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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report:
(Date of earliest event reported)
JULY 8, 2008
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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)
(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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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Information included in this Current Report on Form 8-K may contain
statements which constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both as amended. Those statements include statements
regarding our intent, belief or current expectations. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements. Such
risks and uncertainties include, among other things, our ability to face stiff
competition, our ability to profitably manage our business, the financial
strength of our customers, the continued acceptance of our existing and new
products by our existing and new customers, the risks of foreign manufacturing,
competitive and economic factors in the textile and apparel markets, the
availability of raw materials, the ability to manage growth, weather-related
delays, dependence on key personnel, general economic conditions, global
manufacturing costs and restrictions, and other risks and uncertainties that may
be detailed herein, or from time to time in our other filings made with the
Securities and Exchange Commission.
ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A
RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW
On July 8, 2008, the Audit Committee of the Registrant's Board of
Directors (the "Audit Committee") determined that the Registrant's audited
financial statements for the year ended December 31, 2007, and the unaudited
financial statements for the fiscal quarters ended June 30 and September 30,
2007, need to be restated due to accounting errors in the Registrant's related
party accounts and should no longer be relied upon.
From time to time Paul Guez, the Registrant's Chairman of the Board and
majority stockholder, and his spouse Elizabeth Guez made advances to the
Registrant to support its working capital needs. These advances were
non-interest bearing and unsecured, with no formal terms of repayment. On July
1, 2006, the Registrant converted these advances to a line of credit in an
agreement with Mr. Guez which allows the Registrant to borrow from him up to a
maximum of $3,000,000 at an interest rate of 6% per annum (the "Revolving
Line"). The Registrant may repay the advances in full or in part at any time
until the Revolving Line expires and repayment is required on December 31, 2008.
In early May 2008, Mr. Guez informed the Registrant of claims for sums he
believed were due and owing to him pursuant to advances made to and payments
made on behalf of the Registrant during fiscal 2007 that were separate from the
Revolving Line.
In light of this dispute on May 19, 2008, the Audit Committee
determined that the Registrant's audited financial statements for the year ended
December 31, 2007, and the unaudited financial statements for certain of the
fiscal quarters therein, may need to be restated due to potential accounting
errors in the Registrant's related party accounts. The Audit Committee commenced
a review of these potential errors and instructed management to review the
Registrant's books and records to obtain a summary of transactions recorded and
amounts owed per such records. These investigations revealed accounting errors
in the Registrant's related party accounts pertaining to royalties and other
liabilities that were written off in error and inaccurate entries in the
Registrant's related party general ledger. The Registrant has agreed to a
settlement proposal with Mr. Guez.
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The Registrant's management has also reviewed the Registrant's deferred
tax asset and as a result, in accordance with SFAS 109, "Accounting for Income
Taxes," has informed the Audit Committee that a valuation allowance must be
established against the Registrant's remaining unreserved deferred tax asset.
The precise effect of any potential restatement on the aforementioned
financial statements is currently unknown. The Registrant's Chief Financial
Officer has discussed with the Registrant's registered independent public
accounting firm the matters disclosed in this report.
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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: July 14, 2008 By: /S/ ERIC HOHL
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Eric Hohl
Chief Financial Officer
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