UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report:
(Date
of
earliest event reported)
November
27, 2007
Blue
Holdings, Inc.
(Exact
name of registrant as specified in charter)
Nevada
(State
or
other Jurisdiction of Incorporation or Organization)
|
000-33297
(Commission
File Number)
|
88-0450923
(IRS
Employer Identification No.)
|
5804
E. Slauson Ave.,
Commerce,
CA 90040
(Address
of Principal Executive Offices and zip
code)
(323)
725-5555
(Registrant's
telephone
number,
including area code)
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of registrant under any of the following
provisions:
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule
14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
o
Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Safe
Harbor Statement under the Private Securities Litigation Reform Act of
1995
Information
included in this Current Report on Form 8-K may contain statements which
constitute forward-looking statements within the meaning of Section 27A of
the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
both as amended. Those statements include statements regarding our intent,
belief or current expectations. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements. Such risks and
uncertainties include, among other things, our ability to face stiff
competition, profitably manage our business, the financial strength of our
customers, the continued acceptance of our existing and new products by our
existing and new customers, the risks of foreign manufacturing, competitive
and
economic factors in the textile and apparel markets, the availability of raw
materials, the ability to manage growth, weather-related delays, dependence
on
key personnel, general economic conditions, global manufacturing costs and
restrictions, and other risks and uncertainties that may be detailed herein,
or
from time to time in our other filings made with the Securities and Exchange
Commission.
Item
1.01 Entry
Into a Material Definitive Agreement
Item
3.02 Unregistered
Sales of Equity Securities
On
November 13, 2007, Blue
Holdings, Inc. (the “Registrant”) agreed to issue 1,000,000 shares of a newly
formed Series A Convertible Preferred Stock (the “Series A Preferred”) in
satisfaction of $2,556,682 of advances made to the Registrant by Paul Guez,
the
Registrant’s Chairman of the Board and majority stockholder. The shares of
Series A Preferred were convertible into 3,479,899 shares of the common stock
of
the Registrant based on a conversion formula equal to the price per share
($2.556682) divided by the conversion price ($0.7347) multiplied by the total
number of shares of Series A Preferred issued (1,000,000). The conversion price
equaled the average closing price of a share of the Registrant's common stock
as
quoted on the NASDAQ Capital Market, over the 20 trading days immediately
preceding November 13, 2007, the closing date of the transaction.
Subsequent
to the transaction, and in connection with the Registrant’s application for
additional listing of the shares of common stock underlying the Series A
Preferred, the Registrant was advised orally by NASDAQ Listing Qualifications
that the terms of the Series A Preferred did not comply with specified NASDAQ
Marketplace Rules relating to shareholder approval and voting
rights.
As
a
result of those discussions, and as a result of subsequent negotiations with
Mr.
Guez, on November 28, 2007, the Registrant rescinded the purchase transaction
of
the Series A Preferred (effective as of November 13, 2007, the date that the
transaction originally closed) and entered into a new transaction with Mr.
Guez
pursuant to a Preferred Stock Rescission and Purchase Agreement dated November
28, 2007, whereby the Registrant issued 1,000,000 shares of an amended and
restated form of the Series A Convertible Preferred Stock (the “New Series A
Preferred”) in consideration for (i) the cancellation of the $2,556,682 of
advances made to the Registrant by Mr. Guez (which again became due and owing
to
the Registrant as a result of the rescission of the prior transaction), and
(ii)
an additional cash investment equal to $125,000. The shares of New Series A
Preferred are convertible into 4,623,589 shares of the common stock of the
Registrant based on a conversion formula equal to the price per share
($2.681682) divided by the conversion price ($0.58) multiplied by the total
number of shares of New Series A Preferred issued (1,000,000), subject to
adjustment in accordance with the provisions of the certificate of designations
for the New Series A Preferred. The
conversion price equals the consolidated closing bid price for a share of the
Company's common stock prior to the signing of the definitive agreement
governing the transaction.
The
additional terms of the New Series A Preferred are as follows:
| |
·
|
The
shares of New Series A Preferred accrue cumulative dividends at the
annual
rate of 6% of the purchase price in preference to the common stock,
and
are payable when, as and if declared by the Board.
|
| |
·
|
Upon
the liquidation or dissolution of the Registrant, or any merger or
sale of
all or substantially all of the assets, the shares of New Series
A
Preferred are entitled to receive, prior to any distribution to the
holders of common stock, 100% of the purchase price plus all accrued
but
unpaid dividends.
|
| |
·
|
The
New Series A Preferred plus all declared but unpaid dividends thereon
automatically will be converted into common stock, at the then applicable
conversion rate, upon the affirmative vote of 50% of the outstanding
shares of New Series A
Preferred.
|
| |
·
|
Each
share of New Series A Preferred will carry a number of votes equal to
the number of shares of common stock then issuable upon its conversion
into common stock. The New Series A Preferred generally will vote
together with the common stock and not as a separate class, except
as
provided below.
|
| |
·
|
Consent
of the holders of the outstanding New Series A Preferred will be
required in order for the Registrant to: (i) amend or change the
rights, preferences, privileges or powers of, or the restrictions
provided
for the benefit of, the New Series A Preferred; (ii) authorize,
create or issue shares of any class of stock having rights, preferences,
privileges or powers superior to the New Series A Preferred;
(iii) reclassify any outstanding shares into shares having rights,
preferences, privileges or powers superior to the New Series A Preferred;
or (iv) amend the Registrant’s Articles of Incorporation or Bylaws in
a manner that adversely affects the rights of the New Series A
Preferred.
|
| |
·
|
Holders
of New Series A Preferred will be entitled to unlimited “piggyback”
registration rights on registrations by the Registrant, subject
to pro rata cutback at any underwriter’s discretion.
