UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

               FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2005

                        COMMISSION FILE NUMBER: 000-33297


                               BLUE HOLDINGS, INC.
        (Exact name of small business issuer as specified in its charter)


             NEVADA                                        88-0450923
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

                    5804 E. SLAUSON AVE., COMMERCE, CA 90040
                    (Address of principal executive offices)

                                 (323) 725-5555
                           (Issuer's telephone number)

                           MARINE JET TECHNOLOGY CORP.
                       936A BEACHLAND BOULEVARD, SUITE 13
                              VERO BEACH, FL 32963
          (Former Name or Former Address, if Changed Since Last Report)


         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. 

                               YES  |X|      NO |_|


         Indicate by check mark whether the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act). YES |_| No |X|

         As of October 31, 2005,  25,557,200  shares of the registrant's  common
stock were outstanding.



           Transitional Small Business Disclosure Format (Check One):

                               YES |_|       NO |X|





                             TABLE OF CONTENTS


                                                                            Page
                                                                            ----


PART I    Financial Information

Item 1.   Financial Statements

             Balance Sheet (Unaudited)                                        3

             Statement of Operations (Unaudited)                              4

             Statement of Shareholders' Equity (Unaudited)                    5

             Statement of Cash Flows (Unaudited)                              6

             Notes to the Financial Statements (Unaudited)                    7

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                          15

Item 3.   Controls and Procedures                                            30


PART II   Other Information

Item 6.   Exhibits                                                           31


                                       2



                                     PART I


ITEM 1.   FINANCIAL STATEMENTS

a.        BALANCE SHEET

BLUE HOLDINGS INC. (FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 2005



                                       ASSETS

Current Assets:
  Cash .........................................................     $   489,423
  Due from Factor, net of reserves of $293,949 .................       1,932,527
  Accounts Receivable, net of reserves of $200,000 .............         753,742
  Inventories ..................................................       6,474,070
  Prepaid Expenses and Other Current Assets ....................         192,687
                                                                     -----------
      Total Current Assets .....................................       9,842,449

  Deferred Income Taxes ........................................         278,639
  Property and Equipment, less Accumulated Depreciation ........          63,186
                                                                     -----------

      Total Assets .............................................     $10,184,274
                                                                     ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts Payable .............................................     $ 1,853,224
  Due to Related Parties .......................................         492,472
  Income Taxes Payable .........................................       1,659,673
  Accrued Expenses and Other Current Liabilities ...............         608,492
                                                                     -----------
      Total Current Liabilities ................................       4,613,861
                                                                     -----------

Stockholders' Equity
  Common Stock $0.001 par value
    Authorized 75,000,000 shares
    Issued and outstanding 25,557,200 shares ...................          25,557
  Additional Paid-in Capital ...................................       3,209,070
  Retained Earnings ............................................       2,335,786
                                                                     -----------
      Total Stockholders' Equity ...............................       5,570,413
                                                                     -----------

Total Liabilities and Stockholders' Equity .....................     $10,184,274
                                                                     ===========

See Notes to Condensed Consolidated Financial Statements


                                       3



STATEMENTS OF OPERATIONS

BLUE HOLDINGS INC. (FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004



                                             THREE MONTH PERIOD ENDED        NINE MONTH PERIOD ENDED
                                                   SEPTEMBER 30,                   SEPTEMBER 30,
                                            ---------------------------    ---------------------------
                                                2005           2004            2005           2004
                                            ------------   ------------    ------------   ------------
                                                                                       
Net Sales ...............................   $ 11,720,815   $          0    $ 20,575,044   $          0

Cost of Goods Sold ......................      6,041,774         17,495      10,431,204         17,495
                                            ------------   ------------    ------------   ------------

Gross Profit (Loss) .....................      5,679,041        (17,495)     10,143,840        (17,495)

Selling, distribution & administrative
   expenses .............................      2,580,232        113,649       4,772,569        113,649
                                            ------------   ------------    ------------   ------------

Income (loss) before expenses relating
   to exchange transaction and
   provision for income taxes ...........      3,098,809       (131,144)      5,371,271       (131,144)

Expenses relating to exchange transaction         50,000              0         527,617              0
                                            ------------   ------------    ------------   ------------

Income (loss) before provision for ......      3,048,809       (131,144)      4,843,654       (131,144)
   income taxes

Provision for income taxes ..............      1,239,830              0       1,376,114              0
                                            ------------   ------------    ------------   ------------

Net Income (Loss) .......................   $  1,808,979   $   (131,144)   $  3,467,540   $   (131,144)
                                            ============   ============    ============   ============

Basic and diluted earnings (loss)
   per share ............................   $       0.07   $      (0.01)   $       0.14   $      (0.01)
                                            ============   ============    ============   ============

Basic and diluted weighted average
   shares ...............................     25,464,000     25,441,628      25,449,167     25,441,628
                                            ============   ============    ============   ============


See Notes to Condensed Consolidated Financial Statements 
                                                         


                                       4



STATEMENT OF SHAREHOLDERS' EQUITY

BLUE HOLDINGS INC. (FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
CONDENSED  CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005



                                                             SHARES ISSUED
                                                        -------------------------      PAID
                                           MEMBERS                     PAR VALUE        IN          RETAINED
                                           EQUITY          NUMBER        0.001        CAPITAL       EARNINGS         TOTAL
                                         -----------    -----------   -----------   -----------    -----------    -----------
                                                                                                        
Beginning Balance, January 1, 2005 ...   $    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)          --             --

Issuance of shares during
exchange transaction .................          --           13,493            13           (13)          --             --

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

Shares issued to Finder ..............          --          102,079           102       177,515           --          177,617

Net Income for the period ............          --             --            --            --        3,467,540      3,467,540
                                         -----------    -----------   -----------   -----------    -----------    -----------

