**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM 10-Q**

| **S** | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES                EXCHANGE ACT OF 1934** |
|-------|-------------------------------------------------------------------------------------------------------------------------------------|

|  ̈ | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES                EXCHANGE ACT OF 1934** |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

**Commission      File Number:**

**001-33758**

**Fuqi      International, Inc.**

*(Exact      name of registrant as specified in its charter)*

| **Delaware**                                                                                    |   | **20-1579407**                                        |
|-------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|
| *(State                or other jurisdiction of incorporation**or                organization)* |   | *(I.R.S.                Employer Identification No.)* |

| **5/F.,                Block 1, Shi Hua Industrial Zone,****Cui                Zhu Road North, Shenzhen, 518019,****People’s                Republic of China** |   | **N/A**                     |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|
| *(Address                of principal executive offices)*                                                                                                             |   | *(Zip                Code)* |

**86      (755) 2580-1888**

*(Registrant’s      telephone number, including area code)*

| Large                accelerated filer  o | Accelerated                filer   ̈ | Non-accelerated                filer  x(Do                not check if a smaller reporting company) | Smaller                reporting company o |
|-----------------------------------------------------|----------------------------------------------------|---------------------------------------------------------------------------------------------------------------|--------------------------------------------|

----

**FUQI      INTERNATIONAL, INC.**

**FORM      10-Q QUARTERLY REPORT**

**TABLE      OF CONTENTS**
 

|                          |                                                                                                                                                                             | Page     |
|-------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| PART I                :  | FINANCIAL                INFORMATION                                                                                                                                             |  1  |
|                          | ITEM                1 — FINANCIAL STATEMENTS                                                                                                                               |  1  |
|                          | Condensed                Consolidated Balance Sheets as of March 31, 2008 (unaudited) and                December 31, 2007                                                  |  1  |
|                          | Condensed                Consolidated Statements of Income and Comprehensive Income for the                Three                Months Ended March 31, 2008 and 2007 (unaudited) |  2  |
|                          | Condensed                Consolidated Statements of Cash Flows for the Three Months                Ended March 31, 2008 and 2007 (unaudited)                                |  3  |
|                          | Notes                To Condensed Consolidated Financial Statements (unaudited)                                                                                                  |  4  |
|                          | ITEM                2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND                RESULTS OF OPERATION                                          |  11 |
|                          | ITEM                3 — QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET                RISK                                                                           |  16 |
|                          | ITEM                4 — CONTROLS AND PROCEDURES                                                                                                                            |  17 |
|                          |                                                                                                                                                                             |     |
| PART II                : | OTHER                INFORMATION                                                                                                                                                 |  19 |
|                          |                                                                                                                                                                             |     |
|                          | ITEM                1 — LEGAL PROCEEDINGS                                                                                                                                  |  19 |
|                          | ITEM                1A — RISK FACTORS                                                                                                                                      |  19 |
|                          | ITEM                2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF                PROCEEDS                                                                         |  19 |
|                          | ITEM                3 — DEFAULTS UPON SENIOR SECURITIES                                                                                                                    |  19 |
|                          | ITEM                4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                |  19 |
|                          | ITEM                5 — OTHER INFORMATION                                                                                                                                  |  19 |
|                          | ITEM                6 — EXHIBITS                                                                                                                                           |  19 |
|                          |                                                                                                                                                                             |     |
| SIGNATURES                    |  20                                                                                                                                                                         |

