Fuqi Intl (PINK:FUQI)

Rodman & Renshaw on FUQI                          12/31/2010

FUQI: Terminating Coverage 

Termination of Coverage: Effective immediately, we are discontinuing research coverage of FUQI to better allocate resources within our coverage universe. Effective upon the termination of coverage any of our prior financial projections on this stock should not be relied upon. Our last rating on FUQI was Under Review.

Company Description 

Fuqi International, Inc. is a Chinese company engaged in designing, manufacturing and selling of precious metal jewelry in China. The company develops, promotes, distributes and sells a range of products in the Chinese luxury goods market. The Company’s products consist of a range of styles and designs made from gold and other precious metals, such as platinum and Karat gold (K-gold). The Company also produces jewelry items that contain diamonds and other precious stones on a custom-order basis. The Company operates through its wholly owned subsidiary Fuqi International Holdings Co., Ltd. (Fuqi BVI) and its wholly owned subsidiary, Shenzhen Fuqi Jewelry Co., Ltd. (Fuqi China). As of December 31, 2008, the Company had 69 jewelry retail counters and stores in China.

Recent Updates 

FUQI has not timely filed its financial statements since it reported the 3Q09 results. The delay in FUQI’s financial reporting was originally due to certain accounting errors identified during its SOX 404 audit. FUQI’s previously issued financial results for 1Q09~3Q09 could be materially impacted. FUQI was notified by the SEC of a formal investigation and received a subpoena for certain documents regarding its failure to file its financial results on time. On March 16, 2010 we put FUQI under review in relation to its delayed 2009 10-K filing. On August 17, 2010 the company received notification from NASDAQ for being out of compliance with NASDAQ Marketplace Rule 5250(c)(1), requiring timely filing of SEC periodic reports. The company was granted an exception deadline of September 28, 2010, by when it had to file its 10-K and 10-Q forms for FY09, 1Q FY10, and 2Q FY10.

Extension Granted 

On December 10, 2010, NASDAQ Listing Qualification Panel granted FUQI an additional extension to March 28, 2011 to regain the compliance with NASDAQ continued listing requirement of timely filing its financial reports. On September 28, 2010, the company received the delisting letter from NASDAQ for its failure to timely file the results, and the company requested a hearing to seek another extension.

Valuation

On March 16, 2010, we put our rating under review, mainly due to the delay of the company’s SEC filings. Currently we do not have financial projections for FY10 and FY11.


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