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 September 30, 2012

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 000-27190

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)

121 South Orange Ave., Suite 1500, Orlando, FL		32801
(Address of principal executive offices)		(Zip Code)

__________________(407) 377-6813_______________

(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o

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 x

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). Yes o No x

The number of shares outstanding of the issuer's common stock, $0.001 par value per share, was 24,464,799 as of November 30, 2012.

UNR Holdings, Inc.
Index

		Page

PART I.	FINANCIAL INFORMATION	2

Item 1.	Consolidated Financial Statements	2

	Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011 (Unaudited)	F-1

	Consolidated Statements of Operations for the Nine and Three Months Ended September 30, 2012 and 2011 (Unaudited)	F-2

	Consolidated Statements of Comprehensive Income for the Nine Months Ended September 30, 2012 and 2011 (Unaudited)	F-3

	Consolidated Statement of Equity for the Period Ended September 30, 2012(Unaudited)	F-4

	Statement of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 (Unaudited)	F-5

	Notes to the Unaudited Consolidated Financial Statements	F-6 to F-19

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10

Item 4.	Controls and Procedures	11

PART II.	OTHER INFORMATION	11

Item 1.	Legal Proceedings	11

Item 6.	Exhibits	12

Signatures		13

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 for the year ended December 31, 2011.

The results of operations for the three and nine months ended September 30, 2012 and 2011 are not necessarily indicative of the results for the entire fiscal year or for any other period.

UNR HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			December 31,
	2012			2011
ASSETS:
RESIDENTIAL AND COMMERCIAL CONSTRUCTION ASSETS:	($)			($)
Cash and cash equivalents		10,023,217			42,795,147
Marketable securities		17,898,857			29,144,114
Inventories		637,982,386			465,525,786
Trade and other receivables, net		21,333,387			9,438,081
Property, plant and equipment, net		2,068,354			1,757,392
Other assets		2,508,758			1,417,115
Total Residential and Commercial Construction Assets		691,814,959			550,077,635

ROAD BASE MATERIALS ASSETS:
Inventories		113,806			430,171
Trade and other receivables, net		2,457,109			752,741
Total Road Base Material Assets		2,570,915			1,182,912

TOTAL ASSETS		694,385,874			551,260,547

LIABILITIES AND EQUITY:
RESIDENTIAL AND COMMERCIAL CONSTRUCTION LIABILITIES:
Short-term debt		3,305,281			6,262,437
Accounts payable and accrued expenses		441,179,935			351,080,551
Advances from customers		71,463,194			63,975,004
Deferred income tax liabilities		32,444,485			24,557,523
Total Residential and Commercial Construction Liabilities		548,392,895			445,875,515

ROAD BASE MATERIALS LIABILITIES:
Accounts payable and accrued expenses		15,194,397			7,898,548
Advances from customers		-			-
Total Road Base Materials Liabilities		15,194,397			7,898,548
Total Liabilities		563,587,292			453,774,063

Commitments and Contingencies		-			-

UNR Holdings, Inc. and Subsidiary Stockholders' Equity:
Common stock, $0.001 par value; authorized 500,000,000 shares; issued and outstanding 24,464,799 and 24,464,799 shares at September 30, 2012 and December 31, 2011, respectively		24,465			24,465
Additional paid-in capital		99,579			99,579
Retained earnings		95,563,643			71,636,550
Accumulated other comprehensive loss		(7,351,186	)		(6,658,061	)
Total UNR Holdings, Inc. and Subsidiary Stockholders' Equity		88,336,501			65,102,533

Noncontrolling interest		42,462,081			32,383,951
Total Equity		130,798,582			97,486,484

TOTAL LIABILITIES AND EQUITY		694,385,874			551,260,547

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-1

UNR HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	For the Nine Months Ended					For the Three Months Ended
	September 30,					September 30,
	2012		2011			2012		2011
	($)		($)			($)		($)
Revenues:
Sales and other operating revenues		69,445,911		138,024,063			18,546,199		62,544,293

Costs and expenses:
Cost of sales		29,984,956		93,849,218			7,745,631		44,934,122
Selling, general and administrative expenses		2,825,679		6,074,159			757,201		1,145,548
		32,810,635		99,923,377			8,502,832		46,079,670

Income from operations		36,635,276		38,100,686			10,043,367		16,464,623

Other income (expense):
Foreign currency transaction loss		-		(64,693	)		-		192,011
Other income (loss)		6,319,069		1,674,860			5,502,919		731,827
		6,319,069		1,610,167			5,502,919		923,838

