Unr (UNRH) 10-Q 2010 Q4 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________

Form 10-Q

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

For the quarterly period ended March 31, 2010

o 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)

_____________________________________________

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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, a non-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 of the issuer's common stock, $0.001 par value per share, was 24,464,799 as of May 24, 2010.

UNR Holdings, Inc.
Index
		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Consolidated Financial Statements	1
	Consolidated Balance Sheets as of March 31, 2010
	and December 31, 2009 (Unaudited)	2
	Consolidated Statements of Operations for the
	Three Months Ended March 31, 2010 and 2009 (Unaudited)	3
	Consolidated Statements of Comprehensive Income for the
	Three Months Ended March 31, 2010 and 2009 (Unaudited)	4
	Consolidated Statement of Equity
	for the Period Ended March 31, 2010
	(Unaudited)	5
	Statement of Cash Flows for the Three Months
	Ended March 31, 2010 and 2009 (Unaudited)	6
	Notes to the Unaudited Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial
	Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	23
PART II.	OTHER INFORMATION	24
Item 1.	Legal Proceedings	24
Item 1.A.	Risk Factors	24
Item 6.	Exhibits	24
Signatures		25

ii

PART I — FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED 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. The following unaudited consolidated financial statements should be read in conjunction with the year-end restated consolidated financial statements and notes thereto included in the Company's Form 10-K/A for the year ended December 31, 2009.

The results of operations for the three months ended March 31, 2010 and 2009 are not necessarily indicative of the results for the entire fiscal year or for any other period.  See also Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Cautionary Statement Regarding Forward-Looking Statements” included in this Quarterly Report on Form 10-Q.

1

UNR HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
	March 31,			December 31,
	2010			2009
ASSETS
Cash and cash equivalents	$	43,556,606		$	20,090,671
Inventories		73,207,603			70,266,780
Trade and other receivables, net		72,665,215			63,529,308
Property, plant and equipment - net		1,068,878			987,547
Other assets		165,592			161,131
TOTAL ASSETS	$	190,663,894		$	155,035,437
LIABILITIES AND EQUITY
Short-term debt	$	50,504		$	3,356,923
Accounts payable and accrued expenses		73,921,367			58,161,906
Advances from customers		58,318,921			41,486,476
Deferred income tax liabilities		11,401,632			10,333,416
TOTAL LIABILITIES		143,692,424			113,338,721
Commitments and Contingencies		-			-
Equity:
UNR Holdings, Inc. and Subsidiary Stockholders' Equity:
Common stock, $0.001 par value; authorized 500,000,000
shares; outstanding 24,464,799 and 24,464,799 shares at March 31, 2010
and December 31, 2009, respectively		24,465			24,465
Additional paid-in capital		99,579			99,579
Retained earnings		31,819,096			29,031,864
Accumulated other comprehensive loss		(780,962	)		(1,861,993	)
Total UNR Holdings, Inc. and Subsidiary Stockholders' Equity		31,162,178			27,293,915
Noncontrolling interest		15,809,292			14,402,801
Total Equity		46,971,470			41,696,716
TOTAL LIABILITIES AND EQUITY	$	190,663,894		$	155,035,437

See notes to unaudited consolidated financial statements.

2

UNR HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
	For the Three Months Ended
	March 31,
	2010		2009
Revenues:
Sales and other operating revenues	$	19,549,532	$	11,370,485
Costs and expenses:
Cost of sales		14,558,129		5,928,089
Selling, general and administrative costs		779,993		672,799
		15,338,122		6,600,888
Income from operations		4,211,410		4,769,597
Other income (expense):
Foreign currency transaction gain (loss)		-		50,799
Other income (principally rental income)		1,041,125		421,645
		1,041,125		472,444
Income before provision for income taxes		5,252,535		5,242,041
Provision for income taxes		1,058,812		1,115,453
Net income		4,193,723		4,126,588
Less: Net income attributable to the
noncontrolling interest		1,406,491		1,368,789
Net earnings attributable to UNR Holdings, Inc.
and Subsidiary	$	2,787,232	$	2,757,799
Earnings per share - basic and diluted:
Earnings per share of common stock attributable to
UNR Holdings, and Subsidiary
common shareholders	$	0.11	$	0.11
Weighted average shares of common stock
outstanding - basic and diluted		24,464,799		24,464,799

See notes to unaudited consolidated financial statements.

3

UNR HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
	Three Months Ended
	March 31,
	2010		2009
Net earnings	$	4,193,723	$	4,126,588
Other comprehensive income (loss) - net of tax:
Currency translation adjustment		1,081,031		(3,180,352	)
Comprehensive income		5,274,754		946,236
Comprehensive income attributable to noncontrolling
interest		1,765,069		313,866
Comprehensive income attributable to UNR
Holdings, Inc. and Subsidiary	$	3,509,685	$	632,370

See notes to unaudited consolidated financial statements.

