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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report:
(Date of earliest event reported)
APRIL 29, 2005
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BLUE HOLDINGS, INC.
(Exact name of registrant as specified in charter)
NEVADA
(State or other Jurisdiction of Incorporation or Organization)
000-33297 88-0450923
(Commission File Number) (IRS Employer Identification No.)
5804 E. SLAUSON AVE., COMMERCE, CA 90040
(Address of Principal Executive Offices and zip code)
(323) 725-5555
(Registrant's telephone number, including area code)
MARINE JET TECHNOLOGY CORP.
936A BEACHLAND BOULEVARD, SUITE 13
VERO BEACH, FL 32963
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act
(17 CFR 240.14a-12(b))
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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This Current Report on Form 8-K/A amends Items 9.01(a) and 9.01(b) of
the Registrant's Current Report on Form 8-K dated April 29, 2005, and filed with
the Securities and Exchange Commission on April 29, 2005, regarding the closing
of the transactions contemplated by a certain Exchange Agreement dated April 14,
2005, by and among the Registrant, Antik Denim, LLC, and the members of Antik
Denim, LLC set forth therein. The sole purpose of this amendment is to provide
the unaudited financial statements of the business acquired as of, and for, the
three month period ended March 31, 2005, as required by Item 9.01(a), and the
unaudited pro forma financial information as of, and for, the three month period
ended March 31, 2005, as required by Item 9.01(b), which financial statements
and unaudited pro forma financial information were excluded from the original
Current Report on Form 8-K in reliance on Items 9.01(a)(4) and 9.01(b)(2),
respectively, of Form 8-K.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Unaudited Financial Statements of Antik Denim, LLC as of March
31, 2005, and for the three month period ended March 31, 2005.
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have reviewed the accompanying balance sheet of Antik Denim, LLC as of March
31, 2005 and the related statements of operations and cash flows for the
three-month period then ended. These interim financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board. (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying interim financial statements for them to be in
conformity with U.S. generally accepted accounting principles.
Weinberg & Company
Boca Raton, Florida
June 1, 2005
3
ANTIK DENIM LLC
BALANCE SHEET (UNAUDITED)
MARCH 31, 2005
ASSETS
Current Assets:
Cash ....................................................... $ 69,577
Due from Factor ............................................ 659,754
Accounts Receivable ........................................ 279,732
Inventories ................................................ 2,902,152
Due from Affiliates ........................................ 541,214
Prepaid Expenses and Other Current Assets .................. 35,883
----------
Total Current Assets .................................... 4,488,312
Property and Equipment, less accumulated
depreciation of $917 ......................................... 9,955
----------
Total Assets .................................................. $4,498,267
==========
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
Accounts Payable ........................................... $1,650,027
Due to Customers ........................................... 123,440
Due to Affiliates .......................................... 81,519
Accrued Expenses and Other Current Liabilities ............. 90,865
----------
Total Current Liabilities ............................... 1,945,851
Total Members' Equity ................................... 2,552,416
----------
Total Liabilities and Members' Equity ......................... $4,498,267
==========
See notes to accompanying financial statements
4
ANTIK DENIM, LLC
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2005
Net Sales ....................................................... 4,419,375
Cost of Goods Sold .............................................. 2,305,386
----------
Gross Profit .................................................... 2,113,989
Total Operating Expenses ........................................ 986,029
----------
Income from Operations before provision for Income Taxes ........ 1,127,960
Provision for Income Taxes ...................................... 800
----------
Net Income ...................................................... $1,127,160
==========
See notes to accompanying financial statements
5
ANTIK DENIM, LLC
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income .................................................. $ 1,127,159
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation ............................................ 528
Changes in assets and liabilities
Due from factor ...................................... (281,160)
Accounts Receivable .................................. (154,059)
Inventories .......................................... (2,089,964)
Due to/from affiliates ............................... (668,769)
Prepaid Expenses and other current assets ............ (21,257)
Accounts Payable ..................................... 654,807
Due to Customers ..................................... 33,440
Other current liabilities ............................ 45,029
-----------
Net cash used in operating activities ................... (1,354,246)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Members' contributions' ................................. 1,386,200
Repayment of loan from member ........................... (36,200)
-----------
Net cash provided by financing activities ............... 1,350,000
-----------
NET DECREASE IN CASH ........................................ (4,246)
CASH, BEGINNING OF PERIOD ................................... 73,823
-----------
CASH, END OF PERIOD ......................................... $ 69,577
===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes .............................. $ 800
===========
See notes to accompanying financial statements
6
ANTIK DENIM, LLC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2005
NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS
(a) ORGANIZATION:
ANTIK DENIM, LLC ("the Company" or "Antik") was organized as a
California limited liability company under the laws of the State of California
on September 13, 2004.
