BlastGard International

In the Boardroom With...
Mr. Michael J. Gordon
Chief Financial Officer
BlastGard International Inc.
(OTCBB: BLGA) Michael, thanks for joining us today. Prior to joining BlastGard®, you seem to have had a very interesting background in the environmental field as well. Please tell us about your background.

Michael J. Gordon:  Prior to my involvement with BlastGard, I was Vice President and a Board member of BBJ Environmental Solutions, which conducts research on the causes of, and develops solutions to, biologically related indoor air quality problems, including research in bio-defense and emerging infectious diseases, such as Anthrax. From August 1987 through December 1997, I was employed by Information Systems Corp., where I was responsible for overseeing administrative operations, the filing of all SEC reports and documents, company news releases and public relations. Before joining Phoenix, I served as Director of Legacies and Planned Giving for the American Cancer Society. We understand that BlastGard® was created to design, develop, manufacture and market proprietary blast mitigation materials and that the Company's patent-pending BlastWrap® technology effectively mitigates blast effects and suppresses post-blast fires. Please give us an overview of the Company’s core technology.

Michael J. Gordon: First, it is important to understand that Blast management solutions generally fall into one of two categories: hardening or mitigation. Hardening is a method of blast mitigation by which an object is placed around an explosive material to contain the blast, and is generally accomplished through the use of armor, mass or both. Mitigation (or attenuation) of blast effects is the dissipation of blast energy so that acoustic and shock waves, peak overpressure, reflected peak overpressure, impulse and after-burn are reduced. Because BlastWrap® is so easily customized, it can be used to work with existing products or designed to create finished products for numerous applications across all industries. The Company’s core technology centers around BlastWrap®. BlastWrap® is scientifically engineered and designed to remove much or most of the energy from an explosion. There are two primary components of any explosion – mechanical effects (which are shock impulse and acoustic waves) and chemical effects (fireball). In fact, shock impulse is the real killer in a high explosive blast. BlastWrap® dissipates blast shock wave energy through irreversible processes, such as drag, turbulence, friction, viscosity, reflection, etc.); and at the same time, BlastWrap® dramatically quenches the flame fronts or fireballs created as a result of the explosion, which means we also kill the after-burn and post-blast fires. This is important because a fireball (which represents the rapid gas expansion by the burning of materials) creates enormous pressures, commonly called “the blast wind.” Without giving away any competitive secrets, what are the main features and advantages?

Michael J. Gordon: The real beauty about BlastWrap® is that it is a purely passive mitigation, so it uses no power, alarms, sensors, or activation system. It works 24/7/365; does not dispense chemical extinguishants; never fails; is light weight and is low cost. The main advantage of BlastWrap® is for blast protection products to save lives and valuable assets from explosions, which also means it: reduces liability from loss of life and property; eases QD (Quantity / Distance) requirements; may lower insurance costs; lowers explosion mitigation costs; may Increase inventory level capabilities for explosive materials; prevents sympathetic detonation; and eliminates need for trained personnel to manage detection capability. BlastWrap® not only reduces blast impulse and pressure (including reflected and quasi-static pressure), but rapidly quenches fireballs and suppresses post-blast fires. Lethal fragments and/or ballistic threats may be managed by adding armor. Therefore, BlastWrap® can be used to make a wide variety of products perform better, such as: building materials; magazines; ordnance containers; aircraft (single & twin-aisle) protection systems; explosives storage units; decorative facings; linings; IED and EOD threat management (permanent or portable); wall components; barriers (permanent or portable); vehicle protection systems, etc. BlastGard® recently received a Naval Supply Systems Command Contract. The Military is obviously a big target market. Please give our audience an overview of this particular deal with the Navy and, what can you tell us about the Company’s key market opportunities today and tomorrow.

