**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 June 30,
                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 xNo
o


Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      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 August 11, 2008, was 25,000,000.












**RINO
      INTERNATIONAL CORPORATION**





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




Part
                I - Financial Information
            1Item
                1 - Financial Statements
            1Consolidated
                Balance Sheets as of June 30, 2008 (unaudited) and December 31,
                2007
            1Consolidated
                Statements of Income and Other Comprehensive Income for the six months
                ended June 30, 2008 and 2007 (unaudited)
            2Consolidated
                Statements of Cash Flows for the six months ended June 30, 2008 and
                2007
                (unaudited)
            3Consolidated
                Statements of Shareholders’ Equity for the six months ended June 30, 2008
                (unaudited)
            4Notes
                to the Consolidated Financial Statements (unaudited)
            5Item
                2 - Management's Discussion and Analysis of Results of Operations
                and
                Financial Condition
            28Item
                3 - Quantitative and Qualitative Disclosure about Market
                Risk
            35Item
                4 - Controls and Procedures
            36Part
                II - Other Information
            36Item
                2 - Unregistered Sales of Equity Securities and Use of
                Proceeds
            36Item
                6 - Exhibits
            38Signature
                Page
            39









**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements**


RINO
                  INTERNATIONAL CORPORATION AND SUBSIDIARIES(FORMERLY
                  KNOWN AS JADE MOUNTAIN CORPORATION)CONSOLIDATED
                  BALANCE SHEETSAS
                  OF JUNE 30, 2008 AND DECEMBER 31, 2007
  June
                  30,
                2008
              
              December
                  31,
                2007(Unaudited)ASSETSCURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              2,521,248
              
              $
              7,390,631Restricted
                  cash
              
              
              5,078,061
              
              
              1,000,000Accounts
                  receivable
              
              
              37,376,216
              
              
              20,840,336Notes
                  receivable
              
              
              1,714,822
              
              
              202,670Costs
                  and estimated earnings in excess of billings on uncompleted
                  contracts
              
              
              -
              
              
              2,818,122Inventories
              
              
              1,518,797
              
              
              178,480Advances
                  for inventory purchase
              
              
              19,377,225
              
              
              12,092,202Other
                  current assets and prepaid expenses
              
              
              1,095,390
              
              
              1,174,464Total
                  current assets
              
              
              68,681,759
              
              
              45,696,905PROPERTY,
                  PLANT AND EQUIPMENT, NET
              
              
              11,966,517
              
              
              11,000,581OTHER
                  ASSETSPrepaid
                  expenses (non-current)
              
              
              80,245
              
              
              95,706Advances
                  for equipment and construction material purchase
              
              
              7,188,956
              
              
              3,751,343Prepayment
                  for land use right
              
              
              455,793
              
              
              428,301Intangible
                  assets, net
              
              
              1,238,225
              
              
              1,190,289Total
                  other assets
              
              
              8,963,219
              
              
              5,465,639Total
                  assets
              
              $
              89,611,495
              
              $
              62,163,125LIABILITIES
                  AND SHAREHOLDERS' EQUITYCURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              2,129,787
              
              $
              2,534,858Billings
                  in excess of costs and estimated earnings on uncompleted
                  contracts
              
              
              126,004
              
              
              -Customer
                  deposits
              
              
              1,035,230
              
              
              116,214Liquidated
                  damages payable
              
              
              1,500,000
              
              
              1,000,000Other
                  payables and accrued liabilities
              
              
              729,060
              
              
              686,031Notes
                  payable
              
              
              2,443,981
              
              
              -Sales
                  commission payable
              
              
              803,636
              
              
              -Due
                  to a stockholder
              
              
              803,634
              
              
              106,963Other
                  taxes payable
              
              
              26,067
              
              
              581,444Income
                  tax payable
              
              
              1,065,001
              
              
              5,970,794Value
                  added tax payable
              
              
              3,471,713
              
              
              2,989,365Short-term
                  loan
              
              
              7,295,000
              
              
              -Total
                  current liabilities
              
              
              21,429,113
              
              
              13,985,669REDEEMABLE
                  COMMON STOCK ($0.0001 par value, 5,464,357 sharesissued
                  with conditions for redemption outside the control of the
                  company)
              
              
              24,480,319
              
              
              24,480,319COMMITMENTS
                  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 June 30, 2008 andDecember
                  31, 2007)
              
              
              2,500
              
              
              2,500Additional
                  paid-in capital
              
              
              14,103,283
              
              
              8,221,663Retained
                  earnings
              
              
              19,531,275
              
              
              11,376,163Statutory
                  reserves
              
              
              4,362,140
              
              
              2,109,539Accumulated
                  other comprehensive income
              
              
              5,702,865
              
              
              1,987,272Total
                  shareholders' equity
              
              
              43,702,063
              
              
              23,697,137Total
                  liabilities and shareholders' equity
              
              $
              89,611,495
              
              $
              62,163,125
    -1-
 RINO
                    INTERNATIONAL CORPORATION AND SUBSIDIARIES(FORMERLY
                    KNOWN AS JADE MOUNTAIN CORPORATION)CONSOLIDATED
                    STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOMEFOR
                    THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2008 AND
                    2007(UNAUDITED)
 Three
                    months ended
                
                Six
                    months endedJune
                    30,
                
                June
                    30,2008
                
                2007
                
                2008
                
                2007REVENUES:Contracts
                
                $
                32,187,128
                
                $
                8,739,662
                
                $
                48,484,873
                
                $
                14,276,529Services
                
                
                2,429,986
                
                
                9,962,959
                
                
                5,177,666
                
                
                14,216,41334,617,114
                
                
                18,702,621
                
                
                53,662,539
                
                
                28,492,942COST
                    OF SALESCost
                    of contracts
                
                
                17,583,203
                
                
                5,935,444
                
                
                27,845,892
                
                
                9,309,230Cost
                    of services
                
                
                1,589,775
                
                
                2,540,189
                
                
                2,492,169
                
                
                3,937,109Depreciation
                
                
                162,481
                
                
                138,330
                
                
                320,256
                
                
                258,81419,335,459
                
                
                8,613,963
                
                
                30,658,317
                
                
                13,505,153GROSS
                    PROFIT
                
                
                15,281,655
                
                
                10,088,658
                
                
                23,004,222
                
                
                14,987,789OPERATING
                    EXPENSESSelling,
                    general and administrative expenses
                
                
                3,585,508
                
                
                1,743,268
                
                
                5,730,999
                
                
                3,040,616Depreciation
                
                
                36,692
                
                
                27,714
                
                
                69,297
                
                
                54,240Amortization
                
                
                16,386
                
                
                12,669
                
                
                32,300
                
                
                24,133Research
                    and development
                
                
                578,153
                
                
                831,984
                
                
                588,636
                
                
                831,984Stock
                    compensation expense-shares placed in escrow
                
                
                5,832,960
                
                
                -
                
                
                5,832,960
                
                
                -TOTAL
                    OPERATING EXPENSES
                
                
                10,049,699
                
                
                2,615,635
                
                
                12,254,192
                
                
                3,950,973INCOME
                    FROM OPERATIONS
                
                
                5,231,956
                
                
                7,473,023
                
                
                10,750,030
                
                
                11,036,816OTHER
                    INCOME (EXPENSE), NETOther
                    income
                
