*Table
        of Contents*







**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-Q**





(MARK
      ONE)





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE QUARTERLY PERIOD ENDED March 31,
                2008.






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: 0-52549








**RINO
      International Corporation**


(EXACT
      NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)





**NEVADA**
            
            **41-1508112**(STATE
                OR OTHER JURISDICTION OF
            
            (I.R.S.
                EMPLOYER IDENTIFICATION NO.)INCORPORATION
                OR ORGANIZATION




**11
      Youquan Road, Zhanqian Street, Jinzhou District**


**Dalian,
      People’s Republic of China 116100**


(ADDRESS
      OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)





REGISTRANT’S
      TELEPHONE NUMBER, INCLUDING AREA CODE: **+86-411-87661222**


_______________





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 ྑ.





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





Large
      accelerated filer o     Accelerated
      filer o Non-accelerated
      filer x      Smaller
      reporting company o





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 of Common Stock of the Registrant, par value $.0001 per share,
      outstanding on May 11, 2008, was 25,000,000.












*Table
        of Contents*




**RINO
      INTERNATIONAL CORPORATION**





**INDEX
      TO MARCH 31, 2008 FORM 10-Q**




**Page**Part
                I - Financial InformationItem
                1 - Financial StatementsConsolidated
                  Balance Sheets as of March 31, 2008 (unaudited)and December 31,
                  2007
            
            
            3Consolidated
                  Statements of Income and Other Comprehensive Income forthe three
                  months ended March 31, 2008 and 2007 (unaudited)
            
            
            4Consolidated
                  Statements of Cash Flows for the three months endedMarch 31, 2008
                  and 2007 (unaudited)
            
            
            5Consolidated
                Statements of Shareholders’ Equity for the Three
                Months Ended March 31, 2008 (unaudited)
            
            
            6Notes
                to the Consolidated Financial Statements
                (unaudited)
            
            
            7Item
                  2 - Management's Discussion and Analysis of Results ofOperations
                  and Financial Condition
            
            
            28Item
                3 - Quantitative and Qualitative Disclosure about
                Market Risk
            
            
            34Item
                4 - Controls and Procedures
            
            
            34Part
                II - Other InformationItem
                2 - Unregistered Sales of Equity Securities and Use
                of Proceeds
            
            
            35Item
                6 - Exhibits
            
            
            36Signature
                Page
            
            
            37




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          of Contents*




**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements**




RINO
                INTERNATIONAL CORPORATION AND SUBSIDIARIES(FORMERLY
                KNOWN AS JADE MOUNTAIN CORPORATION)CONSOLIDATED
                BALANCE SHEETSAS
                OF MARCH 31, 2008 AND DECEMBER 31,
                2007




A
                S S E T SMarch
                31, 2008
            
            December
                31, 2007(Unaudited)CURRENT
                ASSETSCash
                and cash equivalents
            
            $
            6,147,346
            
            $
            7,390,631Restricted
                cash
            
            
            4,991,412
            
            
            1,000,000Accounts
                receivable
            
            
            25,271,971
            
            
            20,840,336Notes
                receivable
            
            
            952,087
            
            
            202,670Costs
                and estimated earnings in excess of billings
            
            
            1,049,322
            
            
            2,818,122Inventories
            
            
            244,323
            
            
            178,480Advances
                for inventory purchase
            
            
            14,754,199
            
            
            13,372,629Other
                current assets and prepaid expenses
            
            
            1,685,924
            
            
            1,174,464Total
                current assets
            
            
            55,096,584
            
            
            46,977,332PROPERTY
                AND EQUIPMENT, NET
            
            
            11,426,247
            
            
            11,000,581OTHER
                ASSETSPrepaid
                expenses (non-current)
            
            
            89,250
            
            
            95,706Advances
                for equipment and construction material purchase
            
            
            6,219,083
            
            
            2,470,916Intangible
                assets, net
            
            
            1,674,283
            
            
            1,618,590Total
                other assets
            
            
            7,982,616
            
            
            4,185,212Total
                assets
            
            $
            74,505,447
            
            $
            62,163,125L
                I A B I L I T I E S   A N D   S H A R E H O L D E R
                S'   E Q U I T YCURRENT
                LIABILITIESAccounts
                payable
            
            $
            2,160,540
            
            $
            2,534,858Liquidated
                damages payable
            
            
            1,500,000
            
            
            1,000,000Other
                payables and accrued liabilities
            
            
            830,810
            
            
            802,245Notes
                payable
            
            
            2,392,052
            
            
            -Sales
                commission payable
            
            
            786,561
            
            
            -Due
                to a stockholder
            
            
            79,753
            
            
            106,963Other
                taxes payable
            
            
            (56,465
            )
            
            581,444Income
                tax payable
            
            
            1,233,524
            
            
            5,970,794Value
                added tax payable
            
            
            2,937,899
            
            
            2,989,365Short-term
                loan
            
            
            7,140,000
            
            
            -Total
                current liabilities
            
            
            19,004,674
            
            
            13,985,669COMMITMENTS
                AND CONTINGENCIES
            
            
            -
            
            
            -SHAREHOLDERS'
                EQUITYPreferred
                Stock ($0.0001 par value, 50,000,000 shares authorized,none
                issued and outstanding)
            
            
            -
            
            
            -Common
                Stock ($0.0001 par value, 10,000,000,000 shares
                authorized,25,000,000
                shares issued and outstanding as of March 31, 2008 andDecember
                31, 2007)
            
            
            2,500
            
            
            2,500Additional
                paid-in capital
            
            
            32,742,048
            
            
            32,701,982Retained
                earnings
            
            
            15,841,263
            
            
            11,376,163Statutory
                reserves
            
            
            2,664,785
            
            
            2,109,539Accumulated
                other comprehensive income
            
            
            4,250,177
            
            
            1,987,272Total
                shareholders' equity
            
            
            55,500,773
            
            
            48,177,456Total
                liabilities and shareholders' equity
            
            $
            74,505,447
            
            $
            62,163,125


The
        accompanying notes are an integral part of these statements.


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          3 -
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RINO
                  INTERNATIONAL CORPORATION AND SUBSIDIARIES(FORMERLY
                  KNOWN AS JADE MOUNTAIN CORPORATION )CONSOLIDATED
                  STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOMEFOR
                  THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007(UNAUDITED)
  2008
              
              2007REVENUES:Contracts
              
              $
              19,045,425
              
              $
              7,189,479Services
              
              
              -
              
              
              2,600,84219,045,425
              
              
              9,790,321COST
                  OF SALESCost
                  of contracts
              
              
              11,165,083
              
              
              4,380,774Cost
                  of services
              
              
              -
              
              
              389,932Depreciation
              
              
              157,775
              
              
              120,48411,322,858
              
              
              4,891,190GROSS
                  PROFIT
              
              
              7,722,567
              
              
              4,899,131OPERATING
                  EXPENSESSelling,
                  general and administrative expenses
              
              
              2,145,491
              
              
              1,297,348Depreciation
              
              
              32,605
              
              
              26,526Amortization
              
              
              15,914
              
              
              11,464Reasearch
                  and development
              
              
              10,483
              
              
              -TOTAL
                  OPERATING EXPENSES
              
              
              2,204,493
              
              
              1,335,338INCOME
                  FROM OPERATIONS
              
              
              5,518,074
              
              
              3,563,793OTHER
                  INCOME (EXPENSE), NETOther
                  income
              
              
              73,377
              
              
              -Interest
                  income
              
              
              21,926
              
              
              1,643Interest
                  expenses
              
              
              (78,704
              )
              
              (153,857
              )Liquidated
                  damage expense
              
              
              (500,000
              )
              
              -Other
                  expenses
              
              
              (14,327
              )
              
              (2,623
              )TOTAL
                  OTHER EXPENSES
              
              
              (497,728
              )
              
              (154,837
              )INCOME
                  BEFORE PROVISION FOR INCOME TAXES
              
              
              5,020,346
              
              
              3,408,956PROVISION
                  FOR INCOME TAXES
              
              
              -
              
              
              -NET
                  INCOME
              
              
              5,020,346
              
              
              3,408,956OTHER
                  COMPREHENSIVE INCOME:Foreign
                  currency translation adjustment
              
              
              2,262,905
              
              
              (364,264
              )COMPREHENSIVE
                  INCOME
              
              $
              7,283,251
              
              $
              3,044,692WEIGHTED
                  AVERAGE NUMBER OF SHARES:Basic
              
              
              25,000,000
              
              
              17,899,643Diluted
              
              
              25,161,062
              
              
              17,899,643EARNINGS
                  PER SHARE:Basic
              
              $
              0.20
              
              $
              0.19Diluted
              
              $
              0.20
              
              $
              0.19


The
        accompanying notes are an integral part of these statements.


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          4 -
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          of Contents*




RINO
                    INTERNATIONAL CORPORATION AND SUBSIDIARIES(FORMERLY
                    KNOWN AS JADE MOUNTAIN CORPORATION)CONSOLIDATED
                    STATEMENTS OF CASH FLOWSFOR
                    THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007(UNAUDITED)
  2008
                
                2007**CASH
                    FLOWS FROM OPERATING ACTIVITIES**Net
                    income
                
                $
                5,020,346
                
                $
                3,408,956Adjusted
                    to reconcile net income to cash providedby
                    operating activities:Depreciation
                
                
                190,379
                
                
                155,689Amortization
                
                
                15,914
                
                
                11,998Imputed
                    interest
                
                
                1,862
                
                
                18,271Amortization
                    of long term prepaid expense
                
                
                10,483
                
                
                -Accrued
                    liquidated damages
                
                
                500,000
                
                
                -Changes
                    in operating assets and liabilitiesAccounts
                    receivable
                
                
                (3,430,834
                )
                
                3,985,692Notes
                    receivable
                
                
                (724,697
                )
                
                (190,704
                )Contract
                    in process
                
                
                1,853,886
                
                
                (7,631,873
                )Inventories
                
                
                (56,679
                )
                
                (17,003
                )Other
                    receivables and prepaid expenses
                
                
                550,260
                
                
                (340,565
                )Advances
                    for inventory purchase
                
                
                1,755,588
                
                
                (1,874,035
                )Accounts
                    payable
                
                
                (476,669
                )
                
                (122,583
                )Sales
                    commission payable
                
                
                769,871
                
                
                -Other
                    payables and accrued liabilities
                
                
                (5,329
                )
                
                1,233,615Value
                    added tax payables
                
                
                (180,442
                )
                
                (1,547,597
                )Income
                    tax and other tax payables
                
                
                (5,546,217
                )
                
                (434,443
                )Net
                    cash provided by (used in) operating activities
                
                
                247,722
                
                
                (3,344,582
                )**CASH
                    FLOWS FROM INVESTING ACTIVITIES**Addition
                    to construction in progress
                
                
                -
                
                
                60,863Purchase
                    of property and equipment
                
                
                (128,377
                )
                
                (164,783
                )Purchase
                    of intangible assets
                
                
                -
                
                
                (584,336
                )Advances
                    for construction material and equipment purchase
                
                
                (6,087,123
                )
                
                -Net
                    cash used in investing activities
                
                
                (6,215,500
                )
                
                (688,256
                )**CASH
                    FLOWS FROM FINANCING ACTIVITIES**Increase
                    (decrease) due to related parties
                
                
                (31,231
                )
                
                597,384Increase
                    of restricted cash
                
                
                (4,906,720
                )
                
                -Increase
                    of notes payable
                
                
                2,341,296
                
                
                -Proceeds
                    from short-term bank loan
                
                
                6,988,500
                
                
                52,202Payments
                    on long-term bank loans
                
                
                -
                
                
                42,710Net
                    cash provided by financing activities
                
                
                4,391,845
                
                
                692,296**EFFECT
                    OF EXCHANGE RATE ON CASH**
                
                
                332,648
                
                
                111,646**DECREASE
                    IN CASH AND CASH EQUIVALENTS**
                
                
                (1,243,285
                )
                
                (3,228,896
                )**CASH
                    AND CASH EQUIVALENTS AT BEGINNING OF PERIOD**
                
                
                7,390,631
                
                
                3,604,349**CASH
                    AND CASH EQUIVALENTS AT END OF PERIOD**
                
                $
                6,147,346
                
                $
                375,453**SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION**Cash
                    paid during the period for:Interest
                    expense
                
                $
                76,856
                
                $
                129,314Income
                    taxes
                
                $
                4,896,545
                
                $
                495,995
 The
          accompanying notes are an integral part of these
          statements.