4

UNR HOLDINGS, 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, 2009	$	22,073,811				24,464,799	$	24,465	$	99,579	$	17,195,878	$	(3,840,847	)	$	8,594,736
Net income		17,644,051	$	17,644,051								11,835,986		-			5,808,065
Currency translation adjustment		1,978,854		1,978,854										1,978,854
Comprehensive income			$	19,622,905
Balance, December 31, 2009		41,696,716				24,464,799		24,465		99,579		29,031,864		(1,861,993	)		14,402,801
Net income		4,193,723	$	4,193,723								2,787,232					1,406,491
Currency translation adjustment		1,081,031		1,081,031										1,081,031
Comprehensive income			$	5,274,754
Balance, March 31, 2010	$	46,971,470				24,464,799	$	24,465	$	99,579	$	31,819,096	$	(780,962	)	$	15,809,292

See notes to unaudited consolidated financial statements.

5

UNR HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
	For the Three Months Ended
	March 31,
	2010			2009
Cash flows from operating activities:
Net earnings	$	4,193,723		$	4,126,588
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation		10,663			8,774
Deferred income taxes		1,127,665			(291,659
Change in operating assets and liabilities		21,371,531			(7,678,748	)
Net cash provided by (used in) operating activities		26,703,582			(3,835,045	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(94,779	)		(40,800	)
Net cash provided by (used in) investing activities		(94,779	)		(40,800	)
Cash flows from financing activities:
Repayment of loans		(3,306,419	)		(8,194,450	)
Net cash provided by (used in) financing activities		(3,306,419	)		(8,194,450
Effect of exchange rate changes on cash		163,551			(171,762	)
Net increase (decrease) in cash		23,465,935			(12,242,057	)
Cash - beginning of period		20,090,671			16,430,669
Cash - end of period	$	43,556,606		$	4,188,612
Changes in operating assets
and liabilities consist of:
(Increase) decrease in accounts receivable	$	(8,949,778	)	$	(3,812,396	)
(Increase) decrease in inventories		(2,675,452	)		11,361,008
Increase (decrease) in customer advances		16,982,801			(15,297,586	)
Increase (decrease) in accounts payable and
other liabilities		16,013,960			70,226
	$	21,371, 531		$	(7,678,748	)

See notes to unaudited consolidated financial statements.

6

UNR HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(Unaudited)
	For the Three Months Ended
	March 31,
	2010		2009
Supplementary Information:
Cash paid during the period for
Interest	$	49,549	$	399,890
Income taxes	$	44,742	$	18,026

See notes to unaudited consolidated financial statements.

7

UNR HOLDINGS, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

March 31, 2010

The consolidated balance sheet as of March 31, 2010 and the consolidated statements of operations, stockholders' equity and cash flows for the periods presented have been prepared by UNR Holdings, Inc. 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, have been made. The information for the consolidated balance sheet as of December 31, 2009 was derived from audited financial statements of the Company.

Note 1: Organization

UNR Holdings, Inc. and subsidiary operates its business through its majority-owned subsidiary, Open Joint Stock Company 494 UNR, a company organized and existing under the laws of the Russian Federation (“494 UNR” and together with UNR Holdings, Inc., “we”, “our”, “UNR Holdings” or the “Company”). 494 UNR is a construction contractor operating in the Russian Federation. The Company develops and constructs multi-functional, multi-apartment residential complexes and commercial centers in high density and urban areas, principally in the city of Moscow, as well as in suburban communities in the vicinity of Moscow. In addition to developing construction projects, presently the Company’s principal business activity, the Company produces and supplies its patented road base ma terial that it markets under the name “Prudon-494” to infrastructure projects, and the Company also renders various infrastructure related services.

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 business operations of the Company are located, and of its revenue are earned, within the Russian Federation.

Effective March 24, 2008, the Company entered into an Acquisition Agreement (the “Acquisition Agreement”) with certain stockholders of 494 UNR providing for the acquisition (the “494 UNR Acquisition”) by the Company of 66.83% in the aggregate of the outstanding shares of common and preferred stock of 494 UNR. At the closing of the 494 UNR Acquisition on August 5, 2008, the Company issued 20,500,000 of its common stock to Alexei Ivanovich Kim (the “Controlling Shareholder”), which as of that date represented approximately 84% of the Company’s issued and outstanding shares of common stock. The financial statements prior to August 5, 2008 reflect the assets and liabilities of 494 UNR at historical carrying amounts.

Under the Acquisition Agreement, the former management of the Company had agreed to assume all debt of the Company 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 the Company as of the August 5, 2008, the 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 SEC on August 11, 2008, reduced by approximately $400,000 for the costs of uncompleted contracts 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 Company 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, a new Board of Directors of the Company was elected and new officers were appointed. The Company also sold its existing business to former management.

Note 2: Basis of Presentation

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

8

The subsidiary 494 UNR, which is registered in the Russian Federation, maintains its accounting records in accordance with the Regulations on Accounting and Reporting in the Russian Federation. The accompanying consolidated financial statements have been prepared from these accounting records and adjusted as necessary in order to comply with US GAAP.

In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from such estimates.

Effective for the year ended December 31, 2009, the Company adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The ASC was established as the sole source of US GAAP and superseded existing accounting and reporting guidance issued by the FASB, Emerging Issues Task Force and other sources. The ASC did not change US GAAP. All references to accounting standards in these consolidated financial statements correspond to ASC references.