Earnings before income taxes		42,954,345		39,710,853			15,546,286		17,388,461

Provision for income taxes		8,605,102		7,896,431			3,112,795		3,477,790

Net earnings		34,349,243		31,814,422			12,433,491		13,910,671

Less: Net earnings attributable to the noncontrolling interest		10,422,150		10,476,985			3,134,959		4,614,332

Net earnings attributable to UNR Holdings, Inc. and Subsidiary		23,927,093		21,337,437			9,298,532		9,296,339

Earnings per share - basic and diluted:
Earnings per common share attributable to UNR Holdings, Inc. and Subsidiary common shareholders	$	0.97	$	0.87		$	0.38	$	0.38

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

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-2

UNR HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	For the Nine Months Ended
	September 30,
	2012			2011
	($)			($)

Net earnings		34,349,243			31,814,422

Other comprehensive income (loss) - net of tax:
Currency translation adjustment		(1,037,145	)		(15,687,444	)

Comprehensive income		33,312,098			16,126,978

Comprehensive income attributable to noncontrolling interest		10,078,130			4,244,285

Comprehensive income attributable to UNR Holdings, Inc. and Subsidiary		23,233,968			11,882,693

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-3

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, 2011	$	63,466,764						24,464,799	$	24,465	$	99,579	$	45,139,584	$	(2,933,411	)	$	21,136,547

Net earnings		39,560,060		$	39,560,060									26,496,966					13,063,094

Currency translation adjustment		(5,540,340	)		(5,540,340	)						-				(3,724,650	)		(1,815,690	)

Comprehensive income				$	34,019,720

Balance, December 31, 2011		97,486,484						24,464,799		24,465		99,579		71,636,550		(6,658,061	)		32,383,951

Net earnings		34,349,243			34,349,243									23,927,093					10,422,150

Currency translation adjustment		(1,037,145	)		(1,037,145	)						-				(693,125	)		(344,020	)

Comprehensive income				$	33,312,098

Balance, September 30, 2012	$	130,798,582						24,464,799	$	24,465	$	99,579	$	95,563,643	$	(7,351,186	)	$	42,462,081

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-4

UNR HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	September 30,
	2012			2011
	($)			($)
Cash flows from operating activities:
Net earnings		34,349,243			31,814,422

Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation		115,741			73,117
Gain on sale of property, plant and equipment		(53,578	)		-
Deferred income taxes		7,886,962			4,056,178
Change in operating assets and liabilities		(83,073,707	)		(9,940,932	)
Net cash provided by operating activities		(40,775,339	)		26,002,785

Cash flows from investing activities:
Purchase of property, plant and equipment		(422,840	)		(866,700	)
Proceeds from sale of equipment		263,332			-
Purchase of marketable securities		(37,920,942	)		(9,711,735	)
Proceeds from sale of marketable securities		49,166,199			10,000,000
Net cash used in investing activities		11,085,749			(578,435	)

Cash flows from financing activities:
Proceeds from loans		14,832,467			-
Repayment of loans		(17,789,623	)		-
Net cash used in financing activities		(2,957,156	)		-

Effect of exchange rate changes on cash		(125,184	)		(306,226	)

Net increase (decrease) in cash		(32,771,930	)		25,118,124

Cash - beginning of period		42,795,147			11,234,193

Cash - end of period		10,023,217			36,352,317

Changes in operating assets and liabilities consist of:
Decrease (increase) in accounts receivable		(13,599,674	)		17,450,616
(Increase) decrease in inventories		(172,848,893	)		(43,360,974	)
(Increase) in other assets		(1,091,643	)		(15,604,700	)
Increase (decrease) in customer advances		7,488,190			30,005,812
Increase in accounts payable and other liabilities		96,978,313			1,568,314
		(83,073,707	)		(9,940,932	)

Supplementary Information:
Cash paid during the period for
Interest	$	551,550	$	-
Income taxes	$	59,853	$	45,638

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-5

UNR HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The consolidated balance sheet as of September 30, 2012 and the consolidated statements of operations, stockholders' equity and cash flows for the periods presented have been prepared by UNR Holdings, Inc. (the "Company" or "UNR") 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, 2011 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., “UNR Holdings” or the “Company”). The Company’s principal business activity is the construction and development of multi-functional, multi-apartment residential complexes and commercial centers in high density and urban areas, principally in the city of Moscow and its suburbs. The Company also produces and supplies its patented road base material, which it markets under the name “Prudon-494” to infrastructure projects in the Russian Federation. Substantially all of the Company’s business operations are located, and all of its revenues are earned, in 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 an aggregate of 66.83% 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 shares 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 for periods 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 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 in Ecuador. Following the sale of the then existing business to former management, the Company retained no assets or liabilities attributable to operations of the Company or its Ecuador subsidiary prior to the sale of the subsidiary’s assets and the assumption by prior management of its liabilities.