----

** **
**PART      I - FINANCIAL INFORMATION**

**ITEM      1 - FINANCIAL STATEMENTS**

**Fuqi      International, Inc.**

**Condensed      Consolidated Balance Sheets**
** **
** **
** **
** **

|                                                                                                                                                       |   | **March                31,** |                                | **December                31,** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------------------------------|---------------------------------|--------|
|                                                                                                                                                       |   | **2008**                     |                                | **2007**                        |   |
|                                                                                                                                                       |   | **(Unaudited)**              |                                |                            |   |
| **ASSETS**                                                                                                                                                 |   |                         |                                |                            |   |   |   |
| **Current                assets:**                                                                                                                         |   |                         |                                |                            |   |   |   |
| Cash                                                                                                                                                       |   | $                            | 28,856,716                          |                            | $      | 63,293,653 |   |
| Restricted                cash                                                                                                                             |   |                         | -                                   |                            |   | 410,700 |   |
| Accounts                receivable, net of allowance for doubtful accounts of $729,000 and                $470,000 for 2008 and 2007                       |   |                         |                  29,469,886  |                            |   |                  23,864,141 |   |
| Refundable                value added taxes                                                                                                                |   |                         | 7,694,254                           |                            |   | 2,094,946 |   |
| Inventories                                                                                                                                                |   |                         |                  64,150,655  |                            |   |                  29,639,236 |   |
| Prepaid                expenses and other current assets                                                                                                   |   |                         | 1,563,868                           |                            |   | 1,700,432 |   |
| Deferred                taxes                                                                                                                              |   |                         | 1,893,774                           |                            |   | 79,402 |   |
| Total                current assets                                                                                                                        |   |                         |                  133,629,153 |                            |   |                  121,082,510 |   |
|                                                                                                                                                       |   |                         |                                |                            |   |   |   |
| **Property,                equipment, and improvements, net**                                                                                              |   |                         |                  1,779,011   |                            |   |                  1,495,861 |   |
| **Deposits**                                                                                                                                               |   |                         | 101,681                             |                            |   | 97,706 |   |
| **Other                assets**                                                                                                                            |   |                         |                  38,941      |                            |   |                  38,513 |   |
|                                                                                                                                                       |   |                         |                                |                            |   |   |   |
|                                                                                                                                                       |   | $                            | 135,548,786                         |                            | $      | 122,714,590 |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                    |   |                         |                              |                            |   |   |   |
| **Current                liabilities:**                                                                                                                    |   |                         |                                |                            |   |   |   |
| Notes                payable                                                                                                                               |   | $                            | 14,247,044                          |                            | $      | 15,743,504 |   |
| Line                of Credit                                                                                                                              |   |                         | 1,424,704                           |                            |   | 1,369,000 |   |
| Accounts                payable and accrued liabilities                                                                                                    |   |                         |                  1,217,277   |                            |   |                  662,662 |   |
| Accrued                business tax                                                                                                                        |   |                         | 176,391                             |                            |   | 498,792 |   |
| Customer                deposits                                                                                                                           |   |                         |                  7,678,672   |                            |   |                  5,278,534 |   |
| Income                tax payable                                                                                                                          |   |                         | 3,034,686                           |                            |   | 1,902,443 |   |
| Total                current liabilities                                                                                                                   |   |                         | 27,778,774                          |                            |   | 25,454,935 |   |
|                                                                                                                               |   |                         |                              |                            |   |   |   |
| **STOCKHOLDERS'                EQUITY**                                                                                                                    |   |                         |                                |                            |   |   |   |
| Preferred                stock, $0.001 par value, 5,000,000 shares authorized, none issued                and                outstanding                   |   |                         |                  -           |                            |   |                  - |   |
| Common                stock, $0.001 par value, 100,000,000 shares authorized and 20,924,843                shares issued and outstanding for 2008 and 2007 |   |                         | 20,925                              |                            |   | 20,925 |   |
| Additional                paid in capital                                                                                                                  |   |                         | 77,597,906                          |                            |   | 77,449,355 |   |
| Accumulated                foreign currency translation adjustments                                                                                        |   |                         | 6,951,768                           |                            |   | 2,985,035 |   |
| Retained                earnings                                                                                                                           |   |                         |                  23,199,413  |                            |   |                  16,804,340 |   |
|                                                                                                                                                       |   |                         |                                |                            |   |   |   |
| Total                stockholders' equity                                                                                                                  |   |                         | 107,770,012                         |                            |   | 97,259,655 |   |
|                                                                                                                                                       |   |                         |                                |                            |   |   |   |
|                                                                                                                               |   | $                            | 135,548,786                         |                            | $      | 122,714,590 |   |