                
                1,379
                
                
                5,153
                
                
                74,756
                
                
                5,153Government
                    grant
                
                
                283,680
                
                
                70,043
                
                
                283,680
                
                
                70,043Interest
                    income
                
                
                34,642
                
                
                784
                
                
                56,568
                
                
                2,427Interest
                    expense
                
                
                (146,704
                )
                
                (157,098
                )
                
                (225,408
                )
                
                (310,955
                )Liquidated
                    damage expense
                
                
                -
                
                
                -
                
                
                (500,000
                )
                
                -Other
                    expenses
                
                
                (17,586
                )
                
                (573
                )
                
                (31,913
                )
                
                (3,196
                )TOTAL
                    OTHER INCOME (EXPENSE)
                
                
                155,411
                
                
                (81,691
                )
                
                (342,317
                )
                
                (236,528
                )INCOME
                    BEFORE PROVISION FOR INCOME TAXES
                
                
                5,387,367
                
                
                7,391,332
                
                
                10,407,713
                
                
                10,800,288PROVISION
                    FOR INCOME TAXES
                
                
                -
                
                
                3,623,618
                
                
                -
                
                
                3,623,618NET
                    INCOME
                
                
                5,387,367
                
                
                3,767,714
                
                
                10,407,713
                
                
                7,176,670OTHER
                    COMPREHENSIVE INCOME:Foreign
                    currency translation adjustment
                
                
                1,452,688
                
                
                667,258
                
                
                3,715,593
                
                
                302,994COMPREHENSIVE
                    INCOME
                
                $
                6,840,055
                
                $
                4,434,972
                
                $
                14,123,306
                
                $
                7,479,664WEIGHTED
                    AVERAGE NUMBER OF SHARES:Basic
                
                
                25,000,000
                
                
                17,899,643
                
                
                25,000,000
                
                
                17,899,643Diluted
                
                
                25,183,285
                
                
                17,899,643
                
                
                25,175,890
                
                
                17,899,643EARNINGS
                    PER SHARE:Basic
                
                $
                0.22
                
                $
                0.21
                
                $
                0.42
                
                $
                0.40Diluted
                
                $
                0.21
                
                $
                0.21
                
                $
                0.41
                
                $
                0.40
    -2-
  RINO
                        INTERNATIONAL CORPORATION AND SUBSIDIARIES(FORMERLY
                        KNOWN AS JADE MOUNTAIN CORPORATION)CONSOLIDATED
                        STATEMENTS OF CASH FLOWSFOR
                        THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007(UNAUDITED)
  2008
                    
                    2007**CASH
                        FLOWS FROM OPERATING ACTIVITIES**Net
                        income
                    
                    $
                    10,407,713
                    
                    $
                    7,176,670Adjusted
                        to reconcile net income to cash usedin
                        operating activities:Depreciation
                    
                    
                    389,553
                    
                    
                    313,054Amortization
                    
                    
                    32,300
                    
                    
                    24,133Imputed
                        interest
                    
                    
                    10,456
                    
                    
                    24,082Amortization
                        of long term prepaid expense
                    
                    
                    21,276
                    
                    
                    -Stock
                        compensation expense - options issued
                    
                    
                    38,204
                    
                    
                    -Stock
                        compensation expense - shares placed in escrow
                    
                    
                    5,832,960
                    
                    
                    -Changes
                        in operating assets and liabilitiesAccounts
                        receivable
                    
                    
                    (14,715,707
                    )
                    
                    (1,125,821
                    )Costs
                        and estimated earnings in excess of billings on uncompleted
                        contracts
                    
                    
                    2,923,610
                    
                    
                    -Inventories
                    
                    
                    (1,291,373
                    )
                    
                    (4,088,657
                    )Other
                        current assets and prepaid expenses
                    
                    
                    153,165
                    
                    
                    (763,004
                    )Advances
                        for inventory purchase
                    
                    
                    (6,282,450
                    )
                    
                    (8,191,617
                    )Accounts
                        payable
                    
                    
                    (559,222
                    )
                    
                    (94,546
                    )Billings
                        in excess of costs and estimated earnings on uncompleted
                        contracts
                    
                    
                    122,498
                    
                    
                    180,371Customer
                        deposits
                    
                    
                    885,859
                    
                    
                    -Liquidated
                        damages payable
                    
                    
                    500,000
                    
                    
                    -Other
                        payables and accrued liabilities
                    
                    
                    (510
                    )
                    
                    90,660Notes
                        receivable
                    
                    
                    (1,456,847
                    )
                    
                    12,971Sales
                        commission payable
                    
                    
                    781,273
                    
                    
                    -Other
                        taxes payable
                    
                    
                    (577,866
                    )
                    
                    355,362Value
                        added tax payable
                    
                    
                    273,842
                    
                    
                    548,055Income
                        tax payable
                    
                    
                    (5,158,928
                    )
                    
                    3,788,534Deferred
                        tax liabilities
                    
                    
                    -
                    
                    
                    (664,890
                    )Net
                        cash used in operating activities
                    
                    
                    (7,670,194
                    )
                    
                    (2,414,643
                    )**CASH
                        FLOWS FROM INVESTING ACTIVITIES**Purchase
                        of property and equipment
                    
                    
                    (610,720
                    )
                    
                    (61,907
                    )Purchase
                        of intangible assets
                    
                    
                    -
                    
                    
                    (376,159
                    )Advances
                        for construction material and equipment purchase
                    
                    
                    (3,107,868
                    )
                    
                    -Prepayment
                        for land use right
                    
                    
                    -
                    
                    
                    (328,475
                    )Net
                        cash used in investing activities
                    
                    
                    (3,718,588
                    )
                    
                    (766,541
                    )**CASH
                        FLOWS FROM FINANCING ACTIVITIES**Increase
                        (decrease) in due to related parties
                    
                    
                    670,386
                    
                    
                    (135,187
                    )Increase
                        of restricted cash
                    
                    
                    (3,964,579
                    )
                    
                    -Increase
                        of notes payable
                    
                    
                    2,375,971
                    
                    
                    -Proceeds
                        from short-term loan
                    
                    
                    7,092,000
                    
                    
                    -Net
                        cash provided by (used in) financing activities
                    
                    
                    6,173,778
                    
                    
                    (135,187
                    )**EFFECT
                        OF EXCHANGE RATE ON CASH**
                    
                    
                    345,621
                    
                    
                    55,127**DECREASE
                        IN CASH AND CASH EQUIVALENTS**
                    
                    
                    (4,869,383
                    )
                    