Ending Balance September 30, 2005 ....   $      --       25,557,200   $    25,557   $ 3,209,070    $ 2,335,786    $ 5,570,413
                                         ===========    ===========   ===========   ===========    ===========    ===========


See Notes to Condensed Consolidated Financial Statements 


                                       5



STATEMENT OF CASH FLOWS

BLUE HOLDINGS INC. (FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

                                                                   FOR SEPTEMBER
                                                      FOR THE        13, 2004
                                                    NINE MONTHS     (INCEPTION) 
                                                       ENDED            TO
                                                    SEPTEMBER 30,  SEPTEMBER 30,
                                                       2005             2004
                                                    -----------     -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) ..............................    $ 3,467,540     $  (131,144)
Adjustment to income (loss) not effecting
  use of cash
    Depreciation ...............................          3,062              94
    Stock based exchange transaction
      expense ..................................        177,617            --
Changes in assets and liabilities
    Accounts Receivable ........................       (628,069)           --
    Due from factor ............................     (1,553,933)           --
    Other Receivable ...........................       (235,883)           --
    Inventories ................................     (4,461,882)           --
    Due to Related Parties .....................        247,201         115,563
    Deferred Income Tax ........................       (278,639)           --
    Prepaid Expenses and other current
      assets ...................................         57,817            --
    Income Tax Payable .........................      1,659,673            --
    Accounts Payable ...........................        858,004          18,295
    Due to Customers ...........................        (90,000)           --
    Other Current Liabilities ..................        562,656            --
                                                    -----------     -----------
Net cash (used) provided by operating
  activities ...................................       (214,836)          2,808
                                                    -----------     -----------

CASH FLOWS TO INVESTING  ACTIVITIES
    Purchase of equipment ......................        (55,764)         (2,808)
                                                    -----------     -----------
Net Cash used in investing activities ..........        (55,764)         (2,808)
                                                    -----------     -----------

CASH FLOWS TO FINANCING ACTIVITIES
    Additional Paid in Capital .................        686,200            --
                                                    -----------     -----------
Net cash provided by financing activities ......        686,200            --
                                                    -----------     -----------

Net Increase  in Cash at the end of the
  period .......................................        415,600            --
Cash at the beginning of the period ............         73,823            --
                                                    -----------     -----------
Cash, end of the period ........................    $   489,423     $      --
                                                    ===========     ===========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW STATEMENT

Cash paid for income tax .......................    $       800     $      --
                                                    ===========     ===========

Inventory contributed by a member at its
  historical cost ..............................    $ 1,200,000     $      --   
                                                    ===========     ===========

Stock issued in settlement of an expense
  related to the exchange transaction ..........    $   177,617     $      --
                                                    ===========     ===========

See Notes to Condensed Consolidated Financial Statements


                                       6



BLUE HOLDINGS INC. (FORMERLY KNOWN AS MARINE JET TECHNOLOGY CORP.)
NOTES TO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2005 (UNAUDITED)


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

         The interim condensed  consolidated financial statements are unaudited,
but in the opinion of management of the Company, contain all adjustments,  which
include normal recurring adjustments,  necessary to present fairly the financial
position at September 30, 2005, the results of operations for the three and nine
months ended  September 30, 2005 and 2004,  and the cash flows for the three and
nine months ended September 30, 2005 and 2004.

         Certain  information  and  footnote  disclosures  normally  included in
financial  statements  that have been  presented in  accordance  with  generally
accepted  accounting  principles have been condensed or omitted  pursuant to the
rules and regulations of the Securities and Exchange  Commission with respect to
interim financial  statements,  although management of the Company believes that
the disclosures contained in these financial statements are adequate to make the
information presented therein no misleading.  For further information,  refer to
the  consolidated  financial  statements  and  notes  thereto  included  in  the
Company's  Annual  Report on Form 10-K for the fiscal  year ended  December  31,
2004, as filed with the Securities and Exchange Commission.

         The Company's results of operations for the three and nine months ended
September 30, 2005 are not  necessarily  indicative of the results of operations
to be expected for the full fiscal year ending December 31, 2005.

         (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,  LLC ("Antik").  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. As such, immediately following
the closing and upon the conversion of the Preferred  Shares,  the Antik members
and Elizabeth Guez, our Chief Operating Officer,  owned  approximately  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.


                                       7



         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 shareholders'  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. The Company's Consolidated Equity as of September
30, 2005 was $5,570,413 and no such additional  contribution by the members will
be required.

         (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 names "Antik Denim," "Yanuk," "U," and as of October
31, 2005,  "Taverniti So Jeans." 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  showrooms  in New York and Los Angeles.  The Company  opened a retail
store  in  Los  Angeles  during  August  2005,  whose  operations  are  not  yet
significant to the consolidated operations.

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 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
$234,980 and $296,481  for the three and nine months ended  September  30, 2005,
respectively.


                                       8



         (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 had four  individual  members  until  April 29,  2005.  After the
exchange transaction, Blue Holdings became the sole member of Antik. Federal and
State income tax obligations for the period through and including 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
Antik that the Company will not make any  distributions  to pay tax liabilities,
if any, on income earned prior to April 30, 2005. Consequently, the taxes on the
income of Antik through April 29, 2005 are payable individually by each member.

         The Company  accounts for income taxes and the related  accounts  under
the liability  method.  Deferred tax liabilities and assets are determined based
on the  difference  between the financial  statement and tax bases of assets and
liabilities  using  enacted  rates  expected to be in effect  during the year in
which the basis differences reverse.

         The  Company's  provision  for income taxes at  September  30, 2005 was
based on income for the period  from April 30,  2005 to  September  30,  2005 as
adjusted  for  timing  differences  outstanding  at the date that Blue  Holdings
became the sole member of Antik. The Company's income tax provision was computed
based on the federal  statutory rate and the average state statutory  rates, net
of the related federal benefit.