Reporting and functional currency. The Company has determined that the United States dollar (“$”) is the reporting currency for the purposes of financial reporting under US GAAP.

The local currency and the functional currency of the subsidiary of the Company is the Russian Rouble (“RUR”).

As of March 31, 2010 and December 31, 2009, exchange rates were 29.36 and 30.24 RUR to $1, respectively. Average exchange rates for the three months ended March 31, 2010 and 2009 were 29.89 and 33.93 RUR to $1, respectively.

Any conversion of RUR amounts to USD should not be construed as a representation that such RUR amounts have been, could be, or will in the future be converted into USD at the exchange rate shown or at any other exchange rate.

Note 3: Recent Accounting Pronouncements

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2009. There were no significant changes to these accounting policies during the three months ended March 31, 2010, and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

Note 4. Earnings Per Share

Basic earnings per share of common stock are computed by dividing net earnings by weighted average number of shares of common stock of UNR Holdings, Inc. outstanding during the year. Diluted earnings per share of common stock are computed by dividing net earnings by the weighted average number of shares of common stock and potential shares of common stock outstanding during the year.  There were no potential shares of common stock outstanding for the three months ended March 31, 2010 and 2009, respectively.

Note 5: Fair Value of Financial Instruments

The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:

Level 1	Observable inputs such as quoted market prices in active markets
Level 2	Inputs other than quoted prices in active markets that are either directly or indirectly observable
Level 3	Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions

9

As of March 31, 2010, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of cash and cash equivalents and investments in non-marketable securities. The fair value of the cash and cash equivalents is determined based on quoted market prices in public markets and is categorized as Level 1. The investment in non-marketable securities is determined by the Company to develop its own assumptions and is categorized as Level 3. The Company does not have any financial assets measured at fair value on a recurring basis as Level 2 and there were no transfers in or out of Level 1, Level 2 or Level 3 during the three months ended March 31, 2010 and 2009.

The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring basis as of March 31, 2010 and December 31, 2009.

Assets at Fair Value as of March 31, 2010 and December 31, 2009
			Quoted Prices in
			Active Markets
			for Identical Assets
March 31, 2010	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	43,556,606	$	43,556,606	$	-	$	-
Non-marketable securities		165,962		-		-		165,962
Total	$	43,722,568	$	43,556,606	$	-	$	165,962
December 31, 2009
Cash and cash equivalents	$	20,090,671	$	20,090,671	$	-	$	-
Non-marketable securities		161,131		-		-		161,131
Total	$	20,251,802	$	20,090,671	$	-	$	161,131

The Company has other financial instruments, such as receivables, accounts payable and other liabilities, notes payable and customer deposits, which have been excluded from the tables above. Due to the short-term nature of these instruments, the carrying value of receivables, accounts payable and other liabilities, notes payable and customer deposits approximate their fair values. The Company did not have any other financial liabilities with the scope of the fair value disclosure requirements as of March 31, 2010.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable and temporary investments. 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 places its temporary cash investments with quality financial institutions and commercial issuers at short-term payer and by policy term limits the amount of credit exposure in any one financial instrument.

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.

Note 6: Cash and cash equivalents

As of March 31, 2010 and December 31, 2009, cash balances comprise the following:

	March 31,		December 31,
	2010		2009
Denominated in US dollars	$	-	$	59,815
Denominated in RUR		43,556,606		20,030,856
Total cash and cash equivalents	$	43,556,606	$	20,090,671

10

Note 7: Inventories

	March 31,		December 31,
	2010		2009
Construction in progress	$	54,722,123	$	52,071,113
Apartments for sale		11,012,609		12,741,215
Advances to subcontractors
(net of allowance for doubtful accounts of
$79,277 and $76,980 as of March 31, 2010
and December 31, 2009, respectively)		5,529,225		3,570,056
Construction materials (road base)		1,562,917		1,731,976
Construction materials (residential buildings)		380,729		152,420
Total inventories	$	73,207,603	$	70,266,780

Note 8: Trade and Other Receivables, Net

	March 31,		December 31,
	2010		2009
Trade accounts and notes receivable (net of allowance
for doubtful accounts of $1,012,686 and $906,227 as of
March 31, 2010 and December 31, 2009, respectively)	$	2,749,363	$	2,865,621
Accounts receivable from the Russian Ministry of Defense		57,107,595		55,445,209
Other receivables		12,808,257		5,218,478
Total trade and other receivables, net	$	72,665,215	$	63,529,308

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, 2010 and December 31, 2009, these subcontractors performed construction services for the Project totaling $57,107,595 and $55,445,209, 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 Company has intention to claim the rest of the accounts receivable in the nearest future.  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 the 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.

11

Note 9: Property, Plant and Equipment

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.

