for the three months ended March 31, 2009 and 2008 in the amount of $401,226 and $396,794, respectively has been capitalized and included in the cost of sold and unsold projects under development in the Company’s balance sheet at March 31, 2009 and December 31, 2008.

(a) In July 2008, the notes payable to Dunchoille Holdings Limited was paid in full on the maturity date of the agreement. The note was payable in US dollars and due to the strength of the Ruble compared to the US dollar, a realized exchange gain in the amount of approximately $1.6 million was recorded in the Consolidated Statement of Operations during the year ended December 31, 2008 upon liquidation of the notes reflecting the difference in exchange rates when the note proceeds was received and the exchange rates at maturity.

(b) In November and December 2008, the Company made partial payments to OJSC Ros Der Bank. The note payable was payable in US dollars and due to the strength of the US dollar compared to the Ruble a realized exchange loss in the amount of approximately $450,000 was recorded in the Consolidated Statement of Operations and included in administrative expenses during the year ended December 31, 2008 upon partial liquidation of the notes reflecting the difference in exchange rates when the note proceeds were received and the exchange rates of maturity. In February 2009, the Company paid in full the balance of the note.

5. Income Taxes

The Company adopted the provision of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainties in Income Taxes” (“FIN 48”), on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized no adjustment in the net liabilities or equity for unrecognized income tax benefit. The Company believes there are no potential uncertain tax positions and all tax returns are correct as filed. Should the Company recognize a liability for uncertain tax positions, the Company will separately recognize the liability for uncertain tax positions on its balance sheet. Included in any liability for uncertain tax positions, the Company will also setup a liability for interest and penalties. The Company’s policy is to re cognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes.

6. Noncontrolling Interest

Effective January 1, 2009, the Company completed its implementation of SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – An amendment of ARB No. 51”.

The noncontrolling interest represents the third parties of 494 UNR who did not exchange their shares with the Company in connection with the share exchange agreement.

The following table sets forth the noncontrolling interest balances and the changes in these balances attributable to the noncontrolling investors’ interests:

	March 31,		December 31,
	2009		2008
Balance at beginning of period	$	8,594,736	$	3,717,499

Non-controlling interest share of income		1,368,789		4,877,237

Balance at end of period	$	9,963,525	$	8,594,736

7. Segment Information

The Company operates in one industry with two reportable segments. The segments are home building and road base product. The primary criteria by which financial performance is evaluated and resources are allocated are revenues and operating income. The following is a summary of key financial data:

	Three Months Ended
	March 31,
	2009		2008
Net sales:
Home building	$	10,444,215	$	11,739,581
Road base product		926,270		5,228,996
	$	11,370,485	$	16,968,577

Income from operations:
Home building	$	3,221,051	$	2,711,542
Road base product		290,345		510,351
	$	3,511,396	$	3,221,893

	March 31,		December 31,
	2009 (As restated)		2008 (As restated)
Total Assets:
Home buildings	$	122,625,430	$	145,989,877
Road base products		1,692,387		1,989,155
Total Assets	$	124,317,817	$	147,979,032

8. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss as of March 31, 2009 and December 31, 2008 are summarized below:

	March 31,			December 31,
	2009			2008 (As restated)
Foreign currency translation adjustment	$	(7,021,199	)	$	(3,840,847	)

9. Restated Consolidated Financial Statements

The Company has restated its financial statements for the period ending March 31, 2009 for the correction of errors found in previously issued financial statements. Customer deposits of approximately $47 million have been adjusted and reclassified as a liability on the Company’s Consolidated Balance Sheet. The Company has increased inventories by a corresponding amount rather than netting the customer deposits against inventories.

The Company also corrected an error due to a foreign currency transaction. The Company originally accounted for the foreign currency transaction loss in the fourth quarter of 2008 in other comprehensive income. The Company has restated its statement of operations to reflect the $995,000 foreign currency transaction loss net of taxes in current net income in 2008 and not in the first quarter of 2009. The correction allocation between noncontrolling interest and the Company has been revised.

The Company has restated its realized transaction gain from selling, general and administrative costs and reclassified the amount to foreign transaction gain.

The following represents the restated consolidated financial statements as of March 31, 2009 and adjustments related to the consolidated financial statements.

CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,							March 31,
	2009 (As reported)				Adjustments			2009 (As restated)
ASSETS

Cash and cash equivalents	$	4,188,612			$	-		$	4,188,612
Inventories		25,847,917		(1)		46,616,086			72,464,003
Receivables - net of allowance for doubtful accounts
of $500,000 and $-0-		9,110,518		(3)		37,694,545			46,805,063
Property, plant and equipment - net		716,234							716,234
Other assets		143,275							143,275

TOTAL ASSETS	$	40,006,556						$	124,317,187


LIABILITIES AND EQUITY

Notes payable	$	8,870,557						$	8,870,557
Accounts payable and other liabilities		1,027,482		(3)		37,694,545			38,722,027
Customer deposits		-		(1)		46,616,086			46,616,086
Deferred income taxes		7,088,470							7,088,470
Total Liabilities		16,986,509							101,297,140


Commitments and Contingencies		-							-

Equity:
Promotora Valle Hermoso, Inc. and Subsidiary Stockholders' Equity:
Common stock, $0.001 par value; authorized 100,000,000
shares; outstanding 24,464,799 and 24,464,799 shares, respectively		24,465							24,465
Paid-in capital		99,579							99,579
Retained earnings		19,929,057		(2)		24,620			19,953,677
Accumulated other comprehensive loss		(7,021,199	)						(7,021,199	)
Total Promotora Valle Hermoso, Inc. and Subsidiary Stockholders' Equity		13,031,902							13,056,522

Noncontrolling interest		9,988,145		(2)		(24,620	)		9,963,525
Total Equity		23,020,047							23,020,047

TOTAL LIABILITIES AND EQUITY	$	40,006,556						$	124,317,187

(1)	Customer deposits were restated as a liability.

(2)	Foreign currency transaction adjusted resulted in a reallocation of the net income between the noncontrolling interest and the Company.

(3)	Receivables and accounts payables were increased to reflect amounts due from the Russian Ministry of Defense and the corresponding amount due to subcontractors.

See notes to unaudited consolidated financial statements.