                    (3,261,244
                    )**CASH
                        AND CASH EQUIVALENTS AT BEGINNING OF PERIOD**
                    
                    
                    7,390,631
                    
                    
                    3,604,350**CASH
                        AND CASH EQUIVALENTS AT END OF PERIOD**
                    
                    $
                    2,521,248
                    
                    $
                    343,106**SUPPLEMENTAL
                        DISCLOSURE OF CASH FLOW INFORMATION**Cash
                        paid during the period for:Interest
                    
                    $
                    213,381
                    
                    $
                    274,141Income
                        taxes
                    
                    $
                    5,158,928
                    
                    $
                    499,975
 -3-
  RINO
                    INTERNATIONAL CORPORATION AND SUBSIDIARIES(FORMERLY
                    KNOWN AS JADE MOUNTAIN CORPORATION)CONSOLIDATED
                    STATEMENTS OF SHAREHOLDERS' EQUITYFOR
                    THE SIX MONTHS ENDED JUNE 30, 2008(UNAUDITED)
 Common
                      StockPar Value $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
                
                $
                8,221,663
                
                $
                2,109,539
                
                $
                11,376,163
                
                $
                1,987,272
                
                $
                23,697,137Stock
                    compensation expense-options issued
                
                
                
                
                
                
                
                
                38,204
                
                
                
                
                
                
                
                
                
                
                
                38,204Stock
                    compensation expense-shares placed in escrow
                
                
                
                
                
                
                
                
                5,832,960
                
                
                
                
                
                
                
                
                
                
                
                5,832,960Imputed
                    interest on advances from a shareholder
                
                
                
                
                
                
                
                
                10,456
                
                
                
                
                
                
                
                
                
                
                
                10,456Net
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                10,407,713
                
                
                
                
                
                10,407,713Allocation
                    to statutory reserve
                
                
                
                
                
                
                
                
                
                
                
                2,252,601
                
                
                (2,252,601
                )
                
                
                
                
                -Foreign
                    currency translation gain
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,715,593
                
                
                3,715,593BALANCE,
                    June 30, 2008 (Unaudited)
                
                
                25,000,000
                
                $
                2,500
                
                $
                14,103,283
                
                $
                4,362,140
                
                $
                19,531,275
                
                $
                5,702,865
                
                $
                43,702,063
    -4-




**RINO
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
        KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
        30,
        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.
  -5-
 **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          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 name to “RINO International
        Corporation.” The board approved the changed name and deemed it better reflect
        the direction and business of the Company.
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 Principles
        of Consolidation
 
 The
        accompanying consolidated financial statements of RINO International Corporation
        reflect the activities of 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 of America
        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 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/A.
  -6-
 
 **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 Use
        of
        Estimates
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the Unites States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenues and expenses
        during the reporting period. Management
        believes that the estimates used in preparing its financial statements are
        reasonable and prudent. Actual
        results could differ from those estimates.
 
 Cash
        and Cash Equivalents
 
 For
        purposes of the financial statements, cash and cash equivalents include cash
        on
        hand and demand deposits with a bank with an original maturity of 3 months
        or
        less.
 
 The
        cash
        held in escrow pursuant to the Board Escrow Holdback as described in Note
        21 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. The Company grants credit to customers without collateral. The
        Company’s managements periodically reviews its accounts receivable to determine
        whether an allowance is necessary based on an analysis of past due accounts
        and
        other factors that may indicate that the realization of an account may be
        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 believes all receivables are fully collectible and
        therefore did not reserve an allowance for doubtful account as of June 30,
        2008.
 
 Inventories
 
 Inventories
        are stated at the lower of cost (weighted average method) or
        market.
  -7-
 **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 Property,
        Plant and Equipment
 
 Property
        and equipment are stated at cost, less accumulated depreciation. Expenditures
        for additions, major renewals and betterments are capitalized and 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 June 30, 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.
  -8-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 As
        of
        June 30, 2008, the short term bank loans amounted to $7,295,000. 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
        June 30, 2008, the Company had notes payable of $2,443,981 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.
 
 Carrying
                  As of
                June
                  30 2008
              
              Fair
                  Value Measurements at June 30, 2008 Using Fair Value
                  HierarchyLiabilities
              
              
              
              Level
                  1
              
              Level
                  2
              
              Level
                  3Short-term
                  bank loans
              
              $
              7,295,000
              
              
              
              
              $
              7,295,000Notes
                  payable
              
              $
              2,443,981
              
              
              
              
              
              
              
              $
              2,443,981
  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
        to
        date 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.
  -9-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 *Services.* 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 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.
 
 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 June 30, 2008 and 2007 amounted to $63,286 and $157,802,
        respectively.
 
 Shipping
        and handling expenses for the six months ended June 30, 2008 and 2007 amounted
        to $167,561 and $225,715, respectively.
 
 Research
        and Development Costs
 
 Research
        and development (or “R&D”) expenses include salaries, material, contract and
        other outside service fees, 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).
  -10-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 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 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.
  -11-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 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.
 
 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 ($0.14590 and $0.13710 at June 30, 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 ($0.14184 and $0.12971 for the six months
        ended
        June 30, 2008 and 2007, respectively). Resulting translation adjustments
        are
        recorded as a component of accumulated other comprehensive income (loss)
        within
        shareholders’ 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
        June 30, 2008 and December 31, 2007, translation adjustments resulting from
        this
        process included in accumulated other comprehensive income in the consolidated
        statement of shareholders’ equity amounted to $5,702,865 and
        $1,987,272.
 
 Earnings
        Per Share
 
 Basic
        earnings (loss) per share is computed by dividing the net income (loss)
        available to common shareholders 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.
  -12-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 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 19,
        Concentrations and Risks, below.
 
 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 resulted in enhanced disclosure
        of
        financial instruments but had no impact on the Company’s balance sheet or
        statement of income and other comprehensive income.
 
 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.
  -13-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          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.
 
 In
        May
        2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
        Accounting Principles.” This Statement identifies the sources of accounting
        principles and the framework for selecting the principles to be used in the
        preparation of financial statements of nongovernmental entities that are
        presented in conformity with generally accepted accounting principles (GAAP)
        in
        the United States (the GAAP hierarchy). This Statement will not have an impact
        on the Company’s financial statements.
  In
        May
        2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
        Insurance Contracts, an interpretation of FASB Statement No. 60.” The scope of
        this Statement is limited to financial guarantee insurance (and reinsurance)
        contracts, as described in this Statement, issued by enterprises included
        within
        the scope of Statement 60. Accordingly, this Statement does not apply to
        financial guarantee contracts issued by enterprises excluded from the scope
        of
        Statement 60 or to some insurance contracts that seem similar to financial
        guarantee insurance contracts issued by insurance enterprises (such as mortgage
        guaranty insurance or credit insurance on trade receivables). This Statement
        also does not apply to financial guarantee insurance contracts that are
        derivative instruments included within the scope of FASB Statement No. 133,
        “Accounting for Derivative Instruments and Hedging Activities.” This Statement
        will not have an impact on the Company’s financial statements.
 