	March 31,		December 31,
	2010		2009
Land	$	385,460	$	374,239
Buildings and building improvements		705,415		631,789
Vehicles		52,847		66,224
Machinery and equipment		71,625		71,027
Other		28,076		5,345
		1,243,423		1,148,624
Less: accumulated depreciation		174,545		161,077
Total property, plant and equipment, net	$	1,068,878	$	987,547

Depreciation expense for the three months ended March 31, 2010 and 2009 amounted to $10,663 and $8,774, respectively.

Note 10: Short-term debt

Short-term debt balances as of March 31, 2010 and December 31, 2009 were as follows:

	March 31,		December 31,
	2010		2009
Loan from Sberbank of Russian Federation,
interest at 18.5% per annum, due in November 2010	$	-	$	3,306,419
Loans from officer, interest free, due on demand		50,504		50,504
Total short-term debt	$	50,504	$	3,356,923

The loans 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, 2010 and 2009, in the amount of $49,549 and $401,226, respectively, has been capitalized and included in the cost of sold and unsold projects under development in the Company’s balance sheets.

In November and December 2008, the Company made partial payments to RosDorBank. The loan 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 during the year ended December 31, 2008 upon partial liquidation of the loan, which gain reflects the difference in exchange rates between the date in which the note proceeds were received and maturity.  In February 2009, the Company paid in full the balance of the loan.

Note 11: Accounts payable and accrued expenses

	March 31,		December 31,
	2010		2009
Trade accounts payable	$	15,255,932	$	1,595,186
Salaries payable		37,446		35,630
Accrued liabilities to subcontractors		57,107,595		55,445,209
Other payables		1,520,394		1,085,881
Total accounts payable and accrued expenses, net	$	73,921,367	$	58,161,906

12

Note 12: Advances from customers

As of March 31, 2010 and December 31, 2009, advances from customers totaling $58,318,921 and $41,486,746, respectively, are attributable to prepayments received under the agreement providing that the Company is committed to complete the construction of the apartments and transmit the title to the customers. Generally the customers make a 100 percent payment for the apartment prior to the construction being completed. The sales price amount for the customer is fixed.  Generally, advances received from non-government customers are refundable at the customer’s request only if the Company or the customer replaces the contract and the advance with another customer.

Note 13: Equity

As of March 31, 2010 and December 31, 2009, the share capital of the Company comprises 500,000,000 authorized common stock of $0.001 par value, 24,464,799 of them are issued and outstanding. No dividends were declared as of March 31, 2010 and December 31, 2009.

Note 14: Noncontrolling Interest

Effective January 1, 2009, the Company completed its implementation of ASC 810.

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

13

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,
	2010		2009
Balance at the beginning of period	$	14,402,801	$	8,594,736
Noncontrolling interest share of income		1,406,491		5,808,065
Balance at end of period	$	15,809,292	$	14,402,801

Note 15: Income Taxes

The Company adopted the provisions of ASC 740 on January 1, 2007.  As a result of the implementation of ASC 740, the Company recognized no adjustment in the net liability for unrecognized income tax benefits.  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 set up a liability for interest and penalties.  The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes.

The Company and its subsidiary file income tax returns in the U.S. federal jurisdiction, the state of Florida and the Russian Federation.  The Company is no longer subject to U.S. federal and state examinations for years before 2006. Regarding the Russian Federation, the Company is no longer subject to examination by tax authorities for years before 2006. The Company is currently being audited by the Russian Federation tax authorities with respect to 2007 and 2008.

The President of the United States has presented a budget to the United States Congress which contains various modifications to international tax rules. Some of the proposed changes might subject the Company to, among other things, additional income taxes, restrictions on how foreign tax credits would be calculated and affect taxation regarding the transfer of intangible property.  The Company cannot ascertain at this time what the final outcome of this proposed legislation will be or the effect, if any, on the Company's results of operations or financial condition.  Additionally, the Internal Revenue Service ("IRS") released a draft tax schedule and instructions that provide additional details on its proposal to required companies with assets of $10.0 million or more to report their uncertain tax positions annually, b eginning with the 2010 tax year of their business tax returns.

Note 16: Revenues

Revenues for March 31, 2010 and 2009 comprise the following:

	For the Three Months Ended
	March 31,
	2010		2009
General contractor's fees	$	-	$	-
Sales of residential and commercial properties		16,701,224		10,444,215
Sales of road base materials		2,848,308		926,270
Total revenues	$	19,549,532	$	11,370,485

Note 17: Business Segment Information

FASB ASC 280-10-10, "Segment Reporting" ("ASC 280-10-10"), established standards for reporting information about operating segments.  Operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated regularly by management.  The Company is organized by geographical area and industry segment.

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	March 31,
	2010			2009
Revenue
Residential and commercial construction	$	16,701,224		$	10,444,215
Road base materials		2,848,308			926,270
	$	19,549,532		$	11,370,485
Income (loss) from operations
Residential and commercial construction	$	4,360,587		$	4,479,252
Road base materials		(149,177	)		290,345
	$	4,211,410		$	4,769,597
Total assets (as of)	March 31, 2010			December 31, 2009
Residential and commercial construction	$	190,520,987		$	153,303,461
Road base materials		142,907			1,731,976
	$	190,663,894		$	155,035,437

Note 18: Accumulated Other Comprehensive Loss

The accumulated other comprehensive loss as of March 31, 2010 and December 31, 2009 totaling $780,962 and $1,861,993, respectively, is entirely attributable to the currency translation adjustments.

