Edgar Filing: BLUE HOLDINGS, INC.

As filed with the Securities and Exchange
Commission on October 7, 2005 Registration No. ____________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------

FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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BLUE HOLDINGS, INC.
(Name of Small Business Issuer in its Charter)

NEVADA 2300
(State or Jurisdiction of (Primary Standard Industrial
Incorporation or Organization) Classification Code Number)

88-0450923
(I.R.S Employer
Identification No.)

5804 E. SLAUSON AVE.
COMMERCE, CA 90040
(323) 725-5555
(Address and Telephone Number of Principal Executive Offices)

5804 E. SLAUSON AVE.
COMMERCE, CA 90040
(Address of Principal Place of Business or intended Place of Business)

PATRICK CHOW, CHIEF FINANCIAL OFFICER
BLUE HOLDINGS, INC.
5804 E. SLAUSON AVE.
COMMERCE, CA 90040
(323) 725-5555

Copy to:

ALBERT P. ASATOORIAN, ESQ.
STUBBS ALDERTON & MARKILES, LLP
15821 VENTURA BOULEVARD, SUITE 525
ENCINO, CALIFORNIA 91436
(818) 444-4500
(Name, Address and Telephone Number of Agent for Service)

Approximate date of proposed sale to the public: From time to time after the
effective date of this Registration Statement.

If any of the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box.

CALCULATION OF REGISTRATION FEE

TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED (1) PER UNIT (2) OFFERING PRICE (2) FEE
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Common Stock, par value
$.001 per share.... 3,000,000 (3) $8.525 $25,575,000 $3,011
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TOTAL 3,000,000 $25,575,000 $3,011

(1) In the event of a stock split, stock dividend, or other similar
transaction involving the Registrant's common stock, in order to prevent
dilution, the number of shares registered shall automatically be increased
to cover the additional shares in accordance with Rule 416(a) under the
Securities Act.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, using the
average of the high and low price as reported on the Over-the-Counter
Bulletin Board on October 3, 2005.
(3) The securities being registered may at various times be issued by the
Registrant at indeterminate prices.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Subject to Completion, Dated October 7, 2005

BLUE HOLDINGS, INC.

3,000,000 SHARES
COMMON STOCK

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This prospectus relates to the offer and sale of up to 3,000,000 shares
of our common stock, which we may sell from time to time in one or more
offerings. We will provide specific terms of these sales in supplements to this
prospectus. You should read this prospectus and each supplement carefully before
you invest. This prospectus may not be used by us to offer and sell securities
unless accompanied by a prospectus supplement.

Our common stock is quoted on the Over-The-Counter Bulletin Board under
the symbol "BLHL." On October 3, 2005, the last reported sales price of the
common stock on the Over-The-Counter Bulletin Board was $8.85 per share.

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.

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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.

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The date of this prospectus is ______________

TABLE OF CONTENTS

PAGE PAGE
---- ----

Prospectus Summary................. 1 Executive Compensation........ 30
Risk Factors....................... 3 Principal Shareholders........ 34
Forward-looking Statements......... 10 Related Party Transactions.... 36
Use of Proceeds.................... 11 Description of Capital Stock.. 40
Market for Common Equity and Plan of Distribution.......... 43
Related Shareholder Matters..... 11 Legal Matters................. 44
Management's Discussion and Experts....................... 44
Analysis of Financial Condition Where You Can Find
and Results of Operations....... 12 More Information........... 44
Business........................... 19 Index to Financial
Management......................... 28 Statements................. F-1

ABOUT THIS PROSPECTUS

This prospectus is part of a Registration Statement on Form SB-2 that
we filed with the Securities and Exchange Commission utilizing a "shelf"
registration process. Under this shelf process, we may sell up to 3,000,000
shares of common stock from time to time in one or more offerings. This
prospectus provides you with a general description of the securities that may be
offered. Each time we sell any securities through the shelf process under this
prospectus, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described below under the heading "Where You Can Find More
Information."

You should rely only on the information contained in this prospectus or
any supplement. We have not authorized anyone to provide information that is
different from that contained in this prospectus. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of our common stock.

Except as otherwise indicated, information in this prospectus reflects
a 1-for-29 reverse stock split of our common stock which took effect on and as
of June 7, 2005.

PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED IN GREATER
DETAIL ELSEWHERE IN THIS PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN ALL THE
INFORMATION YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD
READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE MAKING AN INVESTMENT DECISION,
INCLUDING "RISK FACTORS" AND THE CONSOLIDATED FINANCIAL STATEMENTS AND THE
RELATED NOTES. REFERENCES IN THIS PROSPECTUS TO "BLUE HOLDINGS," "WE," "OUR" AND
"US" REFER TO BLUE HOLDINGS, INC. AND OUR CONSOLIDATED SUBSIDIARIES.

OUR BUSINESS

We design, develop, market and distribute high end fashion jeans and
accessories under the brand name "Antik Denim," and as of July 5, 2005, under
the brand name "Yanuk." We plan to also design, develop, market and distribute
jeans and accessories under other brands that we may license or acquire from
time to time. Our products include jeans, jackets, belts, purses and T-shirts.
We currently sell our products in the United States, and internationally in
countries that include, but are not limited to, Canada, Belgium, France,
Germany, Sweden, Italy, Korea, Mexico and Japan, directly to department stores
and boutiques and through distribution arrangements in certain foreign
jurisdictions. We are headquartered in Commerce, California and maintain two
showrooms in New York and Los Angeles.

OUR INDUSTRY

We operate in the high end fashion denim industry. Our competitors are
companies such as Levi Strauss, Calvin Klein, Joe's Jeans, True Religion
Apparel, Seven For All Mankind and Citizens of Humanity. Our competitive edge
lies in our ability to create innovative concepts and designs, to develop
products with extraordinary fit, and to expand our high quality fabrics and
finishes, treatments and embellishments (including our patent pending pockets,
hand stitching and embroidery detail).

OUR HISTORY AND CONTACT INFORMATION

Blue Holdings, Inc. was incorporated in the State of Nevada on February
9, 2000 under the name Marine Jet Technology Corp. From our inception through
January 2005, we focused on developing and marketing boat propulsion technology.
Between January and February 2005, we entered into separate transactions
whereby, among other matters, Keating Reverse Merger Fund, LLC ("KRM Fund"), an
existing shareholder of the Company, agreed to purchase a substantial majority
of our outstanding common stock, and Intellijet Marine, Inc., a company formed
by our former majority shareholder and principal executive officer and director,
Jeff P. Jordan, acquired all of our boat propulsion technology assets and
assumed all of our then existing liabilities.

Between February 4, 2005 and April 29, 2005, we existed as a public
"shell" company with nominal assets whose sole business was to identify,
evaluate and investigate various companies to acquire or with which to merge.

On April 14, 2005, we entered into an Exchange Agreement (the "Exchange
Agreement") with Antik Denim, L.L.C., a California limited liability company
("Antik"), the members of Antik (the "Antik Members"), and KRM Fund. The closing
of the transactions contemplated by the Exchange Agreement occurred on April 29,
2005. At the closing, we acquired all of the outstanding membership interests of
Antik (the "Interests") from the Antik Members, and the Antik Members
contributed all of their Interests to us. In exchange, we issued to the Antik
Members 843,027 shares of our Series A Convertible Preferred Stock, par value
$0.001 per share (the "Preferred Shares"), which, as a result of the approval by
a substantial majority of our outstanding shareholders entitled to vote and the
approval by our Board of Directors, of amendments to our Articles of
Incorporation that (i) changed our name to Blue Holdings, Inc., (ii) increased
our authorized number of shares of common stock to 75,000,000, and (iii) adopted
a 1-

for-29 reverse stock split, on June 7, 2005 converted into 708,984,875 shares of
our common stock on a pre-reverse stock split basis and 24,447,783 shares of our
common stock on a post-reverse stock split basis.

At the closing, Antik became our wholly-owned subsidiary. The exchange
transaction was accounted for as a reverse merger (recapitalization) with Antik
deemed to be the accounting acquirer, and we were deemed to be the legal
acquirer.

As a result of the closing of the transactions contemplated by the
Exchange Agreement, the Antik Members (together with Elizabeth Guez, our Chief
Operating Officer, and Patrick Chow, our Chief Financial Officer) hold
approximately 93.7% of the outstanding shares of our common stock, and our
shareholders existing immediately prior to the closing hold approximately 3.8%
of our outstanding shares of common stock.

The address of our principal executive office is 5804 E. Slauson Ave.
Commerce, CA 90040, and our telephone number is (323) 725-5555.

THE OFFERING

Common stock offered by us............. Up to 3,000,000 shares

Offering price at which common
stock may be offered and
sold by us from time to time ....... At such price or prices as may
be negotiated between us and any
purchaser from time to time.

Common stock outstanding
before this offering................ 25,557,200 shares

Common stock to be outstanding
after this offering................. 28,557,200 shares

Use of proceeds........................ Proceeds from the sale of common
stock by us will be used for
general working capital and
other purposes as we may set
forth from time to time in any
prospectus supplement. See "Use
of Proceeds."

OTC Bulletin Board symbol.............. BLHL

Risk Factors........................... See "Risk Factors" beginning on
page 3 for a discussion of
factors that you should consider
carefully before deciding to
purchase our common stock.

In the table above, the number of shares to be outstanding after this
offering is based on 25,557,200 shares outstanding as of October 3, 2005, and
the assumed sale of all 3,000,000 shares of common stock that may be offered and
sold by us under this prospectus and any applicable prospectus supplement. The
number of shares to be outstanding after this offering does not reflect the
issuance of the following shares which are not being offered for sale under this
prospectus:

o 62,000 shares issuable upon the exercise of outstanding stock
options at a weighted average exercise price of $8.10 per
share, as of October 3, 2005; and

o 2,438,000 additional shares reserved for issuance under our
2005 Stock Incentive Plan, as of October 3, 2005.

RISK FACTORS

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON STOCK. THE RISKS AND
UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES FACING US. ADDITIONAL RISKS
AND UNCERTAINTIES THAT WE ARE UNAWARE OF, OR THAT WE CURRENTLY DEEM IMMATERIAL,
ALSO MAY BECOME IMPORTANT FACTORS THAT AFFECT US. IF ANY OF THE FOLLOWING RISKS
OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE
MATERIALLY AND ADVERSELY AFFECTED. IN THAT CASE, THE TRADING PRICE OF OUR COMMON
STOCK COULD DECLINE, AND YOU MAY LOSE SOME OR ALL OF YOUR INVESTMENT.

RISKS RELATED TO OUR BUSINESS

ANTIK, OUR WHOLLY-OWNED SUBSIDIARY, HAS A LIMITED OPERATING HISTORY, MAKING IT
DIFFICULT TO EVALUATE WHETHER IT WILL OPERATE PROFITABLY.

Antik was formed in September 2004 to design, develop, manufacture,
market, distribute and sell high end fashion jeans, apparel and accessories. As
a result, it does not have a meaningful historical record of sales and revenues
nor an established business track record. While our management believes that we
have an opportunity to be successful in the high end fashion jean market, there
can be no assurance that we will be successful in accomplishing our business
initiatives, or that we will achieve any significant level of revenues, or ever
recognize net income, from the sale of our products. Unanticipated problems,
expenses and delays are frequently encountered in increasing production and
sales and developing new products, especially in the current stage of our
business. Our ability to continue to successfully develop, produce and sell our
products and to generate significant operating revenues will depend on our
ability to, among other matters:

o successfully market, distribute and sell our products or enter
into agreements with third parties to perform these functions
on our behalf; and

o obtain the financing required to implement our business plan.

Given Antik's limited operating history, our new license agreements
with Yanuk, our lack of long-term sales history and other sources of revenue,
there can be no assurance that we will be able to achieve any of our goals and
develop a sufficiently large customer base to be profitable.

WE MAY REQUIRE ADDITIONAL CAPITAL IN THE FUTURE.

We may not be able to fund our future growth or react to competitive
pressures if we lack sufficient funds. Currently, management believes we have
sufficient cash on hand and cash available through our factor to fund existing
operations for the foreseeable future. However, in the future, we may need to
raise additional funds through equity or debt financings or collaborative
relationships, including in the event that we lose our relationship with our
factor. This additional funding may not be available or, if available, it may
not be available on economically reasonable terms.

We cannot assure you that we will complete any sale of shares under
this prospectus and any applicable prospectus supplement or that the sale of the
shares under this prospectus and any applicable prospectus supplement will be
completed on otherwise commercially reasonable terms. In addition, any further
funding may result in significant dilution to existing shareholders. If adequate
funds are not available on commercially acceptable terms, we may be required to
curtail our

operations or obtain funds through collaborative partners that may require us to
release material rights to our products.

FAILURE TO MANAGE OUR GROWTH AND EXPANSION COULD IMPAIR OUR BUSINESS.

Management believes that we, including our Antik Denim subsidiary
specifically, are poised for significant growth in 2005 and 2006. However, no
assurance can be given that we will be successful in maintaining or increasing
our sales in the future. Any future growth in sales will require additional
working capital and may place a significant strain on our management, management
information systems, inventory management, sourcing capability, distribution
facilities and receivables management. Any disruption in our order processing,
sourcing or distribution systems could cause orders to be shipped late, and
under industry practices, retailers generally can cancel orders or refuse to
accept goods due to late shipment. Such cancellations and returns would result
in a reduction in revenue, increased administrative and shipping costs and a
further burden on our distribution facilities.

Additionally, we intend from time to time to open and/or license retail
stores focusing on the Antik Denim, Yanuk and other brands, and to acquire
and/or license other businesses and brands, as applicable, as we deem
appropriate. If we are unable to adequately manage our retail operations, or to
properly integrate any business or brands we acquire and/or license, this could
adversely affect our results of operation and financial condition.

WE CURRENTLY OWN OR LICENSE, AND OPERATE, TWO PRINCIPAL BRANDS, ANTIK DENIM AND
YANUK. IF WE ARE UNSUCCESSFUL IN MARKETING AND DISTRIBUTING THOSE BRANDS OR IN
EXECUTING OUR OTHER STRATEGIES, OUR RESULTS OF OPERATIONS AND FINANCIAL
CONDITION WILL BE ADVERSELY AFFECTED.

While our goal is to employ a multi-brand strategy that will ultimately
diversify the fashion and other risks associated with reliance on a limited
product line, we currently operate, directly and through our wholly-owned
subsidiary, Antik Denim, L.L.C., two principal brands, Antik Denim and Yanuk,
one of which, Yanuk, is being operated pursuant to a very recent license
agreement. If we are unable to successfully market and distribute the Antik
Denim and Yanuk brands, or if the recent popularity of premium denim brands
decreases, or if we are unable to execute on our multi-brand strategy to acquire
and/or license additional companies and/or brands, as applicable, identified by
our management from time to time, our results of operations and financial
condition will be adversely affected.

OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY.

Management expects that we will experience substantial variations in
our net sales and operating results from quarter to quarter. We believe that the
factors which influence this variability of quarterly results include:

o the timing of its introduction of new product lines;

o the level of consumer acceptance of each new product line;

o general economic and industry conditions that affect consumer
spending and retailer purchasing;

o the availability of manufacturing capacity;

o the seasonality of the markets in which it participates;

o the timing of trade shows;

o the product mix of customer orders;

o the timing of the placement or cancellation of customer
orders;

o the weather;

o transportation delays;

o quotas and other regulatory matters;

o the occurrence of charge backs in excess of reserves; and

o the timing of expenditures in anticipation of increased sales
and actions of competitors.

As a result of fluctuations in our revenue and operating expenses that
may occur, management believes that period-to-period comparisons of our results
of operations are not a good indication of our future performance. It is
possible that in some future quarter or quarters, our operating results will be
below the expectations of securities analysts or investors. In that case, our
common stock price could fluctuate significantly or decline.

THE FINANCIAL CONDITION OF OUR CUSTOMERS COULD AFFECT OUR RESULTS OF OPERATIONS.

Certain retailers, including some of our customers, have experienced in
the past, and may experience in the future, financial difficulties, which
increase the risk of extending credit to such retailers and the risk that
financial failure will eliminate a customer entirely. These retailers have
attempted to improve their own operating efficiencies by concentrating their
purchasing power among a narrowing group of vendors. There can be no assurance
that we will remain a preferred vendor for our existing customers. A decrease in
business from or loss of a major customer could have a material adverse effect
on our results of operations. There can be no assurance that our factor will
approve the extension of credit to certain retail customers in the future. If a
customer's credit is not approved by the factor, we could assume the collection
risk on sales to the customer itself, require that the customer provide a letter
of credit, or choose not to make sales to the customer.

OUR BUSINESS IS SUBJECT TO RISKS ASSOCIATED WITH IMPORTING PRODUCTS.

A portion of our import operations are subject to tariffs imposed on
imported products and quotas imposed by trade agreements. In addition, the
countries in which our products are imported may from time to time impose
additional new duties, tariffs or other restrictions on its imports or adversely
modify existing restrictions. Adverse changes in these import costs and
restrictions, or our suppliers' failure to comply with customs or similar laws,
could harm our business. We cannot assure that future trade agreements will not
provide our competitors with an advantage over us, or increase our costs, either
of which could have an adverse effect on our business and financial condition.

Our operations are also subject to the effects of international trade
agreements and regulations such as the North American Free Trade Agreement, and
the activities and regulations of the World Trade Organization. Generally, these
trade agreements benefit our business by reducing or eliminating the duties
assessed on products or other materials manufactured in a particular country.
However, trade agreements can also impose requirements that adversely affect our
business, such as limiting the countries from which we can purchase raw
materials and setting duties or restrictions on products that may be imported
into the United States from a particular country.

Our ability to import raw materials in a timely and cost-effective
manner may also be affected by problems at ports or issues that otherwise affect
transportation and warehousing providers, such as labor disputes. These problems
could require us to locate alternative ports or warehousing providers to avoid
disruption to our customers. These alternatives may not be available on short
notice or could result in higher transit costs, which could have an adverse
impact on our business and financial condition.

OUR DEPENDENCE ON INDEPENDENT MANUFACTURERS AND SUPPLIERS OF RAW MATERIALS
REDUCES OUR ABILITY TO CONTROL THE MANUFACTURING PROCESS, WHICH COULD HARM OUR
SALES, REPUTATION AND OVERALL PROFITABILITY.

We depend on independent contract manufacturers and suppliers of raw
materials to secure a sufficient supply of raw materials and maintain sufficient
manufacturing and shipping capacity in an environment characterized by declining
prices, labor shortage, continuing cost pressure and increased demands for
product innovation and speed-to-market. This dependence could subject us to
difficulty in obtaining timely delivery of products of acceptable quality. In
addition, a contractor's failure to ship products to us in a timely manner or to
meet the required quality standards could cause us to miss the delivery date
requirements of our customers. The failure to make timely deliveries may cause
our customers to cancel orders, refuse to accept deliveries, impose
non-compliance charges through invoice deductions or other charge-backs, demand
reduced prices or reduce future orders, any of which could harm our sales,
reputation and overall profitability.

We do not have long-term contracts with any of our independent
contractors and any of these contractors may unilaterally terminate their
relationship with us at any time. While management believes that there exists an
adequate supply of contractors to provide products and services to us, to the
extent we are not able to secure or maintain relationships with independent
contractors that are able to fulfill its requirements, our business would be
harmed.