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

----

**Fuqi      International, Inc.**

**Condensed      Consolidated Statements of Income and Comprehensive Income      (Unaudited)**

|                                                                                                                   |   | **Three                Months Ended** |                               |
|------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|------------------------------------|
|                                                                                                                   |   | **March                31,**          |                               |
|                                                                                                                   |   | **2008**                              |                               | **2007** |   |
|                                                                                                                   |   |                                  |                               |   |   |
| **Net                sales**                                                                                           |   | $                                     | 77,566,359                         |   | $ | 27,960,269 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Cost                of sales**                                                                                       |   |                                  |                  68,754,984 |   |   |                  24,796,149 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Gross                profit**                                                                                        |   |                                  |                  8,811,375  |   |   |                  3,164,120 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Operating                expenses:**                                                                                 |   |                                  |                             |   |   |   |   |
| Selling                and marketing                                                                                   |   |                                  | 397,396                            |   |   | 193,757 |   |
| General                and administrative                                                                              |   |                                  | 1,509,177                          |   |   |                  421,512 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| Total                operating expenses                                                                                |   |                                  | 1,906,573                          |   |   |                  615,269 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Income                from operations**                                                                              |   |                                  |                  6,904,802  |   |   |                  2,548,851 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Other                income (expenses):**                                                                            |   |                                  |                             |   |   |   |   |
| Interest                expense                                                                                        |   |                                  | (363,220                           | ) |   | (247,167 | ) |
| Interest                income                                                                                         |   |                                  | 8,959                              |   |   |                  - |   |
| Change                of fair value of inventory loan payable                                                          |   |                                  | -                                  |   |   | (41,161 | ) |
| Gain                from derivative instrument                                                                         |   |                                  | 840,522                            |   |   |                  - |   |
| Miscellaneous                                                                                                          |   |                                  | 126,782                            |   |   | - |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| Total                other income (expenses)                                                                           |   |                                  | 613,043                            |   |   |  (288,328 | ) |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Income                before provision for income taxes**                                                            |   |                                  |                  7,517,845  |   |   |                  2,260,523 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Provision                for income taxes**                                                                          |   |                                  |                  1,122,772  |   |   |                  377,319 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Net                income**                                                                                          |   |                                  |                  6,395,073  |   |   |                  1,883,204 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Other                comprehensive income**                -                foreign currency translation adjustments |   |                                  | 3,966,733                   |   |   | 110,060 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Comprehensive                income**                                                                                |   | $                                     | 10,361,806                         |   | $ | 1,993,264 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Earnings                per share - basic**                                                                          |   | $                                     | 0.31                               |   | $ | 0.15 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Earnings                per share - diluted**                                                                        |   | $                                     | 0.31                               |   | $ | 0.12 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Weighted                average number of common shares - basic**                                                    |   |                                  |                  20,924,843 |   |   |                  12,257,624 |   |
|                                                                                                                   |   |                                  |                               |   |   |   |   |
| **Weighted                average number of common shares- diluted**                                                   |   |                                  | 20,924,843                  |   |   | 15,729,008 |   |

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

----

**Fuqi      International, Inc.**    

**Condensed      Consolidated Statements of Cash Flows (Unaudited)**

**Increase      (Decrease) in Cash**

|                                                                                                                    |   | **Three Months Ended March 31,** |                              |
|-------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|-----------------------------------|
|                                                                                                                    |   | **2008**                                             |                              | **2007** |   |
| **Cash                flows provided by operating activities:**                                                         |   |                                                 |                              |   |   |   |   |
| Net                income                                                                                               |   | $                                                    | 6,395,073                         |   | $ | 1,883,204 |   |
| **Adjustments                to reconcile net income to net cash provided by operating                activities:**     |   |                                                 |                              |   |   |   |   |
| Depreciation                and amortization                                                                            |   |                                                 |                  104,232   |   |   |                  79,417 |   |
| Change                of fair value of inventory loan payable                                                           |   |                                                 | -                                 |   |   | 41,161 |   |
| Bad                debt                                                                                                 |   |                                                 |                  237,928   |   |   |                  39,995 |   |
| Stock-based                compensation expense                                                                         |   |                                                 | 148,551                           |   |   | - |   |
|                                                                                                                    |   |                                                 |                              |   |   |   |   |
| **Changes                in operating assets and liabilities:**                                                         |   |                                                 |                            |   |   |   |   |
| Accounts                receivable                                                                                      |   |                                                 | (4,817,841                        | ) |   | 49,256 |   |
| Refundable                value added taxes                                                                             |   |                                                 |  (5,448,855                | ) |   |  (1,248,343 | ) |
| Inventories                                                                                                             |   |                                                 | (32,911,543                       | ) |   | (8,396,043 | ) |
| Prepaid                expenses and other current assets                                                                |   |                                                 | 194,923                           |   |   | 76,057 |   |
| Deposits                related to borrowings on notes payable                                                          |   |                                                 |                  -         |   |   |                  642,276 |   |
| Deferred                taxes                                                                                           |   |                                                 | (1,789,723                        | ) |   | (12,173 | ) |
| Other                assets                                                                                             |   |                                                 |                  1,126     |   |   |                  1,031 |   |
| Accounts                payable, accrued expenses, accrued business tax, and accrued estimated                penalties |   |                                                 | (285,464                          | ) |   | 221,495 |   |
| Customer                deposits                                                                                        |   |                                                 |                  2,158,525 |   |   |                  1,606,579 |   |
| Inventory                loan payable                                                                                   |   |                                                 |                  -         |   |   |                  662,446 |   |
| Income                tax payable                                                                                       |   |                                                 | 1,043,382                         |   |   | 344,426 |   |
| Net                cash used for operating activities                                                                   |   |                                                 | (34,969,686                       | ) |   | (4,009,216 | ) |
|                                                                                                                    |   |                                                 |                              |   |   |   |   |
| **Cash                flows provided by (used for) investing                activities:**                               |   |                                                 |                            |   |   |   |   |
| Purchase                of property, equipment and improvements                                                         |   |                                                 | (81,722                           | ) |   | (7,638 | ) |
| Decrease                (Increase) in restricted cash                                                                   |   |                                                 |                  422,357   |   |   |  (387,047 | ) |
| Net                cash provided by (used for) investing activities                                                     |   |                                                 | 340,635                           |   |   | (394,685 | ) |
|                                                                                                                    |   |                                                 |                              |   |   |   |   |
| **Cash                flows provided by (used for) financing                activities:**                               |   |                                                 |                              |   |   |   |   |
| (Repayments                to) Proceeds from short-term borrowing                                                       |   |                                                 | (2,111,784                        | ) |   | 1,935,234 |   |
| Proceeds                from loans borrowed from stockholder                                                            |   |                                                 | -                                 |   |   | 202,272 |   |
| Repayments                to loans payable to stockholder                                                               |   |                                                 |                  -         |   |   |  (508,249 | ) |
| Net                cash (used for) provided by financing activities                                                     |   |                                                 | (2,111,784                        | ) |   | 1,629,257 |   |
|                                                                                            |   |                                                 |                            |   |   |   |   |
| **Effect                of exchange rate changes on cash**                                                              |   |                                                 | 2,303,898                         |   |   | 122,789 |   |
|                                                                                            |   |                                                 |                            |   |   |   |   |
| **Net                decrease in cash**                                                                                 |   |                                                 | (34,436,937                       | ) |   | (2,651,855 | ) |
|                                                                                            |   |                                                 |                            |   |   |   |   |
| **Cash,**beginning                of the period                                                                         |   |                                                 | 63,293,653                        |   |   | 13,354,981 |   |
|                                                                                            |   |                                                 |                            |   |   |   |   |
| **Cash,**end                of the period                                                                               |   | $                                                    | 28,856,716                        |   | $ | 10,703,126 |   |
|                                                                                            |   |                                                 |                            |   |   |   |   |
| **Supplemental                disclosure of cash flow information:**                                                    |   |                                                 |                              |   |   |   |   |
|                                                                                            |   |                                                 |                            |   |   |   |   |
| Interest                paid                                                                                            |   | $                                                    | 296,120                           |   | $ | 231,172 |   |
|                                                                                                        |   |                                                 |                            |   |   |   |   |
| Income                taxes paid                                                                                        |   | $                                                    | 1,869,312                         |   | $ | 45,067 |   |
|                                                                                            |   |                                                 |                            |   |   |   |   |
| **Non-cash                disclosure:**                                                                                 |   |                                                 |                              |   |   |   |   |
|                                                                                                                    |   |                                                 |                              |   |   |   |   |
| Non                monetary exchanges related to certain retail sales                                                   |   | $                                                    | 231,472                           |   | $ | - |   |