Note 19: Commitments and Contingencies

Economic and operating environment in the Russian Federation. The Russian Federation continues to display certain characteristics of emerging markets. These characteristics include, but are not limited to, the existence of a currency that is in practice not convertible in most countries and a relatively high inflation. Furthermore, the tax, currency, and customs legislation within these countries is subject to varying interpretations and changes which can occur frequently.

Taxation. The Russian tax legislation is subject to varying interpretations and changes which can occur frequently. Management's interpretation of such legislation as applied to the transactions and activities of the Company may be challenged by the relevant regional and federal authorities. Recent developments suggest that the authorities are becoming more active in seeking to enforce, through the Russian court system, interpretations of tax legislation which may be selective for particular taxpayers and different to the authorities’ previous interpretations or practices. Different and selective interpretations of tax regulations by various government authorities and inconsistent enforcement create further uncertainties in the taxation environment in the Ru ssian Federation.

Tax declarations, together with related documentation, are subject to review and investigation by a number of authorities, each of which may impose fines, penalties and interest charges. Fiscal periods remain open to review by the authorities for the three calendar years preceding the year of review (one year in the case of customs). Under certain circumstances reviews may cover longer periods. In addition, in some instances new tax regulations have taken retroactive effect. Additional taxes, penalties and interest which may be material to the financial position of the taxpayers may be assessed in the Russian Federation as a result of such reviews.

Legal contingencies. The Company is a named defendant in a number of lawsuits as well as a named party in numerous other proceedings arising in the ordinary course of business. While the outcomes of such contingencies, lawsuits or other proceedings cannot be determined at present, management believes that any resulting liabilities will not have a materially adverse effect on the financial position or the operating results of the Company.

As discussed in Note 7 to our restated consolidated financial statements included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009, at present the Company is a plaintiff in a lawsuit against its debtor, the Russian Ministry of Defense, to recover accounts receivable totaling $35,341,012 as of March 31, 2010.  The Company’s management and lawyers cannot determine the ultimate outcome of the litigation.  However, management believes that the Company will ultimately prevail and collect substantially all of the amounts due from the Ministry of Defense.  Accordingly, no provision for the unrecoverability of these accounts receivable has been recorded.

Capital Commitments. In the normal course of business, the Company has concluded a number of construction contracts with its subcontractors.  The periods of completion under these contracts are till 2012.  However, management may agree with subcontractors to extend the terms of completion.  As of March 31, 2010, the amount of such commitments was approximately $267 million.

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Note 20: Related Party Transactions

During the three months ended March 31, 2010 and 2009, the Company had activities with purchases, subcontracting construction and lease.  The Company's reported results of operations, financial position and cash flows would be different had such transactions been carried out amongst unrelated parties.  Related parties may enter into transactions which unrelated parties might not, and transactions between related parties may not be effected on the same terms, conditions and amounts as transactions between related parties.

The nature of the relationships with such related companies is that some of the officers of the Company's subsidiary, 494 UNR, also serve as the General Directors of such related companies.  The details of the relationships for those related parties with whom the Company entered into significant transactions or had significant balances outstanding are presented below:

		Three Months Ended March 31,
		2010	2009
Purchases and rental	$	340,161	$	1,238,653
		March 31,	December 31,
		2010		2009
Accounts receivable	$	3,122,376	$	2,082,247
Accounts payable	$	586,866	$	63,436

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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 ability to create, sustain, manage or forecast our growt h; 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

494 UNR is a construction and development company with its principal offices located in Bronnitsy (a near suburb of Moscow), Russian Federation. 494 UNR operates primarily in the city of Moscow and suburbs in its vicinity, the Russian Federation, and it 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.

The following discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements included in this report. This section should be read in conjunction with the consolidated financial statements, including the notes thereto, as well as our other financial information included elsewhere in this report.

Significant Factors Affecting Results of Operations

We believe that the following factors significantly affected our results of operations in the quarter ended March 31, 2010 and/or will have a significant impact on our results of operations in the future.

Russian Macroeconomic Conditions and Trends

Since we carry out all of our projects in the Russian Federation, and we currently have no plans to expand outside of the Russian Federation, our operations are substantially affected by the various Russian macroeconomic conditions and trends.  There has been mo material changes as to how such factors affect our financial condition and results of operations since December 31, 2009.  For more information, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Russian Macroeconomic Conditions and Trends” included in Item 7 of our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009.

Seasonality

We experience seasonal fluctuations in our operations. The winter season is a period of substantially reduced sales. In addition, we engage in our core development, design and construction activities between April and October of each calendar year. The period of November through March of each year is a time of substantially reduced residential and other construction projects and road construction activity, when we engage primarily in selected interior activities (typically, in the buildings we construct).