(b) NATURE OF OPERATIONS:
The Company operates exclusively in the wholesale apparel industry.
Antik designs, develops, markets and distributes high fashion jeans and
accessories with an Old West flair under the brand name "Antik Denim." Antik's
products include jeans, jackets, belts, purses and t-shirts. Antik 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. Antik is headquartered in
Commerce, California, and maintains showrooms in New York and Los Angeles.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) USE OF ESTIMATES:
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.
(b) INVENTORY VALUATION:
Inventories are stated at the lower of cost (first-in, first-out
method) or market.
(c) REVENUE RECOGNITION:
Revenue is recognized when merchandise is shipped to a customer based
upon agreed terms. Revenue is recorded net of estimated returns, charge backs
and markdowns based upon management's estimates and historical experience.
(d) ADVERTISING:
Advertising costs are expensed as of the first date the advertisements
take place. Advertising expenses included in selling expenses approximated
$29,201 for the three months ended March 31, 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
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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:
The taxes on the income of a Limited Liability Company are payable
individually by each member. The amount that might be withdrawn by the partners
in order to pay such taxes will be determined as necessary and distributed from
members' equity. The Company is subject to California minimum tax of $800 and a
fee based on total annual revenue.
(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 factor. Concentration of credit risk with respect to trade accounts
receivable at March 31, 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 a 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. With the exception of Blue Concepts Europe Limited (see Note 6),
no single customer accounted for more than 10% of total sales in the quarter,
and only one customer accounted for 5.4% 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.
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(j) ACCOUNTS RECEIVABLE - ALLOWANCE FOR RETURNS, DISCOUNTS AND BAD
DEBTS:
The Company evaluates the collectibility of accounts receivable and
charge backs (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.
(k) SHIPPING AND HANDLING COSTS:
Freight charges are included in selling and distribution expenses in
the statement of operations and approximated $54,316 for the three months ended
March 31, 2005.
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. As of March 31, 2005, the
amount of the reserve held by the factor was $195,956. 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. At March 31,
2005, items subject to recourse approximated $855,710. The Company is
contingently liable to the factor for merchandise disputes, customer claims and
the like on receivables sold to the factor.
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, general intangibles and the personal guarantees of a
member and a company co-owned by a member.
NOTE 4 - INVENTORIES
Inventories at March 31, 2005 are summarized as follows:
Raw Materials ............................ 1,486,415
Work In Process .......................... 775,316
Finished goods ........................... 640,421
---------
Total ............................ 2,902,152
=========
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NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment at March 31, 2005 is summarized as follows:
Furniture ................................... $ 1,064
Leasehold improvements ...................... 7,000
Computer equipment .......................... 2,808
--------
Total Property & Equipment .................. 10,872
Less: Accumulated depreciation .............. (917)
--------
Total ....................................... $ 9,955
========
NOTE 6 - RELATED PARTY TRANSACTIONS
During the three months ended March 31, 2005, the Company reimbursed
$312,148 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. A 75.4% member and Blue
Concept, LLC have personally guaranteed all advances and ledger debt due to the
Company's factor.
The Company purchased $98,740 of fabric at cost from Blue Concepts LLC,
an entity co-owned by the same member.
During the three months ended March 31, 2005, the Company had total
sales of $699,035 to Blue Concepts Europe Limited, an entity owned by the same
member. The sales terms were at a mark-up over cost but at a 20% discount from
regular wholesale price. The terms have been changed to regular wholesale prices
after the Company's acquisition by Blue Holdings, Inc. (formerly known as Marine
Jet Technology Corp.). As of March 31, 2005, the remaining balance due from Blue
Concepts Europe Limited was $509,379, which was included in due from affiliates.
NOTE 7 - DUE FROM/TO AFFILIATES
The Affiliates are all Limited Liability Companies that are co-owned by
a 75.4% member of the Company. All non-trade-related advances have since been
repaid. Trade-related outstandings follow regular payment terms as invoiced.
NOTE 8 - MAJOR SUPPLIERS
During the quarter, two suppliers comprised greater than 10% of the
Company's purchases. Purchases from these suppliers were 54% and 10%,
respectively.
NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of Cash, Due from factor, Accounts receivable, Due
from affiliates, Accounts payable, Due to Affiliates, Due to customers, Accrued
expenses and other current liabilities approximate fair value because of the
short maturity of these items.
10
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 March 31, 2005, net factor receivables approximated
$660,000.
NOTE 11 - MEMBERS' EQUITY
The Company is a limited liability company; therefore, no member,
manager, agent or employee of the Company is personally liable for the debts,
obligations, or liabilities of the Company, whether arising in contract, tort or
otherwise, or for the acts or omissions of any other member, director, manager,
agent or employee of the Company, unless the individual has signed a specific
personal guarantee.