Michael J. Gordon: The Naval Supply Systems Command, Fleet & Industrial Supply Center (“FISC”), in Sigonella, Italy for the Naval Regional Contracting Detachment (NRCD) in Bahrain purchased 50 blast-mitigated trash receptacles. FISC provides fleet and base support for US Navy, Military Sealift and Coast Guard ships; US bases and facilities located in Europe, Africa and Southwest Asia; contingency operations; and continental US activities requiring supplies and services from Europe, Africa and Southwest Asia. Trash receptacles, which are a necessity for waste management, pose a serious threat to Public Safety considering how easily they can conceal an explosive device planted by a terrorist. Our BlastGard MTR series of mitigated trash receptacles deals with all aspects of the detonation of an improvised explosive device (IED) explosion - primary and secondary fragments, mechanical (shock/blast pressure), thermal (fireball), after-burn threats and reflected pressure. The existing explosion resistant trash receptacles that are on the market today, only deal with the first two points: primary and secondary fragmentation but does nothing to reduce the remaining three: blast pressures, reflected pressures and the fireball.

The military is one of four markets that the Company is focused on, the others being the commercial sector, law enforcement and government agencies. In regards to the military, BlastGard® is GSA approved and our key market opportunities in this market are: Ordnance Containers, which is the storage and transportation of insensitive munition to prevent sympathetic detonation and slow/fast cook-off; and Vehicle Protection, which relates to protecting up-armored HMMWV’s. BlastGard® is also working with several defense companies on behalf of the U.S. Marines marrying BlastWrap® with their product to provide blast protection for additional military applications such as wall protection from IED’s and barrack and bunker protection from mortar rounds. In addition, BlastGard® recently conducted a series of demonstrations (at a firing range in Nigeria near the Benin border) for the Nigerian Army Ordnance Corps (NAOC). These simple demonstrations proved the basic effectiveness of BlastWrap®, for the reduction of blast pressure and impulse and for the prevention of sympathetic detonation. BlastGard® has also submitted proposals for BlastWrap®, for IM packaging, for training programs and oil pipeline protection. Overall, what’s the total size of the market BlastGard® is addressing.

Michael J. Gordon: The demand outlook for blast and fire mitigation is extremely strong. The market for blast mitigation products (including fire suppression systems) is expected to exceed $7 billion in 2005. Nearly all niche areas, from armor plating to access control technology, are seeing a pickup in sales in the wake of the war on terrorism as well as increased government focus on Homeland Security as it relates to terrorism and national security. BlastGard® recently signed a Five Year Alliance Agreement with Nordisk Aviation Products. What are the key aspects of this strategic relationship? Any other key strategic relationships you care to mention?

Michael J. Gordon:
On October 24, 2005, we entered into a five-year alliance agreement with Nordisk Aviation Products, Inc. (“Nordisk”), headquartered in Cape Canaveral, Florida. Nordisk is a manufacturer, repair and leasing company of Unit Loading Devices (“ULD”, the standard luggage containers on twin-aisle aircraft) engaged in developing, supplying and supporting ULD equipment for the commercial passenger and air freight/cargo airline industry as well as the military, including its engineering support, and Worldwide Service Network. The purpose of the Alliance is to combine Nordisk Services products with the BlastGard Technology to offer enhanced blast mitigated products to the ULD marketplace with respect to both existing ULD’s and newly manufactured ULD’s. There are an estimated 600,000 containers in service in the fleet today with approximately 40,000 new units sold each year. Each unit has an average useful life of about 5 years, and we estimate that the total number of units in service will continue to rise over the next 10 years. We are working with the largest ULD container manufacturer in the world to develop a low-cost solution for ‘semi-hardened’ blast mitigation ULD containers that may vastly improve the chances of aircraft survival in the event of a reoccurrence of an airplane explosion in midair as occurred in Lockerbie, Scotland. Nordisk expects to begin marketing its new ULD design with BlastWrap® in the first half of 2006. 