We have initiated standards for our suppliers, and monitor our
independent contractors' compliance with applicable labor laws, but we do not
control our contractors or their labor practices. The violation of federal,
state or foreign labor laws by one of our contractors could result in us being
subject to fines and our goods that are manufactured in violation of such laws
being seized or their sale in interstate commerce being prohibited. To date, we
have not been subject to any sanctions that, individually or in the aggregate,
have had a material adverse effect on our business, and we are not aware of any
facts on which any such sanctions could be based. There can be no assurance,
however, that in the future we will not be subject to sanctions as a result of
violations of applicable labor laws by our contractors, or that such sanctions
will not have a material adverse effect on our business and results of
operations.

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS.

The loss of or inability to enforce our trademark "Antik Denim," our
licensed trademark "Yanuk" or any of our other proprietary or licensed
trademarks, designs, patents, know-how and trade secrets could adversely affect
our business. If any third party copies or otherwise gains access to our
trademarks or other proprietary rights, or develops similar products
independently, it may be costly to enforce our rights and we would not be able
to compete as effectively. Additionally, the laws of foreign countries may
provide inadequate protection of intellectual property rights, making it
difficult to enforce such rights in those countries.

We may need to bring legal claims to enforce or protect our
intellectual property rights. Any litigation, whether successful or
unsuccessful, could result in substantial costs and diversions of resources. In
addition, notwithstanding the rights we have secured in our intellectual
property, third parties may bring claims against us alleging that we have
infringed on their intellectual property rights or that our intellectual
property rights are not valid. Any claims against us, with or without merit,
could be time consuming and costly to defend or litigate and therefore could
have an adverse affect on our business.

THE LOSS OF PAUL GUEZ OR OUR LEAD DESIGNERS WOULD HAVE AN ADVERSE EFFECT ON OUR
FUTURE DEVELOPMENT AND COULD SIGNIFICANTLY IMPAIR OUR ABILITY TO ACHIEVE OUR
BUSINESS OBJECTIVES.

Our success is largely dependent upon the expertise and knowledge of
our Chairman, Chief Executive Officer and President, Paul Guez, our lead
designers, Philippe Naouri and Alexandre Caugant, and our ability to continue to
hire and retain other key personnel. The loss of Mr. Guez, or any of our other
key personnel, could have a material adverse effect on our business,
development, financial condition, and operating results. We do not maintain "key
person" life insurance on any of our management or key personnel, including Mr.
Guez.

RISKS RELATED TO OUR INDUSTRY

OUR SALES ARE HEAVILY INFLUENCED BY GENERAL ECONOMIC CYCLES.

Apparel is a cyclical industry that is heavily dependent upon the
overall level of consumer spending. Purchases of apparel and related goods tend
to be highly correlated with cycles in the disposable income of our consumers.
Our customers anticipate and respond to adverse changes in economic conditions
and uncertainty by reducing inventories and canceling orders. As a result, any
substantial deterioration in general economic conditions, increases in interest
rates, acts of war, terrorist or political events that diminish consumer
spending and confidence in any of the regions in which we compete, could reduce
our sales and adversely affect our business and financial condition.

OUR BUSINESS IS HIGHLY COMPETITIVE AND DEPENDS ON CONSUMER SPENDING PATTERNS.

The apparel industry is highly competitive. We face a variety of
competitive challenges including:

o anticipating and quickly responding to changing consumer
demands;

o developing innovative, high-quality products in sizes and
styles that appeal to consumers;

o competitively pricing our products and achieving customer
perception of value; and

o the need to provide strong and effective marketing support.

WE MUST SUCCESSFULLY GAUGE FASHION TRENDS AND CHANGING CONSUMER PREFERENCES TO
SUCCEED.

Our success is largely dependent upon our ability to gauge the fashion
tastes of our customers and to provide merchandise that satisfies retail and
customer demand in a timely manner. The apparel business fluctuates according to
changes in consumer preferences dictated in part by fashion and season. To the
extent we misjudge the market for our merchandise, our sales may be adversely
affected. Our ability to anticipate and effectively respond to changing fashion
trends depends in part on our ability to attract and retain key personnel in our
design, merchandising and marketing staff. Competition for these personnel is
intense, and we cannot be sure that we will be able to attract and retain a
sufficient number of qualified personnel in future periods.

OUR BUSINESS MAY BE SUBJECT TO SEASONAL TRENDS.

In the experience of our management, operating results in the high end
fashion denim industry have been subject to seasonal trends when measured on a
quarterly basis. This trend is dependent on numerous factors, including:

o the markets in which we operate;

o holiday seasons;

o consumer demand;

o climate;

o economic conditions; and

o numerous other factors beyond our control.

OTHER RISKS RELATED TO AN INVESTMENT IN OUR COMMON STOCK

THE SALE OF SECURITIES BY US IN ANY EQUITY OR DEBT FINANCING COULD RESULT IN
DILUTION TO OUR EXISTING SHAREHOLDERS AND HAVE A MATERIAL ADVERSE EFFECT ON OUR
EARNINGS.

Any sale of shares by us pursuant to this prospectus and any applicable
prospectus supplement, or in a future private placement offering, could result
in dilution to the existing shareholders as a direct result of our issuance of
additional shares of our capital stock. In addition, our business strategy may
include expansion through internal growth, by acquiring complementary
businesses, by acquiring or licensing additional brands, or by establishing
strategic relationships with targeted customers and suppliers. In order to do
so, or to fund our other activities, we may issue additional equity securities
that could dilute our shareholders' stock ownership. We may also assume
additional debt and incur impairment losses related to goodwill and other
tangible assets if we acquire another company and this could negatively impact
our results of operations.

INSIDERS OWN A SIGNIFICANT PORTION OF OUR COMMON STOCK, WHICH COULD LIMIT OUR
SHAREHOLDERS' ABILITY TO INFLUENCE THE OUTCOME OF KEY TRANSACTIONS.

At October 3, 2005, our Chief Executive Officer, Paul Guez, Chief
Operating Officer, Elizabeth Guez, Chief Financial Officer, Patrick Chow, and
three members of our design team, Messrs. Naouri, Caugant and Meyer Abbou, all
former members of Antik, owned approximately 93.7% of the outstanding shares of
our common stock. Paul and Elizabeth Guez alone own approximately 72.1% of the
outstanding shares of our common stock at October 3, 2005. Accordingly, our
executive officers and key personnel have the ability to affect the outcome of,
or exert considerable influence over, all matters requiring shareholder
approval, including the election and removal of directors and any change in
control. This concentration of ownership of our common stock could have the
effect of delaying or preventing a change of control of us or otherwise
discouraging or preventing a potential acquirer from attempting to obtain
control of us. This, in turn, could have a negative effect on the market price
of our common stock. It could also prevent our shareholders from realizing a
premium over the market prices for their shares of common stock.

OUR STOCK PRICE HAS BEEN VOLATILE.

Our common stock is quoted on the Over-The-Counter Bulletin Board, and
there can be substantial volatility in the market price of our common stock. The
market price of our common stock has been, and is likely to continue to be,
subject to significant fluctuations due to a variety of factors, including
quarterly variations in operating results, operating results which vary from the
expectations of securities analysts and investors, changes in financial
estimates, changes in market valuations of competitors, announcements by us or
our competitors of a material nature, loss of one or more customers, additions
or departures of key personnel, future sales of common stock and stock market
price and volume fluctuations.

In addition, general political and economic conditions such as a
recession, or interest rate or currency rate fluctuations may adversely affect
the market price of our common stock. In addition, the stock market in general
has experienced extreme price and volume fluctuations that have affected the
market price of our common stock. Often, price fluctuations are unrelated to
operating performance of the specific companies whose stock is affected. In the
past, following periods of volatility in the market price of a company's stock,
securities class action litigation has occurred against the issuing company. If
we were subject to this type of litigation in the future, we could incur
substantial costs and a diversion of our

management's attention and resources, each of which could have a material
adverse effect on our revenue and earnings. Any adverse determination in this
type of litigation could also subject us to significant liabilities.

PURCHASERS IN THIS OFFERING MAY IMMEDIATELY EXPERIENCE SUBSTANTIAL DILUTION IN
NET TANGIBLE BOOK VALUE.

We plan to sell shares at various times pursuant to this prospectus and
an applicable prospectus supplement at a price or prices that we will negotiate
with potential purchasers from time to time. Because our common stock has in the
past been sold at prices lower than the price that you may pay, you may suffer
immediate substantial dilution in net tangible book value, which represents the
amount of the company's total tangible assets less its total liabilities,
divided by the number of shares of its outstanding capital stock. The exercise
of options may result in further dilution.

ABSENCE OF DIVIDENDS COULD REDUCE OUR ATTRACTIVENESS TO INVESTORS.

Some investors favor companies that pay dividends, particularly in
general downturns in the stock market. We have not declared or paid any cash
dividends on our common stock. We currently intend to retain any future earnings
for funding growth, and we do not currently anticipate paying cash dividends on
our common stock in the foreseeable future. Because we may not pay dividends,
your return on this investment likely depends on your selling our stock at a
profit.

FORWARD-LOOKING STATEMENTS

This prospectus, including the sections entitled "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," contains "forward-looking statements" that include
information relating to future events, future financial performance, strategies,
expectations, competitive environment, regulation and availability of resources.
These forward-looking statements include, without limitation, statements
regarding: proposed new services; our statements concerning litigation or other
matters; statements concerning projections, predictions, expectations, estimates
or forecasts for our business, financial and operating results and future
economic performance; statements of management's goals and objectives; and other
similar expressions concerning matters that are not historical facts. Words such
as "may," "will," "should," "could," "would," "predicts," "potential,"
"continue," "expects," "anticipates," "future," "intends," "plans," "believes"
and "estimates," and similar expressions, as well as statements in future tense,
identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future
performance or results, and will not necessarily be accurate indications of the
times at, or by which, that performance or those results will be achieved.
Forward-looking statements are based on information available at the time they
are made and/or management's good faith belief as of that time with respect to
future events, and are subject to risks and uncertainties that could cause
actual performance or results to differ materially from those expressed in or
suggested by the forward-looking statements. Important factors that could cause
these differences include, but are not limited to:

o our failure to implement our business plan within the time
period we originally planned to accomplish; and

o other factors discussed under the headings "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business."

Forward-looking statements speak only as of the date they are made. You
should not put undue reliance on any forward-looking statements. We assume no
obligation to update forward-looking statements to reflect actual results,
changes in assumptions or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities laws. If we
do update one or more forward-looking statements, no inference should be drawn
that we will make additional updates with respect to those or other
forward-looking statements.

USE OF PROCEEDS

Unless otherwise indicated in the applicable prospectus supplement, we
anticipate that any net proceeds from the sale of the shares of common stock
that we may offer under this prospectus and any accompanying prospectus
supplement will be used for general corporate purposes. General corporate
purposes may include acquisitions, investments, repayment of debt, capital
expenditures, repurchase of our capital stock and any other purposes that we may
specify in any prospectus supplement. We may invest the net proceeds temporarily
until we use them for their stated purpose.

MARKET FOR COMMON EQUITY
AND RELATED SHAREHOLDER MATTERS

COMMON STOCK

Our common stock is quoted on the Over-The-Counter Bulletin Board under
the symbol "BLHL." The following table sets forth, for the periods indicated,
the high and low bid information for the common stock, as determined from
sporadic quotations on the Over-the-Counter Bulletin Board, as well as the total
number of shares of common stock traded during the periods indicated. The
information has been adjusted to reflect a 1-for-29 reverse stock split of our
common stock which took effect on June 7, 2005, after the periods presented. The
following quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.

HIGH LOW
---- ---
YEAR ENDED DECEMBER 31, 2003
First Quarter.................... Not available Not available
Second Quarter................... Not available Not available
Third Quarter.................... Not available Not available
Fourth Quarter................... $8.70 $1.74

YEAR ENDED DECEMBER 31, 2004
First Quarter.................... $4.06 $2.90
Second Quarter................... $4.06 $2.03
Third Quarter.................... $14.79 $2.03
Fourth Quarter................... $2.47 $1.16

YEAR ENDED DECEMBER 31, 2005
First Quarter.................... $17.40 $1.02
Second Quarter................... $28.71 $4.64
Third Quarter.................... $9.60 $8.09

On October 3, 2005, the closing sales price of our common stock as
reported on the Over-The-Counter Bulletin Board was $8.85 per share. At October
3, 2005, there were approximately 67 record holders of our common stock.

DIVIDENDS

We have never paid dividends on our common stock. We intend to retain
our future earnings to re-invest in our ongoing business.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH OUR CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES, AS WELL AS THE SECTION ENTITLED "RISK
FACTORS," THAT APPEAR ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

We, directly and through our wholly-owned subsidiary, Antik Denim,
L.L.C., which was formed in September 2004, design, develop, manufacture,
market, distribute and sell high end fashion jeans, apparel and accessories. We
market, distribute and sell "Antik Denim" and, as a result of recent license
agreement with Yanuk, "Yanuk" brand products in the United States, and
internationally in countries that include, but are not limited to, Canada,
Belgium, France, Germany, Sweden, Italy, Korea, Mexico and Japan. We plan to
also design, develop, market and distribute jeans and accessories under other
brands that we may license or acquire from time to time.

We market and distribute our products by participating in industry
trade shows, as well as through our show rooms in Los Angeles and New York. We
maintain distributor relationships in the United Kingdom, France, Germany,
Sweden, Greece, Belgium, Italy, Mexico and Japan. With respect to the Antik
Denim brand, except for Mexico and Japan we currently have no exclusive or long
term distribution agreements with any party covering any territory, and do not
depend on any single distributor to distribute our products. With respect to the
Yanuk brand, except for Mexico and Japan, we currently have no exclusive or long
term distribution agreements with any party covering any territory, and do not
depend on any single distributor to distribute our products. Our distributors
often, but not always, purchase products from us at a discount for resale to
their customers in their respective territories. Our distributors warehouse our
products at their expense and they ship to and collect payment from their
customers directly.

Our products are sold in the United States to department stores and
boutiques such as Saks Fifth Avenue, Neiman Marcus, Nordstrom, Barney's,
Bloomingdales, Bergdorf Goodman, Atrium, Fred Segal, Intermix, Kitson, and
Bendel, as well as smaller boutiques throughout the country.

Our products are sold internationally to department stores and
boutiques such as Lane Crawford in Hong Kong, Harrods and Harvey Nichols in the
United Kingdom, Barneys and Isetan in Japan, Galleries Lafayette in France, and
Holt Renfrew in Canada.

We intend to operate certain flagship stores domestically and to
license overseas operators to open retail stores that focus on high end fashion
denim generally, and the Antik Denim and Yanuk brands, in particular. While
there is no existing plan with respect to the roll-out of such stores, the first
retail store was opened on August 27, 2005 on Melrose Avenue in Los Angeles.

We also intend to license our proprietary owned and licensed trademarks
with respect to products that we believe are not in our core line of business.
While there is no existing plan with respect to the types of products to which
we intend to license our proprietary trademarks, on September 8, 2005, Antik
entered into a term sheet license agreement with Titan Industries, Inc. that
provides Titan with an exclusive right to use the "Antik Denim" trademark for
the sale of men's and women's footwear in the United States and its possessions
and territories, Canada and Mexico, and a right of first refusal for similar use
of the trademark in Europe and South America.

Our historical operations prior to April 29, 2005 discussed in this
section reflect only the operations of Antik Denim, L.L.C., a California limited
liability company. Prior to April 29, 2005, Blue

Holdings, Inc., formerly known as Marine Jet Technology Corp., since its
inception and through January 2005, focused on developing and marketing boat
propulsion technology. Between January and February 2005, we entered into
separate transactions whereby, among other matters, Keating Reverse Merger Fund,
LLC ("KRM Fund"), an existing shareholder of the Company, agreed to purchase a
substantial majority of our outstanding common stock, and Intellijet Marine,
Inc., a company formed by our former majority shareholder and principal
executive officer and director, Jeff P. Jordan, acquired all of our boat
propulsion technology assets and assumed all of our then existing liabilities.

On April 29, 2005, Blue Holdings, Inc. consummated an exchange
transaction in which all of the outstanding membership interests of Antik Denim,
L.L.C., a privately-held California limited liability company, were exchanged
for 843,027 shares of Blue Holdings, Inc. Series A Convertible Preferred Stock,
par value $0.001 per share, which, on June 7, 2005, converted into 24,447,783
shares of Blue Holdings, Inc. common stock, on a post-reverse stock split basis.
Antik Denim, L.L.C. was formed in September 2004.

RESULTS OF OPERATIONS

SUMMARY FINANCIAL DATA

The following historical financial information should be read in
conjunction with the audited and unaudited financial statements and the notes to
those statements, included elsewhere in this prospectus. The statements of
operations data with respect to the six months ended June 30, 2005 and the
period September 13, 2004 (inception) to December 31, 2004 and the balance sheet
data at June 30, 2005 are derived from, and are qualified by reference to, the
audited and unaudited financial statements included elsewhere in this
prospectus. See footnote 1 below. The historical results are not necessarily
indicative of results to be expected for any future periods.

Period
September 13,
Six Months 2004
Ended to
June 30, December 31,
2005 2004
------------ ------------
(Unaudited) (Audited)

CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Sales, net ...................................... $ 8,854,228 $ 365,290
Selling, Distribution and Administrative Expenses $ 2,192,334 $ 838,700
Net Income (Loss) ............................... $ 1,658,562 $ (1,131,755)
Basic and diluted earnings (Loss) per share ..... $ 0.07 $ (0.05)
Weighted-average common shares outstanding ...... 25,441,628 24,447,783

June 30, December 31,
2005 2004
---------- ----------
(Unaudited)
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents ...................... $ 31,539 $ 73,823
Working capital ................................ $3,554,428 $ 28,572
Total Assets ................................... $6,629,327 $1,416,968
Total liabilities .............................. $2,867,892 $1,377,913
Total shareholders' / members' equity .......... $3,761,435 $ 39,055

(1) On April 29, 2005, Blue Holdings, Inc. (formerly known as Marine Jet
Technology Corp.) acquired all the membership interests in Antik Denim, L.L.C.
in exchange for 843,027 shares of its preferred stock, each of which would be
convertible into 841 shares of Blue Holdings' common stock. The acquisition was
accounted for as a reverse merger (recapitalization) with Blue Holdings, Inc.
deemed to be the legal acquirer, and Antik Denim, L.L.C. deemed to be the
accounting acquirer. Accordingly, the historical financial information presented
herein is that of Antik Denim, L.L.C. as adjusted to give effect to any
difference in the par value of the issuer's and the accounting acquirer's stock
with the offset to capital in excess of par value. Accordingly, our results for
the period from Antik's inception (September 13, 2004) to December 31, 2004, and
for the six months ended June 30, 2005 are not comparable to the corresponding
prior periods and no comparative data has been presented.

FROM SEPTEMBER 13, 2004 (INCEPTION) TO DECEMBER 31, 2004.

We recorded net sales of $0.37 million for the period from September 13
through December 31, 2004. Gross profit for the period was $0.21 million, or
57%.

Selling, distribution and administrative expenses totaled $0.84 million
and included purchases of sample fabric, freight, advertising, commissions,
travel and trade show expense. The principal components were sample costs ($0.14
million), professional fees ($0.13 million), and reimbursement to Blue Concept,
LLC on administrative and selling expenses including rent, utilities, insurance
and payroll ($0.37 million).