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

----

**FUQI      INTERNATIONAL, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

|   | **(1)** | **Organization,                Nature of Business and Basis of                Presentation:** |
|--------|---------|-----------------------------------------------------------------------------------------------|

**Consolidation      Policy**

----

**FUQI      INTERNATIONAL, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) –Continued**

|  | **(1)** | **Organization,                Nature of Business and Basis of Presentation                (continued):** |
|--|---------|-----------------------------------------------------------------------------------------------------------|

**Basic      and Diluted Earnings Per Share**

|                                            |   | **As                of March 31,** |                               |
|-------------------------------------------------|--------|------------------------------------|------------------------------------|
| **  **                                |   | **2008**                           |                               | **2007** |   |
| **  **                                |   |                               |                               |   |   |
| Basic                weighted average shares    |   |                               | 20,924,843                  |   |   | 12,257,624 |   |
| Effect                of dilutive securities    |   |                               | -                           |   |   | 3,471,384 |   |
| Dilutive                potential common shares |   |                               | 20,924,843                  |   |   | 15,729,008 |   |

**Stock-based      Compensation**

**Non-monetary      (Barter) Exchanges**

**Recent      Accounting Pronouncements**

*Disclosures      about Derivative Instruments and Hedging Activities, *

----

**FUQI      INTERNATIONAL, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) –Continued**

|   | **(2)** | **Inventories:** |
|--------|---------|------------------|

|                            |   | **March                31,** |                               | **December                31,** |   |
|---------------------------------|--------|------------------------------|------------------------------------|---------------------------------|--------|
|                            |   | **2008**                     |                               | **2007**                        |   |
|                            |   |                         |                               |                            |   |
| Raw                Materials    |   | $                            | 38,295,781                         |                            | $      | 61,570 |   |
| Work                in progress |   |                         | 6,530,672                          |                            |   | 12,588,152 |   |
| Finished                goods   |   |                         |                  19,324,202 |                            |   |                  16,989,514 |   |
|                          |   | $                       | 64,150,655                         |                            | $      | 29,639,236 |   |