 In
        June
        2008, the FASB issued Emerging Issues Task Force Issue 07-5 “Determining whether
        an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock” (“EITF
        No. 07-5”). This Issue is effective for financial statements issued for fiscal
        years beginning after December 15, 2008, and interim periods within those
        fiscal
        years. Early application is not permitted. Paragraph 11(a) of Statement of
        Financial Accounting Standard No 133 “Accounting for Derivatives and Hedging
        Activities” (“SFAS 133”) specifies that a contract that would otherwise meet the
        definition of a derivative but is both (a) indexed to the Company’s own
        stock and (b) classified in stockholders’ equity in the statement of
        financial position would not be considered a derivative financial instrument.
        EITF No.07-5 provides a new two-step model to be applied in determining whether
        a financial instrument or an embedded feature is indexed to an issuer’s own
        stock and thus able to qualify for the SFAS 133 paragraph 11(a) scope exception.
        Management is currently evaluating the impact of adoption of EITF No. 07-5.
 
 -14-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 In
        June
        2008, FASB issued EITF Issue No. 08-4, “Transition Guidance for Conforming
        Changes to Issue No. 98-5 (“EITF No. 08-4”)”. The objective of EITF No.08-4
        is to provide transition guidance for conforming changes made to EITF No.
        98-5,
“Accounting for Convertible Securities with Beneficial Conversion Features
        or
        Contingently Adjustable Conversion Ratios”, that result from EITF No. 00-27
“Application of Issue No. 98-5 to Certain Convertible Instruments”, and SFAS No.
        150, “Accounting for Certain Financial Instruments with Characteristics of both
        Liabilities and Equity”. This Issue is effective for financial statements issued
        for fiscal years ending after December 15, 2008. Early application is
        permitted. Management is currently evaluating the impact of adoption of
        EITF No. 08-4.
 
 **NOTE
        3 - RESTRICTED CASH**
 
 Restricted
        cash consisted of the following:
 
 June
                  30, 2008
              
              December
                  31, 2007(unaudited)Project
                  bidding
              
              $
              1,634,080
              
              $
              -Security
                  deposit for notes payable
              
              
              2,443,981
              
              
              -Escrow
                  account
              
              
              1,000,000
              
              
              1,000,000Total
              
              $
              5,078,061
              
              $
              1,000,000
 
 **NOTE
        4 - ACCOUNTS RECEIVABLE**
 
 Accounts
        receivable consisted of the following:
 
 June
                  30, 2008
              
              December
                  31, 2007(unaudited)Accounts
                  receivable
              
              $
              37,376,216
              
              $
              20,840,336Less:
                  allowance for doubtful accounts
              
              
              -
              
              
              -Accounts
                  receivable, net of allowance
              
              $
              37,376,216
              
              $
              20,840,336
 
 As
        of
        June 30, 2008 and December 31, 2007, the Company considered all accounts
        receivable collectable and has not recorded a provision for doubtful accounts.
        The Company’s equipment sales contracts allow the customer to retain 10% of the
        contract price for one year from the date of purchase. Accounts receivable
        as of
        June 30, 2008 and December 31, 2007 contain retainage receivables of $3,315,096
        and $1,618,203, respectively.
  -15-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 **NOTE
        5 - INVENTORIES**
 
 As
        of
        June 30, 2008 and December 31, 2007, inventories consisted of raw material
        and
        supplies amounting to $1,518,797 and $178,480, respectively.
 
 For
        the
        periods ended June 30, 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 ON UNCOMPLETED
        CONTRACTS**
 
 “Costs
        and estimated earnings in excess of billings on uncompleted contracts”,
        represents revenues recognized in excess of amounts billed pursuant to the
        percentage-of-completion method used to recognize revenue. As of June 30,
        2008
        and December 31, 2007, revenues recognized in excess of amounts billed were
        $0
        and $2,818,122 as follows:
 June
                    30, 2008
                
                December
                    31, 2007(Unaudited)Contracts
                      costs incurred plus recognized profits
                      less recognized losses to date
                
                $
                25,457,287
                
                $
                44,074,924Less
                    progress billings
                
                
                25,457,287
                
                
                41,256,802Costs
                    and estimated earnings in excess of
                    billings
                
                $
                -
                
                $
                2,818,122
  **NOTE
        7 - BILLINGS IN EXCESS OF COST AND ESTIMATED EARNINGS ON UNCOMPLETED
        CONTRACTS**
 
 “Billings
        in excess of costs and estimated earnings on uncompleted contracts”, represents
        billings in excess of revenues recognized. As of June 30, 2008 and December
        31,
        2007, billings in excess of revenues recognized were $126,004 and $0 as follows:
 June
                    30, 2008
                
                December
                    31, 2007Progress
                    billings
                
                $
                13,389,767
                
                $
                -Contracts
                    costs incurred plus recognized profits
                    estimated less recognized losses
                
                
                13,263,763
                
                
                -Billings
                    in excess of costs and estimated earnings
                
                $
                126,004
                
                $
                -
  -16-
  **RINO
            INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
            KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
            30,
            2008
 (UNAUDITED)
 **NOTE
          8 - PROPERTY, PLANT AND EQUIPMENT**
 
 The
        following is a summary of property and equipment at June 30, 2008 and December
        31, 2007:
 
 June
                  30, 2008
              
              December
                  31, 2007(Unaudited)Buildings
              
              $
              3,854,904
              
              $
              3,612,413Equipment
                  and machinery
              
              
              7,979,969
              
              
              7,430,865Motor
                  Vehicles
              
              
              1,601,228
              
              
              986,274Furniture
                  and office equipment
              
              
              405,687
              
              
              352,840Construction
                  in progress
              
              
              6,731
              
              
              6,30713,848,519
              
              
              12,388,699Less:
                  accumulated depreciation
              
              
              1,882,002
              
              
              1,388,118Property,
                  plant and equipment, net
              
              $
              11,966,517
              
              $
              11,000,581
  Depreciation
        expense for the three months ended June 30, 2008 and 2007 was $199,174 and
        $157,365, respectively. For the three months ended June 30, 2008 and 2007,
        no
        interest was capitalized into construction in progress. Depreciation expense
        for
        the six months ended June 30, 2008 and 2007 was $389,553 and $313,054,
        respectively. For the six months ended June 30, 2008 and 2007, no interest
        was
        capitalized into construction in progress.
 