Net loss before provision for taxes was $1.13 million. The loss was
created by the need of the start-up operations to finance operating expenses and
cover the non-cash development costs of $0.5 million attributed to pending
patent and trademark applications and proprietary designs and design concepts
contributed by certain of Antik's former members.

Net cash used by operating activities was ($0.45 million). The deficit
was caused by the need to build up inventories of $0.8 million and to finance
accounts receivable amounting to $0.13 million. This deficit was financed by an
increase in accounts payable by $1 million and due to customers by $0.09
million. Cash from financing activities included net contributions from members
totaling $0.67 million and loans from related parties of $0.25 million.

SIX MONTHS ENDED JUNE 30, 2005

We recorded sales of $8.85 million for the six months ending June 30,
2005. Sales in 2005 are related to sales of products by Antik. During the six
months, we had total sales of $0.7 million to Blue Concept Europe Limited, an
entity owned by the principal shareholder. Gross profit for the six months
ending June 30, 2005 was $4.46 million, or 50%. Management expects that sales
will continue to increase in the quarter ended September 30, 2005, although the
rate of this increase will depend on the co-ordination of our vendors to catch
up with the increased amount of purchase orders.

Selling, distribution and administrative expenses totaled $2.19 million
and included purchases of sample fabric, freight, advertising, commissions,
travel and trade show expense. The principal components were professional and
consulting fees ($0.52 million), and fees paid to Blue Concept, LLC under a
service agreement ($0.63 million) (see P.33 Related Party Transactions).

Net income after provision for taxes was $1.66 million. Other than the
minimum tax of $800 for the State of California, previous members of Antik have
agreed not to require distributions for their individual tax liabilities for the
period up to the exchange transaction. Therefore, our tax provisions were based
on the income between April 30 and June 30, 2005. Net Income was affected in the
second quarter by the costs associated with the exchange transaction with Antik,
namely $0.30 million on professional fees and $0.18 million in accrual for the
cost of issuing 102,079 post-reverse-stock-split shares as a finders' fee to the
facilitator of the transaction.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operating activities for the six months ended June 30,
2005 was ($0.66 million). The deficit was created by an increase of $3.42
million in inventory and was financed by an increase of $1.29 million in
accounts payable and by additional contributions/paid-in capital of $0.69
million from Mr. Guez.

Since the beginning of 2005, Mr. Guez has personally contributed
$1,200,000 in fabric inventory and $686,200 in cash to Antik. From time to time,
he also supports us with temporary advances. As of June 30, 2005, we had
advances totaling $141,549 from Mr. Guez.

We use a factor for Antik for working capital and credit administration
purposes. Under the factoring agreement, the factor purchases a substantial
portion of the trade accounts receivable and assumes all credit risk with
respect to such accounts.

The factor agreement, which terminates on October 18, 2005, provides
that Antik can borrow an amount up to 85% of the value of our approved factored
customer invoices, less a reserve of 15% of unpaid accounts purchased and 100%
of all such accounts which are disputed. As of June 30, 2005, the amount of the
reserve held by the factor was approximately $464,000. The factor commission is
0.08% of the customer invoice amount for terms up to 90 days, plus one quarter
of one percent (.25%) for each additional thirty-day term. The factor agreement
has been amended to terminate on July 24, 2006 and includes Blue Holdings Inc.
as an additional borrower. The amendments, dated to be effective July 25, 2005,
also make available to both Blue Holdings Inc and Antik Denim, L.L.C. a combined
line of credit up to $1.5 million against inventory. We can borrow against
inventory up to 33.3% of the value of eligible raw materials and finished goods.
By another amendment dated September 1, 2005, the advance ratio against approved
factored invoices has been revised to 90%. Furthermore, the credit facilities
will automatically be renewed after July 24, 2006 and will thereafter be subject
to 120 days' termination notice from either party.

Receivables sold in excess of maximums established by the factor are
subject to recourse in the event of nonpayment by the customer. At June 30,
2005, items subject to recourse approximated $998,863. We are contingently
liable to the factor for merchandise disputes, customer claims and the like on
receivables sold to the factor.

To the extent that we draw funds prior to the deemed collection date of
the accounts receivable sold to the factor, interest is charged at the rate of
1% over the factor's prime lending rate per annum. Factor advances are
collateralized by the factored and non-factored accounts receivable, inventories
and

the personal guarantee of Mr. Guez and Blue Concept, LLC, a company co-owned by
him and Elizabeth Guez.

Our primary source of liquidity is expected to be cash flow generated
from operations, cash and cash equivalents currently on hand, and working
capital attainable through our factor. Additionally, we intend to sell up to
3,000,000 shares of our common stock pursuant to this prospectus and one or more
applicable prospectus supplements, which could enhance our liquidity. However,
we can give no assurance that will be able to complete any sale of these shares
on commercially favorable terms, or at all.

Additionally, pursuant to the provisions of the Exchange Agreement
among us, Antik, and the members of Antik, the members of Antik agreed that, in
the event that our shareholders' equity (on a consolidated basis following the
closing of the transactions contemplated by that agreement) as reported in our
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2005 (the
"Consolidated Equity") was less than $5,000,000, the members would contribute,
within fifteen (15) days following the filing of such periodic report, equity
capital to us in an amount equal to the difference between $5,000,000 and the
actual Consolidated Equity reported in such periodic report ("Required
Contribution"). In the case of such Required Contribution, each of the Antik
members agreed that no additional shares of the our capital stock would be
issued in consideration of such Required Contribution, and therefore, the
existing shareholders, including Antik's members, would not be further diluted.
On June 27, 2005, we, Antik, Antik's former members (i.e., the members of Antik
prior to the closing of the transactions contemplated by the Exchange
Agreement), and Keating Reverse Merger Fund, a beneficiary of certain provisions
of the Exchange Agreement, amended the Exchange Agreement to require that the
Required Contribution is to be made, if at all, in connection with the
Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30,
2005.

OFF-BALANCE SHEET ARRANGEMENTS

At June 30, 2005 and December 31, 2004, we did not have any
relationships with unconsolidated entities or financial partnerships, such as
entities often referred to as structured finance, variable interest or special
purpose entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes. As such, we are not exposed to any financing, liquidity,
market or credit risk that could arise if we had engaged in such relationships.

CONTRACTUAL OBLIGATIONS

The following summarizes our contractual obligations at August 31, 2005
and the effects such obligations are expected to have on liquidity and cash flow
in future periods:

PAYMENTS DUE BY PERIOD
--------------------------------------------------------------
LESS THAN 1 1-3 3-5 AFTER
TOTAL YEAR YEARS YEARS 5 YEARS
---------- ---------- ---------- ---------- ----------

Operating leases ................. $2,298,021 $ 206,062 $ 434,013 $ 464,925 $1,193,021
Employment obligations ........... $1,172,308 $ 240,000 $ 480,000 $ 452,308
---------- ---------- ---------- ---------- ----------
Total contractual obligations $3,470,329 $ 446,062 $ 914,013 $ 917,233 $1,193,021
========== ========== ========== ========== ==========

marketing and wholesale of apparel and related accessories bearing the "Antik
Denim" trademark for a term of 5 years commencing on July 11, 2005 and
terminating on July 10, 2010. Mr. Naouri will receive an annual salary of
$240,000.

CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

Trade accounts receivable are recorded at invoiced amounts, less
amounts accrued for returns, discounts and allowances. An allowance is provided
for specific customer accounts where collection is doubtful and for inherent
risk in ultimate collectibility. There is no off-balance sheet credit exposure
related to customer receivables.

Inventories are stated at the lower of cost or market. Cost is
determined on the first-in, first -out ("FIFO") method.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America, requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued Statement of Financial Accounting
Standard ("SFAS") No. 123R "Share Based Payment." This statement is a revision
of SFAS Statement No. 123, "Accounting for Stock-Based Compensation" and
supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and
its related implementation guidance. SFAS 123R addresses all forms of share
based payment ("SBP") awards including shares issued under employee stock
purchase plans, stock options, restricted stock and stock appreciation rights.
Under SFAS 123R, SBP awards result in a cost that will be measured at fair value
on the awards' grant date, based on the estimated number of awards that are
expected to vest. This statement will become effective for the company at the
first quarter of 2006. The Company has evaluated the effects of the adoption of
this pronouncement and has determined it will not have a material impact on the
Company's financial statements.

In March, 2005, the Securities and Exchange Commission's ("SEC") Office
of the Chief Accountant and its Division of Corporation Finance released
Financial Accounting Bulletin No. 107, "Share-Based Payment" (SAB 107). SAB 107
provides interpretive guidance related to the interaction between Statement of
Financial Accounting Standard No. 123R "Shared Based Payment" (SFAS 123R) and
certain SEC rules and regulations. SAB 107 provides the staff's views regarding
the valuation of shared-based payment arrangements for public companies and
stresses the importance of including appropriate disclosures within SEC filings,
particularly during the transition to SFAS 123R.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets, an amendment to APB Opinion No. 29" ("SFAS No. 153"). SFAS
No. 153 amends Accounting Principles Board Opinion No. 29, "Accounting for
Nonmonetary Transactions", to require that exchanges of nonmonetary assets be
measured and accounted for at fair value, rather than at carryover basis, of the
assets exchanged. Nonmonetary exchanges that lack commercial substance are
exempt from this requirement. SFAS No. 153 is effective for nonmonetary
exchanges entered into in fiscal periods beginning after June 15, 2005. The
Company does not routinely enter into nonmonetary exchanges. Accordingly, the
Company does not expect that the adoption of SFAS No. 153 will have a
significant effect on the Company's financial statement presentation or
disclosures.

BUSINESS

CORPORATE HISTORY

Blue Holdings, Inc., formerly known as Marine Jet Technology Corp., was
incorporated in the state of Nevada on February 9, 2000. From its inception up
to January 20, 2005, the Company focused on developing and marketing boat
propulsion technology developed by Jeff P. Jordan.

Prior to our inception, Mr. Jordan was granted several patents in the
United States, the European Union, Australia and New Zealand. These patents
protect various elements of a marine propulsion system that Mr. Jordan developed
with Robert J. Tomlinson. Also prior to our formation, Mr. Jordan asked David L.
Lyman, who owned and operated a contract-manufacturing firm, to assist in the
design of a prototype engine. Mr. Lyman would assist in making the propulsion
system suitable for mass production using automated equipment.

On May 19, 2000, we entered into a Proprietary Rights Agreement with
Mr. Lyman, whereby we received any and all proprietary rights and future
benefits derived from Mr. Lyman's design, development and work on the prototype
propulsion system. Pursuant to this agreement, we issued 1,000,000 shares of our
common stock to Mr. Lyman. The value of Mr. Lyman's proprietary rights was
negotiated between and among Messrs. Lyman, Jordan and Tomlinson.

On May 19, 2000, we entered into a Technology License Agreement with
Messrs. Jordan and Tomlinson. In accordance with this agreement, Messrs. Jordan
and Tomlinson assigned the rights to three United States patents they owned as
individuals, as well as any improvements, reissues or extensions of those
patents in the United States or abroad to the Company. In exchange for these
patent rights, we issued an aggregate of 15,875,000 shares of our common stock,
of which Mr. Jordan received 14,287,500 common shares and Mr. Tomlinson received
1,587,500 shares of common stock.

In August of 2001, we purchased assets from Mr. Jordan for cash. The
assets included a test boat, patterns for component castings and related
equipment. During 2002 and 2003, Mr. Jordan continued to develop the prototype
system in the test boat and developed various designs to improve the performance
of the prototype system. This led to the development of the Variable Marine Jet
design, our second generation system, which was the subject of a Patent
Cooperation Treaty (PCT) patent filing in December 2003.

We developed a fully operational prototype propulsion system, referred
to as the first generation system, which served as a test bed for further
development. This system underwent testing, research and further development by
our management.

We intended to develop marine jet propulsion systems for sale and to
license the rights to manufacture such systems and/or boats incorporating such
technology under the name "Quick Jet." We sought to develop and market the Quick
Jet technology to produce a proprietary marine jet propulsion system that
offered the low-speed thrust and acceleration of a propeller drive, while
retaining the safety, convenience and maneuverability of a traditional jet
design.

We intended to market our water-jet system for commercial use under the
name "WorkJET." With more thrust at low boat speeds and larger load carrying
capacity than previous marine engine types, our management believed that the
WorkJET would operate efficiently both inshore and in heavy seas. It has the
shallow draft of a jet, yet the stability, sea-keeping and dynamic breaking of a
propeller in big swells. We believed that this market was ideal for our product
because jet propulsion systems are preferred in the fishing industry for their
shallow draft and ability to operate over nets.

Our goal was to sell the Quick Jet system in combination with available
marine motors to boat manufacturers, who would produce boats incorporating the
licensed technology. Since our inception, the Company has been unable to
generate significant revenue from this business plan. In January 2005, we
determined that we were unable to further pursue our business plan of developing
marine jet propulsion systems for sale and licensing of the manufacturing rights
without raising significant additional financing needed for further patent
filings, Variable Marine Jet prototype development, marketing expenses, working
capital and to fund the significant expense of operating as a public company.

On January 11, 2005, Mr. Jordan entered into a Securities Purchase
Agreement ("Purchase Agreement") with Keating Reverse Merger Fund, LLC ("KRM
Fund"), under which KRM Fund agreed to purchase, and Mr. Jordan agreed to sell,
an aggregate of 15,306,500 shares of our common stock owned by him for a
purchase price of $440,000, or $0.029 per share.

On January 20, 2005, we entered into an Assumption Agreement with Mr.
Jordan and Intellijet Marine, Inc. ("Intellijet"), a Nevada corporation that we
established as a wholly-owned subsidiary. Under the Assumption Agreement, we
transferred all of our assets, except for 21,822,570 shares of common stock of
Intellijet and approximately $2,500 in cash, to Intellijet. Intellijet agreed to
assume all of our liabilities and obligations and to indemnify us for any loss
we incur with respect to the assumed liabilities. Mr. Jordan and Intellijet also
agreed to release us from any and all obligations and claims whatsoever.

On February 4, 2005, we completed the distribution of all 21,822,570
shares of common stock of Intellijet owned by us pro rata to our shareholders of
record as of January 24, 2005. Pursuant to the distribution, each of our
shareholders received one share of common stock of Intellijet for each one share
of our common stock owned of by our shareholders on the record date. Intellijet
is now an independent company and will continue to operate our former business
of developing marine jet propulsion technology; supplying mechanical components
under the Quick JetTM brand name; and licensing boat manufacturers to produce
boats incorporating Intelllijet's systems.

Mr. Jordan completed the sale of his Company shares to KRM Fund on
February 9, 2005. After the transfer of our marine propulsion assets and
business to Intellijet, the Company was a public "shell" company with nominal
assets, liabilities or ongoing operations whose sole business was to identify,
evaluate and investigate various companies to acquire or with which to merge.

Following the closing of the transactions contemplated by the Exchange
Agreement, Paul Guez, one of the former Antik Members, became our Chairman,
Chief Executive Officer and President. Mr. Guez has over 30 years experience in
the apparel industry and is best known as the founder of Sasson Jeans, which he
founded in 1976. Since 1989, Mr. Guez has engaged in the design, marketing,
manufacturing and wholesale distribution of premium fashion and denim
collections, including for a growing stable of contemporary brands, such as U,
Taverniti So Jeans, Duarte Jeans, Elvis, Memphis Blues and Grail Jeans.

Additionally, Philippe Naouri and Alexandre Caugant, French denim
innovators, Antik's principal designers, and two of the former Antik Members
continue to provide design services to us. Mr. Naouri has worked on such
international brands as Diesel, Levi's and G-Star, and Mr. Caugant has worked on
the GOA brand in France.

RECENT DEVELOPMENTS

On July 5, 2005, we entered into a ten-year License Agreement,
effective July 1, 2005, with Yanuk Jeans, LLC ("Yanuk"). Under the terms of the
License Agreement, we became the exclusive licensor for the design, development,
manufacture, sale, marketing and distribution of Yanuk's "Yanuk" brand products
to the wholesale and retail trade. We will pay to Yanuk a royalty of six percent
(6%) of all net sales of the products licensed under the agreement and a
guaranteed minimum royalty on a quarterly basis as further set forth in the
License Agreement. In addition, during the term of the License Agreement, we
have the option to purchase from Yanuk the property licensed under the License
Agreement, consisting of certain trademarks and a design patent, at the fair
market value of such property on the date of the exercise of the purchase
option. Yanuk is wholly-owned by Paul Guez, our Chairman, Chief Executive
Officer and President, and a majority shareholder. The License Agreement was
approved by a majority of our Board of Directors including all of our
independent directors.

On August 27, 2005, we opened a retail store in Los Angeles and assumed
all the obligations of a 10-year property lease which was previously signed by
Blue Concept LLC in April, 2005.

Effective September 8, 2005, Antik entered into a Licensing Term Sheet
(the "Term Sheet") with Titan Industries, Inc., a California corporation
("Titan").

Pursuant to the Term Sheet, Antik agreed to enter into a formal license
agreement to provide Titan with an exclusive right to use the "Antik Denim"
trademark for the sale of men's and women's footwear in the United States and
its possessions and territories, Canada and Mexico, and to provide a right of
first refusal for similar use of the trademark in Europe and South America.
Compensation for use of the "Antik Denim" trademark will consist of a royalty
calculated as 6% of Titan's net sales. Titan has agreed to guarantee payment of
royalties on identified minimum net sales amounts ranging from $1.5 to $15
million over each of the next six years, and to spend at least 2% of such
minimum net sales amounts during each year on advertising its Antik Denim
trademarked products. The royalty amount may be adjusted downward in the event
that Antik's gross sales do not reach $20 million during any single year of the
term of the formal license agreement.

The formal license agreement will have a term of forty-two (42) months,
with one five year renewal option, provided, however, Titan will be entitled to
terminate the agreement after the first eighteen (18)

months to the extent that sales of its Antik Denim trademarked products are not
satisfactory in its discretion. Titan is to pay $22,500 upon execution of the
formal license agreement as an advance against royalties due for the first year.
Pursuant to the Term Sheet, the formal license agreement must be entered into
within 30 days of the execution of the Term Sheet, and if for any reason it is
not executed, the Term Sheet will be deemed to be a binding licensing agreement
and all missing terms will be deemed to be those which are usual and customary
in the industry.

On October 6, 2005, we entered into a five-year License Agreement,
effective October 5, 2005, with Yanuk. Under the terms of the License Agreement,
we became the exclusive licensor for the design, development, manufacture, sale,
marketing and distribution of Yanuk's "U" brand products to the wholesale and
retail trade. We will pay to Yanuk a royalty of five percent (5%) of all net
sales of the products licensed under the agreement and a guaranteed minimum
royalty on an annual basis as further set forth in the License Agreement. In
addition, during the term of the License Agreement, we have the option to
purchase from Yanuk the property licensed under the License Agreement,
consisting of certain trademark applications and a copyright, at the fair market
value of such property on the date of the exercise of the purchase option. Yanuk
is wholly-owned by Paul Guez, our Chairman, Chief Executive Officer and
President, and a majority shareholder. The License Agreement was approved by a
majority of our Board of Directors including all of our independent directors.
As a result of the license, we will continue to implement our multi-brand
strategy and will design, develop, market and distribute jeans and accessories
at price points different from those of Antik Denim and Yanuk.