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)



	For the Three Months Ended						For the Three Months Ended
	March 31, 2009 (As reported)			Adjustments			March 31, 2009 (As restated)

Revenues:
Home building	$	10,444,215					$	10,444,215
Road base product		926,270						926,270
		11,370,485						11,370,485

Costs and expenses:
Cost of sales		5,877,290	(2)	50,799				5,877,290
Selling, general and administrative costs		1,981,799	(1)		(1,309,000	)		723,598
		7,859,089						6,600,888

Income from operations		3,511,396						4,769,597
Other income (expense):
Foreign currency transaction gain		-	(2)		50,799			50,799
Other income (principally rental income)		421,645						421,645
		421,645						472,444
Income before provision for income taxes		3,933,041						5,242,041

Provision for income taxes		801,453	(1)		314,000			1,115,453

Net earnings		3,131,588						4,126,588

Less: Net income attributable to the
noncontrolling interest		1,063,368						1,368,789

Net earnings attributable to Promotora
Valle Hermoso Inc. and Subsidiary	$	2,068,220					$	2,757,799

Earnings per share - basic and diluted:
Earnings per common share attributable to
Promotora Valle Hermoso, Inc. and Subsidiary
common shareholders	$	0.08					$	0.11

Weighted average common shares
outstanding - basic and diluted		24,464,799						24,464,799

Amounts attributable to Promotora Valle
Hermoso, Inc. and Subsidiary common shareholders:
Net earnings	$	2,068,220					$	2,757,799

(1) Foreign currency transaction was adjusted to record the amount in the fourth quarter of 2008 - net of taxes.

(2) Realized transaction gain was reclassified from selling, general and administrative costs to foreign currency transaction gain

See notes to unaudited consolidated financial statements.

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)



	For the Three Months Ended							For the Three Months Ended
	March 31, 2009 (As reported)				Adjustments			March 31, 2009 (As restated)

								2008

Net income	$	3,131,588		(1)	$	995,000		$	4,126,588

Other comprehensive income (loss) - net of tax:
Currency translation adjustment		(3,180,352	)						(3,180,352	)

Unrealized foreign translation loss reversal		995,000		(1)		(995,000	)		-

Total Other Comprehensive Income (loss) - net of tax		(2,185,352	)						(3,180,352	)

Comprehensive income		946,236							946,236

Comprehensive income attributable to noncontrolling
interest		313,866							313,866

Comprehensive income attributable to Promotora
Valle Hermoso, Inc. and Subsidiary	$	632,370						$	632,370

(1) Foreign currency transaction was adjusted to record the amount in the fourth quarter of 2008 - net of taxes.

See notes to unaudited consolidated financial statements.

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF EQUITY
MARCH 31, 2009
(Unaudited)

																Accumulated
																Other
As reported				Comprehensive			Common Stock				Paid-In		Retained			Comprehensive			Noncontrolling
	TOTAL			Income			No of shares		Amount		Capital		Earnings			Income (Loss)			Interests

Balance, January 1, 2008	$	11,380,002.00						20,500,000	$	20,500	$	99,579	$	7,373,321		$	169,103		$	3,717,499

Effect of recapitalization		-						3,964,799		3,965				(3,965	)

Net income		15,698,759		$	15,398,759							-		10,491,481			-			5,207,278

Currency translation adjustment		(4,009,950	)		(4,009,950	)						-					(4,009,950	)

Unrealized foreign translation loss		(995,000	)		(995,000	)											(995,000	)

Comprehensive income				$	10,393,809

Balance, December 31, 2008		22,073,811						24,464,799		24,465		99,579		17,860,837			(4,835,847	)		8,924,777


Net income		3,131,588		$	3,131,588							-		2,068,220			-			1,063,368

Currency translation adjustment		(3,180,352	)		(3,180,352	)						-					(3,180,352	)

Unrealized foreign translation loss reversal		995,000			995,000												995,000

Comprehensive income				$	946,236

Balance, March 31, 2009	$	23,020,047						24,464,799	$	24,465	$	99,579	$	19,929,057		$	(7,021,199	)	$	9,988,145

As restated

Balance, January 1, 2008	$	11,380,002.00						20,500,000	$	20,500	$	99,579	$	7,373,321		$	169,103		$	3,717,499

Effect of recapitalization		-						3,964,799		3,965				(3,965	)

Net income		14,703,759		$	14,703,759							-		9,826,522			-			4,877,237

Currency translation adjustment		(4,009,950	)		(4,009,950	)						-					(4,009,950	)

Comprehensive income				$	10,693,809

Balance, December 31, 2008		22,073,811						24,464,799		24,465		99,579		17,195,878			(3,840,847	)		8,594,736


Net income		4,126,588		$	4,126,588							-		2,757,799			-			1,368,789

Currency translation adjustment		(3,180,352	)		(3,180,352	)						-					(3,180,352	)

Comprehensive income				$	946,236

Balance, March 31, 2009	$	23,020,047						24,464,799	$	24,465	$	99,579	$	19,953,677		$	(7,021,199	)	$	9,963,525

See notes to unaudited consolidated financial statements.

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)


	For the Three Months Ended							For the Three Months Ended
	March 31, 2009 (As reported)				Adjustments			March 31, 2009 (As restated)

Cash flows from operating activities:
Net earnings	$	3,131,588		(1)	$	995,000		$	4,126,588

Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation		8,774							8,774
(Gain) on sale of property, plant and equipment		-							-
Deferred income taxes		703,341		(1)		(995,000	)		(291,659	)
Change in operating assets and liabilities		(7,678,748	)						(7,678,748	)
Net cash provided by (used in) operating activities		(3,835,045	)						(3,835,045	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(40,800	)						(40,800	)

Cash flows from financing activities:
Proceeds from borrowings		-							-
Repayment of loans		(8,194,450	)						(8,194,450	)
Net cash provided by (used in) financing activities		(8,194,450	)						(8,194,450	)

Effect of exchange rate changes on cash		(171,762	)						(171,762	)

Net increase (decrease) in cash		(12,242,057	)						(12,242,057	)

Cash - beginning of period		16,430,669							16,430,669

Cash - end of period	$	4,188,612						$	4,188,612

Changes in operating assets
and liabilities consist of:
(Increase) in accounts receivable	$	(769,644	)					$	(769,644	)
(Increase) in inventories		(6,979,330	)	(2)		15,297,586			8,318,256
Increase in accounts payable and
other liabilities		70,226							70,226
Decrease in customer deposits		-		(2)		(15,297,586	)		(15,297,586	)
	$	(7,678,748	)					$	(7,678,748	)

(1) Foreign currency transaction was adjusted to record the amount in the fourth quarter of 2008 - net of taxes.

(2) Customer deposits were recorded as a liability with a corresponding entry to adjust inventories.

See notes to unaudited consolidated financial statements.

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(Unaudited)



	For the Three Months Ended			For the Three Months Ended
	March 31, 2009 (As reported)		Adjustments	March 31, 2009 (As restated)

Supplementary Information:
Cash paid during the period for
Interest	$	399,890		$	399,890
Income taxes	$	18,026		$	18,026

See notes to unaudited consolidated financial statements.