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          5 -
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          of Contents*




RINO
                    INTERNATIONAL CORPORATION AND SUBSIDIARIES(FORMERLY
                    KNOWN AS JADE MOUNTAIN CORPORATION)CONSOLIDATED
                    STATEMENTS OF SHAREHOLDERS'
                    EQUITYFOR
                    THE THREE MONTHS ENDED MARCH 31, 2008(UNAUDITED)
  Common
                      Stock
                    Par
                      Vaule $0.0001
                
                Additional
                
                Retained
                    Earnings
                
                Accumulated
                  otherNumber
                
                Common
                
                Paid-in
                
                Statutory
                
                Unrestricted
                
                comprehensiveof
                    shares
                
                stock
                
                capital
                
                reserve
                
                earnings
                
                income
                
                TotalsBALANCE,
                    December 31, 2007
                
                
                25,000,000
                
                $
                2,500
                
                $
                32,701,982
                
                $
                2,109,539
                
                $
                11,376,163
                
                $
                1,987,272
                
                $
                48,177,456Stock
                    compensation expenese-options issued
                
                
                
                
                
                
                
                
                38,204
                
                
                
                
                
                
                
                
                
                
                
                38,204Imputed
                    interest on advances from a shareholder
                
                
                
                
                
                
                
                
                1,862
                
                
                
                
                
                
                
                
                
                
                
                1,862Net
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,020,346
                
                
                
                
                
                5,020,346Allocation
                    to statutory reserve
                
                
                
                
                
                
                
                
                
                
                
                555,246
                
                
                (555,246
                )
                
                
                
                
                -Foreign
                    currency translation gain
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,262,905
                
                
                2,262,905BALANCE,
                    March 31, 2008 (Unaudited)
                
                
                25,000,000
                
                $
                2,500
                
                $
                32,742,048
                
                $
                2,664,785
                
                $
                15,841,263
                
                $
                4,250,177
                
                $
                55,500,773
 The
          accompanying notes are an integral part of these
          statements.




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          of Contents*




**RINO
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**(FORMERLY
        KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
        31,
        2008
 (UNAUDITED)




**NOTE
      1 - ORGANIZATION AND BUSINESS**




RINO
      International Corporation (formerly known as “Jade Mountain Corporation” or
“JMC”), (the “Company”) was originally incorporated in 1984 as Applied
      Biometrics, Inc. in accordance with the laws of the State of Minnesota. In
      August 2000, the Company determined that it would be unable to complete the
      development of its primary product and ceased its ongoing business operations.





On
      December 27, 2006, the shareholders of JMC approved a proposal to re-domicile
      JMC from the State of Minnesota to the State of Nevada. JMC effected the
      re-domicile through a merger with a new Nevada corporation which was formed
      by
      JMC on September 12, 2006 solely and specifically for the purpose of effecting
      the re-domicile of JMC. At this time, JMC changed its name to Jade Mountain
      Corporation. During the first six months ended June 30, 2007, JMC ceased all
      business operations and disposed of all its assets, liabilities and operating
      activities. JMC has had no operations or significant assets since the year
      ended
      December 31, 2006.





Innomind
      Group Limited (“Innomind”) was incorporated in the British Virgin Islands
      (“BVI”) on November 17, 2006 as an investment holding company. Through its
      wholly owned subsidiary, Dalian Innomind Environment Engineering Co., Ltd.
      (“Dalian Innomind”) incorporated in the People’s Republic of China (“PRC”) as a
      wholly owned foreign limited liability company on July 9, 2007. Innomind’s
      principal activities are the design, development, manufacture and installation
      of industrial equipment used mainly for environmental protection purposes in
      the
      PRC. In accordance with the business permit, Dalian Innomind’s right of
      operation expires on July 8, 2022 and is renewable on expiry.





Dalian
      Rino Environment Engineering Science And Technology Co., Ltd. (“Dalian Rino”)
      was incorporated in the PRC on March 5, 2003 as a limited liability company.
      The
      business activities of Dalian Rino are the same with those of Dalian Innomind.
      In accordance with the business permit, Dalian Rino’s right of operation expires
      on March 4, 2021 and is renewable.




On
      October 5, 2007, JMC consummated a Share Exchange Agreement (“the Agreement”)
      with the shareholders of Innomind pursuant to which JMC issued 17,899,643 shares
      of Common Stock, par value $0.0001 per share to the shareholders of Innomind
      for
      100% equity interest in Innomind. Prior to the Share Exchange: (i) on July
      16,
      2007, the Company consummated a one (1) share for two hundred thousand (200,000)
      shares reverse split of its Common Stock, with fractional shares rounded up
      to
      the nearest whole number (the “Reverse Split”); and (ii) on August 31, 2007, the
      Company’s Board of Directors authorized a one hundred (100) shares for one (1)
      share forward split of the issued and outstanding shares of its Common Stock
      (the “Forward Split”). All share and per share amounts set forth in this Current
      Report as of dates on or after July 16, 2007, give effect to the Reverse Split
      and all share and per share amounts set forth in this Current Report as of
      dates
      after August 31, 2007, give effect to the Forward Split.





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**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


The
      merger of JMC and Innomind is being treated for accounting purposes as a capital
      transaction and recapitalization by Innomind (the “accounting acquirer”) and
      re-organization by JMC (the “accounting acquiree”). As a result, Innomind
      acquired the net assets of Jade Mountain at book value.





The
      financial statements have been prepared as if the re-organization had occurred
      retroactively. Accordingly, these financial statements include:





1)
            The
                balance sheet consisting of the net assets of the accounting acquirer
                at
                historical cost and the net assets of the accounting acquiree at
                historical cost.





2)
            The
                statement of operations including the operations of the accounting
                acquirer for the periods presented and the operations of the accounting
                acquiree from the date of the
                transaction.





On
      October 3, 2007, Dalian Innomind entered into a series of agreements
      (collectively known as the Restructuring Agreements) with Dalian Rino and the
      shareholders of Dalian Rino in which Dalian Innomind assumed the management
      of
      the business activities of Dalian Rino, making Dalian Rino a contractually
      controlled affiliate under EITF 97-2. As both companies were under common
      control before and after the consummation of the Restructuring Agreements on
      October 5, 2007, this was accounted for as a reorganization of entities under
      common control and consolidated financial statements were prepared as if the
      reorganization occurred at the beginning of the first period presented.





Effective
      May 9, 2008, Jade Mountain Corporation changed its original name to “RINO
      International Corporation.” The board approved the changed name and deemed it a
      better reflection of the direction and business of the Company.





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





Principles
      of Consolidation





The
      accompanying consolidated financial statements of Jade Mountain Corporation
      reflect the activities of JMC and its 100% owned subsidiaries Innomind, Dalian
      Innomind and Dalian Rino, a Contractually Controlled Affiliate of Dalian
      Innomind, (collectively, the “Company”). All inter-company balances and
      transactions have been eliminated in consolidation.





Basis
      of Presentation





The
      financial statements of the Company have been prepared in accordance with
      accounting principles generally accepted in the United States and are expressed
      in US dollars.





The
      Company has included all normal recurring adjustments considered necessary
      to
      give a fair presentation of operating results for the periods presented. Interim
      results are





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**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


not
      necessarily indicative of results for a full year. The information included
      in
      this Form 10-Q should be read in conjunction with information included in
      the 2007 annual report filed on Form 10-K. Certain
      prior year amounts have been reclassified to conform to the current year
      presentation.





Use
      of
      Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the Unites States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Management
      believes that the estimates utilized in preparing its financial statements
      are
      reasonable and prudent. Actual
      results could differ from those estimates.





Cash
      and Cash Equivalents





For
      purposes of the statements of cash flows, cash and cash equivalents include
      cash
      on hand and demand deposits with a bank with an original maturity of less than
      3
      months.





The
      cash
      held in escrow pursuant to the Board Escrow Holdback as described in Note 18
      is
      accounted for as other current assets and is not shown as cash or cash
      equivalents on the balance sheet until such funds have been released from escrow
      pursuant to the terms of the Securities Purchase Agreement.





Restricted
      Cash





The
      Company records cash deposits in banks or other institutions subject to
      restrictions on the withdrawal or use of the fund as restricted cash.





Accounts
      Receivable





Accounts
      receivable represents amounts due from customers for products sales and
      services. Overdue balances are reviewed regularly by senior management. Reserves
      are recorded when collection of amounts due are in doubt. The Company’s current
      accounts receivables are outstanding for less than one year and the Company
      has
      not experienced any loss from uncollected accounts receivable. The Company
      did
      not reserve any allowance for doubtful account as of March 31,
      2008.





Inventories





Inventories
      are stated at the lower of cost or market using weighted average method.





Property,
      Plant and Equipment





Property
      and equipment are stated at cost, less accumulated depreciation. Expenditures
      for additions, major renewals and betterments are capitalized and





-
            9 -
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            of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


expenditures
      for maintenance and repairs are charged to expense as incurred. Depreciation
      is
      provided on a straight-line basis, less estimated residual value over the
      assets’ estimated useful lives. The estimated useful lives are as
      follows:


Buildings
              
              
              30
                  YearsPlant
                  and machinery
              
              
              15
                  YearsMotor
                  vehicles
              
              
              10
                  YearsFurniture,
                  fixtures and equipment
              
              
              5
                  Years




Intangible
      Assets





Intangible
      assets are stated at cost, less accumulated amortization and impairments. Land
      use
      rights are stated at cost, less accumulated amortization and are amortized
      over
      the term of the relevant rights of 50 years from the date of
      acquisition.