BUSINESS OF BLUE HOLDINGS, INC.

GENERAL OVERVIEW

We, directly and through our wholly-owned subsidiary, Antik Denim,
L.L.C., which was formed in September 2004, design, develop, manufacture,
market, distribute and sell high end fashion jeans, apparel and accessories. We
market, distribute and sell "Antik Denim" and, as a result of a recent license
agreement with Yanuk, "Yanuk" brand products in the United States, and
internationally in countries that include, but are not limited to, Canada,
Belgium, France, Germany, Sweden, Italy, Mexico and Japan. We plan to also
design, develop, market and distribute jeans and accessories under other brands
that we may license or acquire from time to time.

We market and distribute our products by participating in industry
trade shows, as well as through our show rooms in Los Angeles and New York. We
maintain distributor relationships in the United Kingdom, France, Germany,
Sweden, Greece, Belgium, Italy, Mexico and Japan. With respect to the Antik
Denim brand, except for Mexico and Japan, we currently have no exclusive or long
term distribution agreements with any party covering any territory, and do not
depend on any single distributor to distribute our products. With respect to the
Yanuk brand, except for Mexico and Japan, we currently have no exclusive or long
term distribution agreements with any party covering any territory, and do not
depend on any single distributor to distribute our products. Our distributors
often, but not always, purchase products from us at a discount for resale to
their customers in their respective territories. Our distributors warehouse our
products at their expense and they ship to and collect payment from their
customers directly.

EMPLOYEES

As of July 31, 2005, we had 79 employees, not including our three
executive officers, Paul Guez, our Chairman, Chief Executive Officer and
President, Elizabeth Guez, our Chief Operating Officer, and Patrick Chow, our
Chief Financial Officer and Secretary. Of those employees, 17 are employed on a
full time basis. The remaining 62 employees are part-time and season based
employees. All of our employees are allocated under a service agreement with
Blue Concept, LLC, an entity co-owned by Paul and Elizabeth Guez. A description
of that service agreement is set forth below in the section entitled
"Description of Property." Mr. Guez leads our product development, marketing and
sales, and Ms. Guez oversees all product production, including our contract
manufacturing activities. Our employees are not unionized and except as
described in the paragraph below, no employees are subject to existing
employment agreements.

Antik executed a letter agreement dated March 21, 2005 with Messrs.
Naouri and Caugant, two of its principal designers and former members, pursuant
to which Antik agreed that, to the extent Antik closed its exchange transaction
with us, Antik would, or would use its best efforts to cause us to, enter into
employment agreements with each of Messrs. Naouri and Caugant whereby such
individuals would (i) perform fashion design services for Antik or us, (ii) be
entitled to receive annual salaries of $240,000, plus bonuses based on net sales
arising from "Antik Denim" brand apparel, and (iii) be entitled to receive such
other benefits as Antik or we may elect to offer to our other employees from
time to time. On July 8, 2005, we entered into an Employment Agreement with
Philippe Naouri based on the foregoing letter agreement entered into with Antik.
This agreement was amended on August 23, 2005. Pursuant to the terms of Mr.
Naouri's employment agreement, as amended, Mr. Naouri was engaged by us as a
fashion director and senior vice president in charge of design, development,
manufacturing, marketing and wholesale of apparel and related accessories
bearing the "Antik Denim" trademark for a term of 5 years commencing on July 11,
2005 and terminating on July 10, 2010. Mr. Naouri will receive an annual salary
of $240,000. Mr. Naouri is entitled to participate in our bonus, incentive stock
option, savings and retirement plans as such plans become available. We have not
yet entered into an agreement with Mr. Caugant but anticipate doing so on or
before the end of the fiscal year ended December 31, 2005.

OUR PRODUCTS

Our principal products are high end fashion jeans that we design,
manufacture, market, distribute and sell, including through our wholly-owned
subsidiary, Antik Denim, L.L.C., under the "Antik Denim"

and "Yanuk" labels. These jeans are sold in the United States and abroad to
upscale retailers and boutiques.

We currently sell men's and women's styles and are in the process of
launching a children's line, Antik Denim and Yanuk brand jeans are made from
high quality fabrics milled in the United States, Japan, Italy and Spain and are
processed with cutting edge treatments and finishes. Our concepts and designs,
including Antik Denim's distinct vintage western flair, and our extraordinary
fit, embellishments, patent pending pockets, unique finishes, hand stitching,
embroidery detail and other attention to detail and quality give Antik Denim and
Yanuk brand jeans and apparel a competitive advantage in the high end fashion
jean market.

Our jeans are available in multiple combinations of washes, fabrics and
finishes, with as many as 20 different combinations of colors, fabrics and
finishes on certain styles. Indeed, we introduce new versions of our major
styles each month - in different colors, washes and finishes. Although the
majority of our sales arise from the sale of jean products, our product line is
balanced by tops, including knits and wovens, and accessories, the sales of
which we anticipate will continue to grow.

With the recent license of the "U" brand from Yanuk, we plan to design,
develop, market and distribute jeans and accessories under the "U" brand at
price points different from those of Antik Denim and Yanuk.

PRODUCT STRATEGY

Our overall product strategy is to offer multiple brands of apparel in
the premium and better denim segments. As a result of the License Agreement with
Yanuk Jeans, LLC, we currently market our products under the Antik Denim and
Yanuk brands and plan to continue to further expand our brand portfolio by
acquisition and/or license of existing apparel companies and/or brands, as
applicable, in the premium or better segments of the industry, or the creation
of new brands by our internal design team. Our recent license of the "U" brand
from Yanuk evidences this strategy. While no other definitive arrangement or
plan is currently in place, we expect our management to periodically review
potential acquisition targets and/or license partners and to make
recommendations to our Board of Directors. Our goal to employ a multi-brand
strategy diversifies the fashion and other risks associated with reliance on
limited product lines. We believe the increase in demand for premium denim
products over the last couple of years and relatively high retail price points
for premium jeans, ranging from approximately $200 to $400, offers us a
significant opportunity to increase our revenues and improve our profitability.

Over the last thirty years, Mr. Guez, our Chairman, Chief Executive
Officer and President, has engaged in the design, marketing, manufacturing and
wholesale distribution of premium fashion and denim collections, including
Sasson Jeans and more recently, a growing stable of contemporary brands, such as
U, Taverniti So Jeans, Duarte Jeans, Elvis, Memphis Blues and Grail Jeans. Our
principle designers, Philippe Naouri and Alex Caugant have previously assisted
world-renowned casual apparel companies such as Chevignon, Diesel, GOA, and
Replay in the design and development of successful brands and products.

OPERATING STRATEGY

Our operating strategy is to continue to build on our strengths in
brand development, marketing, distribution, and product sourcing capabilities to
become the leading company in the high fashion denim apparel industry. Our goal
is to leverage the expertise and relationships gained by our executive
management and product design teams' prior experience in creating and developing
premium denim apparel brands, product sourcing and manufacturing in the US,
Mexico, and Asia, and distributing to high-end retail channels both domestically
and internationally.

Additionally, while we have a service agreement with Blue Concept in
place, we have started to build our own team of professionals responsible for
coordinating product manufacturing, material sourcing, and sales and marketing,
all of whom have significant prior experience and established relationships in
the denim apparel industry.

GROWTH STRATEGY

We plan to continue to expand our operations, revenues, and profits
through our internal growth and the acquisition and/or license of complimentary
apparel brands or companies that we may identify from time to time. We
anticipate that our internal growth will be driven by (1) expansion of our
product lines by introducing new styles and complimentary products and
accessories, (2) expansion of our wholesale distribution, both domestically and
internationally through high end retailers, and (3) the opening of select retail
flagship stores domestically and the licensing of operators overseas to open
stores to promote the identity of our brands. The first retail store opened on
August 27, 2005 on Melrose Avenue in Los Angeles. The first product license,
with respect to men's and women's footwear, was executed to be effective
September 8, 2005. We anticipate that our growth strategy through acquisitions
and/or licenses will involve the acquisition or license of additional companies
and/or brands, as applicable, depending upon a company's and/or a brand's sales
revenues, name and brand recognition, and/or synergies with the Antik Denim and
Yanuk brands, with the ultimate goal of building a portfolio of lifestyle brands
in the premium and better segments of the denim industry. Our recent license of
the "U" brand from Yanuk evidences this strategy. While no other definitive
arrangement or plan is currently in place, we expect our management to
periodically review potential acquisition targets and/or licensing partners and
to make recommendations to our Board of Directors.

SUPPLY STRATEGY

We purchase our fabric, thread and other raw materials from various
industry suppliers within the United States and abroad. We do not currently have
any long-term agreements in place for the supply of our fabric, thread or other
raw materials. The fabric, thread and other raw materials used by us are
available from a large number of suppliers worldwide. During the six months
ended June 30, 2005 only one supplier comprised greater than 10% of the
Company's purchases. Purchases from this supplier comprised 13.3%.

MANUFACTURING

We presently outsource all of our manufacturing to contract vendors
using just in time ordering. We use several contract vendors for our
manufacturing needs with the bulk of purchases (approximately 70%) currently
occurring from domestic (U.S.) factories. We are increasing the use of factories
in Mexico and the Far East. We are not reliant on any one manufacturer and
manufacturing capacity is readily available to meet our current and planned
needs. We maintain rigorous quality control systems for both raw and finished
goods. To maintain low fixed expenses, we will continue to outsource the vast
majority of our production. We will add additional contractors as required to
meet our needs.

We believe we can realize significant cost savings in product
manufacturing because of our strong relationships with a diverse group of U.S.
and international contract manufacturers established by our management team
through their prior experience in the apparel industry. Also the increase in
production volume as a result of our multi-brand strategy will give us economies
of scale to achieve more cost savings.

COMPETITION

The high-end fashion denim industry is very competitive and fragmented.
Our competitors are companies such as Levi Strauss, Calvin Klein, Joe's Jeans,
True Religion Apparel, Seven For All Mankind and Citizens of Humanity.

Our competitive edge lies in our ability to create innovative concepts
and designs, to develop products with extraordinary fit, and to expand our high
quality fabrics and finishes, treatments and embellishments (including our
patent pending pockets, hand stitching and embroidery detail). We believe that
we offer value products that can successfully compete in the high end fashion
denim industry.

TRADEMARKS AND OTHER INTELLECTUAL PROPERTY

Antik is the holder of trademark applications for the "Antique Denim"
and "Antik Denim" marks in the United States and various other foreign
jurisdictions. Antik also owns several proprietary concepts and designs,
including pending trademark and patent applications on its pocket designs.
Yanuk, from whom we hold exclusive licenses to exploit products based on the
"Yanuk" and "U" brands, is the holder of several United States and foreign
trademarks. We anticipate continuing to expand the Antik Denim and Yanuk brands,
and the newly licensed "U" brand, and their proprietary trademarks and designs,
worldwide. We also anticipate taking, and have already taken, coordinated action
to curb an increase in the domestic and international counterfeiting of Antik's
stylized pocket design and other intellectual property, including, without
limitation, through litigation if necessary.

GOVERNMENT REGULATION AND SUPERVISION

We benefit from certain international treaties and regulations, such as
the North American Free Trade Agreement (NAFTA), which allows for the duty and
quota free entry into the United States of certain qualifying merchandise.
International trade agreements and embargoes by entities such as the World Trade
Organization also can affect our business, although their impact has
historically been favorable as it relates to Antik and Yanuk.

We have implemented various programs and procedures, including
unannounced inspections, to ensure that all of the apparel manufacturers with
whom we contract fully comply with employment and safety laws and regulations
governing their place of operation.

RESEARCH AND DEVELOPMENT

Mr. Guez, along with a team of designers, is responsible for the design
and development of our product lines. There is no formal research and
development plan at this time, however, since inception, we have apportioned
significant resources on our research and development activities related to our
designs.

FACILITIES

PRINCIPAL EXECUTIVE OFFICES

Our principal executive offices are located at 5804 E. Slauson Ave.,
Commerce California 90040. Our telephone number is (323) 725-5555.

DESCRIPTION OF PROPERTY

Our offices and warehouse are located in Commerce, California. It is
from this facility that we conduct all of our executive and administrative
functions, and ship products to our customers. We also maintain showrooms in
both Los Angeles and New York City. The cost of operations at the Commerce
facility and the showrooms is shared by several companies and is allocated to us
pursuant to our service agreement with Blue Concept, LLC. We utilize
approximately 15,000 sq. ft. of the Commerce, California facility and pay
approximately $15,000 per month pursuant to this agreement with Blue Concept,
LLC. We believe that the facilities utilized by us are well maintained, in good
operating condition and adequate to meet our current and foreseeable needs.

The service agreement with Blue Concept also provides that (i) in
consideration of a monthly service fee of $78,500, Blue Concept provides us
services in the following areas: MIS, human resources, sales, customer service,
EDI Support, quality control, purchasing, import/export services, graphic
design, laundry and distribution; and (ii) we share with Blue Concept 15% of the
actual telephone, utilities and office supply expenses incurred by Blue Concept,
as evidenced by actual invoices presented to us.

On August 27, 2005, we opened a retail store in Los Angeles and assumed
all the obligations of a 10-year property lease which was previously signed by
Blue Concept LLC in April, 2005.

LEGAL PROCEEDINGS

Except as described below, we are not involved in any legal proceedings
that require disclosure in this report.

On August 22, 2005, Antik filed a lawsuit against two companies that we
believe have encroached on its highly identifiable, stylized pocket design. The
complaint was filed in the United States District Court in Los Angeles against
Turn On Products, Inc., d/b/a Younique Clothing, and Alloy Incorporated. The
unique design in question is copyrighted, and is the subject of pending
trademark and design patent registration claims. The complaint alleges, among
other matters, that the companies are violating federal and state trademark,
copyright, unfair trade practices and unfair competition statutes and laws, and
seeks damages and injunctive relief against all parties.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth the name, age and position of each of
our executive officers and directors at October 3, 2005.

NAME AGE POSITION HELD
---- --- -------------

Paul Guez (1) 60 Chairman, Chief Executive Officer and President
Patrick Chow 52 Chief Financial Officer and Secretary
Elizabeth Guez (1) 52 Chief Operating Officer
Kevin R. Keating 65 Director
Marshall Geller 66 Director

----------
(1) Paul Guez and Elizabeth Guez are married.

PAUL GUEZ became our Chairman, Chief Executive Officer and President on
April 29, 2005. Mr. Guez is the sole Manager of Antik, and is co-owner and Chief
Executive Officer of Blue Concept, LLC and its several affiliates, which are
engaged in the design, marketing, manufacturing and wholesale distribution of
premium fashion collections for a growing stable of contemporary brands,
including Yanuk (which we exclusively licensed in July 2005), U (which we
exclusively licensed in October 2005), Taverniti So Jeans, Duarte Jeans, Elvis,
Memphis Blues and Grail Jeans. For the nine year period prior to the formation
of Blue Concept in 2002, Mr. Guez co-operated Azteca Production International,
Inc., a Los Angeles based manufacturer of denim apparel. Mr. Guez started his
career in the apparel industry in 1976, when he launched Sasson Jeans.

PATRICK CHOW became our Chief Financial Officer and Secretary on April
29, 2005. Mr. Chow was Chief Financial Officer and a director of Tarrant Apparel
Group from January 2002 to August 2004 and stayed as a consultant until January,
2005. He joined Tarrant as Treasurer in November, 1998. From 1996 to 1998, he
served as General Manager of Fortune Chart Consultants Limited in Hong Kong
where he provided financial consulting services to corporate clients. Mr. Chow
has a Bachelor of Arts degree from the University of Hong Kong and two diplomas
in Banking and Financial Studies from the Chartered Institute of Bankers, United
Kingdom.

ELIZABETH GUEZ became our Chief Operating Officer on April 29, 2005.
Ms. Guez is also the Chief Operating Officer for Blue Concept, LLC and several
of its affiliates. From 1970 through 1978, Ms. Guez attended Monmouth (West
Longbranch, NJ) and Fashion Institute of Technology of New York City. From
1974-1982, she held various buying and store line positions for the
Bamberger/Macy organization. Ms. Guez subsequently held various sales and
merchandising positions with Esprit de Corp, Chaus, and Jag of Beverly Hills.

KEVIN R. KEATING has served on our Board of Directors since January
2005 and prior to the consummation of our exchange transaction with Antik,
served as our sole officer and director. Mr. Keating is an investment executive
and for the past nine years has been the Branch Manager of the Vero Beach,
Florida, office of Brookstreet Securities Corporation. Brookstreet is a
full-service, national network of independent investment professionals. Mr.
Keating services the investment needs of private clients with special emphasis
on equities. He is currently a director of public companies including 99 Cent
Stuff Inc., Catalyst Lighting Group, Inc., Wentworth I, Inc., Qorus.com, Inc.,
Multilink Telecommunications, Inc., and Century Pacific Financial Corporation.
For more than 35 years, he has been engaged in various aspects of the investment
brokerage business. Mr. Keating began his Wall Street career with the First
Boston Company in New York in 1965. From 1967 through 1974, he was employed

by several institutional research boutiques where he functioned as Vice
President Institutional Equity Sales. From 1974 until 1982, Mr. Keating was the
President and Chief Executive Officer of Douglas Stewart, Inc., a New York Stock
Exchange member firm. Since 1982, he has been associated with a variety of firms
as a registered representative servicing the needs of individual investors. Mr.
Keating is also the manager and sole member of Vero Management, LLC, which had a
management agreement with Marine that was terminated effective as of the
Closing.

MARSHALL GELLER became a member of our Board of Directors on August 1,
2005. Mr. Geller is a co-founder and Senior Managing Director of St. Cloud
Capital Partners, L.P., a Los Angeles, California-based mezzanine fund formed in
December 2001. He is also the Chairman and CEO of Geller & Friend Capital
Partners, a Los Angeles based private merchant bank. He has extensive experience
initiating, arranging and making investments in public and private companies.
Mr. Geller spent over twenty years as Senior Managing Director for Bear, Stearns
& Company, with oversight of all operations in Los Angeles, San Francisco,
Chicago, Hong Kong and the Far East. He is currently a director of public
companies including 1st Century Bank, NA, ValueVision Media, Inc., GP Strategies
Corporation and Viking Systems, Inc. Mr. Geller also serves as a member of the
Board of Governors of Cedars-Sinai Medical Center, Los Angeles. He was
previously the Interim Co-Chairman of Hexcel Corporation and Interim President
and COO of Players International, Inc. Mr. Geller graduated from California
State University, Los Angeles, with a BS in Business Administration, where he
currently serves on the Dean's Advisory Council for the College of Business &
Economics.

BOARD COMPOSITION AND COMMITTEES

Our board of directors currently consists of three members. Each
director was elected either at a meeting of shareholders or by written consent
of the shareholders and serves until our next annual meeting or until his or her
successor is duly elected and qualified.

Our board has an Audit Committee which is comprised of the Board's two
independent directors, Messrs. Keating and Geller. Mr. Keating is the Chairman
of the Audit Committee. Our board does not have a compensation committee or
nominating and corporate governance committee. The functions customarily
delegated to these committees are performed by our full board of directors. We
intend to establish each of these committees to the extent we expand our board
to include at least three directors who are independent directors under the
applicable rules of the SEC and NASDAQ.

