**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549




**FORM
      10-KSB**




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






For
      the
      fiscal year ended December 31, 2006




Commission
      file number **333-62690**






**RHINO
      OUTDOOR INTERNATIONAL, INC.**


(Name
      of
      Small Business Issuer in its charter)




**Nevada**
            **65-1000634**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)






**1191
                  Center Point Dr. Henderson, NV**
            **89704**(Address
                of principal executive offices)
            (Zip
                Code)




Issuer's
      telephone number **1-800-288-3099**




**CYBERADS,
        INC.**
 (Former
        name, former address, and former fiscal year, if changed since last
        report)




Securities
      registered under Section 12(b) of the Act: None




Securities
      registered under Section 12(g) of the Act: Common Stock




Check
      whether the registrant (1) filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days. Yes [ X ] No
      [     ]




Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-B contained in this form, and no disclosure will be contained, to the best
      of
      registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. [X]




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes [     ] No [ X ]




The
      revenues for the year ended December 31, 2006 were $77,093.




The
      number of shares outstanding of the registrant's Common Stock outstanding as
      of
      April 12, 2007 was 62,648,728.




The
        aggregate market value of the voting and non-voting common equity held by
        non-
        affiliates is $5,191,090.




Transitional Small Business Disclosure Format
      (check one):  Yes [    ] No [ X
      ]






**Table
          of Contents**




**TABLE
      OF CONTENTS**


Item
                Description
                Page**Part
                    I**Item
                    1.
                Description
                    of Business
                1Item
                    2.
                Properties
                3Item
                    3.
                Legal
                    Proceedings
                3Item
                    4
                Submission
                    of Matters to Vote of Security
                    Holders
                3**Part
                    II**Item
                    5.
                Market
                    for Common Equity and Related Stockholder Matters and
                    Small Business Issuer Purchase of Equity Securities
                3Item
                    6.
                Management's
                    Discussion and Analysis of Financial Condition
                    and Results of Operations
                4Item
                    7.
                Financial
                    Statements
                8Item
                    8.
                Changes
                    in and Disagreements with Accountants on Accounting
                    and Financial Disclosure
                8Item
                    8a.
                Controls
                    and Procedures
                9**Part
                    III**Item
                    9.
                Directors
                    and Executive Officers, Promoters & Control
                    Persons; Compliance with Section 16(a) of the Exchange
                    Act
                9Item
                    10.
                Executive
                    Compensation
                10Item
                    11.
                Security
                    Ownership of Certain Beneficial Owners and
                    Management
                11Item
                    12.
                Certain
                    Relationships and Related
                    Transactions
                11**Part
                    IV**Item
                    13.
                Exhibits
                11Item
                    14.
                Principal
                    Accountant Fees and Services
                11Signatures
                12
   **Table
              of Contents**




*Certain
        statements in this Report relate to management’s future plans and objectives or
        to future economic and financial performance. Although any forward-looking
        statements made here are, to the knowledge and in the judgment of our
        management, expected to prove true and come to pass, management is not able
        to
        predict the future with any certainty. Forward-looking statements involve
        known
        and unknown risks and uncertainties which may cause our actual performance
        and
        financial results to differ materially from any projection, estimate or
        forecasted results. Certain events or circumstances could cause actual results
        to differ materially from those forecasted results. Forward-looking statements
        are based on management’s knowledge and judgment as of the date of this Report
        and we do not intend to update any forward-looking statements to reflect
        events
        occurring or circumstances existing hereafter* .




**PART
      I**




**Item
              1.**
            **Description of
                Business**




**OVERVIEW**
  Rhino
        Outdoor International, Inc., a Nevada corporation ("RHOI" or the "Company"),
        was
        organized on August 30, 2006 by way of a name change from CyberAds Inc.
        CyberAds, Inc., a Florida corporation ("CYAD" or the "Company"), was organized
        on April 12, 2000, under the laws of the State of Florida. On August 10,
        2005
        the Company changed domiciles to Nevada. During 2005 and 2006, we focused
        our
        efforts on reviewing potential business models for acquisition, and merger
        in
        the outdoor lifestyle and extreme sports and marketing sectors. During 2005
        we
        suspended marketing the XBoard product due to a delay in production by the
        manufacturer. We continue to hold distribution rights for the XBoard product
        in
        the Western United States, and anticipate marketing the product and supporting
        distribution growth when it becomes available.
  During
        2005, we expanded our involvement with extreme sports products and secured
        a
        relationship with Rhino Off Road Industries, whom we subsequently acquired
        through a share exchange agreement and plan of reorganization effective June
        21,
        2006. On June 21, 2006, the Company entered into a share exchange agreement
        and plan of reorganization with Rhino Off Road Industries, Inc. Under this
        agreement and plan of reorganization, the Company acquired 100 percent of
        the
        outstanding common stock of Rhino in exchange for 1,650,000 shares of the
        Company’s Series C convertible preferred stock. Furthermore, the Company issued
        another 600,000 shares of Series C convertible preferred stock for the retention
        of the subsidiary’s officers and agreed to issue 400,000 shares of Series C
        convertible preferred stock for loan guarantees. As of December 31, 2006,
        the
        400,000 shares had not yet been issued. Currently our focus is on developing
        Rhino Off Road and it’s product the “Rough Terrain Vehicle”. Rhino Off-Road
        Industries is the manufacturer of the innovative Rhino Off-Road Rough Terrain
        Vehicle (RTV). The RTV was designed for active, outdoor oriented families
        and
        individuals wanting to experience off-road adventure in virtually any off-road
        terrain. The Rhino RTV has added a new dimension to wilderness adventure
        tours
        and created a new category in the growing off-road rental industry. The
        dependable and affordable Rhino Off-Road RTV is manufactured in Henderson,
        NV in
        our approximately 12,000 square feet facility. The facility serves as our
        administrative offices and corporate headquarters. During 2006 we identified
        a
        market for the Rhino RTV specific to government agencies for search and rescue,
        first responder, and also border patrol. The RTV’s have been in testing with
        government agencies during 2006 and recently we’ve announced an agreement with
        AEP (Arizona Emergency Products) whereby AEP will become our exclusive
        distributor to government agencies. AEP and Rhino have collaborated on
        developing the new Rapid Response Rough Terrain Vehicle (RR/RTV).
  There
        are
        approximately 1,000,000 (million) ATV’s sold worldwide in 2005 according to
        Powersports Business/Annual forecast, it is Rhino’s ambition to carve out 1 % of
        ATV users, which would represent 1,000 RTV’s for the consumer only market. Rhino
        believes the special equipped Rapid Response RTV opportunity is nearly 500
        vehicles per year.
  The
        Rhino
        RTV MSRP is $34,999 before customization, and the Rapid Response RTV is not
        yet
        priced as development and specifications are currently underway.
  In
        2006
        Rhino Outdoor International, Inc. executed a letter of intent with Great
        West
        Vans (GWV). At this time we have not concluded on this acquisition and there
        is
        no guarantee that we will raise the capital required to fund this specific
        acquisition.
 1
 ***Risk
          Factors***
 
 The
          risks
          described below are not the only ones we face. Additional risks not presently
          known to us or that we believe are immaterial may also impair our business
          operations. Our business could be harmed by any of these risks. The trading
          price of our Common Stock could decline as due to any of these risks. In
          assessing these risks, reference should be made to the other information
          contained in this Registration Statement, including our financial statements
          and
          related notes.
 
 ***Risks
          Related to Our Business That May Affect Our Future Results and the Market
          Price
          of Our Common Stock.***
 
 ***We
          are subject to uncertainties concerning our future financial
          results.***
 
 We
          have a
          limited history of generating profits from our operations. There can be
          no
          assurance that we will continue to generate revenues from operations, or
          if we
          do generate such revenues, whether we will generate profits. Profitability
          will
          depend upon many factors, including the success of obtaining future debt
          or
          equity financing and the overall success of our business operations. If
          adequate
          financial resources are not available, we may be required to materially
          curtail
          or cease our operations.
 
 ***We
          do not have any existing bank credit facilities. Our ability to obtain
          such
          financing may be limited.***
 
 We
          do not
          have any existing bank credit facilities. Our ability to obtain such financing
          may be limited and may have an adverse affect on our results of
          operations.
 
 ***Our
          capital resources may not be sufficient to meet our capital
          requirements.***
 
 We
          have
          experienced negative cash flow from operations and could experience negative
          cash flow from operations in the future. Our current and future capital
          requirements are substantial and, at present, cash generated from operations
          is
          not sufficient to meet these requirements. We cannot be sure in the future
          that
          cash generated from operations will be sufficient to meet our requirements
          or
          that financing will be available at favorable terms when required, or at
          all. If
          we are not able to obtain financing, we may not be able to meet our financial
          obligations to our creditors when they become due and we may have to curtail
          or
          cease operations.
 
 ***The
          recreational sports vehicle market is competitive.***
 
 The
          recreational sports vehicle market is competitive. Consumers have many
          choices
          in deciding what type of recreational, off-road vehicle to purchase. Many
          of our
          competitors have substantially greater capital, sales and marketing resources
          and experience. We cannot provide any assurance that we will be able to
          effectively compete with our current and future competitors.
  ***Particular
          Risks Related to Our Common Stock.***
 
 ***At
          the present time there is limited public market for our Common
          Stock.***
 
 At
          the
          present time, our Common Stock is traded in the over-the-counter market
          on the
          OTC Bulletin Board. The volume of trading activity in our Common Stock
          is
          generally small which could have an affect on the liquidity of our Common
          Stock.
          Our results of operations, as well as general stock market conditions,
          could
          adversely affect the price of our Common Stock. In addition, short term
          trading
          strategies of certain investors can also have a significant effect on the
          price
          of our Common Stock.
 
 ***We
          do not expect to pay dividends***
 
 We
          have
          never paid any cash dividends on our Common Stock and we do not anticipate
          paying any cash dividends in the foreseeable future. We currently intend
          to
          retain any future earnings for funding our business Therefore, you may
          not
          receive any return on an investment in our Common Stock in the form of
          cash
          dividends.
  **2**
 **Table
            of Contents**
  **Item
                2.**
              **Properties**
 
 Our
        executive, administrative and manufacturing facilities are located at 1191
        Center Point Dr. , Henderson, Nevada. These facilities consist of 3,200 sq
        feet
        of office space and 8,800 sq feet for manufacturing. We rent these facilities
        on
        a month-to-month basis at a rental of $8,100 per month. We believe that these
        facilities are adequate and suitable to meet our needs for the foreseeable
        future.
 
 **Item
                3.**
              **Legal
                  Proceedings**
 
 We
        are
        not a party to any legal proceedings.
 
 **Item
                4.**
              **Submission
                  of Matters to Vote of Security
                  Holders.**
 
 Effective
        August 30, 2006, our corporate name was changed to Rhino Outdoor International,
        Inc, from our former name of Cyberads, Inc. The name change was approved
        by our
        shareholders pursuant to consent action without a meeting under the Nevada
        Business Corporation Act. On August 10, 2006, we distributed to our shareholders
        of record an Information Statement pursuant to Regulation 14C of the Securities
        Exchange Act of 1934 regarding this action.
  **PART
        II**
  **Item
                5.**
              **Market
                    for Common Equity; Related Stockholder Matters and Small Business
                    Issuer
                    Purchases of Equity Securities.**
 
 *Market
        Information*
 
 The
          principal United States market for our common stock is the OTC Bulletin
          Board.
          The following are the high and low closing sale prices for our common stock
          for
          each quarter during the previous two years.
  The
            share
            prices shown for Fiscal 2005 and 2006 have been adjusted for the 1-for-100
            reverse stock split effective August 30, 2006.
  HIGH
                
                LOW**FISCAL
                    2006**Fourth
                    Quarter (through December 31, 2006)
                
                $
                1.31
                
                $
                0.03Third
                    Quarter (through September 30, 2006)
                
                $
                2.40
                
                $
                0.15Second
                    Quarter (through June 30, 2006)
                
                $
                4.40
                
                $
                1.20First
                    Quarter (through March 31, 2006)
                
                $
                4.90
                
                $
                2.55**FISCAL
                    2005**Fourth
                    Quarter (through December 31, 2005)
                
                $
                9.00
                
                $
                2.00Third
                    Quarter (through September 30, 2005)
                
                $
                22.00
                
                $
                5.00Second
                    Quarter (through June 30, 2005)
                
                $
                27.00
                
                $
                9.00First
                    Quarter (through March 31, 2005)
                
                $
                56.00
                
                $
                6.00
 *Holders
        of Common Stock*
 There
        are
        80 shareholders of record as of April 12, 2007 holding 62,648,728 shares
        of
        Common Stock.
 
 **3**
 **Table
            of Contents**
 
 *Dividends*
 We
        have
        never paid a dividend on our Common Stock. At present, we intend to retain
        any
        earnings for use in our business and do not anticipate paying cash dividends
        in
        the foreseeable future.
 