         Provision  for income  taxes was  $1,376,114  for the nine months ended
September  30, 2005 as compared  to $136,284  for the six months  ended June 30,
2005.  Provision  for income taxes as a percentage of income before income taxes
was 40.85% for the nine months ended  September  30, 2005 and 40.00% for the six
months ended June 30, 2005. For the nine months ended September 30, 2005 and the
six months ended June 30, 2005,  the effective tax rate differs from the federal
statutory  income tax rate of 34.00% primarily due to the effect of state income
taxes and certain expenses that are not deductible for tax 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.


                                       9



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         (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 our factor. Concentration of credit risk with respect to trade accounts
receivable  at  September  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 three and nine  months  ended  September  30,  2005,  and only one  customer
accounted  for 9% and 6% in the three and nine months ended  September 30, 2005,
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 its ability to collect  accounts  receivable and
the  circumstances  surrounding  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
chargebacks  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,   distribution   and
administrative  expenses in the statement of operations and approximated $66,126
and $184,059 for the three and nine months ended September 30, 2005.


                                       10



NOTE 3 - DUE FROM FACTOR

         We use 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 originally provided that Antik could 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 factor agreement,  which was amended effective July 25,
2005,  terminates on July 24, 2006, lists the Company as an additional borrower,
and makes  available to both the Company and Antik a combined  line of credit up
to $1.5  million  against  inventory.  The Company and Antik can borrow  against
inventory up to 33.3% of the value of eligible raw materials and finished goods.
The factor  agreement  was again  amended on  September  1, 2005 to increase the
ratio against approved factored invoices from 85% to 90%, and to provide for the
automatic  renewal of the credit  facilities  after July 24, 2006 subject to 120
days' termination notice from any party.

         As of September  30,  2005,  the factor  holds  $5,393,168  of accounts
receivable  purchased from us and has made advances to us of $3,496,640  against
those   receivables.   The  amount  of  the  reserve  held  by  the  factor  was
approximately  $811,000.  The factor  commission is 0.8% 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  $1,688,797  as of September  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  are
collateralized  by the  non-factored  accounts  receivable,  inventories and the
personal  guarantee  of  Paul  Guez,  our  Chairman,  Chief  Executive  Officer,
President and majority  shareholder,  and Blue Concept, LLC ("Blue Concept"),  a
company co-owned by Paul Guez and his spouse, Elizabeth Guez.


NOTE 4 - INVENTORIES

         Inventories at September 30, 2005 are summarized as follows:


         Raw Materials ...........................           $2,523,968
         Work-in-Process .........................            1,162,369
         Finished Goods ..........................            2,787,733
                                                             ----------
             TOTAL ...............................           $6,474,070
                                                             ==========


                                       11



NOTE 5 - PROPERTY AND EQUIPMENT

         Property and equipment at September 30, 2005 is summarized as follows:


         Furniture .....................................        $ 3,869
         Leasehold Improvements ........................         32,500
         Computer Equipment ............................         30,268
                                                                -------
             SUBTOTAL ..................................         66,637

         Less: Accumulated depreciation
            and Amortization ...........................          3,451
                                                                -------
             TOTAL .....................................        $63,186
                                                                =======

NOTE 6 - RELATED PARTY TRANSACTIONS

         The Company had sales to related parties of $72,107 and $838,618 during
the three and nine months ended  September  30, 2005,  respectively.  Before the
exchange  transaction,  the sales terms were at a discount of approximately  20%
from  regular  wholesale  prices.  The terms were  changed to regular  wholesale
prices after the exchange transaction with Antik.

         The  Company  also  purchased  fabric  at cost from  Blue  Concept  for
$157,740 and $617,604 during the three and nine months ended September 30, 2005,
respectively.  During the three and nine months ended  September  30,  2005,  we
reimbursed $312,148 and $936,443, respectively, for certain expenses (consisting
of salaries, payroll taxes, utilities, common area services, rent, insurance and
other office  services) to Blue Concept.  The arrangement was formalized under a
Service Agreement signed on May 18, 2005.

         Since July 2005, the Company has purchased  finished  "Yanuk"  products
from Blue Concept.  These  purchases were made at a cost plus basis to cover the
cost of goods sold plus allocated overhead.  Off -price Yanuk products were sold
on behalf of Blue Concept with an overhead recovery charged to Blue Concept. The
purchase  formula  was  approved  by the  Board  of  Directors  of the  Company,
including  all of its  independent  directors.  During  the three  months  ended
September 30, 2005,  total  purchases from Blue Concept  amounted to $1,356,947.
The Company has started to build its own production  team to make Yanuk products
in the fourth quarter.

         Paul Guez and Blue Concept have personally  guaranteed all advances and
ledger debt due to the Company's factor.

         October 6, 2005, the Company entered into a five-year license agreement
with Yanuk Jeans LLC ("Yanuk"),  effective  October 5, 2005.  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 "U" brand
products to the  wholesale  and retail  trade.  The Company  will pay to Yanuk a
royalty of five percent of all net sales of the licensed  products and shall pay
a guaranteed minimum royalty on an annual basis. In addition, during the term of
the license  agreement,  the  company has the option to purchase  from Yanuk the
property licensed under the agreement.

