**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM 10-K/A**


**Amendment
      No. 1**







x
            **Annual
                report pursuant to Section 13 or 15(d) of the Securities
                Exchange Act of 1934.****For
                the fiscal year ended December 31, 2007**o
            **Transition
                report pursuant to Section 13 or 15(d) of the Securities
                Exchange Act of 1934.****Commission
                file number 0-52549**




**Jade
      Mountain Corporation**


(Exact
      name of registrant as specified in its charter)




**Nevada**
            
            **41-1508112**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer Identification No.)




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


**Dalian,
      China 116100**


(Address
      of principal executive offices)




**00186
      411 8766 1222**


(Registrant’s
      telephone number)




Securities
      registered pursuant to Section 12(b) of the Act:




**None**




Securities
      registered pursuant to Section 12(g) of the Act:




**Common
      stock, par value $.0001 per share**




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.    Yes o No
      x




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the
      Act.    Yes o No x




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




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein and will not be contained, to the best
      of
      registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10K or any amendment to
      this
      Form 10-K.  x




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




Large Accelerated Filer  o Accelerated
      Filer  o Non-Accelerated Filer x Smaller Reporting Company  o




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




The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the Registrant (assuming for these purposes, but without
      conceding, that all executive officers and directors are “affiliates” of the
      Registrant) as of March 20, 2008 (based on the closing sale price of the
      Registrant’s common stock, as reported on the Yahoo Finance on the
      Over-the-Counter Bulletin Board was $56,802,856. There were 25,000,000 shares
      of
      common stock outstanding on March 20, 2008.




DOCUMENTS
      INCORPORATED BY REFERENCE




None









**Jade
      Mountain Corporation**


**Annual
      Report on Form 10-K**


**For
      the Year Ended December 31, 2007**




**Table
      of Contents**




**PART
                  I**Item
                  1.
              
              Business
              
              3Item
                  1A.
              
              Risk
                  Factors
              
              25Item
                  1B.
              
              Unresolved
                  Staff Comments
              
              39Item
                  2.
              
              Properties
              
              39Item
                  3.
              
              Legal
                  Proceedings
              
              39Item
                  4.
              
              Submission
                  of Matters to a Vote of Security Holders
              
              39**PART
                  II**Item 5.
              
              Market
                  for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                  Purchases of Equity Securities
              
              40Item
                  6.
              
              Selected
                  Financial Data
              
              43Item
                  7.
              
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              
              44Item
                  7A.
              
              Quantitative
                  and Qualitative Disclosures about Market Risk
              
              54Item
                  8.
              
              Financial
                  Statements and Supplementary Data
              
              55Item
                  9.
              
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              
              55Item 9A.
              
              Controls
                  and Procedures
              
              55**PART
                  III**Item 10.
              
              Directors,
                  Executive Officers and Corporate Governance
              
              57Item
                  11.
              
              Executive
                  Compensation
              
              59Item
                  12.
              
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              
              61Item 13.
              
              Certain
                  Relationships and Related Transactions, and Director
                  Independence
              
              62Item 14.
              
              Principal
                  Accountant Fees and Services
              
              63**PART
                  IV**Item
                  15.
              
              Exhibits
                  and Financial Statement Schedules
              
              64Signatures
              
              66





2






Explanatory
      Note




This
      Amendment No. 1 to our Annual Report on Form 10-K
      is being filed to correct our prior filing which was an incomplete proof
      mistakenly filed with the SEC by our EDGAR filing service.  The within
      filing is the complete and correct proof.






**PART I.**




**Disclosure
      Regarding Forward Looking Statements**




Certain
      statements made in this report, and other written or oral statements made by
      or
      on behalf of Jade Mountain Corporation, may constitute “forward-looking
      statements” under the Private Securities Litigation Reform Act of 1995,
      which represent the expectations or beliefs of, including, but not limited
      to,
      statements concerning Jade Mountain Corporation’s operations, performance,
      financial condition and growth. For this purpose, any statements contained
      in
      this report that are not statements of historical fact may be deemed
      forward-looking statements. Without limiting the generality of the foregoing,
      when used in this report, the word “believes,” “expects,” “estimates,”
“intends,” “will,” “may,” “anticipate,” “could,” “should,” “can,” or “continue”
or the negative or other variations thereof or comparable terminology are
      intended to identify forward-looking statements. Examples of such statements
      in
      this report include descriptions of our plans and strategies with respect to
      developing certain market opportunities, our overall business plan, our plans
      to
      develop additional strategic partnerships, our intention to develop our products
      and platform technologies, our continuing growth and our ability to contain
      our operating expenses. All forward-looking statements are subject to certain
      risks and uncertainties that could cause actual events to differ materially
      from
      those projected, including those described under the caption “Risk Factors” in
      Item 1A of this report. We believe that these forward-looking statements
      are reasonable; however, you should not place undue reliance on such statements.
      These statements are based on current expectations and speak only as of the
      date
      of such statements. We undertake no obligation to publicly update or revise
      any
      forward-looking statement, whether as a result of future events, new information
      or otherwise.




**ITEM 1.**
            **BUSINESS**





Through
      our contractually controlled affiliate in the People’s Republic of China, since
      October 5, 2007, we have been engaged in the business of environmental
      protection and remediation. Our business consists of designing, manufacturing,
      installing and servicing wastewater treatment and flue gas desulphurization
      equipment principally for use in China’s iron and steel industry, and
      anti-oxidation products and equipment designed for use in the manufacture of
      hot
      rolled steel plate products. At the present, Jade Mountain’s sole business
      activities are acting as a holding company of our direct and indirect
      subsidiaries, Innomind Group Limited and Dalian Innomind Environment Engineering
      Co., Ltd., which contractually controls and operates our affiliate Dalian Rino
      Engineering Science and Technology Co., Ltd., a limited liability company
      organized under the laws of the People’s Republic of China (“PRC”), since
      October 5, 2007.





**Our
      History**





The
      Company was originally incorporated in Minnesota in 1984 as Applied Biometrics,
      Inc., for the purpose of developing and marketing a cardiac output monitoring
      system. In August, 2000, the Company’s Board of Directors (“Board of Directors”
or “Board”) determined that the Company would be unable to complete the
      development of its primary product, and thereupon ceased its business
      operations. During the latter part of 2000 we wound down our operations,
      eliminated most expenses and negotiated the termination or satisfaction of
      all
      of the Company’s obligations.





On
      May
      14, 2002, the Company filed a Form 15 with the SEC and ceased being a reporting
      company under the Exchange Act.





At
      a
      special meeting held on August 4, 2005, the Company’s shareholders voted to
      adopt a plan of complete liquidation and dissolution of the Company (the
“Plan”). After that shareholder vote, but before the Company’s remaining funds
      were distributed, on October 20, 2005, Glenn A. Little (“Little”) contacted the
      Company and proposed a reorganization that consisted of: (i) revoking the
      Plan; (ii) Little lending $100,000 to the Company (the “Loan”) pursuant to a
      convertible promissory note (the “Convertible Note”); (iii) a one-time
      distribution of all of the Company’s assets (including $75,000 of the Loan) to
      all of our shareholders other than Little; and (iv) amending the Company’s
      Articles of Incorporation to increase the authorized capital in order to permit
      the conversion of the Convertible Note. At a special shareholders’ meeting held
      on February 8, 2006, Little’s proposal was approved, and the Convertible Note
      was subsequently converted to 10,000,000 shares of the Company’s common stock
      (which became 5,000 shares subsequent to the reverse stock splits described
      below). As a result, Little became the Company’s majority shareholder with (at
      the time) 64.1% of the issued and outstanding shares.




3





At
      a
      special meeting held on October 18, 2006, the shareholders voted to approve
      a
      proposal to change the Company’s state of incorporation from Minnesota to
      Nevada, and to authorize the Board of Directors to change the Company’s name
      from “Applied Biometrics, Inc.” to such other name as the Board deemed
      appropriate. In January 2007 the Company (still named Applied Biometrics) merged
      with and into its wholly owned subsidiary, Jade Mountain Corporation (a Nevada
      corporation), in order to effect a change of domicile from Minnesota to Nevada.
      The Company’s name became Jade Mountain Corporation.





By
      written consent of the holder of a majority of the outstanding shares of the
      Company’s common stock, on June 5, 2007, the shareholders authorized a two
      hundred thousand (200,000) for one (1) reverse stock split (with fractional
      shares rounded up to the nearest whole number), which was effectuated on July
      16, 2007.





On
      August
      31, 2007, the Company’s Board of Directors authorized an amendment to its
      Articles of Incorporation to: (i) increase the number of its authorized shares
      of Common Stock from 100,000,000 shares, par value $.0001 per share, to
      10,000,000,000 shares, par value $.0001 per share (the “Authorized Share
      Increase”); and (ii) forward split its issued and outstanding common stock on a
      one share for one hundred (100) shares basis (the “Forward Split”). Under Nevada
      law, neither the Authorized Share Increase nor the Forward Split required the
      approval of the Company’s shareholders.





**Recent
      Development**





***Share
      Exchange Transaction***





On
      October 5, 2007, the Company acquired Innomind Group Limited, a British Virgin
      Islands corporation, in a share exchange transaction whereby the Company issued
      17,899,643 shares of our common stock (“Control Shares”) to the sole holder of
      100% of the capital stock of Innomind Group Limited, Mr. Zhang Ze, a PRC
      resident, in exchange for all the capital stock of Innomind Group Limited,
      a
      British Virgin Islands company (“Innomind”) held by Zhang Ze. As a result of the
      share exchange transaction, Innomind Group Limited became our wholly owned
      subsidiary and Innomind’s wholly-owned subsidiary, Dalian Innomind Environment
      Engineering Co., Ltd., a limited liability company organized under the laws
      of
      the People’s Republic of China (“PRC”), became the Company’s indirect
      subsidiary. (the “Share Exchange Transaction”).





Simultaneously
      with the consummation of the Share Exchange, Zhang Ze transferred and conveyed
      all of the Control Shares (and all of his right, title and interest in and
      to
      the Control Shares) to The Innomind Trust, a trust established under the laws
      of
      and domiciled in the British Virgin Islands, of which Zou Dejun and Qiu
      Jianping, the founders and sole equity owners of RINO, are the sole
      beneficiaries. The Control Shares represent 71.60 % of our total outstanding
      common stock.





The
      acquisition of Innomind and Dalian Innomind on October 5, 2007 by Jade Mountain
      Corporation effected a change in control and was accounted for as a “reverse
      acquisition” whereby Innomind is the accounting acquirer for financial statement
      purposes. Accordingly, for all periods and filings subsequent to the October
      5,
      2007 “reverse acquisition” transaction, the historical financial statements of
      the Company reflect the consolidated financial statements of Innomind since
      its
      inception and the operations of Jade Mountain subsequent to October 5, 2007.
      See
      the Current Report on Form 8-K that we filed with the Securities and Exchange
      Commission on October 12, 2007 for additional information.





***Private
      Placement***





In
      connection with the Share Exchange Transaction, on October 5, 2007, the Company
      completed a private placement transaction with 24 accredited investors in which
      the Company raised $24,480,319 in gross proceeds (or $21,251,000 in net
      proceeds) from the sale of 5,464,357 shares of our common stock to these
      investors pursuant to a Securities Purchase Agreement (“Securities Purchase
      Agreement”). In connection with the private placement we issued to the placement
      agent, Douglas Financial, LLC, as a placement fee (i) **** warrants
      to purchase 382,500 shares of common stock exercisable for a period of six
      years
      at an exercise price of $5.376 per share, subject to adjustment and (ii) 875,000
      shares of common stock, and (iii) paid to Douglas $1,750,000. Also in connection
      with the private placement, we paid Douglas $80,000 as an engagement and
      documentation fee. See the Current Report on Form 8-K that we filed with the
      Securities and Exchange Commission on October 12, 2007 for additional
      information.




4




The
      Securities Purchase Agreement contains representations and warranties by us
      and
      the investors which are customary for transactions of this type. The Securities
      Purchase Agreement also obligates us to indemnify the investors for any losses
      arising out of any breach of the agreement or failure by us to perform with
      respect to the representations, warranties or covenants in the
      agreement.





***Covenants*** :
      The
      Securities Purchase Agreement contains certain covenants on our part, including
      the following:





·
            Until
                April 5, 2008, the Company may not issue any “Future Priced Securities” as
                that term is described by IM 4350-1 of the NASD
                Manual.




·
            We
                must use the proceeds of the financing for working capital purposes
                and
                not to repay any outstanding debt (other than trade payables and
                accrued
                expenses incurred in the ordinary course of business) or to redeem
                or
                repurchase any common stock or common stock equivalents.




·
            Hare
                & Co., an investor in the private placement, has the right to
                designate one member of the Company’s (or at their election, Dalian
                Innomind’s or RINO’s) Board of Directors. As of the date of this
                Prospectus, Hare & Co. has not designated a member of the
                board.




·
            No
                later than February 2, 2008, the Company’s Board of Directors were to
                consist of a minimum of 5 members, a majority of whom must be “independent
                directors” as defined in NASDAQ Marketplace Rule 4200(a)(15). Until this
                covenant is complied with, we are required to hold $1,000,000 in
                escrow
                (“Board Escrow Holdback”). If for any reason or no reason the escrow agent
                does not receive requisite written notice from the investor
                representatives as to releasing this sum from escrow within 65 days
                after
                the private placement closing, we are required to pay liquidated
                damages
                of $244,353 per month (or partial month) until the default is cured.
                On
                March 20, 2008, we appointed three independent directors to our Board
                of
                Directors and fulfilled this obligation. For
                fiscal year 2007, we reserved $500,000
                for liquidated damages because of the delay in appointing the
                independent directors, for which amount no payment has been made
                as of the
                date of this report.





·
            Our
                common stock presently is quoted and trades on the OTCBB. If we apply
                to
                have our common stock traded on another trading market, we are required
                to
                include in that application all of the shares of common stock purchased
                in
                the private placement. We are also required to take all reasonably
                necessary action to continue the listing and trading of our common
                stock
                on the OTC:BB and any other trading market on which the common stock
                is
                listed, and to comply with all applicable rules of the trading market.




·
            On
                or prior to November 5, 2007, we were required to retain one of three
                specified investor relations firms, and a specified accounting firm.
                We
                have satisfied these requirements by retaining Hayden Communications
                International as our investor relations firm, and Jimmy C.H. Cheung
&
                Co. CPA as our independent public auditors. Nevertheless, under the
                Securities Purchase Agreement, by February 2, 2008, we are required
                to
                engage Grant Thornton LLP or another major accounting firm acceptable
                to
                the private placement investors as our independent public accountants.
                We
                are pursuing discussions with a range of auditors with regard to
                the 2008
                audit and quarterly reviews.





5




***Right
      of First Refusal.*** Each
      investor has the right to participate pro rata in any financing prior to April
      5, 2009.





***Delivery
      of up to 5,580,000 Additional Shares of Common Stock from Escrow Based on
      After-Tax Net Income.*** At the
      private placement closing, Zou Dejun and Qiu Jianping - who, through The
      Innomind Trust, together control 71.6% of the Company’s outstanding common
      stock, and are the founders of RINO - delivered to an escrow agent a total
      of
      5,580,000 of their beneficially owned shares of common stock in order to secure
      the Company’s obligation under the Securities Purchase Agreement to deliver
      additional common stock to the private placement investors in the event the
      Company fails to achieve certain pre-tax net income targets for fiscal years
      2007 and 2008 (“Make Good Escrow Shares”). Those targets are $16,000,000 in
      after-tax net income for the fiscal year ended December 31, 2007, $28,000,000
      in
      after-tax net income for the fiscal year ending December 31, 2008 and $1.120
      for
      earnings per share on a fully-diluted basis for 2008. In the event we do not
      achieve the 2007 net income target, we are obligated to transfer 1,674,000
      shares of our common stock to the private placement investors on a pro-rata
      basis, and if we fail to achieve the 2008 net income target, we must transfer
      to
      the investors a further 3,906,000 shares to the investors. In the event the
      Company is required to recognize any expense or deduction from revenue or income
      for releasing the Made Good Escrow Shares to the investors or the founders,
      as
      the case maybe, then such expense or deduction will be excluded for purposes
      of
      determining whether the company’s after-tax net incomes and earnings per share
      (for fiscal year 2008) have met the respective targets. Of the 17,899,643 shares
      of common stock issued on behalf of Mr. Zou and Ms. Qiu in the Share Exchange,
      5,580,000 have been deposited into escrow to secure these obligations. In fiscal
      year 2007, we achieved an after-tax net income of $17,718,325 (excluding any
      expenses that we are required to recognize for releasing any escrowed shares
      to
      the founders which release was deemed stock compensation to the founders),
      accordingly, we are required to release 1,674,000 shares to the founders and
      we
      booked $7,499,520 as compensation expenses which reduced our after-tax net
      income for fiscal year 2007 to $10,218,805.





***Liquidated
      Damages for PRC Governmental Rescission of Restructuring Transaction.*** If
      any
      governmental agency in the PRC challenges or otherwise takes any action that
      adversely affects the transactions contemplated by the Restructuring Agreements
      or the Share Exchange Agreement, and the Company cannot undo or otherwise
      address its materially adverse effect to the investors’ reasonable satisfaction
      within sixty (60) days of the occurrence of the PRC governmental action, then,
      upon written demand from an investor, we are required to, within thirty (30)
      days from the date of the written demand, pay to the investor, as liquidated
      damages, an amount equal to the entire amount that he or it invested in the
      private placement, without interest.





The
      cash
      held in escrow pursuant to the Board Escrow Holdback as described above will
      be
      accounted for as other current assets and will not be shown as cash or cash
      equivalents on the our balance sheet until such funds have been released from
      escrow pursuant to the terms of the Securities Purchase Agreement. The shares
      held in escrow as Make Good Escrow Shares will not be accounted for on our
      books
      until such shares are released from escrow pursuant to the terms of the
      Securities Purchase Agreement. If any Make Good Escrow Shares are released
      to
      the company management or employees, the value of such shares at the time of
      release will be recorded as compensation expense with a corresponding offset
      to
      additional paid-in capital in accordance with SFAS 123(R) paragraph 11. If
      any
      Make Good Escrow Shares are released to the Investors, no entry will be made.
      During the time such Make Good Escrow Shares are held in escrow, they will
      be
      accounted for as contingently issuable shares in determining the EPS denominator
      in accordance with SFAS 128.





Liquidated
      damages potentially payable by the Company under the Securities Purchase
      Agreement and the Registration Rights Agreement will be accounted for in
      accordance with FSP EITF 00-19-2. Estimated damages at the time of closing
      will
      be recorded as a liability and deducted from additional paid-in capital as
      costs
      of issuance. Estimated damages determined later pursuant to the criteria for
      SFAS 5 will be recorded as a liability and deducted from operating income.
      The
      Company may be required to pay to the investors, as liquidated damages, an
      amount equal to the entire amount that the investors invested in the private
      placement, without interest, if any governmental agency in the PRC challenges
      or
      otherwise takes any action that adversely affects the transactions contemplated
      by the Restructuring Agreements or the Share Exchange Agreement, and the Company
      cannot undo or otherwise address its materially adverse effect to the investors’
reasonable satisfaction. Such liquidated damages have the initial appearance
      of
      a redemption provision, in that there is no apparent end date to the provision
      and it appears to be outside the control of the Company. However, according
      to
      the legal opinion issued by the Company’s PRC counsel, the Restructuring
      Agreements and the organizational structure resulted thereunder are legal and
      enforceable under current PRC law and that changes to current law would need
      to
      be enacted in order for the PRC government or any of its entities to challenge
      the structure of the Company. Therefore, the Company believes that the chances
      of the restructuring structure being successfully challenged are remote, and
      therefore such liquidated damages are not recordable as a liability under SFAS
      5.





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




6




***Lock
      Up Agreement.***




Pursuant
      to Lock-Up agreements executed as of October 5, 2007, our CEO (Zou Dejun),
      Chairman of the Board (Qiu Jianping), The Innomind Trust (which is the record
      holder of 17,899,643 shares of our common stock for the benefit of Mr. Zou
      and
      Ms. Qiu) and our Chief Financial Officer and Secretary (Bruce Richardson) are
      prohibited from offering, pledging, selling, contracting to sell, selling any
      option or contract to purchase, purchasing any option or contract to sell,
      granting any option, right or warrant to purchase or otherwise transfer or
      dispose of, directly or indirectly, or announcing the offering of, any of their
      common stock (including any securities convertible into, or exchangeable for,
      or
      representing the rights to receive, common stock) until 1 year after the date
      on
      which the registration statement of which this prospectus forms a part is
      declared effective by the SEC.




***Registration
      Rights Agreement.***




Not
      later
      than November 19, 2007, we were obligated to file a registration statement
      with
      the SEC covering and registering for re-sale all of the common stock offered
      and
      sold in the private placement. If a registration statement is not filed by
      that
      date we will be obligated to pay the private placement investors liquidated
      damages equal in amount to 1% of the principal amount subscribed for by the
      investors for each month (or part of a month) after that date until the
      registration statement is filed (“Filing Damages”). We did not incur any Filing
      Damages. Because the registration statement was not declared effective by the
      SEC on or before March 3, 2008, we are obligated to pay liquidated damages
      to
      the investors equal in amount to 1% of the principal amount subscribed for
      by
      the investors for each month (or part of a month)(an aggregate of $249,460)
      after March 3, 2008, until the registration statement is declared effective
      (“Effectiveness Damages”). The aggregate of Filing Damages and Effectiveness
      Damages is capped at 10% ($2,494,600). Such liquidated damages potentially
      payable by the Company will be accounted for in accordance with FSP EITF
      00-19-2. Estimated damages at the time of closing will be recorded as a
      liability and deducted from additional paid-in capital as costs of issuance.
      Estimated damages determined later pursuant to the criteria for SFAS 5 will
      be
      recorded as a liability and deducted from operating income.




As
      of
December
      31, 2007, we reserved liquidated damages in the amount of $500,000
      under the Registration Rights Agreement, for which no payment has been
      made.





***Piggy-Back
      Registration Rights.***





In
      the
      Share Exchange Agreement we granted to Glenn A. Little “piggy-back” registration
      rights as to 116,071 of the shares of common stock beneficially owned by him.
      These rights, pursuant to which 116,071 of those shares are being registered
      in
      this prospectus, allow Mr. Little to elect to include all or any portion of
      those 116,071 shares in registration statements otherwise filed by the Company.
      Mr. Little has elected to include all such shares in the present registration
      statement.





Pursuant
      to the Securities Purchase Agreement date that the company entered into with
      the
      24 investors, at the private placement closing, Zou Dejun and Qiu Jianping
      -
      who, through The Innomind Trust, together control 71.6% of the Company’s
      outstanding common stock, and are the founders of RINO - delivered to an escrow
      agent a total of 5,580,000 of their beneficially owned shares of common stock
      in
      order to secure the Company’s obligation under the Securities Purchase Agreement
      to deliver additional common stock to the private placement investors in the
      event the Company fails to achieve certain pre-tax net income targets for fiscal
      years 2007 and 2008 (“Make Good Escrow Shares”). Those targets are $16,000,000
      in after-tax net income for the fiscal year ended December 31, 2007, and
      $28,000,000 in after-tax net income for the fiscal year ending December 31,
      2008. In the event we do not achieve the 2007 net income target, we are
      obligated to transfer 1,674,000 shares of our common stock to the private
      placement investors on a pro-rata basis, and if we fail to achieve the 2008
      net
      income target, we must transfer to the investors a further 3,906,000 shares
      to
      the investors. Of the 17,899,643 shares of common stock issued on behalf of
      Mr.
      Zou and Ms. Qiu in the Share Exchange, 5,580,000 have been deposited into escrow
      to secure these obligations.




7




***Restructuring
      Agreements to Acquire RINO’s Operating Business***





In
      connection with the consummation of the Share Exchange Transaction and the
      Private Placement, Dalian Innomind Environment Engineering Co., Ltd., an
      indirect wholly-owned subsidiary of the Company and a limited liability company
      organized under the laws of the PRC. (“Dalian Innomind”), entered into and
      consummated a series of transactions (collectively, the “Restructuring
      Transactions” and the agreements related thereto, collectively, the
“Restructuring Agreements”), with Dalian RINO Engineering Science and Technology
      Co., Ltd., a limited liability company organized under the laws of the P.R.C.
      (“RINO”). Under the Restructuring Agreements dated on October 3, 2007 and closed
      on October 5, 2007, Dalian Innomind agreed to: (i) purchase and lease
      substantially all of the assets of RINO; and (ii) assume control of the
      operations and management of RINO’s business in exchange for a management fee
      equal to the business’s monthly net profits. As a result, the business will be
      conducted by Dalian Innomind. To the extent that any aspect of the business
      needs to be conducted by RINO in the future, the Restructuring Agreements
      provide Dalian Innomind with the ability to control RINO and any of its
      remaining assets and operations. We anticipate that RINO will continue to be
      the
      contracting party under its customer contracts, bank loans and certain other
      assets until such time as those may be transferred to Dalian Innomind. Upon
      the
      effectiveness of the Restructuring Agreements on October 5, 2007, Dalian
      Innomind assumed full operating control of RINO. Dalian Innomind has completed
      all regulatory requirements for the purchase of Dalian Rino assets.





As
      a
      result of the Restructuring Agreements, RINO became an indirectly contractually
      controlled affiliate of the Company.





The
      following is a summary of the material terms of each of the Restructuring
      Agreements.





***Purchase
      Agreement*** .
      Under
      the purchase agreement between Dalian Innomind and RINO (the "Purchase
      Agreement"), Dalian Innomind agreed to purchase from RINO: (i) substantially
      all
      of RINO's manufacturing equipment and tangible assets for RMB 2,250,343; and
      (ii) all of RINO’s three, presently owned patents, and three presently pending
      patent applications, for an aggregate transfer fee of RMB 10,000. Additionally,
      under the Purchase Agreement, RINO: (w) will lease to Dalian Innomind
      substantially all of RINO’s manufacturing plant and land at an annual rent of
      RMB 612,000; (x) with respect to its presently owned patents, will
      contemporaneously enter into a separate transfer agreement with Dalian Innomind
      to accomplish their actual transfer to Dalian Innomind; (y) with respect to
      its
      presently pending patent applications, and in order to accomplish the actual
      transfer of, each such applied-for patent, will enter into additional patent
      transfer contracts within ten days after the issuance of the patents; and (z)
      has granted to Dalian Innomind the royalty-free, perpetual right to use the
      “RINO” trademark and logo.





In
      connection with these purchases and leases, under the Purchase Agreement, RINO
      has agreed to transfer its employees and provide its supply and sales channels
      to Dalian Innomind.




The
      following ancillary agreements also were entered into in connection with the
      Purchase Agreement:





***Patent
      Transfer Contract*** .
      Under
      this contract between RINO, Qiu Jianping and Dalian Innomind, Qiu Jianping
      agreed to transfer and assign to Dalian Innomind the three patents of which
      Qiu
      is the registered owner, for an assignment fee of RMB 10,000. Qiu Jianping
      is in
      the process of commencing the patent transfer process, which is estimated to
      take approximately 5 - 6 months to complete. Prior to the effectiveness of
      the
      patent transfers, Dalian Innomind (subject to RINO's right to use these patents)
      has the exclusive legal right, royalty free, to use these patents.





***Trademark
      Authorization*** .
      In this
      instrument (the "Trademark Authorization"), RINO, as the PRC registered owner
      of
      the "RINO" trademark and logo, granted Dalian Innomind the right to use the
      same
      in perpetuity and free of any royalties.





***Entrusted
      Management Agreement*** .
      Pursuant to this entrusted management agreement among RINO, the RINO
      shareholders and Dalian Innomind (the "Entrusted Management Agreement"), RINO
      and its shareholders agreed to entrust the operations and management of the
      Business to Dalian Innomind. Under the Entrusted Management Agreement, Dalian
      Innomind will manage RINO’s operations and assets, control all of RINO's cash
      flow through an entrusted bank account, will be entitled to RINO's net profits
      as a management fee, and will be obligated to pay all RINO payables and loan
      payments. The Entrusted Management Agreement will remain in effect until Dalian
      Innomind acquires all of the assets or equity of RINO (as more fully described
      below under “Exclusive Option Agreement”). Prior to that acquisition, RINO will
      only own those certain assets that have not been sold or leased to Dalian
      Innomind pursuant to the Restructuring Agreements. We anticipate that RINO
      will
      continue to be the contracting party under its customer contracts, banks loans
      and certain other assets until such time as those may be transferred to Dalian
      Innomind.




8




***Shareholders’
      Voting Proxy Agreement*** .
      Under
      the shareholders' voting proxy agreement among the RINO shareholders and Dalian
      Innomind, the RINO shareholders irrevocably and exclusively appointed the
      members of Dalian Innomind’s board of directors as their proxies to vote on all
      matters that require RINO shareholder approval.





***Exclusive
      Option Agreement*** .
      Under
      the exclusive option agreement among Dalian Innomind, RINO and the RINO
      shareholders, the RINO shareholders have granted Dalian Innomind an irrevocable
      and exclusive purchase option (the “Option”) to acquire RINO’s equity and/or
      remaining assets, but only to the extent that the acquisition does not
      violate limitations imposed by PRC law on such transactions. Current PRC law
      does not specifically provide for a non-PRC entity's equity to be used as
      consideration for the purchase of a PRC entity's assets or equity. Accordingly,
      the Option is exercisable when PRC law would allow foreign equity to be used
      as
      consideration to acquire a PRC entity's equity interests and/or assets, or
      when
      the Company has sufficient funds to purchase RINO's equity or remaining assets.
      The consideration for the exercise of the Option is to be determined by the
      parties and memorialized in future, definitive agreements setting forth the
      kind
      and value of such consideration. To the extent the RINO shareholders receive
      any
      of such consideration, the Option requires them to transfer (and not retain)
      the
      same to RINO or Dalian Innomind.





***Share
      Pledge Agreement*** .
      Under
      the share pledge agreement among Dalian Innomind and the RINO shareholders
      (the
      "Share Pledge Agreement"), the RINO shareholders have pledged all of their
      equity interests in RINO, including the proceeds thereof, to guarantee all
      of
      Dalian Innomind's rights and benefits under the Restructuring Agreements. Prior
      to termination of the Share Pledge Agreement, the pledged equity interests
      cannot be transferred without Dalian Innomind's prior written
      consent.





Please
      refer to our Current Report on Form 8-K that we filed with the Securities and
      Exchange Commission on October 12, 2007 for more information about the
      transactions described above.





**Organizational
      History of Innomind and Dalian Innomind**





***Innomind*** .





Innomind
      Group Limited (“Innomind”) was incorporated under the laws of the British Virgin
      Islands on November 17, 2006. Until the consummation of the Share Exchange
      Transaction, Innomind’s sole shareholder was Zhang Ze, a citizen and resident of
      the People’s Republic of China (the “PRC”).




***Dalian
      Innomind*** .





On
      July
      9, 2007, Innomind incorporated Dalian Innomind Environment Engineering Co.,
      Ltd.
      under the laws of the PRC. All of Dalian Innomind’s outstanding capital stock is
      held by Innomind, and by virtue of such ownership Dalian Innomind is a “wholly
      foreign owned enterprise (“WFOE”) under PRC law.





**Organizational
      History of RINO**




Dalian
      Rino Engineering Science and Technology Co., Ltd. (“RINO”) was formed on March
      5, 2003, under PRC law. Its initial registered capital was RMB 7,000,000
      (approximately US $922,327), which was increased to RMB 30,500,000
      (approximately US $4,018,711) on April 18, 2006. RINO is owned by its two
      founders, Zou Dejun (90%) and his wife, Qiu Jianping (10%). Since its founding,
      RINO has been engaged in developing, marketing and selling its three principal
      products: the Lamella Inclined Tube Settler Wastewater Treatment System (also
      called the “Lamella Wastewater System”), the Circulating Fluidized Bed Flue Gas
      Desulphurization System (also called the “Desulphurization System”), and the
      High Temperature Hot Rolled Steel Anti-Oxidation System (also called the
“Anti-Oxidation System”).




9





The
      Company’s current structure is set forth in the diagram below:









**Overview
      of the Business**





This
      section discusses the business that the Company acquired from of RINO in the
      Share Exchange. We currently operate the business through the Entrusted
      Management Agreement with RINO and, as of October 5, 2007, upon the
      effectiveness of the Entrusted Management Agreement, we have assumed full
      operational control of the business.





We
      are an
      industrial technology-based, PRC environmental protection and remediation
      company. Our business consists of designing, manufacturing, installing and
      servicing wastewater treatment and exhaust emission desulphurization equipment
      principally for use in China’s iron and steel industry, and anti-oxidation
      products and equipment designed for use in the manufacture of hot rolled steel
      plate products. All of our products are custom-built for specific project
      installations, and we execute supply contracts during the design phase of our
      projects. Our products are all designed to reduce either or both industrial
      pollution and energy utilization, and comply with ISO 9001 Quality Management
      System and ISO 14001 Environment Management System requirements, for which
      RINO
      received certificates in 2004.





Since
      1978, the PRC has undergone a substantial economic transformation and rapid
      economic growth, becoming the world’s fifth largest national economy, with the
      world’s largest and most rapidly growing iron and steel market. Through its
      continuous focus on nation-wide economic development, China’s overall industrial
      pollution output has become a central issue for the national government, and
      a
      priority in the PRC’s eleventh five-year plan. For example, in 2006 China’s
      industrial enterprises emitted 25.9 million tons of sulphur dioxide, the
      principal cause of “acid-rain,” and the PRC has become the world’s largest
      emitter of sulphur dioxide pollution. As a consequence of this and other
      industrially-based environmental challenges, RINO’s customer base - the Chinese
      iron and steel industry - faces governmental mandates to decrease or eliminate
      water pollution and sulphur emissions, which are key applications for our
      technologies .




10




Accordingly,
      environmental protection and remediation is a relatively new industry in the
      PRC. Nonetheless, like the Chinese economy, it is rapidly growing - with an
      estimated, 2007 waste water remediation market of $226 million, and an
      estimated, 2007 desulphurization market of $770 million. Further, the market
      for
      the Company’s products is highly regulated by the central PRC government, which
      sets specific pollution output targets for industrial enterprises. For this
      reason, we believe that the demand for our products is predictable, and will
      follow the growth of the PRC’s iron and steel industry and government-mandated
      pollution control standards that are being made more stringent annually.