 *Reverse
        Stock Split*
 Effective
        August 30, 2006, we undertook a 1-for 100 reverse split of our outstanding
        Common Stock.
  **Item
                  6.**
                **Management's
                    Discussion and Analysis of Financial Condition and Results of
                    Operations**
  Management's
          discussion and analysis contains various forward-looking statements within
          the
          meaning of the Securities and Exchange Act of 1934. These statements consist
          of
          any statement other than a recitation of historical fact and can be identified
          by the use of forward looking terminology such as "may", "expect", "anticipate",
          "estimates", or "continue" or use of negative or other variations of comparable
          terminology. We caution that these statements are further qualified by
          important
          factors that could cause actual results to differ materially from those
          contained in our forward looking statements, that these forward looking
          statements are necessarily speculative, and there are certain risks and
          uncertainties that could cause actual events or results to differ materially
          from those referred to in our forward looking statements.
  Management's
          discussion and analysis should be read in conjunction with the financial
          statements and the notes thereto.
  **OVERVIEW**
  Rhino
          Outdoor International, Inc. (ROI) did not record revenues during 2005.
          We
          discontinued the third party affiliate sales of Cellular phones and services
          during 2004, and discontinued all cellular sales in 2005 due to the financial
          losses inherent with the commission structure paid to third party affiliates.
          The affiliate commissions were earned on "leads" provided, rather than
          on sales
          made, therefore the cancellations and returns on cellular phones were not
          recouped from the third party affiliate and the losses became ROI expense.
          During 2006 and 2005, we focused on developing a new business plan in the
          extreme sports sector and marketing of its lifestyle. We engaged with three
          primary products during 2005, XBoard, Rhino, and Planet X TV.
  In
          2006,
          we focused 100% of our efforts on Rhino Off Road Industries, and it’s product
          the RTV. On June 21, 2006 we acquired by share exchange agreement and plan
          of
          reorganization all the outstanding shares of capital stock of Rhino in
          exchange
          for shares of capital stock of ROI, formerly known as CyberAds. On August
          30,
          2006 the company was renamed Rhino Outdoor International, Inc, to reflect
          a more
          accurate brand name for our business model. During 2006, we implemented
          sales
          and marketing strategies for the Rhino Off Road RTV, and invested in further
          development of new models which are designed to increase sales to consumers,
          and
          potentially to government agencies for the Search and Rescue
          requirements.
  RELATED
            PARTIES AND RELIANCE ON CERTAIN PROVIDERS
  We
            rely
            on the manufacturers of XBoard, and the suppliers of inventory to Rhino,
            for
            production of products specific to our reselling, or direct selling rights.
  **RECENT
          EVENTS**
  As
          noted
          above we entered into relationships with Aqua Xtremes, Inc., and its products
          XBoard, whereby the company was provided exclusive rights to resell distribution
          and dealers within a defined territory. During 2005, we developed a resell
          relationship with Rhino Off Road Industries whereby the company would recruit
          and demonstrate the Rhino product line to Distributors, Dealers, and consumers.
          During 2005, we developed a relationship with Planet X TV whereby the company
          would be compensated for recruiting advertisers and sponsors for the Planet
          X TV
          shows.
  During
          2006, we did not focus on either Planet X or XBoard as we put all our efforts
          towards Rhino and the acquisition and subsequent development of the RTV
          and
          potential government Search and Rescue opportunities. In 2006, we entered
          into
          an LOI with Great West Vans (GWV), at this time we have not concluded on
          the
          transaction and there is no guarantee that the company will raise the capital
          required to complete this specific transaction.
  **4**
 **Table
              of Contents**
  During
          2006, we engaged in multiple negotiations with outdoor lifestyle companies
          on
          merger and acquisition discussions, as of December 31, 2006 we were not
          party to
          any binding letter of intents. During 2006 we announced our intention by
          LOI to
          acquire Great West Vans, a Canadian company which produces Class B Motorhomes.
          At this time, we have not completed the acquisition due to financial
          requirements, and have been actively working with a 3 rd party
          who may acquire GWV at which time Rhino Outdoor International is contemplated
          to
          be a minority equity owner with a management agreement in place to manage
          the
          sales and marketing of the GWV product.
  **PATENTS
          AND PROPRIETARY RIGHTS**
  We
          do not
          hold any trademark, copyright or patent protection.
  **RESULTS
          OF OPERATIONS**
  **YEARS
          ENDED DECEMBER 31, 2006 AND 2005**
  We
          reported revenues of $77,093 and $0 for the years ending December 31, 2006
          and
          2005, respectively, losses of $9,610,545and $7,783,970 during
          the years ended December 31, 2006 and 2005, respectively. The increase
          in
          revenue from 2006 to 2005 is attributed to the change in business plan,
          acquisition of Rhino Off Road effective June 21, 2006 and our effort to
          develop
          into an extreme sports and lifestyle sector company. The Increase in losses
          was
          due to the developmental stage of the company, and the delay in delivering
          XBoard to the market in 2005 and 2006, and our investment in developing
          the
          sales and marketing plan for Rhino Off Road.
  **RESULTS
          OF OPERATIONS**
 
 Twelve
          months ended December 31, 2006 compared to the twelve months ended December
          31,
          2005.
 Increase2006
                  
                  2005
                  
                  Amount
                  
                  PercentageRevenue
                  
                  $
                  77,093
                  
                  $
                  0
                  
                  $
                  77,093
                  
                  
                  100%
  Revenue
          for the twelve months ended December 31, 2006 resulted from the sale of
          Rhino
          RTV vehicles as of June 21, 2006. There were no sales in 2005 as we were
          in
          developmental stage.
  **5**
 **Table
              of Contents**
  Decrease2006
                    
                    2005
                    
                    Amount
                    
                    %G&A
                        Expenses
                    
                    $
                    819,958
                    
                    $
                    681,731
                    
                    $
                    137,377
                    
                    20%
 G
&
A
          Expenses for the twelve months ended December 31, 2005 resulted from the
          sale of
          the XBoard distribution, recruitment of new products, and expenses for
          consultants and management relating to the extreme sports segment. G&A
          expenses in 2006 were attributable to maintaining the developmental stage
          of the
          company, and the increase in 2006 vs 2005 is a result of the acquisition
          with Rhino Off Road Industries, Inc.,specifically the cost of
          administrating the aquisition.
  Decrease2006
                      
                      2005
                      
                      Amount
                      
                      %Marketing Expenses
                      
                      $
                      4,146,574
                      
                      $
                      5,605,613
                      
                      $
                      1,459,039
                      
                      26
 Marketing
          Expenses for the twelve months ended December 31, 2006 decreased by $1,459,039
          versus 2005 due to suspending efforts on securing distribution for XBoard.
          Marketing costs include production of TV spots, trade shows, product
          demonstrations, consultants, and efforts toward recruitment of extreme
          sports
          products for the company to resell.
  Increase2006
                    
                    2005
                    
                    Amount
                    
                    %Selling
                        Expenses
                    
                    $
                    3,740,287
                    
                    $
                    1,412,253
                    
                    $
                    2,328,034
                    
                    160
  Selling
          Expenses for the twelve months ended December 31, 2006 increased by $2,328,034
          as a result of additional management consulting expenses primarily in an
          effort
          to represent additional business opportunities, and develop distribution
          opportunities for Rhino,.
 Increase2006
                      
                      2005
                      
                      Amount
                      
                      %Other
                          Income
                      
                      $
                      334,842
                      
                      $
                      5,430
                      
                      $
                      329,412
                      
                      6166
  Other
          Income for the twelve months ended December 31, 2005 was derived by a marketing
          activity related to a promotion on the product line of Rhino.
 **6**
 **Table
                of Contents**
  Decrease2006
                        
                        2005
                        
                        Amount
                        
                        %Gain
                              on Forgivenessof
                              debt
                        
                        $
                        0
                        
                        $
                        2,500
                        
                        $
                        2,500
                        
                        100
  Gain
          on
          Forgiveness of debt for the twelve months ended December 31, 2005 was provided
          through forgiveness of debt by note holder at time of conversion. There
          was no
          forgiveness of debt in 2006.
 Increase2006
                        
                        2005
                        
                        Amount
                        
                        %Interest
                            Expense
                        
                        $
                        85,240
                        
                        $
                        78,132
                        
                        $
                        7,108
                        
                        9
  Interest
          expense for the twelve months ended December 31, 2006 increased to $85,240
          versus $78,132 in 2005. The increase of $7,108 was attributable to interest
          on
          notes to related parties, and advances from stockholder.
 Increase2006
                          
                          2005
                          
                          Amount
                          
                          %Gain/Loss
                              on sale of Investments
                          
                          $
                          (89,167)
                          
                          $
                          0
                          
                          $
                          89,167
                          
                          100
  Loss
          on
          sale of investments for 2006 reflects the direct loss in value of the stock
          the
          company received from a 3 rd party
          for the promotion of Luvoo dating service on Rhino RTV’s at competition events
          during 2006.
  **FINANCIAL
          POSITION & LIQUIDITY AND CAPITAL RESOURCES**
  As
          of
          December 31, 2006 compared to December 31, 2005:
 As
                                of December 31,
                            
                            Increase2006
                            
                            2005
                            
                            Amount
                            
                            %Deferred
                                Net Revenue
                            
                            $
                            448,027
                            
                            $
                            172,453
                            
                            $
                            275,574
                            
                            259
  Deferred
            net revenue in 2006 consisted of the resale of X-Board dealerships for
            approximately $174,453, net of commissions. The X-Board product has not
            yet come
            to market. Accordingly, the Company has not recorded the sales as revenue.
            The
            company received sponsorship agreement with Luvoo which is based on a
            strategic
            relationship and a 3 rd party
            provided Rhino Off Road with Luvoo common stock, during 2006 Rhino Off
            Road
            booked $234,375 in deferred
            sponsorship income. Additionally, there is a $39,199 customer deposit
            listed in
            deferred revenue.
  **7**
 **Table
              of Contents**
 **Liquidity
          and Capital Resources**
 
 As
            of
            December 31, 2006, the Company had current assets totaling $141,804 and
            a
            working capital deficit of $4,569,036. These assets consist of cash on
            hand of
            $1,862, investments of $14,400, inventories of $123,490, and other current
            assets of $2,052. Net stockholders' deficit in the Company was $1,506,168
            at
            December 31, 2006. The Company is in the development stage and, since
            January 1,
            2005, has experienced significant changes in liquidity, capital resources
            and
            shareholders’ equity.
 
 Cash
            flow
            used in operating activities was $200,998 for the period from January
            1, 2005,
            to December 31, 2006. During 2006, cash flow used in operating activities
            was
            $160,199. Cash over the periods was used on accounting, administration,
            consulting, research and development, and shares issued for sales and
            marketing
            expenses.
 
 Cash
            flow
            provided from financing activities was $168,449 for the period from January
            1,
            2005, to December 31, 2006. Financing activities over the period have
            consisted
            of sales of the Company’s common stock, and related or non-related party loans
            or debentures. During 2006, cash flow provided from financing activities
            was
            $120,150 from advances from related parties.
 
 Cash
            flows provided in investing activities was $34,411 for the period from
            January
            1, 2005 to December 31, 2006. During 2006, cash flow was provided by
            investing
            activities in the amount of $18,578 from cash from acquisition of Rhino
            Off Road
            Industries and $23,333 from sale of stock in Luvoo attributed to a sponsorship
            agreement with Rhino Off Road Industries.
  The
          Company’s current assets are insufficient to conduct our plan of operation over
          the next twelve (12) months and we will have to seek debt or equity financing
          to
          fund operations. The Company has no current commitments or arrangements
          with
          respect to, or immediate sources of funding. Further, no assurances can
          be given
          that funding, if needed, would be available or available to the Company
          on
          acceptable terms. The Company’s shareholders would be the most likely source of
          new funding in the form of loans or equity placements though none have
          made any
          commitment for future investment and we have no agreement formal or otherwise.
          The Company’s inability to obtain funding would have a material adverse affect
          on our plan of operation.
 