         On October 31, 2005,  the Company  entered  into an exchange  agreement
with  Taverniti  So  Jeans,   LLC,  a  California   limited   liability  company
("Taverniti"), and the members of Taverniti (the "Taverniti Members"). Under the
exchange  agreement,  the Company  acquired  all of the  outstanding  membership
interests of Taverniti (the  "Interests")  from the Taverniti  Members,  and the
Taverniti  Members  contributed  all  of  their  Interests  to the  Company.  In
exchange,  the Company issued to the Taverniti Members,  on a pro rata basis, an
aggregate of 500,000 shares of the Common Stock,  par value $0.001 per share, of
the  Company,  and  paid to the  Taverniti  Members,  on a pro  rata  basis,  an
aggregate of Seven Hundred Fifty Thousand Dollars ($750,000).  At the closing of
the exchange  transaction,  Taverniti  became a  wholly-owned  subsidiary of the
Company. Paul Guez, the Company's Chairman,  Chief Executive Officer,  President
and  majority  shareholder,  is the  sole  manager  and a 


                                       12



member of Taverniti.  Elizabeth Guez, Paul Guez's spouse and the Company's Chief
Operating Officer,  is a member of Taverniti.  Two other members of Mr. and Mrs.
Guez's family are the remaining members of Taverniti.

         Taverniti  is the  exclusive  licensee  for  the  design,  development,
manufacture,  sale,  marketing  and  distribution  of the  "Taverniti  So Jeans"
trademark in the denim and knit sports wear  categories for men and women. It is
paying  royalties  to  Taverniti  Holdings  LLC in  the  ranges  of 5-8  percent
depending  on the net  sales of the  licensed  products  pursuant  to a  license
agreement with Taverniti  Holdings LLC.  Taverniti Holdings LLC is jointly owned
by Paul Guez (60%) and Jimmy Taverniti  (40%),  the designer of the products for
the brand, and Mr. Guez is the sole manager. The license agreement was signed in
May 2004 and expires on December 31, 2015.

NOTE 7 - DUE FROM/TO RELATED PARTIES

         The related parties are the Company's majority shareholder (who is also
the Chairman,  Chief Executive Officer and President of the Company) and limited
liability companies that are co-owned by the majority shareholder. 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 three months ended September 30, 2005, 3 suppliers comprised
greater than 10% of the Company's purchases. Purchases from these suppliers were
20%, 11% and 10%, respectively. During the nine months ended September 30, 2005,
2 suppliers  comprised  greater than 10% of the Company's  purchases.  Purchases
from these suppliers were 17% and 14%, respectively.

NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying  amounts of cash,  due from factor,  accounts  receivable,
accounts payable, due to related parties,  income-tax payable,  accrued expenses
and other  current  liabilities  approximate  fair  value  because  of the short
maturity of these items.

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.  The amount of total  factor  receivables  approximated
$5,393,168 as of September 30, 2005.

NOTE 11 - CAPITAL CONTRIBUTION

         Since  the  beginning  of 2005,  Mr.  Guez has  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 September 30,
2005,  the  Company  had  advances  totaling  $151,383  from Mr.  Guez which are
included in amounts due to related parties on the accompanying balance sheet.

NOTE 12 - COMMITMENTS

         On July 5, 2005, the Company entered into a ten-year license  agreement
with Yanuk Jeans LLC ("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 of such  products  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 July 8, 2005,  we entered into an  Employment  Agreement,  which was
amended on August 23, 2005, with Philippe  Naouri.  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.


                                       13



Mr. Naouri receives an annual salary of $240,000. Mr. Naouri is also entitled to
participate in our bonus,  incentive stock option,  savings and retirement plans
as such plans become available

         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.

         October 6, 2005, the Company entered into a five-year license agreement
with Yanuk Jeans LLC ("Yanuk"),  effective  October 5, 2005.  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 "U" brand
products to the  wholesale  and retail  trade.  The Company  will pay to Yanuk a
royalty of five percent of all net sales of the licensed  products and shall pay
a guaranteed minimum royalty on an annual basis. In addition, during the term of
the license  agreement,  the  company has the option to purchase  from Yanuk the
property licensed under the agreement.

         On October 31, 2005, the Company entered into an exchange  agreement to
acquire the  business and all the assets and  liabilities  of Taverniti So Jeans
LLC which was 100% owned by Paul Guez and his  family.  The  Company  will issue
500,000 new shares of common stock,  and pay $750,000 in cash, as  consideration
for the  acquisition.  The transaction will be accounted for as a combination of
companies under common control.


                                       14



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

         Statements made in this Form 10-QSB (the  "Quarterly  Report") that are
not historical or current facts are  "forward-looking  statements" made pursuant
to the safe harbor  provisions of Section 27A of the  Securities Act of 1933, as
amended (the "Act"), and Section 21E of the Securities  Exchange Act of 1934, as
amended (the  "Exchange  Act").  The Company  intends that such  forward-looking
statements  be subject to the safe  harbors  for such  statements.  The  Company
wishes  to  caution   readers   not  to  place   undue   reliance  on  any  such
forward-looking  statements,   which  speak  only  as  of  the  date  made.  Any
forward-looking  statements represent  management's best judgment as to what may
occur in the future. The forward-looking statements included herein are based on
current expectations that involve numerous risks and uncertainties.  Assumptions
relating to the foregoing involve judgments with respect to, among other things,
future  economic,   competitive  and  market   conditions  and  future  business
decisions,  all of which are difficult or impossible to predict  accurately  and
many of which are  beyond the  control  of the  Company.  Although  the  Company
believes that the  assumptions  underlying  the  forward-looking  statements are
reasonable, any of the assumptions could be inaccurate and, therefore, there can
be no assurance that the forward-looking statements included in this Form 10-QSB
will prove to be accurate. In light of the significant uncertainties inherent in
the   forward-looking   statements   included  herein,  the  inclusion  of  such
information  should not be  regarded as a  representation  by the Company or any
other person that the objectives and plans of the Company will be achieved.  The
Company  disclaims any  obligation  subsequently  to revise any  forward-looking
statements to reflect events or  circumstances  after the date of such statement
or to reflect the occurrence of anticipated or unanticipated events.