The registration rights may be transferred to a transferree who acquires
all of the New Series A Preferred.
|
The
issuance of the New Series A Preferred to Mr. Guez was intended to be exempt
from registration under the Securities Act of 1933, as amended (the “Securities
Act”) pursuant to Section 4(2) thereof and Rule 506 of Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission
(“Commission”) under the Securities Act, as the New Series A Preferred was
issued to an accredited investor, without a view to distribution and were not
issued through any general solicitation or advertisement. The New Series A
Preferred issued to Mr. Guez may not be offered or sold in the United States
unless they are registered under the Securities Act, or an exemption from the
registration requirements of the Securities Act is available. No registration
statement covering these securities has been filed with the Commission or with
any state securities commission.
A
copy of
the Preferred Stock Rescission and Purchase Agreement entered into between
the
Registrant and Mr. Guez is attached as Exhibit 10.1 to this Current Report
on
Form 8-K, and is incorporated herein by reference. A copy of the Amended and
Restated Certificate of Designations, Preferences, Rights and Limitations of
the
Series A Convertible Preferred Stock is attached as Exhibit 4.1 to this Current
Report on Form 8-K, and is incorporated herein by reference.
| Item
3.01 |
Notice
of Delisting or Failure to Satisfy a Continued Listing Rule or Standard;
Transfer
of Listing
|
On
November 27, 2007, the Registrant received notification from the NASDAQ Listing
Qualifications Department that
the
Registrant did not comply with Marketplace Rule 4310(c)(3), which requires
the
Registrant to have a minimum of $2,500,000 in stockholders’ equity or
$35,000,000 market value of listed securities or $500,000 of net income from
continuing operations for the most recently completed fiscal year or two of
the
three most recently completed fiscal years.
As
a
result of the new transaction with Mr. Guez, the Registrant filed an amendment
to its Quarterly Report on Form 10-Q, for the quarterly period ended September
30, 2007. As set forth in that amendment, the Registrant reported stockholders’
equity to be $2,596,829, on an unaudited pro forma basis, assuming the new
transaction with Mr. Guez was consummated on September 30, 2007. The
Registrant also reported that it believes it satisfies NASDAQ’s stockholders’
equity requirement for continued listing, as set forth in NASDAQ Marketplace
Rule 4310(c)(3),
as of
November 29, 2007.
As
a
result of the new transaction with Mr. Guez and the filing of the Registrant’s
amendment to its quarterly report, on November 29, 2007, the Registrant received
notification from the NASDAQ
Listing
Qualifications Department that the Registrant was again in compliance with
Marketplace Rule 4310(c)(3). The
Registrant expects that NASDAQ will continue to monitor the Registrant’s ongoing
compliance with NASDAQ’s stockholders’ equity requirement for continued listing.
If, at the time of its next periodic report, the Registrant does not evidence
compliance with NASDAQ’s stockholders’ equity requirement for continued listing,
it may be subject to delisting by NASDAQ.
On
November 30, 2007, the
Registrant issued
a
press release announcing its receipt of the separate NASDAQ notifications.
A
copy of the press release is being furnished as Exhibit 99.1 to this report
and
is incorporated herein by reference.
Item
9.01 Financial
Statements and Exhibits
| |
(a)
|
Financial
statements of business acquired.
None.
|
| |
(b)
|
Pro
forma financial information.
None.
|
|
|
4.1 |
Amended
and Restated Certificate
of Designations, Preferences, Rights and Limitations
of Series A Convertible Preferred Stock of Blue Holdings, Inc.
|
|
|
10.1 |
Preferred
Stock Rescission and Purchase Agreement by and between Blue
Holdings, Inc. and Paul Guez
|
|
|
99.1 |
Press
Release issued by the Registrant on November 30,
2007.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, Blue Holdings,
Inc.
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
| |
|
|
| |
Blue
Holdings, Inc.
|
|
|
|
| Date:
November 30, 2007 |
By: |
/s/
Larry Jacobs |
| |
Larry
Jacobs
Chief
Financial Officer and Secretary
|
EXHIBIT
INDEX
| Exhibit
Number |
Description
of Exhibit
|
|
4.1
|
Amended
and Restated Certificate
of Designations, Preferences, Rights and Limitations of Series A
Convertible Preferred Stock of Blue Holdings,
Inc.
|
|
10.1
|
Preferred
Stock Rescission and Purchase Agreement by and between Blue Holdings,
Inc.
and Paul Guez
|
|
99.1
|
Press
Release issued by the Registrant on November 30,
2007.
|