We
      also
      believe that our revenue and profitability growth to date arises from these
      same
      factors. Our net sales for fiscal years 2005, 2006 and 2007 were $3,637,717,
      $10,756,145 and $63,615,738, respectively, representing an increase of 196%
      in
      2006 from 2005 and an increase of 491% in 2007 from 2006. Our gross profit
      for
      fiscal years 2005, 2006 and 2007 were $863,891, $5,411,201 and $30,694,794,
      respectively, representing an increase of 526% in 2006 from 2005, and an
      increase of 467% in 2007 from 2006. Our income from operations for fiscal years
      2005, 2006 and 2007 were $487,256, $4,621,452 and $15,819,358, respectively,
      representing an increase of 848% in 2006 from 2005 and an increase of 242%
      in
      2007 from 2006. In fiscal year 2007, we achieved an after-tax net income of
      $17,718,325 (excluding any expenses that we are required to recognize for
      releasing any escrowed shares to the founders which release was deemed stock
      compensation to the founders), accordingly, we are required to release 1,674,000
      shares to the founders pursuant to the Securities Purchase Agreement and we
      booked $7,499,520 as compensation expenses which substantially reduced our
      income from operations for fiscal year 2007.




**Principal
      Products**




We
      have
      three principal products and product lines: the “Lamella Inclined Tube Settler
      Waste Water Treatment System,” the “Circulating, Fluidized Bed, Flue Gas
      Desulphurization System,” and the “High Temperature Anti-Oxidation System for
      Hot Rolled Steel.”





***Lamella
      Inclined Tube Settler Wastewater Treatment System*** .





The
      Lamella Inclined Tube Settler Wastewater Treatment System (the “Lamella
      Wastewater System”) is a highly efficient, comprehensive industrial waste water
      treatment system utilizing proprietary and patented technology developed solely
      by RINO. The technology has received numerous regional and national design
      awards, and has been successfully installed and used at some of the largest
      steel mills in China, including Jinan Iron & Steel Group Co., Ltd., Benxi
      Iron & Steel (Group) Co., Ltd., Handan Iron & Steel Group Co., Ltd.,
      Tianjin Tiangang Group Co., Ltd., Shijiazhuang Iron & Steel Group Co., Ltd.,
      Panzhihua Iron & Steel Group Co., Ltd., and Anyang Iron & Steel Group
      Co., Ltd.





For
      more
      information about the Lamella Wastewater System technology, please see the
      section of this prospectus entitled “Business, - Technology and Products.”





***Circulating,
      Fluidized Bed, Flue Gas Desulphurization System*** .





The
      Circulating, Fluidized Bed, Flue Gas Desulphurization System (the
“Desulphurization System”) is a highly effective system to remove particulate
      sulphur from sinter and flue gas emissions of steel mills, and the resulting
      discharge from the system meets all relevant PRC air pollution standards.




The
      Desulphurization System utilizes proprietary technology jointly developed by
      RINO and the Chinese Academy of Sciences. On May 18, 2007, RINO acquired the
      intellectual property rights to this technology (including the right to patent
      the same) from the Chinese Academy of Sciences for RMB 1,000,000.





In
      the
      fourth quarter of 2007, we completed installation of three desulphurization
      systems with an aggregate contract price of $22 million and completed
      installation of flue gas desulphurization accessories with a contract value
      of
      approximately $1.3 million. In early 2008, we signed a contract with an existing
      customer to sell an additional desulphurization system with a contract value
      of
      approximately $10.1 million. We can provide no assurance that this contract
      or
      any other will be executed nor if executed that we will receive
      payment.




For
      more
      information about the Desulphurization System, please see the section of this
      report entitled “Business, - Product Technologies.”




11





***High
      Temperature Anti-Oxidation System for Hot Rolled Steel***





The
      Anti-Oxidation System is a set of products and a mechanized system, jointly
      developed by RINO and the Chinese Academy of Sciences, to substantially reduce
      oxidation-related output losses in the production of continuous cast, hot rolled
      steel. The system operates at significantly higher product temperatures than
      its
      competitors, thereby increasing its general utility and its range of steel
      product applications. In March, 2006, RINO acquired the technology from the
      Chinese Academy of Sciences under an agreement that provides for the
      co-ownership of the intellectual property rights to the formula for the
      anti-oxidizing paint used in the system and to the spray system for applying
      the
      paint, co-ownership of any patents granted, and the transfer to RINO of all
      commercialization rights.





The
      first
      unit of our Anti-Oxidation System was installed at Jinan Iron & Steel Co.,
      Ltd. in July, 2007; an additional unit is being installed at Benxi Iron &
Steel Co., Ltd., in China at an aggregate contract price of $1,947,000, and
      negotiations are being held for: (i) three additional installations (Kunming
      Iron & Steel, Wuhan Iron & Steel and Nanjing Iron & Steel) with an
      expected aggregate contract price of $1,298,702; and (ii) supply of
      anti-oxidizing paint (Jinan Iron & Steel Co., Ltd.) at a contract price of
      $156,416. We can provide no assurance that this contract or any other will
      be
      executed nor if executed that we will receive payment.





For
      more
      information about the Anti-Oxidation System, please see the section of this
      report entitled “Business - Product Technologies.”





***Competitive
      Advantages***





We
      believe that the Company’s products have a number of key, competitive advantages
      that include:




·
            The
                Lamella Wastewater System, Desulphurization System and the Anti-Oxidation
                System are all manufactured in the PRC, and, therefore, benefit from
                favorable labor costs and industry incentives that afford us a significant
                price advantage over our international
                competitors.




·
            Based
                on available industry data for the PRC, we believe that the Company
                presently is an industry leader in steel mill waste water decontamination,
                with a present market share of approximately
                10%.




·
            The
                China market for our products and technology (the iron and steel
                industry)
                is the fastest growing such market in the
                world.




·
            Our
                technologies give the Company significant installation and operating
                cost
                advantages as compared to other suppliers of similarly-targeted
                environmental protection and pollution control
                equipment.




·
            All
                of our manufacturing facilities are ISO 9001 and ISO 14001 certified,
                and
                all of our products meet or exceed PRC and international quality
                standards.





**Additional
      Line of Business**





In
      addition to the environmental remediation and protection systems above, in
      late
      2005 RINO began utilizing “down time” on its own, proprietary production
      equipment by performing contract machining for third-party industrial
      enterprises.





The
      specialized heavy machinery and equipment that we use to produce our Lamella
      Wastewater System, Desulphurization System and Anti-Oxidation System also
      provides us with a substantial capacity  to
      undertake the machining of large, high-precision and advanced structures from
      areas outside of northeast China. To this end, RINO established and the Company
      maintains strategic cooperation relationships with Dalian Heavy Industry
      (Zhonggong) and China First Heavy Industries with which we contract to provide
      production time on our heavier machine tools, during “down time” on our own
      production. Since 2005, such contract manufacturing business has provided the
      Company with $3.24 million (or 22.48%) of its cumulative gross revenues and
      $1.83 million (or 29.24%) of its cumulative gross profits.




12




The
      Company expects that as sales of its own products increase, we will reduce
      or
      eliminate contracting the use of our machines and equipment to third parties.





**Environmental
      Challenges in the PRC**





China
      currently is in the midst of extraordinarily rapid economic growth and reform
      that is closely tied to its pace of industrial development. In 2004, the PRC’s
      total industrial output reached RMB 7,238.7 billion (US $934 billion). Since
      1978, China’s real GDP has grown at an average rate of approximately 11.3% per
      year, while its share of world trade has risen from less than 1% to almost
      8% in
      the same timeframe. Foreign trade growth has averaged nearly 15% over the same
      period, or more than 2,700% in the aggregate. Over the last decade the PRC
      has
      become a preferred destination for direct foreign investment, and in 2005
      attracted $72.4 billion in foreign direct investment, according to the Chinese
      Ministry of Commerce. China also is competitive in many advanced technologies
      and continues to be a preferred destination for the relocation of global
      manufacturing facilities in virtually every manufacturing sector. China is
      now
      the fifth largest economy and the third largest trader in the
      world.





With
      the
      PRC’s rapid industrial expansion has come its inevitable by-product:
      industrially generated pollution of water, the air and the environment,
      generally. It is estimated that approximately 80% of China’s environmental
      pollution results from industry-produced solid waste, waste water and waste
      gas
      emissions. During the 1990’s the extent of and dangers posed by China’s
      increasing levels of environmental pollution became widely perceived and
      developed into a priority for the PRC’s central government. During the 2000-2005
      period, China expended over $90 billion on environmental protection efforts.
      For
      the new, eleventh five-year plan (2006-2010), the PRC is expected to spend
      approximately $193 billion on such efforts. The reduction or elimination of
      waste water and airborne pollutants has become a key element in the country’s
      next five year economic plan.





**PRC
      Markets for RINO’s Products and Technologies**





***Waste
      Water Remediation*** .





China
      is
      a country that has limited water resources, with approximately 2,200 cubic
      meters per person, or one-fourth the world average. Conservation through the
      improvement of usage efficiency is the fundamental way to resolve this tension
      between water supply and demand. China’s very high rate of industrial water
      consumption (as compared to that of developed countries) offers great potential
      for water conservation and re-usage programs. Our principal target market,
      the
      iron & steel industry, consumes large quantities of water by the nature of
      the processes employed, and, therefore, has an inherent need to increase
      efficiency and thereby reduce its usage costs, as well as reclamation costs
      and
      governmental penalties.




Today,
      there are approximately 730 blast furnaces over 300 cubic meters in size
      operating in China. Of these, 470 have already adopted wastewater treatment
      facilities utilizing older, coal gas washing techniques, while 260 have no
      wastewater treatment whatsoever. The average cost of equipment for wastewater
      treatment of a blast furnace of this size is $2,000,000. Additionally, there
      are
      670 steel-making converters in China with a capacity of over 75 tons. 340 of
      these converters have existing coal gas wastewater treatment equipment, while
      330 converters have no wastewater treatment facilities whatsoever. The average
      cost of equipment for a converter of this size is $1,700,000. The PRC government
      has mandated that all blast furnaces and converters have wastewater treatment
      facilities in place within five years. Accordingly, these mandates have created
      a $216 million annual market for at least each of the next five years. The
      following chart illustrates this demand level and values.




**Available
                Market - 11th Five Year Plan
                Requirement**




**Blast Furnaces**
            
            **Converters**Total
            
            
            730
            
            
            670Converted
            
            
            470
            
            
            340Untreated
            
            
            260
            
            
            330Avg.
                Cost/unit
            
            $
            2,000,000
            
            $
            1,700,000#/year
            
            
            52
            
            
            66Annual
                Market
            
            $
            104,000,000
            
            $
            112,200,0005
                Year Market
            
            $
            520,000,000
            
            $
            561,000,000





13




In
      addition to the blast furnaces and converters with no wastewater treatment
      facilities, we believe that there is a large replacement market potential for
      those operations that utilize coal gas washing techniques. This is older
      technology introduced by the former Soviet Union in the late 1970s and applied
      in iron & steel industry in the 1980s. Compared with our proprietary Lamella
      Wastewater System technology, coal gas washing has lower throughput capability,
      a much larger footprint and involves large maintenance requirements and
      expenses. Based on our market research with our end-use customers as well as
      market investigation with other iron & steel foundries and mills, as
      illustrated in the following chart, we believe there is a substantial need
      to
      replace this aging technology, thereby creating an additional $87,900,000 market
      for blast furnace and converter retrofits.





**Blast
                Furnaces**
            
            **Converters**Total
            
            
            470
            
            
            340Avg.
                Cost/unit
            
            $
            2,000,000
            
            $
            1,700,000#/year
            
            
            21
            
            
            27Annual
                Market
            
            $
            42,000,000
            
            $
            45,900,000








The
      following chart illustrates the Company’s forecasted, 10 year market for
      wastewater treatment equipment in China, generally, and for our Lamella
      Wastewater System, specifically.





**Wastewater
                market**




water
            
            # of furnace
            
            # of converters
            
            
            
            average
            
            total marketYear
            
            million mts
            
            above 300cbm
            
            above 50mts
            
            # of tanks
            
            unit price
            
            Value($
                millions)
            
            $
                millions2005
            
            
            4,594
            
            
            350
            
            
            175
            
            
            5,244
            
            $
            0.13
            
            $
            6772006
            
            
            4,667
            
            
            356
            
            
            180
            
            
            5,328
            
            $
            0.13
            
            $
            6872007
            
            
            4,741
            
            
            362
            
            
            185
            
            
            5,412
            
            $
            0.13
            
            $
            6982008
            
            
            4,804
            
            
            368
            
            
            189
            
            
            5,484
            
            $
            0.13
            
            $
            7082009
            
            
            4,867
            
            
            374
            
            
            193
            
            
            5,556
            
            $
            0.13
            
            $
            7172010
            
            
            4,920
            
            
            380
            
            
            197
            
            
            5,616
            
            $
            0.13
            
            $
            7252011
            
            
            4,972
            
            
            386
            
            
            201
            
            
            5,676
            
            $
            0.13
            
            $
            7322012
            
            
            5,025
            
            
            391
            
            
            205
            
            
            5,736
            
            $
            0.13
            
            $
            7402013
            
            
            5,077
            
            
            396
            
            
            209
            
            
            5,796
            
            $
            0.13
            
            $
            7482014
            
            
            5,130
            
            
            401
            
            
            213
            
            
            5,856
            
            $
            0.13
            
            $
            7562015
            
            
            5,182
            
            
            406
            
            
            217
            
            
            5,916
            
            $
            0.13
            
            $
            763




**RINO
      market share**




# of annually
            
            # of accumulated
            
            annual paint
            
            annually
            
            average
            
            annualinstalled
            
            installed
            
            consumption
            
            sales of
            
            price
            
            revenue
            
            % byYear
            
            equipments
            
            equipments
            
            (mt/equipment)
            
            paint(mts)
            
            ($/mt)
            
            $ millions
            
            consumption2005
            
            
            
            
            
            
            
            
            
            
            
            0
            
            
            
            
            
            0
            
            
            0
            %2006
            
            
            
            
            
            
            
            
            
            
            
            0
            
            
            
            
            
            0
            
            
            0
            %2007
            
            
            10
            
            
            10
            
            
            1,250
            
            
            6,250
            
            
            1,265
            
            
            7.90
            
            
            1
            %2008
            
            
            30
            
            
            40
            
            
            1,250
            
            
            31,250
            
            
            1,265
            
            
            39.52
            
            
            5
            %2009
            
            
            35
            
            
            75
            
            
            1,250
            
            
            71,875
            
            
            1,265
            
            
            90.89
            
            
            12
            %2010
            
            
            40
            
            
            115
            
            
            1,000
            
            
            95,000
            
            
            1,265
            
            
            120.13
            
            
            16
            %2011
            
            
            45
            
            
            160
            
            
            1,000
            
            
            137,500
            
            
            1,265
            
            
            173.87
            
            
            23
            %2012
            
            
            40
            
            
            200
            
            
            1,000
            
            
            180,000
            
            
            1,265
            
            
            227.61
            
            
            30
            %2013
            
            
            35
            
            
            235
            
            
            1,000
            
            
            217,500
            
            
            1,265
            
            
            275.03
            
            
            37
            %2014
            
            
            30
            
            
            265
            
            
            1,000
            
            
            250,000
            
            
            1,265
            
            
            316.13
            
            
            42
            %2015
            
            
            25
            
            
            290
            
            
            1,000
            
            
            277,500
            
            
            1,265
            
            
            350.90
            
            
            47
            %




14




***Desulphurization
      Technology*** .





In
      China,
      the main cause of airborne pollution is sulfur dioxide emissions from coal.
      According to joint research by the Chinese Institute of Environmental Science
      and Tsinghua University, sulphur dioxide-caused acid rain annually costs China
      over $13.3 billion in various losses, and atmospheric pollution results in
      an
      annual loss equivalent to two or three percent of China's GDP.





In
      2005,
      the latest year for which statistics are available, the Chinese iron & steel
      industry discharged 1.24 million metric tons of sulphur dioxide into the
      atmosphere. Decades of lightly monitored growth in this industry sector, with
      little or no consequences attached to sulphur dioxide emissions, combined with
      mandatory, industry-wide sulphur dioxide reductions over the next five years,
      presents the industry with a pressing need to remediate these emissions from
      iron & steel sinters.





Over
      the
      next five years, coal-fired sinters and other like furnace operations must
      install desulphurization facilities or face stiff, monthly penalties or,
      possibly, shut down their operations. We believe that, because our
      Desulphurization System is the only sinter process equipment that is
      specifically designed for flue gas desulphurization applications that are larger
      than 90 square meters - the standard size for sinter operations in the PRC
      iron
& steel industry - the Company has a substantial competitive advantage over
      its international competitors.




Today,
      there are more than 165 coal fired sinter processes in China without flue gas
      desulphurization equipment (and this number is expected to rise to over 200
      by
      2010). As illustrated by the following chart, over the next five years, this
      translates into a cumulative market for our desulphurization technology of
      over
      $267 million. We plan to penetrate this market aggressively by marketing the
      Desulphurization System as a turn-key solution for the China iron & steel
      industry’s sulphur dioxide emissions problems.




**De-sulphurization**




**total market size - RINO**
            
            
            
            **RINO market share**# of sinter
            
            average price of
            
            total market
            
            # of sinter
            
            Equip.
            
            Annual
            
            Accumulated
            
            % of totalabove
            
            Equipment
            
            Value
            
            above
            
            avg price of
            
            revenue
            
            revenue
            
            penetratedYear
            
            90sqm
            
            ($ millions)
            
            $ millions
            
            90sqm
            
            ($ millions)
            
            ($ millions)
            
            ($ millions)
            
            market2005
            
            
            142
            
            $
            7.74
            
            $
            1,099
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0.00
            %2006
            
            
            154
            
            $
            7.74
            
            $
            1,192
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0.00
            %2007
            
            
            165
            
            $
            7.74
            
            $
            1,277
            
            
            8
            
            $
            7.74
            
            $
            61.94
            
            $
            61.94
            
            
            4.85
            %2008
            
            
            176
            
            $
            7.74
            
            $
            1,363
            
            
            8
            
            $
            7.10
            
            $
            56.77
            
            $
            118.71
            
            
            8.71
            %2009
            
            
            187
            
            $
            7.74
            
            $
            1,448
            
            
            8
            
            $
            7.10
            
            $
            56.77
            
            $
            175.48
            
            
            12.12
            %2010
            
            
            198
            
            $
            7.74
            
            $
            1,533
            
            
            7
            
            $
            7.10
            
            $
            49.68
            
            $
            225.16
            
            
            14.69
            %2011
            
            
            209
            
            $
            7.74
            
            $
            1,618
            
            
            6
            
            $
            7.10
            
            $
            42.58
            
            $
            267.74
            
            
            16.55
            %2012
            
            
            220
            
            $
            7.74
            
            $
            1,703
            
            
            6
            
            $
            7.10
            
            $
            42.58
            
            $
            310.32
            
            
            18.22
            %2013
            
            
            231
            
            $
            7.74
            
            $
            1,788
            
            
            6
            
            $
            7.10
            
            $
            42.58
            
            $
            352.90
            
            
            19.73
            %2014
            
            
            242
            
            $
            7.74
            
            $
            1,874
            
            
            6
            
            $
            7.10
            
            $
            42.58
            
            $
            395.48
            
            
            21.11
            %2015
            
            
            253
            
            $
            7.74
            
            $
            1,959
            
            
            6
            
            $
            7.10
            
            $
            42.58
            
            $
            438.06
            
            
            22.36
            %




15




To
      date,
      one of **** our
      Desulphurization Systems has been installed at Jinan Iron & Steel Co., and 6
      other  PRC steel mills, contracted-for systems are being manufactured for
      installation in the fourth quarter of 2007 at Jinan Iron & Steel and
      Panzhihua Iron & Steel, a contract has been entered into for a large-scale
      Desulphurization System at Shengfeng Iron & Steel, a $1,307,190 contract has
      been entered into for desulphurization accessories at Jinan Iron & Steel,
      and the commercial terms for contracts with Handan Iron & Steel, Chongqing
      Iron & Steel and Kunming Iron & Steel are in the process of being
      negotiated.




***Anti-Oxidation
      Technology*** .




The
      oxidation of hot rolled steel results, on average, in the loss of 3% of finished
      product. Although a number of U.S. and European anti-oxidation systems are
      available internationally, the high costs of the paints and coatings they use,
      as well as their ineffectiveness at high temperatures, have limited their
      application and utility to low temperature, specialty steel products. The
      suppliers of these anti oxidation systems include America Advanced Technical
      Products, ATP Metallurgical, Duffy, Condursal, and Berktekt. Because of the
      high
      cost of usage, these paint/coating systems are all applied on only specialty
      steel and additionally, have limitations of low temperature application - they
      cannot be used on-line.




Importantly,
      the temperature range limitations of these systems prevent them from being
      used
“on-line” in the high temperature ranges of hot rolled steel products, which
      historically account for over 90% of the PRC’s crude steel production. China is
      estimated to have produced approximately 460 million tons of steel in 2007,
      of
      which the expected output of hot rolled steel is estimated at 438 million tons.
      On this basis, it can be expected that, if not treated, China will lose
      approximately 13.1 million tons from its forecasted 2007 hot rolled steel
      production - a volume that is equal to a large steel producer’s annual output.
      Unlike its international competition, the our Anti-Oxidation System is
      specifically designed to use less costly coatings and to operate effectively
      at
      temperatures ranging from 600° - 1,000° C - the environment of hot rolled steel
      plate. Based on the confirmed results of the installation of our anti-oxidation
      equipment and technology at Jinan Iron & Steel in 2007, we believe that the
      Anti-Oxidation System will reduce hot rolled steel oxidation loss by a minimum
      of 60%. This would result in a potential increase of 7.9 million tons of China’s
      projected 2007 output, and estimated commensurate savings in coal (6.3 million
      tons) and water (79 million tons) consumption for processing and
      throughput.




As
      shown
      in the following table, using the PRC hot rolled steel forecast for 2007 as
      a
      benchmark, we estimate that the full application of the Anti-Oxidation System
      to
      that projected production output would result in approximately $551,880,000
      in
      water and cost savings per year.





**2007
      Anti-oxidation Savings**


Calculation**Hot
                  Rolled Steel Output - tons**
              
              
              438,000,000**Avg.
                  Oxidation rate**
              
              
              3
              %
              
              13,140,000
                  tons**RINO
                  System Efficiency**
              
              
              60
              %
              
              7,884,000
                  tons**H****2****O
                  and Coal Cost/ton**
              
              $
              70**Savings/year**
              
              **$**
              **551,880,000**




With
      these factors in mind, we believe that our Anti-Oxidation System can achieve
      a
      significant degree of penetration in the PRC market, as it addresses a domestic
      production need which is beyond the applicability of presently available U.S.
      and European technologies and systems. The following tables illustrate our
      projected, multi-year scope of the Chinese market and the revenues that we
      project from PRC sales.




16




**Anti-oxidation
      coatings market**





steel
            
            
            
            #
                of
                heat
            
            
            
            consumption
            
            
            
            consumption
            
            
            
            Price
            
            
            
            ValueYear
            
            
            (million
                tons)
            
            
            rolling
                lines
            
            
            
            
            
            (tons/installation)
            
            
            (million
                tons)
            
            
            
            
            
            ($/ton)
            
            
            
            
            
            ($
                million)2005
            
            
            
            
            
            380
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232006
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232007
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232008
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232009
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232010
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232011
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232012
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232013
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232014
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.232015
            
            
            
            
            
            438
            
            
            
            
            
            474
            
            
            
            
            
            1,250
            
            
            
            
            
            
            
            
            0.59
            
            
            
            
            $
            1,264.52
            
            
            
            
            $
            749.23




**RINO
      market share**




# of annually
                
                # of accumulated
                
                annual paint
                
                annually
                
                average
                
                annualinstalled
                
                installed
                
                consumption
                
                sales of
                
                price
                
                revenue
                
                % byYear
                
                equipments
                
                equipments
                
                (mt/equipment)
                
                paint(mts)
                
                ($/mt)
                
                $ millions
                
                consumption2005
                
                
                
                
                
                
                
                
                
                
                
                0
                
                
                
                
                
                0
                
                
                0
                %2006
                
                
                
                
                
                
                
                
                
                
                
                0
                
                
                
                
                
                0
                
                
                0
                %2007
                
                
                10
                
                
                10
                
                
                1,250
                
                
                6,250
                
                
                1,265
                
                
                7.90
                
                
                1
                %2008
                
                
                30
                
                
                40
                
                
                1,250
                
                
                31,250
                
                
                1,265
                
                
                39.52
                
                
                5
                %2009
                
                
                35
                
                
                75
                
                
                1,250
                
                
                71,875
                
                
                1,265
                
                
                90.89
                
                
                12
                %2010
                
                
                40
                
                
                115
                
                
                1,000
                
                
                95,000
                
                
                1,265
                
                
                120.13
                
                
                16
                %2011
                
                
                45
                
                
                160
                
                
                1,000
                
                
                137,500
                
                
                1,265
                
                
                173.87
                
                
                23
                %2012
                
                
                40
                
                
                200
                
                
                1,000
                
                
                180,000
                
                
                1,265
                
                
                227.61
                
                
                30
                %2013
                
                
                35
                
                
                235
                
                
                1,000
                
                
                217,500
                
                
                1,265
                
                
                275.03
                
                
                37
                %2014
                
                
                30
                
                
                265
                
                
                1,000
                
                
                250,000
                
                
                1,265
                
                
                316.13
                
                
                42
                %2015
                
                
                25
                
                
                290
                
                
                1,000
                
                
                277,500
                
                
                1,265
                
                
                350.90
                
                
                47
                %




**Product
      Technologies**




***Lamella
      Inclined Tube Settler Wastewater Treatment System*** .





Our
      core
      product, the “Lamella Wastewater System,” is a highly efficient wastewater
      treatment system that incorporates our proprietary and patented ‘Lamella
      Inclined Tube Settler’ technology. We believe that the System is among the
      most technologically advanced wastewater treatment systems presently in use
      in
      China’s iron and steel industry. It includes industrial water treatment
      equipment, complete sets of effluent-condensing equipment, highly efficient
      solid and liquid abstraction dewatering equipment and coal gas dust removal
      and
      cleaning equipment. The Lamella Wastewater System has been successfully
      installed in some of the largest steel mills in the PRC which include, but
      are
      not limited to, installations at Jinan Iron and Steel Group, Co., Ltd., Benxi
      Iron & Steel (Group) Co., Ltd., Handan Iron & Steel Group Co. Ltd.,
      Tianjin Tiangang Group Co. Ltd., Shijiazhuang Iron & Steel Group Co., Ltd.,
      Panzhihua Iron & Steel Group Co. Ltd., and Anyang Iron & Steel Group Co.
      Ltd.




17




Our
      combination of proprietary system design and patented technology allows
      wastewater to flow through the system in layers while at the same time settling
      particulate matter without disturbing the water flow. Operating results of
      the
      above, Lamella Wastewater System installations, show that our technology
      improves the stability of the settling deposition, increases the available
      settling area, shortens the settling distance for waste particles, reduces
      the
      settling time, and results in particle removal efficiency rates of up to 99%.
      After treatment with our technology and system, coal gas wastewater and
      wastewater containing iron mineral powder can be reused and returned to the
      production process without further treatment, allowing users to create a
      closed-loop. This lowers the overall use of industrial water for the enterprises
      utilizing our technology, reduces the output of solid industrial waste, and
      improves the efficient use of resources.





Compared
      with alternative inclined plate technology, the Lamella Wastewater System has
      several important advantages as shown in the following table:





**Normal
                Inclined Plate Settling Pool**
            
            **Lamella
                Inclined Tube Settler**Water
                power staying time 30 min, surface load 3m3/m2·h, small volume, small
                space use coefficient, short waterpower process (with short current
                in
                winter).
            
            Water
                power staying time 45 min with surface load 8m3/m2·h,
                large use coefficient, long water power process.First
                settling, is not fit for a wide range wave of floats, affected by
                the
                stability and effect of the water outlet
            
            Tertiary
                settling (with sludge abstraction collection system in every layer)
                anti-pump load, no interference between water inlet and sludge outlet,
                water outlet stable.Water
                inlet float content: SS3000 ~ 5000mg/L, water outlet float content:
                SS100
                ~ 200 mg/L, low treatment efficiency.
            
            Water
                inlet float content: SS3000 ~ 16000mg/L water outlet float content:
                SS50 ~
                80 mg/L, high treatment efficiency.Inclined
                plate, inclining angle 60 degree, small settling deposition
                area.
            
            Inclined
                plate, inclined tube inclining angle 450,
                results show that the smaller the inclining angle of the inclined
                tube or
                plate, the smaller the settling particles removed, the higher settling
                efficiency for removal of particulate matter.Adopt
                glass steel and compound Nylon Ether ketone, easy to age degrade
                and
                become clogged with sludge, needs to be changed often, has high operation
                and maintenance costs.
            
            Compound
                new material plate, PP inner Surface Coating, resistant corrosion,
                smooth
                and clean surface, minimal sludge collection.Small
                sludge abstraction area, bad sludge water abstraction efficiency,
                short
                life cycle of the sludge outlet, high and unstable water content
                of
                sludge, adds difficulty to the next sludge treatment
                process.
            
            With
                sludge water abstraction area and dust collection transmission device,
                long sludge outlet circle, special sludge disposal equipment sludge
                outlet, lower water content of sludge, convenient for new process
                to
                recycle.




18




The
                low carbon steel structures - such as pool surface frame - exposed
                to
                humidity and high temperature, easily corrode, which greatly reduces
                the
                life of equipment.
            
            Lamella
                Inclined Tube Settler system is enclosed, the high humidity of the
                tank
                will not cause corrosion of the equipment.Occupies
                large area - large footprint, strict requirement for
                placement.
            
            Occupying
                small area - small footprint - equipment can save over 30% area to
                treat
                same amount of water and is flexible for installation.Complicated
                system technique, a lot of equipment configuration, a lot of maintenance,
                not convenient to use with automated control, often creates secondary
                pollution.
            
            Short
                technical process, simple equipment, low failure rate - high MTBF,
                easy
                maintenance, highly automated, low operational cost, closed-end
                circulating treatment, without secondary
                pollution.





***Circulating,
      Fluidized Bed, Flue Gas Desulphurization System*** **.**





Our
      Desulphurization System is a joint development of RINO and the Research
      Institute of the Chinese Academy of Sciences (originally the Chemical Metallurgy
      Research Institute of Chinese Academy of Sciences). The Desulphurization System
      is new proprietary technology consisting of a desulphurization agent inlet
      system, circulating fluidized bed desulphurization reactor, dust removal system,
      desulphurization dust removal treatment system, desulphurization wind pump
      system, monitoring system, electrical control system, and smoke flue
      system.





Our
      Desulphurization System effectively treats the sulphur dioxide emitted from
      iron
      and steel industry sintering (a process in which sulphur and other impurities
      are removed from iron ore by heating, without melting, pulverized iron ore).
      The
      flue gasses that result from sintering contain sulphur dioxide which reacts
      with
      atmospheric water and oxygen to produce sulphuric acid that precipitates as
      “acid rain.”




The
      discharge that results from our Desulphurization System meets all applicable
      air
      pollution standards.










The
      Desulphurization System technology has significant technical advantages as
      compared with other desulphurization techniques:




19




·
            The
                system overcomes surface contamination and sludge
                buildup.




·
            The
                system allows desulphurization reagents to stay freshly active for
                up to
                30 minutes, enabling the ratio of limestone reaction to reach
                99%.




·
            The
                system produces high desulphurization rates. For coal with a high
                (i.e.,
                6%) sulphur content, desulphurization rates can reach
                92%.




·
            Infrastructure
                  investment is relatively low, the equipment’s footprint is relatively
                  small, and specially trained personnel are not needed to operate
                  and
                  maintain the equipment. In sum:
                
                ·Lower
                  installation costs
                ·    
                  Less
                  floor
                  space - small footprint
                ·Heavy
                  duty construction
                ·Automated
                  process control





Although
      RINO had concentrated, and the Company will continue to concentrate, its
      marketing and sales efforts for this system in the PRC iron and steel industry,
      the technology also can be more widely used in fields such as metallurgy,
      electrical power generation, rubbish treatment, and others. Targeted for
      2008-2009, we plan to expand our sales and marketing to such additional
      applications both in the PRC and internationally.





***High
      Temperature Anti-Oxidation System for Hot Rolled Steel*** **.**





The
      Company’s Anti-Oxidation System is a high temperature de-oxidation system for
      hot rolled steel, and a joint development of RINO and the Research Institute
      of
      the Chinese Academy of Sciences (originally the Chemical Metallurgy Research
      Institute of Chinese Academy of Sciences). This is a new, high temperature
      plate
      casting anti-oxidation technology which is proprietary to the Company and
      patented. We believe that in design and technology the Anti-Oxidation System
      is
      the only anti-oxidation process available for the iron and steel industry (both
      in the PRC and internationally) that can be applied in high temperature
      environments, and is a unique solution to the loss of production output due
      to
      high-temperature oxidation, which is a long-standing problem in the world-wide
      iron and steel industry.





In
      the
      process of continuous cast, hot rolled steel, oxidation loss ranges from 2%
      -5%
      on average. This translates into a loss of production output or throughput
      of
      2%-5%. The oxidation in high-temperature steel production results in the waste
      of resources including water and energy, and additionally results in pollution.
      In the United States, Japan, and Europe, technology has been developed to
      ameliorate this problem, but the cost of the coating used in the process and
      the
      inability of the equipment to be utilized in high temperature environments
      limits its application to specialty steel products such as stainless steel,
      and
      silicon and carbide steel products. Because our Anti-Oxidation System is
      specifically designed to work effectively with the high temperature, hot rolled
      steel that comprises approximately 90% of the PRC’s steel production and 90% of
      world-wide production, our technology has a far broader market both in China
      and
      internationally than is the case for competing systems and technologies.





The
      coating developed by RINO for use with the anti-oxidation equipment can be
      produced at relatively low cost, is usable in high temperature environments
      and
      is easily applied in a uniform manner. That coating can be directly sprayed
      onto
      hot steel slabs at temperatures of 600°-1000° C, thereby saving the increased
      costs and energy utilization that all other anti-oxidation equipment
      entails.




20









Our
      Anti-Oxidation System has been installed, tested and accepted by Jinan Iron
      & Steel Group Co., a major PRC steel manufacturer. The installation results
      show that the coating system fully conforms to the hot rolling mill environment,
      effectively reduces oxidation loss by 60%, saves energy, and increases
      production throughput.





**Raw
      Materials Supply**





For
      our
      principal raw materials, the Company presently has eleven PRC suppliers of
      the
      steel and steel products we use in manufacturing our wastewater,
      desulphurization and anti-oxidation systems, of which five account for
      approximately 77% of our steel purchases. We purchase approximately 87% of
      our
      paints, cuttings and welding rods from two PRC suppliers, and rely on one
      supplier, Sichuan Huipusheng Industry Co., for our power supply cabinets. All
      of
      our providers of raw materials are carefully selected and qualified with respect
      to reputation, solvency, product quality and production capacity.


The
      following chart shows the Company’s principal materials suppliers for the full
      year 2007:




Material
              
              Supplier
              
              
              Purchase
                Volume
                  US
                $
                  000Steels
              
              Dalian
                  Shuntongda Trading Co., Ltd.
              
              $
              20,402Handan
                  Haiqing Materials Co., Ltd.
              