The Company has restated its financial statements for the year ending December 31, 2008 for the correction of errors found in previously issued financial statements. Customer deposits of approximately $62 million have been adjusted and reclassified as a liability on the Company’s Consolidated Balance Sheet. The Company has increased inventories by a corresponding amount rather than netting the customer deposits against inventories. The Company has increased receivables and accounts payable by $37,694,545 to reflect amounts due from the Russian Ministry of Defense and the corresponding amount due to subcontractors in connection with the construction of the residential building at Marshal Rybalko Street.

The Company also corrected an error due to a foreign currency transaction. The Company originally accounted for the foreign currency transaction loss through other comprehensive income rather than through current net income. The Company has restated its statement of operations to reflect the $995,000 foreign currency transaction loss net of taxes through current income. The additional loss was allocated between noncontrolling interest and the Company based on ownership of the noncontrolling interest.

The Company has restated its realized transaction gain from selling, general and administrative costs and netted the amount against foreign currency transaction loss.

The following represents the restated consolidated financial statements as of December 31, 2008 and adjustments related to the consolidated financial statements.

CONSOLIDATED BALANCE SHEETS


	December 31,							December 31,
	2008 - As reported				Adjustments			2008 (As restated)
ASSETS

Cash and cash equivalents	$	16,430,669						$	16,430,669
Inventories		21,785,506		(1)	$	61,913,672			83,699,178
Receivables - net of allowance for doubtful accounts
of $500,000 and $-0-		9,310,625		(3)		37,694,545			47,005,170
Property, plant and equipment - net		678,147							678,147
Other assets		165,868							165,868

TOTAL ASSETS	$	48,370,815						$	147,979,032


LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable	$	18,365,007						$	18,365,007
Accounts payable and other liabilities		957,256		(3)		37,694,545			38,651,801
Customer deposits		-		(1)		61,913,672			61,913,672
Deferred income taxes		6,974,741							6,974,741
Total Liabilities		26,297,004							125,905,221

Commitments and Contingencies		-							-

Equity:
Promotora Valle Hermoso, Inc. and Subsidiary Stockholders' Equity:
Common stock, $0.001 par value; authorized 100,000,000
shares; outstanding 24,464,799 and 20,500,000 shares, respectively		24,465							24,465
Paid-in capital		99,579							99,579
Retained earnings		17,860,837		(2)		(664,959	)		17,195,878
Accumulated other comprehensive income (loss)		(4,835,847	)	(2)		995,000			(3,840,847	)
Total Promotora Valle Hermoso, Inc. and Subsidiary
Stockholders' Equity		13,149,034							13,479,075

Noncontrolling interest		8,924,777		(2)		(330,041	)		8,594,736
Total Equity		22,073,811							22,073,811
TOTAL LIABILITIES AND EQUITY	$	48,370,815						$	147,979,032

(1)	Customer deposits were restated as a liability.

(2)	Foreign currency transaction was adjusted and included in current net income and not an unrealized loss adjusted through Accumulated Other Comprehensive Income (loss).

(3)	Receivables and accounts payables were increased to reflect amounts due from the Russian Ministry of Defense and the corresponding amount due to subcontractors.

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS

	For the Year Ended						For the Year Ended
	December 31,						December 31,
	2008 (As reported)			Adjustments			2008 (As restated)
Revenues:
Home building	$	72,930,202					$	72,930,202
Road base product		16,365,276						16,365,276
		89,295,478						89,295,478
Costs and expenses:
Cost of sales		65,260,260						65,260,260
Selling, general and administrative costs		5,279,665	(2)	1,142,663				6,422,328
		70,539,925						71,682,588

Income from operations		18,755,553						17,612,890

Other income expense:			(2)	1,142,663
Foreign currency transaction loss - net		-	(1)		(1,309,000	)		(166,337	)
Other income (principally rental income)		2,091,404						2,091,404
		2,091,404						1,925,067


Income before provision for income taxes		20,846,957						19,537,957
.
Provision for income taxes		5,148,198	(2)		(314,000	)		4,834,198

Net earnings		15,698,759						14,703,759

Less: Net income attributable to the
noncontrolling income		5,207,278						4,877,237

Net earnings attributable to Promotora Valle Hermoso,
Inc. and Subsidiary	$	10,491,481					$	9,826,522

Earnings per share - basic and diluted:
Earnings per common share attributable to
Promotora Valle Hermoso, Inc. and Subsidiary
common shareholders	$	0.45					$	0.42


Weighted average common shares
outstanding - basic and diluted		23,552,352						23,552,352

Amounts attributable to Promotora Valle Hermoso, Inc.
and Subsidiary common shareholders:
Net earnings	$	10,491,481					$	9,826,522

(1)	Foreign currency transaction was adjusted and included in current net income and not an unrealized loss adjusted through Accumulated Other Comprehensive Income (loss).

(2)	Realized transaction gain was reclassified from selling, general and administrative costs to foreign currency transaction loss - net

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Year Ended							Year Ended
	December 31,							December 31,
	2008 (As reported)				Adjustments			2008 (As restated)

Net earnings	$	15,698,759		(1)		(995,000	)	$	14,703,759

Other comprehensive income (loss) - net of tax:
Currency translation adjustment		(4,009,950	)						(4,009,950	)
Unrealized foreign transaction loss		(995,000	)	(1)		995,000			-
Total Other Comprehensive Income (loss) - net of tax		(5,004,950	)						(4,009,950	)

Comprehensive income		10,693,809							10,693,809

Comprehensive income attributable to
noncontrolling interest		(3,671,148	)						(3,671,148	)

Comprehensive income attributable to
Promotora Valle Hermoso, Inc. and Subsidiary	$	7,022,661						$	7,022,661

(1)	Foreign currency transaction was adjusted and included in current net income and not an unrealized loss adjusted through Accumulated Other Comprehensive Income (loss).

