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 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 quarterly report on Form 10-Q, 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 sale of the Company's existing business to former management. We have filed an Information Statement with the Securities and Exchange Commission to change the name of the Company to UNR Holdings, Inc. For accounting purposes, the share exchange 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.

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 increased by approximately $.8 million , to $2.0 million for the three months ended March 31, 2009 from $1.2 million in 2008. The Company attributes the increase primarily to a realized exchange loss of approximately $1.3 million offset, in part, by a reduction in payroll costs, travel expenses and professional fees.

INCOME FROM OPERATIONS. Income from operations increased by approximately $0.3 million, from $3.2 million for the three months ended March 31, 2008, compared to $3.5 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 $3.2 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 $0.9 million for the three months ended March 31, 2008 to $0.8 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 increased to $2.1 million for the three months ended March 31, 2009, from $2.0 million for the comparable period in 2008, primarily due 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 offset, in part, by a lower demand from its road base product and increases in selling, general and administrative expenses, primarily due to a realized exchange loss.

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 $7.0 million and accounts receivable of $0.8 million offset by net earnings of $3.1 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 $25.9 million at March 31, 2009, as compared to $21.8 million at December 31, 2008, due primarily to increases in advance payments to contracts for work to be performed in 2009.

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 economic slowdown 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. However, the Company has arranged financing in the past with a number of 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 statements.

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". 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 Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 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 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 current 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. As of December 31, 2008 and March 31, 2009, 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 generally 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 related 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 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 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. 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.