              
              307Dalian
                  Development Zone Huayi Trading Co., Ltd.
              
              
              243Dalian
                  Economic Development Zone Ansheng Materials Trading Co.,
                  Ltd.
              
              
              115Welding
                  & cutting supplies
              
              Dalian
                  Kaisheng Trading Co., Ltd.
              
              
              81Cable
              
              Dalian
                  Development Zone Jinhai Cable Co., Ltd.
              
              
              42Lubricants
              
              Dalian
                  Lize Oil & Lubricants Co., Ltd.
              
              
              23


**Intellectual
      Property**





***Waste
      Water Treatment Technology*** .





We
      have
      three Chinese National patents for this product line in place currently. The
      patent numbers are: ZL 98 2 16778.4, ZL 03 211913.5 & ZL 03
      111178.5.





***Anti-Oxidation
      Technology*** .





We
      have
      two International invention patents (Patent # 1 PCT/CN2007/000339 & Patent #
      2 PCT/CN2007/00568) in process and have applied for a 3 rd International Patent.





***Desulphurization
      Technology*** .





We
      are in
      the process of doing a prior art search that will determine if we can apply
      for
      patents in China or Internationally. If there is no prior art or existing
      patents, we will apply for both a PRC and International Patent.




21




**Jurisdiction**
            
            **Project
                description**
            
            **Patent
                No.**
            
            **Patent
                type**
            
            **Authorization**China
            
            Lamella
                Inclined Tube Settler
            
            ZL98216778.4
            
            Practical
                new
            
            GrantedChina
            
            Sludge
                disposal equipment
            
            ZL03211913.5
            
            Practical
                new
            
            GrantedChina
            
            Wastewater
                comprehensive treatment system and method
            
            ZL03111178.5
            
            Invention
                patent
            
            GrantedPCT
                International
            
            One
                of the steel anti-oxidation paints and anti-oxidation
                method
            
            PCT/CN2007/000339
            
            Invention
                patent
            
            PendingPCT
                International
            
            Inorganic
                compound bond for heat-resistant coat
            
            PCT/CN2007/000568
            
            Invention
                patent
            
            PendingPCT
                International
            
            Dynamic
                process steel slab high temperature anti-oxidation painting technique
                and
                equipment
            
            
            
            Invention
                patent
            
            Applied




International
      patent applications are administered under the Patent Cooperation Treaty (the
      “PCT”). A PCT application covers all of the PCT member countries, which include
      most major industrialized countries. As of November 13, 2007, there were 137
      member countries. The PRC became a member of the PCT in 1994.





There
      are
      two phases in a PCT application. The first phase is the International Phase.
      Under this Phase, an applicant like the Company can file an application using
      Chinese language in the PRC. Then it will have one year to claim the priority
      of
      its PRC filing date in other member countries. The main benefit of filing under
      the PCT instead of directly in the member countries is to allow an applicant
      to
      delay the “National Phase” filing in the member countries up to 30 months from
      the initial filing, which is 18 months more than the applicant would normally
      have when filing directly in foreign countries. During this International Phase,
      the applicant can gather more market information and have more time to make
      decisions about where to file patent applications. At the end of the
      International Phase period, it will enter the National Phase by filing national
      applications in each country in which the applicant desires a patent. The
      Trade-Related Aspects of Intellectual Property Rights (the “TRIPS”) determine
      the term of a patent applied under the PCT in the member countries.





***Trademark
      and Logo*** .





The
      “RINO” trademark and associated logo are both registered by RINO in the PRC.
      Their perpetual, royalty-free use by Dalian Innomind is authorized as part
      of
      the Restructuring Agreements.





***Other
      Intellectual Property Rights Protections in the PRC*** **.**




In
      addition to patent protection law in the PRC, we also rely on contractual
      confidentiality provisions to protect its intellectual property rights and
      its
      brand. The Company’s research and development personnel and executive officers
      are subject to confidentiality agreements to keep our proprietary information
      confidential. In addition, they are subject to a three-year covenant not to
      compete following the termination of employment with our Company. Further,
      they
      agree that any work product belongs to our Company.




**Customers**





The
      Company depends for its revenues on orders from a limited number of principal
      customers. Sales to our six largest customers accounted for approximately 91%,
      94%, and 84% of gross sales during the years ended December 31, 2007, 2006
      and
      2005, respectively.




22




**%
                Sales****Customer**
            
            **Product**
            
            **2005**
            
            **2006**
            
            **2007**Jinan
                Iron & Steel Group, Ltd.
            
            
            wastewater
                treatment
            
            
            68
            %
            
            35
            %
            
            18
            %Zhongyuan
                Saidi Stock Co.
            
            
            wastewater
                treatment
            
            
            16
            %Panzhihua
                Iron & Steel
            
            
            Desulphurization
            
            
            
            
            
            
            
            
            20
            %Handan
                Iron & Steel
            
            
            desulphurization
            
            
            
            
            
            
            
            
            13
            %Benxi
                Iron & Steel Co.
            
            
            wastewater
                treatment
            
            
            
            
            
            15
            %
            
            9
            %First
                China Heavy Industries
            
            
            contract
                manufacturing
            
            
            
            
            
            28
            %
            
            19
            %Royalty
                Income
            
            
            desulphurization
            
            
            
            
            
            16
            %
            
            15
            %**Total**
            
            
            
            
            
            **84**
            **%**
            
            **94**
            **%**
            
            **91**
            **%**





**Users**
            
            **Applications**
            
            **#
                of tanks****Jinan
                Iron & Steel Group Ltd.**
            
            coking
                factory
            
            2Furnace
            
            24Converter
            
            8Converter
            
            12Furnace
            
            10Furnace
            
            12Converter
            
            24**Benxi
                Iron & Steel (Group) Co**
            
            Converter
            
            20Converter
            
            14**Handan
                Iron & Steel Group Co. Ltd.**
            
            Converter
            
            10**Tianjin
                Tiangang Group Co. Ltd**
            
            Furnace
            
            10**Shijiazhuang
                Iron & Steel Group Co., Ltd.**
            
            Converter
            
            8**Panzhihua
                Iron & Steel Group Co. Ltd.**
            
            Converter
            
            14**Anyang
                Iron & Steel Group Co. Ltd.**
            
            sintering
            
            2**Total**
            
            
            
            170




In
      2007
      we realized $33.18 million in sales of desulphurization related equipment.
      This
      was comprised of 11 projects of which, including related equipment and
      contracted production of desulphurization projects. In addition, in 2007 we
      installed four wastewater treatment project generating revenue of $6.97,. Over
      the same period, we also recorded revenues of $1.97 million in sales of our
      anti-oxidation product related to three separate projects.




Given
      the
      cost of our Lamella Wastewater System, Desulphurization System and
      Anti-Oxidation System products, we believe that for the foreseeable future
      the
      Company will continue to rely on large customers for a substantial portion
      of
      its gross revenues. There are approximately 34 iron and steel companies in
      the
      PRC of a size and with annual production levels that make our products feasible
      for sale and installation. In order to expand our sales, the Company will have
      to capture increasing numbers of these potential customers for primary product
      sales, and aggressively cross-sell our products to each customer. We cannot
      assure you that these and similar efforts will be successful.




23




**Competition**





***Lamella
      Wastewater System*** .





Prior
      to
      RINO’s introduction of its Lamella Wastewater System, the typical industrial
      wastewater treatment technology used in China relied on an inclined “plate
      settling pool” process. Such systems continue to be generally available in the
      PRC, and a substantial portion of them are self-installed by iron and steel
      companies. The Lamella Wastewater System’s advanced technology results in the
      following competitive advantages: lower installation cost; lower usage costs;
      increased throughput; smaller equipment footprint; and lower ongoing maintenance
      costs. We know of no comparable technology presently available in China, and
      we
      will emphasize the foregoing cost and efficiency advantages as we compete for
      customers.




***Desulphurization
      System*** .





In
      the
      PRC the sulphur dioxide emitted in flue gases from  the
      sintering of iron during steel-making, is a major component of the environmental
      pollution that has followed China’s industrial expansion. Sintering is a step in
      steel-making, in which sulphur and other impurities are removed from raw iron
      by
      heating (without melting) pulverized iron ore. Removing the sulphur dioxide
      from
      a steel mill’s hot flue gas emissions is, therefore, a principal way of
      controlling acid rain.





Presently
      in China, major companies engaged in the desulphurization equipment market
      include: Beijing Guodian Longyuan Environmental Company, Zhejiang Feida Company,
      Fujian Longjing Environmental Company, Wuhan Kaidi Electric Power Company,
      Jiulong Electric Power Company, and Qinghua Tongfang Company. To the best of
      our
      knowledge these companies have little or no production and installation
      experience in the iron and steel industry, and do not currently design or
      manufacture equipment that is applicable to sintering processes. We believe
      we
      are the first company to design, manufacture and complete an iron and steel
      sinter machine desulphurization installation in the PRC. Accordingly, we do
      not
      expect to have any direct competitors in this sector for approximately 2-3
      years
      - the minimum time necessary for potential competitors to complete product
      development.





***Anti-Oxidation
      System*** .





We
      believe that the Company’s Anti-Oxidation System is unique and virtually without
      competition in the China market. We know of no entity other than the Company
      that is engaged in developing or supplying anti-oxidation technology that can
      operate on-line at the high temperatures (600° - 1,000° C) involved in hot
      rolled steel production - which represents 90% of China’s steel output. A number
      of anti-oxidation technologies are available internationally from suppliers
      that
      include: Advanced Technical Products Company, ATP Metallurgical Coatings, Duffy
      Company, Condursal and Berktekt. However, the high costs of the anti-oxidizing
      coatings these technologies rely on, and most especially their ineffectiveness
      at high temperatures, have limited their market to specialty steels, and have
      made them ill-suited to China’s iron and steel industry.




**Research
      and Development; Growth Strategy**





In
      2007,
      RINO expended approximately $776,000 for product research and development,
      approximately $526,000 of which was directed at anti-oxidation research and
      approximately $250,000 of which was directed at flue gas desulphurization.
      The
      Company’s continuing research and development program is linked to our growth
      strategy directed towards 2009 and several years thereafter, during which time
      we will develop export markets for our products in the United States and Western
      Europe and seek to develop new applications for our products suited to and
      targeted at these new, international markets.





Accordingly,
      during the next three years the Company expects to invest approximately $4.7
      million, to be spent on wastewater treatment, desulphurization and
      anti-oxidation research.




In
      conducting our research and development, the Company expects to continue its
      collaborative relationship with the Chinese Academy of Sciences, and also
      collaborate with Dalian Technology University.





In
      2007,
      we incurred $807,887 in research and development expenses, in 2006 and 2005
      we
      incurred no R&D expense.




24




**ITEM
      1A. RISK FACTORS**





***An
      investment in our common stock involves a high degree of risk. You should
      carefully consider the risks described below and the other information contained
      in this report before deciding to invest in our common
      stock.***





If
      any of
      the following risks, or any other risks not described below because they are
      currently unknown to us or we currently deem such risks as immaterial but they
      later become material, actually occurs, it is likely that our business,
      financial condition, and operating results could be seriously harmed. As a
      result, the trading price of our common stock could decline and you could lose
      part or all of your investment.





**Risks
      Related to our Business**





***Our
      limited operating history may not serve as an adequate basis to judge our future
      prospects and results of operations.*** ****




RINO
      began its operations in 2003. Our limited operating history in the environmental
      protection industry may not provide a meaningful basis on which to evaluate
      our
      business. Although RINO’s revenues have grown rapidly since its inception, we
      cannot assure you that we will maintain our profitability or that we will not
      incur net losses in the future. We expect that our operating expenses will
      increase as we expand. Any significant failure to realize anticipated revenue
      growth could result in significant operating losses. We will continue to
      encounter risks and difficulties frequently experienced by companies at a
      similar stage of development, including our potential failure to:




·
            maintain
                our cutting edge proprietary
                technology;




·
            expand
                our product offerings and maintain the high quality of our products;





·
            manage
                our expanding operations, including the integration of any future
                acquisitions;




·
            obtain
                sufficient working capital to support our expansion and to fill customers’
                orders in time;




·
            maintain
                adequate control of our expenses;




·
            implement
                our product development, marketing, sales, and acquisition strategies
                and
                adapt and modify them as needed;




·
            anticipate
                and adapt to changing conditions in the iron and steel
                industry markets in which we operate as well as the impact of any
                changes in government regulation, mergers and acquisitions involving
                our
                competitors, technological developments and other significant competitive
                and market dynamics.




If
      we are
      not successful in addressing any or all of these risks, our business may be
      materially and adversely affected.





***We
      may encounter substantial competition in our business and our failure to compete
      effectively may adversely affect our ability to generate
      revenue.***





We
      believe that existing and new competitors will continue to improve the design
      and performance of their products and to introduce new products with competitive
      price and performance characteristics. We expect that we will be required to
      continue to invest in product development and productivity improvements to
      compete effectively in our markets. Our competitors could develop a more
      efficient product or undertake more aggressive and costly marketing campaigns
      than ours, which may adversely affect our marketing strategies and could have
      a
      material adverse effect on our business, results of operations and financial
      condition.




25




Our
      major
      competitors may be better able than we to successfully endure downturns in
      our
      industrial sector. In periods of reduced demand for our products, we can either
      choose to maintain market share by reducing our selling prices to meet
      competition or maintain selling prices, which would likely sacrifice market
      share. Sales and overall profitability would be reduced in either case. In
      addition, we cannot assure you that additional competitors will not enter our
      existing markets, or that we will be able to compete successfully against
      existing or new competition.





***Our
      inability to fund our capital expenditure requirements may adversely affect
      our
      growth and profitability.***





Our
      continued growth is dependent upon our ability to raise capital from outside
      sources. Our ability to obtain financing will depend upon a number of factors,
      including:




·
            our
                financial condition and results of
                operations,




·
            the
                condition of the PRC economy and the environmental protection product
                industry in the PRC, and




·
            conditions
                in relevant financial markets




If
      we are
      unable to obtain financing, as needed, on a timely basis and on acceptable
      terms, our financial position, competitive position, growth and profitability
      may be adversely affected.





***We
      may not be able to effectively control and manage our
      growth***





Our
      sales
      revenues (excluding government grants) have increased from
      $10,307,630 **** for
      the
      fiscal year ended December 31, 2006 to $63,387,308 for the fiscal year ended
      December 31, 2007. If our business and markets continue to grow and develop,
      it
      will be necessary for us to finance and manage expansion in an orderly fashion.
      In addition, we may face challenges in managing expanding product offerings
      and
      in integrating acquired businesses with our own. These eventualities will
      increase demands on our existing management, workforce and facilities. Failure
      to satisfy these kinds of increased demands could interrupt or adversely affect
      our operations and cause production backlogs, longer product development time
      frames and administrative inefficiencies.




***If
      we are unable to successfully complete and integrate strategic acquisitions
      in a
      timely manner, our growth strategy may be adversely impacted.***





An
      important element of our growth strategy is expected to be the pursuit of
      acquisitions of other businesses that increase our existing market share and
      expand our production capacity. However, integrating businesses involves a
      number of special risks, including the possibility that management may be
      distracted from regular business concerns by the need to integrate operations,
      unforeseen difficulties in integrating operations and systems, problems relating
      to assimilating and retaining the employees of the acquired business, accounting
      issues that arise in connection with the acquisition, challenges in retaining
      customers, and potential adverse short-term effects on operating results. In
      addition, we may incur debt to finance future acquisitions, and we may issue
      securities in connection with future acquisitions that may dilute the holdings
      of our current or future stockholders. If we are unable to successfully complete
      and integrate strategic acquisitions in a timely manner, our growth strategy
      may
      be adversely impacted.





***We
      depend on a concentration of customers.***





Our
      revenue is dependent, in large part, on significant orders from a limited number
      of customers. Sales to our five largest customers accounted for approximately
      91% and 90% of our net sales during the years ended December 31, 2007 and 2006,
      respectively. We believe that revenue derived from current and future large
      customers will continue to represent a significant portion of our total revenue.
      Our inability to continue to secure and maintain a sufficient number of large
      customers would have a material adverse effect on our business, operating
      results and financial condition. Moreover, our success will depend in part
      upon
      our ability to obtain orders from new customers, as well as the financial
      condition and success of our customers and general economic
      conditions.




26




***Any
      significant fluctuation in price of our raw materials may have a material
      adverse effect on the manufacturing cost of our
      products.***





The
      prices of steel, electronic components and power systems, valves, machine tools,
      paints and welding rods, our principal raw materials, are subject to market
      conditions and generally we do not, and do not expect to, have long-term
      contracts with our suppliers for those items. While these raw materials are
      generally available and we have not experienced any raw material shortage in
      the
      past, we cannot assure you that the necessary materials will continue to be
      available to us at prices currently in effect or acceptable to us. The prices
      for these raw materials have varied significantly and may vary significantly
      in
      the future. Numerous factors, most of which are beyond our control, influence
      prices of our raw material. These factors include general economic conditions,
      industry capacity utilization, vendor backlogs and transportation delays and
      other uncertainties.





We
      may
      not be able to adjust our product prices, especially in the short-term, to
      recover cost increases in these raw materials. Our future profitability may
      be
      adversely affected to the extent we are unable to pass on higher raw material
      costs to our customers.





***We
      may engage in future acquisitions that could dilute the ownership interests
      of
      our stockholders, cause us to incur debt and assume contingent
      liabilities.***




As
      part
      of our business strategy, we review acquisition and strategic investment
      prospects that we believe would complement our current product offerings,
      augment our market coverage or enhance our technological capabilities, or
      otherwise offer growth opportunities. From time to time we review investments
      in
      new businesses and we expect to make investments in, and to acquire, businesses,
      products, or technologies in the future. In the event of any future
      acquisitions, we could:




·
            
            issue
                equity securities which would dilute current stockholders’ percentage
                ownership;





·
            
            incur
                substantial debt;




·
            
            assume
                contingent liabilities; or




·
            
            expend
                significant cash.




These
      actions could have a material adverse effect on our operating results or the
      price of our common stock. Moreover, even if we do obtain benefits in the form
      of increased sales and earnings, there may be a lag between the time when the
      expenses associated with an acquisition are incurred and the time when we
      recognize such benefits. Acquisitions and investment activities also entail
      numerous risks, including:




·
              
              difficulties
                  in the assimilation of acquired operations, technologies and/or
                  products;




·
            
            unanticipated
                costs associated with the acquisition or investment transaction;




·
            
            the
                diversion of management’s attention from other business concerns;




·
            
            adverse
                effects on existing business relationships with suppliers and customers;




·
            
            risks
                associated with entering markets in which we have no or limited prior
                experience;




27




·
            
            the
                potential loss of key employees of acquired organizations; and




·
            
            substantial
                charges for the amortization of certain purchased intangible assets,
                deferred stock compensation or similar items.




We
      cannot
      ensure that we will be able to successfully integrate any businesses, products,
      technologies, or personnel that we might acquire in the future, and our failure
      to do so could have a material adverse effect on our business, operating results
      and financial condition.





***We
      may not be able to prevent others from unauthorized use of our patents, which
      could harm our business and competitive position.***




Our
      success depends, in part, on our ability to protect our proprietary
      technologies. We own three patents in the PRC covering our waste water treatment
      technology. We also have two international invention patents pending and have
      applied for an additional international invention patent for our anti-oxidation
      technology under the International Patent Cooperation Treaty. The process of
      seeking patent protection can be lengthy and expensive and we cannot assure
      you
      that our patent applications will result in patents being issued, or that our
      existing or future issued patents will be sufficient to provide us with
      meaningful protection or commercial advantages.




We
      also
      cannot assure you that our current or potential competitors do not have, and
      will not obtain, patents that will prevent, limit or interfere with our ability
      to make, use or sell our products in either the PRC or other countries.





The
      implementation and enforcement of PRC intellectual property laws historically
      has not been vigorous or consistent, primarily because of ambiguities in the
      PRC
      laws and a relative lack of developed enforcement mechanisms. Accordingly,
      intellectual property rights and confidentiality protections in the PRC are
      not
      as effective as in the United States and other countries. Policing the
      unauthorized use of proprietary technology is difficult and expensive, and
      we
      might need to resort to litigation to enforce or defend patents issued to us
      or
      to determine the enforceability, scope and validity of our proprietary rights
      or
      those of others. Such litigation will require significant expenditures of cash
      and management efforts and could harm our business, financial condition and
      results of operations. An adverse determination in any such litigation will
      impair our intellectual property rights and may harm our business, competitive
      position, business prospects and reputation.





***We
      may need additional capital to fund our future operations and, if it is not
      available when needed, we may need to reduce our planned development and
      marketing efforts, which may reduce our sales revenues*** **.**




We
      believe that our existing working capital and cash available from operations
      will enable us to meet our working capital requirements for at least the next
      12
      months. However, if cash from future operations is insufficient, or if cash
      is
      used for acquisitions or other currently unanticipated uses, we may need
      additional capital. The development and marketing of new products and the
      expansion of distribution channels and associated support personnel requires
      a
      significant commitment of resources. In addition, if the markets for our
      products develop more slowly than anticipated, or if we fail to establish
      significant market share and achieve sufficient net revenues, we may continue
      to
      consume significant amounts of capital. As a result, we could be required to
      raise additional capital. To the extent that we raise additional capital through
      the sale of equity or convertible debt securities, the issuance of such
      securities could result in dilution of the shares held by existing stockholders.
      If additional funds are raised through the issuance of debt securities, such
      securities may provide the holders certain rights, preferences, and privileges
      senior to those of common stockholders, and the terms of such debt could impose
      restrictions on our operations. We cannot assure you that additional capital,
      if
      required, will be available on acceptable terms, or at all. If we are unable
      to
      obtain sufficient amounts of additional capital, we may be required to reduce
      the scope of our planned product development and marketing efforts, which could
      harm our business, financial condition and operating results.




28




***We
      may have difficulty establishing adequate management, legal and financial
      controls in the PRC.***





The
      PRC
      historically has not adopted a western style of management and financial
      reporting concepts and practices, as well as in modern banking, computer and
      other control systems. We may have difficulty in hiring and retaining a
      sufficient number of qualified employees to work in the PRC. As a result of
      these factors, we may experience difficulty in establishing management, legal
      and financial controls, collecting financial data and preparing financial
      statements, books of account and corporate records and instituting business
      practices that meet Western standards.




***We
      may not have adequate internal accounting controls. While we have certain
      internal procedures in our budgeting, forecasting and in the management and
      allocation of funds, our internal controls may not be
      adequate.***





We
      are
      constantly striving to improve our internal accounting controls. We hope to
      develop an adequate internal accounting control to budget, forecast, manage
      and
      allocate our funds and account for them. There is no guarantee that such
      improvements will be adequate or successful or that such improvements will
      be
      carried out on a timely basis. If we do not have adequate internal accounting
      controls, we may not be able to appropriately budget, forecast and manage our
      funds, we may also be unable to prepare accurate accounts on a timely basis
      to
      meet our continuing financial reporting obligations and we may not be able
      to
      satisfy our obligations under US securities laws.





***Our
      internal controls over financial reporting may not be effective, and our
      independent auditors may not be able to certify as to their effectiveness,
      which
      could have a significant and adverse effect on our
      business.*** **





Rules
      adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002
      require annual assessment of our internal control over financial reporting,
      and
      attestation of this assessment by our company's independent registered public
      accountants. The SEC extended the compliance dates for “non-accelerated filers,”
as defined by the SEC. Accordingly, we believe that the annual assessment of
      our
      internal controls requirement will first apply to our annual report for the
      2007
      fiscal year and the attestation requirement of management's assessment by our
      independent registered public accountants will first apply to our annual report
      for the 2008 fiscal year. The standards that must be met for management to
      assess the internal control over financial reporting as effective are new and
      complex, and require significant documentation, testing and possible remediation
      to meet the detailed standards. We have not yet evaluated our internal controls
      over financial reporting in order to allow management to report on, and our
      independent auditors to attest to, our internal controls over financial
      reporting, as will be required by Section 404 of the Sarbanes-Oxley Act of
      2002
      and the rules and regulations of the SEC. We have never performed the system
      and
      process evaluation and testing required in an effort to comply with the
      management assessment and auditor certification requirements of Section 404,
      which will initially apply to us as of December 31, 2007. Our lack of
      familiarity with Section 404 may unduly divert management’s time and resources
      in executing the business plan. If, in the future, management identifies one
      or
      more material weaknesses, or our external auditors are unable to attest that
      our
      management’s report is fairly stated or to express an opinion on the
      effectiveness of our internal controls, this could result in a loss of investor
      confidence in our financial reports, have an adverse effect on our stock price
      and/or subject us to sanctions or investigation by regulatory authorities.





***Potential
      environmental liability could have a material adverse effect on our operations
      and financial condition.***





To
      the
      knowledge of our management team, neither the production nor the sale of our
      products constitutes activities, or generates materials that create any
      environmental hazards or requires our business operations to comply with PRC
      environmental laws. Although it has not been alleged by PRC government officials
      that we have violated any current environmental regulations, we cannot assure
      you that the PRC government will not amend the current PRC environmental
      protection laws and regulations. Our business and operating results may be
      materially and adversely affected if we were to be held liable for violating
      existing environmental regulations or if we were to increase expenditures to
      comply with environmental regulations affecting our operations.




29





***We
      may not be able to hire and retain qualified personnel to support our growth
      and
      if we are unable to retain or hire such personnel in the future, our ability
      to
      improve our products and implement our business objectives could be adversely
      affected.***




If
      one or
      more of our senior executives or other key personnel are unable or unwilling
      to
      continue in their present positions, we may not be able to replace them easily
      or at all, and our business may be disrupted and our financial condition and
      results of operations may be materially and adversely affected. Competition
      for
      senior management and senior technology personnel is intense, the pool of
      qualified candidates is very limited, and we may not be able to retain the
      services of our senior executives or senior technology personnel, or attract
      and
      retain high-quality senior executives or senior technology personnel in the
      future. Such failure could materially and adversely affect our future growth
      and
      financial condition.




***We
      do not presently maintain product liability insurance, and our property and
      equipment insurance does not cover the full value of our property and equipment,
      which leaves us with exposure in the event of loss or damage to our properties
      or claims filed against us.***





We
      currently do not carry any product liability or other similar insurance. Unlike
      the U.S. and other countries, product liability claims and lawsuits are
      relatively rare in the PRC. However, we cannot assure you that we would not
      face
      liability in the event of the failure of any of our products. We cannot assure
      you that, especially as China’s domestic consumer economy and industrial economy
      continues to expand, product liability exposures and litigation will not become
      more commonplace in the PRC, or that we will not face product liability exposure
      or actual liability as we expand our sales into international markets, like
      the
      United States, where product liability claims are more prevalent.




Except
      for property and automobile insurance, we do not have other insurance such
      as
      business liability or disruption insurance coverage for our operations in the
      PRC.





***Rapid
      technological changes in our industry could render our products non-competitive
      or obsolete and consequently affect our ability to generate
      revenues.***





The
      environmental protection and remediation industry is subject to rapid
      technological change. Our future success will depend on our ability to respond
      to rapidly changing technologies and improve the quality of our products. Our
      failure to adapt to these changes could harm our business. Our future plans
      to
      market our products require them to be innovative. If we are slow to develop
      new
      products and technologies that are attractive to and useful solutions for the
      PRC iron and steel industry, we may not be successful in capturing an
      increasingly significant share of this market.




**Risks
      Related to Doing Business in the PRC.**





***We
      face the risk that changes in the policies of the PRC government could have
      a
      significant impact upon the business we may be able to conduct in the PRC and
      the profitability of such business.***





The
      PRC’s
      economy is in a transition from a planned economy to a market oriented economy
      subject to five-year and annual plans adopted by the government that set
      national economic development goals. Policies of the PRC government can have
      significant effects on economic conditions in China. The PRC government has
      confirmed that economic development will follow the model of a market economy,
      such as the United States. Under this direction, we believe that the PRC will
      continue to strengthen its economic and trading relationships with foreign
      countries and business development in the PRC will follow market forces. While
      we believe that this trend will continue, we cannot assure you that this will
      be
      the case. Our interests may be adversely affected by changes in policies by
      the
      PRC government, including:





·
            changes
                in laws, regulations or their
                interpretation




·
            confiscatory
                taxation




·
            restrictions
                on currency conversion, imports or sources of
                supplies




30




·
            expropriation
                or nationalization of private
                enterprises.





Although
      the PRC government has been pursuing economic reform policies for more than
      two
      decades, we cannot assure you that the government will continue to pursue such
      policies or that such policies may not be significantly altered, especially
      in
      the event of a change in leadership, social or political disruption, or other
      circumstances affecting the PRC's political, economic and social
      life.




***The
      PRC laws and regulations governing our current business operations are sometimes
      vague and uncertain. Any changes in such PRC laws and regulations may harm
      our
      business.***





There
      are
      substantial uncertainties regarding the interpretation and application of PRC
      laws and regulations, including but not limited to the laws and regulations
      governing our business, and the enforcement and performance of our arrangements
      with customers in the event of the imposition of statutory liens, death,
      bankruptcy and criminal proceedings. We and any future subsidiaries are
      considered foreign persons or foreign funded enterprises under PRC laws, and
      as
      a result, we are required to comply with PRC laws and regulations. These laws
      and regulations are sometimes vague and may be subject to future changes, and
      their official interpretation and enforcement may involve substantial
      uncertainty. The effectiveness of newly enacted laws, regulations or amendments
      may be delayed, resulting in detrimental reliance by foreign investors. New
      laws
      and regulations that affect existing and proposed future businesses may also
      be
      applied retroactively. We cannot predict what effect the interpretation of
      existing or new PRC laws or regulations may have on our businesses.





***The
      restructuring of RINO may affect RINO’s existing customer relationships and
      result in additional transactional costs that may adversely impact our
      profitability.***





We
      will
      conduct our business out of Dalian Innomind after we complete the asset
      purchases and leases as contemplated in the Restructuring Agreements. The
      restructuring of RINO’s business through assets transfers and leases to Dalian
      Innomind may affect RINO’s existing customer relationships. To the extent the
      existing customers do not want to assign their purchase orders to a newly formed
      entity (i.e., Dalian Innomind) the Restructuring Agreements provide a mechanism
      to allow RINO to continue its operations under Dalian Innomind’s control.
      However, we cannot assure you that the customers will continue their business
      relationships with us or RINO after this complicated restructuring. Any loss
      of
      RINO’s existing customers will have an adverse impact on our revenues and net
      profits.





In
      addition, the assets transfers and leases involved in the restructuring
      inevitably will incur costs and expenses, such as taxes (both at central and
      local levels), filing fees and registration fees with government authorities.
      We
      believe that these transactional costs for the restructuring are manageable.
      However, due to the complexity of the tax regime in PRC and the great discretion
      the local tax authorities enjoy, we cannot assure you that there are no
      unpredictable costs and expenses associated with the restructuring and any
      such
      costs and expenses will not adversely impact our profitability.




***Our
      Restructuring Agreements with RINO and its shareholders may not be as effective
      in providing control over these entities as direct ownership and potential
      conflicts of interest may occur in the performance and enforcement of the
      Restructuring Agreements in the future.***





We
      operate our business through Dalian Innomind, our indirect wholly-owned
      subsidiary in the PRC, and rely on the Restructuring Agreements with RINO and
      its shareholders to control the operations of RINO. While we own and/or lease
      substantially all of RINO’s manufacturing assets through Dalian Innomind, and to
      the extent that any aspect of RINO’s business needs to be conducted through RINO
      in the future, the Restructuring Agreements provide Dalian Innomind with the
      legal right and power to control RINO and any of its remaining assets and
      operations, the Restructuring Agreements may not be as effective in providing
      control over RINO as direct ownership. For example, if we had direct ownership
      of RINO, we would be able to exercise our rights as a shareholder to effect
      changes in the board of directors of RINO, which in turn could effect changes,
      subject to any applicable fiduciary obligations, at the management level.





Furthermore,
      if RINO or any of its shareholders fails to perform its or his respective
      obligations under the Restructuring Agreements, we may have to incur substantial
      costs and resources to enforce those agreements, and rely on legal remedies
      under PRC law, including seeking specific performance or injunctive relief,
      and
      claiming damages, which may not be effective. For example, if the shareholders
      of RINO refuse to transfer their equity interest in RINO to us or our designee
      if we exercise the equity purchase option under the Restructuring Agreements,
      then we will have to pursue available remedies under PRC law for them to fulfill
      their contractual obligations.




31




The
      terms
      of the Restructuring Agreements were negotiated between RINO and the investors
      in the private placement that we completed on October 5, 2007 on behalf of
      the
      Company at an arms-length, the approval of which by the Company was a condition
      precedent to closing of the private placement. However, there may be potential
      conflicts of interest in the performance and enforcement of the Restructuring
      Agreements because our CEO and director, Mr. Zou, who, together with his wife,
      are the sole beneficiaries of The Innomind Trust which holds 71.60% of all
      of
      our outstanding common stock also hold 100% of RINO’s equity interest. As such,
      we can not assure you that Mr. Zou, in his capacity as our CEO and director,
      will act in the best interest of the Company when a conflict between us and
      RINO
      arises because of his ownership interest in RINO. For example, if RINO violates
      the Restructuring Agreement because of its failure to pay any management fee
      to
      Dalian Innomind, the fact that Mr. Zou has a 90% ownership interest in RINO
      may
      affect his decision as to whether and/or how vigorously the Company will seek
      to
      enforce its rights under the Restructuring Agreements.




The
      Restructuring Agreements are governed by PRC law and provide for the resolution
      of disputes through arbitration in the PRC. Accordingly, these agreements would
      be interpreted in accordance with PRC law and any disputes would be resolved
      in
      accordance with PRC legal procedures. The legal environment in the PRC is not
      as
      developed as in other jurisdictions, such as the United States. As a result,
      uncertainties in the PRC legal system could limit our ability to enforce the
      Restructuring Agreements. If we are unable to enforce the Restructuring
      Agreements, we may not be able to exert effective control over our operating
      entities, and our ability to conduct our business may be negatively affected.





***A
      slowdown or other adverse developments in the PRC economy may harm our customers
      and the demand for our services and our products.***





All
      of
      our operations are conducted in the PRC and all of our revenues are generated
      from sales in the PRC. Although the PRC economy has grown significantly in
      recent years, we cannot assure you that this growth will continue. Pollution
      control for China’s iron and steel sector is a relatively immature and growing
      sector, but we do not know how sensitive we might be to a slowdown in economic
      growth or other adverse changes in the PRC economy which might affect demand
      for
      iron and steel pollution control equipment. A slowdown in overall economic
      growth, an economic downturn, a recession or other adverse economic developments
      in the PRC could significantly reduce the demand for our products and harm
      our
      business.




***Inflation
      in the PRC could negatively affect our profitability and
      growth*** .





While
      the
      PRC economy has experienced rapid growth, such growth has been uneven among
      various sectors of the economy and in different geographical areas of the
      country. Rapid economic growth could lead to growth in the money supply and
      rising inflation. If prices for our products rise at a rate that is insufficient
      to compensate for the rise in the costs of supplies, it may harm our
      profitability.