Critical Accounting Estimates

The SEC recently issued “Financial Reporting Release No. 60 Cautionary Advice Regarding Disclosure About Critical Accounting Policies”, or FRR 60, suggesting that 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 a 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 our significant accounting policies, including the critical accounting policies discussed below, please refer to the accompanying notes to the financial statements included elsewhere in this annual report.

We assess potential impairment of our long-lived assets, which include our property and equipment and our identifiable intangibles, such as deferred charges, under the guidance of ASC 360, formerly Statement of Financial Accounting Standards (“SFAS”) 144, “Accounting for the Impairment or Disposal of Long-Lived Assets. We must continually determine if a permanent impairment of our long-lived assets has occurred and write down the assets to their fair values and charge current operations for the measured impairment.

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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 ASC 360, 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 value of the project, to d etermine 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 abs orption 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.

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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 current estimates in the f uture, 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 March 31, 2009 and 2010, we have 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, management believes that there are 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 generally not significant i n comparison to the total costs written off.

Taxation

We are subject to income tax and other taxes. Significant judgment is required in determining the provision for income tax and other taxes due to the complexity of the Russian Federation tax legislation, to which our subsidiary 494 UNR is subject. There are many transactions and calculations for which the ultimate tax determination is uncertain. We recognize liabilities for anticipated tax audit issues based on estimates of whether it is probable additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the amount of tax and tax provisions in the period in which such determination is made.

Consolidated Results of Operations

General

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.

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 at least until the second half of 2010. As to our infrastructure business, we had a stable level of sales of our road base product in 2009, as compared with 2008 revenue levels derived from such sales, and we expect a stable level of such sales during 2010, although there is no assurance that this will be the case. To date, the economic downturn has materially affected both our construction and infrastructure businesses, and the difficult economic conditions may continue to present a significant challenge to us.

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Consolidated Results of Operations for the Quarter Ended March 31, 2010 Compared to the Quarter Ended March 31, 2009

Revenues. Total revenues for the quarter ended March 31, 2010 increased to $19.5 million, or 71.1%, as compared to $11.4 million for the quarter ended March 31, 2009. The increase was a result of a gradual pickup we experienced mostly in our construction and development business in 2010; no assurance can be given that this trend is sustainable.

Cost of Sales. Cost of sales increased by $9.4 million, or over 200%, to $15.3 million for the quarter ended March 31, 2010, from $5.9 million for the year ended March 31, 2009. We attribute this increase primarily to an increase in revenues in 2010 from increasingly profitable projects located mainly in the city of Moscow.

Selling, general and administrative costs. Selling, general and administrative costs increased by less than $100,000 to approximately $0.8 million for the quarter ended March 31, 2010, as compared to approximately $0.7 million for the year ended March 31, 2009. This was primarily due to the anti-crisis measures our company implemented during the fiscal year 2009, such as a reduction in force and more efficient utilization of the remaining personnel, as well as the savings we realized on the costs of transportation, communications, security and lease of an additional office space.

Income from Operations. Income from operations decreased by approximately $0.6 million, from $4.8 million for the quarter ended March 31, 2009 compared to $4.2 million for the quarter ended March 31, 2010, primarily due to the increase in sales offset by increases in cost of sales.

Other Income(Expense). Other income increased from $0.5 million for the quarter ended March 31, 2009 to $1.0 million for the quarter ended March 31, 2010, primarily due to a increase in rental income.

Provision For Income Taxes. Provision for income taxes remained relatively constant from 2009 to 2010.

Net Earnings. Net earnings remained relatively constant from 2009 to 2010 due to all of the reasons enumerated above.

Liquidity and Capital Requirements

We had a working capital surplus of approximately $45.7 million and stockholders’ equity of approximately $46.7 million as of March 31, 2010. Cash and cash equivalents increased by approximately $23.5 million for the quarter ended March 31, 2010. The increase is primarily attributable to cash provided from operations.

Trade and other receivables, net of allowances, were $73.2 million at March 31, 2010, compared to $63.5 million at December 31, 2009. The increase is primarily due to strong sales of residential units in the first quarter of 2010 and increases in amounts due from the Russian Ministry of Defense. Inventories were $72.3 million at March 31, 2010, as compared to $70.3 million at December 31, 2009, due primarily to continued sluggishness in the construction of units during the first quarter of 1010.

Accounts payable were $74.0 million at March 31, 2010, compared to $58.2 million at December 31, 2009. The Company attributes the increase primarily to amounts owed to subcontractors in connection with the project for the Russian Ministry of Defense. Advances from customers were $58.3 million at March 31, 2010 compared to $41.5 million at March 31, 2009. We attribute the increase to advances applied against completed sales during the first half of 2010.

As discussed in Note 7 to our restated consolidated annual financial statements included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009, and in Note 19 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q, we are a plaintiff in a lawsuit and we claim against our debtor, the Russian Ministry of Defense, to recover $ 35,341,012 of accounts receivable. The court of primary jurisdiction accepted our claims. At present, the ultimate outcome of the litigation cannot presently be determined, however, we intend to recover the balance of the accounts receivable of $20,104,197 in the near future.  Our management believes that they will ultimately prevail and collect substantially all of the amounts due from the Russian Ministry of Defense. Accordingly, no provis ion for any losses that may result upon adjudication has been made in our consolidated financial statements included in this report. In the event that we do not prevail in this litigation, this could have a material adverse effect on our profit, financial condition and prospects.