Other
      Long-Lived Assets





In
      accordance with SFAS No. 144, “Accounting for the impairment or disposal of
      Long-Lived Assets", long-lived assets and certain identifiable intangible assets
      are reviewed for impairment at least annually, or more often whenever events
      or
      changes in circumstances indicate that the carrying amount of an asset may
      not
      be recoverable. For purposes of evaluating the recoverability of long-lived
      assets, the recoverability test is performed using undiscounted net cash flows
      related to the long- lived assets. As of March 31, 2008, the Company expected
      these assets to be fully recoverable.





Fair
      Value of Financial Instruments





On
      January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements.”
SFAS No. 157, defines fair value, establishes a three-level valuation hierarchy
      for disclosures of fair value measurement and enhances disclosures requirements
      for fair value measures. The carrying amounts reported in the balance sheets
      for
      receivables and payables qualified as financial instruments and are a reasonable
      estimate of fair value because of the short period of time between the
      origination of such instruments and their expected realization and their current
      market rate of interest. The three levels are defined as follow:





·
            Level
                1 -- inputs to the valuation methodology are quoted prices (unadjusted)
                for identical assets or liabilities in active
                markets.


·
            Level
                2 -- inputs to the valuation methodology include quoted prices for
                similar
                assets and liabilities in active markets, and inputs that are observable
                for the assets or liability, either directly or indirectly, for
                substantially the full term of the financial
                instruments.


·
            Level
                3 -- inputs to the valuation methodology are unobservable and significant
                to the fair value.





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            10 -
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**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


As
      of
      March 31, 2008, the short term bank loans amounted to $7,140,000. In accordance
      with SFAS 157, the Company determined that the carrying value of these loans
      approximated the fair value using the level 2 inputs by comparing the stated
      loan interest rate to the rate charged by the Bank of China to similar loans,
      since no quoted market is available.





As
      of
      March 31, 2008, the Company had notes payable of $2,392,052 outstanding. This
      amount represents notes issued by banks to vendors with the Company’s restricted
      cash deposit in bank as a guarantee for the payment. These notes were actually
      issued checks with a clearing period ranging from three months to six months.
      These notes are not interest bearing and the cash deposit in bank is restricted
      for withdrawals. The Company determined the carrying amount of the notes payable
      approximated the fair value due to its short term in nature and the difference
      between the carrying value and the fair value would be immaterial, if any,
      by
      using the level 3 inputs to discount the payment of notes to the present fair
      value.




The
      Company did not identify any assets or liabilities that are required to be
      presented on the balance sheet at fair value in accordance with SFAS No. 157.





Revenue
      Recognition





**Contracts**





The
      Company enters into long-term fixed price contracts with customers to
      manufacture and install industrial equipment. Revenue on long-term fixed price
      contracts is recognized under the percentage-of-completion method in accordance
      with the American Institute of Certified Public Accountants Statement of
      Position 81-1 “Accounting for Performance of Construction-Type and Certain
      Production-Type Contracts”. Under the percentage-of-completion method,
      management estimates the percentage-of-completion based upon costs incurred
      as a
      percentage of the total estimated costs to the customer. When total cost
      estimates exceed revenues, the Company accrues for the estimated losses
      immediately. The use of the percentage of completion method requires significant
      judgment relative to estimating total contract revenues and costs, including
      assumptions relative to the length of time to complete the project, the nature
      and complexity of the work to be performed, and anticipated changes in estimated
      costs. Estimates of total contract revenues and costs are continuously monitored
      during the term of the contract, and recorded revenues and costs are subject
      to
      revision as the contract progresses. When revisions in estimated contract
      revenues and costs are determined, such adjustments are recorded in the period
      in which they are first identified.





In
      addition to our specialty equipment sales, the Company uses heavy machining
      equipment to perform machining services for third parties. These engagements
      -
      numbering several hundred per year - are essentially piecework and are completed
      in usually less than one month. Accordingly, these heavy machinery contracts
      do
      not fall within the scope of SOP 81-1. Each machining engagement is governed
      by
      a separate contract, indicating existence of an arrangement. Revenue is
      recognized when service





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            11 -
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            of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


is
      performed, which is usually concurrent with delivery to the customer, the
      contract price is set by contract, collectibility is reasonably assured.
      Accordingly, these revenues are recognized under Staff Accounting Bulletin
      No.
      104.





**Services**





The
      Company also provides technical professional services to its customers based
      on
      a fixed-price time contract. The Company recognizes services-based revenue
      from
      all of its contracts when the services have been performed, the customers have
      approved the completion of the services and invoices have been issued and
      collectibility is reasonably assured.





**Government
      Grant**





The
      Dalian municipal government also approved grants to the Company to encourage
      the
      high technology industry. The grants are recognized as other income on receipt
      from the local government.





**Shipping
      and Handling**





Shipping
      and handling for raw materials purchased are included in cost of goods sold.
      Shipping and handling cost incurred for shipping of finished products to
      customers are included in selling expenses. Shipping and handling expenses
      for
      the three months ended March 31, 2008 and 2007 amounted to $104,275 and $67,913,
      respectively. In
      addition, $26,997 and $648 of transportation and unloading charges and product
      inspection charges were charged to Cost of Sales in the three months ended
      March
      31, 2008 and 2007, respectively;





Research
      and Development Costs




Research
      and development (or “R&D”) expenses include salaries, material, contract and
      other outside service fees, and facilities and overhead costs. Under the
      guidance of SFAS 2, “Accounting for Research and Development Costs”, the Company
      expenses the costs associated with the R&D activities when incurred.





Stock-based
      Compensation





Stock-based
      compensation is accounted for at fair value in accordance with SFAS 123(R)
      “Accounting for Stock-Based Compensation”. SFAS 123R requires that compensation
      cost relating to stock-based payment transactions be recognized in financial
      statements. That cost is measured based on the fair value of the equity or
      liability instruments issued on the grant date of such instruments, and is
      recognized over the period during which a party is required to provide service
      in exchange for the award (typically the vesting period).





Income
      Taxes





The
      Company accounts for income taxes under the SFAS 109, “Accounting for Income
      Taxes”. Under SFAS 109, deferred tax assets and liabilities are recognized for
      the future tax consequences attributable to differences between the financial
      statement





-
            12 -
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            of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


carrying
      amounts of existing assets and liabilities and their respective tax bases.
      Deferred tax assets and liabilities are measured using enacted tax rates
      expected to apply to taxable income in the years in which those temporary
      differences are expected to be recovered or settled. Under SFAS 109, the effect
      on deferred tax assets and liabilities of a change in tax rates is recognized
      in
      income in the period included the enactment date.





The
      Company adopted FASB Interpretation 48, “Accounting for Uncertainty in Income
      Taxes” (“FIN 48”) as of January 1, 2007. A tax position is recognized as a
      benefit only if it is “more likely than not” that the tax position would be
      sustained in a tax examination, with a tax examination being presumed to occur.
      The amount recognized is the largest amount of tax benefit that is greater
      than
      50% likely of being realized on examination. For tax positions not meeting
      the
“more likely than not” test, no tax benefit is recorded. The adoption had no
      effect on the Company’s financial statements.





China
      Income Taxes





The
      Company’s subsidiaries are governed by the Income Tax Law of the People’s
      Republic of China (PRC) concerning Foreign Investment Enterprises and Foreign
      Enterprises and various local income tax laws (the Income Tax
      Laws).





Beginning
      January 1, 2008, the new Enterprise Income Tax (“EIT”) law has replaced the old
      laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises
      (“FIEs”).





The
      key
      changes are:





a.
            The
                new standard EIT rate of 25% replaces the 33% rate applicable to
                both DES
                and FIEs, except for High Tech companies that pay a reduced rate
                of
                15%;





b.
            Companies
                established before March 16, 2007 continue to enjoy tax holiday treatment
                approved by local government for a grace period of either for the
                next 5
                years or until the tax holiday term is completed, whichever is
                sooner.





In
      addition, the new EIT also grants tax holidays to entities operating in certain
      beneficial industries, such as the agriculture, fishing, and environmental
      protection. Entities in beneficial industries enjoy a three-year period tax
      exempt and a three-year period with 50% reduction in the income tax rates.





Dalian
      Innomind and Rino are entities in the environmental protection industry, which
      is qualified for the tax exemption for three years and a 50% reduction for
      the
      following three years. As a result, Dalian Innomind and Rino enjoy a 100% tax
      exemption for the years 2008 through 2010 and a 50% income tax reduction for
      the
      years 2011 through 2013.




-
          13 -
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          of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)




Foreign
      Currency Translation




JMC
      and
      Innomind maintain their accounting records in their functional currency in
      the
      United States dollars and Hong Kong Dollars, respectively, whereas Dalian
      Innomind and Dalian Rino maintain their accounting records in their functional
      currency, Chinese Renminbi (“RMB”). The
      reporting currency of the Company is the United States dollar.





Dalian
      Innomind and Dalian Rino assets
      and liabilities are translated into United States dollars at period-end exchange
      rates ($0.14280 and $0.13710 at March 31, 2008 and December 31, 2007,
      respectively). Dalian
      Innomind and Dalian Rino revenues
      and expenses are translated into United States dollars at weighted average
      exchange rates for the periods ($0.13977 and $0.12901 for the years ended March
      31, 2008 and 2007, respectively). Resulting translation adjustments are recorded
      as a component of accumulated other comprehensive income (loss) within
      stockholders’ equity. The
      resulting translation gains and losses that arise from exchange rate
      fluctuations on transactions denominated in a currency other than the functional
      currency are included in the results of operations as incurred. Items in the
      cash flow statement are translated at the average exchange rate for the period.
      As a result, amounts related to assets and liabilities reported on the statement
      of cash flows will not necessarily agree with changes in the corresponding
      balances on the balance sheet.





As
      of
      March 31, 2008 and December 31, 2007, translation adjustments resulting from
      this process included in accumulated other comprehensive income in the
      consolidated statement of stockholders’ equity amounted to $4,250,177 and
      $1,987,272.





Earnings
      Per Share





Basic
      earnings (loss) per share is computed by dividing the net income (loss)
      available to common stockholders by the weighted-average number of common shares
      outstanding during the respective period presented in the accompanying financial
      statements.





Fully
      diluted earnings (loss) per share are computed similar to basic income (loss)
      per share except that the denominator is increased to include the number of
      common stock equivalents (primarily outstanding options and
      warrants).





Common
      stock equivalents represent the dilutive effect of the assumed exercise of
      the
      outstanding stock options and warrants, using the treasury stock method, at
      either the beginning of the respective period presented or the date of issuance,
      whichever is later, and only if the common stock equivalents are considered
      dilutive based upon the Company's net income (loss) position at the calculation
      date.





Segments





The
      Company designs and manufactures pollution control equipment and other equipment
      designed to reduce the resource intensity of steel production, effectively
      serving one segment. Accordingly, segment disclosure is not presented.
      Additional detail on the composition of revenues is presented in Note 16,
      Concentrations and Risks, below.





-
            14 -
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            of Contents*




**RINO
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED) 
  Reclassifications





Certain
      prior year amounts have been reclassified to conform to the current year
      presentation.