 Further,
          there can be no assurance offered to the public by these disclosures, or
          otherwise, that the Company will be successful, or that we will ultimately
          succeed as a going concern. To the extent that existing resources and any
          future
          earnings prove insufficient to fund our activities, we will need to raise
          additional funds through debt or equity financing. The Company cannot provide
          any assurance that such additional financing will be available or that,
          if
          available, it can be obtained on terms favorable to us and our shareholders.
          In
          addition, any equity financing would result in dilution to the Company
          shareholders and any debt financing could involve restrictive covenants
          with
          respect to future capital raising activities or other financial or operational
          matters. The Company’s inability to obtain adequate funds will adversely affect
          its operations and the ability to implement is plan of operation.
  **Item
                  7.**
                **Financial
                    Statements**
  The
          financial statements of ROI are included (with an index listing all such
          statements) in a separate financial section at the end of the Annual Report
          on
          Form 10-KSB.
  **Item
                    8.**
                  **Changes
                      in and Disagreements with Accountants on Accounting and Financial
                      Disclosure**
 
 Effective
            January 4, 2006, the Registrant's terminated the
            services of its certifying auditors, Timothy L. Steers, CPA, LLC
            ("Steers ").
            During the period of engagement from December 2003, through January 4,
            2006, there
            were no disagreements between the Registrant and Steers on any matter
            of accounting
            principles or practices, financial statement disclosure or auditing scope
            or
            procedure which, if not resolved to the satisfaction of Steers would have
            caused Steers to make reference to the matter in its reports on the Registrant's
            financial statements, had any such reports been issued. During the period
            of
            engagement from December 2003 through September 20, 2005, there were no
            reportable events as the term described in Item 304(a)(1)(iv) of Regulation S-B.
            Effective January 6, 2006, the Registrant has engaged Williams & Webster, P.S.
            Certified Public Accountants, Spokane, Washington, as the Registrant's certifying
            auditors.
  **8**
 **Table
                of Contents**
 **Item
                    8a.**
                  **Controls
                      and Procedures**
 
 As
            required by Rule 13a-15 under the Securities Exchange of 1934, within
            90 days prior
            to
            the filing of this report, we carried out an evaluation of the effectiveness
            of the design and operation of our disclosure controls and procedures.
            This evaluation was carried out under the supervision and with the participation
            of our management, principally our President and Chief Executive Officer.
            Based on that evaluation, we concluded that our disclosure controls and procedures
            are effective. There have been no significant changes in our internal controls
            subsequent to the date we carried out our evaluation. Disclosure controls
            and procedures are controls and other procedures that are designed to ensure
            that information required to be disclosed in our reports filed or submitted
            under the Exchange Act is recorded, processed, summarized and reported within
            the time periods specified in the Securities and Exchange Commission's rule
            and
            form. Disclosure controls and procedures include, without limitation, controls
            and procedures designed to ensure that information required to be disclosed
            in our reports is accumulated and communicated to management.
 **Item
                9.**
              **Director,
                    Executive Officers, Promoters and Control Person; Corporate Governance;
                    Compliance with Section 16(a) of the Exchange Act.**
  Our
          directors hold office until the next succeeding
          annual meeting of shareholders, or until there successors have been elected
          and qualified.
 
 Our
          directors and executive officers are as follows:
  **NAME**
                  
                  **AGE**
                  
                  **POSITION**Howard Pearl
                  
                  57
                  
                  President, Chief Executive Officer,
                    Director.Walter Tatum
                  
                  49
                  
                  Secretary, Chairman of the Board
                    ofDirectorsAugust A. DeAngelo II
                  
                  37
                  
                  Director
  For
            the
            immediate prior 3 1⁄2 years, Mr. Pearl served as President of Rhino Off Road
            Industries, Inc., our wholly-owned subsidiary. Prior to his association
            with
            Rhino Off Road Industries, Inc. Mr. Pearl was executive vice president
            of
            International Commerce Exchange Systems. Mr.
            Pearl
            will continue to serve as President of our subsidiary.
 Walter
            Tatum has served as our Secretary and director since December 2003. Prior to
            joining Rhino Outdoor International, Inc., Mr. Tatum was Vice President
            of Sales
            for DMX Music, a subsidiary
            of Liberty Media, for 9 years.
  August
          A.
          DeAngelo II has served as a director of Rhino Outdoor International, Inc.
          since April 2005. Mr. DeAngelo
          is employed as President of Styles For Less, a women's retail chain headquartered
          in California.
 
 The
          Company's Bylaws currently authorize up to seven directors. Each director
          is elected
          for one year at the annual meeting of stockholders and serves until the next
          annual meeting or until a successor is duly elected and qualified. Executive
          officers serve at the discretion of our board of directors. There are no
          family
          relationships among any of the directors and executive officers.
 
 **9**
 **Table
              of Contents**
 **CODE
          OF ETHICS.**
 
 Effective
          February 24, 2004, the Board of Directors adopted a Code of Ethics for Senior
          Financial Officers. The Code of Ethics was adopted pursuant to the requirements
          of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the
          Securities and Exchange Commission thereunder. A copy of the Code of Ethics will
          be
          made available upon request at no charge. Requests should be directed in writing
          to the Company at 1191
          Center Point Dr. Henderson, NV 89704.
  **Item
                  10.**
                **Executive
                    Compensation**
  **SUMMARY
          COMPENSATION TABLE**
  The
          following table sets forth information relating to salary we paid during
          the past
          fiscal year to our chief executive officer; and to each of our executive officers
          that earned more than $100,000 during the fiscal year ended December 31,
          2006.
          Other than salary and stock awards, we paid no other form of compensation
          to our executive officers and directors. No stock options were exercised
          during the fiscal year ended December 31, 2006.
  Name
                    and Principal Position(a)
                Year
                  (b)
                Salary
                  ($)
                  (c)
                Bonus
                  ($)
                  (d)
                Stock
                    Awards
                  ($)
                  (e)
                Option
                    Awards
                  ($)
                  (f)
                Non-Equity
                    Incentive Plan Compensation
                  ($)
                  (g)
                NonqualifiedDeferred
                    Compensation Earnings
                  ($)
                  (h)
                All
                    Other Compensation
                  ($)
                  (i)
                Total
                  ($)
                  (j)Jeff
                    Criswell
                2006
                  2005
                $150,000
                    $30,000
                0
                $12,675
                      $378,175
                0
                0
                0
                0
                $162,675
                  $408,175Walter
                    Tatum
                2006
                  2005
                $300,000
                  $300,000
                0
                $2,426,600
                    $325,000
                0
                0
                0
                0
                $2,726,600
                  $625,000Howard
                  Pearl
                2006
                  2005
                $70,000
                  $0
                0
                $771,550
                      $25,225
                0
                0
                0
                0
                $841,550
                  $25,225




No
      cash
      compensation was paid to either Mr. Criswell or Mr. Tatum during the past two
      fiscal years. All cash compensation has been accrued as liability of the
      Company. Mr. Criswell resigned as President and a director of the Company on
      March 16, 2007.





Mr.
      Criswell was awarded stock grants in 2005 consisting of 63,000 shares of Common
      Stock and in 2006 stock grants of 3,500 shares. Mr. Tatum was awarded a stock
      grants in 2006 of 10,470,00 shares of Common Stock valued at the time of
      issuance at $2,426,600. In 2005, Mr. Tatum was awarded stock grants of 50,000
      shares of Common Stock valued at $325,000. In 2006, Howard Pearl was awarded
      stock grants of 5,008,000 shares of Common Stock valued at $771,550 and in
      2005
      he was awarded stock grants of 5,000 shares of Common Stock valued at
      $25,225.


Mr.
        Pearl
        serves also as President of Rhino Offroad Industries, Inc., the Company’s
        wholly-owned subsidiary. Mr. Pearl did not receive cash compensation in
        2006. $70,000 was accrued for unpaid compensation for
        2006.


The
      values for the stock awards have been adjusted to reflect the 1-for-100 reverse
      stock split in August 2006.




No compensation was paid to any of the Company's directors
      for
      their services as a director. Neither were there any outstanding equity awards
      to any officer of the Company during the period covered by this
      report.


**INCENTIVE
        AND NON-QUALIFIED STOCK OPTION PLAN**
 
 On
        November 1, 2001, we adopted a 2001 Incentive and Non-Qualified Stock Option Plan.
        We
        have reserved 500,000 shares of our common stock for issuance under the Plan.
        The
        Plan authorizes the granting of awards of up to 500,000 shares of common
        stock to our key employees, officers, directors and consultants. Awards consist
        of stock options (both nonqualified options and options intended to qualify
        as incentive stock options under Section 422 of the Internal Revenue Code
        of
        1986), restricted stock awards, deferred stock awards, stock appreciation
        rights and other stock-based awards, as described in the Plan.No stock
        options are outstanding under the Plan at this time The plan is administered
        by our board of directors which determines the persons to whom awards
        will be granted, the number of awards to be granted and
        the
        specific terms of each grant, including their vesting schedule, subject to
        the
        provisions of the plan. In connection with incentive stock options, the exercise
        price of each option may not be less than 100% of the fair market value of
        the
        common stock on the date of grant (or 110% of the fair market value in the
        case
        of a grantee holding more than 10% of our outstanding stock). The aggregate
        fair market value of shares for which incentive stock options are exercisable
        for the first time by an employee during any calendar year may not exceed
        $100,000. Nonqualified stock options granted under the plan may be granted
        at a price determined by the board of directors, not to be less than the fair
        market value of the common stock on the date of grant.
  **10**
 **Table
            of Contents**
  **Item
                11.**
              **Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters.**
 
 The
        following table sets forth information known to us, as of the date of this report,
        relating to the beneficial ownership of shares of common stock by each person
        who is known by us to be the beneficial owner of more than five percent of
        the
        outstanding shares of common stock; each director; each executive officer;
        and all executive officers and directors as a group. We believe that all
        persons named in the table have sole voting and investment power with respect
        to all shares of common stock shown as being owned by them.
  **Title
                  of Class**
              **Name
                  of Beneficial
                  Owner**
              **Amount
                  and Nature
                  of**
                **Beneficial
                  Ownership**
              **Percent
                  of
                  Class**Common Stock
              Walter Tatum
                70806
                    Halper Lake Dr.
                  Rancho
                    Mirage, CA 92270
              10,452,000
              17%Common Stock
              Howard
                    Pearl
                  1191
                      Center Point Dr.
                    Henderson,
                      NV 89704
              5,000,000
              8%Common Stock
              August
                  A. DeAngelo II
                19162
                  Mesa Dr.
                Villa
                  Park, CA 92861
              5,000
              *All
                  officers and directors(three
                  persons)
              
              15,457,000
              25%
  *
              Less
                  than one percent
 
 **Item
                12.**
              **Certain
                  Relationships and Related
                  Transactions**
 
 As
        of
        December 31, 2006 and 2005, Walter Tatum, the Company's Secretary and Chairman
        of the
        Board
        of Directors, advanced to the Company a total of $121,300 and $32,500,
        respectively. The funds advanced
        were used by the Company for working capital purposes.
 
 **Item
                13.**
              **Exhibits**
  **Exhibit
                No.**
              **Description
                  of Document**
 
 3.1(a)*
              Articles
                  of Incorporation
 3.1(b)*
              Articles
                  of Amendment
 3.2*
              Bylaws
 4.0*
              Form
                  of Stock Certificate
 4.1*
              Certificate
                  of Designation of Series B Convertible Preferred
                  Stock
 4.2*
              Certificate
                  of Designation of Series C Convertible Preferred
                  Stock
 10.1*
              Share
                Exchange Agreement and Plan of Reorganization dated June 21, 2006
                with
                Rhino Off Road Industries, Inc. 31.1
              Certification
                  Pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002
 32.1
            Certification
                Pursuant to Section 906 of
                the Sarbanes-Oxley Act of 2002   *
              Incorporated
                  by reference
  **Item
                14.**
              **Principal
                  Accountant Fees and
                  Services**
  **2006**
              
              **2005****Audit
                fees**
              
              $
              50,000
              
              $
              33,944
 
 **11**
 **Table
            of Contents**
  **Signatures**
 
 In
        accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant
        caused this report to be signed on its behalf by the undersigned,
        thereunto duly authorized, in Henderson, NV on April 17, 2007.
 
 **Rhino
                Outdoor International, Inc.**Date: April
                17, 2007
              By:
              /s/ HOWARD
                PEARLTitle:
                President and Chief
                Executive Officer
  In
        accordance with the requirements of the Securities Act of 1934, this report
        has been signed by the following persons in the capacities and on the dates
        indicated.
  Date: April
                17, 2007
              By:
              /s/ HOWARD
                PEARLTitle:
                President and Chief Executive Officer
   **12**
 **Table
            of Contents**


**RHINO
          OUTDOOR INTERNATIONAL, INC.**
 
 **(A
          Development Stage Company)**
 
 **Financial
          Statements**
 
 **December
          31, 2006**




**RHINO
        OUTDOOR INTERNATIONAL, INC.**
 **(An
        Development Stage Company)**




Table
      of
      Contents




**Page**Report
                of Independent Registered Public Accounting Firm
            F-1Consolidated Financial Statements:Balance
              sheets
            F-2Statements
              of operations
            F-3Statements
              of stockholders' deficit
            F-4Statements
              of cash flows
            F-5Notes
              to the financial statements
            F-6












**Table
          of Contents**


Board
        of
        Directors
 Rhino
          Outdoor International, Inc.
 Henderson,
          Nevada
 
 
 **REPORT
          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 We
          have
          audited the accompanying consolidated balance sheets of Rhino Outdoor
          International, Inc. (a
          development stage company) as of December 31, 2006 and 2005 and the related
          consolidated statements of operations, stockholders’ deficit and cash flows for
          the years then ended and for the period from January 1, 2005 (inception
          of the
          current development stage) through December 31, 2006. These financial statements
          are the responsibility of the Company’s management. Our responsibility is to
          express an opinion on these financial statements based on our
          audit.
 