DIRECTOR COMPENSATION

Our two non-employee directors receive cash compensation equal to
$5,000 per year, paid quarterly, for their services as directors, and are also
reimbursed for their reasonable expenses incurred on our behalf or in attending
meetings. Additionally, the chairman of the Board's Audit Committee receives
cash compensation equal to $2,000 per year, paid quarterly, for his services as
the Chairman. In August 2005, we granted each of Messrs. Keating and Geller, our
two non-employee directors, an option to purchase 30,000 shares of our common
stock at an exercise price of $8.10 per share. These options were granted under
our 2005 Stock Incentive Plan. At the same time, we granted to Mr. Keating an
option to purchase an additional 2,000 shares of our common stock at an exercise
price of $8.10 per share in consideration for his service as Chairman of the
Board's Audit Committee.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth, as to the Chief Executive Officer and
as to each of the other four most highly compensated executive officers whose
compensation exceeded $100,000 during the last fiscal year, information
concerning all compensation paid for services to us in all capacities for our
last completed fiscal year, which commenced on September 13, 2004 (the inception
of Antik Denim, L.L.C.) and ended December 31, 2004. The compensation table
excludes other compensation in the form of perquisites and other personal
benefits that constituted less than 10% of the total annual salary and bonus for
the executive officer during the applicable fiscal year.

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------- -----------
NUMBER OF
FISCAL YEAR SECURITIES
NAME AND ENDED OTHER ANNUAL UNDERLYING
PRINCIPAL POSITION DECEMBER 31, SALARY BONUS COMPENSATION OPTIONS
----------- ------ ----- ------------ -----------
Paul Guez........... 2004 Nil Nil Nil Nil
Chief Executive
Officer and Manager

----------

Under the terms of Antik's Operating Agreement dated to be effective
September 13, 2004 (the "Operating Agreement"), by and among the Antik Members,
including Mr. Guez, certain of the Antik Members (not including Mr. Guez) were
entitled to receive, and were receiving since September 13, 2004, distributions
under the Operating Agreement. Since inception through December 31, 2004, such
distributions totaled $79,190. At the closing of the transactions contemplated
by the Exchange Agreement with Antik, the terms and conditions of the Operating
Agreement terminated and those Antik Members previously receiving distributions
are no longer entitled to such distributions. At the closing, we became the sole
member of Antik and have established such terms and conditions with respect to
the operation and governance of Antik as we deem appropriate.

OPTION GRANTS IN 2004

Antik is a limited liability company formed under the laws of the State
of California. During the period from its inception (September 13, 2004) through
December 31, 2004, it did not maintain any membership interest option or profits
interest plan. Accordingly, Antik did not grant options to purchase membership
or profits interests during the period from its inception (September 13, 2004)
through December 31, 2004.

2005 STOCK INCENTIVE PLAN

Our 2005 Stock Incentive Plan was adopted and became effective in May
2005. A total of 2,500,000 shares of common stock have been reserved for
issuance upon exercise of awards granted under the 2005 Stock Incentive Plan.
Any shares of common stock subject to an award, which for any reason expires or
terminates unexercised, are again available for issuance under the 2005 Stock
Incentive Plan.

Our 2005 Stock Incentive Plan will terminate after 10 years from the
date on which our board approved the plan, unless it is terminated earlier by
our board. The plan authorizes the award of stock options and stock purchase
grants.

Our 2005 Stock Incentive Plan is administered by our full board of
directors. To the extent we expand our board of directors, we intend to form a
compensation committee, all of the members of which will be independent
directors under applicable federal securities laws and outside directors as
defined under applicable federal tax laws. Following its formation, the
compensation committee will have the authority to construe and interpret the
plan, grant awards and make all other determinations necessary or advisable for
the administration of the plan.

Our 2005 Stock Incentive Plan provides for the grant of both incentive
stock options that qualify under Section 422 of the Internal Revenue Code and
nonqualified stock options. Incentive stock options may be granted only to
employees of ours or any parent or subsidiary of ours. All awards other than
incentive stock options may be granted to our employees, officers, directors,
consultants, independent contractors and advisors of ours or any parent or
subsidiary of ours. The exercise price of incentive stock options must be at
least equal to the fair market value of our common stock on the date of grant.
The exercise price of incentive stock options granted to 10% shareholders must
be at least equal to 110% of that value. The exercise price of nonqualified
stock options will be determined by our compensation committee when the options
are granted.

In general, options will vest over a four-year period. The term of
options granted under our 2005 Stock Incentive Plan may not exceed 10 years.

Awards granted under our 2005 Stock Incentive Plan may not be
transferred in any manner other than by will or by the laws of descent and
distribution or as determined by our compensation committee. Unless otherwise
restricted by our compensation committee, nonqualified stock options may be
exercised during the lifetime of the optionee only by the optionee, the
optionee's guardian or legal representative or a family member of the optionee
who has acquired the option by a permitted transfer. Incentive stock options may
be exercised during the lifetime of the optionee only by the optionee or the
optionee's guardian or legal representative. Options granted under our 2005
Stock Incentive Plan generally may be exercised for a period of three months
after the termination of the optionee's service with us or any parent or
subsidiary of ours. Options will generally terminate immediately upon
termination of employment for cause.

The purchase price for restricted stock will be determined by our board
of directors or compensation committee, as applicable, at the time of grant.
Stock bonuses may be issued for past services or may be awarded upon the
completion of services or performance goals.

If we are subject to a change in control transaction, all outstanding
awards may be assumed or replaced with a substitute grant by the successor
company, if any. If the outstanding awards are not assumed by a successor
company, if any, then all remaining unexercised options shall become vested and
fully exercisable.

EMPLOYMENT CONTRACTS

Except as described in this section, we and Antik are not parties to
any employment agreements with any of our respective executive officers.

2005, we entered into an Employment Agreement with Philippe Naouri based on the
foregoing letter agreement entered into with Antik. This agreement was amended
on August 23, 2005. Pursuant to the terms of Mr. Naouri's employment agreement,
as amended, Mr. Naouri was engaged by us as a fashion director and senior vice
president in charge of design, development, manufacturing, marketing and
wholesale of apparel and related accessories bearing the "Antik Denim" trademark
for a term of 5 years commencing on July 11, 2005 and terminating on July 10,
2010. Mr. Naouri will receive an annual salary of $240,000. Mr. Naouri is
entitled to participate in our bonus, incentive stock option, savings and
retirement plans as such plans become available. We have not yet entered into an
agreement with Mr. Caugant but anticipate doing so on or before the end of the
fiscal year ended December 31, 2005.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY

The Nevada Revised Statutes and certain provisions of our Bylaws under
certain circumstances provide for indemnification of our officers, directors and
controlling persons against liabilities which they may incur in such capacities.
A summary of the circumstances in which such indemnification is provided for is
contained herein, but this description is qualified in its entirety by reference
to our bylaws and to the statutory provisions.

In general, any officer, director, employee or agent may be indemnified
against expenses, fines, settlements or judgments arising in connection with a
legal proceeding to which such person is a party, if that person's actions were
in good faith, were believed to be in our best interest, and were not unlawful.
Unless such person is successful upon the merits in such an action,
indemnification may be awarded only after a determination by independent
decision of the board of directors, by legal counsel, or by a vote of the
shareholders, that the applicable standard of conduct was met by the person to
be indemnified.

The circumstances under which indemnification is granted in connection
with an action brought on our behalf is generally the same as those set forth
above; however, with respect to such actions, indemnification is granted only
with respect to expenses actually incurred in connection with the defense or
settlement of the action. In such actions, the person to be indemnified must
have acted in good faith and in a manner believed to have been in our best
interest, and have not been adjudged liable for negligence or misconduct.

Indemnification may also be granted pursuant to the terms of agreements
which may be entered in the future or pursuant to a vote of shareholders or
directors. The statutory provision cited above also grants the power to us to
purchase and maintain insurance which protects our officers and directors
against any liabilities incurred in connection with their service in such a
position, and such a policy may be obtained by us.

We have entered into separate but identical Indemnification agreements
(the "Indemnification Agreements") with each of our directors and executive
officers (the Indemnitees"). Pursuant to the terms and conditions of the
Indemnification Agreements, we indemnified each Indemnitee against any amounts
which he or she becomes legally obligated to pay in connection with any claim
against him or her based upon any action or inaction which he or she may commit,
omit or suffer while acting in his or her capacity as a director and/or officer
of us or our subsidiaries, provided, however, that the Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in or not opposed to
our best interests and, with respect to any criminal action, had no reasonable
cause to believe Indemnitee's conduct was unlawful.

regarding which indemnification by us is sought, nor are we aware of any
threatened litigation that may result in claims for indemnification.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling us pursuant
to the foregoing provisions, we have been informed that, in the opinion of the
SEC, this indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.

PRINCIPAL SHAREHOLDERS

The following table presents information regarding the beneficial
ownership of our common stock as of October 3, 2005 and as adjusted to reflect
the sale of the common stock in this offering by:

o each of the executive officers listed in the summary
compensation table;

o each of our directors;

o all of our directors and executive officers as a group; and

o each shareholder known by us to be the beneficial owner of
more than 5% of our common stock.

Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting or investment power with respect to
securities. Unless otherwise indicated below, to our knowledge, the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable. Shares of our common stock subject to options from the company
that are currently exercisable or exercisable within 60 days of October 3, 2005
are deemed to be outstanding and to be beneficially owned by the person holding
the options for the purpose of computing the percentage ownership of that person
but are not treated as outstanding for the purpose of computing the percentage
ownership of any other person.

The information presented in this table is based on 25,557,200 shares
of our common stock outstanding on October 3, 2005. Unless otherwise indicated,
the address of each of the executive officers and directors and 5% or more
shareholders named below is c/o Blue Holdings, Inc., 5804 E. Slauson Ave.,
Commerce, California 90040.

NUMBER OF SHARES
BENEFICIALLY OWNED
---------------------------------------
PERCENTAGE OF SHARES
NAME OF BENEFICIAL OWNER NUMBER OUTSTANDING
------------------------------------ --------------- --------------------

EXECUTIVE OFFICERS AND DIRECTORS:
Paul Guez (1)....................... 18,433,647 72.1%
Patrick Chow (2).................... 30,000 *
Elizabeth Guez (3).................. 18,433,647 72.1%
Kevin R. Keating (4)................ 46,483 *
Marshall Geller (5)................. 10,000 *
All 3 directors and executive
officers as a group ............. 18,520,130 72.5%

5% SHAREHOLDERS:

Meyer Abbou (6) 2,004,741 7.8%
Philippe Naouri (7) 1,739,741 6.8%
Alexandre Caugant (8) 1,739,741 6.8%

TOTAL: 25,306,657 98.9%
* Less than 1%

(1) Consists of 16,433,647 shares of common stock beneficially held by Mr.
Guez, and 2,000,000 shares of common stock beneficially held by Mr.
Guez' spouse, Elizabeth Guez.

(2) Consists of 30,000 shares of common stock.

(3) Consists of 2,000,000 shares of common stock beneficially held by Ms.
Guez, and 16,433,647 shares of common stock beneficially held by Ms.
Guez' spouse, Paul Guez.

(4) Consists of (i) 34,483 shares of common stock, and (ii) 12,000 shares
of common stock that may be acquired from us within 60 days of October
3, 2005 upon the exercise of outstanding stock options. Kevin R.
Keating, a director of the company, is the father of the principal
member of Keating Investments, LLC. Keating Investments, LLC is the
managing member of KRM Fund. Keating Investments, LLC is also the
managing member and 90% owner of Keating Securities, LLC, a registered
broker-dealer. Kevin R. Keating is not affiliated with and has no
equity interest in Keating Investments, LLC, KRM Fund or Keating
Securities, LLC and disclaims any beneficial interest in the shares of
our common stock owned by KRM Fund. Similarly, Keating Investments,
LLC, KRM Fund and Keating Securities, LLC disclaim any beneficial
interest in the shares of our common stock currently owned by Kevin R.
Keating.

(5) Consists of 12,000 shares of common stock that may be acquired from us
within 60 days of October 3, 2005 upon the exercise of an outstanding
stock option.

(6) Consists of 2,004,741 shares of common stock.

(7) Consists of 1,739,741 shares of common stock.

(8) Consists of 1,739,741 shares of common stock.

RELATED PARTY TRANSACTIONS

Other than the employment arrangements described above in "Employment
Contracts" and the transactions described below, since September 13, 2004
(inception) there has not been, nor is there currently proposed, any transaction
or series of similar transactions to which we were or will be a party:

o in which the amount involved exceeds $60,000; AND

o in which any director, executive officer, other shareholders
of more than 5% of our common stock or any member of their
immediate family had or will have a direct or indirect
material interest.

TRANSACTIONS WITH OFFICERS AND DIRECTORS

PAUL GUEZ / ELIZABETH GUEZ

On August 27, 2005, we opened a retail store in Los Angeles and assumed
all the obligations of a ten-year property lease which was entered into by Blue
Concept LLC in April, 2005. Blue Concept LLC is a company co-owned by Paul Guez
and Elizabeth Guez. The lease is guaranteed by Paul Guez and Elizabeth Guez.

On July 5, 2005, we entered into a ten-year License Agreement,
effective July 1, 2005, with Yanuk Jeans, LLC ("Yanuk"). Under the terms of the
License Agreement, we became the exclusive licensor for the design, development,
manufacture, sale, marketing and distribution of Yanuk's products to the
wholesale and retail trade. We will pay to Yanuk a royalty of six percent (6%)
of all net sales of the products licensed under the agreement and a guaranteed
minimum royalty on a quarterly basis as further set forth in the License
Agreement. In addition, during the term of the License Agreement, we have the
option to purchase from Yanuk the property licensed under the License Agreement,
consisting of certain trademarks and a design patent, at the fair market value
of such property on the date of the exercise of the purchase option. Yanuk is
wholly-owned by Paul Guez, our Chairman, Chief Executive Officer and President,
and a majority shareholder. The License Agreement was approved by a majority of
our Board of Directors including all of our directors independent of and not
affiliated with Yanuk.

During the six months ending June 30, 2005, we had total sales of $0.7
million to Blue Concept Europe Limited, a company owned by Paul Guez.

The cost of operations at our Commerce facility and our Los Angeles and
New York showrooms is shared by several companies and is allocated to us
pursuant to our service agreement ("service agreement") with Blue Concept, LLC,
an entity co-owned by Paul Guez and Elizabeth Guez, our Chief

Executive Officer and Chief Operating Officer, respectively, which is dated to
be effective May 18, 2005. We utilize approximately 15,000 sq. ft of the
Commerce, California facility and pay approximately $15,000 per month pursuant
to this agreement with Blue Concept. We believe that the facilities utilized by
us are well maintained, in good operating condition and adequate to meet our
current and foreseeable needs. The service agreement with Blue Concept also
provides that (i) in consideration of a monthly service fee of $78,500, Blue
Concept provides us services in the following areas: MIS, human resources,
sales, customer service, EDI Support, quality control, purchasing, import/export
services, graphic design, laundry and distribution; and (ii) we share with Blue
Concept 15% of the actual telephone, utilities and office supply expenses
incurred by Blue Concept, as evidenced by actual invoices presented to us. The
service agreement was approved by a majority of our Board of Directors including
all of our directors independent of and not affiliated with Blue Concept. During
the period from inception, September 13, 2004, to December 31, 2004 and for the
six months ended June 30, 2005, the Company reimbursed $390,185 and $624,295
respectively for these expenses.

On April 14, 2005, we entered into the Exchange Agreement with Antik,
the members of Antik, and KRM Fund. The closing of the transactions contemplated
by the Exchange Agreement occurred on April 29, 2005. At the closing, we
acquired all of the outstanding membership interests of Antik (the "Interests")
from the Antik Members, and the Antik Members contributed all of their Interests
to us. In exchange, we issued to the Antik Members 843,027 shares of our Series
A Convertible Preferred Stock, par value $0.001 per share (the "Preferred
Shares"), which, as a result of the approval by a substantial majority of our
outstanding shareholders entitled to vote and the approval by our Board of
Directors, of amendments to our Articles of Incorporation that (i) changed our
name to Blue Holdings, Inc., (ii) increased our authorized number of shares of
common stock to 75,000,000, and (iii) adopted a 1-for-29 reverse stock split, on
June 7, 2005 converted into 708,984,875 shares of our common stock on a
pre-reverse stock split basis and 24,447,783 shares of our common stock on a
post-reverse stock split basis.

At the closing, Antik became our wholly-owned subsidiary. As a result
of the closing of the transactions contemplated by the Exchange Agreement, the
Antik Members (together with Elizabeth Guez, our Chief Operating Officer, and
Patrick Chow, our Chief Financial Officer) hold approximately 93.7% of the
outstanding shares of our common stock.

On February 28, 2005, in accordance with the provisions of the
Operating Agreement of Antik, Paul Guez contributed piece goods inventory with a
fair market value at cost of $1,200,000 to Antik.

Antik was a party to an allocation letter agreement dated January 2,
2005 with Blue Concept pursuant to which, for the year ended December 31, 2005,
the parties agreed to allocate, and Antik was ultimately liable for, operating
expenses of Blue Concept allocable to Antik. The allocations were to be on terms
no less favorable than those that could be reasonably obtained in arms' length
transactions with independent third parties and were to be subject to final
approval by Antik's, or its successor's, audit committee, as applicable. The
allocation agreement applied to, among other matters, employees of Blue Concept
providing services to or on behalf of Antik, and covered salaries, payroll
taxes, and various employment benefits and benefit plans, including medical,
dental and 401(k) plans for such employees. The allocation agreement also
applied to other expenses consisting of utilities, common area services, rent,
insurance and other office services. This allocation agreement was terminated in
consideration for the service agreement described above.

Antik was a party to a similar allocation letter agreement dated
December 31, 2004 with Blue Concept, for the period from inception through
December 31, 2004. Pursuant to this letter agreement, Antik was allocated
approximately $104,049 per month of operating expenses allocable to its
operations, or a total of $390,185 for the entire period. Antik has confirmed
that such allocations were made on

terms no less favorable than those that could be reasonably obtained in arms'
length transactions with independent third parties.

During the period from inception through December 31, 2004, Paul Guez
and several companies co-owned by Paul Guez, provided advance loans to Antik in
the form of inventory with a fair market value at cost, or cash for working
capital purposes, in an amount equal to $246,857. The advances were unsecured
and non-interest bearing, with no formal terms of repayment. As of June 30,
2005, the principal amount outstanding for such advances was equal to $150,995.

Advances made by Blue Holdings and Antik's factor are collateralized by
non-factored accounts receivable, inventories, general intangibles and personal
guarantees executed by Blue Concept and Paul Guez. The guarantees provide that
the factor may pursue claims against Blue Concept or Mr. Guez in the event that
Antik defaults on its obligations to the factor.

In consideration for his initial membership interests in Antik, which
were subsequently exchanged for shares of the preferred stock of Blue Holdings
in its exchange transaction with Antik, Mr. Guez contributed cash in the amount
of $500,000 and certain trademark applications, and agreed to contribute up to
an additional $3,200,000 of cash and/or property as was to be required by him
acting as Manager of Antik. In February 2005, Mr. Guez contributed the piece
goods inventory described above.