In
      order
      to control inflation in the past, the PRC government has imposed controls on
      bank credit, limits on loans for fixed assets and restrictions on state bank
      lending. Such an austere policy can lead to a slowing of economic growth. In
      October 2004, the People's Bank of China, the PRC's central bank, raised
      interest rates for the first time in nearly a decade and indicated in a
      statement that the measure was prompted by inflationary concerns in the Chinese
      economy. Repeated rises in interest rates by the central bank would likely
      slow
      economic activity in China which could, in turn, materially increase our costs
      and also reduce demand for our products.




32





***Dalian
      Innomind and RINO are subject to restrictions on paying dividends and making
      other payments to us. We might be unable to pay dividends to you.***





We
      are a
      holding company incorporated in the State of Nevada and do not have any assets
      or conduct any business operations other than our investments in our
      subsidiaries and affiliates, Innomind, Dalian Innomind and RINO. As a result
      of
      our holding company structure, we rely entirely on dividend payments from Dalian
      Innomind, our subsidiary in China. PRC regulations currently permit payment
      of
      dividends only out of accumulated profits, as determined in accordance with
      PRC
      accounting standards and regulations. Our subsidiary and affiliated entity
      in
      the PRC also are required to set aside a portion of their after-tax profits
      according to PRC accounting standards and regulations to fund certain reserve
      funds. The PRC government also imposes controls on the conversion of RMB into
      foreign currencies and the remittance of currencies out of the PRC. We may
      experience difficulties in completing the administrative procedures necessary
      to
      obtain and remit foreign currency. Furthermore, if Dalian Innomind or RINO
      incurs debt on its own in the future, the instruments governing the debt may
      restrict its ability to pay dividends or make other payments. If we or Innomind
      are unable to receive all of the revenues from RINO’s operations, we may be
      unable to pay dividends on our common stock.




***Governmental
      control of currency conversion may affect the value of your
      investment.***





The
      PRC
      government imposes controls on the convertibility of Renminbi into foreign
      currencies and, in certain cases, the remittance of currency out of the PRC.
      We
      receive substantially all of our revenues in Renminbi, which is currently not
      a
      freely convertible currency. Shortages in the availability of foreign currency
      may restrict our ability to remit sufficient foreign currency to pay dividends,
      or otherwise satisfy foreign currency dominated obligations. Under existing
      PRC
      foreign exchange regulations, payments of current account items, including
      profit distributions, interest payments and expenditures from the transaction,
      can be made in foreign currencies without prior approval from the PRC State
      Administration of Foreign Exchange by complying with certain procedural
      requirements. However, approval from appropriate governmental authorities is
      required where Renminbi is to be converted into foreign currency and remitted
      out of China to pay capital expenses such as the repayment of bank loans
      denominated in foreign currencies.





The
      PRC
      government may also in the future restrict access to foreign currencies for
      current account transactions. If the foreign exchange control system prevents
      us
      from obtaining sufficient foreign currency to satisfy our currency demands,
      we
      may not be able to pay certain of our expenses as they come due.




***The
      fluctuation of the Renminbi may harm your investment.***





The
      value
      of the RMB against the U.S. dollar and other currencies may fluctuate and is
      affected by, among other things, changes in the PRC's political and economic
      conditions. As we rely entirely on revenues earned in the PRC, any significant
      revaluation of the RMB may materially and adversely affect our cash flows,
      revenues and financial condition. For example, to the extent that we need to
      convert U.S. dollars we receive from an offering of our securities into RMB
      for
      our operations, appreciation of the RMB against the U.S. dollar would diminish
      the value of the proceeds of the offering and this could harm our business,
      financial condition and results of operations. Conversely, if we decide to
      convert our RMB into U.S. dollars for the purpose of making payments for
      dividends on our common shares or for other business purposes and the U.S.
      dollar appreciates against the RMB, the U.S. dollar equivalent of the RMB we
      convert would be reduced. In addition, the depreciation of significant U.S.
      dollar denominated assets could result in a charge to our income statement
      and a
      reduction in the value of these assets.





On
      July
      21, 2005, the PRC government changed its decade-old policy of pegging the value
      of the RMB to the U.S. dollar. Under the new policy, the RMB is permitted to
      fluctuate within a narrow and managed band against a basket of certain foreign
      currencies. This change in policy has resulted in significant appreciation
      of
      the RMB against the U.S. dollar. There remains significant international
      pressure on the PRC government to adopt an even more flexible currency policy,
      which could result in a further and more significant appreciation of the RMB
      against the U.S. dollar.





***If
      the PRC were to eliminate the “grandfathered” preferential tax benefits
      currently enjoyed by Dalian Innomind, we would have to pay more taxes in the
      PRC, which could have a material and adverse effect on our financial condition
      and results of operations.***




Recent
      changes in the PRC’s tax laws have, effective January 1, 2008, made wholly
      foreign-owned enterprises (“WFOEs”) subject to standard enterprise income tax
      rates, which as of January 1, 2008, will be 25%. Prior to these changes, WFOEs
      enjoyed tax preferences consisting of multi-year exemptions followed by a period
      of reduced rate taxation and ending with the application of standard tax
      rates.




33




Because
      Dalian Innomind was incorporated before the effective date of these recent
      tax
      law changes, it has been “grandfathered” into the pre-change schema. As a
      consequence, as a WFOE, Dalian Innomind is entitled to: (i) a two-year exemption
      from enterprise income taxation beginning in its first year of operations;
      (ii)
      a 12% enterprise income tax rate for the next three years; and (iii) application
      of the standard enterprise income tax rate (which will be 25% as of January
      1,
      2008) thereafter.





If
      the
      PRC were to eliminate these “grandfathered” tax preferences, Dalian Innomind
      would immediately be subject to the standard statutory tax rate. The loss of
      these preferential tax treatments and the resulting acceleration of the
      application of standard PRC tax rates to our Business, could have a material
      and
      adverse effect on our financial condition and results of operations.





***The
      Restructuring Agreements we have entered into among our subsidiaries and
      affiliated entities or persons may be subject to scrutiny by the PRC tax
      authorities and a finding that we owe additional taxes or are ineligible for
      our
      tax exemption, or both, could substantially increase our taxes owed, and reduce
      our net income and the value of your investment.*** ****





Dalian
      Innomind has purchased assets from RINO, our affiliated company, at their book
      value and leased the remaining assets from RINO at nominal amount. Under
      PRC law, arrangements and transactions among related parties may be subject
      to audit or challenge by the PRC tax authorities. If any of the transactions
      we
      have entered into between Dalian Innomind and RINO are found not to be on an
      arm’s-length basis, or to result in an unreasonable reduction in tax under PRC
      law, the PRC tax authorities have the authority to disallow our tax savings,
      adjust the profits and losses of Dalian Innomind and RINO, and assess late
      payment interest and penalties. A finding by the PRC tax authorities that we
      are
      ineligible for the tax savings achieved in the past, or that RINO or Dalian
      Innomind are ineligible for preferential tax benefits, would substantially
      increase our taxes owed and reduce our net income and the value of your
      investment.




***PRC
      regulations relating to the establishment of offshore special purpose companies
      by PRC residents, if applied to us, may subject the PRC resident shareholders
      of
      us or our parent company to personal liability and limit our ability to acquire
      PRC companies or to inject capital into our PRC subsidiary, limit our PRC
      subsidiary's ability to distribute profits to us or otherwise materially
      adversely affect us.***





In
      October 2005, the PRC State Administration of Foreign Exchange (“SAFE”) issued a
      public notice, the Notice on Relevant Issues in the Foreign Exchange Control
      over Financing and Return Investment Through Special Purpose Companies by
      Residents Inside China (the “SAFE Notice”), which requires PRC residents,
      including both legal persons and natural persons, to register with the competent
      local SAFE branch before establishing or controlling any company outside of
      China, referred to as an “offshore special purpose company,” for the purpose of
      overseas equity financing involving onshore assets or equity interests held
      by
      them. In addition, any PRC resident that is the shareholder of an offshore
      special purpose company is required to amend its SAFE registration with the
      local SAFE branch with respect to that offshore special purpose company in
      connection with any increase or decrease of capital, transfer of shares, merger,
      division, equity investment or creation of any security interest over any assets
      located in China. Moreover, if the offshore special purpose company was
      established and owned the onshore assets or equity interests before the
      implementation date of the SAFE notice, a retroactive SAFE registration is
      required to have been completed before March 31, 2006. If any PRC shareholder
      of
      any offshore special purpose company fails to make the required SAFE
      registration and amendment, the PRC subsidiaries of that offshore special
      purpose company may be prohibited from distributing their profits and the
      proceeds from any reduction in capital, share transfer or liquidation to the
      offshore special purpose company. Moreover, failure to comply with the SAFE
      registration and amendment requirements described above could result in
      liability under PRC laws for evasion of applicable foreign exchange
      restrictions. After the SAFE notice, an implementation rules on the SAFE notice
      was issued on May 29, 2007 which provides for implementation guidance and
      supplements the procedures as provided in the SAFE notice. For an offshore
      special purpose company which was established and owned the onshore assets
      or
      equity interests before the implementation date of the SAFE notice, a
      retroactive SAFE registration requirement is repeated.





Due
      to
      lack of official interpretation, some of the terms and provisions of the SAFE
      Notice and its implementation rules remain unclear, and the implementation
      of
      the SAFE Notice by central SAFE and local SAFE branches has been inconsistent
      since its adoption. Based on the advice of our PRC counsel, Global Law Offices,
      located in Beijing, and after consultation with relevant SAFE officials, we
      believe that the PRC resident shareholders of our parent company, Jade Mountain
      Corporation, were required to complete their respective SAFE registrations
      pursuant to the SAFE Notice.




34




Moreover,
      because of uncertainty over how the SAFE Notice will be interpreted and
      implemented, and how or whether the SAFE Notice and implementation rules will
      apply to us, we cannot predict how SAFE will affect our business operations
      or
      future strategies. For example, our present and prospective PRC subsidiaries’
ability to conduct foreign exchange activities, such as the remittance of
      dividends and foreign currency-denominated borrowings, may be subject to
      compliance with the SAFE Notice by our or our parent company’s PRC resident
      shareholders. In addition, such PRC residents may not always be able to complete
      registration procedures required by the SAFE Notice. We also have little control
      over either our present or prospective direct or indirect shareholders or the
      outcome of such registration procedures. A failure by our or our parent
      company’s PRC resident shareholders or future PRC resident shareholders to
      comply with the SAFE Notice, if SAFE requires it, could subject us to fines
      or
      legal sanctions, restrict our overseas or cross-border investment activities,
      limit our subsidiary’s ability to make distributions or pay dividends or affect
      our ownership structure, which could adversely affect our business and
      prospects.




***Any
      recurrence of severe acute respiratory syndrome, or SARS, or another widespread
      public health problem, could adversely affect our
      operations.***





A
      renewed
      outbreak of SARS or another widespread public health problem in the PRC, where
      all of our revenue is derived, could have an adverse effect on our operations.
      Our operations may be impacted by a number of health-related factors, including
      quarantines or closures of some of our offices that would adversely disrupt
      our
      operations.




Any
      of
      the foregoing events or other unforeseen consequences of public health problems
      could adversely affect our operations.





***Because
      our principal assets are located outside of the United States and some of our
      directors and all our officers reside outside of the United States, it may
      be
      difficult for you to use the United States Federal securities laws to enforce
      your rights against us and our officers and some directors in the United States
      or to enforce judgments of United States courts against us or them in the
      PRC.***





All
      of
      our present officers and some of our directors reside outside of the United
      States. In addition, our operating subsidiary, Dalian Innomind, is located
      in
      the PRC and substantially all of its assets are located outside of the United
      States. It may therefore be difficult for investors in the United States to
      enforce their legal rights based on the civil liability provisions of the United
      States Federal securities laws against us in the courts of either the United
      States or the PRC and, even if civil judgments are obtained in courts of the
      United States, to enforce such judgments in PRC courts. Further, it is unclear
      if extradition treaties now in effect between the United States and the PRC
      would permit effective enforcement against us or our officers and directors
      of
      criminal penalties, under the United States Federal securities laws or
      otherwise.





***The
      PRC’s legal and judicial system may not adequately protect our business and
      operations and the rights of foreign investors***





The
      PRC
      legal and judicial system may negatively impact foreign investors. In 1982,
      the
      National People's Congress amended the Constitution of China to authorize
      foreign investment and guarantee the "lawful rights and interests" of foreign
      investors in the PRC. However, the PRC's system of laws is not yet
      comprehensive. The legal and judicial systems in the PRC are still rudimentary,
      and enforcement of existing laws is inconsistent. Many judges in the PRC lack
      the depth of legal training and experience that would be expected of a judge
      in
      a more developed country. Because the PRC judiciary is relatively inexperienced
      in enforcing the laws that do exist, anticipation of judicial decision-making
      is
      more uncertain than would be expected in a more developed country. It may be
      impossible to obtain swift and equitable enforcement of laws that do exist,
      or
      to obtain enforcement of the judgment of one court by a court of another
      jurisdiction. The PRC's legal system is based on the civil law regime, that
      is,
      it is based on written statutes; a decision by one judge does not set a legal
      precedent that is required to be followed by judges in other cases. In addition,
      the interpretation of Chinese laws may be varied to reflect domestic political
      changes.




35




The
      promulgation of new laws, changes to existing laws and the pre-emption of local
      regulations by national laws may adversely affect foreign investors. However,
      the trend of legislation over the last 20 years has significantly enhanced
      the
      protection of foreign investment and allowed for more control by foreign parties
      of their investments in Chinese enterprises. There can be no assurance that
      a
      change in leadership, social or political disruption, or unforeseen
      circumstances affecting the PRC's political, economic or social life, will
      not
      affect the PRC government's ability to continue to support and pursue these
      reforms. Such a shift could have a material adverse effect on our business
      and
      prospects.




The
      practical effect of the PRC legal system on our business operations in the
      PRC
      can be viewed from two separate but intertwined considerations. First, as a
      matter of substantive law, the Foreign Invested Enterprise laws provide
      significant protection from government interference. In addition, these laws
      guarantee the full enjoyment of the benefits of corporate Articles and contracts
      to Foreign Invested Enterprise participants. These laws, however, do impose
      standards concerning corporate formation and governance, which are qualitatively
      different from the general corporation laws of the United States. Similarly,
      the
      PRC accounting laws mandate accounting practices, which are not consistent
      with
      U.S. generally accepted accounting principles. PRC’s accounting laws require
      that an annual "statutory audit" be performed in accordance with PRC accounting
      standards and that the books of account of Foreign Invested Enterprises are
      maintained in accordance with Chinese accounting laws. Article 14 of the
      People's Republic of China Wholly Foreign-Owned Enterprise Law requires a wholly
      foreign-owned enterprise to submit certain periodic fiscal reports and
      statements to designated financial and tax authorities, at the risk of business
      license revocation. While the enforcement of substantive rights may appear
      less
      clear than United States procedures, the Foreign Invested Enterprises and Wholly
      Foreign-Owned Enterprises are Chinese registered companies, which enjoy the
      same
      status as other Chinese registered companies in business-to-business dispute
      resolution. Any award rendered by an arbitration tribunal is enforceable in
      accordance with the United Nations Convention on the Recognition and Enforcement
      of Foreign Arbitral Awards (1958). Therefore, as a practical matter, although
      no
      assurances can be given, the Chinese legal infrastructure, while different
      in
      operation from its United States counterpart, should not present any significant
      impediment to the operation of Foreign Invested Enterprises.





***We
      may face obstacles from the communist system in the
      PRC.***





Foreign
      companies conducting operations in PRC face significant political, economic
      and
      legal risks. The Communist regime in the PRC, which includes a cumbersome
      bureaucracy, may hinder Western investment.





***We
      may have difficulty establishing adequate management, legal and financial
      controls in the PRC.***





The
      PRC
      historically has not adopted a Western style of management and financial
      reporting concepts and practices, as in modern banking, computer and other
      control systems. We may have difficulty in hiring and retaining a sufficient
      number of qualified employees to work in the PRC. As a result of these factors,
      we may experience difficulty in establishing management, legal and financial
      controls, collecting financial data and preparing financial statements, books
      of
      account and corporate records and instituting business practices that meet
      Western standards. Therefore, we may, in turn, experience difficulties in
      implementing and maintaining adequate internal controls as will be required
      under Section 404 of the Sarbanes Oxley Act of 2002.





***The
      relative lack of public company experience of our management team may put us
      at
      a competitive disadvantage.*** **





Our **** management
      team lacks public company experience, which could impair our ability to comply
      with legal and regulatory requirements such as those imposed by Sarbanes-Oxley
      Act of 2002. The individuals who now constitute our senior management have
      never
      had responsibility for managing a publicly traded company. Such responsibilities
      include complying with federal securities laws and making required disclosures
      on a timely basis. Our senior management may not be able to implement programs
      and policies in an effective and timely manner that adequately responds to
      such
      increased legal, regulatory compliance and reporting requirements. Our failure
      to comply with all applicable requirements could lead to the imposition of
      fines
      and penalties and distract our management from attending to the growth of our
      business.




36




**Risks
      Related to Our Common Stock.**





***Our
      officers, directors and affiliates control us through their positions and stock
      ownership and their interests may differ from other
      stockholders.***





Our
      officers and directors beneficially own approximately 71.6% of our Common Stock.
      As a result, they are able to control the outcome of stockholder votes on
      various matters, including the election of directors and extraordinary corporate
      transactions, including business combinations. The interests of our directors
      and officers may differ from other stockholders. Furthermore, the current ratios
      of ownership of our common stock reduce the public float and liquidity of our
      common stock which can, in turn, affect the market price of our common
      stock.





***We
      are not likely to pay cash dividends in the foreseeable
      future.***





We
      currently intend to retain any future earnings for use in the operation and
      expansion of our business. We do not expect to pay any cash dividends in the
      foreseeable future but will review this policy as circumstances dictate. Should
      we decide in the future to do so, as a holding company, our ability to pay
      dividends and meet other obligations depends upon the receipt of dividends
      or
      other payments from our operating subsidiary. In addition, our operating
      subsidiary, Dalian Innomind, from time to time, may be subject to restrictions
      on its ability to make distributions to us, including as a result of
      restrictions on the conversion of local currency into U.S. dollars or other
      hard
      currency and other regulatory restrictions.





***Our
      common stock is thinly traded, so you may be unable to sell at or near ask
      prices or at all if you need to sell your shares to raise money or otherwise
      desire to liquidate your shares.*** **





Prior
      to
      the October 5, 2007, Share Exchange our shares were not publicly traded. Through
      the Share Exchange we have essentially become public without the typical initial
      public offering procedures which usually include a large selling group of
      broker-dealers who may provide market support after going public. Thus, we
      have
      undertaken efforts to develop market recognition for our stock. Our common
      stock
      was added to the OTC Bulletin Board (the “OTC-BB”) daily list on July 3, 2007.
      As a result, there is limited market activity in our stock and we are too small
      to attract the interest of many brokerage firms and analysts. We cannot give
      you
      any assurance that a broader or more active public trading market for our common
      stock will develop or be sustained. Currently our common stock is quoted in
      the
      OTC Bulletin Board market and the trading volume we will develop may be limited
      by the fact that many major institutional investment funds, including mutual
      funds, as well as individual investors follow a policy of not investing in
      Bulletin Board stocks and certain major brokerage firms restrict their brokers
      from recommending Bulletin Board stocks because they are considered speculative,
      volatile and thinly traded. The OTC Bulletin Board market is an inter-dealer
      market much less regulated than the major exchanges and our common stock is
      subject to abuses and volatilities and shorting. Thus there is currently no
      broadly followed and established trading market for our common stock. An
      established trading market may never develop or be maintained. Active trading
      markets generally result in lower price volatility and more efficient execution
      of buy and sell orders. Absence of an active trading market reduces the
      liquidity of the shares traded there.




The
      trading volume of our common stock has been and may continue to be limited
      and
      sporadic. As a result of such trading activity, the quoted price for our common
      stock on the OTC Bulletin Board may not necessarily be a reliable indicator
      of
      its fair market value. Further, if we cease to be quoted, holders would find
      it
      more difficult to dispose of, or to obtain accurate quotations as to the market
      value of our common stock and as a result, the market value of our common stock
      likely would decline.




37




***Our
      common stock is currently subject to the "penny stock" rules which require
      delivery of a schedule explaining the penny stock market and the associated
      risks before any sale.***




Our
      common stock is currently subject to regulations prescribed by the SEC relating
      to “penny stocks.” The SEC has adopted regulations that generally define a penny
      stock to be any equity security that has a market price (as defined in such
      regulations) of less than $5.00 per share, subject to certain exceptions. On
      February 29, 2008, the last sale price of our common stock was $8.10 per share.
      These regulations impose additional sales practice requirements on
      broker-dealers who sell such securities to persons other than established
      customers and accredited investors (generally institutions with assets in excess
      of $5,000,000 and individuals with a net worth in excess of $1,000,000 or annual
      income exceeding $200,000 (individually) or $300,000 (jointly with their
      spouse)). For transactions covered by these rules, the broker-dealer must make
      a
      special suitability determination for the purchase of these securities and
      have
      received the purchaser's prior written consent to the transaction. Additionally,
      for any transaction, other than exempt transactions, involving a penny stock,
      the rules require the delivery, prior to the transaction, of a risk disclosure
      document mandated by the SEC relating to the penny stock market. The
      broker-dealer also must disclose the commissions payable to both the
      broker-dealer and the registered representative, current quotations for the
      securities and, if the broker-dealer is the sole market-maker, the broker-dealer
      must disclose this fact and the broker-dealer's presumed control over the
      market. Finally, monthly statements must be sent disclosing recent price
      information for the penny stock held in the account and information on the
      limited market in penny stocks. Consequently, the "penny stock" rules may
      restrict the ability of broker-dealers to sell the common stock and may affect
      the ability of investors to sell their common stock in the secondary
      market.





***Our
      common stock is illiquid and subject to price volatility unrelated to our
      operations.***





The
      market price of our common stock could fluctuate substantially due to a variety
      of factors, including market perception of our ability to achieve our planned
      growth, quarterly operating results of other companies in the same industry,
      trading volume in our common stock, changes in general conditions in the economy
      and the financial markets or other developments affecting our competitors or
      us.
      In addition, the stock market is subject to extreme price and volume
      fluctuations. This volatility has had a significant effect on the market price
      of securities issued by many companies for reasons unrelated to their operating
      performance and could have the same effect on our common stock.





***A
      large number of shares will be eligible for future sale and may depress our
      stock price.***




We
      have
      filed a Registration Statement on Form SB-2 on November 19, 2007, as amended
      by
      Amendment No. 1 to Form S-1 filed on March 11, 2008, to register for resale
      5,962,857 shares of our common stock to be offered by certain selling
      stockholders, all of which (assuming the effectiveness of the registration
      statement) are freely tradeable. Sales of substantial amounts of common stock,
      or a perception that such sales could occur, and the existence of warrants
      to
      purchase shares of common stock at prices that may be below the then current
      market price of the common stock, could adversely affect the market price of
      our
      common stock and could impair our ability to raise capital through the sale
      of
      our equity securities.





***We
      are authorized to issue "blank check" preferred stock, which, if issued without
      stockholders approval, may adversely affect the rights of holders of our common
      stock.***





We
      are
      authorized to issue 50,000,000 shares of preferred stock, none of which have
      been issued. Our Board of Directors is authorized under our Articles of
      Incorporation to provide for the issuance of shares of preferred stock by
      resolution, and by filing a certificate of designations under Nevada law, to
      fix
      the designation, powers, preferences and rights of the shares of each such
      series of preferred stock and the qualifications, limitations or restrictions
      thereof without any further vote or action by the stockholders. Any shares
      of
      preferred stock so issued are likely to have priority over our common stock
      with
      respect to dividend or liquidation rights. In the event of issuance, the
      preferred stock could be utilized, under certain circumstances, as a method
      of
      discouraging, delaying or preventing a change in control, which could have
      the
      effect of discouraging bids for the Company and thereby prevent stockholders
      from receiving the maximum value for their shares. We have no present intention
      to issue any shares of our preferred stock in order to discourage or delay
      a
      change of control or for any other reason. However, there can be no assurance
      that preferred stock will not be issued at some time in the future.





***We
      are responsible for the indemnification of our officers and
      directors*** *.*





Our
      Bylaws provide for the indemnification of our directors, officers, employees,
      and agents, under certain circumstances, against costs and expenses incurred
      by
      them in any litigation to which they become a party arising from their
      association with or activities on our behalf. Consequently, we may be required
      to expend substantial funds to satisfy these indemnity obligations.




38




**ITEM 1B.
      UNRESOLVED STAFF COMMENTS.**




None.





**ITEM
      2. PROPERTIES**





**Principal
      Office and Manufacturing Facilities**





The
      Company’s principal office and its manufacturing facilities are located in the
      Jinzhou Industry Cooperation Zone of Dalian, PRC. In 2003 RINO acquired from
      the
      government the right to use 287,117 square feet of land in the Jinzhou Industry
      Cooperation Zone for a 50 year period that expires in 2053 (the “Land Use
      Rights”). Instead of periodic rent, RINO paid a one-time fee of $580,203 for the
      Land Use Rights.





Of
      the
      area leased by us, our factory occupies 91,570 square feet, and office space,
      warehouse facilities and living quarters comprise 90,148 square feet.





**Dalian
      Facilities**





Our
      Dalian facilities have a staff of 270 managerial, technical, clerical and
      manufacturing employees, who cover the Company’s national operations,
      generally.





We
      raised
      funds in October 2007 in part to fund expansion of our Dalian factory. Delays
      in
      the fundraising, however, imposed a disproportionate effect on our plant
      expansion as weather conditions in Dalian basically prohibit outdoor
      construction in the late fourth and early first quarters of each
      year.





In
      addition to weather delays, we have experienced additional delays in removing
      the original tenants from the land we contracted to use for the factory
      expansion. The original tenants engage in small-scale agriculture, an activity
      which still enjoys protection under Chinese law. We recently applied
      successfully to rezone the property for industrial use but are still in
      negotiations with the original tenants. We cannot state with certainty when
      the
      original tenants will leave, nor can we estimate what amounts we might need
      to
      pay them as an incentive to leave the property.





In
      spite
      of delays in completing the plant expansion, we believe that 2008 production
      will not be materially affected. We has originally intended to rationalize
      and
      expand our welding and assembly operations, in lieu of new space we have
      increased workers and operate a second shift as needed to meet production
      demands.





**Branch
      Offices**





In
      addition to the head office in Dalian, the Company leases branch offices in
      Beijing and Shanghai. Each branch office covers and is responsible for the
      Company’s operations in a specific territory in China. Total annual rentals for
      all our branch offices are approximately $71,000.





**ITEM
      3. LEGAL PROCEEDINGS**





Neither
      we nor any of our subsidiaries is a party to any pending legal proceedings
      (other than ordinary routine litigation incidental to our business), nor are
      we
      aware of any such proceedings threatened against us or our
      subsidiaries.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS**





We
      did
      not submit any matters to a vote of our shareholders in the fourth quarter
      of
      the fiscal year ended December 31, 2007.




39




**PART
      II**





**ITEM
      5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES**





**Market
      Information**





Our
      common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under
      the symbol "JDMC". There has never been any established public market for shares
      of our common stock. On March 25, 2008, 382,500 warrants (subject to adjustment)
      to purchase our common stock were outstanding at an exercise price of $5.376
      per
      share.





The
      following table sets forth the high and low bid prices, in the over-the-counter
      market, as reported and summarized by Yahoo Finance ( http://finance.yahoo.com ),
      for
      each fiscal quarter during each of the fiscal years ended December 31, 2006
      and
      December 31, 2007. These prices are based on inter-dealer prices, without retail
      markup, markdown or omissions and may not represent actual transactions. These
      prices have been adjusted to give effect to the August 31, 2007, 100 for one
      forward stock split of all issued and outstanding shares of our common stock.




On
      May
      14, 2002, the Company filed a Form 15 with the SEC and ceased being a reporting
      company under the Exchange Act. On April 4, 2007, the Company filed a Form
      10SB
      registration statement with the SEC and again became a reporting company, and
      on
      July 3, 2007, the common stock was listed for quotation on the OTCBB.
      Consequently, from May 14, 2002, until July 3, 2007, our common stock was not
      traded. The following table reflects this absence of trading.





Quarter
                Ended
            
            High
            
            Low03/31/2006
            
            
            (1
            )
            
            (1
            )06/30/2006
            
            
            (1
            )
            
            (1
            )09/30/2006
            
            
            (1
            )
            
            (1
            )12/31/2006
            
            
            (1
            )
            
            (1
            )03/31/2007
            
            
            (1
            )
            
            (1
            )06/30/2007
            
            
            (1
            )
            
            (1
            )09/30/2007
            
            $
            56.00(2
            )
            $
            0.5112/31/2007
            
            $
            12.25
                (3
            )
            $
            2.40(3
            )







(1)
      Common stock not listed, quoted or traded.




(2)
      The
      high bid is an arbitrarily assigned figure giving effect to the Reverse
      Split and the Forward Split.





(3)
      The
      High and Low are both recorded on low trading volumes.




From
      October 5, 2007, until December 31, 2007, the high bid for our common stock
      was
      $12.25 per share, and the low bid was $2.40 per share.





Since
      the
      completion of the share exchange and private placement, our common stock has
      traded sporadically and with high volatility. Consequently, our historical
      prices may not be an accurate indication of the future prices of our common
      stock.





**Penny
      Stock Regulations**





The
      SEC
      has adopted regulations which generally define "penny stock" to be an equity
      security that has a market price of less than $5.00 per share. Although the
      market price of our common stock has, risen above $5.00, our stock price has
      fluctuated to prices below $5.00 per share and we are subject to rules that
      impose additional sales practice requirements on broker-dealers who sell such
      securities to persons other than established customers and accredited investors
      (generally those with assets in excess of $1,000,000, or annual incomes
      exceeding $200,000 or $300,000, together with their spouse).




40




For
      transactions covered by these rules, the broker-dealer must make a special
      suitability determination for the purchase of such securities and have received
      the purchaser's prior written consent to the transaction. Additionally, for
      any
      transaction, other than exempt transactions, involving a penny stock, the rules
      require the delivery, prior to the transaction, of a risk disclosure document
      mandated by the Commission relating to the penny stock market. The broker-dealer
      also must disclose the commissions payable to both the broker-dealer and the
      registered representative, current quotations for the securities and, if the
      broker-dealer is the sole market-maker, the broker-dealer must disclose this
      fact and the broker-dealer's presumed control over the market. Finally, monthly
      statements must be sent disclosing recent price information for the penny stock
      held in the account and information on the limited market in penny stocks.
      Consequently, the "penny stock" rules may restrict the ability of broker-dealers
      to sell the common stock and may affect the ability of investors to sell their
      common stock in the secondary market.




**Holders**





As
      of
      March 25, 2008, there were 25,000,000 shares of our common stock issued and
      outstanding (including the 5,580,000 Make Good shares now held in escrow),
      and
      there were approximately 126 holders of record of our outstanding shares of
      common stock. This does not reflect the number of persons or entities who held
      stock in nominee or "street" name through various brokerage firms.





**Dividends**





We
      have
      not declared or paid any cash dividends on our common stock during either of
      our
      last two fiscal years or during our last two fiscal quarters. The payment of
      dividends, if any, is at the discretion of the Board of Directors and is
      contingent on the Company's revenues and earnings, capital requirements,
      financial conditions and the ability of our operating subsidiary, Dalian
      Innomind, to obtain approval to send monies out of the PRC. We currently intend
      to retain all earnings, if any, for use in business operations. Accordingly,
      we
      do not anticipate declaring any dividends in the near future.





The
      PRC's
      national currency, the Yuan, is not a freely convertible currency. Please refer
      to the risk factors "Governmental control of currency conversion may affect
      the
      value of your investment," "The fluctuation of the Renminbi may harm your
      investment;" and "Recent PRC State Administration of Foreign Exchange ("SAFE")
      Regulations regarding offshore financing activities by PRC residents have
      undergone a number of changes which may increase the administrative burden
      we
      face.”




**Securities
      Authorized for Issuance Under Equity Compensation Plans**





Plan
                Category
            
            Number of securities to
              be issued upon exercise
              of outstanding options,
              warrants and rights
            
            Weighted-average
              exercise price of
              outstanding options,
              warrants and rights
            
            Number of securities
              remaining available for
              future issuanceunder
              equity compensation
              plans (excluding
              securities reflected in
              column (a))(a)
            
            (b)
            
            (c)Equity
                compensation plans approved by security holders
            
            
            0
            
            
            
            
            
            0Equity
                compensation plans not approved by securities holders (1)
            
            
            250,000
            
            $
            5.38
            
            
            0**Total**
            
            
            **250,000**
            
            
            
            
            
            **0**





(1)
      Pursuant to an employment agreement signed on September 27, 2007, Bruce
      Richardson, our CFO and Secretary, will be granted 250,000 options to purchase
      common stock at an exercise price of $5.38 per share, vesting in 3 equal annual
      installments beginning on January 1, 2009. The options will be issued as soon
      as
      practical after January 2, 2009.




41




**Recent
      Sales of Unregistered Securities**





*Issuance
      of Common Stock in Acquisition of Innomind*





Under
      the
      Share Exchange Agreement, on October 5, 2007, we issued 17,899,643 shares of
      our
      common stock to Zhang Ze, an individual, in exchange for all of the outstanding
      shares of the common stock of Innomind held by Zhang Ze. At the completion
      of
      that share exchange, Innomind became the Company’s wholly owned subsidiary. The
      Share Exchange was accomplished in reliance upon Section 4(2) of the Securities
      Act. Immediately after this Share Exchange, Zhang Ze placed the Jade Mountain
      shares he received in exchange for all his shares in Innomind into a Trust.
      The
      sole beneficiaries of this Trust are Zou Dejun and Qiu Jianping, the founders
      of
      Dalian Rino.




*Issuance
      of Common Stock in Private Placement*





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





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





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





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





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





*Issuance
      of Common Stock to Former Majority Shareholder*





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




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




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





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




42




**ITEM
      6. SELECTED FINANCIAL DATA**





The
      following selected consolidated financial data are derived from our consolidated
      financial statements included elsewhere in this annual report. The information
      set forth below should be read in conjunction with Item 7, “Management’s
      Discussion and Analysis of Financial Condition and Results of Operations” and
      our Consolidated Financial Statements and their related notes included elsewhere
      in this annual report. The historical results presented are not necessarily
      indicative of future results.