The 494 UNR Acquisition was accounted for as a recapitalization. The 2008 and prior 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 494 UNR Acquisition.

F-6

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”).

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.

The Company experiences seasonal fluctuations in its operations. The Company tends to construct more but sell fewer apartments in the summer months, while the Company tends to sell more but construct less apartments during the winter months of a given year. Therefore, the effects of seasonality usually are not correlated with sales trends. In addition, the Company engages in its 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 construction projects and road construction activity where the Company engages primarily in selected interior activities (typically in the buildings under construction).

Effective for the year ended December 31, 2010, 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 Company’s operating subsidiary is the Russian Ruble (“RUR”).

As of September 30, 2012 and December 31, 2011, exchange rates were 30.92 and 32.20 RUR to $1, respectively. Average exchange rates for the nine months ended September 30, 2012 and 2011 were 31.09 and 28.96 RUR to $1, respectively.

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

F-7

Note 3: Summary of Significant Accounting Policies

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. There were no significant changes to these accounting policies during the nine months ended September 30, 2012, except as noted below. Recent accounting pronouncements adopted during the first half of 2012 are as follows:

Accounting Standards Update No. 2011-04 – Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (“ASU No. 2011-04”)

ASU No. 2011-04 clarified some existing concepts, eliminated wording differences between accounting principles generally accepted in the United States of America (“GAAP”) and International Financial Reporting Standards (“IFRS”), and in some limited cases, changed some principles to achieve convergence between U.S. GAAP and IFRS. ASU No. 2011-04 resulted in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU No. 2011-04 also expanded the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The Company implemented the provisions of ASU No. 2011-04 effective January 1, 2012. The adoption of the provisions of ASU No. 2011-04 did not have a material effect on the Company’s consolidated financial position, results of operations or cash flows, nor did it materially modify or expand the Company’s financial statement footnote disclosures.

Accounting Standards Update No. 2011-05 – Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU No. 2011-05”)

ASU No. 2011-05 amended existing guidance by allowing only two options for presenting the components of net income and other comprehensive income: (1) in a single continuous statement of comprehensive income or (2) in two separate but consecutive financial statements, consisting of an income statement followed by a separate statement of other comprehensive income. ASU No. 2011-05 eliminated the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in ASU No. 2011-05 did not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU No. 2011-05 required retrospective application, and was effective for the Company on January 1, 2012. The Company implemented the provisions of ASU No. 2011-05 during the first quarter of 2012 by presenting herein the components of net income and other comprehensive income in two separate but consecutive financial statements.

Accounting Standards Update No. 2011-08 – Testing Goodwill for Impairment (Topic 350): Intangibles—Goodwill and Other (“ASU No. 2011-08”)

ASU No. 2011-08 updated existing guidance regarding testing of goodwill for impairment. ASU No. 2011-08 gives entities the option to perform a qualitative assessment to first assess whether the fair value of a reporting unit is less than its carrying amount. If an entity determines it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. ASU No. 2011-08 became effective during the Company’s first quarter of 2012. The adoption of this standard did not have any impact on the Company’s results of operations or financial condition.

F-8

Note 4: Fair Value Measurements

The Company utilizes the accounting guidance for fair value measurements and discloses for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring 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 at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. ASC 820 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 then 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.

As of September 30, 2012, 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 nine months ended September 30, 2012 and 2011.

F-9

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 September 30, 2012 and December 31, 2011.

			Assets at Fair Value as of September 30, 2012 and December 31, 2011
			Quoted Prices
			in Active		Significant		Significant
			Markets for		Other		Other
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
September 30, 2012	Total		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	10,023,217	$	10,023,217	$	-	$	-
Marketable securities		17,898,857		17,898,857		-		-
Non-marketable securities		2,508,758		-		-		2,508,758
Total	$	30,430,832	$	27,922,074	$	-	$	2,508,758

December 31, 2011
Cash and cash equivalents	$	42,795,147	$	42,795,147	$	-	$	-
Marketable securities		29,144,114		29,144,114		-		-
Non-marketable securities		1,417,115		-		-		1,417,115
Total	$	73,356,376	$	71,939,261	$	-	$	1,417,115

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 within the scope of the fair value disclosure requirements as of September 30, 2012.