|   | **(3)** | **Property,                Equipment and                Improvements:** |
|--------|---------|-------------------------------------------------------------------------|

|                                                          |   | **March                31,** |                              | **December                31,** |   |
|---------------------------------------------------------------|--------|------------------------------|-----------------------------------|---------------------------------|--------|
|                                                          |   | **2008**                     |                              | **2007**                        |   |
|                                                          |   |                         |                              |                            |   |
| Production                equipment                           |   | $                            | 1,174,649                         |                            | $      | 1,108,045 |   |
| Computers                                                     |   |                         | 63,325                            |                            |   | 52,697 |   |
| Office                equipment and furniture                 |   |                         |                  119,058   |                            |   |                  114,403 |   |
| Automobiles                                                   |   |                         | 506,336                           |                            |   | 486,539 |   |
| Leasehold                improvement                          |   |                         |                  479,052   |                            |   |                  448,000 |   |
| Building                                                      |   |                         | 606,604                           |                            |   | 582,886 |   |
| Construction-in-progress                                      |   |                         | 284,940                           |                            |   | - |   |
|                                                          |   |                         |                  3,233,964 |                            |   |                  2,792,570 |   |
| Less                accumulated depreciation and amortization |   |                         | 1,454,953                         |                            |   | 1,296,709 |   |
|                                                          |   | $                            | 1,779,011                         |                            | $      | 1,495,861 |   |

----

**FUQI      INTERNATIONAL, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) –Continued**

|   | **(4)** | **Retail                Operating Agreements:** |
|--------|---------|------------------------------------------------------|

|   | **(5)** | **Notes                Payable: ** |
|--------|---------|-----------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                               |   | **March                31,** |      | **December                31,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|---------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                               |   | **2008**                     |      | **2007**                        |   |
| A                note payable with interest at a rate of 6.732%, secured by the Company’s                inventories, certain real estate properties owned by affiliated companies,                guaranteed by affiliated companies and personally guaranteed by the                Company’s controlling stockholder, matures in January 2008. The loan was                repaid.  |   | $                            | -         |                            | $      | 1,848,150 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |                         |           |                            |   |  |   |
| A                note payable with interest at a rate of 6.732%, guaranteed by affiliated                companies, matures in January 2008. The loan was repaid.                                                                                                                                                                                                                                  |   |                         | -         |                            |   | 2,053,501 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |                         |           |                            |   |  |   |
| A                note payable with interest at a rate of 7.227%, secured by the Company’s                inventories, certain real estate properties owned by affiliated companies,                guaranteed by affiliated companies and personally guaranteed by the                Company’s controlling stockholder, matures in February 2008. The loan was                repaid. |   |                         | -         |                            |   | 1,026,750 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |                         |           |                            |   |  |   |
| A                note payable with interest at a rate of 7.227%, secured by the Company’s                inventories, certain real estate properties owned by affiliated companies,                guaranteed by affiliated companies and personally guaranteed by the                Company’s controlling stockholder, matures in February 2008. The loan was                repaid. |   |                         | -         |                            |   | 889,850 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |                         |           |                            |   |  |   |
| A                note payable with interest at a rate of 6.030%, secured by the Company’s                inventories, guaranteed by affiliated companies and personally guaranteed                by the Company’s controlling stockholder, matures in January 2008. The                loan was repaid.                                                                               |   |                         | -         |                            |   | 1,369,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |                         |           |                            |   |  |   |
| A                note payable with interest at a rate of 6.030%, secured by the Company’s                inventories, certain real estate properties owned by affiliated companies,                guaranteed by affiliated companies and personally guaranteed by the                Company’s controlling stockholder, matures in February 2008. The loan was                repaid. |   |                         | -         |                            |   | 2,121,951 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |                         |           |                            |   |  |   |
| A                note payable with interest at a rate of 8.019%, secured by the Company’s                inventories, guaranteed by affiliated companies and personally guaranteed                by the Company’s controlling stockholder, matures in October                2008.                                                                                                    |   |                         | 1,424,704 |                            |   | 1,369,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |                         |           |                            |   |  |   |
| A                note payable with interest at a rate of 8.019%, secured by the Company’s                inventories, certain real estate properties owned by affiliated companies,                guaranteed by affiliated companies and personally guaranteed by the                Company’s controlling stockholder, matures in May 2008.                                          |   |                         | 997,293   |                            |   | 958,300 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |   |                         |           |                            |   |  |   |
| A                note payable with interest at a rate of 8.019%, secured by the Company’s                inventories, guaranteed by affiliated companies and personally guaranteed                by the Company’s controlling stockholder, matures in June                2008.                                                                                                       |   |                         | 1,424,704 |                            |   | 1,369,000 |   |