 We
          conducted our audit in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          financial
          statements are free of material misstatement. An audit includes examining,
          on a
          test basis, evidence supporting the amounts and disclosures in the financial
          statements. An audit also includes assessing the accounting principles
          used and
          significant estimates made by management, as well as evaluating the overall
          financial statement presentation. We believe that our audit provides a
          reasonable basis for our opinion.
 
 In
          our
          opinion, the financial statements referred to above present fairly, in
          all
          material respects, the financial position of Rhino Outdoor International,
          Inc.,
          as of December 31, 2006 and 2005 and the results of its operations,
          stockholders’ deficit and cash flows for the years then ended and for the period
          from January 1, 2005 (inception of the current development stage) through
          December 31, 2006 in conformity with accounting principles generally accepted
          in
          the United States of America.
 
 The
          accompanying financial statements have been prepared assuming that the
          Company
          will continue as a going concern. As discussed in Note 2 to the financial
          statements, the Company has limited cash resources, has suffered recurring
          losses, and has an accumulated deficit at December 31, 2006. These factors
          raise
          substantial doubt about its ability to continue as a going concern. Management's
          plans in regard to these matters are also described in Note 2. The financial
          statements do not include any adjustments that might result from the outcome
          of
          this uncertainty.
 
 
 
 Williams
          & Webster, P.S.
 *Certified
          Public Accountants*
 Spokane,
          Washington
 April
          16,
          2007


**F-1**
 **Table
          of Contents**




**RHINO
                      OUTDOOR INTERNATIONAL,
                      INC.****(A
                      Development Stage Company)****CONSOLIDATED
                      BALANCE SHEETS**December
                      31,
                  
                  December
                      31,2006
                  
                  2005**ASSETS**CURRENT
                      ASSETSCash
                  
                  $
                  1,862
                  
                  $
                  -Accounts
                      receivable
                  
                  
                  -
                  
                  
                  7,500Loans
                      receivable
                  
                  
                  -
                  
                  
                  15,000Marketable
                      securities
                  
                  
                  14,400
                  
                  
                  -Inventory,
                      net
                  
                  
                  123,490
                  
                  
                  -Other
                      current assets
                  
                  
                  2,052
                  
                  
                  -TOTAL
                      CURRENT ASSETS
                  
                  
                  141,804
                  
                  
                  22,500OTHER ASSETSPlant,
                      property, and eqiupment, net
                  
                  
                  107,954
                  
                  
                  -Goodwill
                  
                  
                  3,013,463
                  
                  
                  -**TOTAL
                      ASSETS**
                  
                  $
                  3,263,221
                  
                  $
                  22,500**LIABILITIES
                      AND STOCKHOLDERS' DEFICIT**CURRENT
                      LIABILITIESAccounts
                      payable and accrued expenses
                  
                  $
                  1,300,032
                  
                  $
                  1,063,251Accrued
                      liabilities
                  
                  
                  1,332,860
                  
                  
                  971,762Bank
                      overdraft
                  
                  
                  21,534
                  
                  
                  15,108Lines
                      of credit
                  
                  
                  299,896
                  
                  
                  -Notes
                      payable
                  
                  
                  294,192
                  
                  
                  294,192Current
                      portion of long-term debt
                  
                  
                  40,485
                  
                  
                  -Deferred
                      revenues and customer deposits
                  
                  
                  448,027
                  
                  
                  172,453Other
                      current liabilities
                  
                  
                  400,000
                  
                  
                  -Related
                      party payables
                  
                  
                  573,814
                  
                  
                  1,226,161TOTAL
                      CURRENT LIABILITIES
                  
                  
                  4,710,840
                  
                  
                  3,742,927LONG-TERM
                      LIABILITIESBank
                      indebtedness
                  
                  
                  37,682
                  
                  
                  -Vehicle
                      loans, net current portion
                  
                  
                  22,047
                  
                  
                  -TOTAL
                      LONG-TERM LIABILITIES
                  
                  
                  59,729
                  
                  
                  -TOTAL
                      LIABILITIES
                  
                  
                  4,770,569
                  
                  
                  3,742,927COMMITMENTS
                      AND CONTINGENCIES
                  
                  
                  -
                  
                  
                  -**STOCKHOLDERS'
                      DEFICIT**Preferred
                      stock, $0.001 par value; 5,000,000 shares authorizedSeries
                      A - 835,660 shares issued and outstanding
                  
                  
                  836
                  
                  
                  836Series
                      B - 1,000,000 shares issued and outstanding
                  
                  
                  1,000
                  
                  
                  1,000Series
                      C - 2,250,000 shares issued and outstanding
                  
                  
                  2,250
                  
                  
                  -Common
                      stock, $0.001 par value; 500,000,000 shares
                      authorized,50,748,709
                      and 1,233,518 shares issued and oustanding,respectively
                  
                  
                  50,749
                  
                  
                  1,233Additional
                      paid-in capital
                  
                  
                  35,502,478
                  
                  
                  23,295,020Accumulated
                      deficit prior to current development stage
                  
                  
                  (19,234,546
                  )
                  
                  (19,234,546
                  )Accumulated
                      deficit in development stage
                  
                  
                  (17,394,515
                  )
                  
                  (7,783,970
                  )Accumulated
                      comprehensive income (loss)
                  
                  
                  (435,600
                  )
                  
                  -Total
                      Stockholders' Deficit
                  
                  
                  (1,507,348
                  )
                  
                  (3,720,427
                  )**TOTAL
                      LIABILITIES AND STOCKHOLDERS' DEFICIT**
                  
                  $
                  3,263,221
                  
                  $
                  22,500


The
            accompanying notes are an integral part of these financial
            statements
 **F-2**
 **Table
          of Contents**




**RHINO
                  OUTDOOR INTERNATIONAL,
                  INC.****(A
                  Development Stage Company)****CONSOLIDATED
                  STATEMENTS OF OPERATIONS**FromInception
                    ofDevelopment StageYears
                  Ended
              
              
              
              (January
                    1, 2005)December
                  31
              
              December
                  31
              
              to2006
              
              2005
              
              September
                    30,2006**REVENUES**
              
              $
              77,093
              
              $
              -
              
              $
              77,093-**COST
                  OF SALES**
              
              
              100,240
              
              
              -
              
              
              100,240Gross
                  Profit (Loss)
              
              
              (23,147
              )
              
              -
              
              
              (23,147
              )**OPERATING
                  EXPENSES**General
                  and administrative
              
              
              819,958
              
              
              681,731
              
              
              1,501,690Depreciation
                  expense
              
              
              18,284
              
              
              -
              
              
              18,284Management
                  fees
              
              
              1,022,729
              
              
              -
              
              
              1,022,729Marketing
                  expenses
              
              
              4,146,574
              
              
              5,605,613
              
              
              9,752,187Selling
                  expenses
              
              
              3,740,287
              
              
              1,412,253
              
              
              5,152,540**TOTAL
                  OPERATING EXPENSES**
              
              
              9,747,873
              
              
              7,699,597
              
              
              17,447,430**LOSS
                  FROM OPERATIONS**
              
              
              (9,770,980
              )
              
              (7,699,597
              )
              
              (17,470,577
              )**OTHER
                  INCOME (EXPENSES)**Other
                  income
              
              
              334,842
              
              
              5,430
              
              
              340,272Gain
                  on forgiveness of debt
              
              
              -
              
              
              2,500
              
              
              2,500Interest
                  expense
              
              
              (85,240
              )
              
              (78,132
              )
              
              (163,372
              )Loss
                  on sale of investment
              
              
              (89,167
              )
              
              -
              
              
              (89,167
              )Loss
                  on abandonment of assets
              
              
              -
              
              
              (14,171
              )
              
              (14,171
              )**TOTAL
                  OTHER INCOME (EXPENSES)**
              
              
              160,435
              
              
              (84,373
              )
              
              76,062**LOSS
                  BEFORE TAXES**
              
              
              (9,610,545
              )
              
              (7,783,970
              )
              
              (17,394,515
              )**INCOME
                  TAXES**
              
              
              -
              
              
              -
              
              
              -**NET
                  LOSS**
              
              
              (9,610,545
              )
              
              (7,783,970
              )
              
              (17,394,515
              )**OTHER
                  COMPREHENSIVE INCOME**Unrealized
                  loss on marketable securities
              
              
              (435,600
              )
              
              -
              
              
              (435,600
              )**COMPREHENSIVE
                  LOSS**
              
              $
              (10,046,145
              )
              $
              (7,783,970
              )
              $
              (17,830,115
              )NET
                  LOSS PER COMMON SHARE,BASIC
                  AND DILUTED
              
              $
              (0.53
              )
              $
              (13.95
              )WEIGHTED
                  AVERAGE NUMBER OFCOMMON
                  STOCK SHARESOUTSTANDING,
                  BASIC AND DILUTED
              
              
              18,025,916
              
              
              557,891




The
            accompanying notes are an integral part of these financial
            statements
 **F-3**
 **Table
          of Contents**


**RHINO
                    OUTDOOR INTERNATIONAL, INC.****(A
                    Development Stage Company)****CONSOLIDATED
                    STATEMENT OF STOCKHOLDERS' DEFICIT**AccumulatedConvertible
                    Preferred Stock
                
                Common
                    Stock
                
                AdditionalPaid-in
                
                Deficit
                
                Other
                    ComprehensiveShares
                
                Amount
                
                Shares
                
                Amount
                
                Capital
                
                Accumulated
                
                Loss
                
                TotalsBalance,
                    December 31, 2004
                
                
                835,660
                
                $
                836
                
                
                232,258
                
                $
                232
                
                $
                16,193,129
                
                $
                (19,234,546
                )
                $
                -
                
                $
                (3,040,349
                )Shares
                    issued for consulting expense
                
                
                -
                
                
                -
                
                
                996,260
                
                
                996
                
                
                6,945,396
                
                
                -
                
                
                -
                
                
                6,946,392Shares
                    issued for debt
                
                
                -
                
                
                -
                
                
                5,000
                
                
                5
                
                
                57,495
                
                
                -
                
                
                -
                
                
                57,500Shares
                    issued in exchange for compensation
                
                
                1,000,000
                
                
                1,000
                
                
                -
                
                
                -
                
                
                99,000
                
                
                -
                
                
                -
                
                
                100,000Net
                    loss for year ending December 31, 2005
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (7,783,970
                )
                
                -
                
                
                (7,783,970
                )Balance,
                    December 31, 2005
                
                
                1,835,660
                
                
                1,836
                
                
                1,233,518
                
                
                1,233
                
                
                23,295,020
                
                
                (27,018,516
                )
                
                -
                
                
                (3,720,427
                )Shares
                    issued for management and consulting fees
                
                
                -
                
                
                -
                
                
                245,000
                
                
                245
                
                
                489,755
                
                
                -
                
                
                -
                
                
                490,000Shares
                    issued for accrued liabilities
                
                
                -
                
                
                -
                
                
                205,000
                
                
                205
                
                
                409,795
                
                
                -
                
                
                -
                
                
                410,000Shares
                    issued for acquisition of subsidiary
                
                
                1,650,000
                
                
                1,650
                
                
                -
                
                
                -
                
                
                1,648,350
                
                
                -
                
                
                -
                
                
                1,650,000-Shares
                    issued for accrued management fees
                
                
                600,000
                
                
                600
                
                
                -
                
                
                -
                
                
                599,400
                
                
                -
                
                
                -
                
                
                600,000-Shares
                    issued for related party payable
                
                
                -
                
                
                -
                
                
                5,200,000
                
                
                5,200
                
                
                1,228,031
                
                
                -
                
                
                -
                
                
                1,233,231-Shares
                    issued for marketing and selling expenses
                
                
                -
                
                
                -
                
                
                43,865,191
                
                
                43,866
                
                
                7,832,127
                
                
                -
                
                
                -
                
                
                7,875,993-Net
                    loss for year ending December 31, 2006
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (9,610,545
                )
                
                -
                
                
                (9,610,545
                )Unrealized
                    loss on investments
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (435,600
                )
                
                (435,600
                )Balance,
                    December 31, 2006
                
                
                4,085,660
                
                $
                4,086
                
                
                50,748,709
                
                $
                50,749
                
                $
                35,502,478
                
                $
                (36,629,061
                )
                $
                (435,600
                )
                $
                (1,507,348
                )
   The
            accompanying notes are an integral part of these financial
            statements
 **F-4**
 **Table
          of Contents**


**RHINO
                    OUTDOOR INTERNATIONAL,
                    INC.****(A
                    Development Stage Company)****CONSOLIDATED
                    STATEMENTS OF CASH FLOWS**FromInception
                    ofDevelopment
                    StageYears
                    Ended
                
                
                
                (January
                    1, 2005)December
                    31
                
                December
                    31,
                
                to2006
                
                2005
                
                June
                    30,2006**CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    loss
                