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 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.

F-10

Note 5: Marketable securities/Non-marketable securities

At September 30, 2012 and December 31, 2011, the Company's marketable securities had an adjusted cost basis of $20,407,615 and $30,561,229, which approximated market value. These marketable securities related primarily to the Company's certificate of deposits of $17,898,857 and $29,144,114 at September 30, 2012 and December 31, 2011, respectively, which have a maturity date of greater than 90 days and non-marketable bank bonds received in connection with the sale of apartments with a maturity date of five years.

The non-marketable bank bonds are reported as other assets in the Company's consolidated balance sheet at September 30, 2012 and December 31, 2011.

During the nine months ended September 30, 2012 and 2011 the Company recorded interest income, which is included in other income on the Company's consolidated statement of operations, of approximately $613,000 and $503,000, respectively, in connection with these investments.

Note 6: Cash and cash equivalents

As of September 30, 2012 and December 31, 2011, cash balances comprise the following:

	September 30,		December 31,
	2012		2011
Denominated in US Dollars	$	3,072,568	$	32,606,980
Denominated in RUR		6,944,906		10,188,167
Denominated in Euro		5,743		-
Total cash and cash equivalents	$	10,023,217	$	42,795,147

Note 7: Inventories

	September 30,		December 31,
	2012		2011
Construction in progress (1)	$	611,524,900	$	447,016,943
Apartments for sale		11,848,795		13,062,850
Advances to subcontractors (net of allowance for doubtful accounts of approximately $1,017,000 and $925,000 as of September 30, 2012 and December 31, 2011, respectively)		13,820,234		5,046,361
Construction materials (road base)		113,806		430,171
Construction materials (residential buildings)		788,457		399,632
Total inventories	$	638,096,192	$	465,955,957

(1)	Costs in excess of billings are included in construction in progress. The table below summarizes total costs incurred on uncompleted contracts, estimated earnings for each period and amount of costs in excess of billings as of each balance sheet date.

F-11

	September 30,		December 31,
	2012		2011
Total costs	$	622,908,702	$	575,228,784
Estimated earnings		37,921,655		52,749,660
		660,830,357		627,978,444
Billings to date		49,305,457		180,961,501
Costs in excess of billings	$	611,524,900	$	447,016,943

Note 8: Trade and Other Receivables, Net

	September 30,		December 31,
	2012		2011
Trade accounts and notes receivable (net of allowance for doubtful accounts of approximately $503,000 and $438,000 as of September 30, 2012 and December 31, 2011, respectively)	$	14,742,439	$	2,267,399
Accounts receivable from the Russian Ministry of Defense		3,508,164		3,305,844
Other receivables (primarily VAT)		5,539,893		4,617,579
Total trade and other receivables, net	$	23,790,496	$	10,190,822

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 September 30, 2012.

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 September 30, 2012 and December 31, 2011, these subcontractors had performed construction services for the Project totaling $35,445,209 and $35,445,209, 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”, and this accounts receivable represented the Company's only accounts receivable due more than one year as of September 30, 2012. During 2010, the Company adjusted its estimates of the various costs of the Project and reduced the amount due from the principal and the amount payable to subcontractors by approximately $20 million.

The Company receives progress payments from non-government trade customers to be applied against construction of individual apartments. When the apartments are completed and title passes to the trade customers, a final billing is issued to the trade customers and all progress payments are applied against the outstanding receivables. The balance of any unpaid trade receivables are due within ninety days. The Company receives no progress payments from the Russian Ministry of Defense and all payments for work by subcontractors are due upon the completion of the Project. Payments for sales of road based materials are due upon the completion of the work and accepted by both the Company and the customer.

F-12

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 due to disagreements between the Company and the Principal over certain provisions of the initial construction contract. The Company initiated a lawsuit in order to recover these amounts from the Principal. The court of primary jurisdiction accepted the Company’s claims. However, the Principal filed an appeal to a higher court. In September 2011, the appeal court ruled in favor of the Company and the claim in the amount of approximately $33.8 million was approved, of which $30.2 million was paid by the Principal. The Company is currently waiting for the balance of the claim to be approved for payment by the Court in 2012.

In August 2012, the appeal court ordered the Russian Military of Defense to pay the Company interest on the amount of settlement. The Company received $4,536,090 during the third quarter of 2012 and recorded the amount in other income on the Company's consolidated statement of operations for the nine and three months ended September 30, 2012.