The Company is also developing a blast-mitigated armor for the RE:NEW project for Media Metrica Ltd. of London. Media Metrica has created an innovative on-street product that combines recycling, blast mitigation and outdoor advertising. This product will spearhead recycling in urban centers and, simultaneously, act as a premium outdoor advertising platform. With security becoming an ever-growing concern in urban centers across the globe, BlastGard® and Media Metrica are working jointly on these new proprietary modular units that will mitigate the effects of an explosion within the units, and suppress the principal hazards of blast, fragmentation, heat, flash and fireball. In addition to developing and manufacturing the RE:NEW units, BlastGard® will be involved with marketing these products in the USA upon completion of all three development phases which are expected to be completed by May 2006.

We have several other strategic partnerships underway but are not at liberty at this time in disclosing them. What about Patent protection for BlastGard® technology? And, competition for the Company?

Michael J. Gordon: Explosive devices are increasingly being used in asymmetric warfare to cause destruction to property and loss of life. These explosive devices can sometimes be disrupted; however, most often there is not sufficient warning of an impending attack. BlastWrap® products were created around this core concept, and a patent was filed on July 31, 2003, which is still pending. In the spring of 2004, the Company filed additional patent applications for other blast mitigation technologies, but those innovations cannot be disclosed in detail at this time. We also filed an application for this technology under the Patent Cooperation Treaty (PCT). Under the PCT, we will have patent protection in most industrialized countries during the review process. A substantial number of countries have been added to the list of PCT members, including almost all of the former Soviet republics and China; thus the new claims will be protected in more than 40 countries while the application is pending.

The market for blast containment and mitigation is not well defined. Competitors range from niche architectural and engineering firms that provide specialized design and construction techniques for buildings to fire systems manufacturers. We have identified the top nine established companies that offer blast mitigation solutions, but none of them have all of the benefits and features of BlastWrap®. BlastGard® has an impressive Board which includes Howard Safir, who served from 1996 to 2000, as the 39th Police Commissioner of New York City. Please tell us about BlastGard® management team and Board.

Michael J. Gordon: Howard Safir joined our Board of Directors in July 2005. Mr. Safir was the 39th Police Commissioner of New York City and served during the same period that Rudolph W. Giuliani was mayor of New York City. Mr. Safir has been a distinguished member of law enforcement for over forty years and has held various posts at the Federal Bureau of Narcotics, the Drug Enforcement Agency, the U.S. Marshals Service and he also served as the New York City’s 29th Fire Commissioner. Mr. Safir has also been engaged by BlastGard through his company - The November Group - to assist BlastGard in bringing BlastGard technology to the attention of key decision-makers in the Department of Defense, the Department of Homeland Security, New York City Police, Fire and Emergency Services, FBI and other Police/Fire Organizations in the USA; as well as providing assistance in identifying and developing teaming or partnering opportunities for the Company. On November 14, 2005, Joel L. Gold joined our Board of Directors. Joel L. Gold is Director of Investment Banking at Andrew Garrett, Inc., an investment-banking firm located in New York City. Mr Gold is currently a director on the boards of several companies of which he serves on the Audit and Compensation Committees. He holds a B.S. in accounting from Brooklyn College, an M.B.A from Columbia Graduate School of Business, and a Juris Doctorate from The NYU School of Law.

The rest of the management team is made up of myself, James Gordon, Jack Waddell and Kevin Sharpe. BlastGard®’s management team has a strong background in marketing, sales, corporate finance, accounting, manufacturing, research and development, and industrial engineering. Our bios are available on our web site at BlastGard® had nice revenue improvement for the third quarter ended September 30, 2005 due to the initial sales of BlastWrap®. How are things looking for 2006?

Michael J. Gordon: The Company is continuing to move toward profitability. We were a development stage company and reported our first revenue at September 30, 2005 of $444,000. Our revenue for our year-end of December 31, 2005 will exceed that figure. We are very confident that 2006 will be our break-out year and we currently have orders on hand of over $800,000. Thank you for your time today, Michael.

Michael J. Gordon: It was my pleasure. I really appreciate the opportunity of introducing our Company to your audience.