PATRICK CHOW

On September 2, 2005, in connection with the acquisition by Patrick
Chow, our Chief Financial Officer, of an aggregate of 30,000 shares of our
common stock in a private transaction not related to the Company, we agreed to
provide Mr. Chow with registration rights with respect to the resale of those
shares. It is pursuant to that agreement that we have agreed to register for
resale the shares held by Mr. Chow on the registration statement of which this
prospectus is a part. The agreement restricts Mr. Chow from selling any amount
greater than 10% of his existing holdings in us during any applicable calendar
month.

KEVIN R. KEATING / KRM FUND

On January 11, 2005, Mr. Jeff Jordan entered into a Securities Purchase
Agreement ("Purchase Agreement") with Keating Reverse Merger Fund, LLC ("KRM
Fund"), under which KRM Fund agreed to purchase, and Mr. Jordan agreed to sell,
an aggregate of 15,306,500 shares of our common stock (on a
pre-reverse-stock-split basis) owned by him for a purchase price of $440,000, or
$0.029 per share.

Mr. Jordan completed the sale of his shares to KRM Fund on February 9,
2005.

On February 17, 2005, we entered into a contract with Vero Management,
LLC ("Vero") for managerial and administrative services. Vero was not engaged to
provide, and Vero did not render, legal, accounting, auditing, investment
banking or capital formation services. Kevin R. Keating, a director, is the
manager of Vero. The term of the contract was for one year. In consideration of
the services provided, Vero was paid $1,000 for each month in which services are
rendered. The agreement with Vero terminated on the closing date of the exchange
transaction with Antik.

On February 17, 2005, we issued 34,483 shares of our common stock (on a
post-reverse-stock-split basis) to Kevin R. Keating, our sole officer and
director at the time, for services rendered to us with a fair value of $10,000.

On February 17, 2005, we issued 172,414 shares of our common stock (on
a post-reverse-stock-split basis) to KRM Fund for an aggregate purchase price of
$50,000.

Kevin R. Keating, a director of the company, is the father of the
principal member of Keating Investments, LLC. Keating Investments, LLC is the
managing member of KRM Fund and, prior to the closing date of the exchange
transaction with Antik, was our majority shareholder. Keating Investments, LLC
is also the managing member and 90% owner of Keating Securities, LLC, a
registered broker-dealer. Kevin R. Keating is not affiliated with and has no
equity interest in Keating Investments, LLC, KRM Fund or Keating Securities, LLC
and disclaims any beneficial interest in the shares of our common stock owned by
KRM Fund. Similarly, Keating Investments, LLC, KRM Fund and Keating Securities,
LLC disclaim any beneficial interest in the shares of our common stock currently
owned by Kevin R. Keating.

At the closing date of the exchange transaction with Antik, we entered
into a certain financial advisory agreement with Keating Securities, LLC under
which Keating Securities, LLC was compensated by us for its advisory services
rendered to us in connection with the closing of the exchange transaction. The
transaction advisory fee was $350,000, with the payment thereof made at the
closing.

TRANSACTIONS WITH THE FORMER MEMBERS OF ANTIK DENIM, L.L.C.

On July 8, 2005, we entered into an Employment Agreement with Philippe
Naouri based on the foregoing letter agreement entered into with Antik. This
agreement was amended on August 23, 2005. Pursuant to the terms of Mr. Naouri's
employment agreement, as amended, Mr. Naouri was engaged by us as a fashion
director and senior vice president in charge of design, development,
manufacturing, marketing and wholesale of apparel and related accessories
bearing the "Antik Denim" trademark for a term of 5 years commencing on July 11,
2005 and terminating on July 10, 2010. Mr. Naouri will receive an annual salary
of $240,000. Mr. Naouri is entitled to participate in our bonus, incentive stock
option, savings and retirement plans as such plans become available. We have not
yet entered into an agreement with Mr. Caugant but anticipate doing so on or
before the end of the fiscal year ended December 31, 2005.

Pursuant to the provisions of the Exchange Agreement among us, Antik,
and the members of Antik, the members of Antik agreed that, in the event that
our stockholders' equity (on a consolidated basis following the closing of the
transactions contemplated by that agreement) as reported in our Quarterly Report
on Form 10-QSB for the quarter ended June 30, 2005 (the "Consolidated Equity")
was less than $5,000,000, the members would contribute, within fifteen (15) days
following the filing of such periodic report, equity capital to us in an amount
equal to the difference between $5,000,000 and the actual Consolidated Equity
reported in such periodic report ("Required Contribution"). In the case of such
Required Contribution, each of the Antik members agreed that no additional
shares of the our capital stock would be issued in consideration of such
Required Contribution, and therefore, the existing shareholders, including
Antik's members, would not be further diluted.

On June 27, 2005, we, Antik, Antik's former members (i.e., the members
of Antik prior to the closing of the transactions contemplated by the Exchange
Agreement), and KRM Fund, a beneficiary of certain provisions of the Exchange
Agreement, amended the Exchange Agreement to require that the Required
Contribution is to be made, if at all, in connection with the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended September 30, 2005.

Under the terms of Antik's Operating Agreement dated to be effective
September 13, 2004 (the "Operating Agreement"), by and among the Antik Members,
Messrs. Naouri, Caugant and Abbou were entitled to receive, and were receiving
since September 13, 2004, distributions under the Operating Agreement. Since
inception through December 31, 2004, such distributions totaled $79,190. At the
closing of the transactions contemplated by the Exchange Agreement with Antik,
the terms and conditions of the Operating Agreement terminated and those Antik
Members previously receiving distributions are no longer entitled to such
distributions.

In consideration for their initial membership interests in Antik, which
were subsequently exchanged for shares of the preferred stock of Blue Holdings
in its exchange transaction with Antik, Messrs. Naouri and Caugant contributed
certain property consisting of trademark and patent applications, as well as
proprietary design concepts and artwork, and Mr. Abbou contributed $250,000 in
cash.

DESCRIPTION OF CAPITAL STOCK

As of October 3, 2005, our authorized capital stock consisted of:

o 75,000,000 shares of common stock, par value $0.001 per share;
and

o 5,000,000 shares of preferred stock, par value $0.001 per
share, none of which were designated.

At October 3, 2005, there were outstanding:

o 25,557,200 shares of common stock held by approximately 67
shareholders of record; and

o 62,000 shares of common stock issuable upon exercise of
outstanding options.

COMMON STOCK

DIVIDEND RIGHTS

Subject to preferences that may apply to shares of preferred stock
outstanding at the time, the holders of outstanding shares of our common stock
are entitled to receive dividends out of funds legally available at the times
and in the amounts that our board may determine.

VOTING RIGHTS

Each holder of common stock is entitled to one vote for each share of
common stock held on all matters submitted to a vote of shareholders. Cumulative
voting for the election of directors is not provided for in our articles of
incorporation, which means that the holders of a majority of the voting shares
voted can elect all of the directors then standing for election.

NO PREEMPTIVE OR SIMILAR RIGHTS

Holders of our common stock do not have preemptive rights, and our
common stock is not convertible or redeemable.

RIGHT TO RECEIVE LIQUIDATION DISTRIBUTIONS

Upon our dissolution, liquidation or winding-up, the assets legally
available for distribution to our shareholders are distributable ratably among
the holders of our common stock, subject to the preferential rights and payment
of liquidation preferences, if any, on any outstanding shares of convertible
preferred stock.

AUTHORIZED BUT UNDESIGNATED PREFERRED STOCK

We are authorized, subject to limitations prescribed by Nevada law, to
issue preferred stock in one or more series, to establish from time to time the
number of shares to be included in each series, to fix the designation, powers,
preferences and rights of the shares of each series and any of its
qualifications, limitations or restrictions. Our board can also increase or
decrease the number of shares of any series, but not below the number of shares
of that series then outstanding, by the affirmative vote of the holders of a
majority of our capital stock entitled to vote, unless a vote of any other
holders is required by the articles of incorporation establishing the series.
Our board may authorize the issuance of preferred stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of the common stock. The issuance of preferred stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, have the effect of delaying,
deferring or preventing a change in control of Blue Holdings and may adversely
affect the market price of our common stock and the voting and other rights of
the holders of common stock. We have no current plan to issue any shares of
preferred stock.

ANTI-TAKEOVER PROVISIONS

Certain provisions of our articles of incorporation and Nevada law may
have the effect of delaying, deferring or discouraging another person from
acquiring control of Blue Holdings.

CHARTER AND BYLAW PROVISIONS

Our articles of incorporation, as amended, allow our Board to issue
5,000,000 shares of Preferred Stock, in one or more series and with such rights
and preferences including voting rights, without further shareholder approval.
In the event that the Board designates additional series of preferred stock with
rights and preferences, including super-majority voting rights, and issues such
preferred stock, the preferred stock could make our acquisition by means of a
tender offer, a proxy contest or otherwise, more difficult, and could also make
the removal of incumbent officers and directors more difficult. As a result,
these provisions may have an anti-takeover effect. The preferred stock
authorized in our articles of incorporation, as amended, may inhibit changes of
control that are not approved by our Board. These provisions could limit the
price that future investors might be willing to pay in the future for our common
stock. This could have the effect of delaying, deferring or preventing a change
in control of the Company.

The issuance of preferred stock could also effectively limit or dilute the
voting power of our shareholders. According, such provisions of our articles of
incorporation, as amended, may discourage or prevent an acquisition or
disposition of our business that could otherwise be in the best interest of our
shareholders.

NEVADA LAW

In addition, Nevada has enacted the following legislation that may
deter or frustrate takeovers of Nevada corporations, such as our company:

AUTHORIZED BUT UNISSUED STOCK. The authorized but unissued shares of
our common stock are available for future issuance without shareholder approval.
These additional shares may be used for a variety of corporate purposes,
including future public offering to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of authorized but
unissued shares of common stock may enable our Board to issue shares of stock to
persons friendly to existing management.

EVALUATION OF ACQUISITION PROPOSALS. The Nevada Revised Statutes
expressly permit our Board, when evaluating any proposed tender or exchange
offer, any merger, consolidation or sale of substantially all of the assets of
Blue Holdings, or any similar extraordinary transaction, to consider all
relevant factors including, without limitation, the social, legal, and economic
effects on the employees, customers, suppliers, and other constituencies of Blue
Holdings and our subsidiaries, and on the communities and geographical areas in
which they operate. Our Board may also consider the amount of consideration
being offered in relation to the then current market price for our outstanding
shares of capital stock and our then current value in a freely negotiated
transaction. Our Board believes such provisions are in the long-term best
interests of Blue Holdings and our shareholders.

CONTROL SHARE ACQUISITIONS. We are subject to the Nevada control share
acquisitions statute. This statute is designed to afford shareholders of public
corporations in Nevada protection against acquisitions in which a person, entity
or group seeks to gain voting control. With enumerated exceptions, the statute
provides that shares acquired within certain specific ranges will not possess
voting rights in the election of directors unless the voting rights are approved
by a majority vote of the public corporation's disinterested shareholders.
Disinterested shares are shares other than those owned by the acquiring person
or by a member of a group with respect to a control share acquisition, or by any
officer of the corporation or any employee of the corporation who is also a
director. The specific acquisition ranges that trigger the statute are:
acquisitions of shares possessing one-fifth or more but less than one-third of
all voting power; acquisitions of shares possessing one-third or more but less
than a majority of all voting power; or acquisitions of shares possessing a
majority or more of all voting power. Under certain circumstances, the statute
permits the acquiring person to call a special shareholders meeting for the
purpose of considering the grant of voting rights to the holder of the control
shares. The statute also enables a corporation to provide for the redemption of
control shares with no voting rights under certain circumstances.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Pacific Stock
Transfer Company.

LISTING

Our common stock is quoted on the Over-The-Counter Bulletin Board under
the trading symbol "BLHL." Prior to our name change, increase in authorized
shares, and 1-for-29 reverse stock split, all which took effect as of June 7,
2005, our common stock was quoted on the Over-The-Counter Bulletin Board under
the trading symbol "MJET."

PLAN OF DISTRIBUTION

We may sell the common stock registered hereby:

o through one or more underwriters or dealers,

o directly to purchasers, whether or not through agents, or

o through a combination of any of these methods of sale.

We may distribute and sell the common stock from time to time in one or
more transactions at a fixed price or prices, which may be changed from time to
time depending on the respective transaction.

We will describe the method of distribution and sale of the common
stock in the applicable prospectus supplement.

Underwriters, dealers or agents may receive compensation in the form of
discounts, concessions or commissions from us or our purchasers (as their agents
in connection with the sale of securities). These underwriters, dealers or
agents may be considered to be underwriters under the Securities Act of 1933. As
a result, discounts, commissions, or profits on resale received by the
underwriters, dealers or agents may be treated as underwriting discounts and
commissions. Each prospectus supplement will identify any such underwriter,
dealer or agent, and describe any compensation received by them from us. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.

Underwriters, dealers and agents may be entitled, under agreements
entered into with us, to indemnification by us against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribution with respect to payments made by the underwriters, dealers or
agents, under agreements between us and the underwriters, dealers and agents.

We may grant underwriters who participate in the distribution of
securities an option to purchase additional securities to cover over-allotments,
if any, in connection with the distribution. Underwriters or agents and their
associates may be customers of, engage in transactions with, or perform services
for us in the ordinary course of business.

In connection with the offering of the common stock, certain
underwriters and selling group members and their respective affiliates, may
engage in transactions that stabilize, maintain or otherwise affect the market
price of the applicable securities. These transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M promulgated by
the SEC pursuant to which these persons may bid for or purchase securities for
the purpose of stabilizing their market price.

The underwriters in an offering of securities may also create a "short
position" for their account by selling more securities in connection with the
offering than they are committed to purchase from us. In that case, the
underwriters could cover all or a portion of the short position by either
purchasing securities in the open market following completion of the offering of
these securities or by exercising any over-allotment option granted to them by
us. In addition, any managing underwriter may impose "penalty bids" under
contractual arrangements with other underwriters, which means that they can
reclaim from an underwriter (or any selling group member participating in the
offering) for the account of the other underwriters, the selling concession for
the securities that are distributed in the offering but subsequently purchased
for the account of the underwriters in the open market. Any of the transactions
described in this paragraph or comparable transactions that are described in any
accompanying prospectus supplement may result in the maintenance of the price of
the securities at a level above that which might otherwise

prevail in the open market. None of the transactions described in this paragraph
or in an accompanying prospectus supplement are required to be taken by any
underwriters and, if they are undertaken, may be discontinued at any time.

Our common stock is listed on the Over-the-Counter Bulletin Board under
the symbol "BLHL." Any shares of common stock sold pursuant to a prospectus
supplement will be listed on the Over-the-Counter Bulletin Board, or such other
market or exchange on which our common stock is trading at the time of issuance,
subject to official notice of issuance.

LEGAL MATTERS

Stubbs Alderton & Markiles, LLP, Encino, California, will pass upon the
validity of the common stock offered in this prospectus, and any applicable
prospectus supplement.

EXPERTS

The consolidated financial statements of Blue Holdings Inc., (formerly
known as Marine Jet Technology Corp.) and Antik Denim, L.L.C. as of December 31,
2004, and for the period from September 13, 2004 (inception) through December
31, 2004, included in this prospectus have been so included in reliance on the
report of Weinberg & Company, P.A., independent registered accountants, given on
the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and
other information with the SEC. We have also filed with the SEC under the
Securities Act a registration statement on Form SB-2 with respect to the common
stock offered by this prospectus. This prospectus, which constitutes part of the
registration statement, does not contain all the information set forth in the
registration statement or the exhibits and schedules which are part of the
registration statement, portions of which are omitted as permitted by the rules
and regulations of the SEC. Statements made in this prospectus regarding the
contents of any contract or other document are summaries of the material terms
of the contract or document. With respect to each contract or document filed as
an exhibit to the registration statement, reference is made to the corresponding
exhibit. For further information pertaining to us and the common stock offered
by this prospectus, reference is made to the registration statement, including
the exhibits and schedules thereto, copies of which may be inspected without
charge at the public reference facilities of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of all or any portion of the registration
statement may be obtained from the SEC at prescribed rates. Information on the
public reference facilities may be obtained by calling the SEC at
1-800-SEC-0330. In addition, the SEC maintains a web site that contains reports,
proxy and information statements and other information that is filed through the
SEC's EDGAR System. The web site can be accessed at HTTP://WWW.SEC.GOV.

INDEX TO FINANCIAL STATEMENTS

PAGE
----

FINANCIAL STATEMENTS OF BLUE HOLDINGS, INC. (FORMERLY KNOWN AS
MARINE JET TECHNOLOGY CORP.), CONSOLIDATED (UNAUDITED) AND
ANTIK DENIM, L.L.C., (AUDITED)

Report of Independent Registered Public Accounting Firm............ F-2

Balance Sheets at June 30, 2005, consolidated (Unaudited)
and December 31, 2004.............................................. F-3

Statements of Operations for the Six Months Ended June 30, 2005,
consolidated (Unaudited) and for the period September 13, 2004
(Inception) to December 31, 2004................................... F-4

Statement of Stockholders' And Members' Equity For the Period
September 13, 2004 (Inception) to December 31, 2004 and for the
six months ended June 30,2005, consolidated (Unaudited)............ F-5

Statements of Cash Flows for Six Months Ended June 30, 2005,
consolidated (Unaudited) and for the period September 13, 2004
(Inception) to December 31, 2004................................... F-6

Notes to Financial Statements as of December 31, 2004 and June 30,
2005 (Unaudited)................................................... F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors:
Blue Holdings, Inc., (formerly known as Marine Jet Technology Corp.),
and Antik Denim, L.L.C.

We have audited the accompanying balance sheet of Blue Holdings, Inc.,
(formerly known as Marine Jet Technology Corp.), and Antik Denim, L.L.C. as of
December 31, 2004 and the related statements of operations, members' equity and
cash flows for the period September 13, 2004 (Inception) to December 31, 2004.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Blue Holdings, Inc.,
(formerly known as Marine Jet Technology Corp.), and Antik Denim, L.L.C. as of
December 31, 2004 and the results of its operations and its cash flows for the
period September 13, 2004 (Inception) to December 31, 2004 in conformity with
accounting principles generally accepted in the United States of America.

WEINBERG & COMPANY, P.A.
Boca Raton, Florida
April 30, 2005

F-2

BLUE HOLDINGS INC. (FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
AND ANTIK DENIM, L.L.C.
BALANCE SHEETS

BLUE ANTIK
HOLDINGS DENIM,
INC. L.L.C.
JUNE 30, DECEMBER 31,
2005 2004
---------- ----------
(Unaudited)

ASSETS

Current Assets:
Cash .............................................. $ 31,539 $ 73,823
Due from Factor, net of reserves of
$293,949 and $59,412, respectively .............. 448,621 378,594
Accounts Receivable, net of reserves of
$200,000 and $-0-, respectively ................. 36,713 125,673
Inventories ....................................... 5,430,657 812,188
Due From Related Parties .......................... 180,345 1,583
Prepaid Expenses and Other Current Assets ......... 294,445 14,624
---------- ----------
Total Current Assets ........................... 6,422,320 1,406,485

Deferred Income Taxes .............................. 197,580 --

Property and Equipment ............................. 9,427 10,483
---------- ----------

$6,629,327 $1,416,968
========== ==========

LIABILITIES AND STOCKHOLDERS' AND MEMBERS' EQUITY

Current Liabilities:
Accounts Payable .................................. $2,288,180 $ 995,220
Due to Related Parties ............................ 150,995 210,657
Due to Shareholder ................................ -- 36,200
Due to Customers .................................. -- 90,000
Income Taxes Payable .............................. 333,064 --
Accrued Expenses and Other Current Liabilities .... 95,653 45,836
---------- ----------
Total Current Liabilities ...................... 2,867,892 1,377,913
---------- ----------

Stockholders' and Members' Equity:
Members' Equity ................................... -- 39,055
Common Stock $0.001 par value
Authorized 75,000,000 shares
Issued and outstanding 25,441,628 .............. 25,442 --
---------- ----------
Common Stock to be Issued, 102,079 shares ......... 177,617 --

Additional Paid-in Capital ........................ 3,031,568 --

Retained Earnings ................................. 526,808 --
---------- ----------
Total Stockholders' and Members' Equity .......... 3,761,435 39,055
---------- ----------
$6,629,327 $1,416,968
========== ==========

See Notes to Financial Statements.