The Company was formed on September 13, 2004 with 4 members, one of
which has a 75.4% ownership interest, and the other 3 members each having a 8.2%
ownership interest. Member contributions in cash were as follows: contributions
of $500,000 by the 75.4 % member and 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 members' equity account, as of March 31, 2005 was as follows:
Members' equity at January 1, 2005 ............... $ 39,056
Contributions by a 75.4 % member- cash & inventory 1,386,200
Add Net Profit ................................... 1,127,160
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Members' equity at March 31, 2005 ................ 2,552,416
==========
Net profits and losses are allocated to the capital account of each
member at the end of each accounting period as follows:
Net profits are first allocated to the 75.4% Member to the extent of
the amount by which the cumulative Net Losses for the current and all prior
fiscal years of the Company allocated to such Member exceeds the cumulative Net
Profits for the current and all prior fiscal years of the Company allocated to
such Member; thereafter, to all of the 8.2% Members in the same manner that
allocations of profits are made to the 75.4% Member and finally to Members in
proportion to their respective negative capital accounts, if any.
Net losses are first allocated to the 75.4% Member to the extent of
such Member's positive capital account balance, second to the 8.2% Members in
proportion to, and to the extent of, their positive capital account balances and
thereafter to Members in proportion to their respective percentage interests.
In accordance with the operating agreement governing the rights of the
members, the majority member is required to contribute an additional $3,200,000
of cash and/or property to the Company as one or more additional capital
contributions, in each case as may be required in the sole discretion of the
75.4% Member. During the three months ended March 31, 2005, the 75.4% member
contributed cash and inventory of $1,386,200. The inventory contributed was
accounted for at the Members historical cost basis of approximately $1,200,000.
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NOTE 12 - SUBSEQUENT EVENTS
On April 14, 2005, the Company entered into an Exchange Agreement with
Blue Holdings, Inc. (formerly known as Marine Jet Technology Corp.). 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 the Company (the "Interests") from the Company's
members, and the Company's members contributed all of their Interests to Blue
Holdings. In exchange, Blue Holdings issued to the Company's 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. As such, immediately following
the closing and upon the conversion of the Preferred Shares, the Antik members
own 95.8% of the total issued and outstanding common stock of Blue Holdings on a
fully-diluted basis. Following completion of the exchange transaction, the
Company became a wholly-owned subsidiary of Blue Holdings.
Pursuant to the provisions of the Exchange Agreement, the members of
Antik agreed that, in the event that the stockholders' equity of Blue Holdings
(on a consolidated basis following the Closing) as reported in Blue Holdings'
Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 (the
"Consolidated Equity") is less than $5,000,000, the 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.
The acquisition is accounted for as a reverse merger (recapitalization)
with Antik deemed to be the accounting acquirer, and Blue Holdings deemed to be
the legal acquirer.
On June 7, 2005, Marine Jet Technology Corp. changed its name to Blue
Holdings Inc., increased its authorized number of common stock to 75,000,000 and
conducted a 1 for 29 reverse stock split.
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(b) PRO FORMA FINANCIAL INFORMATION.
Unaudited Pro Forma Financial Statements of Blue Holdings,
Inc. and Antik Denim, LLC as of March 31, 2005, and for the
three month period ended March 31, 2005.
Unaudited Pro Forma Financial Statements of
Blue Holdings, Inc. and Antik Denim, LLC
as of March 31, 2005, and
for the period ended March 31, 2005.
The unaudited pro-forma financial statements set forth below reflect the closing
of the exchange transaction with Antik Denim, LLC as of March 31, 2005, for
Balance Sheet purposes, and for the three month period ending March 31, 2005 for
Statements of Operations purposes, as if the closing had occurred as of such
date. The unaudited pro-forma financial data and the notes thereto should be
read in conjunction with each of the Registrant's and Antik's historical
financial statements. The unaudited pro-forma financial data is based upon
certain assumptions and estimates of management that are subject to change. The
unaudited pro-forma financial data is presented for illustrative purposes only
and is not necessarily indicative of any future results of operations or the
results that might have occurred if the exchange transaction had actually
occurred on the indicated date.
[The remainder of this page has intentionally been left blank.]
