Procedures for SUBMISSION OF COMMUNICATIONS REGARDING Accounting and Auditing Matters

Section 301 of the Sarbanes-Oxley Act of 2002 requires the Audit Committee of the Board of Directors (the “Audit Committee”) of Blue Holdings, Inc. (the “Company”) to establish procedures for: (a) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters (“Accounting Matters”); and (b) the submission by employees of the Company, on a confidential and anonymous basis, of concerns regarding questionable accounting or auditing matters.

As the Company is committed to achieving compliance with all applicable securities laws and regulations, accounting standards, accounting controls and audit practices, any person may submit a good faith communication regarding Accounting Matters to the Audit Committee, or to the management of the Company, and any employee may do so on a confidential and anonymous basis, without fear of dismissal or retaliation of any kind. Ultimately, the Audit Committee will oversee treatment of concerns in this area.

In order to facilitate the reporting of concerns regarding Accounting Matters, the Company’s Audit Committee has established the following procedures:

• Receipt of Communications

  1. Consistent with the Company’s Code of Ethics, any person, including any employee, with concerns regarding Accounting Matters may report their concerns to the Chief Financial Officer of the Company, Larry Jacobs, at larry.jacobs@blueholdings.com.
  2. Alternatively, any person, including any employee, may forward communications regarding Accounting Matters to the Audit Committee at

     • auditcommittee@blueholdings.com; or
     • if you are concerned about maintaining confidentiality and anonymity, you may send correspondence on a confidential and anonymous basis to the Company’s outside counsel, Stubbs Alderton & Markiles, LLP, by mail to: Blue Holdings, Inc., Audit Committee, c/o Stubbs Alderton & Markiles, LLP, 15821 Ventura Blvd. Suite 525, Encino, California 91436
     • Stubbs Alderton & Markiles, LLP will then direct any such communication to the Audit Committee for its review.

• Scope of Matters Covered by These Procedures

  These procedures relate to concerns relating to any questionable accounting or auditing matters, including, without limitation, the following:

  1. fraud or deliberate error in the preparation, evaluation, review or audit of any financial statement of the Company;
  2. fraud or deliberate error in the recording and maintaining of financial records of the Company;
  3. deficiencies in or noncompliance with the Company’s internal accounting controls;
  4. misrepresentation or false statement to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of the Company; or
  5. deviation from full and fair reporting of the Company’s financial condition.

• Treatment of Communications

  1. Upon receipt of a communication, the Chief Financial Officer, or the Audit Committee, as may be applicable, will (i) determine whether the communication actually pertains to Accounting Matters and (ii) when possible, acknowledge receipt of the communication to the sender.
  2. Communications relating to Accounting Matters will be reviewed under Audit Committee direction and oversight by the Company’s outside counsel, Internal Audit Department or such other persons as the Audit Committee determines to be appropriate. Confidentiality will be maintained to the fullest extent possible, consistent with the need to conduct an adequate review.
  3. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee.
  4. The Company will not discharge, demote, suspend, threaten, harass or in any manner discriminate against any employee in the terms and conditions of employment based upon any lawful actions of such employee with respect to good faith reporting of communications regarding Accounting Matters or otherwise as specified in Section 806 of the Sarbanes-Oxley Act of 2002.

• Reporting and Retention of Communications and Investigations

  The Audit Committee will direct the Chief Financial Officer, Corporate Secretary or outside counsel, as it deems necessary, to maintain a log of all communications, tracking their receipt, investigation and resolution and shall prepare a periodic summary report thereof for the committee. Copies of communications and such log will be maintained in accordance with the Company’s document retention policy.