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

As Reported																Accumulated
																Other
				Comprehensive			Common Stock				Paid-In		Retained			Comprehensive			Noncontrolling
	TOTAL			Income			No of shares		Amount		Capital		Earnings			Income (Loss)			Interests

Balance, January 1, 2008	$	11,380,002						20,500,000	$	20,500	$	99,579	$	7,373,321		$	169,103		$	3,717,499

Effect of recapitalization		-						3,964,799		3,965				(3,965	)

Net income		14,703,759			14,703,759							-		9,826,522			-		$	4,877,237

Currency translation adjustment		(4,009,950	)		(4,009,950	)						-					(4,009,950	)

Comprehensive income				$	10,693,809

Balance, December 31, 2008 (As reported)	$	22,073,811						24,464,799	$	24,465	$	99,579	$	17,195,878		$	(3,840,847	)	$	8,594,736


As Restated																Accumulated
																Other
				Comprehensive			Common Stock				Paid-In		Retained			Comprehensive			Noncontrolling
	TOTAL			Income			No of shares		Amount		Capital		Earnings			Income (Loss)			Interests

Balance, January 1, 2008	$	11,380,002						20,500,000	$	20,500	$	99,579	$	7,373,321		$	169,103		$	3,717,499

Effect of recapitalization		-						3,964,799		3,965				(3,965	)

Net income		15,698,759			15,698,759							-		10,491,481			-			5,207,278

Currency translation adjustment		(4,009,950	)		(4,009,950	)						-					(4,009,950	)

Unrealized foreign transaction		(995,000	)		(995,000	)											(995,000	)


Comprehensive income				$	10,693,809

Balance, December 31, 2008 (As restated)	$	22,073,811						24,464,799	$	24,465	$	99,579	$	17,860,837		$	(4,835,847	)	$	8,924,777

CONSOLIDATED STATEMENT OF CASH FLOWS


	Year Ended								Year Ended
	December 31,								December 31,
	2008 - As Reported					Adjustments			2008 (As restated)

Cash flows from operating activities:
Net earnings	$	15,698,759				$	(995,000	)	$	14,703,759

Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation		64,355								64,355
(Gain) loss on sale of property, plant and equipment		(124,409	)							(124,409	)
Deferred income taxes	��	3,828,921		(1)	(2)		930,257			4,759,178
Change in operating assets and liabilities		(5,078,177	)		(2)		64,743			(5,013,434	)
Net cash provided by (used in) operating activities		14,389,449								14,389,449

Cash flows from investing activities:
Purchase of property, plant and equipment		(350,105	)							(350,105	)

Cash flows from financing activities:
Proceeds from borrowings		20,898,496								20,898,496
Repayment of loans		(24,135,413	)				-			(24,135,413	)
Net cash provided by (used in) financing activities		(3,236,917	)							(3,236,917	)

Effect of exchange rate changes on cash		(1,108,438	)							(1,108,438	)

Net increase (decrease) in cash		9,693,989								9,693,989

Cash - beginning of period		6,736,680								6,736,680

Cash - end of period	$	16,430,669							$	16,430,669

Changes in operating assets
and liabilities consist of:
(Increase) decrease in accounts receivable		(4,080,948	)							(4,080,948	)
(Increase) decrease in inventories		1,047,050			(2)		(7,749,149	)		(6,702,099	)
(Increase) decrease in customer advances		-					-			-
Increase in customer deposits		-
Increase (decrease) in accounts payable and					(2)		7,813,890			7,813,890
other liabilities		(2,044,279	)							(2,044,279	)
	$	(5,078,177	)						$	(5,013,436	)

(1)	Foreign currency transaction was adjusted and included in current net income and not an unrealized loss adjusted through Accumulated Other Comprehensive Income (loss).

(2)	Customer deposits were restated as a liability and the change in inventories were adjusted to reflect the restatement of customer deposits.

CONSOLIDATED STATEMENT OF CASH FLOWS
(Continued)

	Year Ended			Year Ended
	December 31,			December 31,
	2008 - As Reported		Adjustments	2008 (As restated)

Supplementary Information:
Cash paid during the period for
Interest	$	2,877,310		$	2,877,310
Income taxes	$	75,020		$	75,020


Non-cash investing activities:
Services rendered in lieu of proceeds from
the sale of plant, property and equipment	$	674,932		$	674,932

The Company has restated its financial statements for the period ending March 31, 2008 for the correction of an error. The Company corrected an error due to a foreign currency transaction gain in the amount of approximately $1.5 million. The Company recorded the gain as at the balance sheet date and not when realized.

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)



	For the Three Months Ended					For the Three Months Ended
	March 31, 2008 (As reported)			Adjustments		March 31, 2008 (As restated)

Revenues:
Home building	$	11,739,581				$	11,739,581
Road base product		5,228,996					5,228,996
		16,968,577					16,968,577

Costs and expenses:
Cost of sales		12,550,709					12,550,709
Selling, general and administrative costs		1,195,975					1,195,975
		13,746,684					13,746,684

Income from operations		3,221,893					3,221,893
Other income (expense):
Foreign currency transaction gain		-	(1)		1,524,056		1,524,056
Other income (principally rental income)		704,608					704,608
		704,608					2,228,664

Income before provision for income taxes		3,926,501					5,450,557

Provision for income taxes		942,907	(1)		365,227		1,308,134

Net earnings		2,983,594					4,142,423

Less: Net income attributable to the
noncontrolling interest		989,292					1,373,627

Net earnings attributable to Promotora
Valle Hermoso Inc. and Subsidiary	$	1,994,302				$	2,768,796

Earnings per share - basic and diluted:
Earnings per common share attributable to
Promotora Valle Hermoso, Inc. and Subsidiary
common shareholders	$	0.10				$	0.14

Weighted average common shares
outstanding - basic and diluted		20,500,000					20,500,000

Amounts attributable to Promotora Valle
Hermoso, Inc. and Subsidiary common shareholders:
Net earnings	$	1,994,302				$	2,768,796

(1) Foreign currency transaction was adjusted to record the amount in the first quarter of 2008 - net of taxes.

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)


	For the Three Months Ended					For the Three Months Ended
	March 31, 2008 (As reported)			Adjustments		March 31, 2008 (As restated)

						2008

Net income	$	2,983,594	(1)	$	1,158,829	$	4,142,423

Other comprehensive income (loss) - net of tax:
Currency translation adjustment		1,070,032					1,070,032

Unrealized foreign translation loss reversal		-			-		-

Total Other Comprehensive Income (loss) - net of tax		1,070,032					1,070,032

Comprehensive income		4,053,626					5,212,455

Comprehensive income attributable to noncontrolling
interest		1,344,588					1,728,450

Comprehensive income attributable to Promotora
Valle Hermoso, Inc. and Subsidiary	$	2,709,038				$	3,484,005

(1) Foreign currency transaction was adjusted to record the amount in the first quarter of 2008 - net of taxes.