                $
                (9,610,545
                )
                $
                (7,783,970
                )
                $
                (17,394,515
                )Adjustments
                    to reconcile net loss to net cashused
                    by operating activities:Common
                    stock issued for accrued wages
                
                
                410,000
                
                
                100,000
                
                
                510,000Common
                    stock issued for compensation and services
                
                
                490,000
                
                
                6,946,392
                
                
                7,436,392Reserve
                    for issuance of issuance of preferred stock
                
                
                400,000
                
                
                -
                
                
                400,000Preferred
                    shares issued for accrued management fees
                
                
                600,000
                
                
                -
                
                
                600,000Forgiveness
                    of debt
                
                
                -
                
                
                (2,500
                )
                
                (2,500
                )Bad
                    debt expense
                
                
                20,000
                
                
                -
                
                
                20,000Amortization
                    of deferred revenues
                
                
                (328,125
                )
                
                -
                
                
                (328,125
                )Common
                    stock issued for marketing and selling expenses
                
                
                7,875,993
                
                
                -
                
                
                7,875,993Loss
                    on sale of investment
                
                
                89,167
                
                
                -
                
                
                89,167Loss
                    on abandonment of assets
                
                
                -
                
                
                14,171
                
                
                14,171Depreciation
                
                
                18,284
                
                
                -
                
                
                18,284(Increase)
                    decrease in:Inventories
                
                
                59,720
                
                
                -
                
                
                59,720Increase
                    (decrease) in:Accounts
                    payable and accrued expenses
                
                
                123,185
                
                
                194,029
                
                
                317,214Accrued
                    liabilities
                
                
                (386,213
                )
                
                318,626
                
                
                (67,587
                )Deferred
                    revenues and customer deposits
                
                
                78,335
                
                
                172,453
                
                
                250,788Net
                    cash provided (used) by operating activities
                
                
                (160,199
                )
                
                (40,799
                )
                
                (200,998
                )**CASH
                    FLOWS FROM INVESTING ACTIVITIES:**Increase
                    from loans receivable
                
                
                -
                
                
                (7,500
                )
                
                (7,500
                )Cash
                    acquired in acquisition
                
                
                18,578
                
                
                -
                
                
                18,578Cash
                    received from sale of investments
                
                
                23,333
                
                
                -
                
                
                23,333Net
                    cash provided (used) by investing activities
                
                
                41,911
                
                
                (7,500
                )
                
                34,411**CASH
                    FLOWS FROM FINANCING ACTIVITIES:**Advances
                    from related parties
                
                
                133,177
                
                
                39,606
                
                
                172,783Increase
                    in bank overdrafts
                
                
                6,426
                
                
                (6,415
                )
                
                11Decrease
                    in lines of credit
                
                
                (54
                )
                
                
                
                
                (54
                )Decrease
                    in bank indebtness
                
                
                (12,410
                )
                
                15,108
                
                
                2,698Decrease
                    in vehicle loans
                
                
                (6,989
                )
                
                -
                
                
                (6,989
                )Net
                    cash provided by financing activities
                
                
                120,150
                
                
                48,299
                
                
                168,449Change
                    in cash
                
                
                1,862
                
                
                -
                
                
                1,862**Cash,
                    beginning of period**
                
                
                -
                
                
                -
                
                
                -**Cash,
                    end of period**
                
                $
                1,862
                
                $
                -
                
                $
                1,862**SUPPLEMENTAL
                    CASH FLOW INFORMATION:**Interest
                    paid
                
                $
                15,796
                
                $
                -
                
                $
                21,298Income
                    taxes paid
                
                $
                -
                
                $
                -
                
                $
                -**NON-CASH
                    INVESTING AND FINANCING ACTIVITIES:**Common
                    stock issued for debt
                
                $
                -
                
                $
                -
                
                $
                57,500Common
                    stock issued for accrued wages
                
                $
                410,000
                
                $
                -
                
                $
                550,000Preferred
                    shares issued for subsidiary
                
                $
                1,650,000
                
                $
                -
                
                $
                1,650,000Shares
                    issued for related party payable
                
                $
                1,233,231
                
                $
                
                
                $
  The
            accompanying notes are an integral part of these financial
            statements
 **F-5**
 **Table
          of Contents**


**RHINO
        OUTDOOR INTERNATIONAL, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2006**


**NOTE
          1 - BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS**
 
 Rhino
          Outdoor International, Inc. (fka Cyberads, Inc), was incorporated on April
          12,
          2000 in the State of Florida. On August 10, 2005, the Company changed domicile
          from Florida to Nevada. The principal business of the Company is the design,
          manufacturing and sale of off road vehicles and related parts. The Company’s
          operations are located in Henderson, Nevada.
 
 The
          Company’s year-end is December 31.
 
 As
          of
          January 1, 2005, the Company abandoned its previous business plan of marketing
          cellular phone services and began a new development stage where it intends
          to
          provide management and sales support to businesses focused in the Extreme
          Sports/Lifestyle market segment.
 
 On
          June
          21, 2006, the Company entered into a share exchange agreement and plan
          of
          reorganization with Rhino Off Road Industries, Inc. Under this agreement
          and
          plan of reorganization, the Company acquired all of the outstanding common
          stock
          of Rhino in exchange for 1,650,000 shares of the Company’s Series C convertible
          preferred stock. Additionally, the Company issued another 600,000 shares
          of
          Series C convertible preferred stock for the retention of the subsidiary’s
          officers and agreed to issue 400,000 shares of Series C convertible preferred
          stock for loan guarantees. As of December 31, 2006, the 400,000 shares
          had not
          yet been issued and the Company has accrued a liability related to this
          issuance. Rhino Off Road Industries, Inc. was incorporated on September
          25, 2003
          in the State of Nevada.
 
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 This
          summary of significant accounting policies of Rhino Outdoor International,
          Inc.
          is presented to assist in understanding the Company’s financial statements. The
          financial statements and notes are representations of the Company’s management,
          which is responsible for their integrity and objectivity. These accounting
          policies conform to accounting principles generally accepted in the United
          States of America, and have been consistently applied in the preparation
          of the
          financial statements.
 
 Accounting
          Method
 The
          Company’s financial statements are prepared using the accrual basis of
          accounting in accordance with accounting principles generally accepted
          in the
          United States of America.
 
 Accounts
          Receivable
 The
          Company carries its accounts receivable at cost less an allowance for doubtful
          accounts. On a periodic basis, the Company evaluates its accounts receivable
          and
          establishes an allowance for doubtful accounts, based on a history of past
          write-offs and collections and current credit conditions.
 
 The
          Company’s policy is to accrue interest on trade receivables 90 days after
          invoice date. A receivable is considered past due if payments have not
          been
          received by the Company for 90 days. At that time, the Company will discontinue
          accruing interest and turn the account over for collection. If a payment
          is made
          after it has been turned over for collection, the Company will apply the
          payment
          to the outstanding principal first and resume accruing interest. Accounts
          are
          written off as uncollectible if no payments are received 180 days after
          they
          have been turned over for collection.
  
 **F-6**
 **Table
            of Contents**
 **RHINO
            OUTDOOR INTERNATIONAL, INC.**
 **(A
            Development Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
            31, 2006**
 
 Cash
          and Cash Equivalents
 For
          purposes of the statement of cash flows, the Company considers all highly
          liquid
          investments and short-term debt instruments with original maturities of
          three
          months or less to be cash equivalents.
 
 Compensated
          Absences
 Employees
          of the Company are entitled to paid vacation, and sick days, depending
          on job
          classification, length of service, and other factors. Management has deemed
          that
          any liability arising from this policy would be immaterial and has accrued
          no
          compensated absences liabilities for the period ended
 December
          31, 2006.
 
 Cost
          of Sales
 Cost
          of
          sales consists of the purchase price of materials and supplies, shipping,
          labor
          and benefits, and other overhead costs associated with production.
 
 Deferred
          Revenues
 The
          Company received deferred revenues which consisted of the resale of X-Board
          dealership for approximately $174,453, net of commissions. The X-Board
          product
          has not yet come to market. Accordingly, the Company has not recorded the
          sales
          as revenue. In 2006, the Company also received customer deposits of $39,199
          for
          vehicle purchases that had not been delivered as of December 31, 2006.
          The
          Company also received deferred revenues from a sponsorship agreement with
          Luvoo,
          Inc. where the Company received stock in exchange for advertising. The
          deferred
          revenue received from this sponsorship is being amortized over a one year
          period
          at a rate of $46,875 per month as other income. As of December 31, 2006,
          the
          Company had amortized $328,125 of other income from sponsorships. Deferred
          revenues remaining from this sponsorship agreement was $234,375.
  Development
          Stage Activities
 Since
          the
          inception of the current development stage (which began January 1, 2005),
          the
          Company has realized minimal revenue from operations. It expects to be
          engaged
          to provide management and sales support to businesses focused in the Extreme
          Sports/Lifestyle market segment.
 
 Going
          Concern
 The
          accompanying financial statements have been prepared assuming the Company
          will
          continue as a going concern. As shown in the financial statements, the
          Company
          has limited cash and revenues, has negative working capital and substantial
          debt, has incurred a net loss for the year ended December 31, 2006, and has
          an accumulated deficit since the inception of the Company. These factors
          indicate that the Company may be unable to continue in existence. The Company
          is
          currently putting business plans in place which will, if successful, mitigate
          these factors which raise substantial doubt about the Company’s ability to
          continue as a going concern. The financial statements do not include any
          adjustments related to the recoverability and classification of recorded
          assets,
          or the amounts and classification of liabilities that might be necessary
          in the
          event the Company cannot continue existence.
  Management
          has established plans designed to increase the sales of the Company’s products
          and services and decrease debt. These plans will include providing management
          and sales support to businesses focused in the Extreme/Lifestyle market
          segment
          where the Company anticipates earning commissions/fees on securing distribution
          from business and products it represents.
 
 An
          estimated $2 million is believed necessary to continue operations and increase
          development through the next fiscal year. The timing and amount of capital
          requirements will depend on a number of factors, including demand for products
          and services and the availability of opportunities for international expansion
          through affiliations and other business relationships. Management intends
          to
          seek new capital from new equity securities issuances to provide funds
          needed to
          increase liquidity, fund internal growth, and fully implement its business
          plan.
 **F-7**
 **Table
              of Contents**
 **RHINO
              OUTDOOR INTERNATIONAL, INC.**
 **(A
              Development Stage Company)**
 **NOTES
              TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
              31, 2006**
 Goodwill
 Goodwill
          represents the excess of the purchase price and related direct costs over
          the
          fair value of net assets acquired as of the date of the acquisition of
          Rhino Off
          Road Industries, Inc. The Company reviews periodically its goodwill to
          assess
          recoverability based on projected undiscounted cash flows from operations.
          Impairments are recognized in operating results when a permanent diminution
          in
          value occurs. At December 31, 2006, no impairment was deemed necessary
          for the
          Company’s goodwill.
 
 Impaired
          Asset Policy
 The
          Company adopted Statement of Financial Accounting Standards No. 144, “Accounting
          for Impairment or Disposal of Long-Lived Assets.” In complying with this
          standard, the Company reviews its long-lived assets quarterly to determine
          if
          any events or changes in circumstances have transpired which indicate that
          the
          carrying value of its assets may not be recoverable. The Company determines
          impairment by comparing the undiscounted future cash flows estimated to
          be
          generated by its assets to their respective carrying amount whenever events
          or
          changes in circumstances indicate that an asset may not be
          recoverable.
 
 Inventories
 The
          Company records inventories at the lower of cost or market on a first-in,
          first-out basis.
 
 December
                    31,
                
                December
                    31,2006
                
                2005Raw
                    materials and work-in-process
                
                $
                57,954
                
                $
                -Finished
                    goods
                
                
                65,536
                
                
                -Total
                    Inventory
                
                $
                123,490
                
                $
                -
 
 Long-lived
          Assets
 The
          Company accounts for its long-lived assets in accordance with Statement
          of
          Financial Accounting Standards No. 144, “Accounting for the Impairment or
          Disposal of Long-Lived Assets”. This standard establishes a single accounting
          model for long-lived assets to be disposed of by sale, including discontinued
          operations, and requires that these long-lived assets be measured at the
          lower
          of carrying amount or fair value less cost to sell, whether reported in
          continuing operations or discontinued operations. Accordingly, the Company
          reviews the carrying amount of long-lived assets for impairment annually
          and
          when events or changes in circumstances indicate that the carrying amount
          may
          not be recoverable. The determination of any impairment would include a
          comparison of estimated future cash flows anticipated to be generated during
          the
          remaining life of the assets to the net carrying value of the assets.
 
 Marketable
          Securities
 The
          Company’s investments in securities are classified as either trading, held to
          maturity, or available-for-sale in accordance with Statement of Financial
          Accounting Standards No. 115. Available-for-sale securities consist of
          equity
          securities not classified as trading securities or as securities to be
          held to
          maturity. Unrealized holding gains and losses, net of tax, on available-for-sale
          securities are reported as a net amount in a separate component of other
          comprehensive income. Gains and losses on the sale of available-for-sale
          securities are determined using the average cost method and are included
          in
          earnings. The Company determines the gain or loss on investment securities
          held
          as available-for-sale, based upon the accumulated cost basis of specific
          investment accounts. On the Company’s balance sheet, short-term available for
          sale securities are classified as “marketable securities.” See Note
          14.
 