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Other than as described above, there have been no material changes to our liquidity position or capital resource requirements since December 31, 2009.  For more information, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Requirements” included in Item 7 of our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009.

Recent Accounting Pronouncements

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2009.  There were no significant changes to those accounting policies during the three months ended March 31, 2010, and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

Cautionary Statement Regarding Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q, including statements using the words such as “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict”, “project”, “seek” and comparable phrases, as they relate to us and our management, are forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act.  Forward-looking statements are not statements of historical fact and reflect the current views, beliefs and assumptions made by our management based on the information avai lable, as of the date of this report, regarding future events, operating performance, financial condition, business strategy and our plans and objectives for future operations.  These forward-looking statements relate to us and the industry in which we operate.

All forward-looking statements included in this report address matters that involve risks and uncertainties.  Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements.  We believe that these factors include, but are not limited to, the following:

·     changes in political, social, legal or economic conditions in Russia;

·     our ability to obtain necessary regulatory approvals and licenses for our business;

·     our ability to fund future operations and capital needs through borrowings or otherwise;

·     our ability to successfully implement any of our business strategies;

·     our expectations about growth in demand for products and services we sell;

·     competition in the marketplace;

·     changes in general economic conditions, including inflation, interest rates, foreign currency exchange rates and other factors;

·     our ability to respond to legal and regulatory developments and restrictions in relation to the construction industry;

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·     the ultimate outcome of our litigation with the Ministry of Defense of the Russian Federation described in Note 7 to our restated consolidated financial statements included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009, and in Note 19 to our unaudited interim consolidated financial statements included in this Quarterly Report on Form 10-Q; and

·     our success in identifying other risks to our business and managing the risks of the aforementioned factors.

The factors listed above should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and Risk Factors that are included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009 as well as in the other materials filed and to be filed with the U.S. Securities and Exchange Commission, or the Commission .  If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results and outcomes may vary materially from those described herein.  Any forward-looking statements you read in this report reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to, among other things, our operations, results of operati ons, growth strategy and liquidity.  Readers should specifically consider the factors identified in this report that could cause actual results to differ before making any investment decision.

Any forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q.  Subject to any obligations under applicable law, we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.  All subsequent written and oral forward-looking statements attributable to us, and those acting on behalf of us, are expressly qualified in their entirety by this section.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are primarily exposed to economic risk from foreign currency exchange rates, credit risk and liquidity risk.

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.

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 enter into any derivative financial instruments to manage this exposure. We do not engage in financial transactions for trading or speculative purposes.

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 effects of collection risks. As a result, we do not anticipate any material losses in this area.

We are potentially exposed to credit risk with respect to those suppliers to whom we make advances in the ordinary course of business, and, accordingly, we bear credit risk associated with the potential inability of such suppliers either to deliver goods for which we have already made payments or return the money advanced to them. We also bear credit risk on our cash and cash equivalents and short-term investments. Our exposure and the credit ratings of our counterparties are regularly monitored, and the aggregate value of transactions concluded is spread among approved counterparties. We seek to control our credit exposure through counterparty limits that are reviewed and approved by management. We do not hedge our credit risk.

Liquidity Risk

Liquidity risk is the risk that we cannot fulfill our payment commitments on any given due date without significantly raising the cost to fund payments. Liquidity risk arises when the maturities of our assets and liabilities do not coincide. Ultimate responsibility for liquidity risk management rests with the board of directors. We manage our liquidity risk by seeking to maintain adequate reserves, banking facilities and reserve borrowing facilities, by regularly monitoring forecasted and actual cash flows and by seeking to match the maturity profiles of our assets and liabilities. In particular, we manage our liquidity position by drawing down on and repaying our revolving credit facilities as the ongoing needs of our business necessitate.

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ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As supervised by our Board of Directors and our Chief Executive Officer and Chief Financial Officer, management has established a system of disclosure controls and procedures and has evaluated the effectiveness of that system as required by paragraph (b) of Rule 13a-15,as of March 31, 2010.  Our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in the 1934 Securities Exchange Act Rule 13a-15(e)) as of March 31, 2010, were not effective 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.

Our Chief Executive Officer and Chief Financial Officer concluded that material weaknesses existed in the presentation and/or recording of the transactions and amounts described below in respect of the restatement of our historical consolidated financial statements and, in discussion with the Audit Committee of our Board of Directors, authorized the above restatement of the previously issued financial statements.  We have restated our financial statements for the years ended December 31, 2009, 2008 and 2007 to correct the errors.  Based on the restatement of the previously issued financial statements, our Chief Executive Officer and chief financial officer believe the financial statements have been properly reflected as of December 31, 2009, 2008 and 2007.