PROMOTORA VALLE HERMOSO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)


	For the Three Months Ended							For the Three Months Ended
	March 31, 2008 (As reported)				Adjustments			March 31, 2008 (As restated)

Cash flows from operating activities:
Net earnings	$	2,983,594		(1)	$	1,158,829		$	4,142,423

Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation		18,091							18,091
(Gain) on sale of property, plant and equipment		(129,052	)						(129,052	)
Deferred income taxes		942,364		(1)		365,227			1,307,591
Change in operating assets and liabilities		(2,593,513	)	(1)		(1,524,056	)		(4,117,569	)
Net cash provided by (used in) operating activities		1,221,484							1,221,484

Cash flows from investing activities:
Purchase of property, plant and equipment		(2,693	)						(2,693	)

Cash flows from financing activities:
Proceeds from borrowings		7,600,000							7,600,000
Repayment of loans		(6,378,744	)						(6,378,744	)
Net cash provided by (used in) financing activities		1,221,256							1,221,256

Effect of exchange rate changes on cash		295,243							295,243

Net increase (decrease) in cash		2,735,290							2,735,290

Cash - beginning of period		6,736,680							6,736,680

Cash - end of period	$	9,471,970						$	9,471,970

Changes in operating assets
and liabilities consist of:
(Increase) in accounts receivable	$	(1,456,874	)					$	(1,456,874	)
(Increase) in inventories		(2,259,792	)			-			(2,259,792	)
Increase in accounts payable and
other liabilities		3,313,508		(1)		(1,524,056	)		1,789,452
Increase in customer deposits		(2,190,355	)			-			(2,190,355	)
	$	(2,593,513	)					$	(4,117,569	)

(1) Foreign currency transaction was adjusted to record the amount in the first quarter of 2008 - net of taxes.

10. Trade and Other Receivables, Net

	March 31, 2009 (As restated)		December 31, 2008 (As restated)
Trade accounts and notes receivable	$	6,082,976	$	6,699,460
Accounts receivable from the Russian Ministry of Defense		37,694,545		37,694,545
Other receivables		3,027,542		2,611,164
Total trade and other receivables, net	$	46,805,063	$	47,005,169

The balances of accounts receivable from the Russian Ministry of Defense are attributable to the construction of a multi-functional residential and commercial complex on Marshal Rybalko Street (the “Project”) in Moscow. The Company has been acting as the General Contractor of the Project for the Russian Ministry of Defense (the “Principal”). Upon completion of the Project, the Principal will retain ownership of over half of the residential space in the Project, with the Company having the ownership of, and the right to sell, the remaining space in the Project. The Company has not recognized any gross profit on the Project with the Principal through December 31, 2008.

In acting as the General Contractor of the Project, the Company organized the construction and subcontracted with other companies for the performance of certain parts of the Project. As of March 31, 2009 and December 31, 2008, these subcontractors performed construction services for the Project totaling $37,694,545 and $37,694,545, respectively. The amounts of subcontractor services are recorded as liabilities under "accounts payable and accrued expenses." The amount due from the Principal is recorded as an asset under "accounts receivable."

The amounts payable to the subcontractors for their services were presented to the Principal for acceptance and payment. The Principal refused to accept and pay for these subcontractor services. The Company initiated a lawsuit in order to recover these amounts from the Principal. The current amount of the claims is $35,341,012. The court of primary jurisdiction accepted the Company’s claims. However, the Principal filed an appeal to a higher court.

At present, the Company's management and lawyers cannot determine the ultimate outcome of this litigation. However, management believes that the Company will ultimately prevail and collect substantially all of the amounts due from the Principal. Accordingly, no provision for the unrecoverability of these accounts receivable has been recorded.

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

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto and the other financial information included elsewhere in this report. Certain statements contained in this report, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including our ab ility to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.

Overview

Throughout this report, the terms “we,” “us,” “our,” “Promotora Valle Hermoso”, “Promotora” and “our Company” refer to Promotora Valle Hermoso, Inc., a Colorado corporation, and, unless the context indicates otherwise, includes our subsidiaries.

Prior to August 5, 2008, we were engaged in the housing business in the Republic of Ecuador. Effective March 24, 2008, we entered into an Acquisition Agreement (the “Agreement”) with stockholders of OJSC “494 UNR”, a corporation incorporated under the laws of the Russian Federation (“494 UNR”), providing for the acquisition by the Company of 66.83% of all of the outstanding shares of common and preferred stock of 494 UNR. At the closing under the Agreement on August 5, 2008, we issued 20,500,000 shares of our common stock to the controlling stockholder of 494 UNR. The Agreement provided for resignation at closing of the Company’s officers and directors and the appointment of new officers and a new Board of Directors, as well as for the sa le of the Company’s existing business to former management. For accounting purposes, the Acquisition Agreement has been treated as a recapitalization of 494 UNR (now a 68.83% owned subsidiary of the Company) as the acquirer. The financial statements prior to August 5, 2008 are those of 494 UNR.

494 UNR is a construction and development company with its principal offices located in Bronnitsy (Moscow region), Russian Federation. 494 UNR operates primarily in the Moscow region of the Russian Federation and specializes in infrastructure supply services, and design/build apartment and office buildings and parks, warehouses, shopping centers and retail facilities, hotels, commercial housing projects and light industrial projects for governments, developers, businesses and end users.

Recent Developments

Recent constraints on the availability of credit in the worldwide banking system and in the Russian Republic impacted adversely the construction and development projects of our customers and are projected to have a consequent adverse effect on our revenues and results of operations. In addition, the number of customers for residential units in our projects has decreased because of decrease in general purchasing power. We do not see any risks in our disposing of inventory, but the time period for turn over of inventory has increased.

Results of Operations

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

REVENUES. Total revenues for the three months ended March 31,2009, decreased to $11.4 million, or 33.0 %, as compared to $17.0 million during the comparable period of 2008. The decrease was a result of a significant decrease in road base product revenues, from $5.2 million to $0.9 million, representing lower demand in the road/infrastructure construction market of our road base product, and a decrease in home building revenues, from $11.7 million to $10.4 million, or 11.1%, representing a decrease in sales of apartments from completed construction projects.

The Company’s businesses are seasonal. The winter season from December through February is a period of substantially reduced residential and other construction projects and road construction activity.

COST OF SALES. Cost of sales decreased by $6.7 million, or 53.4%, to $5.9 million for the three months ended March 31, 2009, from $12.6 million for the comparable period in 2008. This decrease was primarily due to substantially lower cost of sales of our road base product. Cost of sales of road base products decreased approximately $4.1 million due to the decrease in demand during 2009. Cost of sales decreased approximately $2.6 million for home building due primarily to a decrease in sales of apartments. Cost of sales as a % of sales has decreased 15.9% from 2008 to 2009. The Company attributes this decrease primarily to decreases in building construction costs allocated to completed sales and higher selling prices.