 Property
          and Equipment
 Property
          and equipment are stated at cost. Depreciation of property and equipment
          is
          calculated using the straight-line method over the estimated useful lives
          of the
          assets, which range from three to seven years. See Note 5.
 **F-8**
 **Table
              of Contents**
 **RHINO
              OUTDOOR INTERNATIONAL, INC.**
 **(A
              Development Stage Company)**
 **NOTES
              TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
              31, 2006**
 Principles
          of Consolidation
 The
          accompanying consolidated financial statements include the accounts of
          Rhino
          Outdoor International, Inc. and its wholly owned subsidiaries: IDS Cellular,
          Inc. (“IDS”) and Rhino Off Road Industries, Inc. All significant transactions
          and balances among the companies included in the consolidated financial
          statements have been eliminated. The operations of IDS are currently
          idle.
  Provision
          for Taxes
 Income
          taxes are provided based upon the liability method of accounting pursuant
          to
          Statement of Financial Accounting Standards No. 109, “Accounting for Income
          Taxes” (hereinafter “SFAS No. 109”). Under this approach, deferred income taxes
          are recorded to reflect the tax consequences in future years of differences
          between the tax basis of assets and liabilities and their financial reporting
          amounts at each year-end. A valuation allowance is recorded against deferred
          tax
          assets if management does not believe the Company has met the “more likely than
          not” standard imposed by SFAS No. 109 to allow recognition of such an
          asset.
 
 Recent
          Accounting Pronouncements
 In
          September, 2006, the Financial Accounting Standards Board issued Statement
          of
          Financial Accounting Standards No. 158, “Employers’ Accounting for Defined
          Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
          No. 87,88,106, and 132(R)”. This statement requires an employer to recognize the
          overfunded or underfunded statues of a defined benefit postretirement plan
          (other than a multiemployer plan) as an asset or liability in its statement
          of
          financial position and to recognize changes in that funded status in the
          year in
          which the changes occur through comprehensive income of a business entity
          or
          changes in unrestricted net assets of a not for profit organization. This
          statement also requires an employer to measure the funded status of a plan
          as of
          the date of its year end statement of financial position, with limited
          exceptions. The adoption of this statement had no immediate material effect
          on
          the Company’s financial condition or results of operations.
 
 In
          September 2006, the Financial Accounting Standards Board issued Statement
          of
          Financial Accounting Standards No. 157, “Fair Value Measurements” (hereinafter
“SFAS No. 157”), which defines fair value, establishes a framework for measuring
          fair value in generally accepted accounting principles (GAAP), and expands
          disclosures about fair value measurements. Where applicable, SFAS No. 157
          simplifies and codifies related guidance within GAAP and does not require
          any
          new fair value measurements. SFAS No. 157 is effective for financial statements
          issued for fiscal years beginning after November 15, 2007, and interim
          periods
          within those fiscal years. Earlier adoption is encouraged. The Company
          does not
          expect the adoption of SFAS No. 157 to have a significant effect on its
          financial position or results of operations.
 
 In
          June
          2006, the Financial Accounting Standards Board issued FASB Interpretation
          No.
          48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
          Statement No. 109” (hereinafter “FIN 48”), which prescribes a recognition
          threshold and measurement attribute for the financial statement recognition
          and
          measurement of a tax position taken or expected to be taken in a tax return.
          FIN
          48 also provides guidance on de-recognition, classification, interest and
          penalties, accounting in interim periods, disclosure and transition. FIN
          48 is
          effective for fiscal years beginning after December 15, 2006. The Company
          does
          not expect the adoption of FIN 48 to have an immediate material impact
          on its
          financial reporting, and the Company is currently evaluating the impact,
          if any,
          the adoption of FIN 48 will have on its disclosure requirements.
 
 In
          March
          2006, the Financial Accounting Standards Board issued Statement of Financial
          Accounting Standards No. 156, “Accounting for Servicing of Financial Assets—an
          amendment of FASB Statement No. 140.” This statement requires an entity to
          recognize a servicing asset or servicing liability each time it undertakes
          an
          obligation to service a financial asset by entering into a servicing contract
          in
          any of the following situations: a transfer of the servicer’s financial assets
          that meets the requirements for sale accounting; a transfer of the servicer’s
          financial assets to a qualifying special-purpose entity in a guaranteed
          mortgage
          securitization in which the transferor retains all of the resulting securities
          and classifies them as
 **F-9**
 **Table
              of Contents**
 **RHINO
              OUTDOOR INTERNATIONAL, INC.**
 **(A
              Development Stage Company)**
 **NOTES
              TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
              31, 2006**
 either
          available-for-sale securities or trading securities; or an acquisition
          or
          assumption of an obligation to service a financial asset that does not
          relate to
          financial assets of the servicer or its consolidated affiliates. The statement
          also requires all separately recognized servicing assets and servicing
          liabilities to be initially measured at fair value, if practicable and
          permits
          an entity to choose either the amortization or fair value method for subsequent
          measurement of each class of servicing assets and liabilities. The statement
          further permits, at its initial adoption, a one-time reclassification of
          available for sale securities to trading securities by entities with recognized
          servicing rights, without calling into question the treatment of other
          available
          for sale securities under Statement 115, provided that the available for
          sale
          securities are identified in some manner as offsetting the entity’s exposure to
          changes in fair value of servicing assets or servicing liabilities that
          a
          servicer elects to subsequently measure at fair value and requires separate
          presentation of servicing assets and servicing liabilities subsequently
          measured
          at fair value in the statement of financial position and additional disclosures
          for all separately recognized servicing assets and servicing liabilities.
          This
          statement is effective for fiscal years beginning after September 15, 2006,
          with
          early adoption permitted as of the beginning of an entity’s fiscal year.
          Management believes the adoption of this statement will have no impact
          on the
          Company’s financial condition or results of operations.
 
 In
          February 2006, the Financial Accounting Standards Board issued Statement
          of
          Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial
          Instruments, an Amendment of FASB Standards No. 133 and 140” (hereinafter “SFAS
          No. 155”). This statement established the accounting for certain derivatives
          embedded in other instruments. It simplifies accounting for certain hybrid
          financial instruments by permitting fair value remeasurement for any hybrid
          instrument that contains an embedded derivative that otherwise would require
          bifurcation under SFAS No. 133 as well as eliminating a restriction on
          the
          passive derivative instruments that a qualifying special-purpose entity
          (“SPE”)
          may hold under SFAS No. 140. This statement allows a public entity to
          irrevocably elect to initially and subsequently measure a hybrid instrument
          that
          would be required to be separated into a host contract and derivative in
          its
          entirety at fair value (with changes in fair value recognized in earnings)
          so
          long as that instrument is not designated as a hedging instrument pursuant
          to
          the statement. SFAS No. 140 previously prohibited a qualifying special-purpose
          entity from holding a derivative financial instrument that pertains to
          a
          beneficial interest other than another derivative financial instrument.
          This
          statement is effective for fiscal years beginning after September 15, 2006,
          with
          early adoption permitted as of the beginning of an entity’s fiscal year.
          Management believes the adoption of this statement will have no impact
          on the
          Company’s financial condition or results of operations.
 
 Reclassifications
 Certain
          amounts from prior periods have been reclassified to conform to the current
          period presentation. This reclassification has resulted in no changes to
          the
          Company’s accumulated deficit or net losses presented.
 
 Revenue
          Recognition
 The
          Company recognizes revenue for product sales when there is a mutually executed
          sales contract, when the products are shipped and title passes to customers,
          when the contract price and terms are fixed, and when collectibility is
          reasonably assured.
 
 Use
          of
          Estimates
 The
          process of preparing financial statements in conformity with accounting
          principles generally accepted in the United States of America requires
          the use
          of estimates and assumptions regarding certain types of assets, liabilities,
          revenues, and expenses. Such estimates primarily relate to unsettled
          transactions and events as of the date of the financial statements. Accordingly,
          upon settlement, actual results may differ from estimated amounts.
   **F-10**
 **Table
            of Contents**
 **RHINO
            OUTDOOR INTERNATIONAL, INC.**
 **(A
            Development Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
            31, 2006**
 
  **NOTE 3
          - BANK OVERDRAFTS**
 
 Bank
          overdrafts consist of checks written in excess of funds on deposit. The
          underlying bank is used as an imprest account with automatic transfers
          from the
          Company’s general account as checks are presented.
  **NOTE 4** **-** **PROPERTY
          AND EQUIPMENT**
 
 Property
          and equipment are stated at cost less depreciation taken. Depreciation
          is
          provided using the straight-line method over the estimated useful lives
          of the
          assets. The useful lives of property, plant and equipment for purposes
          of
          computing depreciation are five to forty years. The following is a summary
          of
          property, equipment, and accumulated depreciation:
 
 December
                    31,
                
                December
                    31,2006
                
                2005Plant
                    assets
                
                $
                120,234
                
                $
                -Office
                    furniture
                
                
                4,858
                
                
                -Leasehold
                    improvements
                
                
                1,146
                
                
                -126,238
                
                
                -Less
                    accumulated depreciation
                
                
                (18,284
                )
                
                -Net,
                    property and equipment
                
                $
                107,954
                
                $
                -
 
 Depreciation
          expense for the year ended December 31, 2006 and 2005 was $18,284 and $0,
          respectively. The Company evaluates the recoverability of property and
          equipment
          when events and circumstances indicate that such assets might be impaired.
          The
          Company determines impairment by comparing the undiscounted future cash
          flows
          estimated to be generated by these assets to their respective carrying
          amounts.
          Maintenance and repairs are expensed as incurred. Replacements and betterments
          are capitalized. The cost and related reserves of assets sold or retired
          are
          removed from the accounts, and any resulting gain or loss is reflected
          in
          results of operations.
 
 **NOTE 5
          - INCOME TAXES**
 
 At
          December 31, 2006, the Company had deferred tax assets calculated at an
          expected
          rate of 34% of approximately $12,450,000 principally arising from net operating
          loss carryforwards for income tax purposes. As management of the Company
          cannot
          determine that it is more likely than not that the Company will realize
          the
          benefit of the its deferred tax asset, a valuation allowance equal to the
          deferred tax asset was recorded at December 31, 2006. The significant components
          of the deferred tax asset at Decmeber 31, 2006 and December 31, 2005 were
          as
          follows:
 
 
 December
                    31, 2006
                
                December
                    31, 2005Net
                    operating loss carryforward:****
                
                $
                36,600,000
                
                $
                27,018,000Deferred
                    tax asset
                
                $
                12,450,000
                
                $
                9,148,000Deferred
                    tax asset valuation allowance
                
                
                (12,450,000
                )
                
                (9,148,000
                )Net
                    deferred tax asset
                
                $
                -
                
                $
                -
 
 At
          December 31, 2006 and 2005, the Company has net operating loss carryforwards
          of
          approximately $36,600,000 and $27,018,000, respectively, which begin to
          expire
          in the year 2020. The change in the allowance account from December 31,
          2005 to
          December 31, 2006 was $3,302,000.
 **F-11**
 **Table
              of Contents**
 **RHINO
              OUTDOOR INTERNATIONAL, INC.**
 **(A
              Development Stage Company)**
 **NOTES
              TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
              31, 2006**
 **NOTE 6
          - CAPITAL STOCK**
 
 Preferred
          Stock
 The
          Company is authorized to issue 5,000,000 shares of preferred stock with
          a par
          value of $0.001. These shares are convertible to common stock.  As of
          December 31, 2006, the Company has issued 835,660 shares of preferred Series
          A,
          1,000,000 shares of preferred Series B, and 2,250,000 shares of preferred
          Series
          C.
 
 On
          June
          21, 2006, the Company issued 1,650,000 shares of its convertible preferred
          Series C stock in a share exchange agreement and plan of reorganization
          when the
          Company acquired 100 percent of the outstanding common stock of Rhino Off
          Road
          Industries, Inc. The Company also issued another 600,000 shares of Series
          C
          convertible preferred stock for the retention of the subsidiary’s officers. Per
          the merger agreement, 400,000 shares were to be issued for loan guarantees
          that
          the subsidiary’s officers had for lines of credit and bank indebtedness. As of
          December 31, 2006, these shares have not been issued and the Company has
          accrued
          a liability of $400,000 related to this issuance.
 
 On
          June
          26, 2005, the Company issued 1,000,000 shares of its convertible preferred
          Series B stock in exchange for partial payment of accrued salary to an
          officer
          of the Company. The shares were recorded at $0.10 value, which was a fair
          price
          average during the period of accrual. The Company recorded a reduction
          in
          accrued salary liability as a result of this issuance. While each share
          of
          Series B preferred was originally entitled to 100 votes per share, this
          was
          increased to 255 votes per share on June 21, 2006.
 