Recent
      Accounting Pronouncements





In
      September 2006, FASB issued SFAS 157, Fair Value Measurements. This statement
      defines fair value and establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP). More precisely, this statement
      sets forth a standard definition of fair value as it applies to assets or
      liabilities, the principle market (or most advantageous market) for determining
      fair value (price), the market participants, inputs and the application of
      the
      derived fair value to those assets and liabilities. The Company adopted SFAS
      No.
      157 as of January 1, 2008 and the adoption did not have an impact on the
      Company’s results of operations or financial condition.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities” (SFAS 159) which permits entities to
      choose to measure many financial instruments and certain other items at fair
      value that are not currently required to be measured at fair value. The SFAS
      159
      became effective for us on January 1, 2008. The Company chose not to elect
      the
      option to measure the fair value of eligible financial assets and liabilities.





In
      June
      2007, the FASB issued FASB Staff Position No. EITF 07-3, “Accounting for
      Nonrefundable Advance Payments for Goods or Services Received for use in Future
      Research and Development Activities” (“FSP EITF 07-3”), which addresses whether
      nonrefundable advance payments for goods or services that used or rendered
      for
      research and development activities should be expensed when the advance payment
      is made or when the research and development activity has been performed. The
      Company adopted FSP EITF 07-3 and expensed the research and development as
      incurred.





In
      December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of Accounting Research Bulletin
      No. 51” (“SFAS 160”), which establishes accounting and reporting standards for
      ownership interests ** in
      subsidiaries held by parties other than the parent, the amount of consolidated
      net income attributable to the parent and to the noncontrolling interest,
      changes in a parent’s ownership interest and the valuation of retained
      non-controlling equity investments when a subsidiary is deconsolidated. The
      Statement also establishes reporting requirements that provide sufficient
      disclosures that clearly ** identify
      and distinguish between the interests of the parent and the interests of the
      non-controlling owners. SFAS 160 is effective for ** fiscal
      years beginning after December 15, 2008. The Company believes that the
      application of SFAS 160 will ** not
      have
      an impact on its consolidated financial statements.





-
            15 -
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            of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


In
      December 2007, the FASB issued SFAS 141R, “Business Combinations,” which applies
      to all transactions or other events in which an entity obtains control of one
      or
      more businesses, including those sometimes referred to as “true mergers” or
“mergers of equals” and combinations achieved without the transfer of
      consideration. This statement replaces FASB Statement No. 141 and applies to
      all
      business entities, including mutual entities that previously used the
      pooling-of-interests method of accounting for some business combinations. The
      adoption of SFAS No. 141R will have an impact on the Company’s accounting for
      business combination, but the effect is dependent upon acquisition at that
      time.





**NOTE
      3 - RESTRICTED CASH**





Restricted
      cash consisted of the following:





March
                31, 2008
            
            December
                31, 2007(unaudited)Project
                bidding
            
            $
            1,599,360
            
            $
            —Security
                deposit for notes payable
            
            
            2,392,052
            
            
            —Escrow
                account
            
            
            1,000,000
            
            
            1,000,000Total
            
            $
            4,991,412
            
            $
            1,000,000





**NOTE
      4 - ACCOUNTS RECEIVABLE**





Accounts
      receivable consisted of the following:





March
                31, 2008
            
            December
                31, 2007(unaudited)Accounts
                receivable
            
            $
            25,271,971
            
            $
            20,840,336Less:
                allowance for doubtful accounts
            
            
            —
            
            
            —Accounts
                receivable, net of allowance
            
            $
            25,271,971
            
            $
            20,840,336





As
      of
      March 31, 2008 and December 31, 2007, the Company considered all accounts
      receivable collectable and has not recorded a provision for doubtful
      accounts.





**NOTE
      5 - INVENTORIES**





As
      of
      March 31, 2008 and December 31, 2007, inventories consisted of raw materials
      and
      supplies amounted to $244,323 and $178,480, respectively.





For
      the
      periods ended March 31, 2008 and December 31, 2007, no provision for obsolete
      inventories was recorded by the Company.





**NOTE
      6 - COST AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS**





The
      current costs and estimated earnings in excess of billings represent revenues
      recognized in excess of amounts billed pursuant to the
      percentage-of-completion





-
            16 -
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            of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


method
      used to recognize revenue. As of March 31, 2008 and December 31, 2007, revenues
      recognized in excess of amounts billed were $1,049,322 and $2,818,122,
      respectively.




March
                31, 2008
            
            December
                31, 2007(Unaudited)Contracts
                costs incurred plus recognizedprofits
                less recognized losses to date
            
            $
            17,105,019
            
            $
            44,074,924Less
                progress billings
            
            
            16,055,697
            
            
            41,256,802Costs
                and estimated earnings in excess of billings
            
            $
            1,049,322
            
            $
            2,818,122





**NOTE
      7 - PROPERTY, PLANT AND EQUIPMENT**





The
      following is a summary of property and equipment at March 31, 2008 and December
      31, 2007:




March
                  31, 2008
              
              December
                  31, 2007(Unaudited)Buildings
              
              $
              3,772,997
              
              $
              3,612,413Equipment
                  and machinery
              
              
              7,763,938
              
              
              7,430,865Motor
                  Vehicles
              
              
              1,140,033
              
              
              986,274Furniture
                  and office equipment
              
              
              387,023
              
              
              352,840Construction
                  in progress
              
              
              6,588
              
              
              6,30713,070,579
              
              
              12,388,699Less:
                  accumulated depreciation
              
              
              1,644,332
              
              
              1,388,118Property,
                  plant and equipment, net
              
              $
              11,426,247
              
              $
              11,000,581


Depreciation
      expense for the three months ended March 31, 2008 and 2007 was $190,379 and
      $155,689, respectively. For the three months ended March 31, 2008 and 2007,
      no
      interest was capitalized into construction in progress.





**NOTE
      8 - INTANGIBLE ASSETS**





The
      following is a summary of intangible assets at March 31, 2008 and December
      31,
      2007:




March
                  31,
              
              December
                  31,2008
              
              2007(Unaudited)Land
                  use rights
              
              $
              1,079,934
              
              $
              1,033,970Patents
                  and licenses
              
              
              714,000
              
              
              683,6111,793,934
              
              
              1,717,581Less:
                  accumulated amortization
              
              
              119,651
              
              
              98,991Net
              
              $
              1,674,283
              
              $
              1,618,590





-
            17 -
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            of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)






Amortization
      expense for the three months ended March 31, 2008 and 2007 amounted to $15,914
      and $11,998, respectively.





**NOTE
      9 - LIQUIDATED DAMAGES PAYABLE**





Registration
      Rights





Pursuant
      to the Securities Purchase Agreement entered into between the Company and a
      group of accredited investors (“Securities Purchase Agreement”) on October 5,
      2007, the Company was obligated to make efforts to file a registration statement
      with the SEC to be declared effective by the SEC on or before March 3, 2008.
      After March 3, 2008 and for each 30-calender day period thereafter in which
      the
      registration statement fails to be declared effective, the Company shall pay
      liquidated damages to investors equal to 1% of the funds raised, or $244,803,
      subject to a cap of 10% of total funds raised, or total liquidated damages
      of
      $2,448,032.





On
      the date of the transaction, the Company determined that the registration
      statement would not be filed and declared effective within the required period
      and accrued $500,000 as liquidated damages payable. The liquidated damages
      payment was treated as financing cost at the inception and was recorded as
      a
      deduction from additional paid-in capital in accordance with the provisions
      of
      FSP EITF 00-19-2. This amount accrued is based on the penalties due between
      March 4, 2008 and May 3, 2008, the date before which the Company originally
      anticipated the registration statement would be declared effective. To date,
      the
      registration statement has not been declared effective. Accordingly, the Company
      recorded an additional reserve of $500,000 in March 2008.





Independent
      Directors





Pursuant
      to the Securities Purchase Agreement, the Company’s Board of Directors must
      consist of a minimum of 5 members, a majority of whom must be “independent
      directors” as defined in NASDAQ Marketplace Rule 4200(a)(15) not later than 120
      days after the date of the agreement. The Company was required to hold
      $1,000,000 in escrow (“Board Escrow Holdback”) and will only be released by the
      escrow agent on receiving requisite written notice from the investor
      representatives when this requirement is met. Failing to comply with this
      requirement, the Company shall pay liquidated damages to





-
            18 -
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            of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


investors
      equal to 1% of the funds raised, or $244,803, for each month or part of a month,
      pro rata, in which independent directors do not constitute a majority of the
      5-member board.




On
      the
      date of the transaction, the Company determined that this requirement would
      not
      be met within the required period and accrued $500,000 as liquidated damages
      payable. The liquidated damages payment was treated as financing cost at the
      inception and was recorded as a deduction from additional paid-in capital in
      accordance with the provisions of FSP EITF 00-19-2. This amount accrued is
      based
      on the penalties due from February 2, 2007 to April 8, 2008 on or before
      which the Company originally anticipated the Board of Directors would consist
      of
      a minimum of 5 members with a majority being independent directors. The
      independent directors were seated on March 20, 2008, curing this delinquency.
      Total liquidated damages payable for the independent board member requirement
      therefore is $418,513. To date, no liquidated damages have been
      paid.





**NOTE
      10 - SHORT TERM BANK LOANS PAYABLE**




Balances
        at March 31, 2008 and December 31, 2007 consist of the
        following:




March
                  31,
              
              December
                  31,2008
              
              2007(Unaudited)Due
                  to bank, intereest at 7.47%, in February 2009,secured
                  by certain buildings, equipment,and
                  land use rights
              
              $
              7,140,000
              
              $
              —Total
              
              
              7,140,000
              
              
              —


Total
      interest expense on the bank loans for the three months ended March 31, 2008
      and
      2007 amounted to $78,704 and $153,857, respectively.





**NOTE
      11 - INCOME TAXES**





Income
      Taxes





The
      Company is subject to income taxes on an entity basis on income arising in
      or
      derived from the tax jurisdiction in which each entity is
      domiciled.





RINO
      International Corporation was incorporated in the United States and has incurred
      net operating loss for income tax purpose for the period ended March 31, 2008.
      The Company had loss carry forwards of approximately $86,200 for U.S. income
      tax
      purposes available for offset against future taxable U.S. income expiring in
      2027.





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**RINO
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


Management
      believes that the realization of the benefits from these losses appears
      uncertain due to the Company’s historical operating income and continuing
      losses. Accordingly, a full deferred tax asset valuation allowance has been
      provided and no deferred tax asset benefit has been recorded. The valuation
      allowance at March 31, 2008 was $86,200. The net change in the valuation
      allowance was an increase of $86,200.




Innomind
      was incorporated in the BVI and under current law of the BVI, income is not
      subject to income tax.





Dalian
      Innomind and Dalian Rino were incorporated in the PRC and are subject to PRC
      income tax which is computed according to the relevant laws and regulations
      in
      the PRC.





In
      2007,
      Dalian Innomind was entitled to tax exemption granted to entities qualified
      as
      Foreign Invested Enterprise (“FIE”), accordingly no provision for income tax was
      made.





Before
      July 2007, Dalian Rino was also qualified as Foreign Invested Enterprise (“FIE”)
      so no provision for income tax was made for the three months ended March 31,
      2007. On July 12, 2007, Dalian Rino changed its license status to a domestic
      entity and was subject to an income tax rate of 33%.