F-3

BLUE HOLDINGS INC. (FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
AND ANTIK DENIM, L.L.C.
STATEMENTS OF OPERATIONS
FOR THE PERIOD SEPTEMBER 13, 2004 (INCEPTION)
TO DECEMBER 31, 2004 AND FOR THE SIX MONTHS
ENDED JUNE 30, 2005 (UNAUDITED)

BLUE HOLDINGS ANTIK DENIM,
INC. L.L.C.

SEPTEMBER 13,
2004
SIX MONTHS (INCEPTION)
ENDED TO
JUNE 30, DECEMBER 31,
2005 2004
------------ ------------
(Unaudited)

Net Sales ....................................... $ 8,854,228 $ 365,290

Cost of Goods Sold .............................. 4,389,431 157,545
------------ ------------

Gross Profit .................................... 4,464,797 207,745

Selling, distribution & administrative expenses . 2,192,334 838,700

Non-Cash Development Costs ...................... -- 500,000
------------ ------------

Income (Loss) before expenses relating to the
exchange transaction and provision for income
taxes ......................................... 2,272,463 (1,130,955)

Expenses relating to the exchange transaction ... 477,617 --
------------ ------------

Income (loss) before provision for income taxes . 1,794,846 (1,130,955)

Provision for income taxes ...................... 136,284 800
------------ ------------

Net Income (Loss) ............................... $ 1,658,562 $ (1,131,755)
============ ============

Earnings (loss) per share, Basic and Diluted .... $ 0.07 $ (0.05)
============ ============

Weighted Average number of common shares
outstanding, basic and diluted ................ 25,441,628 24,447,783
============ ============

See Notes to Financial Statements.

F-4

BLUE HOLDINGS INC. (FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
AND ANTIK DENIM, L.L.C.
STATEMENT OF STOCKHOLDER' AND MEMBERS' EQUITY
FOR THE PERIOD SEPTEMBER 13, 2004
(INCEPTION) TO DECEMBER 31, 2004 AND
FOR THE SIX MONTHS ENDED JUNE 30, 2005
(UNAUDITED)

SHARES ISSUED COMMON STOCK ISSUABLE
------------------------ ------------------------
MEMBERS PAR VALUE PAID IN RETAINED
EQUITY NUMBER 0.001 CAPITAL NUMBER AMOUNT EARNINGS TOTAL
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------

Members contributions .... $ 1,250,000 -- $ -- $ -- -- $ -- $ -- $ 1,250,000

Members withdrawals ...... (79,189) -- -- -- -- -- -- (79,189)

Net loss for the period .. (1,131,755) -- -- -- -- -- -- (1,131,755)

Balance, December 31, 2004 39,056 -- -- -- -- -- -- 39,056

Contributions ............ 1,886,200 -- -- -- -- -- -- 1,886,200

Issuance of shares upon
reverse merger ........... -- 24,447,783 24,448 (24,448) -- -- -- --

Old Marine Jet shares .... -- 993,845 994 (994) -- -- -- --

Change in status from LLC
to Corp upon completion of
the exchange transaction . (1,925,256) -- -- 3,057,010 -- -- (1,131,754 --

Shares to be issued to
Finder ................... -- -- -- -- 102,079 177,617 -- 177,617

Net Income for the period -- -- -- -- -- -- 1,658,562 1,658,562
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------

Ending Balance
June 30, 2005 ............ $ -- 25,441,628 $ 25,442 $ 3,031,568 102,079 $ 177,617 $ 526,808 $ 3,761,435
=========== =========== =========== =========== =========== =========== =========== ===========

See Notes to Financial Statements.

F-5

BLUE HOLDINGS INC. (FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
AND ANTIK DENIM, L.L.C.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD SEPTEMBER 13, 2004 (INCEPTION) TO
DECEMBER 31, 2004 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2005 (UNAUDITED)

BLUE HOLDINGS ANTIK DENIM,
INC. L.L.C.

SEPTEMBER 13,
2004
SIX MONTHS (INCEPTION)
ENDED TO
JUNE 30, DECEMBER 31,
2005 2004
----------- -----------
(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) .................................. $ 1,658,562 $(1,131,755)
Adjustments to reconcile income (loss) to net
cash used in operating activities
Non-cash development costs .................... -- 500,000
Depreciation .................................. 1,056 389
Stock based exchange transaction expense ...... 177,617 --
Changes in assets and liabilities
Accounts Receivable ........................... 88,960 (125,673)
Other Receivable .............................. (235,883) --
Inventories ................................... (3,418,469) (812,188)
Due from Related Parties ...................... (178,762) (1,583)
Due to Related Parties ........................ (95,861) 246,857
Deferred Income Taxes ......................... (197,580) --
Prepaid Expenses and other current assets ..... (43,938) (14,624)
Income tax payable ............................ 333,064 --
Accounts Payable .............................. 1,292,960 995,220
Due to Customers .............................. (90,000) 90,000
Other current liabilities ..................... 49,817 45,836
----------- -----------

Net cash used in operating activities ......... (658,457) (207,521)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment ......... -- (10,872)
----------- -----------

Net cash used in investing activities ......... -- (10,872)
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions ......................... 686,200 750,000
Distributions to Members ...................... -- (79,190)
Change in Due from Factor ..................... (70,027) (378,594)
----------- -----------

Net cash provided by financing activities ..... 616,173 292,216
----------- -----------

NET INCREASE (DECREASE) IN CASH AT THE END OF PERIOD (42,284) 73,823
CASH, BEGINNING OF PERIOD .......................... 73,823 --
----------- -----------
CASH, END OF PERIOD ................................ $ 31,539 $ 73,823
=========== ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for income taxes ......................... $ 800 $ 800
=========== ===========

Non-cash Transactions:
During the period ended June 30, 2005, a member contributed inventory valued
at its historical cost of $1,200,000. During the period ended June 30, 2005,
the Company recorded 102,079 shares of common stock to be issued valued at
$177,617 in settlement of an expense related to the exchange transaction.

See Notes to Financial Statements.

F-6

BLUE HOLDINGS, INC.
(FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
AND ANTIK DENIM, L.L.C.

NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 2004
AND JUNE 30, 2005 (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION, ORGANIZATION AND NATURE OF OPERATIONS

(a) ORGANIZATION

Blue Holdings, Inc. (a Nevada corporation formerly known as Marine Jet
Technology Corp.) was incorporated in the State of Nevada on February 9, 2000.
On April 14, 2005, Blue Holdings entered into an Exchange Agreement with Antik
Denim, L.L.C. ("Antik"), a California Limited Liability Company organized on
September 13, 2004. At the closing of the transactions contemplated by the
exchange agreement, which occurred on April 29, 2005, Blue Holdings acquired all
of the outstanding membership interests of Antik (the "Interests") from the
members of Antik, and the members contributed all of their Interests to Blue
Holdings. In exchange, Blue Holdings issued to the members 843,027 shares of
Series A Convertible Preferred Stock, par value $0.001 per share, of Blue
Holdings ("Preferred Shares"), which, on June 7, 2005, as a result of a change
to Marine Jet Technology Corp.'s name to Blue Holdings, Inc. and a 1 for 29
reverse stock split, were converted into 24,447,783 shares of Blue Holding's
common stock on a post-reverse stock split basis (see Note 14). As such,
immediately following the closing and upon the conversion of the Preferred
Shares, the Antik members owned 95.8% of the total issued and outstanding common
stock of Blue Holdings on a fully-diluted basis. Following completion of the
exchange transaction, Antik became a wholly-owned subsidiary of Blue Holdings.
The acquisition is accounted for as a reverse merger (recapitalization) in the
accompanying financial statements with Antik deemed to be the accounting
acquirer, and Blue Holdings deemed to be the legal acquirer. As such the
financial statements herein are those of Antik since September 13, 2004 (the
date of its inception). All assets and liabilities of Marine Jet Technology
Corp. were assumed by the major shareholder of Blue Holdings, Inc. prior to the
exchange transaction and were inconsequential to the merged companies.

On June 7, 2005, Marine Jet Technology Corp. changed its name to Blue
Holdings Inc., and increased its authorized number of common stock to
75,000,000.

Pursuant to the provisions of the Exchange Agreement with Antik, the
former members of Antik agreed that, in the event that the stockholders' equity
of Blue Holdings (on a consolidated basis following the closing of the
transactions contemplated by the Exchange Agreement) as reported in Blue
Holdings' Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 (the
"Consolidated Equity") was less than $5,000,000, the former members would
contribute, within fifteen (15) days following the filing of such periodic
report, equity capital to Blue Holdings in an amount equal to the difference
between $5,000,000 and the actual Consolidated Equity reported in such periodic
report ("Required Contribution"). In the case of such Required Contribution,
each of the Antik members agreed that no additional shares of capital stock of
Blue Holdings would be issued in consideration of such Required Contribution,
and therefore, the existing shareholders of Blue Holdings, including Antik's
former members, would not be further diluted. By an amendment dated June 27,
2005, the date of June 30, 2005 for calculation of the consolidated equity was
amended to September 30, 2005.

(b) NATURE OF OPERATIONS:

The Company operates exclusively in the wholesale apparel industry. The
Company designs, develops, markets and distributes high fashion jeans and
accessories under the brand name "Antik Denim," and as of July 5, 2005, under
the brand name "Yanuk." The Company's products include jeans, jackets, belts,
purses and T-shirts. The Company currently sells its products in the United
States, Canada, Japan and the European Union directly to department stores and
boutiques and through distribution arrangements in certain foreign
jurisdictions. The Company is headquartered in Commerce, California and
maintains two showrooms in New York and Los Angeles.

F-7

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) USE OF ESTIMATES:

(b) INVENTORY VALUATION:

Inventories are stated at the lower of cost (first-in, first-out
method) or market.

Revenue is recognized when merchandise is shipped to the customer based
upon agreed terms and is recorded net of estimated returns, charge backs and
markdowns based upon management's estimates and historical experience. We
sometimes arrange, on behalf of manufacturers, for the purchase of fabric from a
single supplier. We have the fabric shipped directly to the cutting factory and
invoice the factory for the fabric. The factories then pay us for the fabric
with offsets against the price of the finished goods.

(d) ADVERTISING:

Advertising costs are expensed as of the first date the advertisements
take place. Advertising expenses included in selling expenses approximated
$3,500 for the period from September 13, 2004 (inception) to December 31, 2004
and $61,501 for the six months ended June 30, 2005.

(e) PROPERTY AND EQUIPMENT:

Property and equipment is stated at cost. Depreciation is provided by
the straight-line method at rates calculated to amortize cost over the estimated
useful lives of the respective assets.

Upon sale or retirement of such assets, the related cost and
accumulated depreciation are eliminated from the accounts and gains or losses
are reflected in operations. Repairs and maintenance expenditures not
anticipated to extend asset lives are charged to operations as incurred.

(f) INCOME TAXES:

Antik Denim was a limited liability company with four individual
members up until April 29, 2005. After the exchange transaction, Blue Holdings
Inc. became the sole member of the limited liability company. As a result, the
company's tax status changed from a limited liability company to a corporation,
Antik is no longer a pass through entity for U.S. income tax purposes. Federal
and State income tax obligations for the period prior to April 29, 2005, were
passed through to the previous members of Antik, and the Company recorded no
provision for such taxes. The Company has agreed with the previous members of
the limited liability company that the Company will not make any distributions
to pay tax liabilities, if any, on income earned prior to the acquisition date,
April 29, 2005. Consequently, the taxes on the income of the limited liability
company are payable individually by each member.

The Company uses the asset and liability method to account for its
income taxes. The Company's provision for income taxes at June 30, 2005 was
based on income for the period from April 30, 2005 to June 30, 2005 as adjusted
for timing differences outstanding at the date that Blue Holdings became the
sole member of the limited liability company.

F-7

The Company recognizes deferred taxation on temporary differences
between income tax liability for financial statement and income tax purposes. At
June 30, 2005 the deferred tax asset amounted to $197,580 relating principally
to the valuation reserves recorded for Generally Accepted Accounting Principle
purposes.

(g) IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLES:

Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell.

(h) CONCENTRATION OF CREDIT RISK:

Financial instruments, which potentially expose us to concentration of
credit risk, consist primarily of cash, trade accounts receivable, and amounts
due from the factor. Concentration of credit risk with respect to trade accounts
receivable at December 31, 2004 and June 30, 2005 is limited due to the number
of customers comprising the Company's customer base and their dispersion
throughout the United States. The Company extends unsecured credit to its
customers in the normal course of business.

The Company's cash balances on deposit with banks are guaranteed by the
Federal Deposit Insurance Corporation up to $100,000. The Company may be exposed
to risk for the amounts of funds held in one bank in excess of the insurance
limit. In assessing the risk, the Company's policy is to maintain cash balances
with high quality financial institutions.

The Company's products are primarily sold to department stores and
specialty retail stores. These customers can be significantly affected by
changes in economic, competitive or other factors. The Company makes substantial
sales to a relatively few, large customers. In order to minimize the risk of
loss, the Company assigns certain amount of domestic accounts receivable to a
factor without recourse or requires letters of credit from its customers prior
to the shipment of goods. For non-factored receivables, account-monitoring
procedures are utilized to minimize the risk of loss. Collateral is generally
not required. No single customer accounted for more than 10% of total sales in
the six months ended June 30, 2005, and only one customer accounted for 7.7% and
4.2% respectively of total sales.

(i) MERCHANDISE RISK:

The Company's success is largely dependent upon its ability to gauge
the fashion tastes of its targeted consumers and provide merchandise that
satisfies consumer demand. Any inability to provide appropriate merchandise in
sufficient quantities in a timely manner could have a material adverse effect on
the Company's business, operating results and financial condition.

(j) ACCOUNTS RECEIVABLE - ALLOWANCE FOR RETURNS, DISCOUNTS AND BAD DEBTS:

The Company evaluates the collectibility of accounts receivable and
chargebacks (disputes from the customer) based upon a combination of factors. In
circumstances where the Company is aware of a specific customer's inability to
meet its financial obligations (such as in the case of bankruptcy filings or
substantial downgrading by credit sources), a specific reserve for bad debts is
taken against amounts due to reduce the net recognized receivable to the amount
reasonably expected to be collected. For all other customers, the Company
recognizes reserves for bad debts and uncollectible charge backs based on its
historical collection experience. If collection experience deteriorates (for
example, due to an unexpected material adverse change in a major customer's
ability to meet its financial obligations to the Company), the estimates of the
recoverability of amounts due could be reduced by a material amount.

F-8

(k) SHIPPING AND HANDLING COSTS:

Freight charges are included in selling, distribution and
administrative expenses in the statement of operations and approximated $23,000
for the period ended December 2004 and $117,933 for the six months ended June
30, 2005.

(l) INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per share is calculated by dividing net income
(loss) available to common stockholders by the weighted average number of common
shares outstanding during the period. Diluted income (loss) per share is
calculated assuming the issuance of common shares, if dilutive, resulting from
the exercise of stock options and warrants. During the period ended December 31,
2004 and the six months ended June 30, 2005, the Company did not have any common
stock equivalents outstanding. The weighted average number of common shares
outstanding, basic and diluted, shown in the statement of operations for the
period ended December 31, 2004, represent the shares issued to the former
members of Antik Denim, L.L.C. upon the reverse merger as if it had occurred
during 2004.

(m) RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued Statement of Financial Accounting
Standard ("SFAS") No. 123R "Share Based Payment." This statement is a revision
of SFAS Statement No. 123, "Accounting for Stock-Based Compensation" and
supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and
its related implementation guidance. SFAS 123R addresses all forms of share
based payment ("SBP") awards including shares issued under employee stock
purchase plans, stock options, restricted stock and stock appreciation rights.
Under SFAS 123R, SBP awards result in a cost that will be measured at fair value
on the awards' grant date, based on the estimated number of awards that are
expected to vest. This statement will become effective for the Company during
the first quarter of 2006. The Company has evaluated the effects of the adoption
of this pronouncement and has determined it will not have a material impact on
the Company's financial statements.

F-9

NOTE 3 - DUE FROM FACTOR

The Company uses a factor for working capital and credit administration
purposes. Under the factoring agreement, the factor purchases a substantial
portion of the trade accounts receivable and assumes all credit risk with
respect to such accounts. The factor agreement, which terminates on October 18,
2005, provides that the Company can borrow an amount up to 85% of the value of
its approved factored customer invoices, less a reserve of 15% of unpaid
accounts purchased and 100% of all such accounts which are disputed.

The amount of reserve held by the Factor was approximately $89,641 and
$464,000 as of December 31, 2004 and June 30, 2005, respectively.

The factor commission is 0.08% of the customer invoice amount for terms
up to 90 days, plus one quarter of one percent (.25%) for each additional
thirty-day term. Receivables sold in excess of maximums established by the
factor are subject to recourse in the event of nonpayment by the customer. The
Company is contingently liable to the factor for merchandise disputes, customer
claims and the like on receivables sold to the factor. Items subject to recourse
approximated $998,863 as of June 30, 2005. To the extent that the Company draws
funds prior to the deemed collection date of the accounts receivable sold to the
factor, interest is charged at the rate of 1% over the factor's prime lending
rate per annum. Factor advances and ledger debt are collateralized by the
non-factored accounts receivable, inventories and the personal guarantee of the
majority shareholder and a company co-owned by the majority shareholder (see
Note 14).

NOTE 4 - INVENTORIES

Inventories are summarized as follows:

DECEMBER 31, JUNE 30,
2004 2005
---------- ----------
(Unaudited)

Raw Materials .......... $ 699,398 $2,511,503
Work-in-process ........ -- 1,301,764
Finished goods ......... 112,790 1,617,390
---------- ----------
$ 812,188 $5,430,657
========== ==========

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment is summarized as follows:

DECEMBER 31, JUNE 30,
2004 2005
-------- --------
(Unaudited)

Furniture ...................... $ 1,064 $ 1,064
Leasehold improvements ......... 7,000 7,000
Computer equipment ............. 2,808 2,808
-------- --------
10,872 10,872
Less: Accumulated depreciation . (389) (1,445)
-------- --------
Net ............................ $ 10,483 $ 9,427
======== ========

F-10

NOTE 6 - RELATED PARTY TRANSACTIONS

During the period from inception, September 13, 2004, to December 31,
2004 and for the six months ended June 30, 2005, the Company reimbursed $390,185
and $624,295 respectively for certain expenses (consisting of salaries, payroll
taxes, utilities, common area services, rent, insurance and other office
services) to Blue Concept, LLC, an entity that is co-owned by a member of the
Company. These amounts were for the benefit of the Company and are included in
operating expenses in the accompanying Statement of Operations. The arrangement
was formalized under a Service Agreement signed on May 18, 2005.