 Common
          Stock
 The
          Company is authorized to issue 500,000,000 shares of common stock. All
          shares
          have equal voting rights, are non-assessable and have one vote per share.
          Voting
          rights are not cumulative and, therefore, the holders of more than 50%
          of the
          common stock could, if they choose to do so, elect all of the directors
          of the
          Company.
 
 On
          August
          30, 2006, the board of directors approved and the Company effected a one
          hundred-for-one reverse stock split of the Company’s common stock. All
          references in the financial statements to shares, share prices, per share
          amounts and stock plans have been adjusted retroactively for the one
          hundred-for-one reverse stock split.
 
 During
          the twelve month ended December 31, 2006, the Company issued 245,000 and
          205,000
          shares of its common stock for $490,000 and $410,000, respectively, in
          exchange
          for management and consulting services and accrued wages. The services
          were
          measured at the fair market value of the shares received on the day the
          shares
          were issued. Also, during the year ended December 31, 2006, the Company
          issued
          43,865,191 shares of common stock in exchange for marketing and selling
          expenses
          for $7,875,993. Also, during the year ended December 31, 2006, the Company
          issued 5,200,000 shares of common stock for related party debt of
          $1,233,231.
  During
          the year ended December 31, 2005, the Company issued 996,260 shares of
          its
          common stock in exchange for consulting services for $6,946,392. The services
          were measured at the fair market value of the shares received on the day
          the
          shares were issued.
 
 During
          the year ended December 31, 2005, the Company issued 5,000 shares of its
          common
          stock in exchange for debt of $60,000 and recorded a gain of forgiveness
          of debt
          of $2,500 for this exchange. The services were measured at the fair market
          value
          of the shares received on the day the shares were issued.
  **F-12**
 **Table
              of Contents**
 **RHINO
              OUTDOOR INTERNATIONAL, INC.**
 **(A
              Development Stage Company)**
 **NOTES
              TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
              31, 2006**
 **NOTE 7
          - LEASE COMMITMENTS**
 
 Lease
          Payments
 The
          Company has operating lease commitments for its premises. The monthly lease
          commitment is approximately $8,100. For years ended December 31, 2006,
          and 2005,
          the Company had paid approximately $72,000 for rent of facilities. The
          lease
          expired in April 2006. No replacement lease agreement has been signed and
          the
          Company continues to rent the facilities on a month-to-month basis.
 
 **NOTE 8
          - LINES OF CREDIT**
 
 The
          Company has a $100,000 operating line of credit with the Bank of Nevada
          that
          bears interest at a rate of 8.5% per annum, and was completely drawn down
          at
          December 31, 2006. This line of credit has no security directly associated
          with
          it.
 
 The
          Company has a second operating line of credit for $200,000 with the Bank
          of
          Nevada that bears interest at 8.5% per annum. The balance of this line
          at
          December 31, 2006 was $199,896. This line of credit is 100% secured with
          a CD
          owned by related parties.
 
 Both
          lines of credit were acquired during the acquisition with Rhino Off Road
          Industries, Inc. Thus, no balance was owed by the Company at December 31,
          2005.
 
 **NOTE 9
          - VEHICLE LOANS**
 
 The
          Company has two five-year vehicle loans with lending companies and pays
          approximately $1,250 a month in payments at an average interest rate of
          approximately 2.5% on these vehicles. Both loans mature in 2009. At December
          31,
          2006 and 2005, the balances owed on vehicle loans were $36,302 and $0,
          respectively. No balance was owed by the Company at December 31, 2005,
          because
          these loans were acquired during the acquisition with Rhino Off Roads
          Industries, Inc.
 
 Year
                    Ending:December
                  31,
                  2007
                
                $
                14,254December
                  31,
                  2008
                
                
                14,643December
                  31,
                  2009
                
                
                7,405December
                  31,
                  2010
                
                
                -December
                    31,
                    2011
                
                
                -Remaining
                    principal on vehicles
                
                $
                36,302
 
 
 **NOTE
          10 - NOTES PAYABLE**
 
 The
          Company has a note payable due in installments of $5,000 with the final
          payment
          due
 March
          15,
          2004, plus interest at 10% per annum; secured by all of the Company's accounts
          receivable, inventories, and computer hardware and software. It is personally
          guaranteed by two former officers of the Company. This loan is in default
          at
          December 31, 2006. The balance owing at December 31, 2006 and 2005 was
          $109,000.
 
 The
          Company has another note payable to a cellular phone service provider,
          which
          required the Company to make two payments on January 2, 2005 and August
          2, 2005
          of $92,596. These payments were never made. The Company is in default on
          this
          note payable and has accrued interest using the one year Libor index rate.
          The
          balance owing at December 31, 2006 and 2005 was $185,192.
 **F-13**
 **Table
                of Contents**
 **RHINO
                OUTDOOR INTERNATIONAL, INC.**
 **(A
                Development Stage Company)**
 **NOTES
                TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
                31, 2006**
 The
          Company has a 5-year term loan with Bank of Nevada which had an initial
          value of
          $125,000. With approximately three years left on the term, it bears interest
          at
          an annual rate of 7.5%, and is secured by all physical assets of the business.
          This loan is also secured by a personal guarantee by related parties. At
          December 31, 2006, the balance was $63,912. No balance was owed by the
          Company
          at December 31, 2005, because it was acquired during the acquisition with
          Rhino
          Off Roads Industries, Inc.
 
 Year
                    Ending:December
                  31,
                  2007
                
                $
                26,231December
                  31,
                  2008
                
                
                28,267December
                  31,
                  2009
                
                
                9,415December
                  31,
                  2010
                
                
                -December
                    31,
                    2011
                
                
                -Remaining
                    principal note payable with Bank of Nevada
                
                $
                63,913
 
 
 **NOTE
          11 - COMMITMENTS AND CONTINGENCIES**
 
 On
          June
          9, 2006, the Company signed an agreement with Hebei Sida Industry Group
          Col, Ltd
          (“Sida”), pursuant to which Sida will become an authorized exclusive distributor
          of the Company’s products in China. Sida has agreed to purchase 1,000 units over
          a three year period. Under the agreement, Sida will manufacture these units
          in
          China and pay the Company a license fee of 10% over its purchase costs
          for
          distribution rights.
 
 The
          Company is non-compliant with respect to certain federal and state payroll
          related taxes. Included in accrued payroll and payroll related liabilities
          at
          December 31, 2006 is approximately $650,000, which consists of unpaid payroll
          taxes, which were accrued in 2004 and earlier years.
 
 In
          April
          2004, the Company agreed to indemnify a former officer of the Company for
          any
          loss he sustained in a settlement reached with a cellular phone service
          provider
          against IDS Cellular, Inc. and him personally. IDS Cellular, Inc. is a
          wholly
          owned dormant subsidiary of Rhino Outdoor International, Inc. Under the
          indemnification agreement, the Company was obligated to pay an aggregate
          of
          $72,261 with the balance due October 1, 2004. These amounts were never
          paid. The
          indemnification had no effect on the accompanying financial statements
          as the
          amount owed to the cellular phone service provider was previously recorded
          as
          accounts payable in the records of IDS.
 
 The
          Company previously negotiated with an individual who threatened a lawsuit
          against the Company, a former officer, and a cellular phone service provider.
          The Company offered to issue the individual 250,000 shares of common stock
          to
          settle any claims he had against the Company. This individual has verbally
          accepted the Company’s proposed settlement offer. The offer had no effect on the
          accompanying consolidated financial statements as consulting services totaling
          $27,500 owed this individual were previously recorded as accounts payable
          in the
          records of Rhino Outdoor International, Inc. The Company has reserved 250,000
          shares of common stock to be issued under this settlement offer. The shares
          have
          never been issued and the liability remains.
 
 A
          claim
          against the Company of approximately $500,000 has been threatened by the
          Creditors Committee of World Com. The Company does not believe that it
          owes the
          amount and intends to vigorously defend the claim. The claim has not been
          pursued and the Company is not subject to any legal action pursuing this
          claim.
          Any claims asserted may be challenged by claims of the Company concerning
          funds
          owed to Rhino Outdoor International, Inc. for its prior trade relationship
          with
          World Com.
 
 **F-14**
 **Table
                of Contents**
 **RHINO
                OUTDOOR INTERNATIONAL, INC.**
 **(A
                Development Stage Company)**
 **NOTES
                TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
                31, 2006**
 **NOTE
          12 - RELATED PARTY TRANSACTIONS**
 
 Accrued
          payroll and accrued taxes represents amounts owed to management for services
          provided. At December 31, 2006, the Company had accrued payroll of
          $527,333.
 
 Related
          party payables represent amounts due to management and shareholders, who
          have
          loaned money to the Company to pay expenses on behalf of the Company. At
          December 31, 2006 and 2005, short-term related party payables were $573,814
          and
          $1,226,161, respectively. These loans are unsecured, non-interest bearing,
          and
          payable on demand. During the year ended December 31, 2006, related party
          debt
          of $1,233,231 was converted to 5,200,000 shares of common stock.
  The
            Company issues shares of stock for consulting services in consideration
            for
            marketing and selling. During the years ended December 31, 2006 and 2005,
            the
            Company issued 15,556,850 and 303,000 shares of common stock for $3,376,591
            and
            $1,897,650, respectively, to management and related parties for these
            consulting
            services.
  **NOTE
          13 - MARKETABLE SECURITIES**
 
 The
          Company’s securities investments are classified as available-for-sale securities
          and are recorded at fair value as of the balance sheet date, with the change
          in
          fair value during the period included in accumulated comprehensive income
          (loss).
 
 In
          May
          2006, the Company acquired shares of common stock in Luvoo, Inc, a public
          company.
 
 The
          Company’s marketable securities are summarized as follows at December 31,
          2006:
 
 Fair
                    value:Luvoo,
                    Inc
                
                $
                14,400Total
                    fair value
                
                
                14,400Gross
                    unrealized (loss)
                
                
                (435,600
                )Cost
                
                $
                464,400
  **NOTE
          14 - SUBSEQUENT EVENT**
 
 The
          Company has signed a letter of intent to acquire Great Vans West, a privately
          held Canadian company that manufacturers recreational class “B” motor
          homes.
 **F-15**
 **Table
                of Contents**
 **RHINO
                OUTDOOR INTERNATIONAL, INC.**
 **(A
                Development Stage Company)**
 **NOTES
                TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
                31, 2006**
 **NOTE 15
            - ACQUISITION AND PROFORMA OF RHINO OFF ROADS INDUSTRIES,
            INC.**
 
 On
            June
            21, 2006, the Company acquired one hundred percent of the issued and
            outstanding
            shares of Rhino Off Roads Industries, Inc. for 1,650,000 convertible
            preferred
            shares Series C of Rhino Outdoor International, Inc. Per the merger agreement,
            the Company issued another 600,000 shares of Series C convertible preferred
            stock for the retention of the subsidiary’s officers. Furthermore, 400,000
            shares were to be issued for loan guarantees that the subsidiary’s officers had
            for lines of credit and bank indebtedness. As of December 31, 2006, these
            shares
            have not been issued.
 
 The
            purchase price of Rhino Off Roads Industries, Inc. was allocated as
            follows:
 
 Cash
                  
                  $
                  18,578Accounts
                      receivable
                  
                  
                  5,000Marketable
                      securities
                  
                  
                  562,500Inventories
                  
                  
                  183,210Plant,
                      property & equipment, net
                  
                  
                  126,238Other
                      assets
                  
                  
                  2,052Total
                      Assets Acquired
                  
                  
                  897,578Current
                      liabilities
                  
                  
                  (2,186,533
                  )Other
                      liabilities
                  
                  
                  (74,508
                  )Total
                      Liabilities Assumed
                  
                  
                  (2,361,041
                  )Net
                      liabilities acquired in excess of assets
                  
                  $
                  (1,363,463
                  )Cost
                      of acquisition
                  
                  $
                  1,650,000Net
                      liabilities assumed
                  
                  
                  1,363,463Goodwill
                  
                  $
                  3,013,463
 **F-16**
 **Table
                of Contents**
 **RHINO
                OUTDOOR INTERNATIONAL, INC.**
 **(A
                Development Stage Company)**
 **NOTES
                TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
                31, 2006**




**RHINO
                  OUTDOOR INTERNATIONAL, INC.****(A
                  Development Stage Company)****CONSOLIDATED
                  BALANCE SHEETS - PROFORMA**PROFORMARhino
                  Outdoor
              
              Rhino
                  Off Roads
              
              
              
              
              
              Rhino
                  OutdoorInternational,
                  Inc.
              
              Industries,
                  Inc.
              