SELLING, GENERAL AND ADMINISTRATIVE COSTS. Selling, general and administrative costs decreased by approximately $.5 million , to $.7 million for the three months ended March 31, 2009 from $1.2 million in 2008. The Company attributes the decrease primarily to a reduction in payroll costs, travel expenses and professional fees.

INCOME FROM OPERATIONS. Income from operations increased by approximately $1.6 million, from $3.2 million for the three months ended March 31, 2008, compared to $4.8 million for the three months ended March 31, 2009, primarily due to the increases in gross profit from home building operations offset by decreases in road base product operations. Home building operations contributed a profit of $4.5 million in 2009 as compared to an operating profit of $2.7 million in 2008. Road base product operations contributed a profit of $0.3 million in 2009 as compared to a profit of $0.5 million in 2008.

OTHER INCOME. Other income decreased from $0.7 million for the three months ended March 31, 2008 to $0.4 million for the three months ended March 31, 2009, primarily due to the decrease in net rental income during 2009 from rental agreements entered into during 2009 in connection with the rental of various buildings and equipment.

PROVISION FOR INCOME TAXES. The provision for income taxes decreased from $1.4 million for the three months ended March 31, 2008 to $1.1 million for the three months ending March 31, 2009. The decrease in the provision is primarily attributable to lower income tax rates in effect for 2009.

NET EARNINGS: Net earnings remained approximately the same for the three months ended March 31, 2009 compared to the three months ended March 31, 2008. The Company attributes this primarily to a decrease in the cost of sales % in the home building segment resulting in a higher gross profit from this segment’s operations despite a decrease in sales, a decrease in selling, general and administrative expenses and a foreign currency transaction gain offset, in part, by a lower demand for its road base product.

Generally, we expect a slowdown in the housing market in the Russian Federation to extend from late 2008 through 2009, and do not see a recovery back toward previous levels in 2007 to 2008 until 2010. As to our road base product, we expect a stable level of sales in 2009 as compared with 2008 revenue despite the decrease in revenue for the first quarter of 2009, although there is no assurance that this will be the case. The economic downturn should not affect this segment to the same extent that it may affect the Company’s home building segment.

Liquidity and Financial Resources

The Company believes the sources of cash are sufficient to meet the overhead needs of the Company in 2009 including the liquidation of its short term debt. In January and February 2009, the Company liquidated $6.8 million of matured debt. The Company expects to eliminate debt of approximately $8.9 million in June 2009 through cash flow from operations and refinancing the debt with another financial institution. The Company expects to continue its sales of properties during 2009 but at a slower pace due to economic conditions. The global economic slowdown should not have a material effect on outstanding accounts receivable collections based on collections through the first quarter of 2009. However, to build out and complete scheduled projects, the Company will require significant additional financing.

The Company had a working capital surplus of approximately $22.1 million and stockholders’ equity of approximately $13.0 million as of March 31, 2009. During the three months ended March 31, 2009, the Company had repaid $8.2 million in loans. Cash and cash equivalents decreased approximately $12.2 million for the three months ended March 31, 2009. The decrease is primarily attributable to the repayment of debt of appromximately $8.2 million and a decrease in operating activities of approximately $3.9 million (primarily due to an increase in inventories of $8.0 million and accounts receivable of $0.8 million offset by net earnings of $4.1 million.)

Accounts receivable, net of allowances, were $9.1 million at March 31, 2009, as compared to $9.3 million at December 31, 2008. The decrease in accounts receivable is primarily due to lower revenues generated in the first quarter of 2009. Inventories were $72.4 million at March 31, 2009, as compared to $83.7 million at December 31, 2008, due primarily to unrealized translation losses in the value of the inventory.

The sources of liquidity are a broad range of financial institutions in the Russian Federation, Japan, the United States and Europe, including banks, private equity funds and investment banks. The Company is also in negotiations with the government in the Russian Federation for either possible financing or the construction of additional apartment units for the government. The financial markets financing the Company’s construction projects have become much more difficult to obtain with the global liquidity crisis still in effect. The Company does not have any firm commitments as of this date and there is no assurance that the Company will be able to arrange required financing for its residential and other construction projects. The Company may be forced to delay such projects until financing is obtained. The Company has arranged financing in the past with these institutions and believes financing will be obtainable in the near future.

Critical Accounting Policies

The Securities and Exchange Commission recently issued "Financial Reporting Release No. 60 Cautionary Advice Regarding Disclosure About Critical Accounting Policies" ("FRR 60"), suggesting companies provide additional disclosures, discussion and commentary on those accounting policies considered most critical to its business and financial reporting requirements. FRR 60 considers an accounting policy to be critical if it is important to the Company's financial condition and results of operations, and requires significant judgment and estimates on the part of management in the application of the policy. For a summary of the Company's significant accounting policies, including the critical accounting policies discussed below, please refer to the accompanying notes to the financial stateme nts.

The Company assesses potential impairment of its long-lived assets, which include its property and equipment and its identifiable intangibles such as deferred charges under the guidance of SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" (“SFAS 144”). The Company must continually determine if a permanent impairment of its long-lived assets has occurred and write down the assets to their fair values and charge current operations for the measured impairment.

Inventories - Inventories consist of land, land development, construction costs, capitalized interest and construction overhead and are stated at cost, net of impairment losses, if any. Construction costs are accumulated during the period of construction and charged to cost of sales under specific identification methods. Land, land development and common facility costs are allocated based on buildable acres to product types within each construction project, then charged to cost of sales equally based upon the number of projects to be constructed in each product type.

The recoverability of inventories and other long-lived assets are assessed in accordance with the provisions of SFAS 144, which requires long-lived assets, including inventories, held for development to be evaluated for impairment based on undiscounted future cash flows of the assets at the lowest level for which there are identifiable cash flows. As such, we evaluate inventories for impairment at the individual level, the lowest level of discrete cash flows that we measure.

We evaluate inventories under development for impairment when indicators of potential impairment are present. Indicators of impairment include, but are not limited to, decreases in local market values, decreases in gross margins or sales absorption rates, decreases in net sales prices (base sales price net of sales incentives), or actual or projected operating or cash flow losses. The assessment of construction projects for indication of impairment is performed quarterly, primarily by completing detailed budgets for all of our projects and identifying those construction projects with a projected operating loss for any projected fiscal year or for the entire projected life. For those construction projects with projected losses, we estimate remaining undiscounted future cash flows and compare those to the carrying valu e of the project, to determine if the carrying value of the asset is recoverable. The projected operating profits, losses or cash flows of each construction project can be significantly impacted by our estimates of the following:

	•	future base selling prices;
	•	future projects sales incentives;

	•	future construction projects and land development costs; and
	•	future sales absorption pace and cancellation rates.