----

**FUQI      INTERNATIONAL, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) –Continued**

|  | **(5)** | **Notes                Payable (continued):** |
|--|---------|-----------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                          |   |    |                                                   |   |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------------------------------------------------------|--------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                          |   |    |  **March                31,                2008** |   |    | **December                31,                2007** |   |
| A                note payable with interest at a rate of 7.29%, secured by the Company’s                inventories, guaranteed by affiliated companies and personally guaranteed                by the Company’s controlling stockholder, matures in July                2008.                                                                                                   |   | $  | 2,849,409                                              |   | $  | 2,738,002 |   |
|                                                                                                                                                                                                                                                                                                                                                                                          |   |    |                                                        |   |    |  |   |
| A                note payable with interest at a rate of 7.47%, secured by the Company’s                inventories, guaranteed by affiliated companies and personally guaranteed                by the Company’s controlling stockholder, matures in August                2008.                                                                                                 |   |    | 1,424,704                                              |   |    | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                          |   |    |                                                        |   |    |  |   |
| A                note payable with interest at a rate of 7.47%, secured by the Company’s                inventories, certain real estates properties owned by affiliated                companies, guaranteed by affiliated companies and personally guaranteed                by                the Company’s controlling stockholder, matures in August                2008.    |   |    | 1,994,586                                              |   |    | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                          |   |    |                                                        |   |    |  |   |
| A                note payable with interest at a rate of 7.47%, secured by the Company’s                inventories, certain real estates properties owned by affiliated                companies, guaranteed by affiliated companies and personally guaranteed                by                the Company’s controlling stockholder, matures in August                2008.    |   |    | 1,923,351                                              |   |    | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                          |   |    |                                                        |   |    |  |   |
| A                note payable with interest at a rate of 7.47%, secured by the Company’s                inventories, certain real estates properties owned by affiliated                companies, guaranteed by affiliated companies and personally guaranteed                by                the Company’s controlling stockholder, matures in September                2008. |   |    | 2,208,293                                              |   |    | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                          |   |    |                                                   |   |    |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                          |   | $       | 14,247,044                                             |   | $       | 15,743,504 |   |

|   | **(6)** | **Gold                Future Contracts:** |
|--------|---------|-------------------------------------------|

----

**FUQI      INTERNATIONAL, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) –Continued**

|   | **(7)** | **Fair                Value Measurement:** |
|--------|---------|--------------------------------------------|

*Fair      Value Measurements*

|  | Level 1: | Quoted                prices are available in active markets for identical assets or liabilities                as of the reporting                date.   |
|--|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | Level2: | Pricing                inputs are other than quoted prices in active markets included in                Level 1,                which are either directly or indirectly observable as of the reporting                date.   |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | Level3: | Pricing                inputs include significant inputs that are generally less observable                from                objective sources.  These inputs may be used with internally                developed methodologies that result in management’s best estimate of fair                value.   |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |   | **Fair Value Measurements Using** |                             |
|-------------------------------------------------|--------|--------------------------------------------------|----------------------------------|
|                                            |   | **Level 1**                                 |                             | **Level 2** |   | **Level 3** |   |
|                                            |   |                                             |                             |   |   |   |   |
| Assets                                   |   |                                             |                    |   |   |                    |   |   |   |   |
|                                            |   |                                             |                             |   |   |   |   |   |   |   |
| Derivative                financial instruments |   | $                                                | —                          |   | $ | 180,000 |   | $ | — |   |
| Liabilities:                             |   | $                                                | —                   |   | $ | —                  |   | $ | — |   |

|   | **(8)** | **Related                Party Transactions:** |
|--------|---------|------------------------------------------------|

|   | **(9)** | **Income                Taxes:** |
|--------|---------|----------------------------------|

quarters      of 2008 or for 2008 as a whole.

----

**FUQI      INTERNATIONAL, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) –Continued**

|   | **(10)** | **Subsequent                Events:** |
|--------|----------|---------------------------------------|

----

**ITEM      2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      OF OPERATIONS**

**FORWARD-LOOKING      STATEMENTS**

**OVERVIEW**

----

  