We restated our prior financial statements, including the audited financial statements for the years ended December 31, 2009, 2008 and 2007, as well as the unaudited financial statements for the three month period ended March 31, 2009, the six month period ended June 30, 2009 and the nine month period ended September 30, 2009, as our Chief Executive Officer and Chief Financial Officer concluded that weaknesses existed with regard to 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; the presentation of transaction gains and losses as a separate line item in the state ment of operations and not as a component of selling, general and administrative costs; the presentation of our revenues and cost of sales that required a correction in the percentage of completion method of accounting used by us; the provision for income taxes, which should have been reduced to reflect the adjustment of net income; and the additional description of certain related party transactions, which should have been included in the notes to our consolidated financial statements.  Our Chief Executive Officer and Chief Financial Officer, in discussions with our Audit Committee and in consultation with our auditors, authorized such restatements of the previously issued financial statements and concluded, as a result of these restatements, that material weaknesses in internal control over financial reporting existed as of December 31, 2009, 2008 and 2007.  We have restated our audited financial statements for the years ended December 31, 2009, 2008 and 2007, as well as the unaudited f inancial statements for the three month period ended March 31, 2009, the six month period ended June 30, 2009 and the nine month period ended September 30, 2009, to correct these errors.

Changes in Internal Control Over Financial Reporting

Our management has performed an evaluation, with the participation of our Chief Executive Officer and our Chief Financial Officer, of changes in our internal control over financial reporting that occurred during the three months ended March 31, 2010.  We have taken significant actions and implemented new policies to mitigate certain weaknesses in our disclosure controls and procedures that resulted in the above errors and required restatement of our financial statements, as described above.  In the year 2010, we upgraded and implemented our accounting software, coupled with our ongoing efforts to offer improved training and supervision of our appropriate personnel.  Additionally, we are monitoring and improving our existing procedures so that they will fully correspond to the complexity and volume of our ope rations, reflect the underlying transactions within the system, and ensure communication of any weaknesses in the internal control process to our Audit Committee.  We also plan to implement formal procedures over conversion of the amounts as recorded under the Russian accounting principles, under which our operating subsidiary reports its operations, to amounts under U.S. GAAP.  All disclosures and new financial accounting pronouncements are reviewed internally and discussed with the Audit Committee and our independent registered accounting firm.  Disclosure conferences before the release of the financial statements between the Audit Committee and our 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 are now establishing and are committed to providing financial information that is transparent, timely, complete and accurate.  As a result of the restatement of our financial statements described above, we believe that our financial statements for the periods set forth above fairly present in all material respects our financial condition and results of operations.

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PART II—OTHER INFORMATION

ITEM 1.                   LEGAL PROCEEDINGS.

We are, from time to time, involved in various legal proceedings in the ordinary course of business.  Although we cannot accurately predict the amount of our liability, if any, that could arise with respect to legal actions currently pending against us, we do not believe that the resolution of any currently pending legal proceedings will have a material adverse effect on our business, results of operations or financial condition.  Nevertheless, we cannot assure you that lawsuits or other litigation will not have a material adverse effect on our business, results of operations or financial condition.  There can be no assurance that any future litigation will not have a material adverse effect on our business, results of operations or financial condition.

We are currently a plaintiff in litigation with the Ministry of Defense of the Russian Federation, described under Note 7 to our restated consolidated financial statements included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009, and in Note 19 to our unaudited interim consolidated financial statements included in this Quarterly Report on Form 10-Q.

ITEM 1.A.               RISK FACTORS.

Our results of operations and financial condition are subject to numerous risks and uncertainties described in “Risk Factors” included in Item 1.A. of our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009.  Other than the below, the risk factors identified therein have not materially changed.

The restatement of certain of our historical consolidated financial statements may have an adverse effect on us

In April and May 2010, our management concluded that our consolidated audited financial statements for the years ended December 31, 2009 and 2008 and our consolidated interim period unaudited financial statements for the periods ended March 31, 2009, June 30, 2009 and September 30, 2009 needed to be restated and should not be relied upon.  For a more detailed discussion of the restatements, amendments and their underlying circumstances, please refer to our Current Report on Form 8-K filed with the Commission on April 27, 2010, as amended on May 24, 2010, and to the Explanatory Note at the beginning of Amendment No. 1 to our Annual Report on Form 10-K/A for the year ended December 31, 2009 and Notes 20, 21 and 22 to the consolidated financial statements included in that report.  We previously restated our consolidated financial statements and amended our public filings accordingly.  As a result of these restatements, we may become subject to a number of significant risks, which could have an adverse effect on its business, financial condition and results of operations, including potential stockholder litigation and regulatory proceedings or actions, the defense of which may require significant management attention and significant legal expense and which litigation, proceedings or actions, if decided against us, could require us to pay substantial judgments, settlements or other penalties.

ITEM 6. EXHIBITS.

Exhibit No. 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.

* Filed herewith

* Furnished herewith

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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.
Dated: May 24, 2010	By:	/s/ Alexey A. Kim
		Alexey A. Kim Chief Executive Officer
Dated: May 24, 2010	By:	/s/ Iuriy Vladimirovich Shevchenko
		Iuriy Vladimirovich Shevchenko Chief Financial Officer

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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.

* Filed herewith

* Furnished herewith

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