These estimates are dependent upon specific market conditions for each construction project. While we consider available information to determine what we believe to be our best estimates as of the end of a quarterly reporting period, these estimates are subject to change in future reporting periods as facts and circumstances change. Local market-specific conditions that may impact our estimates for a project include:

	•	the intensity of competition within a market, including publicly available sales prices and sales incentives offered by our competitors;
	•	the current sales absorption pace for both our construction project and competitor construction project;

	•	construction project specific attributes, such as location, availability of lots in the market, desirability and uniqueness of our construction project, and the size and style of project currently being offered;
	•	potential for alternative product offerings to respond to local market conditions;

	•	changes by management in the sales strategy of the project; and
	•	current local market economic and demographic conditions and related trends and forecasts.

These and other local market-specific conditions that may be present are considered by management in preparing projection assumptions for each construction project. The sales objectives can differ between our projects, even within a given market. For example, facts and circumstances in a given project may lead us to price our projects with the objective of yielding a higher sales absorption pace, while facts and circumstances in another project may lead us to price our projects to minimize deterioration in our gross margins, although it may result in a slower sales absorption pace. In addition, the key assumptions included in our estimate of future undiscounted cash flows may be interrelated. For example, a decrease in estimated base sales price or an increase in project sales incentives may result in a corresponding increase in sales absorption pace. Additionally, a decrease in the average sales price of projects to be sold and closed in future reporting periods for one project that has not been generating what management believes to be an adequate sales absorption pace may impact the estimated cash flow assumptions of a nearby project. Changes in our key assumptions, including estimated construction and development costs, absorption pace and selling strategies, could materially impact future cash flow and fair value estimates. Due to the number of possible scenarios that would result from various changes in these factors, we do not believe it is possible to develop a sensitivity analysis with a level of precision that would be meaningful to an investor.

If the undiscounted cash flows are more than the carrying value of the project, then the carrying amount is recoverable, and no impairment adjustment is required. However, if the undiscounted cash flows are less than the carrying amount, then the project is deemed impaired and is written-down to its fair value. We determine the estimated fair value of each project by determining the present value of the estimated future cash flows at a discount rate commensurate with the risk of the respective project. Our discount rates used for the impairments recorded to date range from 13.5% to 17.0%. The estimated future cash flow assumptions are the same for both our recoverability and fair value assessments. Should the estimates or expectations used in determining estimated cash flows or fair value decrease or differ from curr ent estimates in the future, we may be required to recognize additional impairments related to current and future projects. The impairment of a project is allocated to each project on a specific identification basis and written down to each project’s fair value. Any impairment is allocated to specific lots on a square foot basis. Should the fair value of any lot need to be written down further based on the future selling value of that lot, an additional impairment charge will be specifically allocated to such lot. As of December 31, 2008 and 2007, the Company has evaluated the inventory for possible impairment and determined no adjustments for impairment existed. There were no contract cancellations and although the economic climate may cause a delay in completing construction projects, there is no current impairment issues that will affect current operations.

Inventories held for sale, which are land parcels where we have decided not to build a project, are a very small portion of our total inventories, and are reported at the lower of carrying amount or fair value less costs to sell. In determining whether land held for sale is impaired, management considers, among other things, prices for land in recent comparable sale transactions, market analysis studies, which include the estimated price a willing buyer would pay for the land (other than in a forced liquidation sale) and recent bona fide offers received from outside third parties.

From time to time, we write-off deposits and approval, engineering and capitalized interest costs when we decide not to exercise options to buy land in various locations or when we redesign projects and/or abandon certain engineering costs. In deciding not to exercise a land option, we take into consideration changes in market conditions, the timing of required land takedowns, the willingness of land sellers to modify terms of the land option contract (including timing of land takedowns), and the availability and best use of our capital, among other factors. The write-off is recorded in the period it is deemed probable that the optioned property will not be acquired. In certain instances, we have been able to recover deposits and other preacquisition costs which were previously written off. These recoveries are gener ally not significant in comparison to the total costs written off.

NEW FINANCIAL ACCOUNTING STANDARDS

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which enhances existing guidance for measuring assets and liabilities using fair value. This Standard provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. In February 2008, the FASB issued FASB Staff Position SFAS 157-1, “Application of SFAS No. 157 to SFAS No. 13 and Its Related Interpretative Accounting Pronouncements that Address Leasing Transactions” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2, “Effective Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes SFAS No. 13 and its rela ted interpretive accounting pronouncements that address leasing transactions from the requirements of SFAS No. 157, with the exception of fair value measurements of assets and liabilities recorded as a result of a lease transaction but measured pursuant to other pronouncements within the scope of SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective for the Company upon adoption of SFAS No. 157 on January 1, 2008. See Note 3 of Notes to Consolidated Financial Statements for disclosures related to the Company’s financial assets accounted for at fair value on a recurring or nonrecurring basis. The Company will provide the additional disclosures required relating to the fair value measurement of nonfinancial assets and nonfinancial liabil ities when it completes its implementation of SFAS No. 157. The Company completed its implementation of SFAS No. 157 effective January 1, 2009, and it did not have a material impact on its financial statements.

In February 2007, the FASB issued SFAS No. 159 (“SFAS 159”) “The Fair Value Option for Financial Assets and Financial Liabilities”, providing companies with an option to report selected financial assets and liabilities at fair value. The Standard’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. It also requires entities to display the fair value of those assets and liabilities for which the Company has chosen to use fair value on the face of the balance sheet. SFAS 159 is effective for fiscal years beginning after November 15, 2007. SFAS No. 159 did not have a material impact on its financial statements.

In December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 “Business Combinations”. This Statement is intended to improve the relevance, completeness and representational faithfulness of the information provided in financial reports about the assets acquired and the liabilities assumed in a business combination. This Statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the Statement. Under SFAS 141(R), acquisition-related costs, including restructuring costs, must be recognized separately from the acquisition and will generally be expensed as incurred. That repla ces SFAS 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. SFAS 141(R) shall be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual report period beginning on or after December 15, 2008. The Company completed its implementation of SFAS No. 141(R) effective January 1, 2009, and it did not have a material impact on its financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States. This Statement is effective sixty days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company is currently evaluating the potential impact, if any, of the adoption of SFAS No . 162 on its financial statements.