 **NOTE
        9 - INTANGIBLE ASSETS**
 
 The
        following is a summary of intangible assets at June 30, 2008 and December
        31,
        2007:
 June
                    30, 2008
                
                December
                    31, 2007(Unaudited)Land
                    use rights
                
                $
                647,585
                
                $
                605,669Patents
                    and licenses
                
                
                729,500
                
                
                683,6111,377,085
                
                
                1,289,280Less:
                    accumulated amortization
                
                
                138,860
                
                
                98,991Net
                
                $
                1,238,225
                
                $
                1,190,289
 
 Amortization
        expense for the three months ended June 30, 2008 and 2007 amounted to $16,386
        and $12,135, respectively. Amortization expense for the six months ended
        June
        30, 2008 and 2007 amounted to $32,300 and $24,133, respectively.
 
 The
        Company paid $455,793 for land use rights; as of June 30, 2008, the Company
        had
        not obtained the title and therefore reports the payment as a long term prepaid
        in other assets.
  -17-
  **RINO
            INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
            KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
            30,
            2008
 (UNAUDITED)
 **NOTE
        10 - 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 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 upon 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 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 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 December 8, 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.
  -18-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 **NOTE
        11 - NOTES PAYABLE**
 
 Balances
        at June 30, 2008 and December 31, 2007 consist of the following:
 
 June
                  30, 2008
              
              December 31,
                  2007(Unaudited)Notes
                  payable to two domestic equipment providers, no interest, due in
                  August
                  and
                September
                  2008, secured by restricted cash balance (Note 3)
              
              $
              2,443,981
              
              $
              -Total
              
              $
              2,443,981
              
              $
              -
 
 **NOTE
        12 - SHORT TERM BANK LOANS PAYABLE**
 
 Balances
        at June 30, 2008 and December 31, 2007 consist of the following:
 June
                    30, 2008
                
                December
                    31, 2007(Unaudited)Due
                    to bank, interest at 7.47%, in February2009,
                    secured by certain buildings,equipment,
                    and land use rights
                
                $
                7,295,000
                
                $
                -Total
                
                $
                7,295,000
                
                $
                -
  Total
        interest expense on the bank loans for the three months ended June 30, 2008
        and
        2007 amounted to $146,704 and $157,098, respectively. Total interest expense
        on
        the bank loans for the six months ended June 30, 2008 and 2007 amounted to
        $225,408 and $310,955, respectively.
 
 **NOTE
        13 - 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
        a net operating loss for income tax purpose for the six months ended June
        30,
        2008. The Company had loss carry forwards of approximately $20,662,000 for
        U.S.
        income tax purposes available for offset against future taxable U.S. income
        expiring in 2027. Management believes that the realization of the benefits
        from
        the loss carry forward appears uncertain due to the Company’s historical
        operating income and continuing losses. Accordingly, 100% valuation allowance
        has been provided and no deferred tax asset benefit has been recorded. The
        valuation allowance at June 30, 2008 was $7,025,000. The net change in the
        valuation allowance was an increase of $168,000.
  Innomind
        was incorporated in the BVI and under current law of the BVI, income is not
        subject to income tax.
  -19-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 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”) so no provision for income tax was made.
 
 Before
        July 2007, Dalian Rino was also qualified as Foreign Invested Enterprise
        (“FIE”). On July 12, 2007, Dalian Rino changed its license status from Foreign
        Invested Enterprise (“FIE”) to a domestic entity and was subject to an income
        tax rate of 33% for the period entitled to tax exemption. For the six months
        ended June 30, 2007, provision of income tax amounted to $3,623,618.
 
 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, 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 six months ended June 30, 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
              
              
              33.0China
                  income tax exemption
              
              
              (25.0
              )
              
              -Effective
                  income tax rate
              
              
              0.0
              %
              
              33.0
              %
 
 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.
 
 VAT
        on
        sales and VAT on purchases amounted to $10,673,689, and $8,017,526 for the
        three
        months ended June 30, 2008 and $2,065,950 and $939,532 for the three months
        ended June 30, 2007, respectively. VAT on sales and VAT on purchases amounted
        to
        $15,730,506, and $11,367,453 for the six months ended June 30, 2008 and
        $3,377,171 and $2,705,689 for the six months ended June 30, 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 June 30, 2008 and December 31, 2007, the VAT payable amounted
        to
        $3,471,713 and $2,989,365, respectively.
  -20-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 **NOTE
        14 - REDEEMABLE COMMON STOCK**
 
 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. The
        Securities Purchase Agreement contained a transferrable provision such that
        if
        any governmental agency in the PRC takes action that adversely affects the
        Restructuring Agreements or the Share Exchange Agreement and the company
        doesn’t
        mitigate the adverse effect to the investors’ reasonable satisfaction within 60
        days of the PRC action, then the company is required to pay liquidated damages
        in an amount equal to the initial investment without interest and the
        shareholder must return the shares acquired under the agreement. Consequently,
        the total amount of the gross proceeds has been excluded from permanent equity
        and recorded as redeemable common stock in accordance with Rule 5-02.28 of
        Regulation S-X and Section 211 of the Codification of Financial Reporting
        Policies. Although there is no fixed redemption requirement in any of the
        next
        five years, the entire amount of $24,480,319 could become redeemable in any
        of
        the next five years. These shares are included as outstanding common stock
        for
        purposes of earnings per share.
 
 **NOTE
        15 - COMMON STOCK AND OTHER SHAREHOLDERS’ 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
        June 30, 2008 and December 31, 2007, the Company appropriated $4,362,140
        and
        $2,109,539 respectively to the reserves funds based on its net income in
        accordance with the laws and regulations of the PRC.
  -21-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 Common
        Stock and Warrants
 
 **Issuance
        of Common Stock in Private Placement**
 
 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 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 such 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
        16 - 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.
  -22-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 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.
 
 ·
              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 six months ended June 30,
        2008.
        As of June 30, 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, 2006
              
              
              -
              
              
              -
              
              
              -Granted
              
              
              -
              
              
              -
              
              
              -Forfeited
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -
              
              
              -Balance,
                  June 30, 2007
              
              
              -
              
              
              -
              
              
              -Granted
              
              
              250,000
              
              $
              5.38
              
              
              -Forfeited
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -
              
              
              -Balance,
                  December 31, 2007
              
              
              250,000
              
              $
              5.38
              
              
              -Granted
              
              
              -
              
              
              -
              
              
              -Forfeited
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -
              
              
              -Balance,
                  June 30, 2008
              
              
              250,000
              
              $
              5.38
              
              
              -
  -23-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 The
        following is a summary of the status of options outstanding at June 30,
        2008:
 
 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
        17 - EARNINGS PER SHARE**
 
 The
        following demonstrates the calculation for earnings per share for the three
        months and six months ended June 30:
  Three
                  months ended June 30, 2008 and 2007
              
              
              2008
              
              
              2007Net
                  income
              
              $
              5,387,367
              
              $
              3,767,714Adjustments
                  for diluted EPS calculation
              