The Company had sales to certain entities controlled by the principal
stockholder of $766,511 during the six months ended June 30, 2005. Before the
exchange transaction, the sales terms were at a mark-up over cost approximately
20% discount from regular wholesale price. The terms for all future sales were
changed to regular wholesale prices after the exchange transaction with Antik.

The Company also purchased fabric at cost from Blue Concept LLC, an
entity co-owned by Paul and Elizabeth Guez, the Company's Chairman, Chief
Executive Officer and President, and Chief Operating Officer, respectively
("Blue Concept"), $459,864 during the six months ended June 30, 2005.

The majority shareholders and Blue Concept have personally guaranteed
all advances due to the Company's factor.

NOTE 7 - DUE FROM/TO RELATED PARTIES

The related parties are the majority shareholder and Limited Liability
Companies that are co-owned by a majority shareholder of the Company (see Note
11). These amounts are all unsecured and non-interest bearing. All non-trade
related advances from related parties have been repaid. Trade-related
outstanding items follow regular payment terms as invoiced.

NOTE 8 - MAJOR SUPPLIERS

During the period from inception, September 13, 2004, to December 31,
2004, two suppliers comprised greater than 10% of the Company's piece goods
purchases. Purchases from these suppliers were 51.3% and 34.1%, respectively.

During the six months ended June 30, 2005 one supplier comprised
greater than 10% of the Company's purchases. Purchases from this supplier
comprised 13.3%.

NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of Cash, Due from factor, Accounts receivable, Due
from related parties, Accounts payable, Due to related parties, Due to
customers, Accrued expenses and other current liabilities approximate fair value
because of the short maturity of these items.

F-11

NOTE 10 - OFF-BALANCE SHEET RISK

Financial instruments that potentially subject the Company to
off-balance sheet risk consist of factored accounts receivable. As described in
Note 3, the Company sells the majority of its trade accounts receivable to a
factor and is contingently liable to the factor for merchandise disputes and
other customer claims. At December 31, 2004 and June 30, 2005, total factor
receivables approximated $515,000 and $449,000 respectively.

NOTE 11 - CAPITAL CONTRIBUTION

Antik Denim, L.L.C. was formed on September 13, 2004 with 4 members,
one of which had a 75.4% ownership interest, and the other 3 members each had a
8.2% ownership interest. Member contributions in cash were as follows:
contributions of $500,000 by the 75.4% member and a contribution of $250,000 by
an 8.2% member. The other 8.2% members each contributed patent and trademark
applications, design concepts and other items to form a complete line of
high-end fashion apparel. For financial statement purposes, the Company valued
each of the contributions at $250,000 ($500,000 in total), which was equal to
the cash consideration paid by the other 8.2% member. The $500,000 has been
reflected as non-cash development costs in the statement of operations for the
period ended December 31, 2004.

The members' equity account, as of December 31, 2004, was as follows:

Contributions by a 75.4 % member- cash .......... $ 500,000
Contributions by a 8.2 % member- cash ........... 250,000
Contributions by two 8.2% members ($250,000 each)
- non-cash development costs ................ 500,000
-----------

Total ...... 1,250,000

Less Net Loss .............................. (1,131,755)

Less Members' withdrawals .................. (79,190)
-----------

Balance at the end of the period ........... $ 39,055
===========

During 2005, Mr. Guez, the principal shareholder, personally
contributed $1,200,000 in fabric inventory and $686,200 in cash to the Company.
From time to time, he also supports the Company with temporary advances. As of
June 30, 2005, the Company had advances totaling $141,549 from Mr. Guez which
are included in due to related parties on the accompanying balance sheet.

NOTE 12 - COMMON STOCK ISSUABLE

As of June 30, 2005, the Company has recorded 102, 079 shares of common
stock to be issued to Alan Kersh as a finder's fee to facilitate the exchange
transaction. The shares were subsequently issued on August 18, 2005. These
shares were valued at $177,617 based upon the market price of the stock on the
date of the agreement.

F-12

NOTE 13- STOCK INCENTIVE PLAN

In general, options will vest over a four-year period. The term of
options granted under our 2005 Stock Incentive Plan may not exceed 10 years.

F-13

NOTE 14 - SUBSEQUENT EVENTS

On July 5, 2005, the Company entered into a ten-year license agreement
with Yanuk. Under the terms of the agreement, the Company will be the exclusive
licensor for the design, development, manufacture, sale, marketing and
distribution of Yanuk's "Yanuk" brand products. The Company will pay to Yanuk a
royalty of six percent of all net sales and shall pay a guaranteed minimum
royalty on a quarterly basis. Also the company has the option to purchase from
Yanuk the property licensed under the agreement.

On August 27, 2005, the Company opened a retail store on Melrose
Avenue, Los Angeles, California and took over all the obligations of a 10-year
property lease which was entered into by Blue Concept LLC in April 2005. The
lease will expire on March 15, 2015 and will be classified as an operating
lease. The monthly base rent is $16,925 plus common area maintenance costs,
utility services and taxes. The base rent will be adjusted annually beginning
April 2006 between 2.5%-3.5% per annum.

The factor agreement with FTC Commercial Corp. has been amended to
terminate on July 24, 2006 and includes Blue Holdings Inc. as an additional
borrower. The amendments, dated to be effective July 25, 2005, also make
available to both Blue Holdings Inc and Antik Denim, L.L.C. a combined line of
credit up to $1.5 million against inventory. We can borrow against inventory up
to 33.3% of the value of eligible raw materials and finished goods. By another
amendment dated September 1, 2005, the advance ratio against approved factored
invoices has been revised to 90%. Furthermore, the credit facilities will
automatically be renewed after July 24, 2006 and will thereafter be subject to
120 days' termination notice from either party.

Subsequent to June 30, 2005, the Company issued a total of 13,493
additional shares to holders of the pre-stock-split shares for rounding
purposes.

In August 2005, we granted each of Messrs. Keating and Geller, our two
non-employee directors, an option to purchase 30,000 shares of our common stock
at an exercise price of $8.10 per share. These options were granted under our
2005 Stock Incentive Plan. At the same time, we granted to Mr. Keating an option
to purchase an additional 2,000 shares of our common stock at an exercise price
of $8.10 per share in consideration for his service as Chairman of the Board's
Audit Committee.

On October 6, 2005, the Company entered into a five-year License
Agreement, effective October 5, 2005, with Yanuk Jeans LLC ("Yanuk"), a related
party. Under the terms of the License Agreement, the Company will be the
exclusive licensor for the design, development, manufacture, sale, marketing and
distribution of Yanuk's "U" brand products. The Company will pay to Yanuk a
royalty of five percent of all net sales and shall pay a guaranteed minimum
royalty on an annual basis. Also the company has the option to purchase from
Yanuk the property licensed under the agreement.

F-14

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

A shareholder's investment may be adversely affected to the extent we
pay the costs of settlement and damage awards against directors and officers as
required by these indemnification provisions. At present, there is no pending
litigation or proceeding involving any of our directors, officers or employees
regarding which indemnification by us is sought, nor are we aware of any
threatened litigation that may result in claims for indemnification.

II-1

Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:

EXHIBIT
EXHIBIT DOCUMENT NUMBER
-------------

Articles of Incorporation of Registrant, as amended........ 3.1
Bylaws of Registrant....................................... 3.2
Form of Indemnification Agreement.......................... 10.7

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table itemizes the expenses incurred by the Registrant in
connection with the offering. All the amounts shown are estimates except the
Securities and Exchange Commission registration fee.

AMOUNT
-------

Registration fee - Securities and Exchange Commission .......... $ 3,021
Legal fees and expenses ........................................ $10,000
Accounting fees and expenses ................................... $10,000
Miscellaneous expenses ......................................... $ 1,000
-------
Total ..................................................... $24,021

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The issuance of the Preferred Shares and, upon conversion, the shares
of our common stock underlying the Preferred Shares, to the Antik Members was
exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to Section 4(2) thereof.

We made this determination based on the representations of the Antik
Members which included, in pertinent part, that such members were "accredited
investors" within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act, that such members were acquiring the Preferred Shares, and the
shares of our common stock underlying the Preferred Shares, for investment
purposes for their own respective accounts and not as nominees or agents, and
not with a view to the resale or distribution thereof, and that each member
understood that the Preferred Shares, and the shares of our

II-2

common stock underlying the Preferred Shares, may not be sold or otherwise
disposed of without registration under the Securities Act or an applicable
exemption therefrom.

Pursuant to an oral agreement entered into between Antik and Savoy
Capital Advisors Inc. ("Savoy") on March 24, 2005, we issued to Mr. Alan Kersh
on August 18, 2005, in accordance with a certain Restated Finders Agreement,
102,079 shares of our common stock (on a post-reverse-stock-split basis) in
consideration for certain finder services provided in connection with the
exchange transaction with Antik. Pursuant to that agreement, we agreed to
register the shares issued to Mr. Kersh under certain terms and conditions. On
September 13, 2005, we filed with the U.S. Securities and Exchange Commission a
registration statement on Form SB-2 (File #: 333-128288) to register for resale
the shares held by Mr. Kersh. The issuance of the shares of common stock to Mr.
Kersh was exempt from registration under the Securities Act pursuant to Section
4(2) thereof. We made this determination based on the representations of Mr.
Kersh which included, in pertinent part, that he is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act, that he was acquiring the shares of common stock for investment purposes
for his own account and not as nominee or agent, and not with a view to the
resale or distribution thereof, and that he understood that the shares of common
stock may not be sold or otherwise disposed of without registration under the
Securities Act or an applicable exemption therefrom.

II-3

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) The following exhibits are filed herewith:

EXHIBIT
NUMBER EXHIBIT TITLE
------- --------------------------------------------------------------

2.1 Exchange Agreement dated April 14, 2005, among Blue Holdings,
Inc. (formerly known as Marine Jet Technology Corp.), Antik
Denim, L.L.C., each member of Antik Denim, L.L.C. and Keating
Reverse Merger Fund, LLC. (1)

2.2 First Amendment to Exchange Agreement dated June 27, 2005,
among Blue Holdings, Inc., Antik Denim, L.L.C., each member of
Antik Denim, L.L.C. and Keating Reverse Merger Fund, LLC. (2)

3.1 Articles of Incorporation of the Registrant filed February 9,
2000. (3)

3.1.1 Certificate of Amendment of Articles of Incorporation of the
Registrant filed December 5, 2000. (3)

3.1.2 Certificate of Amendment of Articles of Incorporation of the
Registrant filed January 5, 2001. (3)

3.1.3 Certificate of Amendment of Articles of Incorporation of the
Registrant filed May 16, 2005 and effective June 7, 2005. (4)

3.2 Bylaws of the Registrant adopted February 12, 2000. (3)

4.1 Articles of Incorporation of the Registrant filed February 9,
2000. (3)

4.2 Certificate of Amendment of Articles of Incorporation of the
Registrant filed December 5, 2000. (3)

4.3 Certificate of Amendment of Articles of Incorporation of the
Registrant filed January 5, 2001. (3)

4.4 Certificate of Amendment of Articles of Incorporation of the
Registrant filed May 16, 2005 and effective June 7, 2005. (4)

4.5 Bylaws of the Registrant adopted February 12, 2000. (3)

5.1 Opinion of Stubbs Alderton & Markiles, LLP.

10.1 Assumption Agreement dated January 20, 2005, among the
Registrant, Intellijet Marine, Inc. and Jeff P. Jordan. (6)

10.2 Financial Advisory Agreement dated April 29, 2005, between the
Registrant and Keating Securities, LLC. (5)

10.3 License Agreement dated July 5, 2005, between the Registrant
and Yanuk Jeans, LLC. (7)

10.4 Employment Agreement dated July 8, 2005, between the
Registrant and Philippe Naouri. (8)

10.5 Service Agreement dated May 18, 2005, between Antik Denim,
L.L.C. and Blue Concepts, LLC. (9)

10.6 First Amendment to Employment Agreement dated August 1, 2005,
between the Registrant and Philippe Naouri. (10)

10.7 Form of Indemnification Agreement between the Registrant and
each of its executive officers and directors. (11)

II-4

10.8 License Agreement dated to be effective October 5, 2005,
between the Registrant and Yanuk Jeans, LLC. (12)

23.1 Consent of Weinberg & Company, P.C.

23.2 Consent of Stubbs Alderton & Markiles LLP (included in Exhibit
5.1).

24.1 Power of Attorney (included as part of the Signature Page of
this Registration Statement).

99.1 2005 Stock Incentive Plan and Form of Stock Option Agreement
of the Registrant. (4)

----------
(1) Filed previously as Exhibit 2.5 to the Registrant's Current Report on
Form 8-K (File #: 000-33297), filed with the Securities and Exchange
Commission on April 15, 2005, and incorporated herein by this
reference.
(2) Filed previously as Exhibit 2(e) to the Registrant's Current Report on
Form 8-K (File #: 000-33297), filed with the Securities and Exchange
Commission on June 30, 2005, and incorporated herein by this reference.
(3) Filed previously as an exhibit to the Registrant's Form 10-SB
Registration Statement (File #: 000-33297), filed with the Securities
and Exchange Commission on October 31, 2001, and again on May 1, 2002,
and incorporated herein by this reference.
(4) Filed previously as an exhibit to the Registrant's Form S-8
Registration Statement (File #: 333-127723), filed with the Securities
and Exchange Commission on August 19, 2005, and incorporated herein by
this reference.
(5) Filed previously as an exhibit to the Registrant's Current Report on
Form 8-K (File #: 000-33297), filed with the Securities and Exchange
Commission on April 29, 2005, and incorporated herein by this
reference.
(6) Filed previously as Exhibit 10 to the Registrant's Current Report on
Form 8-K (File #: 000-33297), filed with the Securities and Exchange
Commission on February 10, 2005, and incorporated herein by this
reference.
(7) Filed previously as Exhibit 10.1 to the Registrant's Current Report on
Form 8-K (File #: 000-33297), filed with the Securities and Exchange
Commission on July 7, 2005, and incorporated herein by this reference.
(8) Filed previously as Exhibit 10.1 to the Registrant's Current Report on
Form 8-K (File #: 000-33297), filed with the Securities and Exchange
Commission on July 14, 2005, and incorporated herein by this reference.
(9) Filed previously as Exhibit 10.1 to the Registrant's Current Report on
Form 8-K (File #: 000-33297), filed with the Securities and Exchange
Commission on August 12, 2005, and incorporated herein by this
reference.
(10) Filed previously as Exhibit 10.1 to the Registrant's Current Report on
Form 8-K (File #: 000-33297), filed with the Securities and Exchange
Commission on August 25, 2005, and incorporated herein by this
reference.
(11) File previously as Exhibit 10.7 to the Registrant's Form SB-2
Registration Statement (File # 333-128288), filed with the Securities
and Exchange Commission on September 13, 2005.
(12) File previously as Exhibit 10.1 to the Registrant's Current Report on
Form 8-K (File #: 000-33297), filed with the Securities and Exchange
Commission on October 7, 2005.

(b) Financial Statement Schedules

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
consolidated financial statements or notes thereto.

II-5

ITEM 28. UNDERTAKINGS.

The undersigned registrant hereby undertakes to:

(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3)
of the Securities Act;

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and notwithstanding the forgoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospects filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in the volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.

(iii) Include any additional or changed material
information on the plan of distribution;

(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time as the initial bona
fide offering.

(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of
Commerce, State of California, on October 7, 2005.

BLUE HOLDINGS, INC.
(Registrant)

By: /S/ PAUL GUEZ
-----------------------------------

Paul Guez
Chief Executive Officer and President
(Principal Executive Officer)

By: /S/ PATRICK CHOW
-----------------------------------

Patrick Chow
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints
each of Paul Guez and Patrick Chow as his true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him and his name,
place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement and to file
a new registration statement under Rule 461, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
foregoing, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the date indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/S/ PAUL GUEZ Chairman, Chief Executive October 7, 2005
--------------------------- Officer and President
Paul Guez

/S/ PATRICK CHOW Chief Financial Officer and October 7, 2005
--------------------------- Secretary
Patrick Chow

/S/ KEVIN R. KEATING Director October 7, 2005
---------------------------
Kevin R. Keating

/S/ MARSHALL GELLER Director October 7, 2005
---------------------------
Marshall Geller

S-1

EXHIBIT INDEX

EXHIBIT
NUMBER EXHIBIT TITLE
------- --------------------------------------------------------------

2.2 First Amendment to Exchange Agreement dated June 27, 2005,
among Blue Holdings, Inc., Antik Denim, L.L.C., each member of
Antik Denim, L.L.C. and Keating Reverse Merger Fund, LLC. (2)

3.1 Articles of Incorporation of the Registrant filed February 9,
2000. (3)

3.1.1 Certificate of Amendment of Articles of Incorporation of the
Registrant filed December 5, 2000. (3)

3.1.2 Certificate of Amendment of Articles of Incorporation of the
Registrant filed January 5, 2001. (3)

3.1.3 Certificate of Amendment of Articles of Incorporation of the
Registrant filed May 16, 2005 and effective June 7, 2005. (4)

3.2 Bylaws of the Registrant adopted February 12, 2000. (3)

4.1 Articles of Incorporation of the Registrant filed February 9,
2000. (3)

4.2 Certificate of Amendment of Articles of Incorporation of the
Registrant filed December 5, 2000. (3)

4.3 Certificate of Amendment of Articles of Incorporation of the
Registrant filed January 5, 2001. (3)

4.4 Certificate of Amendment of Articles of Incorporation of the
Registrant filed May 16, 2005 and effective June 7, 2005. (4)

4.5 Bylaws of the Registrant adopted February 12, 2000. (3)

5.1 Opinion of Stubbs Alderton & Markiles, LLP.

10.1 Assumption Agreement dated January 20, 2005, among the
Registrant, Intellijet Marine, Inc. and Jeff P. Jordan. (6)

10.2 Financial Advisory Agreement dated April 29, 2005, between the
Registrant and Keating Securities, LLC. (5)

10.3 License Agreement dated July 5, 2005, between the Registrant
and Yanuk Jeans, LLC. (7)

10.4 Employment Agreement dated July 8, 2005, between the
Registrant and Philippe Naouri. (8)

10.5 Service Agreement dated May 18, 2005, between Antik Denim,
L.L.C. and Blue Concepts, LLC. (9)

10.6 First Amendment to Employment Agreement dated August 1, 2005,
between the Registrant and Philippe Naouri. (10)

10.7 Form of Indemnification Agreement between the Registrant and
each of its executive officers and directors. (11)

EX-1

10.8 License Agreement dated to be effective October 5, 2005,
between the Registrant and Yanuk Jeans, LLC. (12)

23.1 Consent of Weinberg & Company, P.A.

23.2 Consent of Stubbs Alderton & Markiles LLP (included in Exhibit
5.1).

24.1 Power of Attorney (included as part of the Signature Page of
this Registration Statement).

99.1 2005 Stock Incentive Plan and Form of Stock Option Agreement
of the Registrant. (4)

EX-2