**Year
                      Ended December 31,****2007**
                  
                  **2006**
                  
                  **2005**
                  
                  **2004**
                  
                  **2003****($
                      in millions)****St
                      Statement of Operations:**Net
                      Sales
                  
                  $
                  63.4
                  
                  
                  10.3
                  
                  
                  3.6
                  
                  
                  2.9
                  
                  
                  0.0Gross
                      Profit
                  
                  
                  30.7
                  
                  
                  5.4
                  
                  
                  0.8
                  
                  
                  0.2
                  
                  
                  0.0Selling,
                      general & administrative expenses
                  
                  
                  14.7
                  
                  
                  0.8
                  
                  
                  0.4
                  
                  
                  0.4
                  
                  
                  0.0Income
                      from Operations
                  
                  
                  15.8
                  
                  
                  4.6
                  
                  
                  0.5
                  
                  
                  (0.2
                  )
                  
                  0.0Income
                      from Operations per Common Share
                  
                  
                  0.8
                  
                  
                  0.3
                  
                  
                  0.0
                  
                  
                  (0.01
                  )
                  
                  0.0Interest
                      expense, net
                  
                  
                  0.5
                  
                  
                  0.3
                  
                  
                  0.1
                  
                  
                  0.004
                  
                  
                  0.0Income
                      from Operations before Taxes
                  
                  
                  15.2
                  
                  
                  4.3
                  
                  
                  0.4
                  
                  
                  (0.2
                  )
                  
                  0.0Income
                      Tax Expense
                  
                  
                  5.0
                  
                  
                  1.2
                  
                  
                  0.1
                  
                  
                  0.002
                  
                  
                  0.0Net
                      income (loss)
                  
                  $
                  10.2
                  
                  
                  3.2
                  
                  
                  0.3
                  
                  
                  (0.2
                  )
                  
                  0.0**Other
                      Financial Data**:Cash
                      flow provided by (used in) operating activities
                  
                  $
                  (7.0
                  )
                  
                  3.5
                  
                  
                  (0.1
                  )
                  
                  1.9
                  
                  
                  (0.1
                  )Cash
                      flow used in investing activities
                  
                  
                  (1.6
                  )
                  
                  (4.5
                  )
                  
                  (4.3
                  )
                  
                  1.9
                  
                  
                  0.8Cash
                      flow provided by (used in) financing activities
                  
                  
                  (12.1
                  )
                  
                  4.5
                  
                  
                  3.8
                  
                  
                  0.0
                  
                  
                  0.8**Consolidated
                      Balance Sheet Data**:Cash
                      and cash equivalents
                  
                  $
                  7.4
                  
                  
                  3.6
                  
                  
                  0.1
                  
                  
                  0.
                  
                  
                  0.01Accounts
                      receivable, net
                  
                  
                  21.0
                  
                  
                  5.6
                  
                  
                  0.5
                  
                  
                  2.
                  
                  
                  0.4Total
                      Assets
                  
                  
                  62.2
                  
                  
                  21.6
                  
                  
                  11.8
                  
                  
                  7.
                  
                  
                  1.4Accounts
                      Payable
                  
                  
                  2.5
                  
                  
                  3.9
                  
                  
                  1.2
                  
                  
                  1.
                  
                  
                  0.5Notes
                      Payable
                  
                  
                  0
                  
                  
                  4.2
                  
                  
                  3.7
                  
                  
                  0.0
                  
                  
                  0Notes
                      Payable - long term
                  
                  $
                  0
                  
                  
                  3.5
                  
                  
                  0.0
                  
                  
                  0.0
                  
                  
                  0Total
                      Stockholders’ Equity
                  
                  
                  48.2
                  
                  
                  7.3
                  
                  
                  3.2
                  
                  
                  0.7
                  
                  
                  0.8





The
      company began operations in 2003. Statement of operations for the year ended
      December 31, 2003 indicates no revenue or other economic activity in that year.
      The statement of operations for the year ended December 31, 2004, above, was
      compiled under PRC accounting standards. Consolidated balance sheet data as
      of
      December 31, 2007, 2006, 2005, and 2004 were compiled under US GAAP and were
      audited. Consolidated balance sheet data as of December 31, 2003 was compiled
      under PRC accounting standards.





The
      selected financial data presented above is substantially the operating results
      for Dalian Rino. For the years ended December 31 2006, 2005, 2004, and 2003,
      all
      operations were undertaken by Dalian Rino. Beginning October 5, 2007, Dalian
      Rino began to pay all its after tax net income to Dalian Innomind as a
      management fee under the terms of the Entrusted Management Agreement. From
      October 5, 2007 , the two companies’ operations are consolidated as a
      contractually controlled affiliate under EITF 97-2. Jade Mountain Corporation
      and Innomind Group Limited exist as holding companies and have only *de
      minimis* income.




43




**ITEM
      7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION**





**Overview**





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





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





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





In
      addition to the foregoing, we provide machining services to third parties,
      utilizing our heavy machine tools’ idle time to generate contract manufacturing
      revenue. In the first quarter of 2007, we also earned a significant amount
      of
      revenue from providing technical support to a business partner for the
      fulfillment of its desulphurization contract. The technical support business
      maintains our revenue growth while we continue to experience production capacity
      constraints. We anticipate that the technical support business will decline
      beginning in 2008 as we build up adequate production capacity which allows
      us to
      refocus on our manufacturing business.




We
      also
      receive grants from local government with amounts varying from year to year
      as
      rewards for our continued investment in new technologies.  While being
      selected for these grants signals important government support for our
      technology development efforts, we believe the amounts of these grants are
      immaterial to our business. In the twelve months ended December 31, 2007, we
      received government grants of $228,430, or 0.4% of our total equipment and
      services sales revenue for the period. In the twelve months ended December
      31,
      2006 and 2005, we received government grants of $448,515 and $52,518,
      respectively, or 4.4% and 1.5% of our total sales revenue for those
      periods





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





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





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





**Recent
      Development**





***Share
      Exchange, Restructuring Agreements and Private Placement
      Financing***





In
      a
      share exchange transaction that closed on October 5, 2007 (the “Share
      Exchange”), the Company acquired Innomind, and through that acquisition also
      acquired Innomind’s wholly-owned subsidiary, Dalian Innomind, as well as the
      assets and business of Dalian Innomind’s PRC affiliate, RINO. In the Share
      Exchange the Company issued a controlling number of shares (the “Control
      Shares”) of its common stock to Zhang Ze, Innomind’s sole shareholder, in
      exchange for all of the issued and outstanding shares of Innomind, which were
      owned by Zhang Ze (the “Innomind Shares”). Zhang Ze immediately transferred his
      Jade Mountain shares into a Trust, the sole beneficiaries of which were Zou
      Dejun, our CEO and Director, and Qiu Jianping, our Director and Chairman of
      the
      Board.




44




Prior
      to
      the Share Exchange: (i) on July 16, 2007, the Company consummated a two hundred
      thousand (200,000) shares for one (1) share reverse split of its Common Stock,
      with fractional shares rounded up to the nearest whole number (the “Reverse
      Split”); and (ii) on August 31, 2007, the Company’s Board of Directors
      authorized a one (1) share for a one hundred (100) shares forward split of
      the
      issued and outstanding shares of its Common Stock. The ratio of the Reverse
      Split was chosen in order to accommodate the post Share Exchange capital
      structure of the Company as agreed upon by the Company and the holder of
      Innomind shares prior to the Share Exchange. The ratio of the Forward Split
      was
      chosen to make the public float of the Company fit exactly into the post private
      placement capital structure as agreed upon by the Company and the investors
      in
      the private placement. All share and per share amounts set forth in this Report
      as of dates on or after July 16, 2007, give effect to the Reverse Split and
      all
      share and per share amounts set forth in this Report as of dates after August
      31, 2007, give effect to the Reverse Split and Forward Split.





The
      acquisition of Innomind and Dalian Innomind on October 5, 2007 by Jade Mountain
      Corporation effected a change in control and was accounted for as a “reverse
      acquisition” whereby Innomind is the accounting acquirer for financial statement
      purposes. Accordingly, for all periods and filings subsequent to the October
      5,
      2007 “reverse acquisition” transaction, the historical financial statements of
      the Company reflect the consolidated financial statements of Innomind since
      its
      inception and the operations of Jade Mountain subsequent to October 5,
      2007.





In
      connection with the Share Exchange, through a series of agreements between
      Dalian Innomind and RINO that we refer to as the “Restructuring Agreements,”
which were executed on October 3, 2007, Dalian Innomind agreed to: : (i)
      purchase and lease from RINO substantially all of RINO’s assets and properties,
      including, among other things, the purchase of RINO’s manufacturing equipment,
      patent and trademark for an aggregate of $298,173 (or RMB 2,250,343) and the
      lease of RINO’s manufacturing plants and land at an annual rent of approximately
      $82,778 (or RMB 610,000); and (ii) fully conduct and manage RINO’s business (the
“Business”) in exchange for RINO’s payment to Dalian Innomind of a management
      fee equal to the Business’s monthly net profits. To the extent that any aspect
      of the Business needs to be conducted directly through RINO in the
      future, the Restructuring Agreements provide Dalian Innomind with the legal
      right and power to control RINO and any of its remaining assets and
      operations. The acquisition of the assets and business of RINO through the
      Restructuring Agreements was effective on October 5, 2007 whereby we assumed
      full operating control of RINO’s business. As of the date of this report, we
      have completed all requlatory requirements with regard to the asset purchase.
      Moreover, as of the date of this report, we have paid approximately $298,173
      purchase price payment to RINO for the assets purchased from RINO.





The
      Restructuring Agreements were utilized instead of a direct acquisition of RINO's
      assets, because of the lack of clarity in the implementation of current PRC
      laws
      regarding the use of a non-PRC entity’s equity as consideration to acquire a PRC
      entity’s equity or assets. This makes it highly uncertain, if not impossible,
      for a non-PRC entity (such as the Company or Innomind) to use its equity to
      acquire a PRC entity (such as RINO). While PRC law does allow for the purchase
      of equity interests in, or assets of a PRC entity by a non-PRC entity for cash,
      the purchase price must be based on the appraised value of the equity or assets.
      Because the Company did not have sufficient cash to pay the estimated full
      value
      of all of the assets of RINO, the Company, through Dalian Innomind, purchased
      the maximum amount of assets possible with the net proceeds of the private
      placement described below, and leased from RINO the remainder of the assets
      used
      in RINO’s business.





The
      funds
      used to consummate the Company’s acquisition of Innomind and the Restructuring
      Agreements were provided from the proceeds of a private placement. In connection
      with the Share Exchange Transaction and the consummation of the Restructuring
      Agreements, on October 5, 2007, the Company completed a private placement
      transaction with 24 accredited investors in which the Company raised $24,480,319
      in gross proceeds (or $21,251,000 in net proceeds) from the sale of 5,464,357
      shares of our common stock to these investors pursuant the a Securities Purchase
      Agreement (the “Private Placement”). Pursuant to the Securities Purchase
      Agreement between the investors and the Company, the net proceeds of the Private
      Placement will otherwise principally be used by the Company and by Dalian
      Innomind to expand manufacturing and production capacity and facilities, and
      to
      provide working capital for the business.




45




***Change
      in Independent Accountants***





On
      October 5, 2007, we engaged Jimmy C.H. Cheung & Co., CPAs as our independent
      accountants to perform our 2007 full year financial audit.





**Results
      of Operations, Liquidity and Capital Resources**





***Fiscal
      Years Ended December 31, 2007 And December 31, 2006.*** **





**Results
      of Operations**





***Net
      Sales***





Net
      sales, excluding government grants, increased by $53.1 million to $63,287,308
      or
      515% for the twelve months ended December 31, 2007, as compared to the twelve
      months ended December 31, 2006. The increase in 2007 was due to continued growth
      in demand across our entire product lines. In 2007, we also added in our product
      and service offerings anti-oxidation equipment and coatings. We note that we
      have discontinued technical support services in order to employ our
      professionals in our core business of environmental protection equipment. The
      breakdown of the revenue growth, excluding government grants, is as
      follows:




**For the twelve months ended December 31****Net
                  Sales (in thousands)**
              
              **2007**
              
              **%
                  to**
                **Total
                  Net**
                **Sales**
              
              **2006**
              
              **%
                  to**
                **Total
                  Net**
                **Sales**
              
              **Increase**Wastewater
                  treatment contracts
              
              $
              6,968
              
              
              10.99
              %
              $
              5,499
              
              
              53.34
              %
              
              26.71
              %Flue
                  gas desulphurization (including related royalties, and ancillary
                  equipment)
              
              
              33,140
              
              
              52.32
              %
              
              1,673
              
              
              16.23
              %
              
              1,799.00
              %Anti-oxidation
                  equipment and coatings
              
              
              1,968
              
              
              3.10
              %Machining
                  service contracts
              
              
              11,859
              
              
              18.70
              %
              
              3,136
              
              
              30.42
              %
              
              278.16
              %Technical
                  support services
              
              
              9,452
              
              
              14.90
              %Total
                  Net Sales
              
              $
              63,387
              
              
              100
              %
              $
              10,308
              
              
              100
              %
              
              515.30
              %





***Wastewater
      treatment equipment.*** Our line
      of wastewater treatment continued to enjoy strong demand in the face of
      increasingly strict environmental enforcement. We executed two contracts for
      wastewater equipment to existing customers in the first half of 2007, and signed
      an additional two contracts in December, 2007.





***Flue
      Gas Desulphurization equipment.*** While
      most of China’s coal-burning electric plants have installed desulphurization
      equipment, the clean-up of China’s iron sintering remains in its early phase.
      Accordingly, our flue gas desulphurization equipment enjoyed strong growth
      in
      2007 as tightening environmental policies required increased reductions in
      emissions of sulphur dioxide. In 2007, we executed ten contracts for
      desulphurization equipment, two to repeat desulphurization customers. Five
      of
      these ten contracts used a third-party equipment maker, a practice we have
      discontinued as our production capacity expanded. In December 2007, we signed
      a
      contract for an additional set of desulphurization equipment to a third repeat
      desulphurization customer. Increased activity in desulphurization of sintering
      operations has attracted competitors, including some international providers.
      While we expect to continue strong sales based on our track record and strong
      industry relations, we note that these sales will require greater working
      capital as customers are abandoning the customary 30% prepayment at contract
      signing.




46




***Anti-Oxidation
      Equipment.***  Our
      anti-oxidation equipment has achieved considerable technical success,
      outperforming our projected reductions in oxidation loss during heat processing
      of hot-rolled steel, one of China’s major steel categories. We installed two
      sets of anti-oxidation equipment in 2007 for two separate customers and have
      signed an additional contract in 2008. After commissioning the first two
      installations, we have successfully raised the sales price of the equipment
      itself to approximately $1.3 million from $0.53 million. While we believe the
      prospects for anti-oxidation equipment and coatings is bright, we anticipate
      that in 2008 we will achieve greater revenue growth from sales of
      desulphurization equipment.





***Cost
      of Sales***





The
      cost
      of sales for the twelve months ended December 31, 2007 increased by $27.6
      million to $32.9 million from $5.3 million for the twelve months ended December
      31, 2006, largely due to increased sales. As a percentage of sales excluding
      government grants, the cost of sales remained steady at 51.9% for the twelve
      months ended December 31, 2007 compared to 51.9% for the same period of 2006. ‘ We
      believe that our continued strong gross margins in the face of high growth
      reflects the results of strong product demand and our continual emphasis on
      cost
      control. In addition, second quarter 2007 revenues include approximately $9.5
      million dollars of revenue representing engineering consulting sales, a high
      value added business line which generated above average gross
      margins.





***Operating
      Expense.***




Operating
        expenses for the twelve months ended December 31, 2007 increased to $14.9
        million from $0.8 million for the same period ended December 31, 2007. The
        large
        increase was substantially attributable to a 2,033% increase in selling,
        general
        and administrative expenses to 14.7 million for the twelve months ended December
        31, 2007 from $690,877 for the twelve months ended December 31, 2006. The
        increase in our selling, general and administrative expenses was primarily
        due
        to the $7,499,520 stock compensation expense that we recognized because we
        are
        required to release 1,674,000 make good shares from the make good escrow
        account
        to our founders. In fiscal year 2007, we achieved an after-tax net income
        of
        $17,718,325 (excluding any expenses that we are required to recognize for
        releasing any escrowed shares to the founders which release was deemed stock
        compensation to the founders), accordingly, we are required to release 1,674,000
        shares to the founders pursuant to the Securities Purchase Agreement and
        we
        booked $7,499,520 as compensation expenses which reduced our after-tax net
        income for fiscal year 2007 to $10,218,805. The increase in our selling,
        general
        and administrative expenses was also a result of higher levels of operations
        in
        2007 and on increased sales and travel expenses.
  ***Other
        Income and Expense*** .




Other
        income and expense include primarily interest income and interest expense.
        Our
        other income and expense increased to $575,779 for the twelve months ended
        December 31, 2007 from $317,282 for the corresponding period in 2006,
        representing an increase of 81.5%.




Interest
      income was immaterial due to the fact we have maintained a low cash balance
      for
      most of our operations. Interest expense increased to $0.53 million for the
      twelve months ended December 31, 2007 from $0.30 million for the period ended
      December 31, 2006, due to an increased amount of the bank debt financing we
      undertook during 2007. All bank debt was repaid by year-end 2007, but we
      borrowed $6.6 million from one commercial bank in China in January,
      2008.




**Liquidity
      and Capital Resources**





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




As
        of
        December 31, 2007, 2006 and 2005, the Company had firm purchase commitments
        for
        capital projects in progress of $750,844, $702,494 and $829,794, respectively.
        As compared to that in fiscal year 2006, our firm purchase commitments for
        capital projects in fiscal year 2007 represented an increase of $48,350 as
        a
        result of our expansion in production capacity.




47




***Cash
      and Cash Equivalents***





Cash
      and
      cash equivalents totaled $7.39 million as of December 31, 2007, as compared
      to
      $3.60 million as of December 31, 2006, representing an increase of 105%. The
      increase was attributable to proceeds from our private placement stock issuance
      and increases in income taxes and value added taxes payable, partially offset
      by
      higher accounts receivable, higher contracts in progress, increased deposits
      with suppliers and repayment of bank loans.





The
      following tables present our net cash flows for the twelve months ended December
      31, 2007 and for the same period ended December 31, 2006.





For the twelve month
              ended December 312007
            
            2006(In
                thousands)Cash
                (used in) provided by operating activities
            
            $
            (7,024
            )
            
            3,502Cash
                used in investing activities
            
            
            (1,623
            )
            $
            (4,498
            )Cash
                provided by financing activities
            
            $
            12,017
            
            $
            4,469




***Cash
      flow from operating activities*** .




Net
        cash
        used by operating activities was $8.02 million for the twelve months ended
        December 31, 2007 as compared to net cash of $3.5 million generated in the
        same
        period ended December 31, 2006. The negative cash flow from operating activities
        was chiefly attributable to an increased inventories and receivables as we
        expanded our equipment sales; our credit policies and contract terms remained
        unchanged, see Accounts Receivables, below.




***Accounts
      Receivables***





During
      the twelve months ended December 31, 2007, our accounts receivable rose to
      $21,043,006 from $5,622,219 at year-end 2006. Our accounts receivable at
      December 31, 2007 constituted approximately 33.8% of our total assets at that
      date. The level of our receivables reflects the combined effect of our growing
      revenues and our sales to a small number of large clients, which means that
      repayment or delay in repayment on even a single account can have a
      disproportionate effect on total receivables in any given period. Our growth
      in
      receivables is due almost entirely to rising sales.





We
      design
      our credit policy based on our analysis of the financial conditions and
      creditworthiness of our customers. We sell almost exclusively to significant
      participants in China’s steel sector. Although they are all state-owned, many of
      these companies are listed either in China or on international stock markets,
      giving us direct access to audited financial data on our major customers. In
      addition, many of these firms enjoy policy support and/or access to bank loans.
      Accordingly, to date we have been able to extend trade receivables to our
      customers with no material adverse results. In addition to assessing our
      customers’ creditworthiness, we also normally receive approximately 30% of
      contract value at signing, giving us increased assurance that customers will
      pay. Additional receipts of 30% of contract value at shipment and another 30%
      of
      contract value payment at commissioning, further reduce our repayment
      risk.




***Contracts
      in
      progress***




Contracts
      in progress Represent
      work in progress. During the twelve months ended December 31, 2007, our
      contracts in progress rose to $2,818,122 from $0 at year-end 2006, as we
      continued to perform on major equipment contracts.


***Deposits
        with Suppliers***


Deposits
        with


***Other
          Current Assets***


During
        the twelve months ended December 31, 2007, our other current assets and prepaid
        expenses rose to $1.17 million from $0.17 million at year-end 2006. The increase
        was caused by our advances to employees and prepaid future operating
        costs.




48




***Cash
      used in investing activities*** .





For
      the
      twelve months ended December 31, 2007, net cash used in investing activities
      increased by $2.88 million to $1.62 million as compared to $4.50 million for
      the
      same period ended December 31, 2006. This increase primarily resulted from
      the
      purchase of property, plant and equipment.





***Cash
      provided by financing activities*** .





Our
      operations historically have been financed by capital contributions and loans
      from RINO’s founder and by bank loans. For the twelve months ended December 31,
      2007, net cash provided by financing activities increased by $8.5 million to
      $13.02 million as compared to $4.47 million for the same period ended December
      31, 2006. This was principally the result of the private placement in October
      2007, partially offset by reductions in capital contributions from RINO’s
      founders and a net decrease in bank loans in 2007.





**Contractual
      Obligations**





As
      of
      December 31, 2007, we did not have any long-term debt, capital lease, operating
      lease or other long-term liabilities reflected on our balance sheet under GAAP
      except the following:





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




**Payments
                  due by period****Contractual
                  Obligations**
              
              Total
              
              Less
                  than
                1
                  year
              
              1
                  -
                  3 years
              
              3
                  -
                  5 years
              
              More
                  than
                5
                  yearsPurchase
                  Obligations
              
              $
              750,844
              
              $
              750,844
              
              
              0
              
              
              0
              
              
              0Total
              
              $
              750,844
              
              $
              750,844
              
              
              0
              
              
              0
              
              
              0





**Off-Balance
      Sheet Arrangements**





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





**Fiscal
      Years Ended December 31, 2006 And December 31, 2005.**





***Results
      of Operations, Liquidity and Capital Resources***





**Results
      of Operations**





***Revenues*** .





Revenues,
      excluding government grants, increased by $6.7 million or 187% for the twelve
      months ended December 31, 2006, as compared to the twelve months ended December
      31, 2005. The revenue increase in 2006 was due to the growing demand for our
      wastewater treatment product, contract machining services, and technical support
      services. The breakdown of the revenue growth, excluding government grants,
      is
      as follows:




For the twelve months ended December 31(In
                thousands)
            
            2006
            
            2005
            
            IncreaseWastewater
                treatment contracts
            
            $
            5,499
            
            $
            3,485
            
            $
            2,014Machining
                service contracts
            
            
            3,136
            
            
            100
            
            
            3,036Technical
                support services
            
            
            1,673
            
            
            -
            
            
            1,673$
            10,308
            
            $
            3,585
            
            $
            6,723




49




***Cost
      of Revenue*** . The
      cost of revenue for the twelve months ended December 31, 2006 increased by
      $2.5
      million to $5.3 million from $2.8 million for the twelve months ended December
      31, 2005, largely due to increased sales. As a percentage of revenue excluding
      government grants, the cost of revenue decreased to 50% for the twelve months
      ended December 31, 2006 from 76% for the same period of 2005, primarily because
      our acquisition of heavy machine tools in 2006 allowed us to process product
      parts and components in-house, resulting in machine processing
      savings.




***Operating
      Expenses*** .
      Operating expenses for the twelve months ended December 31, 2006 increased
      to
      $0.8 million from $0.4 million for the same period ended December 31, 2005
      as a
      result of higher levels of operations during the year of 2006. As a percentage
      of revenue, the operating expenses decreased by 3% to 7% for the twelve months
      ended December 31, 2006 from 10% for the same period in 2005.




50




***Other
      Income and Expenses*** . Other
      income and expenses include primarily interest income and interest expense.
      Interest income was immaterial due to the fact we have maintained a low cash
      balance for most of our operations. Interest expense increased to $0.3 million
      for the twelve months ended December 31, 2006 from $0.09 million for the period
      ended December 31, 2005, due to an increased amount of the bank debt financing
      we undertook during 2006.





**Liquidity
      and Capital Resources**





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




Cash
      and
      cash equivalents totaled $3.6 million as of December 31, 2006, as compared
      to
      $0.07 million as of December 31, 2005.





The
      following table presents our net cash flows for the twelve months ended December
      31, 2006 and for the same period ended December 31, 2005.




For the twelve months ended
              December 31(In
                thousands)
            
            2006
            
            2005Cash
                (used in) provided by operating activities
            
            $
            3,503
            
            
            ($147
            )Cash
                (used in) provided by investing activities
            
            
            ($4,498
            )
            
            ($4,299
            )Cash
                (used in) provided by financing activities
            
            
            ($4,468
            )
            
            ($3,808
            )




***Cash
      flow from operating activities*** .  
Net cash used in operating activities was $3.5 million for the twelve months
      ended December 31, 2006 as compared to $0.15 million for the same period ended
      December 31, 2005. The positive cash flow from operating activities was chiefly
      attributable to a decrease in inventory and increases in production and project
      installations.




***Cash
      used in investing activities*** . For
      the twelve months ended December 31, 2006, net cash used in investing activities
      increased by $0.2 million to $4.5 million as compared to $4.3 million for the
      same period ended December 31, 2005. This increase primarily resulted from
      the
      purchase of intangible assets.




***Cash
      provided by financing activities*** Our
      operations historically have been financed by capital contributions and loans
      from RINO’s founder and by bank loans. For the twelve months ended December 31,
      2006, net cash provided by financing activities increased by $0.66 million
      to
      $4.47 million as compared to $3.81 million for the same period ended December
      31, 2005. This was principally the result of capital contributions from RINO’s
      founders and a net increase in bank loans in 2006.




**Critical
      Accounting Policies and Estimates**





The
      following discussion and analysis is based upon the Company’s consolidated
      financial statements, which have been prepared in conformity with accounting
      principles generally accepted in the United States of America. The Company’s
      significant accounting policies are more fully described in the Notes to the
      Consolidated Financial Statements. However, certain accounting policies and
      estimates are particularly important to the understanding of the Company’s
      financial position and results of operations and require the application of
      significant judgment by the Company’s management or can be materially affected
      by changes from period to period in economic factors or conditions that are
      outside of the control of management. As a result they are subject to an
      inherent degree of uncertainty. In applying these policies, the Company’s
      management uses their judgment to determine the appropriate assumptions to
      be
      used in the determination of certain estimates. Those estimates are based on
      the
      Company’s historical operations, its future business plans and projected
      financial results, the terms of existing contracts, the Company’s observance of
      trends in the industry, information provided by customers and information
      available from other outside sources, as appropriate. The following discusses
      the Company’s significant accounting policies and estimates.




51




***Principles
      of Consolidation***





Financial
      statements dated subsequent to October 5, 2007 will include the accounts of
      Jade
      Mountain Corporation, Innomind, its wholly owned subsidiary, Dalian Innomind,
      Innomind’s wholly owned subsidiary, and Dalian Rino, a Contractually Controlled
      Affiliate of Dalian Innomind.





All
      significant inter-company accounts and transactions have been eliminated in
      consolidation.





***Revenue
      Recognition***





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





Our
      desulphurization projects require in general 6 to 7 months from inception to
      final installation and commissioning, while our anti-oxidation systems require
      about 3 to 4 months from inception to installation.





The
      extended time period required to manufacture, deliver, and install our products
      entails recognizing revenue nearly always in more than one quarter and sometimes
      in more than one annual accounting period. This indicates to us that the
      percentage of completion method of revenue recognition offers financial
      statement users the most meaningful information on the Company’s
      revenues.





We
      estimate the percentage completion for each project based on the percentage
      of
      estimated total raw materials for the project actually applied to work in
      progress in any period. While our production costs also include labor,
      depreciation, and other manufacturing costs, we believe that using the
      application of raw materials to work in progress to drive our percentage
      completion estimates offers the most concrete factual basis for estimation
      of
      percentage completion. This is because using raw materials to drive percentage
      of completion estimates prevents other estimates, such as allocation of
      overheads and utilities, from affecting our recognition of revenues. Our
      estimates of percentage completion are signed off on by clients before we make
      progress billings, we believe this practice increases the objectivity of our
      estimates of percentage completion.





In
      addition to our specialty equipment sales, we use our heavy machining equipment
      to perform machining services for third parties. These engagements - numbering
      several hundred per year - are essentially piecework and are completed in
      usually less than one month. Accordingly, these heavy machinery contracts do
      not
      fall within the scope of SOP 81-1. Each machining engagement is governed by
      a
      separate contract, indicating existence of an arrangement, we recognize revenues
      as services are performed, which is usually concurrent with delivery to the
      client, our contract prices are set by contract, collectibility is assured
      - we
      have little or no bad debt. Accordingly, these revenues can be recognized under
      SAB Topic 13.





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




52





****  ***Consolidation
      of Contractually Controlled Affiliate***





On
      October 5, 2007 Dalian Innomind entered into Restructuring Agreements with
      Dalian Rino and its shareholders in which Dalian Innomind took over the
      management of the business activities of Dalian Rino. The Restructuring
      Agreements consist of the following agreements:





(a)
            Dalian
                Rino sold substantially all of its manufacturing equipment and tangible
                assets to Dalian Innomind for RMB 2,250,343;(b)
            Dalian
                Rino transferred all of its three, presently owned patents, and three
                presently pending patent applications, to Dalian Innomind for an
                aggregate
                transfer fee of RMB 10,000;(c)
            Dalian
                Rino will lease to Dalian Innomind substantially all of its manufacturing
                plant and land at an annual rent of RMB 612,000;(d)
            With
                respect to its presently owned patents, Dalian Rino will contemporaneously
                enter into a separate transfer agreement (the “Patent Transfer Contract”)
                with Dalian Innomind to accomplish their actual transfer to Dalian
                Innomind;(e)
            With
                respect to its presently pending patent applications, and in order
                to
                accomplish the actual transfer of, each such applied-for patent,
                Dalian
                Rino will enter into additional patent transfer contracts within
                ten days
                after the issuance of the patents; and(f)
            Dalian
                Rino has granted to Dalian Innomind the royalty-free, perpetual right
                to
                use the “RINO” trademark and logo.





The
      Company determined it has a controlling financial interest in Dalian Rino and
      will consolidate the results of Dalian Rino based on the criteria under Emerging
      Issues Task Force, or EITF, Issue No. 97-2, Physician Practice Management
      Entities and Certain Other Entities with Contractual Management Agreements.
      All
      intercompany accounts will be eliminated in consolidation.





***Contracts
      in progress***





Contracts
      in progress are stated at the lower of cost or market value and include the
      costs and earnings in excess of billings, pursuant to the percentage of
      completion method of accounting for long-term fixed price contracts. The costs
      of contracts in progress include production costs and related overhead,
      including an applicable portion of general and administrative
      expenses.





***Inventories***





Raw
      materials are stated at the lower of cost or market value, cost being calculated
      on the weighted average basis. The Company provided inventory allowances
      based on excess and obsolete inventories determined principally by customer
      demand.





***Property
      and equipment***





Property
      and equipment are stated at cost, less accumulated depreciation. Expenditures
      for additions, major renewals and betterments are capitalized and expenditures
      for maintenance and repairs are charged to expense as incurred.





Depreciation
      is provided on a straight-line basis, less estimated residual value over the
      assets’ estimated useful lives. The estimated useful lives are as
      follows:





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





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





The
      Company’s principal office and its manufacturing facilities are located in the
      Jinzhou Industry Cooperation Zone of Dalian, PRC. In 2003 RINO acquired from
      the
      government the right to use 287,117 square feet of land in the Jinzhou Industry
      Cooperation Zone for a 50 year period that expires in 2053 (the “Land Use
      Rights”). Instead of periodic rent, RINO paid a one-time fee of $580,203 for the
      Land Use Rights.




53




Of
      the
      area leased by us, our factory occupies 91,570 square feet, and office space,
      warehouse facilities and living quarters comprise 90,148 square
      feet.





***Accounting
      Treatment of the Private Placement***





The
      cash
      held in escrow pursuant to the Securities Purchase Agreement is accounted for
      as
      other current assets and will not be shown as cash or cash equivalents on the
      our balance sheet until such funds have been released from escrow pursuant
      to
      the terms of the Securities Purchase Agreement. The shares held in escrow as
      Make Good Escrow Shares will not be accounted for on our books until such shares
      are released from escrow pursuant to the terms of the Securities Purchase
      Agreement. If any Make Good Escrow Shares are released to the company management
      or employees, the value of such shares at the time of release will be recorded
      as compensation expense with a corresponding offset to additional paid-in
      capital in accordance with SFAS 123(R) paragraph 11. If any Make Good Escrow
      Shares are released to the Investors, no entry will be made. During the time
      such Make Good Escrow Shares are held in escrow, they are accounted for as
      contingently issuable shares in determining the EPS denominator in accordance
      with SFAS 128.





Liquidated
      damages potentially payable by the Company under the Securities Purchase
      Agreement and the Registration Rights Agreement have been accounted for in
      accordance with FSP EITF 00-19-2. Estimated damages at the time of closing
      were
      recorded as a liability and deducted from additional paid-in capital as costs
      of
      issuance. Estimated damages determined later pursuant to the criteria for SFAS
      5
      will be recorded as a liability and deducted from operating income. The Company
      may be required to pay to the investors, as liquidated damages, an amount equal
      to the entire amount that the investors invested in the private placement,
      without interest, if any governmental agency in the PRC challenges or otherwise
      takes any action that adversely affects the transactions contemplated by the
      Restructuring Agreements or the Share Exchange Agreement, and the Company cannot
      undo or otherwise address its materially adverse effect to the investors’
reasonable satisfaction. Such liquidated damages have the initial appearance
      of
      a redemption provision, in that there is no apparent end date to the provision
      and it appears to be outside the control of the Company. However, according
      to
      the legal opinion issued by the Company’s PRC counsel, the Restructuring
      Agreements and the organizational structure resulted thereunder are legal and
      enforceable under current PRC law and that changes to current law would need
      to
      be enacted in order for the PRC government or any of its entities to challenge
      the structure of the Company. Therefore, the Company believes that the chances
      of the restructuring structure being successfully challenged are remote, and
      therefore such liquidated damages are not recordable as a liability under SFAS
      5.





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




**ITEM
      7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**




We
      are
      exposed to foreign currency exchange rate risk due to our operations in the
      PRC.
      Our results of operations can be impacted through foreign currency exchange
      rate
      risk (a) to the balance sheet components (assets and liabilities) and
      (b) through our foreign currency denominated revenue and expenses in the
      PRC. A 10% strengthening in the Chinese RMB against the U.S. dollar would have
      increased fiscal 2007 net income by $0.1 million.