         The words "we," "us," "our," and the "Company," refer to Blue Holdings,
Inc. The words or phrases  "may,"  "will,"  "expect,"  "believe,"  "anticipate,"
"estimate,"  "approximate,"  or "continue,"  "would be," "will allow,"  "intends
to," "will likely result," "are expected to," "will continue," "is anticipated,"
"estimate,"  "project," or similar  expressions,  or the negative  thereof,  are
intended to identify  "forward-looking  statements." Actual results could differ
materially from those projected in the forward looking statements as a result of
a number of risks and  uncertainties,  including  but not  limited  to:  (a) our
failure to  implement  our  business  plan within the time period we  originally
planned  to  accomplish;  and (b) other  risks that are  discussed  in this Form
10-QSB or included in our  previous  filings  with the  Securities  and Exchange
Commission ("SEC").

DESCRIPTION OF BUSINESS

CORPORATE HISTORY

         Blue Holdings, Inc. was incorporated in the State of Nevada on February
9, 2000 under the name  Marine Jet  Technology  Corp.  Since our  inception  and
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, L.L.C.
("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.


                                       15



         On April 14, 2005, we entered into an Exchange Agreement (the "Exchange
Agreement")  with Antik  Denim,  LLC, 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 us 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) held  approximately  95.8% of the outstanding  shares of our
common stock immediately following the transaction.

         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 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.

         October 6, 2005, the Company entered into a five-year license agreement
with Yanuk Jeans LLC ("Yanuk"),  effective  October 5, 2005.  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 "U" brand
products to the  wholesale  and retail  trade.  The Company  will pay to Yanuk a
royalty of five percent of all net sales of the licensed  products and shall pay
a guaranteed minimum royalty on an annual basis. In addition, during the term of
the license  agreement,  the  company has the option to purchase  from Yanuk the
property licensed under the agreement.

         On October 7, 2005, the Company filed a registration  statement on Form
SB-2 (file  number  333-128906)  with the  Securities  and  Exchange  Commission
registering the sale of up to 3,000,000  shares of our common stock from time to
time in one or more  offerings.  We  subsequently  determined  not to pursue the
proposed  offering as described in the  registration  statement and withdrew the
registration  statement  on October  19, 2005  pursuant to Rule 477  promulgated
under the Securities Act of 1933, as amended.

         On October 31, 2005,  the Company  entered  into an exchange  agreement
with  Taverniti  So  Jeans,   LLC,  a  California   limited   liability  company
("Taverniti"), and the members of Taverniti (the "Taverniti Members").


                                       16



Under the  exchange  agreement,  the  Company  acquired  all of the  outstanding
membership  interests of Taverniti (the "Interests") from the Taverniti Members,
and the Taverniti Members  contributed all of their Interests to the Company. In
exchange,  the Company issued to the Taverniti Members,  on a pro rata basis, an
aggregate of 500,000 shares of the Common Stock,  par value $0.001 per share, of
the  Company,  and  paid to the  Taverniti  Members,  on a pro  rata  basis,  an
aggregate of Seven Hundred Fifty Thousand Dollars ($750,000).  At the closing of
the exchange  transaction,  Taverniti  became a  wholly-owned  subsidiary of the
Company. Paul Guez, the Company's Chairman,  Chief Executive Officer,  President
and  majority  shareholder,  is the  sole  manager  and a member  of  Taverniti.
Elizabeth Guez, Paul Guez's spouse and the Company's Chief Operating Officer, is
a member of Taverniti.  Two other members of Mr. and Mrs.  Guez's family are the
remaining members of Taverniti.

         Taverniti  is the  exclusive  licensee  for  the  design,  development,
manufacture,  sale,  marketing  and  distribution  of the  "Taverniti  So Jeans"
trademark in the denim and knit sports wear  categories for men and women. It is
paying  royalties  to  Taverniti  Holdings  LLC in  the  ranges  of 5-8  percent
depending  on the net  sales of the  licensed  products  pursuant  to a  license
agreement with Taverniti  Holdings LLC.  Taverniti Holdings LLC is jointly owned
by Paul Guez (60%) and Jimmy Taverniti  (40%),  the designer of the products for
the brand, and Mr. Guez is the sole manager. The license agreement was signed in
May 2004 and expires on December 31, 2015.

OUR BUSINESS

GENERAL OVERVIEW

         We, directly and through our wholly-owned subsidiary, Antik Denim, LLC,
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"  brand  products  and, as a result of recent
license  agreements with Yanuk,  "Yanuk" and "U" brand  products,  in the United
States, and  internationally in countries that include,  but are not limited to,
Canada, Belgium,  France, Germany,  Sweden, Italy, Korea, and Japan. As a result
of the  acquisition  of Taverniti in October  2005,  we will  similarly  market,
distribute and sell the "Taverniti So Jeans" brand products.

         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,"  "Yanuk," "U" and "Tavernit So Jeans"
brands,  in  particular.  While  there is no existing  plan with  respect to the
roll-out of such  stores,  our first  retail  store opened on August 27, 2005 on
Melrose Avenue in Los Angeles.

EMPLOYEES

         As of October 31, 2005,  we had 73  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, 53 are employed on a
full time basis. The


                                       17



remaining 20 employees  are  part-time  and season based  employees.  All of our
part-time and season based  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 and such  amendment was effective
on August 1, 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, LLC, under the "Antik Denim" and "Yanuk" labels. These
jeans  are sold in the  United  States  and  abroad  to  upscale  retailers  and
boutiques.  As a result of the acquisition of Taverniti in October 2005, we will
similarly  design,  manufacture,  market,  distribute and sell the "Taverniti So
Jeans" brand products.