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BLUE HOLDINGS, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
MARCH 31, 2005
BLUE ANTIK PRO FORMA PRO FORMA
HOLDINGS DENIM ADJUSTMENT CONSOLIDATED
----------- ----------- ----------- -----------
(Note A)
ASSETS
Current Assets:
Cash .................................... $ 86,018 $ 69,577 (86,018)(E) $ 69,577
Due from Factor ......................... -- 659,754 -- 659,754
Accounts Receivable ..................... -- 279,732 -- 279,732
Inventories ............................. -- 2,902,152 -- 2,902,152
Due from affiliates ..................... -- 541,214 -- 541,214
Prepaid Expenses and Other Current Assets -- 35,883 -- 35,883
-- ----------- -- -----------
Total Current Assets ................ -- 4,488,312 -- 4,488,312
Property and Equipment - at Cost
Less Accumulated Depreciation $917 ....... -- 9,955 -- 9,955
----------- ----------- ----------- -----------
Total Assets ............................... $ 86,018 $ 4,498,267 (86,018) $ 4,498,267
=========== =========== =========== ===========
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
Accounts Payable ........................ $ 15,379 $ 1,650,027 (15,379)(E) $ 1,650,027
Due to Customers ........................ 50,000 123,440 (50,000)(E) 123,440
Due to affiliates ....................... -- 81,519 -- 81,519
Accrued Expenses and Other Current
Liabilities ......................... 2,500 90,865 (25,000)(E) 90,865
----------- ----------- ------------ -----------
Total Current Liabilities ............ 67,879 1,945,851 -- 1,945,851
Shareholders' Equity:
Common Stock $0.001 par value 28,123 -- (2,706)(C) 25,520 (C)
Authorized 75,000,000 shares
Issued and outstanding 25,519,607
shares
Additional Paid-in Capital ............. 344,055 -- (344,055)(E) 1,399,736 (B)
Members' Equity ........................ 1,425,256 (1,425,256)(B) --
Retained Earnings ...................... (354,039) 1,127,160 354,039 (E) 1,127,160 (D)
----------- ----------- ------------ -----------
Total Shareholders Equity ............ 18,139 2,552,416 (18,139)(E) 2,552,416
----------- ----------- ----------- -----------
Total Liabilities and Members' Equity ...... $ 86,018 $ 4,498,267 (86,018) $ 4,498,267
=========== =========== =========== ===========
NOTES
-----
(A) The consolidated Balance Sheet includes the accounts of the Company and
its wholly owned subsidiary, Antik Denim LLC ("Antik"). The acquisition
of Antik will be accounted for as a reverse merger with Antik deemed to
be the accounting acquirer and Blue Holdings Inc. (formerly known as
Marine Jet Technology Corp.) deemed to be the legal acquirer.
(B) At the Closing, Members' equity of Antik, $1,425,256 will be
reclassified to additional paid-in capital.
(C) Shares are shown after a post-closing mandatory conversion of certain
preferred stock issued after closing followed by a reverse split of
Blue Holding's outstanding common shares on a 1 for 29 basis. At
closing, $2,706 will be reclassified to common stock to reflect the
additional shares that will be issued at a par value of $0.001.
(D) Antik was a limited liability company before April 29, 2005 and all tax
liabilities flowed through to previous members of the LLC, as such, the
Company has not reflected any current tax provision. If Antik were
operating at the beginning of the period as a wholly-owned subsidiary
of Blue Holdings Inc., a provision of $450,864 would have been required
for tax liabilities
(E) Accounts for the sale of the assets & liabilities of Blue Holdings for
$2,500 before closing the Antik exchange transaction.
14
BLUE HOLDINGS, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2005
BLUE ANTIK PRO FORMA PRO FORMA
HOLDINGS INC. DENIM LLC ADJUSTMENTS CONSOLIDATED
----------- ----------- ----------- -----------
(Note A)
Net Sales ....................... -- $ 4,419,375 -- $ 4,419,375
Cost of Goods Sold .............. -- (2,305,386) -- (2,305,386)
----------- -----------
Gross Profit .................... -- 2,113,989 -- 2,113,989
----------- -----------
General & Administrative Expenses
Total Operating Expenses ........ $ (132,253) (986,029) (132,253)(B) (986,029)
----------- ----------- ----------- -----------
Income from Operations .......... (132,253) 1,127,960 132,253 (B) 1,127,960
Other (Income) Expenses: ........ 83,091 -- (83,091)(B) --
----------- ----------- ----------- -----------
Income(Loss) before tax ......... $ (49,162) $ 1,127,160 49,162 (B) $ 1,127,160
----------- ----------- ----------- -----------
Note (A) The Consolidated Statement of Operations includes the accounts of the
Company and its wholly owned subsidiary, Antik Denim, LLC. This
acquisition has been accounted for as a reverse merger
(recapitalization) with Antik deemed to be the accounting acquirer and
Blue Holdings deemed to be the legal acquirer.
Note (B) Accounts for the sale of the assets & liabilities of Blue Holdings for
$2,500 before closing the Antik exchange transaction.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Blue Holdings, Inc. has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BLUE HOLDINGS, INC.
Date: June 8, 2005 By: /s/ Patrick Chow
-------------------------------------
Patrick Chow, Chief Financial Officer
and Secretary
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