              
              -
              
              
              -Adjusted
                  net income for calculating EPS-diluted
              
              $
              5,387,367
              
              $
              3,767,714Weighted
                  average number of common stock - Basic
              
              
              25,000,000
              
              
              17,899,643Effect
                  of dilutive securities:Warrants
                  and options
              
              
              183,285
              
              
              -Weighted
                  average number of common stock - Diluted
              
              
              25,183,285
              
              
              17,899,643Earnings
                  per share:Basic
              
              $
              0.22
              
              $
              0.21Diluted
              
              $
              0.21
              
              $
              0.21
 
 Six
                  months ended June 30, 2008 and 2007
              
              2008
              
              2007Net
                  income
              
              $
              10,407,713
              
              $
              7,176,670Adjustments
                  for diluted EPS calculation
              
              
              -
              
              
              -Adjusted
                  net income for calculating EPS-diluted
              
              $
              10,407,713
              
              $
              7,176,670Weighted
                  average number of common stock - Basic
              
              
              25,000,000
              
              
              17,899,643Effect
                  of dilutive securities:Warrants
                  and options
              
              
              175,890
              
              
              -Weighted
                  average number of common stock - Diluted
              
              
              25,175,890
              
              
              17,899,643Earnings
                  per share:Basic
              
              $
              0.42
              
              $
              0.40Diluted
              
              $
              0.41
              
              $
              0.40
  -24-
 **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 **NOTE
        18 - RELATED PARTY TRANSACTIONS**
 
 The
        Company owed $803,634 and $106,963 to a stockholder as of June 30, 2008 and
        December 31, 2007 respectively for advances made on an unsecured basis, payable
        on demand and interest free. Imputed interest is charged per annum on the
        amount
        due at 8% and 7% for the periods ended June 30, 2008 and December 31, 2007
        respectively. Total imputed interest recorded as additional paid-in capital
        amounted to $8,608 and $5,811 for the three months ended June 30, 2008 and
        2007,
        respectively. Total imputed interest recorded as additional paid-in capital
        amounted to $10,456 and $24,082 for the six months ended June 30, 2008 and
        2007,
        respectively.
 
 **NOTE
        19 - CONCENTRATIONS AND RISKS**
 
 Cash
 
 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 June 30, 2008 and December 31, 2007 amounted to $2,507,125 and
        $7,344,223, respectively, of which no deposits are covered by insurance.
        In
        addition, as of June 30, 2008 and December 31, 2007, restricted cash of
        $5,078,061 and $1,000,000 (Note 3), respectively, are uninsured. 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.
 
 Customers
 
 The
        Company made sales to a small number of customers. During the three months
        ended
        June 30, 2008 and 2007, five major customers accounted for 45% and 99%
        respectively, of the Company’s total sales. For the six months ended June 30,
        2008 and 2007, five major customers accounted for 47% and 98% respectively,
        of
        the Company’s total sales. At June 30, 2008, accounts receivable from those
        customers totaled $14,035,225.
  -25-
 
 **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 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
        20 - 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 employee benefits were $123 and $1,116 for
        the
        three months ended June 30, 2008 and 2007, respectively. The total provisions
        and contributions made for such employee benefits were $913 and $1,140 for
        the
        six months ended June 30, 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
        June 30, 2008 and December 31, 2007, the Company had firm purchase commitments
        for capital projects in progress of $0 and $750,844 respectively.
  -26-
  **RINO
          INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **(FORMERLY
          KNOWN AS JADE MOUNTAIN CORPORATION)**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 JUNE
          30,
          2008
 (UNAUDITED)
 **NOTE
        21 - 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
        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 the Company fails 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, the Company was
        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, the Company was required to
        pay
        liquidated damages of $244,803 per month (or partial month) until the default
        is
        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
        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, 2007. Based on the performance for the six months ended
        June
        30, 2008, the Company believes there is more likely than not to achieve 2008
        after-tax net income target. Therefore the Company accrued $5,832,960 of
        compensation expense for the six months ended June 30, 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-




**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. 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-





Demand
      for our core product, the Lamella Wastewater System, increased 37.5% to $8.2
      million in first half of 2008, as compared with the first half of 2007. In
      first
      half 2008, we recorded revenues related to 4 wastewater systems.





Our
      Desulphurization System, which we introduced in late 2006, utilizes 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 anticipate strong demand from the iron and steel industry for the solutions
      that our Desulphurization System offers for airborne sulphur dioxide emissions.
      In first half 2008, we recorded revenues of $37.5 million, versus revenues
      of
      $8.4 million in first half 2007. We recorded revenues related to 16
      desulphurization contracts in first half 2008.





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 first half 2008, we recorded
      revenues of $2.8 million anti-oxidation equipment and related coatings sales,
      versus revenues of $1.8 million in first half 2007. The increase in revenues
      largely reflects our increased pricing as the anti-oxidation technology has
      been
      proven in practice.




In
      addition to the foregoing, we provide machining services to third parties,
      utilizing our heavy machine tools’ idle time to generate contract manufacturing
      revenue.




We
      also
      receive grants from the local government in Dalian, China, 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 six months ended June 30, 2008
      and
      2007, we received government grants of $283,680 and $70,043, respectively,
      totaling 0.5% and 0.25% of respective first half revenues.





All
      of
      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 within twelve
      months.




Our
      project-based revenue is affected directly by our customers’ capital budgets and
      need to build new plants. Because our customers are state-owned-enterprises,
      their budgeting decisions are influenced by the Chinese central government’s
      environmental protection and pollution control policies, which presently are
      favorable to our business and products. We believe that such policy emphasis
      will 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.




-29-




**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.” Our Board of Directors approved the new name and
      deemed it a better reflection of the direction and business of the
      Company.





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”.





*Nominating
      Committee of the Board of Directors*





Our
      board
      of directors established a Nominating Committee on July 15, 2008 and appointed
      Messrs. Quan Xie, Kennith Johnson and Zhang Weiguo as our Nominating Committee
      members. Mr. Zhang Weiguo was appointed as the Chairman of our Nominating
      Committee. Each of our nominating committee members is determined by our Board
      of Directors to be “independent” under the Rules of NASDAQ, Marketplace Rule
      4200(a)(15).





Our
      Nominating Committee adopted a charter on July 15, 2008. A copy of the
      Nominating Committee charter is available to our securities holders on the
      Company’s website at: www.rinogroup.com. The Nominating Committee identifies and
      considers candidates for board membership. The Nominating Committee has the
      power and authority to review candidates proposed by our stockholders for
      nomination to the Board of Directors, and to conduct appropriate inquiries
      into
      the background and qualifications of any such candidates. In connection with
      the
      private placement that we completed on October 5, 2007, Hare & Co., an
      investor in the private placement, has the right to designate one member of
      the
      board of directors of the Company (or at their election, the board of directors
      of Dalian Innomind Environment Engineering Co., Ltd., a wholly-owned subsidiary
      of Innomind organized under the laws of the People’s Republic of China or Dalian
      RINO Environment Engineering Science and Technology Co., Ltd., a contractually
      controlled affiliate of Dalian Innomind organized under the laws of the PRC).
      As
      of the date of this Report, Hare & Co. has not designated a member of the
      board.