         We  currently  sell men's and women's  styles and are in the process of
launching a children's  line.  "Antik  Denim,"  "Yanuk" and "Taverniti So Jeans"
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," "Yanuk" and "Taverniti So Jeans" 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, Yanuk and Taverniti So Jeans.

PRODUCT STRATEGY

         Our overall product  strategy is to offer multiple brands of apparel in
the premium and better denim  segments.  As a result of license  agreements with
Yanuk Jeans,  LLC, we currently  market our  products  under the "Antik  Denim,"
"Yanuk"  and "U"  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,  and our recent  acquisition of Taverniti,  evidences this
strategy. While no other definitive arrangement or


                                       18



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 which  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.

         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.

         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
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.  Our first retail store opened on
August 27, 2005 on Melrose Avenue in Los Angeles.  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," "Yanuk" and "U" 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,  and our
recent  acquisition  of  Taverniti,  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,


                                       19



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 three  months ended  September  30,  2005,  three  suppliers
comprised  greater than 10% of the  Company's  purchases.  Purchases  from these
suppliers  were 20%,  11% and 10%  respectively.  During the nine  months  ended
September 30, 2005,  two suppliers  comprised  greater than 10% of the Company's
purchases.  Purchases from these suppliers were 17% and 14%, respectively.

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, Innovo Group, Inc., 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.

         Taverniti  is the  exclusive  licensee  for  the  design,  development,
manufacture,  sale,  marketing  and  distribution  of the  "Taverniti  So Jeans"
trademark in the denim and knit sports wear  categories for men and women. It is
paying  royalties  to  Taverniti  Holdings  LLC in  the  ranges  of 5-8  percent
depending  on the net  sales of the  licensed  products  pursuant  to a  license
agreement with Taverniti  Holdings LLC.  Taverniti Holdings LLC is jointly owned
by Paul Guez (60%) and Jimmy Taverniti  (40%),  the designer of the products for
the brand, and Mr. Guez is the sole manager. The license agreement was signed in
May 2004 and expires on December 31, 2015.

         We anticipate  continuing to expand the "Antik Denim," "Yanuk," "U" and
"Taverniti  So Jeans"  brands,  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.


                                       20



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.

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.

LIQUIDITY AND CAPITAL RESOURCES

         For the  nine  months  ended  September  30,  2005,  net  cash  used by
operating activities amounted to $(0.21 million).  The deficit was created by an
increase of $4.5 million in inventory, $1.6 million in due from factor and $0.86
million in accounts  receivables.  This  deficit was  financed by an increase of
$1.7  million  in  tax  payable,   $0.9  million  in  accounts  payable  and  by
contribution   of  inventory  for  $1.2  million  by  Mr.  Guez  and  additional
paid-in-capital of $0.7 million, mostly 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 the Company. From time to
time, he also supports the Company with temporary advances.  As of September 30,
2005,  the  Company  had  advances  totaling  $151,383  from Mr.  Guez which are
included in amounts due to related parties on the accompanying balance sheet.

         We use 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.


                                       21



         The factor agreement,  which originally terminated on October 18, 2006,
provides  that Antik 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 factor  agreement,  which
was amended  effective July 25, 2005, now terminates on July 24, 2006, and lists
the Company as an additional  borrower,  and makes available to both the Company
and Antik a combined line of credit up to $1.5 million  against  inventory.  The
Company  and  Antik can  borrow  against  inventory  up to 33.3% of the value of
eligible  raw  materials  and finished  goods.  The factor  agreement  was again
amended on  September 1, 2005 to increase the ratio  against  approved  factored
invoices from 85% to 90%, and to provide for the automatic renewal of the credit
facilities after July 24, 2006 subject to 120 days' termination  notice from any
party.

         As of September 30, 2005,  the amount of the reserve held by the factor
was  approximately  $811,000.  The  factor  commission  is 0.8% 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  $1,688,797  as of September  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  Paul  Guez,  our  Chairman,  Chief  Executive  Officer,
President and majority  shareholder,  and Blue Concept, LLC ("Blue Concept"),  a
company co-owned by Paul Guez and his spouse, 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,  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 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.  Our
Consolidated  Equity for the quarter ended  September 30, 2005 was $5.5 million,
and accordingly,  the Required  Contribution  will not be required to be paid by
the former Antik members.

RESULTS OF OPERATIONS

         The  acquisition  of Antik Denim,  LLC  ("Antik") 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.  Accordingly the financial  statements herein are those of Antik
since  September  13, 2004 (the date of its  inception).  As such,  there are no
comparisons with previous periods.

NINE MONTHS ENDED SEPTEMBER 30, 2005

         For the  nine  months  ended  September  30,  2005,  net  cash  used by
operating activities amounted to $(0.21 million).  The deficit was created by an
increase of $4.5 million in inventory, $1.6 million in due from factor and $0.86
million in accounts  receivables.  This  deficit was  financed by an increase of
$1.7  million  in  tax  payable,   $0.9  million  in  accounts  payable  and  by
contribution  of inventory for $1.2 million by Mr. Guez and  additional  paid-in
capital of $0.7 million, mostly from Mr. Guez.


                                       22



         We recorded sales of $20.6 million for the nine months ending September
30, 2005.  Gross profit for the nine months ending  September 30, 2005 was $10.1
million,  or 49.3%.  The majority of our sales in the nine months were generated
from the Antik Denim brand.  Management expects that sales in the fourth quarter
will slow down as a result of seasonality trends in purchases by customers.

         Selling,  distribution and administrative  expenses for the nine months
ended   September  30,  2005  totaled  $4.8  million  and  included  design  and
sales-related expenses such as purchases of sample fabric, freight, advertising,
commissions,  travel and trade show expense. The principal components were legal
and professional ($1.00 million),  and fees paid to Blue Concept,  LLC under the
service agreement ($0.94 million). Net Income after provision for taxes was $3.4
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  income  between  April  30 and
September 30, 2005.