We
      are
      exposed to market price risk by purchasing steel, electronic components and
      power systems, valves, machine tools, paints and welding rods, our principal
      raw
      materials in the market. We generally do not have long term agreements with
      our
      suppliers. Our results of operations can be impacted by the fluctuation of
      the
      price of our raw materials when we are unable to pass the price increase to
      our
      customers and we may lose market share even if we can sell our products are
      a
      higher price. *See
      “Risk Factors - Any significant fluctuation in price of our raw materials may
      have a material adverse effect on the manufacturing cost of our products” in
      Item 1A. and “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations—Raw Materials Supply” in Item 7.*




We
      do not
      use derivative financial instruments. We manage the risks associated with the
      market price fluctuations by passing prices increases on to our customers in
      certain instances.




54




We
      did
      not have variable rate debt outstanding at December 31, 2007. To the extent
      we incur additional debt with variable interest rate, we will be exposed to
      interest rate market risk.




**ITEM
      8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**




The
      Company's Consolidated Financial Statements, together with the independent
      registered public accounting firm report thereon, and supplementary data appear
      at pages starting from F-1of this Form 10-K.


Supplementary
        Data
 
 The
        following selected consolidated financial data are derived from the accounts
        of
        the Company without audit as required by Item 302 of Regulation
        S-K.
 
 2007
                  Quarter EndedMarch
                  31
              
              June
                  30
              
              September
                  30
              
              December
                  31Net
                  sales
              
              $
              9,765,096
              
              $
              18,902,092
              
              $
              17,648,671
              
              $
              17,299,879Gross
                  profit
              
              $
              4,886,509
              
              $
              10,311,315
              
              $
              7,370,192
              
              $
              8,126,778Net
                  income
              
              $
              2,280,213
              
              $
              5,057,334
              
              $
              4,262,802
              
              $
              (1,381,544
              )Basic
                  earnings per share
              
              $
              0.13
              
              $
              0.28
              
              $
              0.24
              
              $
              (0.06
              )Fully
                  diluted earnings per share
              
              $
              0.13
              
              $
              0.28
              
              $
              0.24
              
              $
              (0.06
              )Basic
                  EPS denominator
              
              
              17,899,643
              
              
              17,899,643
              
              
              17,899,643
              
              
              24,614,111Fully
                  diluted EPS denominator
              
              
              17,899,643
              
              
              17,899,643
              
              
              17,899,643
              
              
              24,738,283
 
 2006
                  Quarter EndedMarch
                  31
              
              June
                  30
              
              September
                  30
              
              December
                  31Net
                  sales
              
              $
              1,631,999
              
              $
              2,525,466
              
              $
              2,626,125
              
              $
              3,972,555Gross
                  profit
              
              $
              665,378
              
              $
              1,423,283
              
              $
              1,044,659
              
              $
              2,277,881Net
                  income
              
              $
              319,876
              
              $
              931,977
              
              $
              488,219
              
              $
              1,412,798Basic
                  earnings per share
              
              $
              0.02
              
              $
              0.05
              
              $
              0.03
              
              $
              0.08Fully
                  diluted earnings per share
              
              $
              0.02
              
              $
              0.05
              
              $
              0.03
              
              $
              0.08Basic
                  EPS denominator
              
              
              17,899,643
              
              
              17,899,643
              
              
              17,899,643
              
              
              17,899,643Fully
                  diluted EPS denominator
              
              
              17,899,643
              
              
              17,899,643
              
              
              17,899,643
              
              
              17,899,643
  The
        selected financial data presented above is substantially the operating results
        for Dalian Rino. Until October 5, 2007, all operations were undertaken by
        Dalian
        Rino. From that date forward, the results of Dalian Rino are consolidated
        with
        those of Dalian Innomind Group Limited and Jade Mountain Corporation pursuant
        to
        the Restructuring Agreements whereby Dalian Rino became a contractually
        controlled affiliate under EITF 97-2. Consequently, the quarterly financial
        data
        is not the same as that previously reported by Jade Mountain Corporation
        on
        Forms 10-QSB.


**ITEM
      9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUTING AND FINANCIAL
      DISCLOSURE**





**Previous
      Independent Accountants**





On
      October 5, 2007, in connection with the Company’s acquisition of RINO’s assets
      and business and the related change in control of the Company, our Board of
      Directors elected to discontinue our relationship with S.W. Hatfield, CPA as
      our
      independent accountant.





S.W.
      Hatfield, CPA’s audit opinions on the Jade Mountain’s financial statements for
      the fiscal years ended December 31, 2005 and December 31, 2006 did not contain
      an adverse opinion or a disclaimer of opinion, nor were they qualified or
      modified as to uncertainty, audit scope or accounting principles, except that
      the report of S.W. Hatfield, CPA for the fiscal years ended December 31, 2005
      and December 31, 2006 indicated conditions that raised substantial doubt about
      the Company’s ability to continue as a going concern.





During
      the fiscal years ended December 31, 2005 and December 31, 2006 , the interim
      period ended June 30, 2007, and through the date of the discontinuance of S.W.
      Hatfield, CPA’s engagement as the Company’s independent accountant, we have had
      no disagreements with S.W. Hatfield, CPA on any matter of accounting principles
      or practices, financial statement disclosure, or auditing scope or procedure,
      which disagreements, if not resolved to the satisfaction of S.W. Hatfield,
      CPA,
      would have caused it to make reference to the subject matter of such
      disagreements in its report on our financial statements for such
      periods.





During
      the fiscal years ended December 31, 2005 and December 31, 2006, the interim
      period ended June 30,2007, and through the date of the discontinuance of S.W.
      Hatfield’s engagement, there were no reportable events as defined under Item
      304(a)(1)(v) of Regulation S-K adopted by the SEC.





**New
      Independent Accountants**





Our
      Board
      of Directors has appointed Jimmy C.H. Cheung & Co. (“Cheung”) as our new
      independent registered public accounting firm as of October 5, 2007. During
      the
      two most recent fiscal years and through the date of our engagement, the Company
      did not consult with Cheung regarding either (1) the application of accounting
      principles to a specified transaction, either completed or proposed, or the
      type
      of audit opinion that might be rendered on our financial statements, or (2)
      any
      matter that was the subject of a disagreement (as defined in Regulation S-K
      Item
      304(a)(1)(v)). Prior to our acquisition of RINO’s assets and business, however,
      RINO had been audited by Cheung, and RINO consulted with Cheung with regard
      to
      certain aspects of such acquisition.





**ITEM
      9A. CONTROLS AND PROCEDURES**




**Disclosure
      Controls and Procedures**




The
      Company’s management, with participation of the Company’s Chief Executive
      Officer and Chief Financial Officer, has evaluated the effectiveness of the
      Company’s disclosure controls and procedures (as such term is defined in Rules
      13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
      (the “Exchange Act”)) as of the end of the period covered by this report. Based
      on such evaluation, the Company’s Chief Executive Officer and Chief Financial
      Officer have concluded that, as of the end of such period, the Company’s
      disclosure controls and procedures are effective in ensuring that information
      required to be disclosed by the Company in reports that it files or submits
      under the Exchange Act is recorded, processed, summarized and reported, within
      the time periods specified by the rules and forms of the U.S. Securities and
      Exchange Commission (“SEC”), and accumulated and communicated to the Company’s
      management, including the Company’s Chief Executive Officer and Chief Financial
      Officer, as appropriate to allow timely decisions regarding required disclosure.




55




**Management
      Report on Internal Control Over Financial Reporting**




We,
      as
      management of the Company, are responsible for establishing and maintaining
      adequate internal control over financial reporting. Pursuant to the rules and
      regulations of the SEC, internal control over financial reporting is a process
      designed by, or under the supervision of, the company’s principal executive and
      principal financial officers, or persons performing similar functions, and
      effected by the company’s board of directors, management and other personnel, to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles and includes those policies and
      procedures that:




1.
              Pertain
                  to the maintenance of records that in reasonable detail accurately
                  and
                  fairly reflect the transactions and dispositions of the assets
                  of the
                  company;
 2.
              Provide
                  reasonable assurance that transactions are recorded as necessary
                  to permit
                  preparation of financial statements in accordance with generally
                  accepted
                  accounting principles, and that receipts and expenditures of the
                  company
                  are being made only in accordance with authorizations of management
                  and
                  directors of the company; and
 3.
              Provide
                  reasonable assurance regarding prevention or timely detection of
                  unauthorized acquisition, use or disposition of the company’s assets that
                  could have a material effect on the financial
                  statements.




Management
      assessed the design and effectiveness of the Company’s internal control over
      financial reporting as of December 31, 2007. In making this assessment,
      management used the criteria set forth by the Committee of Sponsoring
      Organizations of the Treadway Commission (“COSO”) in Internal Control -
      Integrated Framework (1992).




Prior
      to
      October 5, 2007, the Company was a shell company as defined under Rule 12b-2
      under the Securities and Exchange Act, as amended (the “Exchange Act”), and only
      had nominal assets. In a share exchange, private placement and restructuring
      transactions that were closed on October 5, 2007, the Company acquired Innomind
      Group Limited (“Innomind”), and through that acquisition also acquired
      Innomind’s wholly-owned subsidiary, Dalian Innomind Environment Engineering Co.,
      Ltd. (“Dalian Innomind”), as well as the assets and business of Dalian
      Innomind’s PRC affiliate, Dalian RINO Environment Engineering Science and
      Technology Co., Ltd. (“RINO”). As a result of the foregoing transactions, the
      Company ceased to be a shell company as defined under Rule 12b-2 under the
      Exchange Act. The sole business activities of Jade Mountain and Innomind are
      acting as direct and indirect holding companies of Dalian Innomind, which was
      formed to enter into the transactions with RINO through which we acquired the
      business and substantially all of the assets of RINO. Our management’s
      assessment as of December 31, 2007 also included the internal control of
      Innomind, Dalian Innomind and RINO.




Based
      on
      management’s assessment, management has concluded that the Company’s internal
      control was effective as of December 31, 2007 to provide reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external reporting purposes in accordance with
      GAAP.




**Report
      of Independent Registered Public Accounting Firm on Internal Control Over
      Financial Reporting**




This
      annual report does not include an attestation report of the Company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by the Company’s registered
      public accounting firm pursuant to temporary rules of the SEC that permit the
      Company to provide only management’s


report
      in
      this annual report.




**Changes
      in internal control over financial reporting**




There
      have been no changes to the Company’s internal control over financial reporting
      during the quarter ended December 31, 2007 that have materially affected,
      or are reasonably likely to materially affect, the Company’s internal control
      over financial reporting.




56




**PART
      III**





**Item
      10. Directors, Executive Officers and Corporate Governance**





The
      directors and executive officers of Jade Mountain as of the date of this report
      are as follows:




Name
            
            Position
            
            AgeZou
                Dejun
            
            Director
                and CEO
            
            46Qiu
                Jianping
            
            Director
                and Chairman of the Board
            
            39Quan
                Xie
            
            Director
            
            46Zhang
                Weiguo
            
            Director
            
            50Kennith
                C. Johnson, CPA
            
            Director
            
            54Bruce
                Richardson
            
            CFO
                and Secretary
            
            49





**Mr.
      Zou Dejun** has been
      a Director and the Chief Executive Officer of the Company since October 2007.
      Mr. Zou is the founder of RINO and has been a Director and its Chief Executive
      Officer since 2003. He has also been a Director and the Chief Executive Officer
      of Dalian Innomind since July 2007. Prior to founding RINO, from 1993 until
      1996
      Mr. Zou served as Vice President of Yingkou Special Valve Manufacturing Co.,
      and
      from 1996 until 2003 he served as the chief executive officer of Dalian Yingkun
      Energy and Environmental Engineering, Ltd. Mr. Zou graduated from Liaoning
      Broadcast University, majoring in Electronic Automation.





**Ms.
      Qiu Jianping** has been
      the Chairman of the Board of the Company since March 2008. Ms. Qiu has been
      a
      Director and Chairman of the Board of RINO since 2003. Ms. Qiu is also a
      Director and Chairman of the Board of Dalian Innomind since July 2007. From
      1988
      to 1994, Ms. Qiu was the Director of the Finance Department of the Water &
Electricity No. 5 Engineering Bureau. From 1994 through 1996 Ms. Qiu was engaged
      in studies at the Dalian University of Foreign Languages, and from 1996 to
      2003,
      she served as the Chairman of the Board of Dalian Yingkun Energy and
      Environmental Engineering, Ltd. Ms. Qiu has won the prestigious ‘Entrepreneur of
      the Year’ award in the Jinzhou District of Dalian and is the holder of three
      patents. She currently chairs the Association of Industry and Commerce in
      Dalian.





**Professor
      Quan Xie** has been
      a Director of the Company since March 2008. Prof. Quan is the Director of the
      Institute for Environmental and Life Sciences of Dalian University of Technology
      (DUT). Prof, Quan began lecturing at DUT in 1986 and has participated in
      visiting scholar programs at major universities and research centers in Germany,
      Austria, and England. He is a Senior Fellow of the China Society of
      Environmental Science and has authored and co-authored over 200 papers in his
      career. Prof. Quan earned his doctorate in chemistry from Karl-Franzens
      University in Graz, Austria.





**Mr.
      Kennith Johnson** ,
      CPA,
      has been a Director of the Company since March 2008. Mr. Johnson’s career in
      public and corporate accounting stretches back to the mid-1970’s when he worked
      for Arthur Andersen’s New York audit practice. Since 2005, Mr. Johnson has
      served as Senior Vice President - CFO of Fairfax/MFX, an insurance and financial
      conglomerate. From 2001 to 2005 he served as Principal - Management Consultant
      at Johnson & Scanlon Associates. Beginning in 2004 through the present, Mr.
      Johnson has served as Chairman of the Audit and Compensation Committee of
      Interpharm Holdings, an AMEX listed company. Mr. Johnson holds an MBA in
      International Corporate Finance from the Stern School of
      Management.





**Mr.
      Zhang Weiguo** has been
      a Director of the Company since March 2008. In 2001 Mr. Weiguo Zhang joined
      Synutra, Inc. as President to oversee its U.S. operations. In June 2005, he
      was
      appointed President and Chief Operating Officer of Synutra, to help develop
      the
      company's growth strategy and take the company public. In addition to Synutra's
      U.S. business operations, Mr. Weiguo Zhang is responsible for the company's
      financial market operations, including investor relations, corporate
      development, and international strategic development. Mr. Zhang holds an M.A.
      in
      American Foreign Policy and International Economics from the School of Advanced
      International Studies at John Hopkins University.





On
      October 5, 2007, in connection with the Share Exchange, Glenn A. Little tendered
      his resignation as (i) a director of the Company, effective 10 days after our
      Information Statement on Schedule 14 f-1, relating to a change in control of
      the
      Board, was first mailed to our stockholders. That Information Statement was
      so
      mailed on October 24, 2007. Mr. Little’s resignation as an executive officer of
      the Company was effective on October 5, 2007.




57




The
      directors will serve until our next annual meeting, or until their successors
      are duly elected and qualified. The officers serve at the pleasure of the
      Board.





To
      our
      knowledge, during the last five years, none of our directors and executive
      officers (including those of our subsidiaries) has:





·
            Had
                a bankruptcy petition filed by or against any business of which such
                person was a general partner or executive officer either at the time
                of
                the bankruptcy or within two years prior to that
                time.





·
            Been
                convicted in a criminal proceeding or been subject to a pending criminal
                proceeding, excluding traffic violations and other minor
                offenses.





·
            Been
                subject to any order, judgment or decree, not subsequently reversed,
                suspended or vacated, of any court of competent jurisdiction, permanently
                or temporarily enjoining, barring, suspending or otherwise limiting
                his
                involvement in any type of business, securities or banking
                activities.





·
            Been
                found by a court of competent jurisdiction (in a civil action), the
                SEC,
                or the Commodities Futures Trading Commission to have violated a
                federal
                or state securities or commodities law, and the judgment has not
                been
                reversed, suspended or vacated.





*Family
      Relationship*





There
      are
      no family relationships among our directors or executive officers except that
      Mr. Zou Dejun and Ms. Qiu Jianping are married to each other.





*Nomination
      of Directors by Security Holders*





We
      do not
      currently have procedures by which our security holders may recommend nominees
      to our Board of Directors except that in connection with the private placement
      that we completed on October 5, 2007, Hare & Co., an investor in the private
      placement, has the right to designate one member of the Company’s (or at their
      election, Dalian Innomind’s or RINO’s) Board of Directors. As of the date of
      this Report, Hare & Co. has not designated a member of the board.





*Section 16(a)
      Beneficial Ownership Reporting Compliance*





Section 16(a)
      of the Securities Exchange Act of 1934, as amended, requires the Company’s
      directors, executive officers and persons who own more than 10% of the Company’s
      Common Stock to file reports of ownership and changes in ownership on Forms
      3, 4
      and 5 with the Securities and Exchange Commission (the “SEC”). Directors,
      executive officers and greater than 10% stockholders are required by SEC rules
      to furnish the Company with copies of Section 16(a) forms they file.





The
      Company believes that all of its directors, executive officers and greater
      than
      10% beneficial owners complied with all filing requirements applicable to them
      in 2007.





*Code
      of Ethics*





The
      Company does not permit activities that give rise to conflicts of interest
      by
      directors, executive officers or employees. In this regard, the Company adopted
      a Code of Ethics in March 2008, a copy of which is attached hereto as Exhibit
      14.1. Our Code of Ethics applies to Directors, our Chief Executive Officer,
      Chief Financial Officer and all of the other employees. Our Code of Ethics
      include standards that are reasonably designed to deter wrongdoing and to
      promote (i) honest and ethical conduct, (ii) full, fair, accurate, timely,
      and
      understandable disclosure in reports and documents that we file or submit to
      the
      SEC and in our other public communications, (iii) compliance with applicable
      governmental laws, rules and regulations, (iv) the prompt internal reporting
      of
      violation of the code to an appropriate person or person identified in the
      code,
      and (v) accountability for adherence to the code.




58




*Audit
      Committee*





Our
      board
      of directors currently acts as our audit committee. We appointed Messrs. Quan
      Xie, Kennith Johnson and Zhang Weiguo as our directors on March 20, 2008, each
      of which directors is determined by our Board of Directors to be “independent”
under the Rules of NASDAQ, Marketplace Rule 4200(a)(15). We intend to appoint
      an
      audit committee comprised entirely of independent directors, including at least
      one financial expert, in the near future.





**Item
      11. Executive Compensation**





The
      Company’s executive officers each hold the same position with RINO and Dalian
      Innomind. None of the Company’s executive officers receive any compensation for
      serving as executive officers of the Company, but are compensated by and through
      RINO. The following table sets forth information concerning cash and non-cash
      compensation paid by RINO to its Chief Executive Officer and Chairman of the
      Board for each of the two years ended December 31, 2006 and December 31, 2007.
      No executive officer of the Company, Dalian Innomind or RINO received
      compensation in excess of $100,000 for any of those two years.




**Name**
                  **and**
                  **Principal**
                  **Position**
                
                **Year**
                  **Ended**
                
                **Salary**
                  **($)**
                
                **Bonus**
                  **($)**
                
                **Stock**
                  **Awards**
                
                **Non-Equity**
                  **Incentive
                    Plan**
                  **Compensation**
                  **($)**
                
                **Non-Qualified**
                  **Deferred**
                  **Compensation**
                  **Earnings**
                  **($)**
                
                **All
                    Other**
                  **Compensation**
                  **($)**
                
                **Total**
                  **($)**Zou
                    Dejun, CEO
                
                
                12-31-06
                    12-31-07
                
                
                62,745
                    65,100
                
                
                0
                  0
                
                
                1,506,600
                
                
                0
                  0
                
                
                0
                  0
                
                
                0
                  0
                
                
                62,745
                    6,814,668Qiu
                    Jianping, Director, Chairman of the Board
                
                
                12-31-06
                    12-31-07
                
                
                62,745
                    65,100
                
                
                0
                  0
                
                
                167,400
                
                
                0
                  0
                
                
                0
                  0
                
                
                0
                  0
                
                
                62,745
                    815,052





***Outstanding
      Equity Awards at 2007 Fiscal Year End***





At
      the
      private placement closing, Zou Dejun and Qiu Jianping - who, through The
      Innomind Trust, together control 71.6% of the Company’s outstanding common
      stock, and are the founders of RINO - delivered to an escrow agent a total
      of
      5,580,000 of their beneficially owned shares of common stock in order to secure
      the Company’s obligation under the Securities Purchase Agreement to deliver
      additional common stock to the private placement investors in the event the
      Company fails to achieve certain pre-tax net income targets for fiscal years
      2007 and 2008.





In
      fiscal
      year 2007, we achieved an after-tax net income of $17,718,325 (excluding any
      expenses that we are required to recognize for releasing any escrowed shares
      to
      the founders which release was deemed stock compensation to the founders),
      accordingly, we are required to release 1,674,000 shares out of the 5,580,000
      Make Good Escrow Shares to our founders. These shares are deemed stock based
      compensation to our founders.





The
      Company entered into an employment agreement dated September 27, 2007, with
      Bruce Richardson, pursuant to which Mr. Richardson has been employed by the
      Company as the Company’s Chief Financial Officer for a term of 3 years at a
      monthly salary of $11,667. In addition, Mr. Richardson will be issued 250,000
      options to purchase common stock at an exercise price of $5.38 per share,
      vesting in 3 equal annual installments beginning on January 1, 2009. The options
      will be issued as soon as practical after January 2, 2009. Under the agreement,
      Mr. Richardson is entitled to 20 days of paid vacation per year.




59




***Employment
      Agreements***





We
      have
      employment agreements with each of our executive officers, which are summarized
      below.





·
            ***Zou
                Dejun.***Pursuant
                to an employment agreement dated August 1, 2007, Zou Dejun is employed
                by
                Dalian Innomind as its Manager at a monthly salary of 40,000 RMB
                (approx.
                $5,230). The employment agreement expires on December 31, 2010. Under
                the
                agreement, Mr. Zou’s salary is subject to adjustment commensurate with
                Dalian Innomind’s revenues, but in no event less than the lowest standard
                salary prescribed by the Dalian city government. In addition, Mr.
                Zou is
                entitled to annual vacation in compliance with PRC rules pertaining
                to the
                same. The agreement is terminable by Dalian Innomind for cause, on
                30 days
                notice.





Mr.
      Zou
      has also signed a non-competition/non-disclosure agreement with the
      Company.





·
            ***Qiu
                Jianping.***Pursuant
                to an employment agreement dated August 1, 2007, Qiu Jianping is
                employed
                by Dalian Innomind as its Chairman of the Board at a monthly salary
                of
                40,000 RMB (approx. $5,230). In the PRC, this position is an executive
                officer position, instead of directorship. The employment agreement
                expires on December 31, 2010. Under the agreement, Ms. Qiu’s salary is
                subject to adjustment commensurate with Dalian Innomind’s revenues, but in
                no event less than the lowest standard salary prescribed by the Dalian
                city government. In addition, Ms. Qiu is entitled to annual vacation
                in
                compliance with PRC rules pertaining to the same. The agreement is
                terminable by Dalian Innomind for cause, on 30 days
                notice.




Ms.
      Qiu
      has also signed a non-competition/non-disclosure agreement with the
      Company.




·
            ***Bruce
                Richardson.***Pursuant
                to an employment agreement dated September 27, 2007, Bruce Richardson
                is
                employed by Jade Mountain Corporation as the Company’s Chief Financial
                Officer for a term of 3 years at a monthly salary of $11,667. In
                addition,
                Mr. Richardson will be granted 250,000 options to purchase common
                stock at
                an exercise price of $5.38 per share, vesting in 3 equal annual
                installments beginning on January 1, 2009. The options will be issued
                as
                soon as practical after January 2, 2009. Under the agreement, Mr.
                Richardson is entitled to 20 days of paid vacation per year. The
                agreement
                is terminable on 30 days notice, and contains non-competition and
                non-disclosure covenants.





Mr.
      Richardson has also agreed to serve as the Company’s Secretary for no additional
      compensation. ******





***Director
      Compensation***





The
      Company’s directors did not receive compensation for their service on the Board
      of Directors for the fiscal years ended December 31, 2006 and 2007.





Each
      of
      our independent directors will be paid $2,000 cash retainer per quarter and
      $500
      for each board meeting or committee meeting attended. We will also reimburse
      our
      directors for actual, reasonable and customary expenses incurred in connection
      with the performance of their duties as board members.




60




**Item
      12.** **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS**





The
      following table sets forth certain information with respect to the beneficial
      ownership of our common stock as of March 20, 2008 by (i) any person or group
      with more than 5% of our voting securities, (ii) each director, (iii) each
      executive officer and (iv) all executive officers and directors as a group.





As
      of
      March 20, 2008, we had 25,000,000 shares of common stock outstanding. In
      determining the percent of common stock owned by a stockholder on March 30,
      2008, (a) the numerator is the number of shares of common stock beneficially
      owned by such stockholder, including shares the beneficial ownership of which
      may be acquired, within 60 days upon the conversion of convertible securities
      or
      the exercise of warrants held by such stockholder, and (b) the denominator
      is
      the sum of (i) 25,000,000, the number of shares outstanding on March 20, 2008,
      and (ii) the total number of shares underlying the convertible securities and
      warrants, which such stockholder has the right to acquire within 60 days
      following March 30, 2008.





Unless
      otherwise stated, each beneficial owner has sole power to vote and dispose
      of
      the shares and the address of such person is c/o the Company, at 11 Youquan
      Road, Zhanqian Street, Jinzhou District, Dalian, People’s Republic of China
      116100.





**Title
                  of Class**
              
              **Name and Address of**
                **Beneficial Owner**
              
              **Amount and**
                **Nature of**
                **Beneficial**
                **Ownership**
              
              **Percent of**
                **Class**Common
                  Stock
              
              
              Zou
                  Dejun, Director and CEO
              
              
              16,109,679(1)
                  (2
              )
              
              64.43
              %Common
                  Stock
              
              
              Qiu
                  Jianping, Director and Chairman of the Board
              
              
              1,789,964(1)
                  (2
              )
              
              7.15
              %Common
                  Stock
              
              
              Quan
                  Xie, Director
              
              
              0
              
              
              0
              %Common
                  Stock
              
              
              Kennith
                  C. Johnson, Director
              
              
              0
              
              
              0
              %Common
                  Stock
              
              
              Zhang
                  Weiguo, Director
              
              
              0
              
              
              0
              %Common
                  Stock
              
              
              Bruce
                  Richardson, CFO and Secretary
              
              
              0
              
              
              0
              %Common
                  Stock
              
              
              Hare
                  & Co.c/oBlue
                  Ridge Investments, LLC214
                  North Tryon StreetCharlotte,
                  N.C. 28255
              
              
              1,785,714
              
              
              7.03
              %Common
                  Stock
              
              
              All
                  Directors and Officers of theCompany
                  as a group (3 people
              )
              
              17,899,643
              
              
              70.51
              %







(1)
      17,899,643 shares of our common stock are owned of record by The Innomind Trust,
      a British Virgin Islands trust, of which Zou Dejun, the Company’s Chief
      Executive Officer, is the beneficiary of 16,109,679 shares (the **“** Zou
      Shares **”** ),
      and
      Qiu Jianping, the Company’s Chairman of the Board, is the beneficiary of
      1,789,964 shares (the “Qiu Shares”). Each retains voting and investment power
      over his/her respective shares. Mr. Zou and Ms. Qiu are married. Mr. Zou
      disclaims beneficial ownership of the Qiu Shares, and Ms. Qiu disclaims
      beneficial ownership of the Zou Shares.




(2)
      As a
      closing condition to the private placement completed on October 5, 2007, Zou
      Dejun and Qiu Jianping agreed to place in escrow for the benefit of the private
      placement investors 5,580,000 shares of common stock, some or all of which
      is
      distributable to the investors in the event the Company fails to attain
      specified financial performance milestones. See the Current Report on Form
      8-K
      that we filed with the Securities and Exchange Commission on October 12, 2007for
      additional information.




61




**ITEM
      13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE**





**Certain
      Relationships and Related Transactions**





***Loans
      from Directors***




Pursuant
      to resolutions of the Board of Directors of Dalian Innomind dated July 8, 2007,
      our CEO and Director Zou Dejun, his wife, Qiu Jianping, and their nephew Zhang
      Ze, each board members of Dalian Innomind, agreed to permit Dalian Innomind
      to
      borrow funds from directors of Dalian Innomind from time to time for working
      capital and general corporate purposes. Zou Dejun actually extended the loan
      to
      Dalian Innomind. Zou Dejun and Qiu Jianping, together hold 100% of RINO’s equity
      interest, and are the sole beneficiaries of The Innomind Trust which holds
      71.60% of our total outstanding common stock. Pursuant to the board resolutions,
      as of September 30, 2007, the Company owed Zou Dejun an aggregate of $466,766
      for advances made on an unsecured basis and free of interest payment and
      repayable on demand. Imputed interest expense of 7% per annum was credited
      to
      additional paid-in capital in the amount of $33,019 for the year ended December
      31, 2007. There was no written loan agreement entered into by the parties
      regarding the foregoing. As of the date of this Registration Statement, the
      Company owes Zou Dejun $106,963.




***Restructuring
      Agreements with RINO***





At
      the
      present time, PRC law does not provide for a direct share exchange between
      a PRC
      entity and an offshore company. To obtain the same result as a direct share
      exchange, RINO (whose ownership interest is 100% owned by our CEO and director,
      Mr. Zou Dejun and his wife) and our indirect subsidiary, Dalian Innomind,
      entered into the Restructuring Agreements on October 3, 2007. Under the
      Restructuring Agreements, Dalian Innomind agreed to: (i) purchase and lease
      from
      RINO substantially all of RINO’s assets and properties, including, among other
      things, the purchase of RINO’s manufacturing equipment, patent and trademark for
      an aggregate of $298,173 (or RMB 2,260,343) and the lease of RINO’s
      manufacturing plants and land at an annual rent of $82,778 (or RMB 610,000);
      and
      (ii) fully conduct and manage RINO’s business in exchange for RINO’s payment to
      Dalian Innomind of a management fee equal to the Business’s monthly net profits.
      To the extent that any aspect of the Business needs to be conducted
      directly through RINO in the future, the Restructuring Agreements provide Dalian
      Innomind with the legal right and power to control RINO and any of its remaining
      assets and operations. The purchase price of the RINO assets was the basis
      to
      RINO less accumulated depreciation, this principle is set by PRC law. The
      Entrusted Management Agreement makes Dalian Rino a contractually controlled
      affiliate under EITF 97-2, allowing the Company to consolidate Dalian Rino’s
      operations.




For
      a
      description of the Restructuring Agreements, see the section of this prospectus
      entitled “Business - Acquisition of Innomind and the Business of RINO, -
      Restructuring Agreements to Acquire RINO’s Operating Business.”




***Issuance
      of Common Stock to Former Majority Shareholder and Sole Director and Executive
      Officer***




On
      or
      about February 8, 2006, the Company issued Glenn Little a convertible promissory
      note in the amount of $100,000 in connection with the reorganization of the
      Company. The convertible note was subsequently converted to 10,000,000 (5,000
      post-split) shares of the common stock on June 24, 2006, as a result of which
      Little became the Company’s majority shareholder with 64.1% of the then issued
      and outstanding shares of the Company. The Company relied on the exemption
      from
      registration provided under Section 4(2) of the Securities Act.





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




62




On
      September 11, 2007, the Company issued 92,800 shares of its common stock to
      Glenn A. Little (the “Little Shares”) at prices that exceeded the then-current
      bid. At that time and immediately prior to the consummation of the Share
      Exchange, Mr. Little was the Company’s majority shareholder and its sole
      director and executive officer.




The
      investors in the private placement netted the number of shares of common stock
      purchasable therein and the aggregate purchase price for those shares against
      the issuance of the Little Shares, resulting in gross private placement proceeds
      of $24,480,319 and the issuance of 5,464,357 shares of common stock to those
      investors.





***Employment
      Agreement***





The
      Company entered into an employment agreement dated September 27, 2007, with
      Bruce Richardson, pursuant to which Mr. Richardson has been employed by the
      Company as the Company’s Chief Financial Officer for a term of 3 years at a
      monthly salary of $11,667. In addition, Mr. Richardson will be issued 250,000
      options to purchase common stock at an exercise price of $5.38 per share,
      vesting in 3 equal annual installments beginning on January 1, 2009. The options
      will be issued as soon as practical after January 2, 2009. Under the agreement,
      Mr. Richardson is entitled to 20 days of paid vacation per year. The agreement
      is terminable on 30 days notice, and contains non-competition and non-disclosure
      covenants.





**Director
      Independence**





Each
      of
      Messrs. Quan Xie, Kennith Johnson and Zhang Weiguo is an “independent director”
under the Rules of NASDAQ, Marketplace Rule 4200(a)(15).





Under
      the
      terms of the Securities Purchase Agreement entered into as of September 27,
      2007, with certain of the selling stockholders, we were required, prior to

      February 2, 2008, to increase our Board of Directors to not less than 5 members,
      a majority of whom must be “independent directors” as defined in NASDAQ
      Marketplace Rule 4200(a)(15). Until this covenant is complied with, we are
      required to hold $1,000,000 in escrow. If for any reason or no reason the escrow
      agent does not receive requisite written notice from the investor
      representatives as to releasing this sum from escrow within 65 days after the
      private placement closing, we are required to pay liquidated damages of $244,353
      per month (or partial month) until the default is cured. We appointed each
      of
      the independent directors on March 20, 2008. Because of our delayed appointment
      of independent directors, we have accrued liquidated damages in the amount
      of
      $1,000,000 in this regard.





**ITEM
      14. PRINCIPAL ACCOUNTING FEES AND SERVICES**





**Independent
      Public Accountants**





S.W.
      Hatfield, CPA, independent certified public accountants, located at 9002 Green
      Oaks Circle, 2 nd Floor,
      Dallas, Texas 75243-7212, served as independent public accountant and audited
      the financial statements of Jade Mountain for the fiscal years ended December
      2006 and 2005. On October 5, 2007, in connection with the Company’s acquisition
      of RINO’s assets and business and the related change in control of the Company,
      our Board of Directors elected to discontinue our relationship with S.W.
      Hatfield, CPA as our independent accountant and appointed Jimmy C.H. Cheung
      & Co., independent public accountants located at 1607 Dominion Center, 43
      Queen’s Road, East, Wanchai, Hong Kong, to be the independent public accountant
      of the Company.





**Fees
      and Services of Independent Public Accountants**





1. **Jimmy
      C.H. Cheung & Co.**





Fiscal Year Ended
            
            Fiscal Year EndedDecember 31, 2007
            
            December 31, 2006Audit
                Fees
            
            $
            70,000
            
            $
            70,000Audit
                Related FeesTax
                FeesAll
                Other FeesTotal
            
            $
            70,000
            
            $
            70,000





63




2. **** **S.W.
      Hatfield, CPA**





Fiscal
                Year Ended
            
            Fiscal
                Year EndedDecember
                31, 2007
            
            December
                31, 2006Audit
                Fees
            
            $
            6,672
            
            $
            3,705Audit
                Related FeesTax
                FeesAll
                Other Fees
            
            $
            2,966Total
            
            $
            9,638
            
            $
            3,705





In
      the
      event that we should require substantial non-audit services, the Board of
      Directors would approve such services and the fees therefore.