The Company records revenue and costs associated with the Russian Ministry of Defense under the completed contract method. Revenue and costs from apartments sold to non-government trade customers are recognized under the percentage of completion method. Revenue and costs from road based materials are recognized under the completed contract method due to the short-term nature of the construction.

The Company continues to work on the remaining residential space in the Project, which was approximately 98% complete as of December 2011, while the Company continues to pursue the balance of its claim in the ongoing litigation with the Russian Ministry of Defense. There have been no temporary or permanent work stopovers due to the present litigation.

At present, the Company’s management and lawyers cannot determine the ultimate outcome of the new litigation. However, management believes that the Company will ultimately prevail and collect substantially all of the amounts due from the Principal.

The Company has recorded revenue and cost of sales related to the Marshal Rybalko Street Project as follows:

	Nine Months Ended
	September 30,
	2012		2011
Revenue	$	4,910,006	$	62,362,530
Cost of sales		3,175,949		32,814,730

The Marshal Rybalko Street Project represents one of three government construction projects of the Company during the periods presented above. The other projects are Na Yaaunze and Nemchinova.

F-13

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 is recorded at cost less accumulated depreciation.

	September 30,		December 31,
	2012		2011
Land	$	603,800	$	374,239
Buildings and building improvements		1,252,002		1,128,957
Vehicles		14,495		237,436
Machinery and equipment		249,799		214,710
Other		256,442		62,909
		2,376,538		2,018,251
Less: accumulated depreciation		308,184		260,859
Total property, plant and equipment, net	$	2,068,354	$	1,757,392

Depreciation expense, which is included in selling, general and administrative expenses, for the nine months ended September 30, 2012 and 2011 amounted to $115,741 and $73,117, respectively.

Note 10: Short-term debt

Short-term debt balances as of September 30, 2012 and December 31, 2011 were as follows:

	September 30,		December 31,
	2012		2011
Loan payable to RosDer Bank	$	-	$	6,211,933
interest @ 12.5 % per anum, due August 2012.
The loan was paid in full in February 2012.
Loan payable to RosDer Bank,
interest @ 12% per annum, due October 2012.		3,234,477
Loans from officer, interest free, due on demand		70,804		50,504
	$	3,305,281	$	6,262,437

Interest expense for the nine months ended September 30, 2012 and 2011 in the amount of approximately $552,000 and $-0-, respectively, has been capitalized and included in the cost of sold and unsold projects under development in the Company’s balance sheets as of September 30, 2012 and December 31, 2011.

Note 11: Accounts payable and accrued expenses

	September 30,		December 31,
	2012		2011
Trade accounts payable	$	456,322,302	$	355,663,335
Accrued liabilities to subcontractors		-		3,305,844
Other payables		52,029		9,920
Total accounts payable and accrued expenses	$	456,374,331	$	358,979,099

F-14

Note 12: Advances from customers

As of September 30, 2012 and December 31, 2011, advances from customers totaling $71,463,194 and $63,975,004, respectively, were attributable to prepayments received under agreements with customer requiring the Company to complete the construction of the apartments and transmit the title to the customers. Generally the customers make progress payments for the apartment price prior to the construction being completed. The sales price 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. Accounts receivable are recorded when the apartments are delivered and the advances from customers are offset against the accounts receivable at that time.

Note 13: Equity

As of September 30, 2012 and December 31, 2011, the share capital of the Company comprises 500,000,000 authorized shares of common stock, $0.001 par value per share, 24,464,799 of which shares were issued and outstanding as of each such date. No dividends were declared as of September 30, 2012 and December 31, 2011.

Note 14: Noncontrolling Interest

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 signed in connection with the 494 UNR Acquisition.

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

	September 30,			December 31,
	2012			2011
Balance at the beginning of the period	$	32,383,951		$	21,136,547
Currency translation adjustment		(344,020	)		(1,815,690	)
Noncontrolling interest share of income		10,422,150			13,063,094
Balance at the end of the period	$	42,462,081		$	32,383,951

Note 15: Income Taxes

The Company follows the provisions of ASC 740. 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 record 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.

F-15

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 2008. Regarding the Russian Federation, the Company is no longer subject to examination by tax authorities for years before 2010. The Company was audited by the Russian Federation tax authorities with respect to 2007 and 2009 and the tax authorities determined there was no additional tax liability related to those years.

On August 10, 2010, President Obama signed into law the "Education Jobs and Medicaid Assistance Act" (H.R. 1586) (the "Act"). The Act's international tax provisions place certain restrictions on the use of foreign tax credits. The Company has evaluated the newly-enacted international tax provisions and determined they do not materially affect the company's operating results or financial condition.