THREE MONTHS ENDED SEPTEMBER 30, 2005

         Net cash  provided by operating  activities  for the three months ended
September 30, 2005 was $0.51  million.  Besides the cash inflow from net income,
the  surplus  was also the result of an  increase  in income tax payable by $1.3
million and accrued  expenses by $0.51  million.  These cash  inflows  were then
offset by an increase of $0.72 million in accounts  receivable,  $1.5 million in
due from Factor, and $1 million in inventory.

         We  recorded  sales  of  $11.7  million  for the  three  months  ending
September 30, 2005.  Gross profit for the three months ended  September 30, 2005
was 5.7  million,  or 48.5%.  The gross margin in the quarter was diluted by the
sale of old inventory at lower margins. The majority of our sales in the quarter
were  generated  from the Antik Denim  brand.  The  increase in sales was due to
strong demand for the Antik Denim brand, both domestically and internationally.

         Selling,  distribution and administrative expenses totaled $2.6 million
and  included  design and  sales-related  expenses  such as  purchases of sample
fabric, freight,  advertising,  commissions,  travel and trade show expense. The
principal components were design and development  expenses ($0.4 million),  fees
paid  to  Blue  Concept,  LLC  under  the  service  agreement  ($0.31  million),
advertising and trade shows ($0.23  million),  and legal and  professional  fees
($0.18  million).  With the  exception of fees under the service  agreement,  we
expect these other expenses will continue to increase in line with the expansion
of our business.

         Net Income after  provision for taxes was $1.8 million.  Other than the
minimum tax of $800 for the State of  California,  former  members of Antik have
undertaken  not  to  take  further   distributions   for  their  individual  tax
liabilities. Therefore, our tax provisions were based on the income between July
1 and September 30, 2005. During the quarter,  the Company reimbursed $50,000 to
the principal  shareholder in full and final settlement of all expenses relating
to the exchange transaction.


                                       23



PERIOD FROM SEPTEMBER 13, 2004 (INCEPTION) THROUGH SEPTEMBER 30, 2004

         Net cash used by  operating  activities  for the period from  inception
through  September 30, 2004 was $0 as funds were provided  through  increases in
due to related parties by $0.12 million and accounts payable by $0.02 million.

         We recorded sales of $0 for the period from inception through September
30, 2004.  Selling,  distribution  and  administrative  expenses  totaled  $0.13
million and included payroll,  purchases of sample fabric,  freight,  travel and
duties. The principal component was design expenses ($0.03 million).

CRITICAL ACCOUNTING POLICIES

         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.

         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 our ability to ultimate  collect.  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.


RISK FACTORS

YOU  SHOULD  CAREFULLY  CONSIDER  THE  FOLLOWING  RISK  FACTORS  AND  ALL  OTHER
INFORMATION CONTAINED IN THIS DESCRIPTION BEFORE PURCHASING SHARES OF OUR COMMON
STOCK OR OTHER  SECURITIES.  INVESTING IN BLUE HOLDINGS' COMMON STOCK INVOLVES A
HIGH DEGREE OF RISK.  THE RISKS AND  UNCERTAINTIES  DESCRIBED  BELOW ARE NOT THE
ONLY ONES FACING US.  ADDITIONAL RISKS AND  UNCERTAINTIES  THAT WE ARE NOT AWARE
OF, OR THAT WE CURRENTLY DEEM IMMATERIAL, ALSO MAY BECOME IMPORTANT FACTORS THAT
AFFECT US. IF ANY OF THE  FOLLOWING  EVENTS OR  OUTCOMES  ACTUALLY  OCCURS,  OUR
BUSINESS,  OPERATING  RESULTS AND FINANCIAL  CONDITION WOULD LIKELY SUFFER. AS A
RESULT,  THE TRADING PRICE OF OUR COMMON STOCK COULD  DECLINE,  AND YOU MAY LOSE
ALL OR PART OF THE MONEY YOU PAID TO PURCHASE OUR COMMON STOCK.


                                       24



RISKS RELATED TO OUR BUSINESS

WE HAVE A LIMITED OPERATING HISTORY,  MAKING IT DIFFICULT TO EVALUATE WHETHER WE
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, we do 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:

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

         -        obtain the financing required to implement our business plan.

Given our limited operating history,  our new license agreements with Yanuk, our
acquisition  of  Taverniti,  and 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. In addition,  any additional
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 are poised for significant growth in 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,"  "Taverniti So Jeans" 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.


                                       25



WE CURRENTLY OWN OR LICENSE,  AND OPERATE, A LIMITED NUMBER OF PRINCIPAL BRANDS.
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,  LLC, a limited  number of principal  brands,  most of
which  are  being  operated  pursuant  to very  recent  license  or  acquisition
agreements.  If we are unable to successfully  market and distribute our branded
products,  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:

         -        the timing of its introduction of new product lines;
         -        the level of consumer acceptance of each new product line;
         -        general economic and industry  conditions that affect consumer
                  spending and retailer purchasing;
         -        the availability of manufacturing capacity;
         -        the seasonality of the markets in which it participates;
         -        the timing of trade shows;
         -        the product mix of customer orders;
         -        the  timing  of the  placement  or  cancellation  of  customer
                  orders;
         -        the weather;
         -        transportation delays;
         -        quotas and other regulatory matters;
         -        the occurrence of charge backs in excess of reserves; and
         -        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.


                                       26



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 is 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.


                                       27



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

The  loss  of or  inability  to  enforce  our  trademarks  or any  of our  other
proprietary  or licensed  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,  and our lead
designers,  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:

         -        anticipating  and  quickly  responding  to  changing  consumer
                  demands;
         -        developing  innovative,  high-quality  products  in sizes  and
                  styles that appeal to consumers;
         -        competitively  pricing our  products  and  achieving  customer
                  perception of value; and
         -        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.