**ITEM
      15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES**





3.1
            Certificate
                of Incorporation. (1)3.2
            Bylaws.
                (1)4.1
            Common
                Stock Specimen (4)4.2
            Form
                of Warrant (2)5.1
            Legal
                Opinion of Guzov Ofsink, LLC re legality of the common stock being
                registered (5)10.1
            Share
                Exchange Agreement dated October 5, 2007 by and among the Company,
                Zhang
                Ze and Innomind Group Limited (2)10.2
            Translation
                of Purchase Agreement, dated as of October 3, 2007, by and among
                Dalian
                Rino Engineering Science and Technology Co., Ltd., and Dalian Innomind
                Environment Engineering Co., Ltd. (2)10.3.1
            Translation
                of Entrusted Management Agreement, dated as of October 3, 2007, by
                and
                among Dalian Innomund Environment Engineering Co., Ltd., Dalian Rino
                Engineering Science and Technology Co., Ltd., Zou Dejun and Qiu Jianping
                (2)10.4
            Translation
                of Patent Transfer Contract, dated as of October 3, 2007, by and
                among
                Dalian Rino Engineering Science and Technology Co., Ltd., and Dalian
                Innomind Environment Engineering Co., Ltd. (2)10.5
            Translation
                of Shareholders’ Voting Proxy Agreement, dated as of October 3, 2007, by
                and among Dalian Innomind Environment Engineering Co., Ltd., Zou
                Dejun and
                Qiu Jianping (2)





64




10.6
            Translation
                of Exclusive Option Agreement, dated as of October 3, 2007, by and
                among
                Dalian Innomind Environment Engineering Co., Ltd., Zou Dejun and
                Qiu
                Jianping (2)10.7
            Translation
                of Pledge of Equity Agreement, dated as of October 3, 2007, by and
                among
                Dalian Innomind Environment Engineering Co., Ltd., Zou Dejun and
                Qiu
                Jianping (2)10.8
            Securities
                Purchase Agreement, dated as of September 27, 2007 by and among the
                Company and the named investors (2)10.9
            Lock-Up
                Agreement, dated September 27, 2007, by and among Jade Mountain
                Corporation and Zou Dejun and Qiu Jianping (4)10.9.1
            Lock-Up
                Agreement, dated September 27, 2007, by and among Jade Mountain
                Corporation and The Innomind Trust (4)10.9.2
            Lock-Up
                Agreement, dated September 27, 2007, by and among Jade Mountain
                Corporation and Bruce Richardson (4)10.10
            Registration
                Rights Agreement, dated as of September 27, 2007, by and among Jade
                Mountain Corporation and the investors signatory - thereto
                (4)10.11
            Engagement
                Agreement Providing for Investment Banking Services, dated January
                19,
                2007 by and between RINO and Douglas Financial (5)10.12
            Side
                Letter Agreement dated July 27, 2007 by and between Douglas Financial
                LLC
                and Dalian RINO Environmental Engineering Science and Technology
                Co., Ltd.
                (5)




10.13
            Employment Agreement dated September 27, 2007, by and between Jade
                Mountain Corporation and Bruce Richardson (5)14.1
            Code
                of Ethics21.1
            List of subsidiaries (4)31.1
            Certification
                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002





(1)
            Incorporated
                herein by reference to the Registration Statement on Form 10-SB filed
                with
                the SEC on April 5, 2007.(2)
            Incorporated
                herein by reference to the Current Report on Form 8-K filed by the
                Current
                Report filed by the Company on October 12, 2007.(3)
            Incorporated
                herein by reference to the Current Report on Form 8-K/A filed by
                the
                Company on October 19, 2007.(4)
            Incorporated
                herein by reference to the Current Report on Form SB-2 filed by the
                Company on November 19, 2007.(5)
            Incorporated
                herein by reference to the Registration Statement on Form S-1/A filed
                with
                the SEC on March 11, 2008.





65




SIGNATURES





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on April 1, 2008
      on its behalf by the undersigned, thereunto duly authorized.




JADE
                MOUNTAIN CORPORATIONBy
            /s/
                Zou DejunZou
                DejunChief
                Executive Officer and Director








Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated.




**SIGNATURE**
              
              **TITLE**
              
              **DATE**/s/
                  Zou Dejun
              
              Chief
                  Executive Officer and Director
              
              April
                  1, 2008Zou
                  Dejun
              
              (Principal
                  Executive Officer)/s/
                  Bruce Richardson
              
              Chief
                  Financial Officer and Secretary
              
              April
                  1, 2008Bruce
                  Richardson
              
              (Principal
                  Financial Officer)/s/
                  Qiu Jianping
              
              Chairman
                  of the Board
              
              April
                  1, 2008Qiu
                  Jianping/s/
                  Zhang Weiguo
              
              Director
              
              April
                  1, 2008Zhang
                  Weiguo/s/
                  Quan Xie
              
              Director
              
              April
                  1, 2008Quan
                  Xie/s/
                  Kennith Johnson
              
              Director
              
              April
                  1, 2008Kennith
                  Johnson




66




JADE
          MOUNTAIN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED
          FINANCIAL STATEMENTS
 AS
          OF
          DECEMBER 31, 2007 AND 2006
  
  JADE
          MOUNTAIN CORPORATION AND SUBSIDIARIES
 
 CONTENTS
  PagesReport
                    of Independent Registered Public Accounting Firm
                1Consolidated
                    Balance Sheets
                2Consolidated
                    Statements of Operations and Comprehensive Income
                3Consolidated
                    Statements of Stockholders’ Equity
                4Consolidated
                    Statements of Cash Flows
                5Notes
                    to the Consolidated Financial Statements
                6
                    -
                    18
  
 
 **Jimmy
                    C.H. Cheung & Co**
                Registered
                    with the Public Company*Certified
                    Public Accountants*
                Accounting
                    Oversight Board*(A
                    member of Kreston International)*
 
 REPORT
          OF
          INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
          the
          Board of Directors of:
 Jade
          Mountain Corporation
  
 We
          have
          audited the accompanying consolidated balance sheets of Jade
          Mountain Corporation and subsidiaries ,
          as of
          December 31, 2007 and 2006 and the related consolidated statements of operations
          and comprehensive income, stockholders’ equity and cash flows for each
          of
          the three years in the period ended December
          31, 2007. 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 audits.
 
 We
          conducted our audits 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 audits of the financial
          statements provide a reasonable basis for our opinion.
 
 In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the financial position of Jade Mountain Corporation,
          as of December 31, 2007 and 2006, and the results of its operations and
          its cash
          flows for each of the three years in the period ended December 31, 2007,
          2006
          and 2005, in conformity with accounting principles generally accepted in
          the
          United States of America.
  **JIMMY
          C.H. CHEUNG & CO**
 Certified
          Public Accountants
  Hong
          Kong
 Date:
          January 23, 2008
  1607
                    Dominion Centre, 43 Queen’s Road East, Wanchai, Hong KongTel:
                    (852) 25295500 Fax: (852) 28651067Email:jimmycheung@jimmycheungco.comWebsite:
                    http://www.jimmycheungco.com
  1
  **JADE
          MOUNTAIN CORPORATION AND SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEETS**
 December
                    31,2007
                
                2006**ASSETS****CURRENT
                    ASSETS**Cash
                    and cash equivalents
                
                $
                7,390,631
                
                $
                3,604,350Restricted
                    cash
                
                
                1,000,000
                
                
                -Accounts
                    receivable, net of allowances
                
                
                21,043,006
                
                
                5,622,219Contracts
                    in progress
                
                
                2,818,122
                
                
                -Inventories,
                    net
                
                
                178,480
                
                
                111,321Deposits
                    with suppliers
                
                
                15,843,545
                
                
                801,246Other
                    current assets and prepaid expenses
                
                
                1,174,464
                
                
                171,772Total
                    Current Assets
                
                
                49,448,248
                
                
                10,310,908**PROPERTY
                    AND EQUIPMENT, NET**
                
                
                11,000,581
                
                
                10,460,727**OTHER
                    ASSETS**Prepaid
                    expenses (non-current)
                
                
                95,706
                
                
                -Intangible
                    assets, net
                
                
                639,176
                
                
                268,628Land
                    use rights, net
                
                
                979,414
                
                
                528,084**TOTAL
                    ASSETS**
                
                $
                62,163,125
                
                
                21,568,347**LIABILITIES
                    AND STOCKHOLDERS' EQUITY****CURRENT
                    LIABILITIES**Accounts
                    payable
                
                $
                2,534,858
                
                $
                3,858,078Liquidated
                    damages payable
                
                
                1,000,000
                
                
                -Other
                    payables and accrued liabilities
                
                
                802,245
                
                
                885,674Notes
                    payable
                
                
                -
                
                
                4,221,298Due
                    to a stockholder
                
                
                106,963
                
                
                451,921Business
                    tax and other taxes payable
                
                
                581,444
                
                
                195,438Income
                    tax payable
                
                
                5,970,794
                
                
                540,531Value
                    added tax payable
                
                
                2,989,365
                
                
                12,500Total
                    Current Liabilities
                
                
                13,985,669
                
                
                10,165,440**LONG-TERM
                    LIABILITIES**Notes
                    payable - long term
                
                
                -
                
                
                3,453,790Deferred
                    tax liabilities
                
                
                -
                
                
                655,705**TOTAL
                    LIABILITIES**
                
                
                13,985,669
                
                
                14,274,935**COMMITMENTS
                    AND CONTINGENCIES****STOCKHOLDERS'
                    EQUITY**Preferred
                    stock ($0.0001 par value, 50,000,000 shares authorized, none
                    issued and
                    outstanding as of December 31, 2007 and 2006)
                
                
                -
                
                
                -Common
                    stock ($0.0001 par value, 10,000,000,000 shares authorized, 2007:
                    25,000,000 shares issued and outstanding, 2006: 17,899,643 shares
                    issued
                    and outstanding)
                
                
                2,500
                
                
                1,790Additional
                    paid-in capital
                
                
                32,701,982
                
                
                3,827,447Retained
                    earningsUnappropriated
                
                
                11,376,163
                
                
                2,940,341Appropriated
                
                
                2,109,539
                
                
                326,556Accumulated
                    other comprehensive gain
                
                
                1,987,272
                
                
                197,278Total
                    Stockholders' Equity
                
                
                48,177,456
                
                
                7,293,412**TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY**
                
                $
                62,163,125
                
                $
                21,568,347
 
 The
          accompanying notes are an integral part of these consolidated financial
          statements
  2
  
 **JADE
          MOUNTAIN CORPORATION AND SUBSIDIARIES**
 **CONSOLIDATED
          OPERATIONS AND COMPREHENSIVE INCOME**
  For
                    the Year Ended December 31,2007
                
                2006
                
                2005**NET
                    SALES**Contracts
                
                $
                53,935,016
                
                $
                8,635,094
                
                $
                3,585,299Services
                
                
                9,452,292
                
                
                1,672,536
                
                
                -Government
                    grant
                
                
                228,430
                
                
                448,515
                
                
                52,41863,615,738
                
                
                10,756,145
                
                
                3,637,717**COST
                    OF SALES**Cost
                    of contracts
                
                
                (30,984,925
                )
                
                (4,874,851
                )
                
                (2,626,882
                )Cost
                    of services
                
                
                (1,364,752
                )
                
                (190,213
                )
                
                -Depreciation
                
                
                (571,267
                )
                
                (279,880
                )
                
                (146,944
                )(32,920,944
                )
                
                (5,344,944
                )
                
                (2,773,826
                )**GROSS
                    PROFIT**
                
                
                30,694,794
                
                
                5,411,201
                
                
                863,891**OPERATING
                    EXPENSES**Selling,
                    general and administrative expenses
                
                
                14,733,445
                
                
                690,877
                
                
                278,048Depreciation
                
                
                87,670
                
                
                87,750
                
                
                87,766Amortization
                    of intangible assets
                
                
                42,667
                
                
                -
                
                
                -Amortization
                    of land use rights
                
                
                11,654
                
                
                11,122
                
                
                10,821Total
                    Operating Expenses
                
                
                14,875,436
                
                
                789,749
                
                
                376,635**INCOME
                    FROM OPERATIONS**
                
                
                15,819,358
                
                
                4,621,452
                
                
                487,256**OTHER
                    INCOME (EXPENSES)**Other
                    income
                
                
                12,926
                
                
                19,639
                
                
                622Interest
                    income
                
                
                32,065
                
                
                855
                
                
                8,315Imputed
                    interest
                
                
                (33,019
                )
                
                (26,482
                )
                
                (22,744
                )Interest
                    expenses
                
                
                (531,334
                )
                
                (297,303
                )
                
                (85,457
                )Other
                    expenses
                
                
                (56,417
                )
                
                (13,991
                )
                
                (31,603
                )Total
                    Other Expenses
                
                
                (575,779
                )
                
                (317,282
                )
                
                (130,867
                )**INCOME
                    FROM OPERATIONS BEFORE TAXES**
                
                
                15,243,579
                
                
                4,304,170
                
                
                356,389**INCOME
                    TAX EXPENSE**
                
                
                (5,024,774
                )
                
                (1,151,300
                )
                
                (85,390
                )**NET
                    INCOME**
                
                
                10,218,805
                
                
                3,152,870
                
                
                270,999**OTHER
                    COMPREHENSIVE INCOME**Foreign
                    currency translation gain
                
                
                1,789,994
                
                
                174,303
                
                
                22,975**COMPREHENSIVE
                    INCOME**
                
                $
                12,008,799
                
                $
                3,327,173
                
                $
                293,974Net
                    income per share-basic
                
                $
                0.52
                
                $
                0.18
                
                $
                0.02Weighted
                    average number of shares -basic
                
                
                19,611,510
                
                
                17,899,643
                
                
                17,899,643Net
                    income per share-diluted
                
                $
                0.52
                
                $
                0.18
                
                $
                0.02Weighted
                    average number of shares -diluted
                
                
                19,694,481
                
                
                17,899,643
                
                
                17,899,643
  The
          accompanying notes are an integral part of these consolidated financial
          statements
  3
  
 Additional
                
                Unappropriated
                
                Appropriated
                
                Accumulated
                    otherCommon
                    Stock
                
                paid-in
                
                retained
                
                retained
                
                comprehensive
                
                
                
                ComprehensiveShares
                
                Amount
                
                capital
                
                earnings
                
                earnings
                
                gain
                
                Total
                
                IncomeBalance
                    at December 31, 2004
                
                
                17,899,643
                
                $
                1,790
                
                $
                846,577
                
                $
                (156,972
                )
                $
                -
                
                $
                -
                
                $
                691,395Contribution
                    by stockholders
                
                
                -
                
                
                -
                
                
                2,274,135
                
                
                -
                
                
                -
                
                
                -
                
                
                2,274,135Imputed
                    interest on advances from a stockholder
                
                
                -
                
                
                -
                
                
                22,744
                
                
                -
                
                
                -
                
                
                -
                
                
                22,744Net
                    income for the year
                
                
                -
                
                
                -
                
                
                -
                
                
                270,999
                
                
                -
                
                
                -
                
                
                270,999Transfer
                    to statutory surplus reserve
                
                
                -
                
                
                -
                
                
                -
                
                
                (11,243
                )
                
                11,243
                
                
                -
                
                
                -Foreign
                    currency translation gain
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                22,975
                
                
                22,975Comprehensive
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                $
                293,974Balance
                    at December 31, 2005
                
                
                17,899,643
                
                
                1,790
                
                
                3,143,456
                
                
                102,784
                
                
                11,243
                
                
                22,975
                
                
                3,282,248Contribution
                    by stockholders
                
                
                -
                
                
                -
                
                
                657,509
                
                
                -
                
                
                -
                
                
                -
                
                
                657,509Imputed
                    interest on advances from a stockholder
                
                
                -
                
                
                -
                
                
                26,482
                
                
                -
                
                
                -
                
                
                -
                
                
                26,482Net
                    income for the year
                
                
                -
                
                
                -
                
                
                -
                
                
                3,152,870
                
                
                -
                
                
                -
                
                
                3,152,870Transfer
                    to statutory surplus reserve
                
                
                -
                
                
                -
                
                
                -
                
                
                (315,313
                )
                
                315,313
                
                
                -
                
                
                -Foreign
                    currency translation gain
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                174,303
                
                
                174,303Comprehensive
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                3,327,173Balance
                    at December 31, 2006
                
                
                17,899,643
                
                
                1,790
                
                
                3,827,447
                
                
                2,940,341
                
                
                326,556
                
                
                197,278
                
                
                7,293,412Recapitalization
                
                
                491,000
                
                
                49
                
                
                (49
                )
                
                -
                
                
                -
                
                
                -
                
                
                -Shares
                    issued for placement
                
                
                5,464,357
                
                
                546
                
                
                22,253,176
                
                
                -
                
                
                -
                
                
                -
                
                
                22,253,722Shares
                    issued for services
                
                
                1,125,000
                
                
                113
                
                
                (113
                )
                
                -
                
                
                -
                
                
                -
                
                
                -Stock
                    compensation expenses-shares issued
                
                
                20,000
                
                
                2
                
                
                48,998
                
                
                -
                
                
                -
                
                
                -
                
                
                49,000Stock
                    compensation expenses-options issued
                
                
                
                
                
                
                
                
                38,204
                
                
                
                
                
                
                
                
                
                
                
                38,204Stock
                    compensation expenses-escrow shares
                
                
                
                
                
                
                
                
                7,499,520
                
                
                
                
                
                
                
                
                
                
                
                7,499,520Provision
                    for liquidated damages
                
                
                -
                
                
                -
                
                
                (1,000,000
                )
                
                -
                
                
                -
                
                
                -
                
                
                (1,000,000
                )Contribution
                    by stockholders
                
                
                -
                
                
                -
                
                
                1,780
                
                
                -
                
                
                -
                
                
                -
                
                
                1,780Imputed
                    interest on advances from a stockholder
                
                
                -
                
                
                -
                
                
                33,019
                
                
                -
                
                
                -
                
                
                -
                
                
                33,019Net
                    income for the year
                
                
                -
                
                
                -
                
                
                -
                
                
                10,218,805
                
                
                -
                
                
                -
                
                
                10,218,805Transfer
                    to statutory surplus reserve
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,782,983
                )
                
                1,782,983
                
                
                -
                
                
                -Foreign
                    currency translation gain
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,789,994
                
                
                1,789,994Comprehensive
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                $
                12,008,799Balance
                    at December 31, 2007
                
                
                25,000,000
                
                $
                2,500
                
                $
                32,701,982
                
                $
                11,376,163
                
                $
                2,109,539
                
                $
                1,987,272
                
                $
                48,177,456
  The
          accompanying notes are an integral part of these consolidated financial
          statements
  4
 
 **JADE
          MOUNTAIN CORPORATION AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 
 For
                    the Year Ended December 31,2007
                
                2006
                
                2005**CASH
                    FLOWS FROM OPERATING ACTIVITIES**Net
                    income
                
                $
                10,218,805
                
                $
                3,152,870
                
                $
                270,999Adjusted
                    to reconcile net income to cash (used in) provided by operating
                    activities:Depreciation
                    - cost of sales
                
                
                571,267
                
                
                279,880
                
                
                146,944Depreciation-operating
                    expenses
                
                
                87,670
                
                
                87,750
                
                
                87,766Amortization
                    of intangible assets
                
                
                42,667
                
                
                -
                
                
                -Amortization
                    of land use rights
                
                
                11,654
                
                
                11,122
                
                
                10,821Stock
                    compensation expenses-shares issued
                
                
                49,000
                
                
                -
                
                
                -Stock
                    compensation expenses-options issued
                
                
                38,204
                
                
                -
                
                
                -Stock
                    compensation expenses-shares placed in Escrow
                
                
                7,499,520
                
                
                -
                
                
                -Imputed
                    interest on advances from a stockholder
                
                
                33,019
                
                
                26,482
                
                
                22,744Changes
                    in operating assets and liabilities(Increase)
                    decrease in:Accounts
                    receivable
                
                
                (14,435,613
                )
                
                (5,011,716
                )
                
                2,287,423Contracts
                    in progress
                
                
                (2,705,985
                )
                
                739,686
                
                
                (498,034
                )Inventories
                
                
                (57,130
                )
                
                796,329
                
                
                (843,331
                )Deposits
                    with suppliers
                
                
                (14,390,791
                )
                
                1,441,549
                
                
                (795,539
                )Other
                    current assets and prepaid expenses
                
                
                (951,441
                )
                
                (66,090
                )
                
                114,849Value
                    added tax recoverable
                
                
                -
                
                
                464,353
                
                
                (451,821
                )Prepaid
                    expenses ( non-current)
                
                
                (91,898
                )
                
                -
                
                
                -Increase
                    (decrease) in:Accounts
                    payable
                
                
                (1,525,537
                )
                
                2,542,849
                
                
                (1,149,324
                )Other
                    payables and accrued liabilities
                
                
                (138,641
                )
                
                (2,250,644
                )
                
                611,674Business
                    tax payable
                
                
                357,730
                
                
                191,413
                
                
                -Income
                    tax payable
                
                
                5,178,462
                
                
                508,199
                
                
                (1,218
                )Value
                    added tax payable
                
                
                2,857,585
                
                
                12,243
                
                
                (25,220
                )Deferred
                    tax liabilities
                
                
                (672,947
                )
                
                575,642
                
                
                64,762Net
                    cash (used in) provided by operating activities
                
                
                (8,024,400
                )
                
                3,501,917
                
                
                (146,505
                )**CASH
                    FLOWS FROM INVESTING ACTIVITIES**Purchase
                    of property and equipment
                
                
                (831,886
                )
                
                (4,235,354
                )
                
                (4,298,778
                )Purchase
                    of intangible assets
                
                
                (380,717
                )
                
                (263,096
                )
                
                -Purchase
                    of land use rights
                
                
                (410,125
                )
                
                -
                
                
                -Net
                    cash used in investing activities
                
                
                (1,622,728
                )
                
                (4,498,450
                )
                
                (4,298,778
                )**CASH
                    FLOWS FROM FINANCING ACTIVITIES**Contribution
                    by stockholders
                
                
                1,780
                
                
                657,509
                
                
                2,274,135Net
                    proceeds from stock issuance in private placement
                
                
                22,253,722
                
                
                -
                
                
                -Restricted
                    cash in escrow
                
                
                (1,000,000
                )
                
                -
                
                
                -Due
                    to a stockholder
                
                
                (361,098
                )
                
                53,065
                
                
                (2,122,999
                )Bank
                    loans borrowed
                
                
                -
                
                
                7,517,017
                
                
                3,657,070Bank
                    loans repaid
                
                
                (7,876,910
                )
                
                (3,758,508
                )
                
                -Net
                    cash provided by financing activities
                
                
                13,017,494
                
                
                4,469,083
                
                
                3,808,206**EFFECT
                    OF EXCHANGE RATES ON CASH**
                
                
                415,915
                
                
                61,474
                
                
                (27,441
                )**NET
                    INCREASE IN CASH AND CASH EQUIVALENTS**
                
                
                3,786,281
                
                
                3,534,024
                
                
                (664,518
                )**CASH
                    AND CASH EQUIVALENTS AT BEGINNING OF YEAR**
                
                
                3,604,350
                
                
                70,326
                
                
                734,844**CASH
                    AND CASH EQUIVALENTS AT END OF YEAR**
                
                $
                7,390,631
                
                $
                3,604,350
                
                $
                70,326**SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION**Cash
                    paid for interest expenses
                
                $
                531,334
                
                $
                297,303
                
                $
                85,457Cash
                    paid for income tax
                
                $
                519,258
                
                $
                67,459
                
                $
                21,844
  The
          accompanying notes are an integral part of these consolidated financial
          statements
  5
  JADE
          MOUNTAIN CORPORATION AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 AS
          OF
          DECEMBER 31, 2007 AND 2006
 
 1.
                **SUMMARY
                    OF SIGNIFICANT ACCOUNTING POLICIES AND
                    ORGANIZATION**
 
 (A)
                Organization
 
 Jade
          Mountain Corporation (“JMC”) was originally incorporated in 1984 as Applied
          Biometrics, Inc. in accordance with the laws of the State of Minnesota.
          On
          December 27, 2006, the shareholders of JMC approved a proposal to re-domicile
          JMC from the State of Minnesota to the State of Nevada. JMC effected the
          re-domicile through a merger with a new Nevada corporation which was formed
          by
          JMC on September 12, 2006 solely and specifically for the purpose of effecting
          the re-domicile of JMC. At this time, JMC changed its name to Jade Mountain
          Corporation. During the first six months ended June 30, 2007, JMC ceased
          all
          business operations and disposed of all its assets, liabilities and operating
          activities. JMC has had no operations or significant assets since the year
          ended
          December 31, 2006.
 
 Innomind
          Group Limited (“Innomind”) was incorporated in the British Virgin Islands
          (“BVI”) on November 17, 2006 as an investment holding company. Through its
          wholly owned subsidiary, Dalian Innomind Environment Engineering Co., Ltd.
          (“Dalian Innomind”) incorporated in the People’s Republic of China (“PRC”) as a
          wholly owned foreign limited liability company on July 9, 2007, Dalian
          Innomind’s principal activities are the design, development, manufacturing and
          installation of industrial equipment used mainly for environmental protection
          purposes in the PRC. In accordance with the business permit, Dalian Innomind’s
          right of operation expires on July 8, 2022 and is renewable on
          expiry.
 
 Dalian
          Rino Environment Engineering Science And Technology Co., Ltd. (“Dalian Rino”)
          was incorporated in the PRC on March 5, 2003 as a limited liability company.
          The
          business activities of Dalian Rino are the same with those of Dalian Innomind.
          In accordance with the business permit, Dalian Rino’s right of operation expires
          on March 4, 2021 and is renewable.
  On
          October 5, 2007, JMC consummated a Share Exchange Agreement (“the Agreement”)
          with the shareholders of Innomind pursuant to which JMC issued 17,899,643
          shares
          of Common Stock, par value $0.0001 per share to the stockholders of Innomind
          for
          100% equity interest in Innomind.
 
 The
          merger of JMC and Innomind is being treated for accounting purposes as
          a capital
          transaction and recapitalization by Innomind (“the accounting acquirer”) and
          re-organization by JMC (“the accounting acquiree”). The financial statements
          have been prepared as if the re-organization had occurred retroactively.
 
 Accordingly,
          these financial statements include the following:
 
 (1)
                The
                    balance sheet consisting of the net assets of the acquirer at
                    historical
                    cost and the net assets of the acquiree at historical
                    cost.
 
 (2)
                The
                    statement of operations including the operations of the acquirer
                    for the
                    periods presented and the operations of the acquiree from the
                    date of the
                    transaction.
 
 On
          October 3, 2007, Dalian Innomind entered into a series of agreements
          (collectively known as the Restructuring Agreements) with Dalian Rino and
          the
          shareholders of Dalian Rino in which Dalian Innomind assumed the management
          of
          the business activities of Dalian Rino, making Dalian Rino a contractually
          controlled affiliate under Emerging Issues Task Force (“EITF”) 97-2. As both
          companies were under common control after the consummation of the Restructuring
          Agreements on October 5, 2007, this was accounted for as a reorganization
          of
          entities under common control and consolidated financial statements were
          prepared as if the reorganization occurred at the beginning of the first
          period
          presented.
 
 JMC,
          Innomind, Dalian Innomind and Dalian Rino are hereinafter referred to as
          (“the
          Company”).
 
 (B)
                Principles
                    of consolidation
 
 The
          accompanying consolidated financial statements include the financial statements
          of JMC and its wholly owned subsidiaries, Innomind, Dalian Innomind and
          its
          contractually controlled affiliate, Dalian Rino. All significant inter-company
          transactions and balances have been eliminated in
          consolidation.
  6
  (C)
                Use
                    of estimates
 
 The
          preparation of the financial statements in conformity with generally accepted
          accounting principles requires management to make estimates and assumptions
          that
          affect the reported amount of assets and liabilities and disclosure of
          contingent assets and liabilities at the date of the financial statements
          and
          the reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates.
 
 (D)
                Cash
                    and cash equivalents
 
 For
          purposes of the statements of cash flows, cash and cash equivalents include
          cash
          on hand and demand deposits with a bank with a maturity of less than 3
          months.
 
 The
          cash
          held in escrow pursuant to the Board Escrow Holdback as described in note
          13 is
          accounted for as restricted cash and is not shown as cash or cash equivalents
          on
          the balance sheet until such funds have been released from escrow pursuant
          to
          the terms of the Securities Purchase Agreement.
 
 (E)
                Accounts
                    receivable
 
 The
          Company extends unsecured credit to its customers in the ordinary course
          of
          business but mitigates the associated risks by performing credit checks
          and
          actively pursuing past due accounts. An allowance for doubtful accounts
          is
          established and recorded based on managements’ assessment of the credit history
          with the customers and current relationships with them.
 
 (F)
                Contracts
                    in progress
 
 Contracts
          in progress are stated at the lower of cost or market value and include
          the
          costs and earnings in excess of billings, pursuant to the percentage of
          completion method of accounting for long-term fixed price contracts. The
          inventoried costs include production costs and related overhead, including
          an
          applicable portion of general and administrative expenses.
 
 (G)
                Inventories
 
 Raw
          materials are stated at the lower of cost or market value, cost being calculated
          on the weighted average basis.
 
 The
          Company provided inventory allowances based on excess and obsolete inventories
          determined principally by customer demand.
 
 (H)
                Property
                    and equipment
 
 Property
          and equipment are stated at cost, less accumulated depreciation. Expenditures
          for additions, major renewals and betterments are capitalized and expenditures
          for maintenance and repairs are charged to expense as incurred.
 
 Depreciation
          is provided on a straight-line basis, less estimated residual value over
          the
          assets’ estimated useful lives. The estimated useful lives are as
          follows:
 
 Buildings
                30
                    YearsPlant
                    and machinery
                15
                    YearsMotor
                    vehicles
                10
                    YearsFurniture,
                    fixtures and equipment
                5
                    Years
  Land
          use
          rights are stated at cost, less accumulated amortization and are amortized
          over
          the term of the relevant rights of 50 years from the date of
          acquisition.
  (I)
                Long-lived
                    assets
 
 In
          accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144,
“Accounting for the impairment or disposal of Long-Lived Assets", long-lived
          assets and certain identifiable intangible assets held and used by the
          Company
          are reviewed for impairment whenever events or changes in circumstances
          indicate
          that the carrying amount of an asset may not be recoverable. For purposes
          of
          evaluating the recoverability of long-lived assets, the recoverability
          test is
          performed using undiscounted net cash flows related to the long- lived
          assets.
          The Company reviews long-lived assets to determine that carrying values
          are not
          impaired.
 
 (J)
                Fair
                    value of financial instruments
 
 SFAS
          No.
          107, "Disclosure About Fair Value of Financial Instruments," requires certain
          disclosures regarding the fair value of financial instruments. The carrying
          amounts of accounts receivable, other receivables and prepaid expenses,
          accounts
          payable, other payables and accrued liabilities and due to a stockholder
          approximate their fair values because of the short-term nature of the
          instruments. The fair value of long term notes payable approximates their
          carrying value as the interest rates does not significantly differ from
          market.
  7
  
 (K)
                Intangible
                    assets
 
 Under
          the
          SFAS No. 142, “Goodwill and Other Intangible Assets”, all goodwill and certain
          intangible assets determined to have indefinite lives will not be amortized
          but
          will be tested for impairment at least annually. Intangible assets other
          than
          goodwill will be amortized over their estimated useful lives and reviewed
          for
          impairment in accordance with SFAS No. 144, “Accounting for Impairment or
          Disposal of Long-Lived Assets”.
 
 (L)
                Revenue
                    recognition
 
 Contracts
 
 The
          Company enters into long-term fixed price contracts with customers to
          manufacture and install industrial equipment. Revenue on long-term fixed
          price
          contracts is recognized under the percentage-of-completion method in accordance
          with the American Institute of Certified Public Accountants Statement of
          Position (“SOP”) 81-1 “Accounting for Performance of Construction-Type and
          Certain Production-Type Contracts”. Under the percentage-of-completion method,
          management estimates the percentage-of-completion based upon costs incurred
          as a
          percentage of the total estimated costs to the customer. When total cost
          estimates exceed revenues, the Company accrues for the estimated losses
          immediately. The use of the percentage of completion method requires significant
          judgment relative to estimating total contract revenues and costs, including
          assumptions relative to the length of time to complete the project, the
          nature
          and complexity of the work to be performed, and anticipated changes in
          estimated
          costs. Estimates of total contract revenues and costs are continuously
          monitored
          during the term of the contract, and recorded revenues and costs are subject
          to
          revision as the contract progresses. When revisions in estimated contract
          revenues and costs are determined, such adjustments are recorded in the
          period
          in which they are first identified.
 
 In
          addition to our specialty equipment sales, the Company uses heavy machining
          equipment to perform machining services for third parties. These engagements
          -
          numbering several hundred per year - are essentially piecework and are
          completed
          in usually less than one month. Accordingly, these heavy machinery contracts
          do
          not fall within the scope of SOP 81-1. Each machining engagement is governed
          by
          a separate contract, indicating existence of an arrangement. Revenue is
          recognized when service is performed, which is usually concurrent with
          delivery
          to the customer, the price is set by contract, collectibility is reasonably
          assured . Accordingly, these revenues are recognized under Staff Accounting
          Bulletin No. 104.
 
 Services
 
 The
          Company also provides technical professional services to its customers
          based on
          a fixed-price time contract. The Company recognizes services-based revenue
          from
          all of its contracts when the services have been performed, the customers
          have
          approved the completion of the services and invoices have been issued and
          collectibility is reasonably assured.
 
 Government
          grant
 
 The
          local
          government of Dalian City also approved grants to the Company to encourage
          the
          high technology industry. The grants are recognized as revenue on receipt
          from
          the local government.
  (M)
                Income
                    taxes
 
 The
          Company accounts for income taxes under the SFAS No. 109, “Accounting for Income
          Taxes” (“Statement 109”). Under Statement 109, deferred tax assets and
          liabilities are recognized for the future tax consequences attributable
          to
          differences between the financial statement carrying amounts of existing
          assets
          and liabilities and their respective tax bases. Deferred tax assets and
          liabilities are measured using enacted tax rates expected to apply to taxable
          income in the years in which those temporary differences are expected to
          be
          recovered or settled. Under Statement 109, the effect on deferred tax assets
          and
          liabilities of a change in tax rates is recognized in income in the period
          included the enactment date.
 