The Company continues to monitor proposed legislation affecting the taxation of transfers of U.S. intangible property and other potential tax law changes.

Note 16: Revenues

Revenues for September 30, 2012 and 2011 comprise the following:

	For the Nine Months Ended				For the Three Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
General contractor's fees	$	-	$	-	$	-	$	-
Sales of residential and commercial properties		54,083,691		117,001,579		12,720,217		56,621,403
Sales of road base materials		15,362,220		21,022,484		5,825,982		5,922,890
Total revenues	$	69,445,911	$	138,024,063	$	18,546,199	$	62,544,293

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 that are evaluated regularly by management. The Company is organized by geographical area and industry segment.

F-16

	Nine Months Ended				Three Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Revenue
Residential and commercial construction	$	54,083,691	$	117,001,579	$	12,720,217	$	56,621,403
Road base materials		15,362,220		21,022,484		5,825,982		5,922,890
	$	69,445,911	$	138,024,063	$	18,546,199	$	62,544,293
Income (loss) from operations
Residential and commercial construction	$	36,581,769	$	37,541,334	$	10,008,525	$	16,303,086
Road base materials		53,507		559,352		34,842		161,537
	$	36,635,276	$	38,100,686	$	10,043,367	$	16,464,623

Total assets (as of)	September 30, 2012		December 31, 2011
Residential and commercial construction	$	691,814,959	$	550,077,635
Road base materials		2,570,915		1,182,912
	$	694,385,874	$	551,260,547

Note 18: Accumulated Other Comprehensive Income (Loss)

The accumulated other comprehensive loss as of September 30, 2012 and December 31, 2011 totaling $7,351,186 and $6,658,061, respectively, is in each case 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 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 Russian 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.

F-17

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 8, the Company was a plaintiff in a lawsuit against its debtor, the Russian Ministry of Defense, to recover accounts receivable totaling approximately $33.8 million. In September 2011, the Company prevailed in the litigation and the Russian Ministry of Defense paid $30.2 million. The Company is currently waiting for the balance of the claim to be approved for payment by the court in 2012. Management of the Company did not expect to collect the remaining balance of $20 million from the Russian Ministry of Defense. In the course of the third quarter of 2010, management reviewed and adjusted its estimates of the various costs of the Marshal Project. As a result, management modified the estimates related to the Marshal Project and made the appropriate adjustments to the relevant line items in the consolidated financial statements of the Company for the year-ended December 31, 2010. The reduction of the accounts receivable from the Russian Ministry of Defense in the amount of $20 million and a corresponding reduction in accounts payable to subcontractors did not have an effect on the Company’s consolidated statement of operations for the year ended December 31, 2010. A subcontractor has won a judgment of approximately $25.7 million against the Company in connection with the Marshal Project. As of December 31, 2011, the Company paid the contractor who won the judgment as well as all subcontractors who were owed money in connection with the Marshal Project.

The Company incurred approximately $9.1 million in additional costs on the Project in connection with the litigation with the Russian Ministry of Defense. Management is in the process of filing additional litigation against the Russian Ministry of Defense to recover these costs. The Company has not recorded the receivable from the Russian Ministry of Defense as of December 31, 2011 but has recorded the expense in cost of sales during the year ended December 31, 2011. At present, the Company's management and lawyers cannot determine the ultimate outcome of the new litigation. However, management believes that the company will ultimately prevail and collect all of the amounts due from the Russian Ministry of Defense.

Capital Commitments. In the normal course of business the Company has entered into a number of construction contracts with its subcontractors. These contracts have various completion dates through 2012. However, management may seek to extend the completion through agreements with the subcontractors. As of September 30, 2012, the amount of such commitments was approximately $140 million.

Note 20: Related Party Transactions

During the nine months ended September 30, 2012 and 2011, the Company had activities with related companies in connection with purchases, subcontracting construction and leases. The Company’s reported results of operations, financial position and cash flows could 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 affected on the same terms, conditions and amounts as transactions between unrelated 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.