**RECENT      EVENTS—TEMIX ACQUISITION AGREEMENT**

**RESULTS      OF OPERATIONS**

|                                                                                                                   |   | **Three                Months Ended March 31,**                            |                           |
|------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------------------------------|
|                                                                                                                   |   | **2008**                                                                   |                           | **2007** |   |
|                                                                                                                   |   | **In                Dollars**                                              |                           | **Percent                of****Revenues** |   | **In                Dollars** |   | **Percent                of****Revenues** |   |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |
|                                                                                                                   |   | (in                thousands, except share amounts and earnings per share) |                           |
| **Net                sales**                                                                                           |   | $                                                                          | 77,566                         |   |   | 100.00 | % | $ | 27,960 |   |   | 100.00 | % |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| **Cost                of sales**                                                                                       |   |                                                                       |                  68,755 |   |   | 88.64 | % |   | 24,796 |   |   | 88.68 | % |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| **Gross                profit**                                                                                        |   |                                                                       |                  8,811  |   |   | 11.36 | % |   |                  3,164 |   |   | 11.32 | % |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| **Operating                expenses:**                                                                                 |   |                                                                       |                         |   |   |  |   |   |   |   |   |  |   |
| Selling                and marketing                                                                                   |   |                                                                       | 397                            |   |   | 0.51 | % |   | 194 |   |   | 0.69 | % |
| General                and administrative                                                                              |   |                                                                       |                  1,509  |   |   | 1.95 | % |   |                  421 |   |   | 1.51 | % |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| Total                operating expenses                                                                                |   |                                                                       |                  1,906  |   |   | 2.46 | % |   |                  615 |   |   | 2.20 | % |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| **Income                from operations**** **** **                                                        |   |                                                                       | 6,905                   |   |   | 8.90   | % |   | 2,549  |   |   | 9.12  | % |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| **Other                income (expense), net**                                                                         |   |                                                                       | 613                            |   |   | 0.79 | % |   | (288 | ) |   | -1.03 | % |
|                                                                                           |   |                                                                       |                         |   |   |  |   |   |   |   |   |  |   |
| **Income                before provision for income taxes**                                                            |   |                                                                       | 7,518                          |   |   | 9.69 | % |   | 2,261 |   |   | 8.09 | % |
|                                                                                           |   |                                                                       |                         |   |   |  |   |   |   |   |   |  |   |
| **Provision                for income taxes**                                                                          |   |                                                                       | 1,123                          |   |   | 1.45 | % |   | 377 |   |   | 1.35 | % |
|                                                                                           |   |                                                                       |                         |   |   |  |   |   |   |   |   |  |   |
| **Net                income**                                                                                          |   |                                                                       | 6,395                          |   |   | 8.24 | % |   | 1,884 |   |   | 6.74 | % |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| **Other                comprehensive income**                -                foreign currency translation adjustments |   |                                                                       |                  3,967  |   |   | 5.12 | % |   | 110 |   |   | 0.39 | % |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| **Comprehensive                income**                                                                                |   | $                                                                          | 10,362                         |   |   | 13.36 | % | $ | 1,994 |   |   | 7.13 | % |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| **Earnings                per share - basic**                                                                          |   | $                                                                          | 0.31                           |   |   |  |   | $ | 0.15 |   |   |  |   |
|                                                                                                                   |   |                                                                       |                           |   |   |   |   |   |   |   |   |   |   |
| **Earnings                per share - diluted**                                                                        |   | $                                                                          | 0.31                           |   |   |  |   | $ | 0.12 |   |   |  |   |

----

**Three      Months Ended March 31, 2008 and 2007**

**Net      sales**

Net      sales, which consist of gross sales net of returns, for the three months ended      March 31, 2008 increased to $77.6 million, an increase of $49.6 million, or      177%, from net sales of $28.0 million for the three months ended March 31,      2007.      The increase was primarily attributable to increases in the selling price and      sales volume of our products. The selling price of our jewelry products is      based      on the market price of the precious metals (e.g., gold and platinum) in the      period when the products are sold, plus our processing and design fees. During      the first quarter of 2008, the average price of gold and platinum increased      by      31.9% and 45.8%, respectively, as compared with the same period in 2007. In      addition, there was an increase of 102% in sales volume for the three months      ended March 31, 2008, as a result of an increase in sales of jewelry products      to      existing and new customers.

 

|                                                  |   | **Three                months ended March 31,** |                         |
|-------------------------------------------------------|--------|-------------------------------------------------|------------------------------|
|                                                  |   | **2008**                                        |                         | **2007** |   |
|                                                  |   | **Amount                in****Millions**        |                         | **Percentage** |   | **Amount                in****Millions** |   | **Percentage** |   |
| **Platinum**                                   |   | $                                               | 5.8                          |   |   | 8                  | % | $ | 5.6 |   |   | 20                  | % |
| **Gold**                                       |   |                                            |                  70.2 |   |   | 90                   | % |   |                  14.7 |   |   | 53                  | % |
| **K-gold                and Studded Jewelry**  |   |                                            |                  1.6  |   |   | 2                   | % |   |                  7.7 |   |   | 27                  | % |
| **Total**                                      |   | $                                               | 77.6                         |   |   | 100                   | % | $ | 28.0 |   |   | 100                  | % |