Starting
      January 1, 2008, the new Enterprise Income Tax laws went effective. Under the
      new law, Dalian Innomind and Dalian Rino are entitled to a three-year income
      tax
      exemption and a 50% income tax reduction for the following three years,
      accordingly no provision for income tax was made for 2008.





The
      provision for income taxes differs from the amount computed by applying the
      statutory United States federal income tax rate to income before income taxes.
      The following table reconciles the statutory rates to the Company’s effective
      tax rate for the three months ended March 31, 2008 and 2007:




2008
            
            
            2007U.S.
                Statutory rate
            
            
            34.0
            %
            
            34.0
            %Foreign
                income not recognized in USA
            
            
            (34.0
            )
            
            (34.0
            )China
                income taxes
            
            
            25.0
            
            
            25.0China
                income tax exemption
            
            
            (25.0
            )
            
            (25.0
            )Effective
                income tax rate
            
            
            0.0
            %
            
            0.0
            %





Value
      Added Tax





Enterprises
      or individuals who sell commodities, engage in repair and maintenance or import
      and export goods in the PRC are subject to a value added tax, VAT, in accordance
      with Chinese laws. The VAT standard rate is 17% of the gross sales price. A
      credit is available whereby VAT paid on the purchases of semi-finished products
      or raw materials used in the production of the Company’s finished products can
      be used to offset the VAT due on sales of the finished product.





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            20 -
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**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


VAT
      on
      sales and VAT on purchases amounted to $5,056,817, and $3,349,927 for the
      periods ended March 31, 2008 and $1,311,221 and $1,766,157 for the period ended
      March 31, 2007, respectively. Sales and purchases are recorded net of VAT
      collected and paid as the Company acts as an agent because the VAT taxes are
      not
      impacted by the income tax holiday. As of March 31, 2008 and December 31, 2007,
      the VAT payable amounted to $2,937,899 and $2,989,365,
      respectively.





**NOTE
      12 - STOCKHOLDERS’ EQUITY**





Statutory
      Reserves





The
      Company is required to make appropriations to the statutory surplus reserve
      based on the after-tax net income determined in accordance with the laws and
      regulations of the PRC. Prior to January 1, 2006 the appropriation to the
      statutory surplus reserve should be at least 10% of the after tax net income
      determined in accordance with the laws and regulations of the PRC until the
      reserve is equal to 50% of the entities’ registered capital. Appropriations to
      the statutory public welfare fund are at 5% to 10% of the after tax net income
      determined by the Board of Directors. Effective January 1, 2006, the Company
      is
      only required to contribute to one statutory reserve fund at 10 percent of
      net
      income after tax per annum, such contributions not to exceed 50 percent of
      the
      respective company’s registered capital.





The
      statutory reserve funds are restricted for use to set off against prior period
      losses, expansion of production and operation or for the increase in the
      registered capital of the Company. These reserves are not transferable to the
      Company in the form of cash dividends, loans or advances. These reserves are
      therefore not available for distribution except in liquidation.





As
      of
      March 31, 2008 and December 31, 2007, the Company appropriated $2,664,785 and
      $2,109,539 respectively to the reserves funds based on its net income in
      accordance with the laws and regulations of the PRC.





Common
      Stock and Warrants





**Issuance
      of Common Stock in Private Placement**





On
      October 5, 2007, the Company received $24,480,319 (or $21,253,722 net proceeds
      after deducting the offering expenses) from a group of accredited investors
      and
      issued 5,464,357 shares of restricted common stock at $4.48 per share.





In
      connection with the private placement, 250,000 shares of common stock were
      issued to a consultant for advisory services. This expense is recorded as
      additional paid-in capital in the accompanying financial statements.





In
      connection with the private placement and pursuant to the Engagement Agreement
      Providing for Investment Banking Services, dated January 19, 2007 by and between
      the





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            21 -
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**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


Company
      and the placement agent, the placement agent received the following
      compensation: (i) $80,000 cash as an engagement and documentation fee; (ii)
      $1,750,000 as a placement commission; (iii) 875,000 shares of Common Stock,
      and
      (iv) warrants to purchase 382,500 shares of Common Stock at an exercise price
      of
      $5.376 per share, exercisable within 6 years of the date of issue. The exercise
      price of the warrant is subject to adjustments under certain circumstances
      and
      the warrants permit cashless exercise by the holders. This expense is recorded
      as additional paid-in capital in the accompanying financial statements.





The
      warrants issued to the placement agent, qualify as permanent equity under EITF
      00-19, the value of which warrants has created offsetting debit and credit
      entries to additional paid-in capital.





**Issuance
      of Common Stock to Former Chief Financial Officer of Dalian
      Rino**





At
      the
      Closing of the Share Exchange Agreement and the private placement, the Company
      issued 20,000 shares of common stock to the former chief financial officer
      of
      Dalian Rino, in full satisfaction of Dalian Rino’s obligations to the former
      chief financial officer under a Compensation Agreement dated July 30, 2007.
      The
      shares were valued at market on the date of issuance, yielding an aggregate
      fair
      value of total $49,000. This expense was recorded as stock compensation expense.





**NOTE
      13 - STOCK BASED COMPENSATION**





On
      September 27, 2007, pursuant to an Employment Agreement, the Company granted
      to
      Mr. Bruce Richardson, the Chief Financial Officer and Secretary, a non-qualified
      stock option to purchase 250,000 shares of its Common Stock at an exercise
      price
      of $5.376 per share, vesting in 3 equal annual installments beginning on January
      2, 2009. The options will be issued as soon as practical after January 2,
      2009.





The
      fair
      values of stock options granted to the executive were estimated at the date
      of
      grant using the Black-Scholes option-pricing model with the following
      assumptions:





Expected
            
            Expected
            
            Dividend
            
            Risk
                Free
            
            Grant
                DateLife
            
            Volatility
            
            Yield
            
            Interest
                Rate
            
            Fair
                ValueExecutives
            
            
            3.0
                yrs
            
            
            50
            %
            
            0
            %
            
            4.05
            %
            $
            4.48





-
            Volatility:
                One year historical volatility of our stock is 82.04%. Adjustment
                is made
                based on volatility of industry peers average which is 31%, to arrive
                at
                50% as expected volatility.





-
            Dividend
                Yield: The expected dividend yield is zero. The Company has not paid
                a
                cash dividend and does not anticipate paying cash dividends in the
                foreseeable future.





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            22 -
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            of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


-
            Risk
                Free Rate: Risk-free interest rate of 4.05% was used. The risk-free
                interest rate was based on U.S. Treasury yields with a remaining
                term that
                corresponded to the expected term of the option calculated on the
                granted
                date.





-
            Expected
                Life:  Life of three years was used. Because the Company has no
                historical share option exercise experience to estimate future exercise
                patterns, the expected life was determined using the simplified method
                as
                these awards meet the definition of "plain-vanilla" options under
                the
                rules prescribed by Staff Accounting Bulletin No.
                107.





The
      fair
      value of the stock option grant to the executives was $4.48 per share on the
      date of grant.  The fair value of the stock option grant to the Chief
      financial Officer and Secretary was $1.83 per share on the date of grant.





Stock
      compensation expense is recognized based on awards expected to vest. There
      were
      no estimated forfeitures as the Company has a short history of issuing options.
      SFAS No. 123R requires forfeitures to be estimated at the time of grant and
      revised in subsequent periods, if necessary, if actual forfeitures differ from
      those estimates.





The
      250,000 options granted in 2007 had fair value of approximately $458,448. The
      Company recognized $38,204 of compensation expense in general and administrative
      expenses for the three months ended March 31, 2008.





As
      of
      March 31, 2008, the total compensation cost related to stock options not yet
      recognized was $382,040 and will be recognized over the weighted average life
      of
      3 years.





The
      following is a summary of the stock options activity:





Number
                of Options Outstanding
            
            Weighted-Average
                Exercise Price
            
            Aggregate
                Intrinsic ValueBalance,
                December 31, 2007
            
            
            250,000
            
            $
            5.38
            
            
            —GrantedForfeitedExercisedBalance,
                March 31, 2008
            
            
            250,000
            
            $
            5.38
            
            
            —





The
      following is a summary of the status of options outstanding at March 31, 2008:





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            23 -
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**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


Outstanding
                Options
            
            Exercisable
                OptionsExercise
                Price
            
            Number
            
            Average
                Remaining Contractual Life
            
            Average
                Exercise Price
            
            Number
            
            Weighted
                Average Exercise Price$5.38
            
            
            250,000
            
            
            2.50
                years
            
            
            $5.38
            
            
            —
            
            
            $5.38Total
            
            
            250,000
            
            
            
            
            
            
            
            
            —





**NOTE
      14 - EARNINGS PER SHARE**





The
      following demonstrates the calculation for earnings per share for the three
      months ended March 31:




2008
            
            2007Net
                income
            
            $
            5,020,346
            
            $
            3,408,956Adjustments
                for diluted EPS calculation
            
            
            —
            
            
            —Adjusted
                net income for calculating EPS-diluted
            
            $
            5,020,346
            
            $
            3,408,956Weighted
                average number of common stock - Basic
            
            
            25,000,000
            
            
            17,899,643Effect
                of dilutive securities:Warrants
                and options
            
            
            161,062
            
            
            —Weighted
                average number of common stock - Diluted
            
            
            25,161,062
            
            
            17,899,643Earnings
                per share:Basic
            
            $
            0.20
            
            $
            0.19Diluted
            
            $
            0.20
            
            $
            0.19





**NOTE
      15 - RELATED PARTY TRANSACTIONS**





The
      Company owed $79,753 and $106,963 to a stockholder as of March 31, 2008 and
      December 31, 2007 respectively for advances made on an unsecured basis,
      repayable on demand and interest free. Imputed interest is charged per annum
      on
      the amount due at 7% and 6% for the periods ended March 31, 2008 and December
      31, 2007 respectively. Total imputed interest recorded as additional paid-in
      capital amounted to $1,862 and $18,271 for the periods ended March 31, 2008
      and
      2007, respectively.





**NOTE
      16 - CONCENTRATIONS AND RISKS**





Cash
      includes cash on hand and demand deposits in accounts maintained with
      state **** owned
      banks within the People’s Republic of China. Total cash deposited with these
      banks at March 31, 2008 and December 31, 2007 amounted to $11,138,758
      and





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            24 -
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**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


$8,390,631,
      respectively, of which no deposits are covered by insurance. The Company has
      not
      experienced any losses in such accounts and believes it is not exposed to any
      risks on its cash in bank accounts.





The
      Company relied on a small number of customers. During the three months ended
      March 31, 2008 and 2007, five major customers accounted for 64.5% and 94.4%
      respectively, of the Company’s total sales. At March 31, 2008 and December 31,
      2007, accounts receivable from those customers totaled $10,287,355 and
      $13,627,578 respectively.




PRC
      Risks





The
      Company's operations are carried out in the PRC. Accordingly, the Company's
      business, financial condition and results of operations may be influenced by
      the
      political, economic and legal environments in the PRC, and by the general state
      of the economy in the regions where the Company’s customers are located. The
      Company's operations in the PRC are subject to specific considerations and
      significant risks not typically associated with companies in the North America
      and Western Europe. These include risks associated with, among others, the
      political, economic and legal environments and foreign currency exchange. The
      Company's results may be adversely affected by changes in governmental policies
      with respect to laws and regulations, anti-inflationary measures, currency
      conversion and remittance abroad, and rates and methods of taxation, among
      other
      things.