F-18

The details of the relationships for those related parties with whom the Company entered into significant transactions or had significant balances outstanding as of September 30, 2012 and 2011 are presented below:

	Nine Months Ended
	September 30,
	2012		2011
Purchases (included in cost of sales)	$	3,584,357	$	2,003,817
Rental income	$	1,417,078	$	1,043,588

	September 30,		December 31,
	2012		2011
Accounts receivable	$	2,130,377	$	2,421,166
Accounts payable	$	6,149,357	$	8,493,815

F-19

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 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

Prior to August 5, 2008, our company was engaged in the housing business in the Republic of Ecuador under the name of Promotora. At the closing under the 494 UNR Acquisition Agreement on August 5, 2008, we issued 20,500,000 shares of our common stock to the controlling stockholder of 494 UNR, in exchange for 66.83% of all of the outstanding shares of common and preferred stock of 494 UNR. For accounting purposes, the Acquisition Agreement has been treated as a recapitalization of 494 UNR (now our subsidiary owned 68.83% by us) 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 (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 years 2008 through 2011 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 Russian macroeconomic conditions. There has been no material changes as to how such factors affected our financial condition and results of operations since December 31, 2011. For more information, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations - Russian Macroeconomic Condition Trends - included in Item 7. on Form 10-K for the fiscal year ended December 31, 2011.

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.

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 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. 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 September 30, 2012 and December 31, 2011, 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 in 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.

New Financial Accounting Standards

Accounting Standards Update No. 2011-05 – Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU No. 2011-05”)

Accounting Standards Update No. 2011-08 – Testing Goodwill for Impairment (Topic 350): Intangibles—Goodwill and Other (“ASU No. 2011-08”)

Consolidated Results of Operations for the Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011

Revenues. Total revenues for the nine months ended September 30, 2012 decreased to $69.4 million, or 50%, as compared to $138.0 million for the nine months ended September 30, 2011. The decrease was a result of a decline we experienced mostly in our construction and development business in 2012 due to delayed profit recognition from the Marchal Rybalko project resulting from prolonged litigation with the Russian Ministry of Defense, offset by an increase in prices for apartments and commercial space.

Cost of Sales. Cost of sales decreased by $63.9 million, or over 68%, to $30.0 million for the nine months ended September 30, 2012, from $93.9 million for the nine months ended September 30, 2011. Cost of sales decreased substantially during the first three quarters of 2012 as compared to 2011 primarily due to a decrease in revenues from our construction and development business. Cost of sales percentage decreased primarily due to the increase in prices for apartments and commercial space while costs remained constant, confirming the Company’s view that the Russian Real estate market is on track for a sustaining recovery.

Selling, general and administrative costs. Selling, general and administrative costs decreased by $3.2 million to approximately $2.8 million for the nine months ended September 30, 2012, as compared to approximately $6.0 million for the nine months ended September 30, 2011. This was primarily due to decreases in professional fees, administrative overhead and approximately $2.0 million of costs incurred in 2011 in connection with expenses incurred in the Middle East project that was discontinued during 2011.

Income (Loss) from Operations. Income from operations decreased to approximately $36.6 million for the nine months ended September 30, 2012, from income of approximately $38.1 million for the comparable period in 2011, primarily due decreases in sales offset by decreases in the cost of sales percentage and a decrease in overhead during the nine month period ended September 30, 2012.

Other Income(Expense). Other income was approximately $6.3 million for the nine months ended September 30, 2012, as compared with $1.7 million for the nine months ended September 30, 2011, primarily due to an increase in interest income of approximately $4.6 million paid by the Russian Ministry of Defense ordered by the appeal court in connection with the court ordered settlement.

Provision For Income Taxes. Provision for income taxes increased to $8.6 million for the nine months ended September 30, 2012 as compared to $7.9 million for the nine months ended September 30, 2011. The increase is primarily due to a higher net income during the nine months ended September 30, 2012.

Net Earnings. Net earnings increased to$34.3 million for the nine months ended September 30, 2012 as compared to net earnings of $31.8 million for the nine months ended September 30, 2011. The Company attributes the increase in earnings primarily to an increase in gross profit during the nine month period ended September 30, 2012, a decrease in operating overhead and interest earned from the settlement with the Russian Ministry of Defense.

Consolidated Results of Operations for the Three Months Ended September 30, 2012 Compared to the Three Months Ended September 30, 2011

Revenues. Total revenues for the three months ended September 30, 2012 decreased to $18.6 million, or 70%, as compared to $62.6 million for the three months ended September 30, 2011. The decrease was a result of a decline we experienced mostly in our construction and development business in 2012 in connection with the Marchal Rybalko project, offset by an increase in prices for apartments and commercial space.

Cost of Sales. Cost of sales decreased by $37.2 million, or over 83%, to $7.7 million for the three months ended September 30, 2012, from $44.9 million for the three months ended September 30, 2011. Cost of sales decreased substantially during the third quarter of 2012 as compared to 2011 primarily due to a decrease in revenues from our construction and development business. Cost of sales percentage decreased primarily due to the increase in prices for apartments and commercial space while costs remained constant.