*Compensation
      Committee of the Board of Directors*





Our
      board
      of directors established a Compensation Committee on July 15, 2008 and appointed
      Messrs. Quan Xie, Kennith Johnson and Zhang Weiguo as our Compensation Committee
      members. Mr. Quan Xie was appointed as the Chairman of our Compensation
      Committee. Each of our Compensation Committee members is determined by our
      Board
      of Directors to be “independent” under the Rules of NASDAQ, Marketplace Rule
      4200(a)(15).





Our
      Compensation Committee oversees and administers our executive compensation
      programs. The Compensation Committee seeks to ensure that the total compensation
      paid to our named executive officers is fair, reasonable and competitive. The
      Compensation Committee’s complete roles and responsibilities are set forth in
      the written charter adopted by the Board of Directors on July 15, 2008. A copy
      of the Compensation Committee charter is available to our securities holders
      on
      the Company’s website at: www.rinogroup.com.





*Compensation
      Committee Interlocks and Insider Participation*




None
      of
      the Compensation Committee members is, or was ever, an officer or employee
      of
      the Company or any of its subsidiaries, nor did any of the Compensation
      Committee members have any relationship requiring disclosure by the Company
      under any subsection of Item 404 of Regulation S-K promulgated by the
      SEC. During the last fiscal year, none of the executive officers of the Company
      served on the board of directors or on the compensation committee of any other
      entity, any of whose executive officers served on the Board.




-30-





**Results
      of Operations**





*Three
      Months Ended June 30, 2008 And June 30, 2007.*





**Results
      of Operations**





*Net
      Sales*





Net
      sales
      increased by $15.9 million to $34.6 million or 84.1% for the three months ended
      June 30, 2008, as compared to the three months ended June 30, 2007. The increase
      in the second quarter 2008 was due to continued growth in demand in our waste
      water treatment and flue gas desulphurization product lines. The breakdown
      of
      the revenue growth is as follows:




For
                the three months ended June 30,2008
            
            
            2007Net
                Sales 000
            
            
            %
                to Total
            
            
            Net
                Sales 000
            
            
            %
                to Total
            
            
            %
                IncreaseWastewater
                treatment equipment
            
            $
            6,035
            
            
            17.4
            %
            $
            2,209
            
            
            12.3
            
            
            161.7
            %Flue
                gas desulphurization (including ancillary equipment)
            
            
            25,000
            
            
            72.2
            %
            
            5,249
            
            
            26.1
            
            
            372.6
            %Anti-oxidation
                equipment and coatings
            
            
            1,153
            
            
            3.3
            %
            
            1,282
            
            
            6.8
            
            
            -10.1
            %Machining
                services
            
            
            2,429
            
            
            7.0
            %
            
            3,224
            
            
            17.1
            
            
            -24.4
            %Services
            
            
            -
            
            
            0.0
            
            
            6,738
            
            
            35.7
            
            
            -100.0
            %Total
                Net Sales
            
            $
            34,617
            
            
            100.0
            %
            $
            18,702
            
            
            100.0
            %
            
            84.1
            %





*Wastewater
      treatment equipment* .
      Our
      line of wastewater treatment continued to enjoy strong demand supported by
      of
      increasingly strict environmental enforcement. In the first quarter of 2008,
      we
      installed wastewater treatment equipment which generated sales revenue of $6.0
      million. We have orders for an additional approximately $12 million or 100
      additional wastewater filtration canisters and related slurry and sludge
      handling equipment . 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 second quarter 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. As in the first quarter 2008, this
      has
      lead to increased time spent in the tendering and negotiation processes.





*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 second quarter of 2008 we
      have focused our sales efforts on desulphurization equipment, but 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.




-31-





*Machining
      services.* Our
      machining services revenue declined 24.4% due in part to our 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.


*Cost
      of Sales*





The
      cost
      of sales for the three months ended June 30, 2008 increased by $10.7 million
      to
      $19.3 million from $8.6 million for the three months ended June 30, 2007,
      largely due to increased sales. As a percentage of sales, the cost of sales
      rose
      to 55.9% of revenue for the three months ended June 30, 2008 compared to 46.1%
      for the same period of 2007. This decline in gross profitability reflects in
      large part the effects of changes in product mix, with none of the higher margin
      services revenue recorded in first quarter 2007 being recorded in the three
      months ended June 30, 2008. The gross margin achieved in the three months ended
      June 30, 2008 is however within the historical range of the Company’s quarterly
      gross margins.





*Operating
      Expense.*





Operating
      expenses for the three months ended June 30, 2008 increased to $10.1 million
      from $2.6 million for the same period ended June 30, 2007, an increase of
      276.2%. The $7.5 million increase in our operating expenses was largely led
      by a
      $5.8 million charge for stock compensation expense related to the 2008 earnings
      target or “Make Good” provision agreed upon in out Stock purchase Agreement with
      investor in October, 2007. Our year-to-date performance indicates that we may
      achieve our 2008 Make Good of after-tax net income of $28.0 million and earnings
      per share of $1.12, If we achieve the Make Good, founders’ shares currently held
      in escrow will be returned to our founders, triggering a non-cash stock-based
      compensation charge of $17.5 million. We have allocated one-third of that amount
      to selling, general and administrative expenses in second quarter to better
      match revenues and expenses. Increased charges for depreciation and amortization
      as our asset base increased, were partially offset by falling research and
      development expense of $578,153, down from $831,984 for the same period in
      2007.





*Other
      Income and Expense.*




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 $146,704 for the three months
      ended
      June 30, 2008 from $157,098 for the quarter ended June 30, 2007. All bank debt
      was repaid by year-end 2007, but we borrowed approximately $7.3 million from
      one
      commercial bank in China in January, 2008.