                                       28



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:

         -        the markets in which we operate;
         -        holiday seasons;
         -        consumer demand;
         -        climate;
         -        economic conditions; and
         -        numerous other factors beyond our control.

OTHER RISKS RELATED TO AN INVESTMENT IN OUR COMMON STOCK

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

Any sale of shares by us in future private  placement  offerings could result in
dilution to our  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.

As of October 31, 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  89.9% 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 31, 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.


                                       29



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.

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.

OFF-BALANCE SHEET ARRANGEMENTS

None.

ITEM 3.  CONTROLS AND PROCEDURES

         As of September 30, 2005, the end of the period covered by this Report,
we conducted an evaluation,  under the supervision and with the participation of
our Chief  Executive  Officer and Chief  Financial  Officer,  of our  disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e))  under the
Exchange Act. Based on this  evaluation,  our Chief Executive  Officer and Chief
Financial  Officer  concluded  that our  disclosure  controls and procedures are
effective to ensure that  information  required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and  reported  within the time  periods  specified  in  Securities  and Exchange
Commission rules and forms.

         There  was no  change  in  the  our  internal  control  over  financial
reporting during our most recently  completed fiscal quarter that has materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting.


                                       30



                                     PART II

ITEM 6.  EXHIBITS

      EXHIBIT
      NUMBER        DESCRIPTION OF EXHIBIT
      -------       ----------------------

       10.1         License  Agreement  dated July 5, 2005,  between the Company
                    and Yanuk Jeans,  LLC  (Incorporated by reference to Exhibit
                    10.1 of the  Current  Report  on Form  8-K  filed  with  the
                    Securities and Exchange Commission on July 7, 2005).

       10.2         Employment Agreement dated July 8, 2005, between the Company
                    and Philippe  Naouri  (Incorporated  by reference to Exhibit
                    10.1 of the  Current  Report  on Form  8-K  filed  with  the
                    Securities and Exchange Commission on July 14, 2005).

       10.3         First  Amendment  to  Employment  Agreement  effective as of
                    August 1, 2005,  between  the Company  and  Philippe  Naouri
                    (Incorporated  by  reference  to Exhibit 10.1 of the Current
                    Report on Form 8-K filed with the  Securities  and  Exchange
                    Commission on August 25, 2005).

       10.4         Licensing Term Sheet dated September 8, 2005,  between Antik
                    Denim, LLC and Titan Industries, Inc.

       10.5         License  Agreement  effective  October 5, 2005,  between the
                    Company and Yanuk Jeans,  LLC  (Incorporated by reference to
                    Exhibit  10.1 of the  Current  Report on Form 8-K filed with
                    the Securities and Exchange Commission on October 7, 2005).

       31.1         Certification  by  Chief  Executive  Officer  and  President
                    pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities
                    Exchange Act of 1934, as amended.

       31.2         Certification  by Chief Financial  Officer  pursuant to Rule
                    13a-14(a) or 15d-14(a) under the Securities  Exchange Act of
                    1934, as amended.

       32.1         Certification  of  Chief  Executive  Officer  and  President
                    pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant to
                    Section 906 of the Sarbanes-Oxley Act of 2002.

       32.2         Certification  of Chief  Financial  Officer  pursuant  to 18
                    U.S.C.  Section 1350, as adopted  pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002.


                                       31



                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                     BLUE HOLDINGS, INC.



Date: November 8, 2005               By:  /S/ PATRICK CHOW      
                                          -------------------------------------
                                          Patrick Chow
                                          Chief Financial Officer and Secretary


                                       32



                                  EXHIBIT INDEX

      EXHIBIT
      NUMBER        DESCRIPTION OF EXHIBIT
      -------       ----------------------

       10.1         License  Agreement  dated July 5, 2005,  between the Company
                    and Yanuk Jeans,  LLC  (Incorporated by reference to Exhibit
                    10.1 of the  Current  Report  on Form  8-K  filed  with  the
                    Securities and Exchange Commission on July 7, 2005).

       10.2         Employment Agreement dated July 8, 2005, between the Company
                    and Philippe  Naouri  (Incorporated  by reference to Exhibit
                    10.1 of the  Current  Report  on Form  8-K  filed  with  the
                    Securities and Exchange Commission on July 14, 2005).

       10.3         First  Amendment  to  Employment  Agreement  effective as of
                    August 1, 2005,  between  the Company  and  Philippe  Naouri
                    (Incorporated  by  reference  to Exhibit 10.1 of the Current
                    Report on Form 8-K filed with the  Securities  and  Exchange
                    Commission on August 25, 2005).

       10.4         Licensing Term Sheet dated September 8, 2005,  between Antik
                    Denim, LLC and Titan Industries, Inc.

       10.5         License  Agreement  effective  October 5, 2005,  between the
                    Company and Yanuk Jeans,  LLC  (Incorporated by reference to
                    Exhibit  10.1 of the  Current  Report on Form 8-K filed with
                    the Securities and Exchange Commission on October 7, 2005).

       31.1         Certification  by  Chief  Executive  Officer  and  President
                    pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities
                    Exchange Act of 1934, as amended.

       31.2         Certification  by Chief Financial  Officer  pursuant to Rule
                    13a-14(a) or 15d-14(a) under the Securities  Exchange Act of
                    1934, as amended.

       32.1         Certification  of  Chief  Executive  Officer  and  President
                    pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant to
                    Section 906 of the Sarbanes-Oxley Act of 2002.

       32.2         Certification  of Chief  Financial  Officer  pursuant  to 18
                    U.S.C.  Section 1350, as adopted  pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002.


                                       33