The
      PRC
      government imposes controls on the convertibility of RMB into foreign currencies
      and, in certain cases, the remittance of currency out of the PRC. Under existing
      PRC foreign exchange regulations, payment of current account items, including
      profit distributions, interest payments and expenditures from the transaction,
      can be made in foreign currencies without prior approval from the PRC State
      Administration of Foreign Exchange by complying with certain procedural
      requirements. However, approval from appropriate governmental authorities is
      required where RMB is to be converted into foreign currency and remitted out
      of
      the PRC to pay capital expenses, such as the repayment of bank loans denominated
      in foreign currencies. The PRC government may also at its discretion restrict
      access in the future to foreign currencies for current account
      transactions.





**NOTE
      17 - COMMITMENTS AND CONTINGENCIES**





Employee
      Benefits





The
      full
      time employees of the Company are entitled to employee benefits including
      medical care, welfare subsidies, unemployment insurance and pension benefits
      through a Chinese government mandated multi-employer defined contribution plan.
      The Company is required to accrue for those benefits based on certain
      percentages of the employees’ salaries and make contributions to the plans out
      of the amounts accrued for medical and pension benefits. The total provisions
      and contributions made for such





-
            25 -
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**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


employee
      benefits was $4,739 and $3,725 for the three months ended March 31, 2008 and
      2007, respectively. The Chinese government is responsible for the medical
      benefits and the pension liability to be paid to these employees.





Capital
      Commitments





As
      of
      March 31, 2008 and December 31, 2007, the Company had firm purchase commitments
      for capital projects in progress of $0 and $750,844 respectively.





Issuance
      of Options to Purchase Common Stock to Current Chief Financial
      Officer





Pursuant
      to an employment agreement signed on September 27, 2007, the current chief
      financial officer was granted options to purchase 250,000 shares of common
      stock.





**NOTE
      18 - ESCROW ACCOUNTS**





At
      the
      private placement closing, Zou Dejun and Qiu Jianping, who, through The Innomind
      Trust, together control 71.6% of the Company’s outstanding common stock, and are
      the founders of Dalian Rino - delivered to an escrow agent a total of 5,580,000
      of their beneficially owned shares of common stock in order to secure the
      Company’s obligation under the Securities Purchase Agreement to deliver
      additional common stock to the private placement investors in the event the
      Company fails to achieve certain after -tax
      net
      income targets for fiscal years 2007 and 2008 (“Make Good Escrow Shares”). Those
      targets are $16,000,000 in after-tax net income (“ATNI”) for the fiscal year
      ended December 31, 2007, and $28,000,000 in after-tax net income for the fiscal
      year ending December 31, 2008. For purposes of the Make Good agreements only,
      no
      expense related to return of the shares from escrow would be charged against
      ATNI. If the Company had not achieved the 2007 net income target, Zou Dejun
      and
      Qiu Jianping would have been obligated to transfer 1,674,000 shares of their
      common stock to the private placement investors on a pro-rata basis. The 2007
      net income target was achieved and the shares are to be returned to Zou and
      Qiu.
      If we fail to achieve the 2008 net income target, Zou and Qiu must transfer
      to
      the investors the remaining 3,906,000 shares still in escrow.





No
      later
      than February 2, 2008, the Company’s Board of Directors were to consist of a
      minimum of 5 members, a majority of whom must be “independent directors” as
      defined in NASDAQ Marketplace Rule 4200(a)(15). This covenant was complied
      with
      on March 20, 2008. Until this covenant was complied with, we were required
      to
      hold $1,000,000 in escrow (“Board Escrow Holdback”). If for any reason or no
      reason the escrow agent did not receive requisite written notice from the
      investor representatives as to releasing this sum from escrow within 120 days
      after the private placement closing, we were required to pay liquidated damages
      of $244,803 per month (or pro rata for a partial month) until the default was
      cured. No liquidated damages have yet been paid.





The
      cash
      held in escrow pursuant to the Board Escrow Holdback as described above will
      be
      accounted for as other current assets and will not be shown as cash or cash
      equivalents on the balance sheet until such funds have been released from
      escrow





-
            26 -
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            of Contents*




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  MARCH
          31,
          2008
 (UNAUDITED)


pursuant
      to the terms of the Securities Purchase Agreement. The shares held in escrow
      as
      Make Good Escrow Shares will not be accounted for on our books until such shares
      became releasable from escrow pursuant to the terms of the Securities Purchase
      Agreement. If any Make Good Escrow Shares are released to the company management
      or employees, the value of such shares at the time of release will be recorded
      as compensation expense with a corresponding offset to additional paid-in
      capital in accordance with SFAS 123(R) paragraph 11. As a result, the Company
      recognized $7,499,520 of compensation expense for the year ended December 31,
      2008. If any Make Good Escrow Shares are released to the Investors, no entry
      will be made. During the time such Make Good Escrow Shares are held in escrow,
      they will be accounted for as contingently issuable shares in determining the
      EPS denominator in accordance with SFAS 128.







-
          27 -
 *Table
          of Contents*




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




Disclaimer
      Regarding Forward-looking Statements




Certain
      statements made in this report, and other written or oral statements made by
      or
      on behalf of Jade Mountain Corporation, may constitute “forward-looking
      statements” under the Private Securities Litigation Reform Act of 1995,
      which represent the expectations or beliefs of, including, but not limited
      to,
      statements concerning Jade Mountain Corporation’s operations, performance,
      financial condition and growth. For this purpose, any statements contained
      in
      this report that are not statements of historical fact may be deemed
      forward-looking statements. Without limiting the generality of the foregoing,
      when used in this report, the word “believes,” “expects,” “estimates,”
“intends,” “will,” “may,” “anticipate,” “could,” “should,” “can,” or “continue”
or the negative or other variations thereof or comparable terminology are
      intended to identify forward-looking statements. Examples of such statements
      in
      this report include descriptions of our plans and strategies with respect to
      developing certain market opportunities, our overall business plan, our plans
      to
      develop additional strategic partnerships, our intention to develop our products
      and platform technologies, our continuing growth and our ability to contain
      our operating expenses. All forward-looking statements are subject to certain
      risks and uncertainties that could cause actual events to differ materially
      from
      those projected, including those described under the caption “Risk Factors” in
      our Annual Report on Form 10-K and matters described in this report generally.
      In light of these risks and uncertainties, there can be no assurance that the
      forward-looking statements contained in this filing will in fact occur. You
      should not place undue reliance on these forward-looking
      statements.





The
      following discussion and analysis of our financial condition and results of
      operations should be read in conjunction with the financial statements and
      accompanying notes and the other financial information appearing in Part I,
      Item 1 and elsewhere in this report.





*Except
      as otherwise specifically stated or unless the context otherwise requires,
      the
      "Company", "we," "us," "our," and the "Registrant" refer to (i) RINO
      International Corporation (formerly Jade Mountain Corporation), (ii) Innomind
      Group Limited (“Innomind”), a wholly-owned subsidiary of RINO International
      Corporation organized under the laws of the British Virgin Islands, Dalian
      Innomind Environment Engineering Co., Ltd. (“Dalian Innomind”), a wholly-owned
      subsidiary of Innomind organized under the laws of the People’s Republic of
      China (the “PRC”), and Dalian RINO Environment Engineering Science and
      Technology Co., Ltd., a contractually controlled affiliate of Dalian Innomind
      organized under the laws of the PRC (“RINO” or “Dalian
      Rino”).*





**Overview**





The
      Company is engaged in designing, developing, manufacturing, and installing
      environmental protection and energy saving equipment for the Chinese iron and
      steel industry. Most of our customers are large, state-owned iron and steel
      companies. Our business operations are conducted throughout China.




China’s
      iron and steel companies have experienced robust growth during the last twenty
      years, following the expansion of China’s economy and industrial base,
      generally. Along with this growth, the iron and steel industry has produced
      large amounts of waterborne and airborne industrial waste and pollution, and
      as
      a consequence it faces increasingly stringent governmental mandates to reduce
      or
      eliminate sulphur dioxide emissions and untreated wastewater discharges. Failure
      to meet mandated emission and discharge standards can result in financial
      penalties.




-
          28 -
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          of Contents*


Demand
      for our core product, the Lamella Wastewater System, increased 26.7% to $6.97
      million in 2007 and continued to record strong growth in the first quarter
      of
      2008, rising 17.6% over first quarter 2007. Our Desulphurization System which
      we
      introduced in late 2006 is based on proprietary technology we jointly developed
      with the Research Institute of the Chinese Academy of Sciences, and can reduce
      flue gas sulphur dioxide levels by over 90%. We expect to see strong demand
      from
      the industry for the solutions that our Desulphurization System offers for
      airborne sulphur dioxide emissions. Starting in January 2007, we launched
      another new product, our Anti-Oxidation System that materially reduces oxidation
      loss in the production of hot rolled steel plate. Anti-oxidation is a
      long-sought solution in the Iron and Steel industry. We believe our
      Anti-Oxidation System, including coatings and spraying equipment is the only
      online system that prevents or reduces oxidation without needing to first cool
      down the steel slab. We anticipate that our Anti-Oxidation System will be an
      important driver of revenue growth.




In
      addition to the foregoing, we provide machining services to third parties,
      utilizing our heavy machine tools’ idle time to generate contract manufacturing
      revenue. In the first quarter of 2007, we also earned a significant amount
      of
      revenue from providing technical support to a business partner for the
      fulfillment of its desulphurization contract. That technical support business
      maintained our revenue growth while we experienced production capacity
      constraints. This business declined throughout the final 2 quarters of 2007
      as
      we built up adequate production capacity which allowed us to refocus on our
      manufacturing business.




We
      also
      receive grants from the local government with amounts varying from year to
      year
      as rewards for our continued investment in new technologies. While being
      selected for these grants signals important government support for our
      technology development efforts, we believe the amounts of these grants are
      immaterial to our business. In the twelve months ended December 31, 2007, we
      received government grants of $228,430, or 0.4% of our total equipment and
      services sales revenue for the period. In the twelve months ended December
      31,
      2006, we received government grants of $448,515, or 4.4% of our total sales
      revenue for those periods. In the three months ended March 31, 2008 and 2007,
      we
      received no government grants.




All
      our
      products are custom-built to our customers’ specific requirements. We enter into
      fixed price engineering and installation agreements with our customers that
      are
      performed in engineering, manufacturing, construction and installation phases.
      Equipment and components are engineered and manufactured primarily at our
      headquarter facilities. Generally, we fulfill our contracts in twelve
      months.




Our
      project-based revenue is affected directly by our customers’ capital budgets and
      need to build new plants. Since most of our customers are
      state-owned-enterprises, their budgeting decisions are influenced by the central
      government’s environmental protection and pollution control policies, which
      presently are favorable to our business and products. We expect such policy
      emphasis to continue for the foreseeable future.