              Eliminations
              
              
              
              International,
                  Inc.December
                  31,
              
              December
                  31,
              
              
              
              
              
              December
                  31,2005
              
              2005
              
              
              
              
              
              2005(unaudited)**ASSETS**CURRENT
                  ASSETSCash
              
              $
              -
              
              $
              4,137
              
              $
              -
              
              
              
              $
              4,137Accounts
                  receivable
              
              
              7,500
              
              
              5,000
              
              
              (7,500
              )
              a
              
              
              5,000Loans
                  receivable
              
              
              15,000
              
              
              -
              
              
              (15,000
              )
              a
              
              
              -Inventory,
                  net
              
              
              -
              
              
              287,747
              
              
              -
              
              
              
              
              287,747Other
                  current assets
              
              
              -
              
              
              1,202
              
              
              -
              
              
              
              
              1,202TOTAL
                  CURRENT ASSETS
              
              
              22,500
              
              
              298,086
              
              
              (22,500
              )
              
              
              
              298,086OTHER
                  ASSETSPlant,
                  property, and eqiupment, net
              
              
              -
              
              
              143,343
              
              
              -
              
              
              
              
              143,343Goodwill
              
              
              -
              
              
              -
              
              
              2,201,700
              
              b
              
              
              2,201,700**TOTAL
                  ASSETS**
              
              $
              22,500
              
              $
              441,429
              
              $
              2,179,200
              
              
              
              $
              2,643,129**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**CURRENT
                  LIABILITIESAccounts
                  payable and accrued expenses
              
              $
              1,063,251
              
              $
              105,890
              
              $
              -
              
              
              
              $
              1,169,141Accrued
                  liabilities
              
              
              971,762
              
              
              613,176
              
              
              -
              
              
              
              
              1,584,938Bank
                  overdraft
              
              
              15,108
              
              
              -
              
              
              -
              
              
              
              
              15,108Lines
                  of credit
              
              
              -
              
              
              299,950
              
              
              -
              
              
              
              
              299,950Notes
                  payable
              
              
              294,192
              
              
              341,114
              
              
              (22,500
              )
              a
              
              
              612,806Current
                  portion of long-term debt
              
              
              -
              
              
              40,404
              
              
              -
              
              
              
              
              40,404Deferred
                  revenues and customer deposits
              
              
              172,453
              
              
              5,014
              
              
              -
              
              
              
              
              177,467Related
                  party payables
              
              
              1,226,161
              
              
              -
              
              
              -
              
              
              
              
              1,226,161TOTAL
                  CURRENT LIABILITIES
              
              
              3,742,927
              
              
              1,405,548
              
              
              (22,500
              )
              
              
              
              5,125,975LONG-TERM
                  LIABILITIESBank
                  indebtedness
              
              
              -
              
              
              58,131
              
              
              -
              
              
              
              
              58,131Vehicle
                  loans, net current portion
              
              
              -
              
              
              35,215
              
              
              -
              
              
              
              
              35,215Related
                  party payables
              
              
              -
              
              
              1,144,235
              
              
              -
              
              
              
              
              1,144,235TOTAL
                  LONG-TERM LIABILITIES
              
              
              -
              
              
              1,237,581
              
              
              -
              
              
              
              
              1,237,581TOTAL
                  LIABILITIES
              
              
              3,742,927
              
              
              2,643,129
              
              
              (22,500
              )
              
              
              
              6,363,556COMMITMENTS
                  AND CONTINGENCIES
              
              
              -
              
              
              -
              
              
              -
              
              
              
              
              -**STOCKHOLDERS'
                  DEFICIT**Preferred
                  stock, $0.001 par value; 5,000,000 shares authorizedSeries
                  A - 835,660 shares issued and outstanding
              
              
              836
              
              
              52
              
              
              (52
              )
              b
              
              
              836Series
                  B - 1,000,000 shares issued and outstanding
              
              
              1,000
              
              
              -
              
              
              -
              
              
              
              
              1,000Series
                  C - 2,250,000 shares issued and outstanding
              
              
              -
              
              
              -
              
              
              -
              
              
              
              
              -Common
                  stock, $0.001 par value; 500,000,000 shares
                  authorized,50,748,709
                  and 1,233,518 shares issued and oustanding,respectively
              
              
              1,233
              
              
              188
              
              
              (188
              )
              b
              
              
              1,233Additional
                  paid-in capital
              
              
              23,295,020
              
              
              599,760
              
              
              (599,760
              )
              b
              
              
              23,295,020Accumulated
                  deficit prior to current development stage
              
              
              (19,234,546
              )
              
              (2,801,700
              )
              
              2,801,700
              
              b
              
              
              (19,234,546
              )Accumulated
                  deficit in development stage
              
              
              (7,783,970
              )
              
              -
              
              
              -
              
              
              
              
              (7,783,970
              )Total
                  Stockholders' Deficit
              
              
              (3,720,427
              )
              
              (2,201,700
              )
              
              2,201,700
              
              
              
              
              (3,720,427
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT**
              
              $
              22,500
              
              $
              441,429
              
              $
              2,179,200
              
              
              
              $
              2,643,129




**F-17**
 **Table
              of Contents**
 **RHINO
              OUTDOOR INTERNATIONAL, INC.**
 **(A
              Development Stage Company)**
 **NOTES
              TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
              31, 2006**


**RHINO
                OUTDOOR INTERNATIONAL, INC.****(A
                Development Stage Company)****CONSOLIDATED
                STATEMENTS OF OPERATIONS - PROFORMA**Rhino
                Off RoadsIndustries,
                Inc.
            
            
            
            PROFORMARhino
                Outdoor
            
            For
                the
            
            
            
            Rhino
                OutdoorInternational,
                Inc.
            
            Period
                from
            
            
            
            International,
                Inc.Years
                Ended
            
            January
                1, 2006
            
            
            
            Years
                EndedDecember
                31
            
            through
            
            
            
            December
                312006
            
            June
                21, 2006
            
            Eliminations
            
            2006(unaudited)
            
            
            
            (unaudited)**REVENUES**
            
            $
            77,093
            
            $
            102,210
            
            $
            -
            
            $
            179,303**COST
                OF SALES**
            
            
            100,240
            
            
            188,550
            
            
            -
            
            
            288,790Gross
                Profit (Loss)
            
            
            (23,147
            )
            
            (86,340
            )
            
            -
            
            
            (109,487
            )**OPERATING
                EXPENSES**General
                and administrative
            
            
            819,959
            
            
            89,772
            
            
            -
            
            
            909,731Research
                and development
            
            
            -
            
            
            1,907
            
            
            -
            
            
            1,907Depreciation
                expense
            
            
            18,284
            
            
            16,254
            
            
            -
            
            
            34,538Management
                fees
            
            
            1,022,729
            
            
            128,604
            
            
            -
            
            
            1,151,333Marketing
                expenses
            
            
            4,146,574
            
            
            5,368
            
            
            -
            
            
            4,151,942Selling
                expenses
            
            
            3,740,287
            
            
            -
            
            
            -
            
            
            3,740,287**TOTAL
                OPERATING EXPENSES**
            
            
            9,747,833
            
            
            241,905
            
            
            -
            
            
            9,989,738**LOSS
                FROM OPERATIONS**
            
            
            (9,770,980
            )
            
            (328,245
            )
            
            -
            
            
            (10,099,225
            )**OTHER
                INCOME (EXPENSES)**Other
                income
            
            
            334,842
            
            
            32,813
            
            
            -
            
            
            367,655Gain
                on forgiveness of debt
            
            
            -
            
            
            -
            
            
            -
            
            
            -Interest
                expense
            
            
            (85,240
            )
            
            (42,271
            )
            
            -
            
            
            (127,511
            )Loss
                on sale of investment
            
            
            (89,167
            )
            
            -
            
            
            -
            
            
            (89,167
            )Loss
                on abandonment of assets
            
            
            -
            
            
            -
            
            
            -
            
            
            -**TOTAL
                OTHER INCOME (EXPENSES)**
            
            
            160,435
            
            
            (9,458
            )
            
            -
            
            
            150,977**LOSS
                BEFORE TAXES**
            
            
            (9,610,545
            )
            
            (337,703
            )
            
            -
            
            
            (9,948,248
            )**INCOME
                TAXES**
            
            
            -
            
            
            -
            
            
            -
            
            
            -**NET
                LOSS**
            
            
            (9,610,545
            )
            
            (337,703
            )
            
            -
            
            
            (9,948,248
            )**OTHER
                COMPREHENSIVE INCOME**Unrealized
                loss on marketable securities
            
            
            (435,600
            )
            
            -
            
            
            -
            
            
            (435,600
            )**COMPREHENSIVE
                LOSS**
            
            $
            (10,046,145
            )
            $
            (337,703
            )
            $
            -
            
            $
            (10,383,848
            )NET
                LOSS PER COMMON SHARE,BASIC
                AND DILUTED
            
            
            
            
            
            
            
            
            
            
            $
            (0.55
            )WEIGHTED
                AVERAGE NUMBER OFCOMMON
                STOCK SHARESOUTSTANDING,
                BASIC AND DILUTED
            
            
            
            
            
            
            
            
            
            
            
            18,025,916




**F-18**
 **Table
            of Contents**
 **RHINO
            OUTDOOR INTERNATIONAL, INC.**
 **(A
            Development Stage Company)**
 **NOTES
            TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
            31, 2006**


**RHINO
                OUTDOOR INTERNATIONAL, INC.****(A
                Development Stage Company)****CONSOLIDATED
                STATEMENTS OF OPERATIONS - PROFORMA**PROFORMARhino
                Outdoor
            
            Rhino
                Off Roads
            
            
            
            Rhino
                OutdoorInternational,
                Inc.
            
            Industries,
                Inc.
            
            
            
            International,
                Inc.Years
                Ended
            
            Years
                Ended
            
            
            
            Years
                EndedDecember
                31
            
            December
                31
            
            
            
            December
                312005
            
            2005
            
            Eliminations
            
            2005(unaudited)**REVENUES**
            
            $
            -
            
            $
            416,482
            
            $
            -
            
            $
            416,482**COST
                OF SALES**
            
            
            -
            
            
            659,854
            
            
            -
            
            
            659,854Gross
                Profit (Loss)
            
            
            -
            
            
            (243,372
            )
            
            -
            
            
            (243,372
            )**OPERATING
                EXPENSES**General
                and administrative
            
            
            681,731
            
            
            265,255
            
            
            -
            
            
            946,986Research
                and development
            
            
            -
            
            
            26,950
            
            
            
            
            
            26,950Depreciation
                expense
            
            
            -
            
            
            30,052
            
            
            -
            
            
            30,052Management
                fees
            
            
            -
            
            
            327,041
            
            
            -
            
            
            327,041Marketing
                expenses
            
            
            5,605,613
            
            
            56,730
            
            
            -
            
            
            5,662,343Selling
                expenses
            
            
            1,412,253
            
            
            -
            
            
            -
            
            
            1,412,253**TOTAL
                OPERATING EXPENSES**
            
            
            7,699,597
            
            
            706,028
            
            
            -
            
            
            8,405,625**LOSS
                FROM OPERATIONS**
            
            
            (7,699,597
            )
            
            (949,400
            )
            
            -
            
            
            (8,648,997
            )**OTHER
                INCOME (EXPENSES)**Other
                income
            
            
            5,430
            
            
            -
            
            
            -
            
            
            5,430Gain
                on forgiveness of debt
            
            
            2,500
            
            
            -
            
            
            -
            
            
            2,500Interest
                expense
            
            
            (78,132
            )
            
            (97,928
            )
            
            -
            
            
            (176,060
            )Loss
                on sale of investment
            
            
            -
            
            
            -
            
            
            -
            
            
            -Impairment
                of assets
            
            
            -
            
            
            (6,298
            )
            
            
            
            
            (6,298
            )Loss
                on abandonment of assets
            
            
            (14,171
            )
            
            -
            
            
            -
            
            
            (14,171
            )**TOTAL
                OTHER INCOME (EXPENSES)**
            
            
            (84,373
            )
            
            (104,226
            )
            
            -
            
            
            (188,599
            )**LOSS
                BEFORE TAXES**
            
            
            (7,783,970
            )
            
            (1,053,626
            )
            
            -
            
            
            (8,837,596
            )**INCOME
                TAXES**
            
            
            -
            
            
            -
            
            
            -
            
            
            -**NET
                LOSS**
            
            
            (7,783,970
            )
            
            (1,053,626
            )
            
            -
            
            
            (8,837,596
            )**OTHER
                COMPREHENSIVE INCOME**Unrealized
                loss on marketable securities
            
            
            -
            
            
            -
            
            
            -
            
            
            -**COMPREHENSIVE
                LOSS**
            
            $
            (7,783,970
            )
            $
            (1,053,626
            )
            $
            -
            
            $
            (8,837,596
            )NET
                LOSS PER COMMON SHARE,BASIC
                AND DILUTED
            
            
            
            
            
            
            
            
            
            
            $
            (15.84
            )WEIGHTED
                AVERAGE NUMBER OFCOMMON
                STOCK SHARESOUTSTANDING,
                BASIC AND DILUTED
            
            
            
            
            
            
            
            
            
            
            
            557,891




**F-18**