**Cost      of sales**

**Gross      profit**

**Selling      and marketing expenses**

----

**General      and administrative expenses**

**Other      income (expense), net **

**Provision      for income tax **

**Net      income**

**LIQUIDITY      AND CAPITAL RESOURCES**

**Operating      activities -**

----

**Investing      activities - **

**Financing      activities**

**Contractual      Debt Obligations.**

**Future      Capital Expenditures **

----

**Off-Balance      Sheet Arrangements**

**CRITICAL      ACCOUNTING POLICIES AND ESTIMATES**

*Fair      Value Measurements*

| Level 1: | Quoted                prices are available in active markets for identical assets or liabilities                as of the reporting                date.   |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 2: | Pricing                inputs are other than quoted prices in active markets included in                Level 1,                which are either directly or indirectly observable as of the reporting                date.   |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 3: | Pricing                inputs include significant inputs that are generally less observable                from                objective sources.  These inputs may be used with internally                developed methodologies that result in management’s best estimate of fair                value.   |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM      3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**** **

***Commodity      Price Sensitivity***

----

**ITEM      4 — CONTROLS AND PROCEDURES**
** **

**Disclosure      Controls and Procedures**

| 1. | We                did not maintain effective controls over the financial closing process                to                ensure the accurate and timely preparation of local financial statements                and financial data which is necessary for preparation of consolidated                financial statements due to an insufficient complement of local financial                and accounting staffs who are knowledgeable of local accounting rules                to                support the size of our company’s current organizational structure;                and |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | We                did not maintain effective internal audit function due to the lack                of                qualified internal auditors who are familiar with internal audit,                and we                did not implement adequate and proper supervisory review to ensure                that                the significant internal control deficiencies can be detected or                prevented. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Remediation      Measures of Significant Deficiencies **

| 1.   | We                increased the level of interaction among our management, audit committee,                independent auditors and other external                advisors; |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 2.   | We                recruited a Financial Controller, who will commence work in the latter                part of the second quarter of 2008, to enhance financial reporting                function of China operation; |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | We                evaluated the sufficiency of local financial and accounting staff,                and,                based on that evaluation, we hired and continue to hire additional                accounting staff; |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | We                plan to re-evaluate the sufficiency of local financial and accounting                staff upon the completion of our intended acquisition in retail business                in 2008; |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | We                are in the process of enhancing training programs on accounting principles                and procedures for our existing                staffs; |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | We                are in the process of standardizing the monthly and quarterly data                collection timetable and procedures, and assigning data collection                responsibilities to designated                personnel; |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.   | We                are in the process of negotiating with a professional advisory firm                on                outsourcing part of our internal audit function; |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.   | We                recruited an internal audit staff accountant in April 2008 to assist                us                improve our internal audit procedures and assigned an internal personnel                to responsible for coordinating and monitoring the progress of our                internal audit procedures; and |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.   | We                are in the process of recruiting a qualified and experienced internal                auditor to implement the internal audit function, and we plan to                provide                additional training to this internal auditor on appropriate controls                and                procedures necessary to document and evaluate our internal control                procedures. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Changes      in Internal Controls over Financial Reporting **

----

**PART II      — OTHER INFORMATION**

**ITEM      1 — LEGAL PROCEEDINGS**
** **

**ITEM      1A - RISK FACTORS**

**ITEM      2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF      PROCEEDS**
** **

**ITEM      3 — DEFAULTS UPON SENIOR SECURITIES**** **

None.

**ITEM      4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
** **

**ITEM      5 — OTHER INFORMATION**** **

  

**ITEM      6 — EXHIBITS**
** **

| 31.1   | Certification                of Chief Executive Officer pursuant to Section 302(a) of the                Sarbanes-Oxley Act of 2002. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                 |
| 31.2   | Certification                of Chief Financial Officer pursuant to Section 302(a) of the                Sarbanes-Oxley Act of 2002. |
|   |                                                                                                                                 |
| 32.1   | Certification                of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley                Act of 2002.*   |

----

----

**SIGNATURES**

|                              | **FUQI                INTERNATIONAL, INC.**   |
|-----------------------------------|---------------------------------------------------------|
|                         |                                               |   |
| Date:                May 15, 2008 | By:                                           | /s/                Yu Kwai Chong |
|                              |                                                    | Yu                Kwai Chong |
|                              |                                                    | Chief                Executive Officer  |
|                         |                                               |                    |
| Date:                May 15, 2008 | By:                                           | /s/                Ching Wan Wong |
|                              |                                                    | Ching                Wan Wong |
|                              |                                                    | Chief                Financial Officer |

----