 (N)
                Foreign
                    currency transactions
 
 JMC
          and
          Innomind maintain their accounting records in their functional currencies
          of
          United States Dollars (“US$”) and Hong Kong Dollars (“HK$”) respectively,
          whereas Dalian Innomind and Dalian Rino maintain their accounting records
          in
          their functional currency of Renminbi (“RMB”). Foreign currency transactions
          during the year are translated to the functional currency at the approximate
          rates of exchange on the dates of transactions. Monetary assets and liabilities
          denominated in foreign currencies at the balance sheet date are translated
          at
          the approximate rates of exchange at that date. Non-monetary assets and
          liabilities are translated at the rates of exchange prevailing at the time
          the
          asset or liability was acquired. Exchange gains or losses are recorded
          in the
          statement of operations.
  8
  (O)
                Foreign
                    currency translation
 
 The
          financial statements of Innomind, Dalian Innomind and Dalian Rino (whose
          functional currencies are HK$, RMB and RMB) are translated into US$ using
          the
          closing rate method. The balance sheet items are translated into US$ using
          the
          exchange rates at the respective balance sheet dates. The capital and various
          reserves are translated at historical exchange rates prevailing at the
          time of
          the transactions while income and expense items are translated at the average
          exchange rate for the year. All exchange translation differences are recorded
          as
          a component of accumulated other comprehensive income within equity. The
          translation gain recorded for the years ended December 31, 2007, 2006 and
          2005
          was $1,789,994, $174,303 and $22,975 respectively.
 
 (P)
                Comprehensive
                    income
 
 The
          foreign currency translation gain or loss resulting from translation of
          the
          financial statements expressed in RMB to US$ is reported as other comprehensive
          income gain (loss) in the statements of operations and stockholders’ equity.
          Other comprehensive income for the years ended December 31, 2007, 2006
          and 2005
          was $1,789,994, $174,303 and $22,975 respectively.
 
 (Q)
                Earnings
                    per share
 
 Earnings
          per share in accordance with the provisions of SFAS No. 128, "Earnings
          Per
          Share." SFAS No. 128 requires presentation of basic and diluted earnings
          per
          share in conjunction with the disclosure of the methodology used in computing
          such earnings per share. Basic earnings per share excludes dilution and
          is
          computed by dividing income available to common stockholders by the weighted
          average common shares outstanding during the period. Diluted earnings per
          share
          takes into account the potential dilution that could occur if securities
          or
          other contracts to issue common stock were exercised and converted into
          common
          stock using the treasury method.
 
 (R)
                Segments
 
 The
          Company designs and manufactures pollution control equipment and other
          equipment
          designed to reduce the resource intensity of steel production, effectively
          serving one segment. Accordingly, segment disclosure is not presented.
          Additional details on the composition of revenues are presented in Note
          17,
          Concentrations and Risks below.
 
 (S)
                Stock-Based
                    Compensation
 
 The
          Company adopted SFAS No. 123R, “Share-Based Payments”. This Statement
          requires a public entity to measure the cost of services received in exchange
          for an award of equity instruments based on the grant-date fair value of
          the
          award. That cost will be recognized over the period during which services
          are
          received. Stock compensation for stock granted to non-employees has been
          determined in accordance with SFAS 123R and the Emerging Issues Task Force
          consensus Issue No. 96-18, "Accounting for Equity Instruments that are
          issued to
          Other than Employees for Acquiring, or in Conjunction with Selling Goods
          or
          Services" ("EITF 96-18"), as the fair value of the consideration received
          or the
          fair value of equity instruments issued, whichever is more reliably
          measured.
 
 (T)
                Recent
                    Accounting Pronouncements
 
 In
          September 2006, FASB issued SFAS No. 157, Fair Value Measurements. This
          statement defines fair value and establishes a framework for measuring
          fair
          value in generally accepted accounting principles (GAAP). More precisely,
          this
          statement sets forth a standard definition of fair value as it applies
          to assets
          or liabilities, the principal market (or most advantageous market) for
          determining fair value (price), the market participants, inputs and the
          application of the derived fair value to those assets and liabilities.
          The
          effective date of this pronouncement is for all full fiscal and interim
          periods
          beginning after November 15, 2007. The Company is currently evaluating the
          impact this new Standard, but believes that it will not have a material
          impact
          on the Company’s financial position.
 
 In
          February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
          Financial
          Assets and Financial Liabilities—including an amendment of FASB Statement No.
          115 (“FAS 159”). FAS 159 permits companies to choose to measure many financial
          instruments and certain other items at fair value that are not currently
          required to be measured at fair value. The objective of FAS 159 is to provide
          opportunities to mitigate volatility in reported earnings caused by measuring
          related assets and liabilities differently without having to apply hedge
          accounting provisions. FAS 159 also establishes presentation and disclosure
          requirements designed to facilitate comparisons between companies that
          choose
          different measurement attributes for similar types of assets and liabilities.
          SFAS 159 will be effective in the first quarter of fiscal 2009. The Company
          is
          evaluating the impact that this statement will have on its consolidated
          financial statements.
  9
  In
          June
          2007, the FASB issued FASB Staff Position No. EITF 07-3, “Accounting for
          Nonrefundable Advance Payments for Goods or Services Received for use in
          Future
          Research and Development Activities” (“FSP EITF 07-3”), which addresses whether
          nonrefundable advance payments for goods or services that used or rendered
          for
          research and development activities should be expensed when the advance
          payment
          is made or when the research and development activity has been performed.
          The
          Company adopted FSP EITF 07-3 and expensed the research and development
          as
          incurred.
 
 In
          December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
          Consolidated Financial Statements - an amendment of Accounting Research
          Bulletin
          No. 51” (“SFAS 160”), which establishes accounting and reporting standards for
          ownership interests in subsidiaries held by parties other than the parent,
          the
          amount of consolidated net income attributable to the parent and to the
          noncontrolling interest, changes in a parent’s ownership interest and the
          valuation of retained non-controlling equity investments when a subsidiary
          is
          deconsolidated. The Statement also establishes reporting requirements that
          provide sufficient disclosures that clearly identify and distinguish between
          the
          interests of the parent and the interests of the non-controlling owners.
          SFAS
          160 is effective for fiscal years beginning after December 15, 2008. The
          Company
          has not determined the effect that the application of SFAS 160 will have
          on its
          consolidated financial statements.
 
 In
          December 2007, Statement of Financial Accounting Standards No. 141(R), *Business
          Combinations* ,
          was
          issued. SFAS No. 141R replaces SFAS No. 141, *Business
          Combinations.* SFAS
          141R
          retains the fundamental requirements in SFAS 141 that the acquisition method
          of
          accounting (which SFAS 141 called the *purchase
          method* )
          be used
          for all business combinations and for an acquirer to be identified for
          each
          business combination. SFAS 141R requires an acquirer to recognize the assets
          acquired, the liabilities assumed, and any noncontrolling interest in the
          acquiree at the acquisition date, measured at their fair values as of that
          date,
          with limited exceptions. This replaces SFAS 141’s cost-allocation process, which
          required the cost of an acquisition to be allocated to the individual assets
          acquired and liabilities assumed based on their estimated fair values.
          SFAS 141R
          also requires the acquirer in a business combination achieved in stages
          (sometimes referred to as a step acquisition) to recognize the identifiable
          assets and liabilities, as well as the noncontrolling interest in the acquiree,
          at the full amounts of their fair values (or other amounts determined in
          accordance with SFAS 141R). SFAS 141R applies prospectively to business
          combinations for which the acquisition date is on or after the beginning
          of the
          first annual reporting period beginning on or after December 15, 2008.
          An entity
          may not apply it before that date. The adoption of adopting SFAS No. 141R
          will
          have an impact on its accounting for business combination once adopted,
          but the
          effect is dependent upon acquisition at that time.
 
 2.
                **ACCOUNTS
                    RECEIVABLE, NET OF ALLOWANCES**
 
 Accounts
          receivable at December 31, 2007 and 2006 consisted of the
          following:
 
 2007
                
                2006Accounts
                    receivable
                
                $
                21,043,006
                
                $
                5,622,219Less:
                    allowance for doubtful accounts
                
                
                -
                
                
                -Accounts
                    receivable, net
                
                $
                21,043,006
                
                $
                5,622,219
 
 As
          of
          December 31, 2007, 2006 and 2005, the Company considered all accounts receivable
          collectible and has not recorded a provision for doubtful accounts.
 
 
 3.
                **INVENTORIES**
 
 Inventories
          at December 31, 2007 and 2006 consisted of the following:
  2007
                
                2006Raw
                    materials
                
                $
                178,480
                
                $
                111,321Less:
                    provision for obsolescence
                
                
                -
                
                
                -$
                178,480
                
                $
                111,321
  10
  For
          the
          years ended December 31, 2007, 2006 and 2005, no provision for obsolete
          inventories was recorded by the Company.
 
 4.
                **DEPOSITS
                    WITH SUPPLIERS**
 
 Deposits
          with suppliers of $15,843,545 represents both prepayments for raw materials
          and
          parts, as well as down payments for manufacturing equipment related to
          the
          Company’s expansion of plant, property and equipment.
  
 5.
                **OTHER
                    CURRENTS ASSETS AND PREPAID
                    EXPENSES**
 
 Other
          current assets and prepaid expenses at December 31, 2007 and 2006 consisted
          of
          the following:
 
 2007
                
                2006Other
                    receivables
                
                $
                177,612
                
                $
                19,799Advances
                    to staff
                
                
                243,541
                
                
                25,334Short-term
                    advance to a supplier
                
                
                205,083
                
                
                -Prepaid
                    expenses
                
                
                548,228
                
                
                126,639$
                1,174,464
                
                $
                171,772
 
 6.
                **PROPERTY
                    AND EQUIPMENT**
 
 The
          following is a summary of property and equipment at December 31:
 
 2007
                
                2006Buildings
                
                $
                3,612,413
                
                $
                3,290,591Plant
                    and machinery
                
                
                7,430,865
                
                
                6,898,832Motor
                    vehicles
                
                
                986,274
                
                
                606,877Furniture
                    and office equipment
                
                
                352,840
                
                
                254,269Construction
                    in progress
                
                
                6,307
                
                
                66,83712,388,699
                
                
                11,117,406Less:
                    accumulated depreciation
                
                
                1,388,118
                
                
                656,679Property
                    and equipment, net
                
                $
                11,000,581
                
                $
                10,460,727
 
 Depreciation
          expense for the years ended December 31, 2007, 2006 and 2005 was $658,937,
          $367,630 and $234,710 respectively.
  7.
                **INTANGIBLE
                    ASSETS**
 
 In
          2006,
          the Company acquired from a third party an exclusive license under patent
          rights
          for $268,628 for a de-oxidation paint formula and production techniques
          for a
          period of three years subject to further renewal. In April 2007, the Company
          re-negotiated with the third party to extend the license to fifteen years
          for an
          additional cost of $259,772.
 
 In
          May
          2007, the Company acquired from a third party a patent right for $136,772
          for a
          desulphurization technology for a period of ten years.
 
 The
          following is a summary of intangible assets at December 31:
 
 2007
                
                2006Patents
                
                $
                683,611
                
                $
                268,628Less:
                    accumulated amortization
                
                
                44,435
                
                
                -$
                639,176
                
                $
                268,628
 
 Amortization
          expense for the years ended December 31, 2007, 2006 and 2005 was $42,667,
          $0 and
          $0, respectively.
  11
  8.
                **LAND
                    USE RIGHTS**
 
 The
          following is a summary of land use rights at December 31:
 
 2007
                
                2006Cost
                
                $
                1,033,970
                
                $
                567,772Less:
                    accumulated amortization
                
                
                54,556
                
                
                39,688$
                979,414
                
                $
                528,084
  The
          land
          use rights are amortized over fifty years from the term of the respective
          leases. The amortization expense for the years ended December 31, 2007,
          2006 and
          2005 was $11,654, $11,122 and $10,821, respectively.
 
 9.
                **OTHER
                    PAYABLES AND ACCRUED LIABILITIES**
 
 Other
          payables and accrued liabilities at December 31, 2007 and 2006 consist
          of the
          following:
 
 2007
                
                2006Other
                    payables
                
                $
                536,707
                
                $
                279,273Deposits
                    from customers
                
                
                116,214
                
                
                4,973Short-term
                    advances from third parties
                
                
                -
                
                
                454,109Accrued
                    liabilities
                
                
                149,324
                
                
                147,319$
                802,245
                
                $
                885,674
  10.
                **LIQUIDATED
                    DAMAGES PAYABLE**
 
 2007
                
                2006Provision
                    for liquidated damage with regard to
                
                $
                500,000
                
                $
                -registration
                    rights agreementProvision
                    for payment of liquidated damage with regard to independent board
                    members
                
                
                500,000
                
                
                *-*$
                1,000,000
                
                $
                -
  Pursuant
          to the Securities Purchase Agreement entered into between the Company and
          a
          group of accredited investors (“Securities Purchase Agreement”) on September 27,
          2007, the Company was obligated to make efforts to file a registration
          statement
          with the SEC for the registration of 5,580,428 shares of Common Stock offered
          by
          selling stockholders to be declared effective by the SEC on or before March
          3,
          2008. After March 3, 2008 and for each 30-calender day period thereafter
          in
          which the registration statement fails to be declared effective, the Company
          shall pay liquidated damages to investors equal to 1% of the funds raised,
          or
          $244,803, subject to a cap of 10% of total funds raised, or total liquidated
          damages of $2,448,032.
 
 The
          Company accrued $500,000 as liquidated damages payable and recorded as
          a
          deduction from additional paid-in capital in accordance with the provisions
          of
          EITF 00-19-2. This amount accrued is based on the penalties due between
          March 4,
          2008 to May 3, 2008 on or before which the Company anticipates the registration
          statement will be declared effective.
 
 Pursuant
          to the Securities Purchase Agreement, the Company’s Board of Directors must
          consist of a minimum of 5 members, a majority of whom must be “independent
          directors” as defined in NASDAQ Marketplace Rule 4200(a)(15) not later than 120
          days after the date of the agreement. The Company was required to hold
          $1,000,000 in escrow (“Board Escrow Holdback”) and will only be released by the
          escrow agent on receiving requisite written notice from the investor
          representatives when this covenant is complied with. Failing to comply
          with this
          requirement, the Company shall pay liquidated damages to investors equal
          to 1%
          of the funds raised, or $244,803, subject to a cap of 10% of total funds
          raised,
          or total liquidating damages of $2,448,032.
 
 The
          Company accrued $500,000 as liquidated damages payable and recorded as
          a
          deduction from additional paid-in capital in accordance with the provisions
          of
          EITF 00-19-2. This amount accrued is based on the penalties due between
          February
          1, 2008 to April 8, 2008 on or before which the Company anticipates the
          Board of
          Directors will consist of a minimum of 5 members with a majority of which
          are
          independent directors.
  12
  11.
                **NOTES
                    PAYABLE**
 
 Balances
          at December 31, 2007 and 2006 consist of the following:
 
 2007
                
                2006Note
                    payable to a bank, interest rate of 6.732% per annum, collateralized
                    by
                    plant and machinery of the Company and guaranteed by a third
                    party, due
                    December 2007
                
                
                -
                
                
                537,256Note
                    payable to a bank, interest rate of 6.732% per annum, collateralized
                    by
                    plant and machinery of the Company and guaranteed by a third
                    party, due
                    November 2007
                
                
                -
                
                
                3,556,124Note
                    payable to a bank, interest rate of 7.128% per annum, collateralized
                    by
                    buildings of the Company and guaranteed by stockholders of the
                    Company and
                    a third party, due December 2007
                
                
                -
                
                
                127,918Note
                    payable to a bank, interest rate of 7.128% per annum, collateralized
                    by
                    buildings of the Company and guaranteed by stockholders of the
                    Company and
                    a third party, due December 2008
                
                
                -
                
                
                255,836Note
                    payable to a bank, interest rate of 7.128% per annum, collateralized
                    by
                    buildings of the Company and guaranteed by stockholders of the
                    Company and
                    a third party, due December 2009
                
                
                -
                
                
                639,592Note
                    payable to a bank, interest rate of 7.128% per annum, collateralized
                    by
                    buildings of the Company and guaranteed by stockholders of the
                    Company and
                    a third party, due December 2010
                
                
                -
                
                
                1,279,181Note
                    payable to a bank, interest rate of 7.128% per annum, collateralized
                    by
                    buildings of the Company and guaranteed by stockholders of the
                    Company and
                    a third party, due December 2011
                
                
                -
                
                
                1,279,181-
                
                
                
                
                
                7,675,088Less:
                    current maturities
                
                
                -
                
                
                4,221,298$
                -
                
                $
                3,453,790
 
 Interest
          expense paid in 2007, 2006 and 2005 was $531,334, $297,303 and $85,457,
          respectively.
 
 12.
                **INCOME
                    TAX**
 
 a.
                The
                    Company is subject to income taxes on an entity basis on income
                    arising in
                    or derived from the tax jurisdiction in which each entity is
                    domiciled.
 
 JMC
          was
          incorporated in the United States and has incurred net operating loss for
          income
          tax purpose for 2007, 2006 and 2005. JMC had loss carry forwards of
          approximately $86,200 for U.S. income tax purposes available for offset
          against
          future taxable U.S. income expiring in 2027. Management believes that the
          realization of the benefits from these losses appears uncertain due to
          the
          Company’s limited operating history income and continuing losses. Accordingly,
          a
          full deferred tax asset valuation allowance has been provided and no deferred
          tax asset benefit has been recorded. The valuation allowance as of December
          31,
          2007 was $86,200. The net change in the valuation allowance was an increase
          of
          $86,200.
  Innomind
          was incorporated in the BVI and under current laws of the BVI, income earned
          is
          not subject to income tax. Dalian Innomind and Dalian Rino were incorporated
          in
          the PRC and are subject to PRC income tax which is computed according to
          the
          relevant laws and regulations in the PRC. The applicable tax rate has been
          33%
          and no tax benefit is expected from the tax credits in the future. Dalian
          Innomind is a wholly owned foreign enterprise, is entitled to a two-year
          income
          tax exemption and a 50% income tax reduction for the following three years,
          no
          provision for income tax was made by Dalian Innomind.
  13
  Income
          tax expense for 2007, 2006 and 2005 are summarized as follows:
 
 2007
                
                2006
                
                2005Current
                
                $
                5,024,774
                
                $
                575,658
                
                $
                85,390Deferred
                
                
                -
                
                
                575,642
                
                
                -$
                5,024,774
                
                $
                1,151,300
                
                $
                85,390
 
 b.
                Deferred
                    income tax liabilities for 2006 reflect the effect of temporary
                    differences between amounts of assets, liabilities, and equity
                    for
                    financial reporting purposes and the bases of such assets, liabilities,
                    and equity as measured by tax laws.
 
 Deferred
          income tax liabilities mainly result from temporary differences for revenues
          earned but not yet taxable under the PRC tax regulations. All the deferred
          tax
          liabilities are classified as long-term liabilities as the Company will
          not be
          demanded for payment within the next twelve months.
 
 c.
                The
                    reconciliation of income taxes computed at the statutory income
                    tax rates
                    to total income taxes for the years ended December 31, 2007,
                    2006 and 2005
                    is as follows:
  2007
                
                2006
                
                2005JMCIncome
                    tax computed at the federal statutory rate
                
                
                34
                %
                
                34
                %
                
                34
                %State
                    income taxes, net of federal tax benefit
                
                
                5
                %
                
                5
                %
                
                5
                %Valuation
                    allowance
                
                
                -39
                %
                
                -39
                %
                
                -39
                %Dalian
                    InnomindChina
                    income taxes
                
                
                33
                %
                
                -
                
                
                -China
                    income taxes exemption
                
                
                -33
                %
                
                -
                
                
                --
                
                
                -
                
                
                -Dalian
                    RinoChina
                    income taxes
                
                
                33
                %
                
                33
                %
                
                33
                %
 
 13.
                **RELATED
                    PARTY TRANSACTIONS**
 
 The
          Company owed $106,963 and $451,921 to a stockholder as of December 31,
          2007 and
          2006 respectively for advances made on an unsecured basis, repayable on
          demand
          and interest free. Imputed interest is charged per annum on the amount
          due at
          7%, 6% and 6% for the years ended December 31, 2007, 2006 and 2005 respectively.
          Total imputed interest recorded as additional paid-in capital amounted
          to
          $33,019, $26,482 and $22,744 for the years ended December 31, 2007, 2006
          and
          2005, respectively.
  14
  14.
                **EARNINGS
                    PER SHARE**
 
 The
          following is information of net income per share at December 31,
          2007:
 
 2007
                
                2006
                
                2005Net
                    income for basic and diluted earnings per share
                
                $
                10,218,805
                
                $
                3,152,870
                
                $
                270,999Weighted
                    average shares used in basic computation
                
                
                19,611,510
                
                
                17,899,643
                
                
                17,899,643Effect
                    of dilutive securities:Warrants
                
                
                47,632
                
                
                -
                
                
                -Option
                
                
                35,339
                
                
                -
                
                
                -Weighted
                    average shares used in diluted computation
                
                
                19,694,481
                
                
                17,899,643
                
                
                17,899,643Earnings
                    per share:Basic
                
                
                0.52
                
                
                0.18
                
                
                0.02Diluted
                
                
                0.52
                
                
                0.18
                
                
                0.02
 
 382,500
          warrants granted on October 12, 2007 at an exercise price of $5.376 were
          included in the diluted earnings per share calculation due to their dilutive
          effect.
 
 250,000
          options granted on October 1, 2007 at an excise price from $5.38 was included
          in
          the diluted earnings per share calculation due to their dilutive
          effect.
 
 
 15.
                **STOCKHOLDERS’
                    EQUITY**
 
 **(A)**
                **Appropriated
                    retained earnings**
 
 The
          Company is required to make appropriations to the statutory surplus reserve
          based on the after-tax net income determined in accordance with the laws
          and
          regulations of the PRC. Prior to January 1, 2006 the appropriation to the
          statutory surplus reserve should be at least 10% of the after tax net income
          determined in accordance with the laws and regulations of the PRC until
          the
          reserve is equal to 50% of the entities’ registered capital. Appropriations to
          the statutory public welfare fund are at 5% to 10% of the after tax net
          income
          determined by the Board of Directors. Effective January 1, 2006, the Company
          is
          only required to contribute to one statutory reserve fund at 10 percent
          of net
          income after tax per annum, such contributions not to exceed 50 percent
          of the
          respective company’s registered capital.
 
 The
          statutory reserve funds are restricted for use to set off against prior
          period
          losses, expansion of production and operation or for the increase in the
          registered capital of the Company. These reserves are not transferable
          to the
          Company in the form of cash dividends, loans or advances. These reserves
          are
          therefore not available for distribution except in liquidation.
 
 During
          2007, 2006 and 2005, the Company appropriated $1,782,983, $315,313 and
          $11,243
          respectively to the reserve funds based on its net income in accordance
          with the
          laws and regulations of the PRC.
 
 **(B)**
                **Common
                    Stock and Warrants**
 
 (1)
                Issuance
                    of Common Stock in Private
                    Placement
 
 In
          accordance with the Securities Purchase Agreement, the Company received
          $24,480,319 (or $21,253,722 net proceeds after deducting the offering expenses)
          from a group of accredited investors (as defined under Rule 501(a) of Regulation
          D promulgated under the Securities Act) for an issue of 5,464,357 shares
          of
          restricted common stock at $4.48 by a private placement. The Company relied
          on
          an exemption from registration pursuant to Section 4(2) under the Securities
          Act
          of 1933 in connection with the issuance of these shares.
 
 In
          connection with the private placement, 250,000 shares of common stock were
          issued to a consultant for advisory services. This expense is recorded
          as
          additional paid-in capital in the accompanying financial statements. The
          Company
          relied on an exemption from registration pursuant to Section 4(2) under
          the
          Securities Act of 1933 in connection with the issuance of these
          shares.
 
 In
          connection with the private placement and pursuant to the Engagement Agreement
          Providing for Investment Banking Services, dated January 19, 2007 between
          the
          Company and the placement agent, the placement agent received the following
          compensation: (i) $80,000 cash as an engagement and documentation fee;
          (ii)
          $1,750,000 as a placement commission; (iii) 875,000 shares of Common Stock,
          and
          (iv) warrants to purchase 382,500 shares of Common Stock at an exercise
          price of
          $5.376 per share, exercisable within 6 years of the date of issue. The
          exercise
          price of the warrant is subject to adjustments under certain circumstances
          and
          the warrants permit cashless exercise by the holders.
  15
  This
          expense is recorded as additional paid-in capital in the accompanying financial
          statements. The Company relied on the exemption from registration provided
          by
          Section 4(2) of the Securities Act for the issuance of common stock and
          warrants
          to the placement agent.
 
 The
          warrants issued to the placement agent, qualify as permanent equity under
          EITF
          00-19, the value of which warrants has created offsetting debit and credit
          entries to additional paid-in capital.
 
 (2)
                Issuance
                    of Common Stock to former Chief Financial Officer of Dalian
                    Rino
 
 At
          the
          Closing of the Share Exchange Agreement and the private placement, the
          Company
          issued 20,000 shares of common stock to the former Chief Financial Officer
          of
          Dalian Rino, in full satisfaction of Dalain Rino’s obligations to the former
          Chief Financial Officer under a Compensation Agreement dated July 30, 2007.
          The
          shares were valued at the market price on the date of issuance, yielding
          an
          aggregate fair value of $49,000. This expense is recorded as stock compensation
          expenses in the accompanying financial statements. The Company relied on
          an
          exemption from registration pursuant to Section 4(2) under the Securities
          Act of
          1933 in connection with the issuance of these shares.
 
 16.
                **STOCK-BASED
                    COMPENSATION**
 
 (A)
                Stock-based
                    compensation-option
 
 On
          September 27, 2007, the Company granted to the current Chief Financial
          Officer
          and Secretary, a non-qualified stock option to purchase 250,000 shares
          of its
          Common Stock at an exercise price of $5.38 per share, vesting in 3 equal
          annual
          installments beginning on January 2, 2009. The options will be granted
          as soon
          as practical after January 2, 2009.
 
 The
          fair
          value of stock options granted was estimated at the date of grant using
          the
          Black-Scholes option-pricing model with the following assumptions:
 
 Expected
                
                Expected
                
                Dividend
                
                Risk
                    Free
                
                Grant
                    DateLife
                
                Volatility
                
                Yield
                
                Interest
                    Rate
                
                Fair
                    Value2
                    yrs
                
                
                50
                %
                
                0
                %
                
                4.05
                %
                $
                1.8338
 
 -
                Volatility:
                    One year historical volatility of our stock is 82.04%. Adjustment
                    is made
                    based on volatility of industry peers average which is 31%, to
                    arrive at
                    50% as expected volatility.
 
 -
                Dividend
                    Yield: The expected dividend yield is zero. The Company has not
                    paid a
                    dividend and does not anticipate paying dividends in the foreseeable
                    future.
 
 -
                Risk
                    Free Rate: Risk-free interest rate of 4.05% was used. The risk-free
                    interest rate was based on U.S. Treasury yields with a remaining
                    term that
                    corresponded to the expected term of the option calculated on
                    the granted
                    date.
 
 -
                Expected
                    Life:  Because the Company has no historical share option exercise
                    experience to estimate future exercise patterns, the expected
                    life was
                    determined using the simplified method as these awards meet the
                    definition
                    of "plain-vanilla" options under the rules prescribed by Staff
                    Accounting
                    Bulletin No. 107.
 
 Stock
          compensation expense is recognized based on awards expected to vest. There
          was
          no estimated forfeiture as the Company has a short history of issuing options.
          SFAS No. 123R requires forfeiture to be estimated at the time of grant and
          revised in subsequent periods, if necessary, if actual forfeitures differ
          from
          those estimates.
 
 The
          250,000 options issued during the year of 2007 had fair value of approximately
          $458 , 448.
          The
          Company recognized $38,204 of compensation expenses in general and
          administrative expenses for the year ended December 31, 2007.
 
 As
          of
          December 31, 2007, the total compensation cost related to stock options
          not yet
          recognized was $420,244 and will be recognized over the life of
          3 years.
  16
  The
          following is a summary of the stock options activity:
 
 Number
                    of
                  Options
                  Outstanding
                
                Exercise
                  Price
                
                Aggregate
                  Intrinsic
                    ValueBalance,
                    December 31, 2005
                
                
                -
                
                
                -
                
                
                -GrantedForfeitedExercisedBalance,
                    December 31, 2006
                
                
                -
                
                
                -
                
                
                -Granted
                
                
                250,000
                
                $
                5.38
                
                
                -Forfeited
                
                
                -
                
                
                -
                
                
                -Exercised
                
                
                -
                
                
                -
                
                
                -Balance,
                    December 31, 2007
                
                
                250,000
                
                $
                5.38
                
                $
                1,717,500
 
 The
          following is a summary of the status of options outstanding at December
          31,
          2007:
 
 Outstanding Option
                
                Exercisable OptionsExercise Price
                
                Number
                
                Remaining
                  Contractual Life
                
                Average
                  Exercise
                  Price
                
                Number
                
                Weighted
                  Average
                  Exercise Price$
                5.38
                
                
                250,000
                
                
                2.75
                    years
                
                
                5.38
                
                
                0
 
 (B)
                Escrowed
                    share arrangement
 
 In
          accordance with the Securities Purchase Agreement, the two founders of
          Dalian
          Rino who collectively control 71.6% of the Company’s outstanding common stock,
          delivered to an escrow agent a total of 5,580,000 of their beneficially
          owned
          shares of common stock in order to secure the Company’s obligations under the
          Securities Purchase Agreement to deliver additional common stock to the
          private
          placement investors in the event the Company fails to achieve certain pre-tax
          net income targets for fiscal years 2007 and 2008 (“Make Good Escrow Shares”).
          Those targets are $16,000,000 in after-tax net income for the fiscal year
          ended
          December 31, 2007, and $28,000,000 in after-tax net income for the fiscal
          year
          ending December 31, 2008. In the event the Company does not achieve the
          2007 net
          income target, the Company obligated to transfer 1,674,000 shares of their
          common stock to the private placement investors on a pro-rata basis, and
          if the
          Company fails to achieve the 2008 net income target, we must transfer to
          the
          investors a further 3,906,000 shares to the investors. Of the 17,899,643
          shares
          of common stock issued in the Share Exchange, 5,580,000 have been deposited
          by
          the founders of Dalian Rino into escrow to secure these obligations. The
          two
          founders are the Chairman of the Board and Chief Executive Officer of the
          Company.
 
 Under
          U.S. generally accepted accounting principles, the release of any of such
          escrow
          shares to any of our employees based on our fulfillment of stated performance
          thresholds constitutes a compensatory plan to such employees, which requires
          us
          to record a corresponding compensation expense in our financial statements.
          The
          key provisions of SFAS-123R require that share-based compensation awards
          to
          employees be measured at the grant-date fair value and the cost recognized
          over
          the period during which the employee is required to provide service in
          exchange
          for the award.
 
 As
          the
          performance threshold was satisfied for fiscal 2007, 1,674,000 escrowed
          shares
          will be released to the employee stockholders in 2008, the remaining 3,906,000
          shares will be released in fiscal 2009 if the performance threshold for
          fiscal
          2008 is also satisfied.
 
 The
          grant
          date of the escrowed share agreement is October 5, 2007 and the grant date
          fair
          value is $4.48 per share. Since the 2007 net income target was met, the
          Company
          recognized $7,499,520 of compensation expense in selling, general and
          administrative expenses for the year ended December 31, 2007. The potential
          compensation expense in 2008 is $17,498,880.
 
 
 17.
                **COMMITMENTS
                    AND CONTINGENCIES**
 
 (A)
                Employee
                    benefits
 
 The
          full
          time employees of the Company are entitled to employee benefits including
          medical care, welfare subsidies, unemployment insurance and pension benefits
          through a Chinese government mandated multi-employer defined contribution
          plan.
          The Company is required to accrue for those benefits based on certain
          percentages of the employees’ salaries and make contributions to the plans out
          of the amounts accrued for medical and pension benefits. The total provisions
          and contributions made for such employee benefits was $150, $9,746 and
          $14,043
          for the years ended December 31, 2007, 2006 and 2005, respectively. The
          Chinese
          government is responsible for the medical benefits and the pension liability
          to
          be paid to these employees.
  17
  (B)
                Capital
                    commitments
 
 As
          of
          December 31, 2007 and 2006, the Company had firm purchase commitments for
          capital projects in progress of $750,844 and $702,494
          respectively.
 
 18.
                **CONCENTRATIONS
                    AND RISKS**
 
 During
          2007 and 2006, 100% of the Company’s assets were located in China and 100% of
          the Company’s revenues were derived from companies located in China.
 
 The
          Company relied on a small number of customers in China. Five major customers
          accounted for 83% of the sales for the year ended December 31, 2007 and
          four
          customers accounted for 95% of the Company’s total sales for the year ended
          December 31, 2006. At December 31, 2007 and 2006, accounts receivable from
          those
          customers totaled $13,415,689 and $3,500,807 respectively.
 
 19.
                **ESCROW
                    ACCOUNTS**
 
 In
          accordance with the Securities Purchase Agreement, the founders of Dalian
          Rino
          who collectively control 71.6% of the Company’s outstanding common stock,
          delivered to an escrow agent a total of 5,580,000 of their beneficially owned
          shares of common stock in order to secure the Company’s obligations under the
          Securities Purchase Agreement to deliver additional common stock to the
          private
          placement investors in the event the Company fails to achieve certain pre-tax
          net income targets for fiscal years 2007 and 2008 (“Make Good Escrow Shares”).
          Those targets are $16,000,000 in after-tax net income for the fiscal year
          ended
          December 31, 2007, and $28,000,000 in after-tax net income for the fiscal
          year
          ending December 31, 2008. In the event the Company does not achieve the
          2007 net
          income target, the Company obligated to transfer 1,674,000 shares of their
          common stock to the private placement investors on a pro-rata basis, and
          if the
          Company fails to achieve the 2008 net income target, we must transfer to
          the
          investors a further 3,906,000 shares to the investors. Of the 17,899,643
          shares
          of common stock issued in the Share Exchange, 5,580,000 have been deposited
          by
          the founders of Dalian Rino into escrow to secure these
          obligations.
 
 No
          later
          than February 2, 2008, the Company’s Board of Directors were to consist of a
          minimum of 5 members, a majority of whom must be “independent directors” as
          defined in NASDAQ Marketplace Rule 4200(a)(15). This covenant has not yet
          been
          complied with. Until this covenant is complied with, we are required to
          hold
          $1,000,000 in escrow (“Board Escrow Holdback”). If for any reason or no reason
          the escrow agent does not receive requisite written notice from the investor
          representatives as to releasing this sum from escrow within 65 days after
          the
          private placement closing, we are required to pay liquidated damages of
          $244,803
          per month (or partial month) until the default is cured. No liquidated
          damages
          have yet been paid.
 
 The
          cash
          held in escrow pursuant to the Board Escrow Holdback as described above
          will be
          accounted for as restricted cash and will not be shown as cash or cash
          equivalents on the our balance sheet until such funds have been released
          from
          escrow pursuant to the terms of the Securities Purchase Agreement. The
          shares
          are held in escrow as Make Good Escrow Shares.
  18