The
      cost
      of revenue for our products includes direct materials, direct labor, and
      manufacturing overhead, with a significant portion allocable to materials costs,
      which are subject to fluctuation.




**Recent
      Developments**




*Change
      in Independent Accountants*




On
      April
      29, 2008, our board of directors approved our termination of Jimmy C.H. Cheung
      & Co., CPAs as our independent accountants and our engagement of Moore
      Stephens Wurth Frazer and Torbet, LLP as our independent accountants.




*Name
      Change and Trading Symbol Change*





Effective
      May 9, 2008, we changed our name from Jade Mountain Corporation to “RINO
      International Corporation.” The board approved the changed name and deemed it a
      better reflection of the direction and business of the Company.


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          29 -
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          of Contents*


The
      name
      change is completed in connection with a merger pursuant to Section 92A.180
      of the Nevada Revised Statutes, according to which, the merger is in the form
      that the Company’s wholly-owned subsidiary, China RINO, Inc., a corporation
      incorporated under the laws of the State of Nevada on March 21, 2008, merged
      into the Company itself, having the Company as the surviving corporation.
      Therefore, no shareholder approval for the merger and the related name change
      from either the parent or the subsidiary company is required. The change to
      the
      Company’s name is reflected in the Articles of Merger attached herein, filed on
      April 28, 2008 with the State of Nevada. We filed a Current Report on Form
      8-K
      with the Securities and Exchange Commission to report our name change on May
      9,
      2008.





In
      connection with our name change, NASDAQ assigned a new symbol to our common
      stock effective May 13, 2008. As a result, our common stock is now quoted on
      the
      National Association of Securities Dealers Over-the-Counter Bulletin Board
      under
      the symbol “RINO”.





*Key
      Man Life Insurance*





Our
      Securities Purchase Agreement requires the Company to obtain key man life
      insurance coverage of $5,000,000 for each of our two founders. This coverage
      has
      been arranged and will take effect as soon as payment can be effected under
      PRC
      foreign exchange regulations. Currently, we expect the payment to be rendered
      within 10 days of this report.





**Results
      of Operations**





*Quarters
      Ended March 31, 2008 And March 31, 2007.*





**Results
      of Operations**





*Net
      Sales*





Net
      sales
      increased by $9,255,104 million to $19,045,425 or 94.5% for the three months
      ended March 31, 2008, as compared to the three months ended March 31, 2007.
      The
      increase in first quarter 2008 was due to continued growth in demand across
      our
      entire product lines. The breakdown of the revenue growth is as
      follows:




For
                the three months ended March 30,2008
            
            2007Net
                Sales 000
            
            %
                to Total
            
            Net
                Sales 000
            
            %
                to Total
            
            %
                IncreaseWastewater
                treatment equipment
            
            $
            2,178.1
            
            
            11.4
            %
            $
            1,852.5
            
            
            18.9
            
            
            17.6
            %Flue
                gas desulphurization (including ancillary equipment)
            
            
            12,471.1
            
            
            65.5
            %
            
            3,164.6
            
            
            32.3
            
            
            294.1
            %Anti-oxidation
                equipment and coatings
            
            
            1,648.6
            
            
            8.7
            %
            
            519.8
            
            
            5.3
            
            
            217.2
            %Machining
                services
            
            
            2,747.6
            
            
            14.4
            %
            
            1,652.6
            
            
            16.9
            
            
            66.3
            %Services
            
            
            -
            
            
            -
            
            
            2,600.8
            
            
            26.6
            
            
            -100.0
            %Total
                Net Sales
            
            $
            19,045.4
            
            
            100.0
            %
            $
            9,790.3
            
            
            100.0
            %
            
            94.5
            %





*Wastewater
      treatment equipment* .
      Our
      line of wastewater treatment continued to enjoy strong demand in the face of
      increasingly strict environmental enforcement. In the first quarter of 2008,
      we
      executed wastewater treatment equipment worth sales revenue of $2.2 million.
      We
      have orders for an additional approximately 100 additional


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          30 -
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          of Contents*


wastewater
      filtration canisters and related slurry and sludge handling equipment valued
      conservatively at approximately $12.0 million. Although we have a strong record
      of performance and profitability, we cannot guarantee that these contracts
      will
      be successfully executed or that we will be paid upon completion.





*Flue
      Gas Desulphurization equipment* .
      While
      most of China’s coal-burning electric plants have already installed
      desulphurization equipment, the clean-up of China’s iron sintering remains in
      its early phase. Accordingly, our flue gas desulphurization equipment continued
      to enjoy strong growth in the first three months of 2008 as tightening
      environmental policies required increased reductions in emissions of sulfur
      dioxide. Increased activity in desulphurization of sintering operations has
      attracted competitors, including some international providers. This has lead
      to
      increased time spent in the tendering and negotiation processes, but as of
      the
      date of this report we have succeeded in one major long-term round of bidding,
      winning against international competitors. In addition to continuing to win
      bids, we are now winning tenders for very large sinters; both the sales
      volumes and the expected gross margins on these products are higher than those
      of existing installations in our current portfolio. Although we have a strong
      record of performance and profitability, with nearly no bad debt, we cannot
      guarantee that the contracts won will be successfully executed or that we will
      be paid should our efforts be successful.





*Anti-Oxidation
      Equipment* .
      Our
      anti-oxidation equipment has achieved considerable technical success,
      outperforming our projected reductions in oxidation loss during heat processing
      of hot-rolled steel, one of China’s major steel categories. We installed two
      sets of anti-oxidation equipment in 2007 for two separate customers and have
      signed one additional contract in 2008. During the first three months of 2008
      we
      have focused our sales efforts on desulphurization equipment, and expect to
      continue so in the second quarter, when we expect the new contract activity
      for
      desulphurization equipment for 2008 will slow in keeping with steelmakers’
budgetary cycles. Thus we are planning increased sales activity of
      anti-oxidation equipment and coatings beginning in third quarter 2008. To this
      end, we have already exhibited our working anti-oxidation installations to
      approximately 30 of China’s steelmakers. Although these prospective customers
      have expressed great interest in our anti-oxidation solutions and we have a
      strong record of performance, we cannot guarantee that the contracts won will
      be
      successfully executed or that we will be paid should our efforts be
      successful.





*Machining
      services.* Our
      machining services continued to record strong growth although at a slower pace
      than that recorded by flue gas desulphurization or by anti-oxidation equipment
      and coatings. This slower growth results in part from using our heavy machining
      equipment to produce more of our own products rather than for third-party
      contract work, as indicated by the lower percentage of machining services to
      total revenues. Although we enjoy good relations with customers of our machining
      services, we can offer no assurance of future growth in this product
      line.





*Cost
      of Sales*





The
      cost
      of sales for the three months ended March 31, 2008 increased by $6.4 million
      to
      $11.3 million from $4.9 million for the three months ended March 31, 2007,
      largely due to increased sales. As a percentage of sales, the cost of sales
      rose
      to 59.5% for the three months ended March 31, 2008 compared to 50.0% for the
      same period of 2007. This decline in gross profitability reflects the combined
      effects of changes in product mix, with none of the higher margin services
      revenue recorded in first quarter 2007, and the effects of rising prices of
      steel, one of our primary raw materials. The gross margin achieved in the three
      months ended March 31, 2008 is however within the historical range of the
      Company’s quarterly gross margins.





*Operating
      Expense.*





Operating
      expenses for the three months ended March 31, 2008 increased to $2.1 million
      from $1.3 million for the same period ended March 31, 2007. The 65% increase
      in
      our selling, general and administrative expenses was also a result of higher
      levels of operations in 2008 and on increased sales and travel expenses related
      to bidding on higher value-added projects.




-
          31 -
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*Other
      Income and Expense.*




Our
      other
      income increased to $73,377 for the three months ended March 31, 2008 from
      $0
      for the corresponding period in 2007. Our other expenses increased to $14,327
      for the three months ended March 31, 2008 from $2,623 for the corresponding
      period in 2007, representing an increase of 446.2%. Approximately $11,271 of
      other expenses represents discretionary donations to educational
      scholarships.




Interest
      income rose sharply from a low base as our cash balances increased after raising
      equity capital in October 2007, but the absolute amount of interest income
      remains immaterial. Interest expense fell to $78,704 for the three months ended
      March 31, 2008 from $153,857 for the period ended March 31, 2007, due to a
      reduced amount of bank debt financing as we applied collections of accounts
      receivable in the third and fourth quarters of 2007 to repay bank loans. All
      bank debt was repaid by year-end 2007, but we borrowed approximately $7.1
      million from one commercial bank in China in January, 2008.





An
      amount
      of $500,000 was recorded for the three months ended March 31, 2008 for
      additional liquidated damages payable under the Securities Purchase Agreement
      relating to the Company’s delay in obtaining an effective registration
      statement. The registration process is now in its third round of questions
      from
      the SEC, we can offer no firm assurance as to when the registration statement
      will be made effective.





**Liquidity
      and Capital Resources**





We
      have
      historically funded our working capital needs from operations, advance payments
      from customers, bank borrowings, and capital from shareholders. Our working
      capital requirements are influenced by the level of our operations, the
      numerical and dollar volume of our project contracts, the progress of our
      contract execution, and the timing of accounts receivable collections.





As
      of
      March 31, 2008, and December 31, 2007, the Company had firm purchase commitments
      of $0 and $750,844, respectively. As compared to December 31, 2007, our firm
      purchase commitments at March 31, 2008 decreased by $750,844 as we completed
      advance arrangements for expansion in production capacity.





*Cash
      and Cash Equivalents*





Cash
      and
      cash equivalents totaled $6.1 million as of March 31, 2008, as compared to
      $7.4
      million as of December 31, 2007, representing a decrease of 16.8%. The decrease
      was attributable to continued investment in accounts receivable, settlement
      of
      income taxes payable, investment in plant, property and equipment, and a rise
      in
      restricted cash, partially offset by falling contracts in progress and advances
      for supplies, and increased notes payable and bank loans.





The
      following tables present our net cash flows for the three months ended March
      31,
      2008 and for the same period ended March 31, 2007.




For
                the three months ended
              March
                31,US$
                thousands
            
            2008
            
            2007Cash
                provided by (used in) operating activities
            
            $
            248
            
            $
            (3,345
            )Cash
                used in investing activities
            
            $
            (6,216
            )
            $
            (688
            )Cash
                provided by financing activities
            
            $
            4,392
            
            $
            692




*Cash
      flow from operating activities.*





Net
      cash
      provided by operating activities was $247,722 for the three months ended March
      31, 2008 as compared to net cash used in operations of $3.3 million in the
      same period ended March 31, 2007. Increased net income and higher non-cash
      expenses increased cash flows from operations, as did a sharp drop in contracts
      in progress and in advances for inventory purchases. These increases to cash
      flow from operations were partially offset by increased accounts receivable
      and
      by settlement of income taxes payable.




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          32 -
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          of Contents*





*Accounts
      Receivables*




During
      the three months ended March 31, 2008, our accounts receivable rose to $25.3
      million from $20.8 million at December 31, 2007. As a percentage of total
      assets, our accounts receivable remained steady at 33.9% at March 31, 2008,
      as
      compared to that of 33.5% at December 31, 2007. The level of our receivables
      reflects the combined effect of our growing revenues and our sales to a small
      number of large clients, which means that repayment or delay in repayment on
      even a single account can have a disproportionate effect on total receivables
      in
      any given period. Our growth in receivables is due largely to rising
      sales.