Selling, general and administrative costs. Selling, general and administrative costs decreased by $0.4 million to approximately $0.8 million for the three months ended September 30, 2012, as compared to approximately $1.1 million for the three months ended September 30, 2011. This was primarily due to decreases in professional fees and administrative overhead.

Income (Loss) from Operations. Income from operations decreased to approximately $10.0 million for the three months ended September 30, 2012, compared to approximately $16.5 million for the comparable period in 2011, primarily due to decreases in sales offset by decreases in cost of sales percentage during the three month period ended September 30, 2012.

Other Income(Expense). Other income (loss) was approximately $5.5 million for the three months ended September 30, 2012, as compared with $0.7 million for the three months ended September 30, 2011, primarily due to an increase in interest income of approximately $4.6 million paid by the Russian Ministry of Defense.

Provision For Income Taxes. Provision for income taxes decreased to $3.1 million for the three months ended September 30, 2012 as compared to $3.5 million for the three months ended September 30, 2011. The decrease is primarily due to lower net income during the three months ended September 30, 2012.

Net Earnings. Net earnings decreased to $12.4 million for the three months ended September 30, 2012 as compared $13.9 million for the three months ended September 30, 2011. The Company attributes the decrease in earnings primarily to a decrease in sales offset by an increase in interest income paid by the Russian Ministry of Defense during the three month period ended September 30, 2012.

Liquidity and Capital Requirements

We had a working capital surplus of approximately $126.2 million and stockholders’ equity of approximately $88.3 million as of September 30, 2012. Cash and cash equivalents decreased by approximately $32.8 million for the nine months ended September 30, 2012. The decrease is primarily attributable to an increase in inventories of approximately $172.5 million offset by an approximate $97.4 million in accounts payable and net proceeds of approximately $11.2 million from marketable securities.

Trade and other receivables, net of allowances, were $23.8 million at September 30, 2012, compared to approximately $10.2 million at December 31, 2011. The increase is primarily due to a majority of sales of residential units during the first nine months of 2012 having occurred in March 2012 and payments not expected to be received until the fourth quarter. Inventories were $638.0 million at September 30, 2012, as compared to $466.0 million at December 31, 2011, due primarily to the increase in construction during the nine months ended September 30, 2012 to keep up with the increased real estate sales activity in Russia.

Accounts payable were $456.4 million at September 30, 2012, compared to $359.0 million at December 31, 2011. The Company attributes the increase primarily to the increase in inventory to support the Company's increased construction activity offset by payments to creditors made by the Company. Advances from customers were $71.5 million at September 30, 2012 compared to $64.0 million at December 31, 2011. We attribute the increase to an increase in sales activity during the latter part of 2012.

As discussed in Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, we prevailed in a lawsuit against the Russian Ministry of Defense, to recover $30.2 million of accounts receivable.

Other than as described above, there have been no material changes to our liquidity position or capital resource requirements since December 31, 2011. 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 for the fiscal year ended December 31, 2011.

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 available, 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;

●

the ultimate outcome of our litigation with the Ministry of Defense of the Russian Federation described in Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and in Note 8 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 for the fiscal year ended December 31, 2011 as well as in the other materials filed and to be filed with the U.S. Securities and Exchange 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 operations, 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.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed by us in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is also based in part on certain assumptions regarding the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Given these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their stated goals under all potential future conditions.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2012 that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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.

On July 25, 2011, we were served with a complaint filed by Securex Filings LLC, as plaintiff, in the District Court, Denver County, Colorado, seeking judgment for the amount of $21,491 for edgarizing services rendered to the Company by the plaintiff and interest on unpaid amounts. We intend to settle this claim.

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

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.


SEC Ref. No.		Title of Document
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Label Linkbase Document
101.PRE		XBRL Taxonomy Presentation Linkbase Document

The XBRL related information in Exhibits 101 to this Quarterly Report on Form 10-Q shall not be deemed “filed” or a part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, and is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of those sections.

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: December 3, 2012	By:	/s/ Alexey A. Kim
		Alexey A. Kim Chief Executive Officer

Dated: December 3, 2012	By:	/s/ Iuriy Vladimirovich Shevchenko
		Iuriy Vladimirovich Shevchenko Chief Financial Officer

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

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.


SEC Ref. No.		Title of Document
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Label Linkbase Document
101.PRE		XBRL Taxonomy Presentation Linkbase Document

UNR HOLDINGS INC 10-Q