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements - An amendment of ARB No. 51” (“SFAS 160”). SFAS 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of non-controlling interests (minority interest) as equity in the consolidated financial statements and separate from parent’s equity. The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement. SFAS 160 clarifies that changes in a parent’s ownership in a subsidiary that does not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the non-controlling equity investment of the deconsolidation date. SFAS 160 also includes expanded disclosure requirements regarding the interest of the parent and its non-controlling interest. SFAS 160 is effective for fiscal years, and interim periods other than fiscal years, beginning on or after December 15, 2008. The Company completed its implementation of SFAS No. 160 effective January 1, 2009, and it did have a material impact on the Company's Consolidated Balance Sheet.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are primarily exposed to foreign currency risk, interest rate risk and credit risk.

Foreign Currency Risk - Because our revenues are currently denominated in U.S. dollars, a strengthening of the dollar could reduce our reported revenues. We do not engage in financial transactions for trading or speculative purposes.

Interest Rate Risk - Interest rate risk refers to fluctuations in the value of a security resulting from changes in the general level of interest rates. Investments that are classified as cash and cash equivalents have original maturities of three months or less. We believe that there is not a material risk exposure to our short term investments.

Credit Risk - Our accounts receivables are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. As a result we do not anticipate any material losses in this area.

Item 4(T). Controls and Procedures.

Restatement of Our Financial Statements

On July 31, 2009, the Audit Committee of the Company’s Board of Directors, after discussion with the Company’s independent auditors, concluded that our previously issued financial statements in the following reports should no longer be relied upon because of errors in such financial statements:

o	the (audited) consolidated financial statements for the year ending December 31, 2008, included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “Commission”) on April 7, 2009;
o	the interim period unaudited statements for the three month period ended March 31, 2009, included in our Quarterly Report on Form 10-Q, filed with the Commission on May 13, 2009;

o	the interim period unaudited statements for the nine and three month periods ended September 30, 2008, included in our Quarterly Report on Form 10-Q, filed with the Commission on November 14, 2008; and
o	the (audited) consolidated financial statements for the year ended December 31, 2007, included in the Amendment to our Current Report on Form 8-K/A, filed with the Commission on September 3, 2009, reflecting the acquisition on August 5, 2008 of OJSC “494 UNR”.

The financial statements included in the September 3, 2008 Form 8-K/A were erroneous in that an incorrect amount of a note payable was reflected in the balance sheet at December 31, 2007. The 2008 third quarter 10-Q, filed November 14, 2008, contained this same balance sheet error, and in addition improperly reflected certain exchange gains or losses in Other Comprehensive Income rather than the income statement. The 2008 Form 10-K, filed April 7, 2009, corrected the 2007 balance sheet error in the omitted note payable; however, certain exchange gains or losses were improperly included in Other Comprehensive Income rather than the income statement, and exchange gains or losses were presented in the income statement under selling, general and administrative expenses rather than after the calculation of o perating income. In addition, the December 31, 2008 balance sheet did not provide for presentation of a liability entry on the balance sheet for customers’ non-refundable deposits held by the Company. The March 31, 2009 10-Q corrected the recognition of the unrealized transaction loss in the December 31, 2008 and reflected the netting out of this loss in the 2009 first quarter when the note was paid.

Management’s Report on Internal Control Over Financial Reporting

Management of Promotora Valle Hermoso, Inc. is responsible for establishing and maintaining adequate internal controls over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a – 15 (f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment we used the criteria set fourth in the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treasury Commission. Based on our evaluation under the framework in Internal Control – Integrated Framework, manageme nt had concluded that our internal control over financial reporting was not effective as of December 31, 2008 due to material weaknesses in the controls, as evidenced by the restatement of our financial statements due to the errors in such financial statements discussed above.

The Company’s chief executive officer and chief financial officer concluded that material weaknesses existed in recording of a financial transaction, the financial reporting of transaction gains and losses as of the balance sheet dates, the presentation of customer deposits as of the balance sheet dates that should have been reported as a liability and not to be netted against inventory, and the presentation of transaction gains and losses as a separate line item in the statement of operations and not as a component of selling, general and administrative costs.

The Company’s chief executive officer and chief financial officer in discussion with the Company’s audit committee authorized the restatement of the previously issued financial statements and concluded, as a result of the restatement, that material weaknesses in internal control over financial reporting existed as of December 31, 2008 and 2007. The Company has restated its financial statements for the years ended December 31, 2008 and 2007, and for the periods ended March 31, 2009 and 2008 to correct the errors. Based on the restatement of the previously issued financial statements, the chief executive officer and chief financial officer believe the financial statements have been properly reflected as of December 31, 2008 and 2007, and as of March 31, 2009 and 2008. Management has made significant changes subsequ ent to the balance sheet date in is engaged in an ongoing effort to correct the material weaknesses in internal control over financial reporting.

The restatement of our financial statements involved previously issued financial statements for the periods ended March 31, 2009 and 2008, and, in their evaluation of the effectiveness of our disclosure controls and procedures as of the end of the quarterly period covered by this report, our chief executive officer and chief financial officer concluded, as a result of the restatement, that material weaknesses in our disclosure controls and procedures existed as at March 31, 2009, and that our disclosure controls and procedures were not effective as of March 31, 2009. Given these reportable conditions and material weaknesses, management has devoted additional resources to resolving questions that arose during the period covered by this report. As a result we are confident our financial statements as of March 31, 2009 and for the three months ended March 31, 2009 and 2008, fairly present in all material respects our financial condition and results of operations.

Changes in Internal Control Over Financial Reporting

We have taken actions and implemented new policies to mitigate certain weaknesses in our disclosure controls and procedures that resulted in errors we identified with regard to our financial statements at December 31, 2008, and for the two years then ended, and for the interim periods ended March 31, 2009 and 2008, which require restatement of such financial statements, as discussed above. Procedures have been implemented since the beginning of 2009 to properly reflect the underlying transactions within the system and communicate any weaknesses in the internal control process to the audit committee. All disclosures and new financial accounting pronouncements are reviewed internally and discussed with the audit committee and the Company’s independent registered accounting firm. Disclosure conferences before t he release of the financial statements between the audit committee and the Company’s independent registered accounting firm are done on a quarterly basis. We are dedicated to maintaining the high standards of financial accounting and reporting that we have now established, and are committed to providing financial information that is transparent, timely, complete and accurate.

PART II—OTHER INFORMATION

ITEM 6. EXHIBITS.

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.

32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	UNR HOLDINGS, INC.
	(formerly Promotora Valle Hermoso, Inc.)


	By:	/s/ Alexey A. Kim
		Alexey A. Kim Chief Executive Officer

Dated: April 13, 2010

EXHIBIT INDEX


Exhibit Number	Description
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

Unr (UNRH) Inactive 10-Q/A2009 Q4 Quarterly report (amended)