*Six
      Months Ended June 30, 2008 And June 30, 2007.*





**Results
      of Operations**





*Net
      Sales*





Net
      sales
      increased by $25.1 million to $53.7 million or an increase of 87.65% for the
      six
      months ended June 30, 2008, as compared to the six months ended June 30, 2007.
      The increase in first half 2008 was due to continued growth in demand across
      our
      entire product lines, with the exception of our discontinued Services line,
      which involved provision of technical consulting on flue gas desulphurization
      The breakdown of the revenue growth is as follows:




For
                the six months ended June 30,2008
            
            
            2007Net
                Sales 000
            
            
            %
                to Total
            
            
            Net
                Sales 000
            
            
            %
                to Total
            
            
            %
                IncreaseWastewater
                treatment equipment
            
            $
            8,213
            
            
            15.3
            %
            $
            4,061
            
            
            14.5
            
            
            37.5
            %Flue
                gas desulphurization (including ancillary equipment)
            
            
            37,471
            
            
            69.8
            %
            
            8,414
            
            
            29.6
            
            
            343.2
            %Anti-oxidation
                equipment and coatings
            
            
            2,801
            
            
            5.2
            %
            
            1,802
            
            
            6.3
            
            
            55.4
            %Machining
                services
            
            
            5,178
            
            
            9.6
            %
            
            4,877
            
            
            17.0
            
            
            6.3
            %Services
            
            
            0.0
            
            
            0.0
            
            
            9,339
            
            
            32.6
            
            
            -100.0
            %Total
                Net Sales
            
            $
            53,663
            
            
            100.0
            %
            $
            28,493
            
            
            100.0
            %
            
            87.6
            %




-32-




*Cost
      of Sales*





The
      cost
      of sales for the six months ended June 30, 2008 increased by $17.2 million
      to
      $30.7 million from $13.5 million for the six months ended June 30, 2007, largely
      due to increased sales. As a percentage of sales, the cost of sales rose to
      57.05% for the six months ended June 30, 2008 compared to 47.4% for the same
      period of 2007. This decline in gross profitability reflects in large part
      the
      effect of changes in product mix, with none of the higher margin services
      revenue recorded in first quarter 2007 being recorded in 2008. The gross margin
      achieved in the six months ended June 30, 2008 is however within the historical
      range of the Company’s gross margins.





*Operating
      Expense.*





Operating
      expenses for the six months ended June 30, 2008 increased to $12.3 million
      from
      $4.0 million for the same period ended June 30, 2007, an increase of 204.6%.
      The
      $8.3 million increase in our operating expenses was largely led by a $5.8
      million charge for stock compensation expense related to the 2008 Make Good.
      Increased charges for depreciation and amortization in second quarter 2008
      were
      partially offset by reduced research and development expense of $588,636, down
      from $831,984 for the same period in 2007.




*Other
      Income and Expense.*




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 $225,408 for the six months ended
      June 30, 2008 from $310,955 for the period ended June 30, 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 $7.3 million from one
      commercial bank in China in January, 2008.





**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
      June 30, 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 June 30, 2008 decreased by $750,844 as we completed
      advance arrangements for expansion in production capacity.





In
      connection with our Stock Purchase Agreement with investors entered into in
      October, 2007, we agreed to a provision which provides that in the event that
      the legal structure of our Company is challenged by Chinese authorities and
      we
      do not mitigate the adverse effect to the investors’ reasonable satisfaction
      within 60 days of the Chinese government action, then we are required to redeem
      the investors’ common stock for $24.4 million. Consequently, this amount has
      been excluded from permanent equity and recorded as redeemable common stock
      in
      accordance with Rule 5-02.28 of Regulation S-X and Section 211 of the
      Codification of Financial Reporting Policies. While we believe that the
      possibility of such a redemption is remote, we do not currently have adequate
      cash on hand for such a redemption and the requirement to pay this amount would
      result in our having to borrow funds or raise additional capital. There can
      be
      no assurance that loans or additional capital would be available, if necessary,
      or that they would be available on terms acceptable to us.




-33-





Without
      a
      redemption, we believe that we have sufficient cash, along with projected cash
      to be generated by our business to support operations for at least the next
      12
      months.





*Cash
      and Cash Equivalents*





Cash
      and
      cash equivalents totaled $2.5 million as of June 30, 2008, as compared to $7.4
      million as of December 31, 2007, representing a decrease of 65.9%. The decrease
      in cash and cash equivalents was attributable to continued investment in
      accounts receivable and in advances for inventory purchases, 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. Restricted cash balances rose to $5.1 million as of
      June
      30, 2008, up from restricted cash of $1.0 million at December 31, 2007. The
      rise
      is attributable to increases in deposits related to tenders and to amounts
      pledged as security on notes payable for purchase of equipment.





The
      following tables present our net cash flows for the six months ended June 30,
      2008 and for the same period ended June 30, 2007.




For
                the six months ended
              June
                30,US$
                thousands
            
            2008
            
            2007Cash
                used in operating activities
            
            $
            (7,670
            )
            $
            (2,415
            )Cash
                used in investing activities
            
            $
            (3,719
            )
            $
            (767
            )Cash
                provided by (used in) financing activities
            
            $
            6,174
            
            $
            (135
            )




*Cash
      flow from operating activities.*





Net
      cash
      used by operating activities was $7.7 million for the six months ended June
      30,
      2008 as compared to net cash used in operations of $2.4 million in the same
      period ended June 30, 2007. Increased net income and higher non-cash expenses
      increased cash flows from operations, as did a sharp drop in contracts in
      progress. These increases to cash flow from operations were offset by increased
      accounts receivable and advances for inventory purchases.




*Accounts
      Receivable*




During
      the six months ended June 30, 2008, our accounts receivable rose to $37.4
      million from $20.8 million at December 31, 2007. As a percentage of total
      assets, our accounts receivable rose to 41.7% at June 30, 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 six months ended June 30,
      2008, billings in excess of costs and estimated earnings on uncompleted
      contracts increased to $126,000 from $0 as of December 31, 2007.. Costs and
      estimated earnings in excess of billings were decreased to $0 from $2.8 million
      at December 31, 2007.




-34-





*Advances
      for inventory purchase*





Advances
      for inventory purchase are required to ensure timely delivery of raw materials
      needed to execute existing production contracts as well as to expand the
      business. Our advances for inventory purchase increased to $19.4 million at
      June
      30, 2008, an increase of $7.3 million, from the $12.1 million recorded at
      December 31, 2007 as more orders of raw materials were placed for
      production.





*Other
      Current Assets*





During
      the six months ended June 30, 2008, our other current assets and prepaid
      expenses fell to $1.1 million from $1.2 million at year-end 2007.





*Cash
      used in investing activities.*





For
      the
      six months ended June 30, 2008, net cash used in investing activities increased
      to $3.7 million as compared to $766,541 for the same period ended June 30,
      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, our $24.4 million private placement in October, 2007 and by
      short-term bank loans. For the six months ended June 30, 2008, net cash provided
      by financing activities increased to $6.2 million as compared to cash used
      in
      financing of $135,187 million for the same period ended June 30, 2007. This
      was
      principally the result of an increase in short-term bank loans, notes payable
      and amounts due to related parties in during first half 2008, partially offset
      by increased amounts of restricted cash.




**Contractual
      Obligations**





As
      of
      June 30, 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
      June 30, 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.





**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.




-35-





*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 over financial reporting* .
      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  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.




-36-




*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.




*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.




-37-





**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.




-38-




**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: August
              14, 2008
            By:
            /s/ Bruce
              RichardsonBruce
                Richardson
              Chief
                  Financial Officer  -39-





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.





-40-