As
      we
      sell almost exclusively to a few significant customers with established credit
      history with us, historically, we have not experienced collection issues,
      therefore we generally do not need to record a reserve for doubtful
      accounts.




*Contracts
      in progress*





Contracts
      in progress represent work in progress. During the three months ended March
      31,
      2008, our contracts in progress fell to $1.0 million from $2.8 million at
      December 31, 2007, due in part to seasonal factors such as Chinese New Year,
      and
      the budgetary cycle of our major customers, who spend most of first quarter
      in
      contract tenders.





*Deposits
      with Suppliers*





Deposits
      with suppliers are required to ensure timely delivery of raw materials and
      equipment needed to execute existing production contracts as well as to expand
      the business. Our deposits with suppliers increase to $14.8 million at March
      31,
      2008, an increase of $1.4 million, from the $13.4 million recorded at December
      31, 2007 as more orders of raw materials were placed for
      production.





*Other
      Current Assets*





During
      the three months ended March 31, 2008, our other current assets and prepaid
      expenses rose to $1.7 million from $1.2 million at year-end 2007. The increase
      was caused by our advances to employees and prepaid future operating costs.





*Cash
      used in investing activities.*





For
      the
      three months ended March 31, 2008, net cash used in investing activities
      increased to $6.2 million as compared to $688,256 for the same period ended
      March 31, 2007. This increase primarily resulted from the purchase of property,
      plant and equipment to be used in capacity expansion.





*Cash
      provided by financing activities.*





Our
      operations historically have been financed by capital contributions and loans
      from RINO’s founder and by short-term bank loans. For the three months ended
      March 31, 2008, net cash provided by financing activities increased by $1.4
      million to $2.1 million as compared to $0.7 million for the same period ended
      March 31, 2007. This was principally the result of an increase in short-term
      bank loans in during first quarter 2008.




**Contractual
      Obligations**





As
      of
      March 31, 2008, we did not have any long-term debt, capital lease, operating
      lease or other long-term liabilities reflected on our balance sheet under GAAP
      except the following:





As
      of
      March 31, 2008, the Company had firm purchase commitments for capital projects
      in progress of $0, compared with firm purchase commitments of $750,844 at
      December 31, 2007.




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          of Contents*




**Off-Balance
      Sheet Arrangements**




The
      Company does not have any off-balance sheet arrangements.




**CRITICAL
      ACCOUNTING POLICIES**




There
      have been no changes in our critical accounting policies or significant
      accounting estimates as disclosed in our 2007 Annual Report on Form 10-K,
      as amended.




**Item
      3.****Quantitative
      and Qualitative Disclosures about Market Risk**





*Disclosures
      About Market Risk.* We may
      be exposed to changes in financial market conditions in the normal course of
      business. Market risk generally represents the risk that losses may occur as
      a
      result of movements in interest rates and equity prices. We currently do not
      use
      financial instruments in the normal course off business that are subject to
      changes in financial market conditions.





*Currency
      Fluctuations and Foreign Currency Risk.* Substantially all of our operations are conducted in the PRC, with the exception
      of our export business and limited overseas purchases of raw materials. Most
      of
      our sales and purchases are conducted within the PRC in Renminbi, which is
      the
      official currency of the PRC. As a result, the effect of the fluctuations of
      exchange rates is considered minimal to our business operations. Substantially
      all of our revenues and expenses are denominated in Renminbi. However, we use
      the United States dollar for financial reporting purposes. Conversion of
      Renminbi into foreign currencies is regulated by the People’s Bank of China
      through a unified floating exchange rate system. A 10% strengthening in the
      Chinese RMB against the U.S. dollar would have increased the other comprehensive
      income for the quarter ended March 31, 2008 by approximately $0.55 million.
      Although the PRC government has stated its intention to support the value of
      the
      Renminbi, there can be no assurance that such exchange rate will not again
      become volatile or that the Renminbi will not devalue significantly against
      the
      U.S. dollars. Exchange rate fluctuations may adversely affect the value, in
      U.S.
      dollar terms, of our net assets and income derived from our operations in the
      PRC.





*Interest
      Rate Risk.* We do
      not have significant interest rate risk, as our debt obligations are primarily
      short-term in nature, with fixed interest rates.





*Credit
      Risk.* We have
      not experienced significant credit risk, as most of our customers are long-term
      customers with superior payment records. Our receivables are monitored regularly
      by our credit managers.




**Item
      4.****Controls
      and Procedures.**




(a)  *Evaluation
      of disclosure controls and procedures* .
      Our
      chief executive officer and our chief financial officer, after evaluating the
      effectiveness of the company’s “disclosure controls and procedures” (as defined
      in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rules
      13a-15e and 15d-15e) as of the end of the period covered by this report (the
      “Evaluation Date”), have concluded that, as of the Evaluation Date, our
      disclosure controls and procedures were effective.




(b)  *Changes
      in internal controls* .
      During
      the fiscal quarter covered by this quarterly report, there was no change in
      our
      internal control over financial reporting that has materially affected, or
      is
      reasonably likely to materially affect our internal control over financial
      reporting.




A
      control
      system, no matter how well conceived and operated, can provide only reasonable,
      not absolute, assurance that the objectives of the control systems are met.
      Because of the inherent limitations in all control systems no evaluation of
      controls can provide absolute assurance that all control issues, if any, within
      a company have been detected. Such limitations include the fact that human
      judgment in decision-making can be faulty and


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          of Contents*


that
      breakdowns in internal control can occur because of human failures, such as
      simple errors or mistakes or intentional circumvention of the established
      process.




**PART
      II****- OTHER
      INFORMATION**





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





*Issuance
      of Common Stock in Acquisition of Innomind*





In
      a
      share exchange transaction that was signed on October 3, 2007 and closed on
      October 5, 2007 (the “Share Exchange”), the Company acquired Innomind, and
      through that acquisition also acquired Innomind’s wholly-owned subsidiary,
      Dalian Innomind, as well as some of the assets and the business of Dalian
      Innomind’s PRC affiliate, RINO. In the Share Exchange the Company issued
      17,899,643 shares of our common stock (the “Control Shares”) to Zhang Ze,
      Innomind’s sole shareholder, in exchange for 10 shares of capital stock of
      Innomind, which represented all of the issued and outstanding shares of
      Innomind, which were owned by Zhang Ze. At the completion of that share
      exchange, Innomind became the Company’s wholly owned subsidiary. The Share
      Exchange was accomplished in reliance upon Section 4(2) of the Securities Act.
      Immediately after this Share Exchange, Zhang Ze placed the Jade Mountain shares
      he received in exchange for all his shares in Innomind into a Trust. The sole
      beneficiaries of this Trust are Zou Dejun and Qiu Jianping, the founders of
      Dalian Rino.




*Issuance
      of Common Stock in Private Placement*





On
      August
      16, 2007, the Company issued 125 (12,500 post-forward split) common shares
      in a
      private placement for cash of $5,532. The Company relied on the exemption from
      registration provided under Section 4(2) of the Securities Act.





On
      October 5, 2007, in a private placement through Douglas Financial, LLC, an
      NASD
      and SEC registered broker-dealer (“Douglas Financial”), we sold 5,464,357 shares
      of our common stock for $24,480,319 gross proceeds (or $21,250,109 net proceeds
      after deducting the offering expenses) under a Securities Purchase Agreement
      by
      and among the Company and a group of accredited investors (as defined under
      Rule
      501(a) of Regulation D promulgated under the Securities Act) named therein
      dated
      as of September 27, 2007 (the “Securities Purchase Agreement”). In the private
      placement we sold the common stock and issued warrants in reliance upon the
      exemption from registration provided by Rule 506 of Regulation D promulgated
      under the Securities Act of 1933 and Section 4(2) of the Securities
      Act.





Under
      the
      Securities Purchase Agreement, we are required to register for resale each
      share
      of common stock sold therein as well as the shares of common stock underlying
      the above, placement agent warrants.





In
      connection with the private placement, 250,000 shares of common stock were
      issued to Chief Capital, Ltd., for advisory services. We relied on the exemption
      from registration provided by Regulation S of the Securities Act for such
      issuance.





In
      connection with the private placement and pursuant to the Engagement Agreement
      Providing for Investment Banking Services, dated January 19, 2007 by and between
      RINO and Douglas Financial, Douglas Financial, as placement agent, received
      the
      following compensation: (i) $80,000 cash as an engagement and documentation
      fee;
      (ii) $1,750,000 as a placement commission; (iii) 875,000 shares of our Common
      Stock, and (iv) warrants to purchase 382,500 shares of Common Stock at an
      exercise price of $5.376 per share, exercisable within 6 years of the date
      of
      issue. The exercise price of the warrant is subject to adjustments under certain
      circumstances and the warrants permit cashless exercise by the holders. We
      relied on the exemption from registration provided by Section 4(2) of the
      Securities Act for the issuance of common stock and warrants to Douglas
      Financials.




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          35 -
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          of Contents*




*Issuance
      of Common Stock to Former Majority Shareholder*


On
      August
      8, 2007, the Company issued 2,950 (295,000 post-forward split) common shares
      to
      Glenn A. Little for cash of $14,750. The Company relied on the exemption from
      registration provided under Section 4(2) of the Securities Act.




On
      September 11, 2007, the Company issued 928 pre- Forward Split shares (or 92,800
      shares post-Forward Split) of its common stock to Glenn A. Little (the “Little
      Shares”) for an aggregate of $4,168. At that time and immediately prior to the
      consummation of the Share Exchange, Mr. Little was the Company’s majority
      shareholder and its sole director and executive officer. The Company relied
      on
      the exemption from registration provided under Section 4(2) of the Securities
      Act.




*Issuance
      of Common Stock to Former Chief Financial Officer of RINO*





At
      the
      Closing of the Share Exchange and the private placement, the Company issued
      20,000 shares of common stock to Eric Gan (“Gan”), RINO’s former chief financial
      officer, in full satisfaction of RINO’s obligations to Gan under a Compensation
      Agreement dated July 30, 2007. The Company relied on the exemption from
      registration provided under Section 4(2) of the Securities Act.





**Item
      6.********Exhibits**





(a)
            Exhibits





31.1
      - Certification of Chief Executive Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.





31.2
      - Certification of Chief Financial Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.





32.1
      - Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.





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          36 -
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          of Contents*




**SIGNATURES**





Pursuant
      to the requirements of the Securities Act of 1934, the Registrant has duly
      caused this report to be signed on its behalf by the undersigned there unto
      duly
      authorized.





**RINO
                INTERNATIONAL CORPORATION**Date:
                May 15, 2008
            BY:
            /s/
                Bruce RichardsonBruce
                RichardsonChief
                Financial Officer




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          37 -
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          of Contents*




INDEX
      TO
      EXHIBITS




EXHIBIT
                NUMBER
            
            DESCRIPTION31.1
            
            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 and Chief Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of 2002.